Dirty work

hands1

Yesterday I wrote a little about countries that export their primary jobs. You know the kind – the work that came before the work most of us do now. Designing and making things. Growing stuff. Processing materials. Jobs with tangible results.

Lately leaders’ heads have been jammed with globalization thoughts. The result has been a migration of historic proportions. Factories close in southern Ontario and open in that huge industrial park outside Shanghai. Even call centres in Mumbai replace ones in New Brunswick. Our largest industrial corporations, the car companies, stagger in and out of bankruptcy. And the biggest corporation of all, Wal-Mart, becomes the largest employer in North America. What do the people there work at?

Yeah. Selling things made in China.

Globalization was supposed to mean we get all the jobs that don’t make you dirty and pay eight times as much. They get the greenhouse gas emissions, toxins, subsistence wages and the promise that workers can go from bicycles and rice to cars and chicken.

And folks seemed more or less content until about a year ago when we learned how much of our elevated, clean-hands, everybody-deserves-stainless-appliances lifestyle was based on debt. Since then contentment’s been harder to find.

The irony is that Canada and America are now more indebted than ever, and the guys with the factories and the primary jobs are holding a lot of the mortgage. We may delude ourselves for weeks or months at a time borrowing and spending more money and pretending nothing’s changed, but it has. Inexorably. For at least the next decade or two, billions of tax dollars a year will flow east, just as those containers of manufactured goods float west.

This will happen as we enter a period of peak oil, as ever-rising demand outstrips new capacity. A barrel could be $200, easily, by 2015. In fact, that should be a fascinating year. The leading edge of the largely-pensionless Boomers will be raiding their meagre RRSPs and dumping their houses as they move towards seventy. And we should be in the critical last period of the climate change debate. That’s the part where we have to teach kids about frogs, warblers and the arctic fox in history class.

But I digress. My point’s simple: There is a huge amount about the future that’s predictable.

Sadly, the guys with the mortgage income and the steady jobs making stuff for Wal-Mart may just end up eating our lunch.

This brings me to Bruce:

I’m glad I bought your book “After The Crash.” Tremendous food for thought and more importantly, an excellent assessment of risk for our situation. As well, it’s a very helpful and do-able manual for self preservation and sufficiency. Thanks.

My question: Real Estate stinks. Do you think that the stock markets at their current valuations, give or take ten percent, offer a reasonably secure place to store wealth or are they likely to suffer like real estate? If you’re familiar with Harry Dent’s writings, www.hsdent.com he currently sees a market top now with a long protracted drop in market values for several years, akin to the ’30’s depression. He arrives at his conclusions primarily based on demographics (we boomers are all becoming net savers so don’t expect us to keep the consumer economy going) and through analyzing numerous categories of cycles. I have had the same broker (and friend) for the last thirty years and he has talked me out of many crazy things over the years so I’m not trying to be a do-it-yourselfer. He and I took in a couple of your financial presentations together in the KW area several years ago. Would you comment on my question? Thanks for your time. Sincerely, Bruce

Hey, Bruce, Dent is an interesting guy whose work I have followed for years. I agree with him on the impact of demographics (obviously), which will be resolutely negative for housing values and consumer spending in general – but bullish for financial services and health care.

As far as the market goes, predictability is now a mug’s game. Last winter I said stocks would charge ahead in advance of any economic recovery, and that’s what has happened. However, easy call. Saying where the TSX or Dow will be in 2015 is something else entirely.

But I do believe this…

  • The age of asset inflation will be over soon enough. My bearish outlook for real estate is utterly undiminished.
  • Commodity prices, in contrast, will spiral higher. Energy and food will be in critical supply as the society where our bondholders live ascends.
  • North America will pay a heavy price for having gutted its manufacturing capacity. Most people have no idea yet how this will affect them.
  • The years ahead seem ripe for shocks – terror politics, energy-related conflict, climactic events and the consequences of American decline.

So, I think we know interest rates will rise, bond prices will fall, energy and agricultural issues will rock higher, pharmas and banks will outperform, Asian markets will dominate and the last thing you want to own is coastal real estate.

142 comments ↓

#1 [email protected] on 08.19.09 at 10:45 pm

The last few articles I really have enjoyed reading them…My view is this will results in a lower standard of living for everyone – same expenses, fewer jobs, higher taxes. Instead of progressing into the future, we are going back 30-40 years. Gov’ts policay is basically we can’t control it anyways so let it take its course. Get ready to work more for less, and be the privileged few.

#2 1whoheardofsomething on 08.19.09 at 11:14 pm

My neighbor just passed on the bad news. His brother is being laid off with over 3000 others. A big call center in Toronto is going offshore.

He said, don’t expect to see this in the media; apparently it does not have to be reported in the news.

#3 hal smith on 08.19.09 at 11:30 pm

Al Quaeda suicide bombers:

1-have been indoctrinated since birth.
2-have no real world education
3-have been misled by family and friends
4-have been lied to by their governments
5-have been misinformed by their media
6-have never heard a different point of view
7-believe that they are going to paradise to bonk virgins

Real estate suicide bombers:

-See points 1 thru 7 above.

#4 Investor on 08.19.09 at 11:49 pm

“boomers are all becoming net savers”

I guess that is out the window at least in the USA.

http://www.usatoday.com/money/perfi/credit/2009-07-27-credit-card-debt-seniors_N.htm

#5 Shawn Allen on 08.20.09 at 12:12 am

Some of the articles and commentss lately seem anti-free trade.

Lamenting manufacturing jobs gone to China…

I ask: Arn’t the Chinese people too, why as an Alberta consumer should I support an Ontario auto worker (or even an ALberta if one existed) more so than supporting a Chinese worker?

Is my responsibility not to get the best deal for me?

If free trade is okay within a Village, a City, a Province and a Country then why should free trade stop at the country border?

Free trade benefits us all. Maybe it is counter intuitive but it does ultimately benefit people on average.

#6 Shawn Allen on 08.20.09 at 12:15 am

If things are so awfully bad, then why do things seem to be so good on average?

I was in Peterborough to visit this Summer, It’s a lower income area and yet the stores were busy busy… Things still looked rather prosperous.

As for Alberta of course the stores are still jam packed here…

#7 HouseBuster on 08.20.09 at 12:15 am

Now that the manufacturing has been outsourced, the IT and tax departments are going too.

What’s going to be left in North America?

This is really disturbing.

#8 Sid on 08.20.09 at 12:26 am

Garth – What do you have against coastal real estate?

#9 Oh My on 08.20.09 at 12:58 am

Are those your dirty hands Garth??? You should clean your keyboard once in a while.

#10 Nostradamus Le Mad Vlad on 08.20.09 at 12:58 am

“. . . Wal-Mart, becomes the largest employer in North America. . . . those containers of manufactured goods float west.”

Several months ago, a friend sent an e-mail with several pix of a cargo ship. It has only one job — load up with goods made in China, drop them off outside Calif. and return back to China again.

That’s it. That’s all it does. The ship is so wide and long that no harbor can hold it, so Wal-Mart built its own landing and transportation facilities in the Pacific, then trucks it thruout the continent. Talk about efficient.

“. . . Canada and America are now more indebted than ever, . . . billions of tax dollars a year will flow east, . . . and dumping their houses (to whom?) . . . and food will be in critical supply . . . agricultural issues . . .”

To the agricultural side, this — http://cornandsoybeandigest.com/davidkohl/0818-FDIC-ag-bank-crisis/ — If the Ag. banks drop like nine-pins, where do the farmers get their money from?

A number of commercial banks have already gone belly-up, so this becomes more of the same, except under a different moniker.

Unless Monsanto lends farmers enough money to buy GM crops from Monsanto (which could be a possibility), Farmers Markets are looking really nice, so what bets on govts. trying to force them out of business?

Famines are increasing across the globe — look at Alta., where they have had some, but not much rain. The entire mechanism is out of kilter.
***
One wonders whether the debt / deficit loads of both countries are not a cover for the real events of life. Bloggers here are not sheeple; we leave that task to half-baked dimwits, most of whom are more than happy to plug themselves further into debt pits.

“. . . the last thing you want to own is coastal real estate.” Au contraire.

Coastal real estate is where sheeple of all kinds can live happily ever after, the higher and bigger the mortgage the better, ‘coz when The Big One — 9.5 on the Richter Scale — hits, then everyone, incl. bankers will be underwater!
——
Further to the economy —
http://www.bloomberg.com/apps/news?pid=20601080&sid=aHBffCEG0Nms
http://www.mybudget360.com/34-million-americans-receiving-food-assistance-6-million-increase-in-one-year-five-charts-showing-the-status-of-us-employment-manufacturing-pounded-participation-rate-at-multi-decade-lows-pa/
“34 Million Americans Receiving Food Assistance – 6 Million Increase in One Year: Five Charts Showing the Status of U.S. Employment: Manufacturing Pounded, Participation Rate at Multi-Decade Lows, Part-time Employment at Record Levels, and Less Layoffs with few Hires.”
——
For all the closet Pythonites swinging from tree to tree, dressed in women’s clothing and hanging ’round in bars! —
http://rawstory.com/08/news/2009/08/19/monty-python-to-reunite-to-receive-gong/

#11 Spanky_Pantsbottom on 08.20.09 at 12:59 am

“Energy and food will be in critical supply as the society where our bondholders live ascends” – Yet that flies in the face of the realities of life in China. Although China is a communist country, there is no social safety net. They are a nation of savers, not consumers, out of necessity. There is no evidence of an emerging, consuming middle class that will in anyway usurp the western world. Although, many of your other points are valid.

#12 Ghost of Tom Joad on 08.20.09 at 1:23 am

Go into a Canadian Tire store and take a look at what is on every product: “Made in China”. Canadian Tire should really be called Chinese Tire.

BTW: Finally good to see so many posters realize that globalization means an end to the West. I remember my school days, we had teachers pushing NAFTA and globalization on us. Turned out that NAFTA is just a DISASTA.

Is it too late?

#13 TaxHaven on 08.20.09 at 1:41 am

We’d better start freeing up our small entrepreneurs so that we can begin actually MAKING stuff again. Starting any kind of business must once again be a ten-minute operation, and NO business of any government. We’d better slash regulation and taxation, social program spending, and return to a meritocracy where, probably unfortunately, the less able and competent, the less well-educated and imaginative are allowed to fail.

Yes, allowing businesses and individuals, banks and investments, companies and, yes, the poor to FAIL. We need to eliminate all kinds of bailouts, safety net schemes, pensions, insurance and parachutes for the unfortunate if we ever wish to compete again.

What do real estate agents actually PRODUCE? Lawyers, driving schools, clothing retailers, insurance agents, store clerks, office workers, government employees? What do they actually ADD to the net national wealth of Canada?

Oh, God…! Look what’s coming…

The dollar, the pound, the euro…they’re going to head steadily toward utter valuelessness. More and more currency chasing fewer and fewer real goods. You’ll need to be in GOLD, in resource companies, in ag commodities, in foreign currencies, even in collectibles…

Forget hi-rise condos. I will be looking at rural acreages with small houses on them.

#14 nonplused on 08.20.09 at 1:43 am

Environmental degredation is real, but C02 global warming is a scam! It’s a trace element in the atmosphere eve with human emissions and plant life sequestures it! It’s a white wash for why the commoners aren’t going to be getting any oil going forward as peak oil plays out.

What is real is over fishing, pollution, habitat destruction, toxic chemicals, and industrialized topsoil strip mining (modern farming).

#15 WillsDad on 08.20.09 at 2:07 am

I recently came back to Canada on vacation from my home of 6 years in Korea. One thing I was surprised to find was “self-bagging” in Wal-Mart and Superstore. Even the biggest employer in NA is looking at ways of eliminating employees, and with no union, it’ll be a piece of cake.
I wish every Canadian and American could see how Koreans protest, be it unions, anti-American beef, Free-Trade Agreements, etc. We could learn a thing or two about self-preservation, instead of letting big business dictate our lives. Ask yourself why Canadians average two weeks vacation/year while Australians start at a month, even though they have a dollar worth less, and a much smaller economy.

I remember protesting tuition fees during the early 90s, and a group of visible minorities were standing off to the side. One of them said to the others, “You can always tell a Canadian protest-everyone is laughing.”

The joke is on Canadians and Americans who have put their faith in the “free” market. Euros, Asians, and Aussies know better.

#16 JOJO on 08.20.09 at 2:43 am

GTA REALTORS® Report August Mid-Month Resale Market Figures

August 18, 2009 — In the first two weeks of August, Greater Toronto REALTORS® reported 3,832 sales – up 27 per cent compared to the first two weeks of August 2008. The average price for these transactions was up three per cent year-over-year.

Yeah, you was “right” about stock market TSX but you was COMPLETLY WRONG about real estate form March 2008. Because you don’t know in what country you live and ONLY in Canada the RE prices are still going higher from 2007,2008. In any,any country in Europe, Australia or USA prices had fall down.
So prices are alredy higher over 10% in GTA from last year and I’m positive will going higher 10% more.
After that “YOUR FANTASTIC PREDICTION” prices will pull back about 10%-15% when interest rates hit 6%.
Did you calculated how much will be monthly payment, with higher interest rate. AGAIN MORE EXPENSIVE.

You wrote about Detroit RE prices! Ha, I still fell better in Detroit than Brampton or Fort MacMurry. Check the RE prices or climate? Do you know where you LIVE? Welcome to Canada new immigrants and we need you more after when we rid off our 500,000 Canadian employees because they alredy have
” Canadian experience” and they are too expensive.
So next two years will bring 600,000 Cheap labour which will push economy forward. Yeah, For new gyus and No Canadian Experience you have to work for $ 7,
$ 8 or $ 9 per hour.

So, You think that you know about economy from previous “recessions” in Canada? Please when and in what recession you had interest rate 0.25 %?
During any Canadian Recession when we had rise of
RE prices?
You still don’t have a clue how bad will be in Canada after 3 years. And I’m not talking only for RE assets.
And the consequences of that kind of Politics in North America will wipe out Midlle Class,you can see Crime like 1929-1939 in Chicago,worst Depression, and it will bring global war.
My prediction for 2010 that RE prices in Canada will rise.
From Oct/2010 to Feb/2016 will decline.
Living expences,Oil and Gold next year again will rise,
and from 2011 and 2012 , you can see Crash on the TSX like never before and Oil price $ 20, and gold price about $ 500. Unemployment rate in Canada over 15% in 2012.
Please remember my predictions guys.

#17 Mike (Authentic) on 08.20.09 at 3:29 am

Garth said: “Wal-Mart, becomes the largest employer in North America”

I thought you were kidding so I looked it up on Wiki and you (sadly) were not kidding, 2.1 Million employees and a revenue of $404 Billion in 2009. OMG.

Our family boycotted Wal-Mart is 1996 in Ontario because we saw what their company growth model was doing to local businesses and refushed to shop there. I heard back then that for every 2 jobs Wal-Mart creates 3 are lost locally. We still do not go into Wal-Mart today because we support local businesses and jobs.

#1 employer in North America? That is insane. How did this happen? It is just a retail store!

What happens when people slow their retail buying down? Will the Gov’t say Wal-Mart is a “too big to fail” company then?

I would strongly refuse to pay higher taxes to keep Wal-Mart in business (based on reasons above).

Mike

#18 somecatchphrase on 08.20.09 at 3:56 am

It’s nice to see this blog evolving into a broader economic and financial discussion that’s not so narrowly focused on Canadian real estate. Not to diminish the importance of this topic to many readers here, I don’t own any real estate, and, that won’t be changing anytime soon.

Garth’s post today really gets down to the core issues. The unfolding real estate disaster is just one symptom of the underlying problems.

Everyone reading this blog needs to watch Chris Martenson’s Crash Course. It’s a series of short video clips which provide an excellent overview of the world economic situation. Some might find Martenson a bit wonkish, but I assure you it’s well worth the time and effort.

Garth nails it here:

“My point’s simple: There is a huge amount about the future that’s predictable.”

Nobody knows the exact timing, details, or contours of the future, but there is a lot that’s completely predictable. There’s a lot less ambiguity than many people seem to think. Martenson’s Crash Course will further reinforce this point of view.

http://www.chrismartenson.com/crashcourse

#19 Tim Siemens on 08.20.09 at 4:51 am

Its important to remember that peak oil as well as global warming are all theories. In my opinion oil prices are held artificially high by speculation, OPEC and of course refiners. There is also no concrete evidence C02 actually causes warming of the atmosphere, but that’s a different website.
My first post, so flame away….

I like this blog, read it every day.

#20 David Bakody on 08.20.09 at 6:57 am

Good post Garth ….. as for investments, for us boomers plus (War Babies) good ode fashion money practices is as good to-day as it ever was. Hold little/no debt and save wisely….. enjoy life by spending wisely …. exercise daily and try to eat healthy ….. all the rest is CDF on a day to day basis.

Note: Have I aways done that NO! but I have worked for a long time at all those accomplishments be they one or two at a time.

#21 Cash is King on 08.20.09 at 7:56 am

Toronto’s Economy in Deep Slump – National Post

http://network.nationalpost.com/np/blogs/toronto/archive/2009/08/20/toronto-economy-in-deep-slump-city-report-shows-really-scary.aspx

Some highlights
11.5% unemployment, Steep decline in building permits Welfare rolls up 18%, Stagnant wages, hard hit manufacturing sector, building permits are down 38%…..

At least the resale housing market is booming!

This is going to end badly.

Saving Cash for the Crash

#22 ca on 08.20.09 at 7:58 am

This is one of the best and most concise summaries I have seen on where we are headed.

#23 jeff on 08.20.09 at 8:00 am

capital always seeks out the cheapest labour, this “globalization” is really no surprise; it is frightfully logical

#24 Leonard on 08.20.09 at 8:05 am

Good Day

I saw that title today

http://georgewashington2.blogspot.com/2009/08/is-bank-of-montreal-canadas-fourth.html

If anybody could paste it to this blog that would be nice, cuz cannot read it China. All ‘blogspot’ are blocked.

Thanks

#25 phlex on 08.20.09 at 8:08 am

Garth, you talk about a critical energy shortage, but look at natural gas. America has become the Saudi Arabia of natural gas almost overnight thanks to new technology and the discovery of huge shale deposits. Some estimate that they have over 500 years worth of natural gas and another 500 years worth of coal. So if oil does peak in the coming years, couldn’t we switch to electric cars powered by natural gas and clean coal? I think that would make it even cheaper to drive than it is today.

NG cars are a distinct option, but not without a multi-billion supportive infrastructure program. Who will pay for that? — Garth

#26 Industrial Guy on 08.20.09 at 8:23 am

The desire to own real estate is entrenched in our national psyche. It’s even proclaimed in our literature. In Mordecai Richler’s “The Apprenticeship of Duddy Kravitz”, our charming anti-hereo is told by his grandfather: “A man without land is nothing”.

Globalization ……. What were we thinking? Our Government leaders think is OK to enter into trade agreements with countries who’s human rights records are horrific. Thank to this decision, we all have blood on our hands.

The WTO is a joke…and Canada is a big supporter of this mortally wounded organization. Brazil openly subsidizes its aircraft industry at the cost of Canadian jobs at Bombardier. Canada wins judgements against Brazil at the WTO worth hundreds of millions of dollars. Now the bad news. It has not stopped the subsidies. To the Government of Brazil, it’s just a cost of doing business.

Can Canada take a protectionist stance and close it borders to international trade? No. We’re an exporting economy. We would be crushed under retaliatory actions by our primary trading partners. The job losses would be staggering.

We are in the midst of a national crisis and the Government of Canada tells us through the Bank of Canada that its time to sound the all clear. The “recession is over”. It’s not over. We need to realize this situation is is grave and do something about it. In previous postings I suggested we need coordinated National Industrial Strategy ….. and we need it NOW! We already have a National Resource Development Strategy. Get it out of the ground and ship it out of Canada. All this “recovery” will do is return us to the same conditions which cause the recession. Inefficeint manufacturing, a over reliance on a single export market (the USA) and a lack of research an development must be addressed.

Why is this National Industrial Strategy so important?….Well, how do you think we’re going to pay for this years orgy of Government spending? 60 Billion Dollars. Let’s see …if we run a surplus of ..oh let’s say 5 Billion per year …..yeah …just as I thought. My kids will be paying for this ……

1,300 positions recalled at GM this week is nothing compared to the 200,000 workers who have lost their jobs in Southern Ontario. It is good news, but how long will it last. The “Cash for Clunkers” program created a sudden increase in auto sales, but just like our own government’s low interest solution to a crashing housing prices. It’s just not sustainable. It seems all our good economic news is based on a faux economy.

#27 Kris on 08.20.09 at 8:24 am

“Real estate stinks” is a bit of a simplification, to say the least.

The key is diversifying your investments so that no matter what happens you have the downside covered and leave some potential for upside gains.

Real estate should be a component of most peoples’ portfolios, whether it’s physical land/buildings or shares in REIT, the question is how much to devote to this asset class.

As far as Harvey Dent is concerned, if he knew with certainty what was going to happen in the markets, he wouldn’t be wasting his time writing books. His information is good, but must be viewed alongside other sources of information and opinions.

Now for some shameless self promotion…I have an article in the month’s Canadian Moneysaver that discusses Black Swans. It will be of interest to readers of this blog.

#28 David Bakody on 08.20.09 at 8:31 am

” Financial Advisor two step” listening to an financial advisor on radio this morning, when asked is the recession over? OMG what a disappointment! his answer was ….. silence, they a long well followed by this ” We are about half way through” Ladies and gentlemen whoever you are dealing with if they can not give you a straight YES/NO looking you right in the eye get up and walk out of their office …. tell them on the way out, call me when this recession is over and I will think about coming back! If you have done all your homework and your mind is up you do not need advice just tell them to do it.

By the way it was mentioned those who had secure savings just may have saved many others …. as Cash is King and aways was. Hello?

#29 Albertaboy on 08.20.09 at 8:38 am

Good post Garth except for the following:

“And we should be in the critical last period of the climate change debate. That’s the part where we have to teach kids about frogs, warblers and the arctic fox in history class.”

Has anyone else noticed that the media went from GLOBAL WARMING to Climate Change? Apparently it was too big of a pill for the general public to swallow, while anything and everything that causes the slightest upset can be attributed under the broad umbrella of climate change. You can prove Global Warming is a farce – its much harder to prove an abstract definition is.

I also find it interesting that you slam gold, yet cite that commodities will go higher. Gold, being a commodity and the ONLY storehouse of true value & wealth since the dawn of civilization – is definitely heading higher and has been trending up slowly, yet steadily since 2001.

I agree that commodities are headed higher – which is why I’m only invested in gold, silver & oil. I plan on adding agra to my portfolio (Potash being at the top) as its a no brainer. I think Uranium in 10 years time will also shoot to the moon as Peak Oil wreaks havoc on electrical costs due to coal fired plants. BTW – Peak Oil is no longer a theory, its a proven fact. The amount light sweet crude has been in decline for 30 years and the heavier sulfur rich crude that requires more refining and has a lower energy value will cause prices to rocket while supplies dwindle.

Climate change is a far more accurate moniker than the media-created ‘global warming.’ The greatest impact on most of us could be altered weather patterns, not heat. As for gold, I have not slammed it. In fact my book ‘After the Crash’ recommends a gold position, and explains why. I do take exception with those, however, who claim it is money. It’s not, and never will be again. — Garth

#30 FY on 08.20.09 at 8:44 am

#4 Shawn Allen

Pointing out issues in globalzation does not mean it’s anti-free trades. Besides, what economists are saying is that “free trade benefits all of us, as a whole” (you know, homo sapient, everyone together in the global village ?).

But what benefits us as a whole does not mean it will benefit everyone. There will be winners and losers (which can be subjective). There have been bodies of research literature to show free trade does not benefit everyone, not every group within a country, but sometimes not an entire country as well. Its effects depend on many factors beyond easy predication.

If you want an ancient example: The Opium War was Great Britain’s attempt to balance their trade with China. At the time, a single trip to China for tea could payback the entire ship building cost. GB faced trade deficits with its silver (currency at the time) flowing to China. To balance that, they must find something as addictive to the Chinese as the tea to the Brits. That was the opening salvo.

Later day examples include many South American and African nations.

#31 dd on 08.20.09 at 8:45 am

Agree, however why would “banks outperform.” Is their main revenue model mortgages? Would this not be squeezed buy the uncoming movements in demo and wages?

#32 dd on 08.20.09 at 8:47 am

#18 Tim Siemens

“In my opinion oil prices are held artificially high by speculation”

In 1997 oil was $10 barrel. It is $70ish today. Speculation and Opec can only squeeze supply by so much.

#33 ted on 08.20.09 at 8:53 am

#13 nonpulsed good post. I agree 100% with what you say. I am concerned about the environment in fact frightened but I take offense when people think I don’t care because I don’t believe in global warming. You said it perfectly.

#34 dd on 08.20.09 at 8:53 am

..Saying where the TSX or Dow will be in 2015 is something else entirely….

…Commodity prices, in contrast, will spiral higher. Energy and food will be in critical supply…banks will outperform…

Commodities, Energy, and Financials make up a large % of the TSX. Therefore if these are goiing higher than the TSX is going higher.

#35 infernalmachine on 08.20.09 at 9:06 am

Tim, if you would like “concrete” evidence of C02’s role as a greenhouse gas (aka planet warmer) please hop on a space shuttle headed to Venus. Or just take the most basic of environmental chemistry courses.

Ugh.

So Garth, as a mid-20s white collar average schmuck like me supposed to do? Eschew any hopes of a settled life? Bunker down for climate change and high taxes? Seems like my generation is basically SOL.

#36 eddy on 08.20.09 at 9:10 am

the supply of listings in TO is shrinking drastically, people are refinancing, staying put, enjoying some temporary mortgage relief. demand is high = no crash in near future

I have never used the word ‘crash’ in my projections for Canadian RE. There will be a correction, and prices will decline by 15-20%, depending on local conditions. The timing will be determined by the factors which have been exhaustively referenced here. — Garth

#37 East 905 on 08.20.09 at 9:25 am

Hi Garth,

I read your blog every day but your last two post have really peaked my interest.

For the last year I have only bought stuff from retailers that design and/or manufacture some of their products in Canada. The list is not as short as you think (especially in ladies’ wear). With a little bit of research and some self-control you can do it to.

If you’re interested in reading more on this topic, check out Jeff Rubin’s book “Why Your World is About to get a Whole Lot Smaller.” He talks A LOT about peak oil, but he also sees manufacturing coming back.

And yes Garth, I cherish your autographed books more than I cherish Jeff’s.

#38 Kurt on 08.20.09 at 9:27 am

Shawn Allen: I see no reason to have free trade with a country that grants its businesses so many unfair advantages over ours: little or no environmental protection, little or no consuner safety, no social welfare, no union protection, no free speech, no political freedom, easily corrupted public officials. I see no reason for us to commit suicide on the altar of free trade.

#39 Peter Wiener on 08.20.09 at 9:31 am

# 15 JOJO

Interesting vision you have there.

Two small but important questions:

1) What qualifies you to make such predictions (In other words, could you direct us to some facts upon which you base your predictions)?
2) How do you arrive at your timing in your predictions – are you using a regression model or?

I am not arguing with your conclusions, and in fact I share a few of them, just with a different timetable. It’s just that I, like some others on this blog, do some factual analysis to arrive at our conclusions and I think if you let us know how you arrive at yours we could all have a better insight. Thanks for posting what you did so far.
Always good to consider other opinions, but best when you can review the thinking behind the conclusions.

#40 Peter Wiener on 08.20.09 at 9:32 am

# 25

Don’t worry, you will have a country full of company in your predicament,

#41 Peter in TO on 08.20.09 at 9:33 am

Shawn Allen,
I ask: Arn’t the Chinese people too, why as an Alberta consumer should I support an Ontario auto worker (or even an ALberta if one existed) more so than supporting a Chinese worker?

There are a few big assumptions in free trade:
1) Both parties are truly open to recipricol trading
China has significant issues on how ownership is done in china and flagrantly violates patent and copyright law stealing from the west.
2) Both parties have to exist with minimum government intervention
China has been lending to the US for years allowing the US dollar to continue to operate at inflated rates. This results in hollowing out of US production and HUGE monetary control potential by China. If China were to sell all of their T bills the US dollar would plummet and China’s currency would soar. This would result in more home bought products for US and high inflation for all imports including oil!!!!!!
Short term this would be a huge shock for the US long term they would gain their independence again. But not gonna happen as not politically expedient in US or China.
US is buy buy buy while China is about gathering power.

#42 Joseph on 08.20.09 at 9:35 am

#4 asked: Arn’t the Chinese people too, why as an Alberta consumer should I support an Ontario auto worker (or even an ALberta if one existed) more so than supporting a Chinese worker?

Answer” Come on, we need to keep our wealth inside the country. By shipping jobs overseas, we are shipping wealth overseas that could be applied to create growth and opportunity here. Our deficits would not be nearly as high if we had this approach. We, as citizens, and especialy heads of corporate enterprises better start putting Canada (and the US) first or we will slowly economically bleed to death. The US seems to bleeding profusely as international free trade seems to have benefited everyone but them. They have a few good jobs created as a result of free trade, but it is offset by the vast majority of them which are being lost. China sure ain’t thinking about us when they make decisions to spend their trillion dollars of capital. They spend it on domestic infrastructure and even pass legislation stipulating that the capital must be spent in a way so as not to leave the country. So, you might be getting a better “deal” for now on your purchases, but in the long term, you and I and Canada and the US will pay for this kind of mindset dearly.

#43 Makeorbreak on 08.20.09 at 9:50 am

It is easy to say consumers should not buy goods made in China. The mother who has mouths to feed, school articles and clothes to buy is looking at the best way to maximize her money, whether or not the good is made in China. The maxed out consumer is looking for the best deal. That is the reality of globalization: a viscious cycle with no way out…

We are all guilty. The consumers who buy, the big corporations wanting to maximize their profits, the voracious unions, the government giving in to political pressures, endless regulations, etc. On one hand, people want everything and yet they complain when their good paying jobs are shipped abroad. Maybe we should go back to 1950.

#44 TorontoBull on 08.20.09 at 9:53 am

“I have never used the word ‘crash’ in my projections for Canadian RE. There will be a correction, and prices will decline by 15-20%, depending on local conditions. The timing will be determined by the factors which have been exhaustively referenced here. — Garth”
Garth, you may want to take a look at the title of your latest RE book…also by starting to use the word ‘correction’ you are playing it save buddy, as you will never be wrong, even if prices correct by 50%. I tend to agree with JOJO that prices might continue to appreciate/stagnate until 2010 when we get a) HST and b) employment benefits start to expire.
Garth, if I may add that recently you message has been confusing: on the one hand you say that housing prices are 7 times income while at the peak in the US the ratio was 5-times income; and on the other hand you see only 15-20% correction in Canada. So what will sustain only a 20% drop in a climate of a (global)consumer deleveraging?
next, when there is a bubble (as you have endlessly been pointing out is the case in Canadian RE) prices historically overshoot on the downside…

The ‘crash’ in my book title refers to the events of the aumumn of 2008 (try reading it before you comment). And I have been consistent since writing ‘Greater Fool’ in saying the market will correct, not replicate a US-style plunge. There are many reasons for that, and it’s still coming. The current era of manipulated rates, forced credit and false bravado cannot last. Reasonable minds grasp that. — Garth

#45 Albertaboy on 08.20.09 at 9:55 am

As for gold, I have not slammed it. In fact my book ‘After the Crash’ recommends a gold position, and explains why. I do take exception with those, however, who claim it is money. It’s not, and never will be again. — Garth

Gold was money up until the gold standard was removed in 1971. So what do you see being used to peg currencies against or should they continue to be floating abrstractions?? Right now there is no limit to what governments can print and how much. Prior to the removal of the gold standard, your dollar had real worth – in the 38 years since that time, your purchasing power has gone from dollar for dollar to six cents per dollar all thanks to our Central Banks.

When pricing oil, grain or other commodities against the price of gold, the cost has remained fairly constant over the past 80 years. How then – if gold is not and never will be money – will the BoC and Fed be reigned in so as not to have runaway inflation and a Zimbabwe type nightmare?

Money is currency. Gold is metal. Bullion was not a medium of exchange prior 1971. Nobody could buy a tin of tuna with it then, or now. It’s functionality at this time is as an inflation hedge, similar to most commodities. — Garth

#46 Makeorbreak on 08.20.09 at 9:56 am

http://money.cnn.com/2009/08/20/news/economy/initial_jobless_claims/index.htm

#47 bigpictureguy on 08.20.09 at 9:58 am

#41 Joseph on 08.20.09 at 9:35 am

The problem with your stance is Global Competition. If Canada doesn’t import cheaper goods and others do then your cost of living is higher. It’s in human nature to look for value.

If you do what Japan does and put high tarriffs on designated imported goods such as rice and fruits, you are paying 100% more on local food stuffs due to protectionism.

You pay the price either way. You choose.

#48 Mr. D - Ottawa on 08.20.09 at 9:59 am

Reply to #18 Tim

The debate is not whether peak oil will occur, but when. We won’t know the exact date of peak oil until after it occurs. We may be at or very near peak oil now. Oil will still be produced after peak oil, but the rate of production will go into a terminal decline. There will be shortages and prices will rise substantially.

Here’s a quote from another site:

The imminent decline of global oil production

In 2008 the International Energy Agency (IEA) conducted for the first time a detailed field-by-field analysis of global oil production and its findings are bleak. Asked by a journalist on what the previous analysis relied on, the Chief-Economist of the IEA admitted, “It was mainly an assumption”. In the 2008 World Energy Outlook (WEO), they have analysed about 800 fields, which account for ¾ of global reserves and more than 2/3 of global oil production. They come to the conclusion that decline rates are far higher than previously thought, between 6.7 and 8.6% a year. As result, they now estimate that to maintain the current levels of oil production by 2030 the world would need to develop and produce 45 MBD; as said by Dr. Birol, approximately four new Saudi-Arabias.

As for those who deny CO2 has anything to do with climate change, they are completely blind to the scientific studies and overwhelming consensus on this.

#49 Kurt on 08.20.09 at 10:02 am

Non-plussed: Climatology is a difficult field, but the influence of CO2 is as settled as *anything* in the field. Your blowing off the science with the “trace element” line (doh! flunked our grade 10 chemistry did we?) reveals how shallow your understanding of this area is: if the ozone layer of the atmosphere was somehow brought down to sea level, it would be less than 1 *cm* thick! Now *that’s* a trace component of the atmosphere. If you did the same thing with atmospheric CO2, the layer would be several *meters* thick. What to *do* about AGW (if anything) belongs to the realm of politics and is open to infinite debate – the science, to the extent anything in climatology can be, is settled. Stop aiding those interests with a vested interest in denial, and starting thinking about its impact on *your* life and how you can mitigate it (hint: stay away from RE in the polders, New Orleans and southern Florida.)

#50 Mr. D - Ottawa on 08.20.09 at 10:02 am

Reply to #7 Sid:

Coastal real estate will be severely impacted by rising sea levels and more intense storms. For example, look what’s happening in the San Francisco Bay area NOW and in the near future.

http://www.reuters.com/article/latestCrisis/idUSN10469894

#51 Linda Pearson on 08.20.09 at 10:04 am

#18 Tim Siemens

I’m glad to say, Tim, that you started my day with a big laugh. It’s MY opinion that I should be beautiful and rich but I don’t see either happening. If you want to read something that just might change your opinion about oil supplies, please read Jeff Rubin’s book, Why Your World is About to Get a Whole Lot Smaller.

Poster #36 also makes reference to the same book for another reason. Altogether, a good read that may stretch your thinking, never a bad exercise for any of us.

#52 TorontoBull on 08.20.09 at 10:27 am

Garth,
you haven’t answered any of the questions in my post. I read your book by the way and agree with most of your conclusions and thank you for this blog, which is an example of great public service. But I would like you to elaborate how a 15% price drop will take us to the historical average RE of 3-3.5 times income? Is that 15% in real or nominal terms? In addition if we see on ly 15% price drop, well all RE Bulls have been right because if you invested in 2000 and got a 70% asset appreciation, how does that compare to your investment in index stocks for examlpe (don’t bother to answer that one its a rhetorical question)

My correction estimate is a national average, since there is a wide discrepency between local markets and one very regional event (like an Olympics) can impact prices for a defined period of time by exaggerating or suppressing demand. Nowhere have I said we would quickly return to a certain multiple of earnings equivalent for house prices, since that is a complex economic issue. The overall conclusion, however, is simple: real estate assets are inflated, a condition which will correct. How radical an idea is that?

#53 moretrouble on 08.20.09 at 10:32 am

Citizens Bank, an arm of Vancity Credit Union, just more or less closed. Its Mortgage backed securities and personal loans taken over by the TD.

Yesterday Canada Housing Trust, a federal agency, issued $3.5 billions of bonds.

I wonder why VanCity, possibly the biggest credit union in BC, did not keep the Mortgage backed securities……

It looks like some might have been in default…..

Then the breakdown of negotiations between 9000 lumber workers & the independent in BC……

Of course, history will run its course, with the pine needle killing the forests.

#54 char on 08.20.09 at 10:32 am

Thanks Tim Siemens and Albertaboy! No significant anthropogenic global warming is usually my hobby horse, but I’m getting tried of it because no one on this site will address the science. Ok, once again :

http://www.youtube.com/watch?v=cfnF7ilVzeo

http://www.members.shaw.ca/rolfwitzsche/canada/global_warming.hmtl

Stick to the SCIENCE guys, not the tedious, “…well, they’re all paid off by big oil”!

No politicians are preparing for global COOLING, which has started due to (probably periodic) decreased sun radiation. This may cause crop failures in Canada, in fact corn was in trouble this summer. But hey, school kids may soon see the Arctic Fox in Thornhill !

Btw, read an interesting theory : we were all in the grip of the global warming social hysteria as the economy was overheating. Now that things have taken a dive, more and more scientists are ‘dissenters’, and are sounding the global cooling alarm. I like it.

So herd, but at least be at the front !

#55 Gregor Samsa on 08.20.09 at 10:32 am

Shawn Allen, wrote: “Free trade benefits us all.”

Hmmm…. it’s sure working great for the U.S. right now. The beauty of this debate is that there almost is no debate. Canada is following the same playbook as the U.S., and one only needs to look south to get a glimpse into Canada’s future.

The reality is that under the guise of “free-trade” corporations have been moving jobs to the lowest cost places to maximize profits. So a few factory workers lose their jobs to China, and Shawn Allen goes: “so what, I don’t work in a factory.” He sees a cheaper price at the mall and he is happy. Then all the engineers that used to design those products for the factory lose their jobs to China, and Shawn Allen goes: “so what, I’m not an engineer.” The prices at the mall get even lower! Because of government meddling, Shawn Allen’s Calgary McMansion doubles in price! He is now RICH! Could things get any better? The economy is GREAT!

Meanwhile, unemployment slowly rises, with good paying jobs being replaced with low paying jobs at Wal-Mart. Only the bubble economy hides it all. House prices are rising, creating jobs in construction, real estate, law, and at the mall. So Shawn Allen lives in his little bubble in his McMansion while the economy is dismantled around him. Then one day, his house is worth nothing and he is in danger of losing HIS job. Shawn Allen is angry and confused. Poor Shawn Allen.

#56 Men With Hats on 08.20.09 at 10:37 am

One thing is certain China has screwed up the global food chain with contamination .
Boycott China .

#57 Got A Watch on 08.20.09 at 10:47 am

“Free Trade” with nations that do not have or do not enforce the same kind of standards we do…is just a myth. That is not “Free”, that is just stupidity.

Since these nations (cough, China, cough) feel they can ship us poisoned food,or toxic products, or goods with quality so low they are actually hazardous, with impunity, I feel we have no reason to import anything at all from China. Period.

We should simply require all imports to meet Canadian safety and quality standards in every way, and the cost of testing by CSA or ULC to be paid for by the importing company. Those who can’t or won’t meet our reasonable standards should simply be banned from sending us any kinds of goods. Nations with standards that match ours or come close (USA, UK, EU, Australia, Japan, not too many more) would be exempt. When the Chinese Ambassador phones to “protest” this, I would hang up. If China or Brazil do not like this, I could care less. They actually need us much more than we need them, in all ways.

So called “free trade” is an illusion propagated by global corporatists who could care less about this country. So why should we care one whit about them.

“Globalisation” seems to me to be a colossal failure for all parties involved except a few oligarchs, the “benefits” seem awfully hard to define while the negative effects abound.

It is a lie brought to you by the same systemic criminals who delivered this credit crisis to everyone. Supported by the usual crooked politicians who live in their wallets.

If we don’t change our ways, our society is doomed. Not because of external forces, but because of endemic corruption in our “leadership” (gag).

I don’t see any of our current crop of “leaders” whether they be Premiers, PM’s or Opposition, as up to the task. They may be the worst have ever had.

#58 john m on 08.20.09 at 10:48 am

Great blog Garth.when we are surrounded with news media and political misinformation i find it refreshing to read something that makes sense.

#59 Devil's Advocate on 08.20.09 at 10:49 am

One way to fight the pending North American economic failures is to open up immigration. Immigrants, typically, are fleeing a life of lesser opportunity. They are seeking opportunity to work toward a better life. North Americans, on the other hand, have become all too complacent. We have lost our entrepreneurial spirit as we move closer and closer toward a welfare state. Many immigrants understand the shortcomings of socialism and other more radical governance. Leftist politics is anti-entrepreneurial and lobotomizes the innovative drive.

As Boomers begin to retire, wind down and save we are finding the demographic moving toward replacing them not nearly so plentiful in numbers. Our economic engine is, effectively, there-by running out of gas. We will need at least half again as many spenders entering their peak earning years as we have to replace those leaving the workplace.

I doubt we will make any significant progress toward a sustainable lifestyle norm in North America. Our economic model is one reliant on continuous growth in one form or another. A faltering economy is, in reality, a good thing… a cleansing thing… a move toward efficiencies… a “shake-out phase” as Harry Dent explains in his book The Great Depression Ahead. Mr. Dent explains demographics well in that book and it becomes clear that demographics are the back-story to our economy as the economy is the back-story to history. The future, which becomes history, is somewhat predictable through demographics. Essentially, we are entering an era where our economy can be expected to contract due in large part to the pulling out of a huge number of income earners/spenders with few to moving into the ranks to replace them. Opening up immigration might be one way to replenish that shrinking demographic of workers/spenders.

#60 R on 08.20.09 at 11:28 am

Here in B.C. things are getting ugly. It will get worse once the provincial budget comes down on Sept. 1. Tourism and Forestry are in the tank along with most other things . People are still buying overpriced real estate at record numbers. I guess the buyers must be from China.

#61 Rasputin on 08.20.09 at 11:39 am

Shawn Allen #4:
As Einstein said: “There are only 2 things in the universe that are infinite, space and human stupidity. And I’m not so sure about space.”
You proved his point.

#62 Joseph on 08.20.09 at 11:41 am

#46 bigpictureguy replied to my #41 entry by saying,

“If you do what Japan does and put high tarriffs on designated imported goods such as rice and fruits, you are paying 100% more on local food stuffs due to protectionism.

You pay the price either way. You choose.”

This is not the case. If the US had not made their economy an “open” one to Asia in the last 15 years, all of that money now in Asia would be at the discretion of US enterprises. The reason why there is no “bounce” in the US economy as Warren Bufet recently surmised is that in the past even though prices in the US were high the money was still inside the USA which private enterprises were able to channel to re-invogorate economic growth. We had high prices before and economic recovery because we were able to tap into domestic wealth. Now this money is sitting in China. They sure are not interested in giving our economies much needed “bounces” but rather are turning their wealth for domestic use. I would much rather pay a few extra bucks for merchandise bought here than pay less and ship the difference to China. I think it was right after the US revolutionary war that Alexander Hamilton saw the peril of international free trade and warned Americans against it. He stated that he would rather pay TWICE the amount for a cotton prodcued good made inside the USA, than pay half and ship America’s wealth overseas. We are losing (i.e. squandering) everything that our Canadian and US forefathers fought for in creating the two most prosperous nations on earth by our own befuddled rationale. This is nothing less than national economic suicide. And think about it, as the wealth continues to disappear, the job that you have that allows you to purchase these “cheaper” goods may one day disappear as well, either directly or indirectly as a result of the federal government taking in less and less revenue. So if you think that your job is safe because you are not directly linked to the private enterprise that produces goods in this vicious cycle of wealth destruction, you are mistaken.

#63 Rob on 08.20.09 at 11:47 am

#4 its not a question of free trade its about fair trade. How does a country like Canada compete with other countries that use child labour and pay their workers $3 a day ? The only people free trade, off shoring and outsourcing benefits is big business. The only way to compete if globalization is your model is to have a race to the bottom for all countries standard of living. All profits go to the top 2% of a society and the other 98% are left being serfs in their own country. We need tariffs to put an end to entire countries being used as cheap labour to produce stuff that only the Ceo’s and inner circle benefit from. I am not a fan of socialism either, we just need a level playing field where people can at least make a living above the povery line . Free trade is just a fancy term given to enslaving the public into subsistance living while sucking the profits off shore into tax free bank accounts.

#64 X on 08.20.09 at 11:55 am

http://www.canadiancapitalist.com

Looming larger than all those costs is the monster in the room — mortgage costs. The average price of a home in Canada’s major markets has soared since 2000, shooting from just over $160,000 to $315,000. Last year the ability of the average Canadian to own a home was at its lowest point since the last housing bubble in 1990.

#65 from victoria on 08.20.09 at 12:06 pm

People are going to look back at this as crazy times. Toronto is in big trouble and people are still buying houses like candy. I just don’t get it.

Dumpy homes are still selling for big money in Victoria. Our house was around $920,000 – 20 years old and we have crappy aluminum windows. I would expect for that amount at least something decent. Would love to sell – but too many kids, too many pets. Husband won’t budge. Who would rent to us?

Is Victoria (other than Vancouver) still the most expensive real estate in Canada????

(by the way many of the homes are pretty fugly here. There was a huge building boom in the 60s and these are the homes people are buying).

#66 Rhino on 08.20.09 at 12:10 pm

thanks Garth

I have been away as this blog was getting a little too repetitive.

If you are moving to the #1 BIG ISSUE that is destroying the economy, I will be back at your blog regularly again.

It is all about FAIR TRADE – not “Free Trade”.

Sorry, but the only ones who have benefitted over the long term under present trade deals are the owners, CEO’s and stockholders. The middle class has been taking the hit for more than a decade now.

About time folks, politicians, and the media woke up…

Keep up the string. This story needs telling.

I, personally, have lost 3 manufacturing/engineering/management jobs as companies went overseas. Now I “sell stuff” for the Chinese in retail. Quality is garbage, and our world needs to move away from the stupid consumerism driven throw-away attitude.

#67 Live Within Your Means on 08.20.09 at 12:18 pm

#4 Shawn Allen on 08.20.09 at 12:12 am
Some of the articles and commentss lately seem anti-free trade.

Lamenting manufacturing jobs gone to China…

I ask: Arn’t the Chinese people too, why as an Alberta consumer should I support an Ontario auto worker (or even an ALberta if one existed) more so than supporting a Chinese worker?

Is my responsibility not to get the best deal for me?

If free trade is okay within a Village, a City, a Province and a Country then why should free trade stop at the country border?

Free trade benefits us all. Maybe it is counter intuitive but it does ultimately benefit people on average.

Shawn

Of course the Chinese, and all those third world ‘slaves’ working for $.50 an hour and living in dormitories are people. By purchasing most of the ‘cheap garbage’ coming from those countries we are just perpetuating the problem. The fat cats in the west and in those countries are taking advantage of the destitute. And, globalization, without adequate environmental, human rights, & adequate survival wages, is destroying both our societies. Just look at the electronic & other garbage that we’re shipping to many far east countries which pollutes their rivers & causes all kinds of health problems for those who are eking out a living. Instead of benefiting all of mankind, the WTO, & similar organizations, are just lining the pockets of the rich vultures. They could care less about the average worker. I guess you don’t watch/read about some of the devastation that so called ‘free trade’ has caused. Its all about the lowest common denominator.

#68 asp on 08.20.09 at 12:18 pm

Factory jobs are high paid because they are unionized. Office jobs pay lower because they are not. Restaurant jobs can be high paid, if the clientele tips.

The old goods vs services sectors of the economy is bogus, it was just a convenient way to create a class divide between retail, factory, and office workers and provide more data for statisticians.

All jobs are service jobs. Whether one provides the service of assembling hot milk drinks, or the service of assembling automobiles, or the service of assembling written reports does not really matter.

We don’t need more stuff. It does not matter if we buy it from other countries or make it here. We can just as effectively achieve social status by buying luxury services rather then luxury goods like SUV’s.

Increasing and unsustainable consumer debt is not a result of moving away from factory jobs. Lower wages is a result of lower union membership in society. Increased debt is fueled by the loosening of lending standards provided by excessive and unregulated securitization of loans. Consumers have always discounted the future. In the 50’s they were not allowed to. These days they are, thanks to financial innovation and deregulation.

#69 Live Within Your Means on 08.20.09 at 12:31 pm

Today I was using a Cuisinart food processor to make a coleslaw. I’ve only had it a few years. I used it last week but now its on the fritz. I paid decent money for it. I checked and its made in China. As is most of what is available today. I had a German one before that lasted me about 25 years. When it died, it was my fault, not the manufacturers. I tried to buy another one but it was no longer available at the time.

Just saing – I’d rather spend 2or 3X the price for something that lasts rather than have to throw it in the garbage after a few years. Apparently our major home appliances now last 1/3 the time they used to. Most parts, if not all, are produced in China and other far east countries, but assembled in NA, if we’re lucky. And now our knowledge workers are being outsourced too. Please tell me what jobs will be left in the west other than McJobs!!

#70 bigpictureguy on 08.20.09 at 12:31 pm

Joseph on 08.20.09 at 11:41 am
#46 bigpictureguy replied to my #41 entry by saying

You missed the point. To maintain protectionist nirvana every country would need to maintain this status. The first one who opens the flood gates of free trade will force others to follow like lemmings. It’s human nature to seek the lowest price. The forces of capitalism seeks the lowest cost source. To interfere with this ecosystem through government intervention has implications which cost society directly or indirectly.

Free trade is here to stay. One cannot reverse the clock.

It’s a complex issue with pros and cons.

#71 Rob in NVan on 08.20.09 at 12:32 pm

Long time reader, first time poster . . . renter in N Van, sitting on a large down payment, one of the “prudent savers” of the world who stand to be taxed by inflation as a means of redistributing my capital to the “reckless borrowers”, should the nearer future play out like the majority of economists apparently believe it will. Dent’s latest effort, “The Great Depression Ahead” makes for interesting reading.

In summary, Dent’s premise is that demographic trends are the greatest driver of our economy. An individual’s peak spending years predictably occur in his/her late 40s. The “spending wave” of the boomers has crested past this point, and their consumption patterns will therefore steadily fall. He closely matches this spending wave with the rise and the fall of the Dow over the last 50 years.

Dent believes that this effect will be compounded by a “shake out phase” technologically whereby the spending on the huge influx of consumer goods that was spawned by the digital revolution will also wane because these consumer goods have naturally reached saturation points; the economy as a whole will determine winners and losers amongst the companies that manufacture such goods and the stock market will downturn accordingly.

Dent believes that the current stimulus measures will fail to mitigate the deflationary forces that will arise from a massive spending contraction (echoes of Japan in the 90s, whose older demographic at that time in part supported that trend).

Dent offers the following interesting predictions regarding real estate:

– a global unwinding of the real estate bubbles, a predicted 40 to 60 percent decline, i.e. a reversal to year 2000 levels in general, peaking sometime after 2011, potentially in 2012
– a drop in global immigration levels (largely economic contraction, but in part influenced by anti-immigration sentiment fuelled by unemployment) will hit real estate values harder in coastal cities, including Vancouver, and in any states/provinces that have a combination of high prices and high immigration

I also recommend, “The origin of financial crises” by George Cooper – it helped me begin to get a handle on central banking policy, the origins of inflation, the fallacy of the “efficient market hypothesis”, and the bizarre combination of (capitalist) free-market ideology that supports bubble formation, and the essentially-hypocritical wealth-redistributing (socialist) response that follows the inevitable collapse.

The latest “Adbusters” (September/October 2009: “thought control in economics”) provides a fantastic compendium of critical thinking regarding unsustainable growth-based economics, the ecological and social effects, and imperative directions for the future. Interestingly, although “real income per head” has steadily increased since the 1940s, the percentage of people who describe themselves as “very happy” remains the same. Apparently, happiness is a state of mind, not a situation.

#72 Albertaboy on 08.20.09 at 12:42 pm

Char you probably jumped on the Global Cooling bandwagon back in the 70’s too when David Suzuki was flouting that garbage eh.

And I suppose you think that H1N1 is also a legitmate threat to the future of mankind as well. Speaking of sheeple.

If there is one thing I learned its that I don’t believe 95% of what the mass media reports. In 20 years, once the masses have moved on to some other phantom calamity – history will look back on Global Warming the same as Global Cooling – absolute bunk.

H1N1 is an overblown media sensation to cause further panic and add to mass hysteria. The knee jerk reaction of the masses will help ensure Obama’s pharma stocks do well and nothing more. Line up for your needles!

#73 NKVD Black Raven on 08.20.09 at 12:54 pm

3 years ago I brought a car made in Mexico. I’m dumb – I’ve been ripped. Mexicans are only paid $2/hr. Yet I still ended up paying the same price as a car assembled in North America. Somebody’s making a killing – this won’t happen again.

#74 Makeorbreak on 08.20.09 at 1:02 pm

http://www.theglobeandmail.com/globe-investor/bombardier-cancels-learjet-order/article1258306/

http://www.bloomberg.com/apps/news?pid=20601080&sid=aLaleNInHsOA

http://www.forbes.com/2009/08/19/recession-job-losses-nber-gdp-growth-opinions-columnists-nouriel-roubini.html

http://www.philly.com/philly/business/personal_finance/082009_recession_divorce.html

http://www2.macleans.ca/2009/08/20/so-long-recession-we%E2%80%99ll-miss-you/

http://www.vancouverite.com/2009/04/man-robbed-at-gunpoint-in-downtown-vancouver-as-senator-warns-recession-will-breed-crime-spree/

#75 Herb on 08.20.09 at 1:05 pm

For those who hope that the Obama Administration will lead us out of the economic wilderness, here is a slice of what they are doing in one important sector:

http://www.gregpalast.com/obama-on-drugs-98-cheney/#more-2664

#76 Onemorething on 08.20.09 at 1:07 pm

Great one Garth! The reality will be harsh!

I’ll be riding it out in Asia for the next 4 years making it over a decade out of Canada.

Not sure if I’ll want to move back!

Globally, RE will be a steal over the next 5-7 years if you have the cash. Who do you think has the cash sitting on the sidelines.

I will give you a list of who dont, the US, Canada, UK, Europe, throw in AUS, RSA and the KIWIS, Japan, Korea, Taiwan and HK.

Guess who’s left!

#77 David on 08.20.09 at 1:07 pm

Capital is a lot more mobile than dirt. Money can move to low wage climates and when those wages are deemed too high, find another even more inviting business friendly atmosphere. There were the maquiladoras on the Mexican border at one time, then it was Indonesian running shoes and Chinese building materials and cotton shirts from Bangladesh. It is a great race to the bottom. These export processing zones are strictly established to serve corporate interests and are entirely disconnected from their host economies.
Real estate has been fortunate, there is no threat of international competition and no one can export dirt. Better yet, that dirt only goes up in value in that local sheltered market.
It is enlightening to listen in on coffee shop conversations. This morning I heard a 70 something grandma venting at her mullet do’ed realtor about not getting $349K for her 1100sq ft home sans basement no less. Big ranting about new home warranties I also heard from the same lady. Built to last home construction is now somewhere in the range of 6 months to 5 years. The bubble has now officially run its course, there is no real estate industry to save or worth saving.

#78 Future Expatriate on 08.20.09 at 1:11 pm

#7 – Today’s coastal real estate = Tomorrow’s float home… IF it stays intact

If not, Today’s coastal real estate = Tomorrow’s driftwood.

#79 Men With Hats on 08.20.09 at 1:20 pm

#56 Got A Watch on 08.20.09 at 10:47 am

“Free Trade” with nations that do not have or do not enforce the same kind of standards we do…is just a myth. That is not “Free”, that is just stupidity.

Agree one hundred percent .

#80 Bill on 08.20.09 at 1:36 pm

Immigration needs to be increased, nearly double intake. Plain and simple.
The immigrants and their families are the main drivers of the economy. The housing market, consumer goods sales, and business expansion is fueled by immigrants. This is what has given our country such a high standard of living. Furthermore, Canada should invite more immigrant’s parents. They are excellent for baby sitting their grandchildren, while both parents work. As parents work, they make more money, and pay more taxes into the system. Common sense sure is not out there.

#81 moretrouble on 08.20.09 at 1:49 pm

To # 59 “R”:

I would like to add this to your speculative comment that today the buyers in BC are from China.

I was in China fall ’07 for a few weeks on my own. There is wealth there like I could not have imagined. Beijing has been rebuilt over its ashes so to speak; it is mostly gorgeous & ultra modern. A city of 14 millions!. The luxury is astonishing and much is of opulent. There is also Shanghai & even HK which is also much more modern and beautiful than even the big apple is. A sunset over HK harbour is much more than a sunset over Manhattan.

There are rich people also in the interior. We made a couple of acquaintances with such people and we keep hoping they don’t come over to visit us; because of our reduced circumstances…

Go see for yourself. It is apparently unknown how many are rich in China; anywhere from 50 to 200 millions. It is said that they are mainly PLA (people liberation army) members. Too many for it to be a sin against socialism.

Nevertheless, for diversification of assets, CA, even SF, being full of distressed homes for sale might attract more buyers than Vancouver.

In Ottawa, like you, we also wonder who keeps buying the new houses & condo’s, after tech deflation over 9 years.

I think that the speculators are in my family, my office, my neighbourhood. Afterall, 2nd homes also qualify for CHMC insurance and appear to require no more cash or assets to buy than principal residences.

What do you all think?

#82 Albertaboy on 08.20.09 at 1:58 pm

Money is currency. Gold is metal. Bullion was not a medium of exchange prior 1971. Nobody could buy a tin of tuna with it then, or now. – Garth

You’re telling me that gold was not a medium of exchange prior to 1971? You’re serious? I’m pretty sure the Romans, the Greeks, the Indians, the Chinese have all used it at some point in their history as a medium of both currency and exchange. Money isnt currency (unless its made of gold) – its worthless paper that can be printed on a whim. The idea of paper currency came about as it was more portable than gold but had a value associated with it to an amount of gold.

True wealth isn’t paper currency, its a tangible asset with an intrinsic value – not a floating abstract which is all global currencies are today.

It amazes me that the concept of our modern currency pegged to the USD has some type of intrinsic value when in fact it has next to none. It’s no wonder our financial system is a mess and our politicians have no clue what the root cause is.

Gold is not money. Get over it. — Garth

#83 supersocco on 08.20.09 at 2:04 pm

$3-billion shortfall in BC
http://www.cbc.ca/canada/british-columbia/story/2009/08/20/bc-provincial-budget-shortfall-hansen.html

#84 fishbytr on 08.20.09 at 2:07 pm

Given the predictable drop in real estate value over the next few years, what’s the better strategy: sell your house as soon as possible to try and beat the great Boomer rush or hold onto it as a rental property with two units?

#85 rick on 08.20.09 at 2:40 pm

My brother just rented his second house to a RE agent and his wife who sold their home a couple of months ago and now choose to rent. I couldn’t believe it and I asked him was he sure and he said 100% yes. It’s seems that now is not the good time as I head more and mroe stories about bankers and now RE agents selling their homes and going to rent. What do they know that we don’t?

#86 pbrasseur on 08.20.09 at 2:49 pm

Garth, what is it you don’t understand about the concept of free market?

Low skill jobs are exported because they are…low skill…and the low productivity associated with these jobs do not justify the high pay. Evidently low pay workers are available in emerging countries, not so in Canada.

Of course some of the lost jobs are high paying jobs but that’s only because the unions (or governments) made it possible to (temporarily) screw and ignore the market.

But in the end, like it or not, the market always win.

There is only a few ways to keep highly paid/low productivity jobs in Canada: you need to subsidize them or protect them with tarifs or regulations. Either way such policies are a waste of wealth and will eventually blow up in your face because as I said: in the end the market always win.

What is it you don’t understand about civility? — Garth

#87 Makeorbreak on 08.20.09 at 2:59 pm

Anyone likes cottage life?

http://www.theglobeandmail.com/globe-investor/personal-finance/is-a-cottage-a-good-investment/article1258346/

#88 eddy on 08.20.09 at 3:08 pm

from an unscientific analysis, i saw a 15 – 20 % correction in TO last spring. Garth predicted it, it happened. But prices have gone up as much since then.

#89 Bill-Bob on 08.20.09 at 3:09 pm

#69 bigpictureguy…

I disagree with your claims about human nature, for two reasons:

1. we can never prove what human nature is…the entire nature/nurture debate is unresolvable…and hence any appeal to human nature is essentially saying: I cannot prove this, just trust me.

2. even if we grant something like human nature, we can still overcome this. I see many attractive women every day that I would like to shag…but because of things like consent and fidelity, I choose not to. Free will, morality and other kinds of value judgements allow us to contextualize an immediate choice within the frame-work of a larger world-view and to make judgements based upon this larger good.

I’m not saying you are wrong; people often do make choices because in the short-term it seems most advantageous. But to speak of this in terms of human nature suggests we are merely passive victims of fate who are incapable of choosing otherwise.

As many thoughtful posters have written today, we can choose and if we do not start choosing more wisely about what is good for us in the long-run, we will very quickly not recognize the society in which we live.

#90 Mike (Authentic) on 08.20.09 at 3:11 pm

564,000 jobs lost in the USA in 4 weeks.
6.4 million unemployed in the USA alone.
Record mutli-Trillion dollar US deficit.
57ish% decrease in Corporate tax revenue.
53ish% decrease in Personal tax revenue.

DOW drops this morning right off the bat as reality sets in the recession isn’t over yet.

AIG says they are going to “pay back” bailout funds.

DOW rallies based on news banks are healthy.

Sorry Main Street, your pain doesn’t seem to count for much.

I just shake my head and wonder WTF the market is thinking.

Mike

#91 David on 08.20.09 at 3:26 pm

My Indonesian runners are comfortable for a guy like me with bad feet. I am uncomfortable with people making the equivalent of 3 cents an hour and having their job performance measured in micro milliseconds by some brightest guy in the room A-Hole metrician. As one conservative wag put it, the world might just become too efficient for you and me. Efficiency and productivity only applies to the poor and despised. Get a job with a municipal government and rake it all in to your pocket. Rising property tax assessments on McMansions and McCondos will cover the salary. The party is now over for these knaves. Detroit might be an ominous harbinger of the future shock that awaits North America, but better to be forearmed than fore shocked. Best save those shekels for the hailstorm that awaits. Never mind a rainy day.

#92 Men With Hats on 08.20.09 at 3:43 pm

Food facts :

Initially, globalization was encouraged to support the developing countries, but forty years after it was promoted by the New World Order it is obvious that the generous and sustainable nations that took it on board are now sinking into potential starvation status themselves .
Seventy-two nations are sustainable, reasonably food secure, capable of feeding their own populations, but 91 nations – including, incredibly, the generous European nations that opened their borders to immigration – are now unsustainable and rely totally upon the sustainable nations to feed them.”

Globalization became a loud and insistent mantra since the 1970s simply because without co-operation, millions of people would have starved,and, right now, with a global excess population of over 2 billion people, half of which live in Europe, it is not just little black, brown or yellow people that are at risk but big, fat ,lard assed white people as well (who may as well eat up while the food lasts!)

Seventy-two nations are sustainable, reasonably food secure, capable of feeding their own populations, but 91 nations – including, incredibly, the generous European nations that opened their borders to immigration – are now unsustainable and rely totally upon the sustainable nations to feed them.
Open borders anyone ?
Rather than staving off starvation, globalization promotes starvation and a multitude of other problems. It is particularly useless if the globalists pushing it refuse to address the underlying causes of poverty and starvation out of fear of upsetting the major religions .
Rather than admitting that the policy naively devised to promote global harmony will ultimately lead to global food wars — and immediately doing something to avert widespread starvation – the globalists are either incompetent idiots, or they are totally evil and fully intend to wipe out half of the world’s population by withholding food when it suits them to do so.

Various sources

#93 Rural Rick on 08.20.09 at 4:21 pm

If someone would pay me say 7 or 800 grand for my house I would take the money and run. These are once in a lifetime conditions. Do you know how cheap you can live away from the big metropolis and its bubbles. That kind of money is 20 years salary for most Canadians. Move to a small town rent something till the dust settles and you know your way around. Even a parttime job or some minor entrepreneurial venture and you are stylin.
You could have an honest to goodness life for your family instead of being another rat in the race.
Pretty soon they will take the money off the table.

#94 pbrasseur on 08.20.09 at 4:40 pm

Garth, about your reply (# 84)

Sorry sir, but when a populist commentator complains about low productivity jobs being exported to emerging nations it’s either two things: he does not understand how a free economy works or he’s a politician about to seek election.

(a) I did not complain but rather underscored an economic reality with mounting social consequences. (b) Nobody has an excuse to come here and be rude or condescending. Grow up. — Garth

#95 john m on 08.20.09 at 4:42 pm

Just read some interesting information on Obama’s “cash for clunkers program”…dealers are apparently furious and on the hook for approximately 1.7 billion..approximately 143 million has been paid out and something like 417,000 transactions have been made under this program……. the Obama administration has now announced the program will end on monday ……what then folks?? auto plants have beefed up production,called back workers and bragged about their profits……and now they head back to reality—the economy is in the toilet and you can not buy back prosperity with borrowed money which can only save the day for a short period. All i can say is thank God the Harper administration never adopted this plan (imagine how they could have screwed it up and how much it would cost us) ……..keeping my fingers crossed that they don’t.

#96 Shawn on 08.20.09 at 4:51 pm

I asked: Arn’t the Chinese people too, why as an Alberta consumer should I support an Ontario auto worker (or even an ALberta if one existed) more so than supporting a Chinese worker?

# 41 Joseph Answered ” Come on, we need to keep our wealth inside the country.”

A number of others took my bait as well and argued against free trade

Joseph, my friend, its not “our wealth”. Canada can be rich but any given citizen can be poor. Why do people think it is better if Canadian Tire gets their money rather than Wal-Mart? Your money becomes someone else’s either way. Except at Wal-Mart yu get to hang on to more of YOUR money.

I can spend MY wealth where I want.

My friends,just 40 to 50 years ago in this country, outhouses and tiny shack houses were still pretty common. Kids down the street from us had no running water in the 60’s.

Look my friends at the standard of living today, most although not all of us are living a way better living standard than 50 years ago.

Yeah Mom didn’t ‘work’ then, well not other than 16 hours a day doing a lot of things like stoking the coal stove and making preservatives and growing food, that she does not do now.

#97 john m on 08.20.09 at 5:11 pm

The Greatest Ponzi Scheme has been inflicted upon us and we sit back powerless not recognizing it.Our corporations have transferred our jobs overseas,made enormous profits and passed nothing back to the consumer.It has been all gobbled up in billions of dollars by multi million dollar C.E.O. salaries and bonuses while we the consumer pay more ,get less service, faulty products and our neighbours are losing their jobs. How in the world can it be right when for example a surgeon spends years in college,accumulates huge debt for his education,works untold hours in his profession and may after a lifetime become a millionaire……when a young C.E.O. can become a multi millionaire in one year with the right connections—its simply not right and we are paying for it….no one is worth the money some of those people are getting and curiously enough even our government justifies it?

#98 Tim Siemens on 08.20.09 at 5:14 pm

Peak oil occurs on individual wells, of course. But oil went from 10/barrel to 70/barrel due to the huge inflation that occurred over the last decade which affected everything right up to the financial crunch.

Just a response on that. Its important to note that the gov’t might orchestrate something like a global warming farce in order to excuse their carbon taxes and their political fear agendas. Sure the earth is getting dirtier, I’m just claiming it may not be getting warmer.

#99 Live Within Your Means on 08.20.09 at 5:31 pm

Hubby is out again, stocking up for Hurricain Bill. Our cars are topped up as well as his bikes. Money in the safe, propane tanks filled, 6 bottles of ? for the coleman stove , small generator. lots of batteries, bottled water, etc. We were without power for a week during Juan & have since been prepared. Lots of dried food ready. Hope we won’t need it. But, if we should, we’ll be able to manage and help out our family & wonderful neighbours.

#100 Bill-Bob on 08.20.09 at 5:38 pm

#89 David wrote: “As one conservative wag put it, the world might just become too efficient for you and me.”

It wasn’t just a conservative wag…there is also a guy named Karl Marx who said something very similar. He predicted that those who controlled the means of production would become so efficient (thru mechinization, globilization, etc.) at producing goods that there would be no one left (i.e. workers) with any money left to buy things.

This is one of the reasons Marx thought Capitalism must be a self-defeating system…perhaps we are seeing the beginning of the end?

#101 john m on 08.20.09 at 5:47 pm

#93 Shawn on 08.20.09 at 4:51 pm…interesting take on Ontario’s manufacturing base..im just curious tho if you would feel the same way if the rest of Canada and the US boycotted Alberta oil and refused to buy it–due to the huge impact the tar sands are making on our environment and the huge related costs and went for a cheaper cleaner product from e.g. saudi arabia?

#102 Two-thirds on 08.20.09 at 5:47 pm

Canada’s own unofficial “cash for clunkers” program:

http://en.autos.sympatico.msn.ca/news/canadian-press-car-article.aspx?cp-documentid=21237657

#103 Two-thirds on 08.20.09 at 5:51 pm

And more bad news for Alberta:

“Natural gas prices sink below $3 mark, lowest level in seven years”

http://finance.sympatico.msn.ca/investing/news/businessnews/article.aspx?cp-documentid=21283828

Folks, a new round of layoffs in the province might be coming in the next 6 months, especially in the public sector.

Keep saving.

#104 Seilfworcehtsa on 08.20.09 at 5:57 pm

#’s28,44,80 Albertaboy and Garth:”gold is not money”

Money is a matter of function four, a medium, a measure, a standard, a store. Gold is and always has been a form of money and it has a nice shine to it. Beautiful stuff and the American eagle is legal tender. Gold is subject to the law of supply and demand but you gotta love it.
Sometimes it is better to ride the bull than shoot the bull. I would just like a little precision in knowing when to get on and when to get off. And yes, gold is rather bullish right now.

#105 BOOM on 08.20.09 at 6:02 pm

Oh the irony!

What’s really funny about Shawn’s free trade commentary is that Shawn, despite all his academic and professional credentials, is employed principally as a regulatory specialist for the Government of Alberta.

Less than 2 minutes of searching leads from Investor’s Friend to APEGGA to the Government online telephone book.

#106 [email protected] on 08.20.09 at 6:05 pm

#55

Sure China has some pollution problems. What country wouldn’t if it had 1.3 billion population. They realize this and are working extremely hard at reducing the pollution and spend a great deal of money cleaning up their rivers, etc. The at least are working hard at solving this problem instead of Canadians which tend to feel we have so much space we can just dump our trash in some isolated area and the problems goes away. We just outsource all our polluting creating manufacturing to places like China, India and then start complaining that they have too much pollution.

Would you rather eat fish from Lake Ontario or The China Sea? Probably neither. Would you rather have all the manufacturing jobs back in Canada and then have a great deal more pollution?

btw China is way back behind the leaders US/Canada with respect to carbon dioxide emissions per capita and really when you discuss pollution output you would really have take into account population as it is humans that are creating this pollution. At least with this pollution they are far more efficient at reducing it then we are.

#107 bigpictureguy on 08.20.09 at 6:05 pm

#87 Bill-Bob on 08.20.09 at 3:09 pm
#69 bigpictureguy…

I disagree with your claims about human nature, for two reasons:

Walmart become the biggest retailer in the world. Human nature and Capitalism has spoken. Consumers have cast their choice.

Quite honestly I’m agree that outsource manufacturing has taken a toll on western society. I just say as it is.

Capitalism and Consumerism has spoken. It’s only now when people are hurting badly that this topic is top of mind. Where were you all 5 years ago when the economy was hot?

Buying and consuming.

#108 Shawn on 08.20.09 at 6:07 pm

#94, John M.

if you think corporations are making all the loot then BUY SHARES.

Click my name for some suggestions. I don’t want to keep gettin’ rich here all by my lonesome…

Then, when your rich too, you can shop only made in Canada or better yet only buy things made within say 5 km of your house.

#109 Kash is King on 08.20.09 at 6:12 pm

People, please, please quit bashing China!

China and Russia want to be our friends!

#110 dd on 08.20.09 at 6:36 pm

Another 10 people laid off at work. Well paid positions too.

Yup … house pricesincreases are backed by strong fundamentals alright.

#111 Bilbo Bloggins on 08.20.09 at 6:38 pm

To all of you who think our energy problems are over…
Natural gas extraction from shale is only viable if NG prices are in the $7 to $8 range and above.
NG prices are $3 currently.

#112 dd on 08.20.09 at 6:46 pm

#95 Tim Siemens o

…But oil went from 10/barrel to 70/barrel due to the huge inflation that occurred over the last decade…

Sure that too if demand stayed constant.

#113 dd on 08.20.09 at 6:50 pm

#98 john m

…US boycotted Alberta oil and refused to buy it…

Oh that is funny. Not a hope in hell but funny.

#114 dd on 08.20.09 at 6:55 pm

#98 john m

PS … Breaking News…U.S. approves Alberta Clipper pipeline project which will deliver Canadian oil to U.S. refineries … creating more than 3,000 U.S. jobs…
Most of the oil shipped on the line will come from Canadian oil sands producers.

Dream on buddy.

#115 bigpictureguy on 08.20.09 at 6:59 pm

Stop blaming other countries folks for the poor state of affairs of Canada. Because we are blessed or cursed? with vast natural resources we became lazy.

Our Government doesn’t have a coherent long term strategy on R&D and Education to support and create value add industries to create jobs.

I can’t remember which Nordic country but they own the paper manufacturing industry! How the heck does a small nordic country do this when Canada has vast forests in their own back yards? It’s called R&D and advanced manufacturing which translates to lowest cost producer. Canada just cut and ships the trees a low commodity service.

Blame our Government for our weak position globally.

#116 dd on 08.20.09 at 7:01 pm

#88 Mike (Authentic)

“Sorry Main Street, your pain doesn’t seem to count for much”

That is until earnings are effected by people not buying what the corp is making because the main st has no money. This stock lift is all on hope and not much on earnings.

#117 dd on 08.20.09 at 7:05 pm

#83 rick

“What do they know that we don’t?”

They are just picking up what “we” on this website already know.

#118 Gord In Vancouver on 08.20.09 at 7:07 pm

#78 Bill

Furthermore, Canada should invite more immigrant’s parents. They are excellent for baby sitting their grandchildren, while both parents work.
___________________________________________

Can our medical system handle them?

#119 Upenuff on 08.20.09 at 7:22 pm

BC: Recession what Recession??? Finally just out from the BC Liberal Govt as documented by the Vancouver Sun —

B.C. deficit now up to four years duration — not two
Downturn ‘far beyond what we previously had anticipated’

Well, there you go, we may catch up to the east…. lets see if this does something to the crazy real estate in the Vancouver area….. somehow I doubt it

#120 TJ on 08.20.09 at 7:23 pm

As it sit here re-reading The Oracle Of Omaha’s op ed. in NYTimes: I am struck by the fact that one has to wonder – do you think Bill Shakespeare was wrong?

First – kill all the Economists?

Here in Canada we have some just about laughable pronouncements on the imminent “recovery” and hearing numbers tossed around like “10% growth….by 2Q 2010…”

Seriously, I couldn’t make this up.
The head Economist for Merrill Lynch in Canada had that gem for us.

I just about dropped my sippy cup.

Even cooked Chinese Bank books barely kept up to 10% growth, as Beijing was being bulldozed for the Steroid Games.

The whole front line goon squad that keeps pretending that we are actually being helped by the white shoe boys in the Banking Sector,
should be picking up Coors cans beside the Trans Canada.

In Vancouver – Real Estate is on FIRE…We have first time fools getting nailed for 35 year amortizations on just about zero down. We are back to begging people to take ‘free money’.

I would mention the Fed here, but I don’t want to raise your blood pressure – again.

Now I am going to get back to sticking pins in my Mark Carney Doll – while I whistle ‘Kumbaya”.

#121 jess on 08.20.09 at 7:42 pm

I think the chinese people believe that wealth is health !

“600 to 700 villagers rioted earlier this month after news broke about the lead poisoning, overturning police cars and smashing a local government sign.

The plant, which is within 500 metres of a primary school, a middle school and a kindergarten, opened in May 2008, reportedly without the approval of the local environmental protection bureau.

Although the factory had been operating for only a year, 1,354 children were found to have more than 100mg of lead per litre of blood, the limit considered safe. A gradual build-up of lead in the bloodstream can lead to anaemia, muscle weakness and brain damage.

The plant is unlikely to have gone ahead without support from the local government. Many poor districts ignore environmental regulations to attract investment, and Hunan is notorious for its heavy metal industry. The Wugang city government said it had demanded an overhaul of more than 100 plants, including seven other smelters.

But the problem is likely to be nationwide because authorities are not obliged to conduct expensive tests for heavy metals, which tend to accumulate over time rather than be emitted in noticeable bursts.

In Shaanxi, northern China, last week, 615 children tested positive for lead poisoning attributed to a smelter, which is due to cease operating this Saturday.
1,300 children get lead poisoning from year-old factory in China”

Jonathan Watts, Asia environment correspondent guardian.co.uk, Thursday 20 August 2009 18.59 BST

#122 Live Within Your Means on 08.20.09 at 7:43 pm

#41 Joseph on 08.20.09 at 9:35 am

Thank you Joseph for saying it so much better than I ever could .

#123 jess on 08.20.09 at 8:08 pm

liar loans to liar lobbyists

A US congressional inquiry has found more than a dozen forged letters to members of Congress purportedly from voters opposed to a climate change bill – including a number from old people’s homes.

The house select committee on energy independence and global warming now says it has confirmed 13 fake letters to members of Congress apparently from old people’s centres and Latino and African-American groups opposing climate change legislation.

The committee is still investigating 45 other letters sent by the lobbying firm Bonner & Associates, which was hired to campaign against the climate change bill.

#124 The Great Gazoo on 08.20.09 at 8:12 pm

Follow the link for insight into the China-America relationship:

http://www.theglobeandmail.com/report-on-business/article973785.ece

In the end, the rich from each end benefit from each other, however, Canada’s/America’s middle class loses as blue collar jobs are going to be lost and never will return. I remember the days, being in engineering school, when companies (mostly manufacturing) would BEG students to work for them… now where I work a co-op student from my school works for free, to get “experience” as no other jobs are available, all new products my company gets are going to get built in Mexico or China.

This is why the real estate bubble peeves me off, its not because of people with good jobs and prospering industries (in Ontario) but rather debt induced backed by re moguls and re agents that is the sleaziest most unethical profession in the free market.

#125 Nostradamus Le Mad Vlad on 08.20.09 at 8:15 pm

Whether pro- or anti-Obama doesn’t matter. Received this “joke” this a.m., and it is bang on the money:

“Obama’s health care plan will be written by a committee whose head says he doesn’t understand it, passed by a Congress that hasn’t read it, signed by a president who smokes, funded by a treasury chief who did not pay his taxes, overseen by a surgeon general who is obese, and financed by a country that is BROKE!

“What could possibly go wrong?”
***
Indeed, what but it may have something to do with this — http://www.guardian.co.uk/world/feedarticle/8665134

5:19 clip of the close ties between JP Morgan and the Obama administration. — http://revolutionarypolitics.com/?p=2258
——
Garth said that oil will be US$200 / brl. by 2015 and apparently, he is not far off. —
http://www.youtube.com/watch?v=0IQRh99bpQo&eurl=http%3A%2F%2Fthecomingdepression.blogspot.com%2F2009%2F08%2Fpeter-schiff-oil-is-going-well-above.html&feature=player_embedded
——
Climate change is one thing; comments from wrh.com are more accurate. —
http://www.kiplinger.com/businessresource/forecast/archive/climate_change_legislation_090818.html

“Fuel costs will rise for consumers and companies, and even suppliers won’t escape headaches from the increases.”

Webmaster’s Commentary: “But Al Gore and his buddies get to be rich, and THAT’S what’s important right? Even in an era where [ the head of Greenpeace is forced to admit they just made up all the alarmist claims about Arctic ice vanishing by 2030 ] .”
——
Ahh, The Moneychangers. From 2006.
http://www.iamthewitness.com/books/Andrew.Carrington.Hitchcock/The.History.of.the.Money.Changers.htm
——
Interesting link re: swine flu outbreak, showing how govts. work together to create panic. Early in the clip, the announcer says the govt. can control or restrict air / ship travel. Well, here are the two links:
http://eclipptv.com/viewVideo.php?video_id=6930
http://www.rense.com/general87/govv.htm
“Starting this year, Americans will have to get government approval to travel by air.”
A further link (not posted) states that Tamiflu could lead to 600,000 strokes; if the strokes are major, they may disable or kill people.

#126 Peter Wiener on 08.20.09 at 8:29 pm

re # 103 Dave from Oakville

You have obviously never visited China.
The pollution is created by unregulated manufacturing and corrupt practices that would NEVER BE ALLOWED ANYWHER IN CANAD, not people. They had approx the same number of people 15 years ago, but not the environmental hazards they have today due to rapid and often environmentally careless development.
Last I read the top 17 of 20 most polluted cities in the world are in mainland China.

As to Canada, try and develop even a “greenfields” residential project in Ontario and you’ll see what enironmental restrictions are – study after study, expert after expert, commitee after commitee. See what happens to you when a little topsoil washes into a “coldwater creek” – it can escalate into criminal charges in Canada, – China – not so much. Better yet, try to permit a mine (7 years not unheard of in Cda – 7 weeks in China if the gov’t or paying party wants it).

Please restrict your comments to something you know factually or do some research, cause you have no idea of what you are talking about in this instance.

#127 john m on 08.20.09 at 8:36 pm

105 Shawn on 08.20.09 at 6:07 pm..not my point at all shawn.. if you don’t care about your country or your children’s future…and are quite happy to fill your pockets on a quick buck then fill your boots…not my style

#128 Elle on 08.20.09 at 8:38 pm

To Garth:

…”interest rates will rise,
bond prices will fall,
energy and agricultural issues will rock higher,
pharmas and banks will outperform,
Asian markets will dominate and
…..the last thing you want to own is Coastal real estate.”

Huh?…….coastal real estate! That line doesn’t seem to fit in with all the above. An after thought, maybe?? Bear with me on this, but, why did you throw that in?

Of course it’s something to think about, with the polar caps melting and the San Adreas fault running along the coast…..but this little toss of a provoking sentence is a bit askew of your writing style. …….Do you know something that we don’t,….. perchance?

elle

#129 john m on 08.20.09 at 8:55 pm

111 dd on 08.20.09 at 6:55 pm

#98 john m

PS … Breaking News…U.S. approves Alberta Clipper pipeline project which will deliver Canadian oil to U.S. refineries … creating more than 3,000 U.S. jobs…
Most of the oil shipped on the line will come from Canadian oil sands producers.

Dream on buddy.
<<<<<<<<<lol and do you think you will live to see it?Who is going to pay for it?The US is about tapped out and so is Canada and oil companies are not going to? So where is the funding going to come from?And never underestimate the power of the environmental groups…people in Athabaska Lake are dying by high percentages from cancer,mutated fish,and Saskatchewan is suffering from acid rain contributed to the Alberta tar sands and this is only the beginning…….wait till they try to expand (as their future plans) with toxic ponds bigger than lake Ontario………it won't happen pal we all breath the same air….and furthermore most of Ontario's oil already comes from saudi arabia anyway..thanks to the free trade agreements……..so really don't count on us to pay for the pipeline :-)

#130 Absman on 08.20.09 at 9:29 pm

Global warming…what a joke. If there’s money to be made, it will always outweigh the environment…it always has and always will. The electric cars have been spoken about for years and yet majority of people dont drive them. Either they don’t care or can’t afford them.

My confusion about the RE market is that my realtor tells me that prices usually fall in the summer because there are more listings but I feel they actually go up as people are more likely to look for a house in the good weather and summer holidays.

Does anyone think the price of houses actually drops in the fall because of weather, kids going back to school, Christmas around the corner, more construction type workers on EI, and most ppl are just more occuppied?
Because Id like to buy a house but am unsure if its really a bad time or not.

#131 miketheengineer on 08.20.09 at 9:53 pm

#121

The days for Manufacturing Engineering are now “gone”. Civil, Electrical are the only bright spots from what I see.

Tell your kids to work in the Government. That will be the only good paying jobs, thanks to CUPE.

#132 Dan on 08.20.09 at 10:01 pm

Various rants:

1. Trade. Essentially trade had the same purpose for thousands, and possibly tens of thousands of years. One group of people produces an excess of commodity A and needs commodity B. Another group of people are in the reverse position. Exchanging their excess production makes both groups better off. No debt, no interest, just pure barter. This kind of globalisation would no doubt be good for the world. People would be required to live within their means of production, and trade only what they could produce in excess of their needs. Introducing debt into the equation immediately makes it unsustainable. The current position is a recipe for the poorhouse, and the only information needed to reach that conclusion is whether or not a nation has a consistent trade deficit.

2. Immigration. I have no problem with a multicultural society. My friends are from diverse backgrounds. However, although immigration may be a temporary fix, in the long term it is also unsustainable. The crucial question: does the earth have infinite resources? If you have answered yes, you will be quite disappointed. I won’t make any predictions about timing of various peak resources, but unless you believe earth is infinite, eventually we will reach maximum food production, maximum water consumption, peak oil, any resource that is consumed eventually has a point at which it can’t expand any further. If this fact is accepted, eventually the human population has to stabilise. Designing an economy to be stable despite zero growth will be one of the great challenges for economists – so far they don’t seem to have even contemplated this. Surely it would be better to fix the structural problems before we are forced? Immigration is a short term bandaid, not a solution.

#133 Ben on 08.20.09 at 10:07 pm

(b) Nobody has an excuse to come here and be rude or condescending. Grow up. — Garth

Does that include you?

#134 SURVIVAL on 08.20.09 at 10:16 pm

In my opinion globalised companies in banking and high demand manufactured products rule the business world and jobs. Canada do not have much of these companies. It is very much an oil and mineral based economy. The oil creates a high currency for Canada and it does not help Canada much in its development of manufaturing industries. It does not have many globalised manufacturing products like Japan and Germany. Canada does not make world reknown cars or Microchips like Intel.

Globalised companies move in and out of countries to produce their products selling to the world market. Today is China and India, tomorrow it may be Indonesia or other Cheap labour hard working people.

Canada is currently enjoying its trade with US and reluctant to move outside. When that business decreases day by day (the effects) like the Toronto city unemployment happening now, policy makers (who are they anyway???) and companies will need to change their business model and strategies. Some companies are far sighted some short sighted. US economic decline will pull Canada down with it. (Help me big brother).

Tweaking of interest rates is only a temporary solution.

When the housing bubble burst, some financial institutions may go bust due to their heavy portfolio on real estate. So much for Canadian banks stability, government is supporting them through various measures, they are holding overvalued assets much like Japan did.

#135 TaxHaven on 08.20.09 at 10:26 pm

OT, but I have to agree with the posters maintaining that gold is money.

“Money” is even described in the U.S. constitution as a particular weight of gold or silver. These “notes” that we use on a day-to-day basis are currency, not money. Read them: they say “This Note is Legal Tender for All Debts, Public or Private”. They’re NOTES, not “dollars”. The bill itself is NOT a “dollar”; it is merely a cheque denominated in dollars, a cheque that was once redeemable for a specific weight of gold. Not any more, of course, but that does not dismiss the fact that gold is the backbone of the currency we use day to day.

Indeed, we have to accurately differentiate between “currency” and “money”. A true “money” should have three characteristics. It should be a)a unit of account (the “dollar”); b)a medium of exchange (as a currency, it certainly is such) and c)a store of value – which today’s paper certainly is NOT.

What about “not being able to buy a litre of milk with gold”? Well, if you sell your 1/10 oz. Krugerrand, which you paid $25 for in 1999, for about $94 NOW, you can buy a hell of a lot more milk than you could with your initial $25 in currency…

A currency is not a store of value. How would you prefer to save long-term? In dollars, and watch your “money” lose purchasing power decade after decade, even after you earn interest on it? Or in gold? How can “money” lose value, year after year? Central banks still prefer gold, tycoons move it around, and debts are settled in it.

Zimbabwe: when a currency collapses, gold wears the pants…!

Gold has a long history as a true money. Far more than any paper substitute.

Come back when you can pay for a fill-up at PetroCan with gold, and I’ll start believing you. Gold is not money. — Garth

#136 Mike (Authentic) on 08.21.09 at 2:52 am

#126 Absman “Does anyone think the price of houses actually drops in the weather”

Your realtor would be generally incorrect as home prices rise in the spring/early summer and fall in August to January.

There are “perfect times” to buy items, cars, mattresses, appliances. Winter is the best time to buy a house because prices are lower than summer and people selling during winter generally need to sell (who likes moving in -20 weather for fun? Anyone?!)

Mike

#137 Future Expatriate on 08.21.09 at 11:09 am

“Come back when you can pay for a fill-up at PetroCan with gold, and I’ll start believing you. Gold is not money. — Garth”

Depends on who owns the concession. I bet if you looked hard enough you could find at least one station in all of Canada whose owner would happily take gold in trade for petrol.

And as time goes on, that number will probably grow.

Of course, then you could argue it was barter, and not money, but then we’d just be chasing our own tails with semantics.

Find one station. I’ll fill your tank for you. — Garth

#138 [email protected] on 08.21.09 at 3:06 pm

#123 Peter Wiener

Nope haven’t been there but will soon but know many people who did. Have you been there?

“The pollution is created by unregulated manufacturing and corrupt practices that would NEVER BE ALLOWED ANYWHER IN CANAD, not people.”

And unregulated manufacturing and corrupt practices are not caused by humans? All by greedy humans !!!!

Right theres absolutely no corruption at all here in Canada or US. For years doctors claimed the cigarette smoking was actually good for you. Once Melamine was found in Chinese baby formula the FDA jumped at it a claimed absolutely no amount of Melamine is a safe amount. Then it was discovered in US baby formula as well in smaller amounts. Then the FDA quickly corrected itself and claimed it was safe in very small amounts. I bet you blame all the world global warming problems on China. So you really believe if Canada’s population was 1.3 billion we would have absolutely no more pollution than today because we wouldn’t have the unregulated manufacturing and corrupt practices?

Keep on living with your head buried in the sand.

CO2 from human breathing alone contributes to up to 8% of man-made worldwide carbon dioxide emissions. Burning of trees, automobiles etc all add to it. Last I heard human feces is also pollution.

Yes that is true they do have a lot of corruption in China. Yet the penalties are very severe there if you are caught unlike here where likely companies will only receive a small fine if any at all and it is extremely rare for anyone to do jail time. China has executed many over corruption and thats part of the reason China’s most wanted criminal,Lai Changxing, is living free in Vancouver. China is extremely aggressively trying to eradicate the corruption. Two people in China have been executed over the Melamine issue. How many Maple Leaf Foods employees were jailed over the listeriose scandal.

There are numerous experts suggesting China likely to become a world leader in green technologies in the coming years. They have no choice but to make huge investments in green technologies.

http://news.xinhuanet.com/english/2009-07/11/content_11689555.htm

Canada however has fallen farther and farther behind even European nations with much smaller GDP’s with respect to their use of green technologies. Why is this? Lack of funds, and lack of any real desire politically for real changes and as you say, even the simplest thing as permit for a mine can take up to 7 years in Canada.

Any real changes will be debated for years in Canada before anything ever is accomplished.

Yes they do have some serious issue they need to tackle environmentally and socially. They know this and are making improvements at an enormous pace which is how things are done in China; at an accelerated pace.

#139 Future Expatriate on 08.22.09 at 8:10 am

“Find one station. I’ll fill your tank for you. — Garth”

Now Garth, you know I’m still stuck in Obamahell.

But when I’m free, I’ll find one… it’ll make a great photo op!

#140 Peter Wiener on 08.22.09 at 9:56 am

re #134

Yes, been there and have an interest in a GOVERNMENT REGULATED business there for 8 years. Our operating partner is a core Ministry and we have been successful and profitable, so my comments are not sour grapes.

I really don’t know where to start your education on this topic, so I won’t bother. Let’s simply put it this way, they wrote the book on corruption, full stop. The odd execution / strong jail sentences that are publicized are reserved for the unconnected usually.

Again, until you have actually done business there (and watched the city disappear from view on some days from the 14th or 15th floor), you haven’t a clue. The cities are advanced and take advantage of every modern technology, but outside of MAJOR cities, you would not be able to EXIST there, let alone live for a period of time as a Westerner – it’s pretty rough.

Suffice it to say, I go there only if I have to now.

#141 Devil's advocate on 08.22.09 at 5:56 pm

Ian is a genius

#142 Chris no longer in England on 08.23.09 at 10:56 am

“Furthermore, Canada should invite more immigrant’s parents. They are excellent for baby sitting their grandchildren, while both parents work.”
___________________________________________

Gord in Vancouver #118 asks “Can our medical system handle them?”

If you make sure these immigrants are all medical health professionals (and be prepared to recognise their qualifications) they can diagnose/treat their parents inside their own homes and have them up and about looking after the children again in no time. Sorted!