Contrarian

contrarian1

Some misguided people think I’m a gloomy guy. They accuse this blog of being nihilistic. They probably don’t believe I wear boxers with little hearts on them. Ha. Fools.

So I’d like to make it clear what this site (and me) are all about. I have nothing to sell but the occasional book. There are no ads here. No pop-ups to knock down. No aggregation or sale of email addys. No offers for insider investment newsletters, fabulous pre-construction condos or no-lose mutual funds. The blog’s free. My financial talks are free. And while I hope you buy the new book (it’s a corker), I’ll still be here if you don’t.

My agenda is to tell the truth, at least as I see it. My finances are in order. I live by my own rules. And since deciding a few days ago to forever shun the hypocrisy and compromise of party politics, I even have a pure soul. Well, except for my shorts.

So let me tell you where I think we’re at.

When Mark Carney made his big announcement this week it was viewed as evidence that Bank of Canada interest rates won’t soon rise. Duh. Of course they won’t – not until next year. But we knew that. However we also know Mr.C has no control over the bond markets, where mortgage rates are set, so this means less than it seems.

What Carney did let out of the bag was that the rising dollar has now wiped out all of the promising gains made by the economy lately. And he has no control over that, either. So the export and job-killing flight of our currency will continue.

Rising bond yields and the march to dollar parity were both forecast here some time ago. Yes, and hundred-dollar oil.

Underscoring this is the dismal collapse of government finances. Did you heard Ontario Treasurer Dwight Duncan this week? “To be able to continue investing in key priorities while managing down the deficit, we must focus our priorities and make strategic and, yes, sometimes difficult choices,” he said. That means Ontario is launching a review of its spending, because there’s now no choice but to cut funding for schools and hospitals.

I told you that would happen, too. Ontario, BC, even Alberta, along with Ottawa – they will have absolutely no choice over the coming years but to decrease services and increase taxes.

And have you been reading the Globe’s seven-part series on the retirement crisis this week? Do it. This is the elephant in the room. At this point 60% of Canadian workers have no corporate pensions, and almost half have no retirement savings, either. Of the half that do have RRSPs and whatnot, the average amount saved is enough to live on for less than two years.

And do you know what the public pension system in Canada pays you when the work runs out? The combined total of CPP and OAS is just over $16,000 a year. So what, exactly, are eleven million pensionless families going to be living on? More importantly to the rest of us, what burden will this put on the economy (through a collapse in disposable incomes) and taxes (because this disaster will surely be mitigated)? And how about all those houses which will have to be unloaded?

These are the things that perplex me. Make me wondrous when I see people gorging themselves on cheap debt that will only cost more soon, to buy things that will be worth less eventually. Make me question leaders who lie to us about options. Has me worried like hell about ten years from now.

And I haven’t even started in on peak oil, climate change or the demographic tsunami.

So if you think this blog is too, um, raw for your sensibilities, split. If you’d rather be in a happy place, invite Phil Soper, Gregory Klump or Ringo Harper over for dinner.

But if you want some suggestions on what to do about what’s coming, stick around. There are times we need contrarians.

This is one.

126 comments ↓

#1 [email protected] on 10.20.09 at 9:40 pm

I will stick around, if it wasn’t for this blog, we would be like sheep in a herd. But I have come to realize nothing today makes logical sense, and this can only be explained by average folks tolerance that good things always lay ahead.

-What about expanding your blog to include current news events, like the 200km/hr bmw on finch ave. that killed 3 over the weekend – would like your insight into current news events.

#2 RM in Oakville on 10.20.09 at 9:50 pm

Garth, we don’t always agree on the issues and remedies (I’d say we agree about 80% overall) but your blog has, over the last several years, become a must-read for me.

I’m sure I speak for many when I say thanks and please continue to speak your mind. You don’t need a seat in the HOC to be effective and a voice worth listening to.

#3 Watched Bubble Never Pops on 10.20.09 at 9:53 pm

Ultimately it doesn’t matter about which prediction will end up being ‘right’ or ‘wrong’ or if a poster is gloomy or cheerful.

As it was in the past, as it is in the present and as it will be in the future, the cycle of greed and fear of the many will result in wealth for the few.

As it should be.

#4 K-D0G on 10.20.09 at 9:57 pm

Thanks to this Blog I have gotten myself 100% out of debt this year and it has also stopped me from making a very large mistake of getting into real estate this year (which i was about to do). Thanks so much for taking the time Garth.

#5 Nicholas P on 10.20.09 at 10:04 pm

Hi Garth;

it’s been a while since I’ve shared any of my thoughts with you but I believe now is as good a time as any to give you a koudos on your decision to stay out of the vile arena of politics; an arena where no more room exist for a truthseeker/teller like many of us who frequent this blessing of a blog you maintain.

#6 john on 10.20.09 at 10:05 pm

The world was told over a year ago that the days of greed and living beyond ones means was over.

I ask what has really changed:

Oil going to $100
Our dollar at par
Markets frothing
Real estate erected
Banks paying bonuses

So one must ask if all this excess precipitated the mess of 2008 what would prevent another sudden collapse again?

#7 Eduardo on 10.20.09 at 10:05 pm

dd – “Sure. Six bucks. NG is 15% over the 5 year average. Long term very bullish. Short term it is going back down. Not enough demand and too much supply.”

Yeah well it’s a good thing I didn’t say that it would be higher than 6. I said 6 because that was a reasonable price for the end of the year considering the storage and production stats and it’s on it’s way. We were talking about THIS YEAR when I made that call and all you people had a field day when gas was 2.50 saying it was going to 1. Good thing I said “by the end of the year” because everybody knows the short term fundamentals were bad. The time for saying “we’re going to be at full storage” was the summer… not now.

Want to discuss next year? Why don’t you provide me your expert forecast seeing as you think you know. You didn’t know before because if I remember right you were one of the ones saying gas was going to be cheap all year. You’re still forecasting that. I think you’re wrong unless we have an abnormally warm winter because of shale declines.

I’m only mentioning this because it relates to Alberta deficits and for all the people on the board so they can rip me and be wrong again.

#8 Bulls eye on 10.20.09 at 10:06 pm

This site is just a prelude of things to come – it will explode once things hit then fan. By then its too late.

For what? — Garth

#9 Cory on 10.20.09 at 10:26 pm

I have a blog on Stockhouse, have for a few years. I made alot of the same predictions and alot have to to pass. Housing and credit are still on my hitlist though since these two areas are still flying high….too high. I don’t believe you are a doomsayer, but a realist. At least that’s what I call myself. If the things were good, and for good reason, not artificially inflated via easy credit, I would say so, as I am sure you would Garth. The problem is that people simply only want to hear what they want these days, politicians know it, and they follow the prescription to a T. People like to plug their ears and sing “lalalala” until the negativity goes away….it’s the way of the world now.

I have been sure a major housing crisis has been brewing for awhile. It definitely showed itself in the fall of 2006, with a bounce upward in 2007. Now, with CMHC’s recent increase to insurance coverage, I am 110% convinced it’s really going to get ugly here. It is simply going to take time to make it to the surface.

It’s all so clear.

#10 Basil Fawlty on 10.20.09 at 10:27 pm

Keep up the good work Garth. There will be no shortage of issues to discuss in the future. I think the real contrarians today are those that are telling us “again” that the road to success is paved with easy money and credit. The same group of Bananas that told us by offshoring our manufacturing base we could become rich through the Service economy. Anyone who spoke out against their easy money and globalisation agenda was labelled a contrarian or just ignored. These same people are sill in charge and still preach the neo-liberal bafflegab, but they are starting to look like buffons as the logical inconsistencies of their dogma unravels like a cheap sweater.

#11 Robert Reid on 10.20.09 at 10:35 pm

The reality of the times we are living, may be gloomy at times, your blog however is a lighthouse in a dark storm for many of us. Your Blog Rocks!!!

#12 not ninety on 10.20.09 at 10:42 pm

I wish you would talk about climate change. The Inuits seem to think it’s relevant

http://www.ipsnews.net/news.asp?idnews=45091

and so does one of the largest insurance companies in the world

http://www.transworldnews.com/NewsStory.aspx?id=131337&cat=1

#13 contrarian on 10.20.09 at 10:47 pm

Over the last weekend I visited few friends in Edmonton.Almost all of them have bought new homes in last spring-summer season.According to them, as soon as oil heats 90 bucks , international realty investors will zoom in again on Alberta and happy days of 06-07 will be back.And houses swill be never as cheap as they r now.
When I tried to put forward the issues like interest rates, % down payment, amortization length ,it seemed they had no clues what I was talking about.All they can reply me back was “rates are very low” , ” Alberta is good” , “house never go down” crap.

And I thought in my mind, don’t these people do any research before buying ?

#14 Not Garth on 10.20.09 at 10:53 pm

Hi Garth.

Bond yields tanked today, along with the Cdn dollar. I agree with you on all fronts – but please let us know your opinion on this:

Do you think bond/mortgage rates will rise in the next few months (any sense or guesstimate on how this may play out)? thx.

#15 Dave on 10.20.09 at 10:55 pm

I’ve mentioned in previous blogs here, I pay for financial newsletters, and when everyone everywhere was saying get out of everything, sell everything (stocks included), Garth pretty much called the stock market bottom in March 2009 to the day. There’s only a few other trusted sources I have that made that call. For the record, they aren’t free though.

#16 victor on 10.20.09 at 10:57 pm

Thank you Garth. Love your blog… checking everyday for new stuff. If you’d have a couple minute for me … About two years ago realizing we’re not going to have proper pension (I’m 53)followed by advise, borrowed 200K (prime +0.5)and invested in balanced growth, in hope to get some on top of it… so, 200K bottomed 136K. In February moved 68K to Bisset Energy now it 110K and Balanced went up to 90K so total 200K again as of today. I would close it but… still 5%penalty for withdrawal and 15K paid as interest for collateral loan. How to get out of it? What do you think abt Energy and the future of mutual fund market? Possible scenario of all of this?

I think do-it-yourself security selection is often the kiss of death. — Garth

#17 nonplused on 10.20.09 at 10:57 pm

I’ll preorder the book if you promise to make it a good one. Maybe even proof it for you. On second thought my spelling is no good and I take liberties with grammar, so maybe that’s not such a good idea.

I am with you on the retirement problem. I’m an engineer by training and work with numbers all day, so I was perplexed by the social security system years ago. And when I joined the labor force, I was still offered a choice between “defined benefits” and “define contribution”. I took defined contribution without even having to think about it because nobody in my generation thought they would ever be at one company long enough to make the defined benefit pay out, and couldn’t understand how the companies themselves could be predicted to either survive long enough or have the wherewithal to make good on them. Both calls turned out to be good ones.

But to me, the real elephant in the room was always public debt. Even in the good years, when Canada was running a surplus, the efforts to pay down the public debt were a pittance. All the politicians bickered over new spending programs and urgent public “needs” and the debt just quietly sat there, demanding interest payments and waiting for the day rate rises would force the cost of carrying that debt back into the stratosphere.

Imagine how much better positioned Canada would have been to whether this storm if every level of government had made an effort in the good years to pay the debt down? Our spending would be lower, our ability to borrow if we needed to higher, and our future brighter.

Now, there is but one way out. Continue to borrow until we cannot borrow any longer, and then default. It will be that way for all levels of governments except possibly Alberta, and I am not so sure about them either.

I would say California has in essence already defaulted with its IOU payment system for venders. How can you pay somebody with an IOU? What do you get when you try and redeem it? Another IOU? How long can this go on? Can you at least pay your taxes with them?

It’s like Einstein said: “Compound interest is the eight wonder of the world.” I take it his sense was that compound interest is unsustainable. But when you are borrowing more to pay the interest on debt, that is what you have. And if a government has outstanding debt and it is borrowing more, clearly it does not have the revenue to meet all the interest it is paying, or the deficit would be smaller (I would argue non-existent).

I understand interest payments are still one of the largest components of the federal budget, even with the low rate environment. Without the debt, the budget would be much easier to balance. Just roughly, I figure if the debt is about $500 billion (http://www.debtclock.ca/) and the interest rate is 5%, then we must be paying about $25 billion a year just to service the interest payments. That’s about half the forecast deficit. So the interest is definitely compounding again.

If we could get the deficit down to just $25 billion, so that we were borrowing only enough to service the interest on the current debt and borrowing not another dollar beyond debt service, the debt will grow to $1300 billion, or $1.3 trillion, in just 20 years, all on it’s own, and the amount need to service just the interest will be a mind blowing $66 billion. That’s all at just 5%. This is assuming not one dollar extra is borrowed for spending. Clearly this is unsustainable. Thank you Pierre T. I hope the devil has you on a compound interest program of his own design.

This is why I have repeatedly harped on this blog that I believe default is inevitable at some point in the future combined most probably with a currency crises.

And we haven’t even started on social security or health care yet. It could be Garth’s longest book ever!

This is, of course, why the founding fathers in the US prohibited the raising of an income tax. They knew from the British experience that public debt is a great destroyer of nations, and that the only way to prevent a public debt was to deny the government a means of servicing it. An amendment was passed in 1913 I think it was to provide for income taxes as a means of paying for World War I. But you just can’t get something like that back off the books.

The alternative to taxes, when the debt grows to large, is empire. And we’ve seen that happen more than once too. Debt, taxes, empire. It is the way of things.

It’s all explained in a very understandable manner right here: http://en.wikipedia.org/wiki/Tragedy_of_the_commons

The only difference is that in a social democracy, the finances of the state can be thought of as a “common”. Once social spending is initiated, voters are loath to vote for a limit to the spending, because it makes up in some way their own income (either through paying for health care, or through funding their retirement, or through welfare, or EI, or even by transferring the cost of education onto the state rather than parents or the community. The list goes through nearly every government program.) And if the state is allowed to borrow, the costs of the programs are soon pushed beyond sustainable levels by each voter acting in his own interest to raise his share of government spending while forcing the burden of those expenses onto the “common”. Sometimes deeply rational behaviors can have completely irrational results. The only recourse is to avoid creating a common in the first place, which the modern mind finds revolting where finance and especially state finances are concerned. Hence the conclusion is unavoidable.

PS, it’s also why whales are in such short supply. And cod. And now salmon. The ocean is the world’s common, with no regulator. We will, eventually, fish it empty. It’s the only rational thing to do. Otherwise somebody else will. Every nation that launches a new “high seas” fishing boat has that many more fish to eat or sell. So the economically prudent thing to do is let your own fleet grow to its maximum size and fish international waters. But if all the sea fairing nations do that, at some point the oceans must have a limit to the amount of sustainable fishing.

Sorry about the long post. This issue strikes a chord with me.

#18 ruraldude on 10.20.09 at 11:05 pm

Forget the news, there are hundreds of places to get news. However people do need a voice of reason and a place where they can vent and maybe give there life situations in the hopes of getting some badly needed advice. Keep up the good work.

#19 Brian on 10.20.09 at 11:06 pm

Good to hear. Thanks for your past post and thanks in advance for your future posts.

Out of curiousity, what info sources do you use to keep up on events and trends that you use to form your opinions. I have found lot’s of US sources (with a wide range of quality), but no decent Canadian sources.

#20 viamede on 10.20.09 at 11:18 pm

News shmooze. The web is chock-a-block full of all the “news” one could ever hope to digest. Most of it from like three sources but whatever…I’ll take the insight TYVM.

#21 Joshua on 10.20.09 at 11:39 pm

Great entry Garth. Now I feel some Juicy information is to come ahead because I know you got some tricks under your sleeve…not that you control whats happening, but I know you got a great insight of whats going on.

Especially when you were part of our gov’t.

Can’t wait to read it tomorrow.

#22 Dan in Victoria on 10.20.09 at 11:41 pm

Seems pretty straight forward to me.Stick around and do some meaningful contributions,constructive critisim,or read and learn.Not too hard.Take a powder if that doesn’t work for you.
I prefer to be told the truth,this crap from msm has been a joke for years.I remember when I twigged on that something was not right.We watched BCTV news in the early eighties and it was doom and gloom blah blah blah.I told my buisness partner at the time that this was crap we were being manipulated.I said its like a school of fish,they are being told doom doom doom.I said wait and see everyone will change their mind at the same time and we’ll all be thinking positive thoughts.
Your’re just ahead of the times here Garth,from you letting your constitutents know what was going on,to this “Financial”blog.Over time this will be how people will communicate,it has to be,msm is too controlled.
The smart people have known for sometime that things are out of kilter,and that there has to be a correction,How large,where, and the time is still a mystrey. I just whistle out loud with some of the smug “I told you so”comments and their reasons posted here.Fine with me,say what you will,natural selection will thin them out.
Just keep at it Garth,call it the way you see it.I don’t always agree but if it makes me think a diffrent way,thats good.Gets some of the dust out of the head.
And, I have learned a tremendous amount about other areas of finance that I never understood.
And,surprislingly I found that there are some people that” do get it”What a relief that has been.

#23 Joseph on 10.20.09 at 11:44 pm

Garth, you stated that, “The combined total of CPP and OAS is just over $16,000 a year. So what, exactly, are eleven million pensionless families going to be living on?” I have taken the effort in the last two years to ask married retirees exactly how much money they need to have a comfortable retirement. Without exception, the number was between $25,000 and $30,000. Now, mind you, all the folks I asked had their homes paid for. So, in the context of married retired couples who have no mortgage, $16K x 2 = $32K, seems enough to live on. It is the singles that will be off the worst.

Not for this dude. — Garth

#24 Pascal DELAUNAY on 10.21.09 at 12:04 am

Hello Garth,
Information is essential and you provide it.Many won’t understand because they only believe CBC or Remax.
We have a bomb who is gone explode and everybody ignore it.Canada is not different that the US.We do the same stupidity,the same way and we ignore the reality.
The wake up is gone be great,I will enjoy the big crash because I am so tired of this people who always blame somebody else,but not themselves.Knowing what’s happenned in the US during the last 2 years,it is creazy to see how incompetent our government and banks are.
This house bubble will explode and nothing will stop that.Continue what you do,continue this blog,it is important to know that,at least,we have some people who understand this situation and are ready to speak.

#25 Elle on 10.21.09 at 12:18 am

…..tonight you sound like
the Garth of ‘Greater Fool’……
benevolent, introspective, bittersweet and …………. I like it.

I’ll stick around too, it’s an amazing place where we can express our thoughts……albeit, a one sided conversation, and a bit of voyeurism… listening in to see what is on the minds of the ‘great unseen’. Thanks Garth and everyone of you bloggy doggies.

elle

#26 freedom_2008 on 10.21.09 at 1:37 am

We will stick around, too.

We just sold our rental house in Victoria. by ourselves, and got more than asking price (due to multiple offers). We already intended to sell before reading your blog, but felt much more urgent after reading the blog.

So please keep your thoughts coming, although we may not agree with them all, we do respect you honesty and independent thinking.

#27 Onemorething on 10.21.09 at 2:16 am

Garth, TOP SHELF!

Lower USD = Higher GOLD!

That is it for the Bugs! RE will tank, Gold will tank as the USD takes one more sweet ride upward when equities hit the skids. Oil rising! This is all you need to know.

Look at it simply this way….The Banks got a windfall at the tax payers expense to jerk thier balance sheets into shape. There was no oversight just a scam.

If you are not a contrarian, you will be hit by the bus or the 200km/hr BMW!

For those of you sheeple who visit this blog and have not a similar view, step off…the curb!

Stick with your own kind so the rest of us can get down to the real business of setting a reasonable coarse for our families during these PONZILICIOUS times!

#28 Jimster on 10.21.09 at 2:51 am

Garth.

If you keep pumping Global Warming and Peak Oil me thinks you will be 0 for 3.

Stick to our rigged financial system, there’s a chance that farse will be exposed.

#29 average joe on 10.21.09 at 2:55 am

Hey Garth,

No vile from this camp.
Your books and blog give great advice.
Keep it up.

Debt is bad…pay it off.

You value what you pay for…but you should actually pay for it…credit doesn’t count.

I am on a VRM at a good rate right now with less than 10 years ARM. My spouse and I are putting as much as we can in anniversary payments, even though we have kids in university. No contributions are going to RSP.
Once we have finished our mortage and are out of our big spending years for the kids’ school we will still have time to build up retirement.
It is all about paying off the debt.

Garth,
If you have to deal with contraians, then they are most likely the ones who live too high. Those of us who live within their means or are trying to, appreciate what you do.

One question though…
When do you think the prime will raise, and by how many points?

#30 dd on 10.21.09 at 3:12 am

Carney … well well another prediction from him that he is taking back. Mark is looking at static models too much.

#31 Rob on 10.21.09 at 4:25 am

Garth,The real wake up call will come when people realize this has all been done by design. The Globalist have done this to make North Americans and Europeans debt slaves to the system, unable economically or emotionally fight back against what they have planned for us. There will be a new One world Currency(sdr’s) which they control, the IMF which is a group of un elected global bankers. They will set interest rates and currency exchange rates as they see fit . It will be like countries trying to play a card game but the IMF has rigged the deck to benefit a select few. There will be a one world Government, the United Nations . They will dictate And over rule local government policy in favor of Free Trade Globalization, offshoring and outsourcing . Hey Garth its your dream come true, free trade, no borders and no tariffs. This way we can all compete with Chinese slave labor without any checks and balances.
The best part about free trade and globalization is there is no middle class, there is just the rich bankers and the slave labor, think of China on a global scale.
The catch is to implement this they must crash the U.S dollar and economy . This way the Globalists can justify their solution to the problem that they created. Its called problem, reaction, solution: psychology 101. Of all the Bank of Canada heads we could of had, it just had to be a former Goldman Sachs boy. Its going to be interesting times over the next few years, and I think the current housing price will be the least of our worries.

#32 Tanya on 10.21.09 at 4:28 am

Garth, it’s important to have people who will tell the truth. And your pessimism isn’t alone. Gail Vax-Oxlade (http://www.gailvazoxlade.com) says “Plan like a pessimist so you can live like an optimist.” She thinks cheap debt spent on crap is stupid too. You can gail should go on a date.

#33 ally ally oxycontin free on 10.21.09 at 5:00 am

Please REVISE the masthead … From CONTRARIAN To SENSIBLE CONTRARIAN

#34 Anon on 10.21.09 at 5:16 am

“So what, exactly, are eleven million pensionless families going to be living on”

good question, and as they try to keep or find jobs they will compete with the younger unemployed…

I don’t think you need to apologize for this blog. Except, maybe, for the promotion of your generator store site…

#35 Patrick on 10.21.09 at 5:36 am

Count me in and be as dark as you must.

Incidentally, has anyone seen the latest Toronto Life, which has a page telling the story of a young couple who made an outrageously high offer on a house (helped by ma and pa, I hasten to add), in order to skirt a bidding war? It reads like something out of The Onion.

#36 Maurice on 10.21.09 at 5:51 am

Sir Garth:
Not that I doubt your forcast, but why do the U.S. 30 year bond interest rates keep on dropping if as you suggest Bond rates will rise? As the U.S. currency is in the dumpster the 30 year U.S. Bond rate drops 3 days out of every 5 and has been doing so for months. Why are large institutional investers, the most likely buyers, willing to tie their millions up for 30 years at less than 4%?

#37 David Bakody on 10.21.09 at 6:07 am

So if you think this blog is too, um, raw for your sensibilities NO” . If you’d rather be in a happy place, invite Phil Soper, Gregory Klump or Ringo Harper over for dinner. {NO< NO< & most definately NO}

But if you want some suggestions on what to do about what’s coming, stick around. There are times we need contrarians. yes ///// & thank you and the price of next book is of course well worth my yes …. if you want advance purchases Garth put it up early on this site.

#38 Todd Harper on 10.21.09 at 6:11 am

Garth,

Thank you for consistently posting all things relevant, valuable, if not at least, downright thought-provoking. And thank you for the information contained in your books. Not much is free these days, so the more I read this site, the richer I become.

Information provided here by you and the blog-dog contributors has provided me with the following:

I am really questioning the faux economic recovery.

I have avoided the temptation to borrow cheap money for a home. I told my Mom it’s okay for her to continue renting.

I am interested in attempting to be soon, living within my fiscal limits.

I discount almost everything I hear from the Bank of Canada.

I have to now re-consider the possibility of assisting my aging parents (No RRSP’s, limited pensions).

I am attempting to save money. What a self-empowering concept this has been. I feel more mature.

I am now certain there are less risky ways of investing.

I view the current government with suspicion; I am now interested in what a growing federal fiscal debt means to me as a Canadian.

I have become interested in things like stock markets, financial bubbles, O.T.C. derivatives, and other weapons of mass destruction.

I now avoid any realtor that tells me what how I can improve my current living arrangement.

I feel that I may be more prepared than exposed.

I am now convinced that we are experiencing the pitfalls of the greatest mis-allocation of resources known to man, with the expansion of this concept called suburban sprawl.

I never thought that home ownership was a privileage;
I thought it was expected of me to qualify to be accepted.

I found a way out of dinner invitations and birthday parties. It started with my G.T. book reviews.

I invested in self-reliant devices around the home. I have a “bad day box” now.

I could go on.

That is all.

#39 rory on 10.21.09 at 6:27 am

Morning all …this link is a good place to keep up with pension goings on …it also has a link to the G&M retirement articles GT mentioned.

http://fairpensionsforall.blogspot.com/

#40 Jojo on 10.21.09 at 6:45 am

Hmm Garth,
Do you think that TSX stock market hit the top?
When even you know that Oil price will going $100,
Gold probably $ 1250. TSX is commodity market.
So will you short the market or play “contrarian” right now when $ US is so weak and CAD stronger?
If you learn from 2007/2008 TSX jumped to 15,100 points because of very weak $ US (index value about 70) after that we saw pull back to 89 index value in March/09 and now again slammed 75.

#41 Watched Bubble Never Pops on 10.21.09 at 6:57 am

#17 nonplused

“It’s like Einstein said: “Compound interest is the eight wonder of the world.” I take it his sense was that compound interest is unsustainable.”

No.

#42 Herb on 10.21.09 at 7:02 am

“… forever shun the hypocrisy and compromise of party politics …”

You concluding that there is no hope of political redemption hurts, Garth. But don’t just push individual economic salvation and leave government to the asso’s. Push digital democracy in insurgency against party politics and nominal democracy.

It’s been suggested before, but perhaps you really should start a party or political movement that rejects hypocrisy and compromise. People are going to get hurt, they are going to ask questions, and they will need an alternative.

You’re ok and don’t need the pain, Garth, but a lot of us do.

#43 Watched Bubble Never Pops on 10.21.09 at 7:04 am

#38 Todd Harper

“I discount almost everything I hear from the Bank of Canada.”

How much do you discount their overnight rate by?

#44 Kash is King on 10.21.09 at 7:11 am

#31 Rob, perhaps things really may not be as bad as you are thinking.

In all likelihood there is a new global, non-fiat financial system coming; of course no one will know full details ahead of time, but there’s enough chatter out there to investigate… ie the whole NESARA thing, some say it’s real, some debunk it. It sounds positive though.

Then there is the OITC chartered through the UN… I have posted the link before, some debunked it. I find it hard to believe that the UN would permit a site to stay up which uses it’s logos, and references a charter number if it wasn’t legit. Wadda I know tho.

http://www.unoitc.org/

They invite the visitor to explore the site completely. There’s even two videos worth a watch.

Here’s a quote out of the “objectives” tab :

“To “dictate” our policies and conditions, or apply draconian conditions, as some countries experienced following the 1997 “Currency Crash” with the International Monetary Fund’s “Bail Out” programs, is not and never will be an option”

Also with reference to the IMF, things don’t look to be going the way that they want:

http://www.asianews.it/index.php?l=en&art=16504&size=A

http://news.theage.com.au/breaking-news-business/cracks-in-imf-world-bank-recovery-work-20091007-gljb.html

#45 miketheengineer on 10.21.09 at 7:21 am

Garth et al:

Garth, is a realist. He calls it as he see’s it. No bull. The people that contribute to the list

Nostradamus, le mad vlad
Jo

And whole host of others, also, contribute as they see it, and Garth lets them voice their thoughts. No Bull.

If you want to see happy stuff, watch Rick Mercer.

The only way to win during this crisis, is to get outa debt. Credit Card, line of Credit, etc. Unless you do as Garth suggest, and use it to invest.

Another way to win during the crisis, is to watch every “penny”. Don’t purchase anything, unless it is on sale, and 50% off. Watch the sales. The food stores are making an easy 30% margin right now, so they are winning. (Potential investment) Prices are all over the place. Tuna was 1.29 over the summer, now 1.69 to 1.99, like what is going on here? How do you spell price gorging.

Lots of heart aches and pain ahead, ala 1980’s. So watch your pennies, and get outa debt, before interest rates go up to the historic norms or higher.

I still think RE is necessary, as long as renting is more than your payments, and you live in an 1800sf home or smaller, you win. Anything bigger is a complete waste of your cash. When owning costs more than renting, you loose.

#46 greyhairedoldgoat on 10.21.09 at 7:29 am

Keep your chin up so you can see what is coming. We will need someone to help as I am one of the 11 million that you are talking about.

#47 Ray MacDonald on 10.21.09 at 7:40 am

You can get by on 1/2 your pre-retirement earnings (we do) if you are mortgage free and have no debts going into retirement.
But how many Boomers are going to be in that position? And for us at least, 1/2 your pre-retirement income is more than 32K per year.

#48 Toronto C9 Renter on 10.21.09 at 7:45 am

Garth, keep up the good work.

Enjoy your blog, plus I’ve gleaned profitable tidbits from you, also some of your posters. I thank you for that.

Feeling guilty though, I’ve yet to buy your books although they sound great. (just don’t have the attention span for a whole finance book)

So to make it up to you (perhaps gain absolution also) can I make a modest donation to a charity of your choice? Anything but the “Save Our Squirrels” fund

#49 insurance going up 14-30% on 10.21.09 at 7:48 am

since everybody are so rich in this economy let see how they handle the prices of other services and commodities
Can everybody live within their box??

#50 molson cdn on 10.21.09 at 7:52 am

Garth
i owe you and your spouse a dinner at Queens Pasta in Bloor West Village. After reading endless columns about future mtg/inflation increases, i cross referenced your opinion via howestreet, schriff, etc… and you were right. so your message sunk in and i locked in at 5.1% for 10 yrs. i owe you that one.

You have been accurate on the dollar at par and the rising oil.
I agree with your vision of the future-the crisis of the elderly with no cash.

But you have been off the mark on GOLD. im not sure why but it was noticeable. Also, why did your ego need to get back to politics–thankgod you woke up from that nightmare!
I find that you introduce Cdn subjects which affects me and makes me THINK about future circumstances. its your opinion, not gosbel, but it starts the brain turning.

So, over all, i give you a score of 8.5-9/10.
Excellent job.

#51 mattbg on 10.21.09 at 7:58 am

One thing I am getting really tired of is the sensationalization of unlikely events by the media in our country.

Two recent events I can think of are:

1. The federal election. When the summer break was about to end, a federal election was an absolute certainty according to the media, even though it was unlikely that the NDP and Bloc would have allowed the government to fall. They profited from both sides of the story: by pumping it on one side, and then on the so-called letdown on the other side.

2. The imminent rate increases by the Bank of Canada because of the rising Canadian dollar. Going only by the media, you’d have thought there was a serious possibility that interest rate increases were imminent, despite the firm position by BoC — their promise — that rates would stay as-is until 2010. Reneging on a promise would have serious consequences to confidence.

I am tired of this and am thinking of cancelling my newspaper subscription. They are no longer rational and reliable sources of news.

#52 seanmhair on 10.21.09 at 8:23 am

Canadians are under attack from a variety of sources . Yesterday, we mailed in our consent to pay $45/mo for continuing health care. Add to that the $400 or so (per year) we now contribute toward prescription coverage and our fixed income has taken an approximately $900/year cut. Then we read, that as Ontarians, we can expect our already pricey home/auto insurance to increase 10-20%!

Thanks to your unabashed contrary writings, we are in a position to absorb this loss (although it sucks, big time). I wonder how/if the average family will be able to do likewise. IMHO, they are already under financial strain and the concerns you raise may present a tipping point for them.

As you say, this will not end well.

Thank you for this blog. Keep up the contrarian work! People need to hear truth.

#53 SaraBeth on 10.21.09 at 8:24 am

Methinks people are going to have to start asking themselves the hard questions… such as, what IS “comfortable”? What does it really mean? What are wants, and what are NEEDS…

IMO, the way of the future will be living smaller and simpler lives…… living sustainably, and yes, by that I mean growing our own food…making our own power…etc…….co-habitation…cooperation…..local community/economy rather than globalization…

One book I recomend… “Small Is Beautiful: Economics as if people mattered”, by E. F. Schumacher

http://en.wikipedia.org/wiki/Small_Is_Beautiful

I also think that Edward Abbey had it right when he said…… “Growth for the sake of growth is the ideology of the cancer cell.”

My own thought is that we must rethink “Growth”…. Right now it seems to me that we have “Growth” without any real purpose other than the creation of monetary wealth… which, IMO, is an illusion… And no one is really, truly happy… the more one has, the more one wants…there is never enough…there is never a limit…

Watch this video to see why I say that…

http://www.youtube.com/watch?v=vVkFb26u9g8

#54 Jack the Lad on 10.21.09 at 8:58 am

Here’s a great story:

http://www.businessinsider.com/20-year-old-buys-home-with-183000-fha-loan-and-just-35-down-2009-10

The kicker was this line… I think she has the right stuff to work for the CREA…

“Tejada appears to be using imaginary numbers about the value of her house. She says that when she bought it, the house was just a “box” with no kitchen or bathroom. Now it is “gorgeous”. She claims the renovation has increased the value of her home from $155,000 to $255,000.

“I bought my house for $155,000. And now, after all the fixing, after all the remodeling, my house is worth $255,000. So just within a month period, I made a $100,000,” she tells Market Place’s Scott Jagow.

As far as we can tell, this is just mark-to-imagination valuation. She doesn’t give any indication about how she arrived at the conclusion that she has made a $100,000 gain in just a month. Even if her improvements had dramatically increased the value of the house beyond the cost of the improvements themselves, she would have to contend a declining housing market. From last year to this year, the median price of homes sale in Oakland, California has declined 28%.

Tejada sees her house as an investment rather than a home. And she is planning on buying more homes, despite the fact that her income is already strained by her debt.”

#55 Downsized and Delighted on 10.21.09 at 9:08 am

Since your posting about CMHC I have been trying to remember the name of the CMHC plan back around 1979 1980 where you took a variable rate mortgage at a preset rate, and then added on the difference (as rates increased) to the principal of the mortgage. This was the mortgage that people walked from in droves. What was the name of that Garth? It should be required reading for anyone taking out a CMHC mortgage now.

On the current subject, there are houses that people can buy that won’t go down in value, but the younger generation are so self-indulgent that they won’t buy these properties. They buy houses to show their friends what great taste they have. (rather than financial acumen)

There is a house for sale right now in my neighborhood for $300,000 less than I recently got for my older house (land value). Ten years ago, it was appraised at the same value as mine. All those brand new finishes look crappy now, but my lot looks better than ever.

#56 Daystar on 10.21.09 at 9:11 am

Distractions, distractions, (chuckles) more distractions! ;-)

http://archives.cbc.ca/economy_business/the_media/clips/16740/

#57 Bill-Muskoka (NAM) on 10.21.09 at 9:14 am

My simple approach has been, ‘comprehend the past, understand the present, and do not worry about the future because it is not set or predictable.’ In other words, learn from the yesterday, live today, and tomorrow will become another today tomorrow. Above all communicate with God and then listen.

As the all-wise Master Turtle said in ‘Kung Fu Panda’:

‘Yesterday is history,

Tomorrow a mystery

Today is a gift

That is why it is called the Present’

The world is constantly changing and no one, neither Garth or Nostradumbass can predict the outcome. They simply are not in control of the 6 billion people on this planet.

Have ethics and convictions for fairness and justice and you will survive when others crumble.

Have a nice day!

#58 Davinci on 10.21.09 at 9:22 am

Nice picture choice a happy golden boy. :)

Gold is money and nothing else. I wish those elite bankers would come out laughing at you people who think holding debt of someone who is unable to pay is money. It’s a joke, and it’s on you.

Because most human minds does not change without feeling serous pain every banker could publicly laugh and you would still hold those dollars as if it were gold and the bankers would gladly print more, to cover up bad debts with more debt. (TARP)

Fools.

I don’t know how it’s going to end up, maybe the dollar goes to zero or they stabilize it at higher values ($10 is the new $1) . WHEN that day comes and you happen to have the mental capacity and humility to see and admit you where wrong. Do not tell me, help society and tell others like I have tried so disparately to do.

Tell them that gold IS MONEY.

#59 pjwlk on 10.21.09 at 9:29 am

#17 nonplused on 10.20.09 at 10:57 pm

Great post! You’ve managed to put into words a belief that has been irritating me in the back of my mind for decades. I always thought it was me just being “too negative” on society as some people I know like to point out. Your post has brought clarity and focus to my thoughts. Thanks!

#60 carolina on 10.21.09 at 9:31 am

Dear nonplused:

You wrote something very helpful. I have something to say in the same vein.

It has become clear that private interests have been handed over the keys to the credit of the people.

http://baselinescenario.com/2009/10/17/who-is-carlos-slim/

This credit is a resource that the less altruistic exploit. Corporations have a legal mandate to act in their best interest; therefore, they do it systematically; 24/7. They have massive capacity to exploit and do it shamelessly. They are not altruistic and cannot be by law. What does that tell you about the grazing of the common?

Lawrence Mishel says: “The finance sector was not only a major contributor to the recession and the resulting loss of jobs, but it has also helped to drive up the deficit because of the costs of the financial bailout, some of which will not be repaid.”

http://www.epi.org

Now, look at what banks do with the cheap cash now; it is called the “carry trade”.

http://www.ft.com/cms/s/0/f3aec6c2-b99e-11de-a747-00144feab49a.html?nclick_check=1

In the meantime, there is no CAPEX (capital investment), therefore, no job creation over here by the corporations, even with zero interest rate. It is not in their best interest; there’s hardly flesh left now on us for them to pick. So, the corporations wait for their candy. THE STIMULUS.

#61 Into The Sunset on 10.21.09 at 9:36 am

After a lifetime of shaking our heads at what a rich and beautiful country like ours allows the politicians and their mandarins to get away with, we found an alternative; seek and find an offshore investment program in a safe and secure haven, making very good returns, that cannot be attacked by the out-of-control Canadian government of the day…..and we did!
However, you must be careful, there are fraud schemes in the thousands. Due Diligent is a must!! Now we do not have to depend on CPP, OAS or RRSP’s or paying 3 times the price you can purchase excellent health care insurance outside of Canada.

#62 Artisuseless on 10.21.09 at 9:36 am

Well if I’ve learned anything from other posters’ comments on here, it seems the problems are easily fixed.

One is that there is a limitless supply of 20-somethings who earn well over 100K & have ample savings and live at home with their parents. They can bail out some of the retirees, starting by paying some rent to mum and dad for a start.

The second is the infinite amount of drug money floating around in Vancouver, inflating housing beyond pretty much anywhere else in the world.

The government should take advantage while there’s a Democratic administration down South, and legalize & tax pot. Just distribute it through the same channels as liquor.

Even in the late 90s revenue from that industry eclipsed forestry so right now, the government is foregoing BILLIONS in potential revenue!

Not to mention all that untaxed income.

#63 Vicguy on 10.21.09 at 9:43 am

What Carney did let out of the bag was that the rising dollar has now wiped out all of the promising gains made by the economy lately. And he has no control over that, either.

I didn’t read all 60+ comments above, so someone may already have made this point…

His announcement may have been calculated — the dollar dropped two cents immediately after he made it. It will be interesting to see if the effect is short or long term…

#64 PeckedToDeathByDucks on 10.21.09 at 9:48 am

TFSA over-contribution problem…..certain wealthy individuals were able to throw $100,000 or more into the thing, buy warrants for pennies and then collect the million dollar reapings as the stock is manipulated up. Then they only had to pay a 1% penalty instead of paying tax? Do I understand that correctly? WTF? (pardon me but I find myself saying WTF a lot lately – a nasty habit)

I mean couldn’t an award winning, forward-looking Finance Minister have anticipated this? Why weren’t the Banks mandated to lock the contribution to $5000 and no more? Ahhh, but then we wouldn’t have had that juicy loop hole for some. So, how much in taxes did the country lose? Was it equivalent to the supposed “tax drainage” from the Income Trusts? Can we have the details not blacked out this time?

But who could have predicted that people would take such advantage…..
#8 Pecked to Death by Ducks on 02.27.08 at 8:54 am – Garth’s Blog 2008
“If so, then it is a foot in the door for those that wanted an elimination of the capital gains tax.”

#65 Larry on 10.21.09 at 9:56 am

I appreciate reading this blog with my coffee Garth.
Keep up the good work.

#66 PeckedToDeathByDucks on 10.21.09 at 10:03 am

@Herb re. yesterday’s Chickenlittle’syoungerbrother- Thanks, I’m glad that you enjoyed it.

In case some of you didn’t read yesterday’s Blog contributors, there were some real eye-opening posts about the credit crisis by TJ #100 and Two-Thirds #91.
Thanks for those, :-) going forward :-)

#67 Daystar on 10.21.09 at 10:08 am

Combined provincial debt is now estimated at $90 Billion.

http://www.commandnews.com/fpweb/fp.dll/$cpac/htm/cpac/x_dv.htm/_ibyx/daj/_svc/cp_pub/_Id/1250670743/_k/DfsbxI18BXY9aEgq

Combine this years provincial debt with the low ball est. $56 Billion dollar deficit, we are looking at $146 Billion dollars of intergovernmental debt and this number is likely to be on the low side.

What does this mean?

Considering our GDP as of July is presently 1.183 Trillion:

http://2.bp.blogspot.com/_0YOsyi5WbLY/SsaIATxkHjI/AAAAAAAAAMA/4x6dhX9iZ3I/s1600-h/July_2009_GDP_Canada.Bmp

Combined intergovernmental deficits (not counting municiple deficits) will tally at least 146 Billion meaning our current deficits (not counting trade or municiple deficits) will make up a bloated 12.34% Canada’s GDP.

But we need not worry according to Stephen Harper. While TD economists have said the deficit cannot be eliminated without tax increases, the economist Harper has ruled out any and all tax increases as unnecessary. Apparently, last years tax cuts to the GST and corporations and to the rich leading to a 15% tax revenue shortfall (and growing) are what this nation needs instead according to Harper.

Harper also said we would not run a deficit if elected last fall, so we shouldn’t worry.

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

http://www.youtube.com/watch?v=rm29cgVXJTk

#68 pjwlk on 10.21.09 at 10:15 am

#60 carolina on 10.21.09 at 9:31 am

Wow… that’s some pretty dark stuff Carolina… and accurate too! A DVD entitled “The Corpoaration” is one of the best documentaries I’ve ever seen on the behavior and legal obligations of corpoarate management. (I think it can also be found on youtube.) After watching that, I now understand why corporations do what the do and what to expect from them next. The documentary does however leave one with somewhat of a feeling of despair. It has changed the way I look at corporations for ever though.

#69 smw on 10.21.09 at 10:16 am

#27 Onemorething

So oil isn’t rising on a weak US dollar or speculation, just gold?

However you expect oil to continue to rise in the near term another 20% and not be in a bubble? 20% more and its in a forthier position than gold.

Gold is up from $275USD in 2000 to $1050USD today.

Oil is up $25USD in 2000 to $80USD today.

The US dollar is down approximately 60% – 65%.

Whether you like specific commodities or not, they all react to the devaluation of the reserve currency.

For instance:

Copper in 2000 was approximately $.75USD a pound, its at $2.90USD today.

– Aluminum was at $.80USD in 2004 and sits there today(Although it was as high as $1.50lb in summer 2008).

– Natural Gas varrying between $2.5 – $5USD range between 2000 – 2004 and is at $6USD today(That’s for you Eduardo).

– Nickel was at approximately $6USD in 2004, up to $25USD in 2007 and sitting just under $9USD today.

I think its highly unlikely that for any commodity to tank, unless the central banks reverse their stance on the bank rate. I believe you are correct with your assessment of the banks, all that capital they had access to is flooding the stock market, so when does the carpet get pulled out so they can take those profits to shore up their bottom lines? Maybe when they start to see more of that money market and cash thrown into the stock market? Next earnings reporting period?

Very few deals to be had out there and earnings that are beating “esitmates” are only beating originally bleak corporate guestimates. If you have to jump in, dividends are your friend.

Also, heard a rumor that the TSX for instance, is really being moved by an onslaught of foreign capital. Same as the CAN dollar of course.

The question of the day is, if banks/investment banks start shorting the markets, again, will investors run the the “safe heaven” of the USD, again?

#70 Nostradamus jr. on 10.21.09 at 10:21 am

“”That means Ontario is launching a review of its spending, because there’s now no choice but to cut funding for schools and hospitals.

Garth””

…..So people should live in Ontario’s Toronto, which will be well serviced by schools and hospitals.

However, Toronto has millions of citizens in the dieing Manufacturing centre.

…Go west young man, go west.

Nostradamus jr.

#71 Sincere in SK on 10.21.09 at 10:22 am

Garth,

I have been reading your blog for almost a year. It has been a highlight of my morning! You have informed me of things I didn’t even know I should have known. Thanks.

I have always said that you do what you do earnestly, not for gain. Because of you we have chosen not to buy a house for a long while and are happy with our increasing savings.

Thanks for all your hard work. I look forward to what you have to say each day!

p.s. When are you coming to SK? I promise to personally gather a crowd.

#72 Gregor Samsa on 10.21.09 at 10:23 am

How come no-one told me
All throughout history
The loneliest people
Were the ones who always spoke the truth
The ones who made a difference
By withstanding the indifference
I guess it’s up to me now
Should I take that risk or just smile?

What do you know
It happened again
What do you know

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

#73 young & foolish on 10.21.09 at 10:24 am

Hey Garth,

Thanks for being there for us. I am sure that all who come here, come to be challenged by your openly thoughtful forum.
It’s hard to look into the future, and sometimes even more difficult to tell the truth, but your commitment to the “greater good” is inspirational.

#74 kc on 10.21.09 at 10:39 am

Doom & Gloom… or reality? Quote from Carlin… “if you don’t like the station, there are 2 knobs on the radio turn it off.”

Last night there was a great show on PBS Frontline, no idea if anyone was able to watch it, however, this is worth the peek. Your famous cast of idiots are in here talking about how the OTC Derivs. market is the best thing since sliced bread and then Brooksley Born sticks her nose into the whole mess to expose it for the fraud it is. Then guess what happens next…. the house of cards starts to unwind, and this is back pre 9/11, just as the dotCON bubble was becoming unglued. Problem with this is that nothing has changed to the OTC’s except the fact they went from $20T to an estimated $500T and still no one knows how to regulate these, even Obama wants talks about how to do it… “ya right”

Indepth articles here and the whole show.

http://www.pbs.org/wgbh/pages/frontline/warning/

cheers

#75 Jonathan on 10.21.09 at 10:39 am

They don’t just need to cut services – they need to cut government salaries and pensions.

Private workers don’t get paid what government workers do – not even close. Fire public workers and then shrink the remaining salaries.

Pensions – private workers don’t get the pensions government workers get – kill the pensions now – these pensions are destined to go broke.

Fact is, you can’t tax the private sector any more than what you are doing now. In an economy that is about to face deflation – increasing taxes will collapse spending and trigger a deflationary cycle.

There’s plenty to cut – and in the process we will free up all those government workers to work in the private sector and make real usable products that people actually will pay for. Those extra workers will be tremendously useful as the boomers retire.

#76 GregW., Oakville on 10.21.09 at 10:41 am

Hi Garth, FYI, visual ~1min (Can this be good?)

This animated map provides a striking visual of employment trends over the last business cycle using net change in jobs from the U.S. Bureau of Labor Statistics on a rolling 12-month basis. Read more…
http://tipstrategies.com/archive/geography-of-jobs/

#77 vreaa on 10.21.09 at 10:42 am

((Garth: Please reconsider, I think you rejected this post first time: check out the vreaa site: It’s not commercial in any way (it’s a labour of love). ))

‘Contrarians don’t often make money, but when they do, they tend to make a lot.’

Here in Vancouver, the small group of RE bears is getting smaller, …and smaller, …and even smaller.
Those left know that we will indeed ultimately prevail, but, by the time we do, we will likely have contracted down to a few mangey specimens.
But eventually having the truth ‘out’ will make it all worthwhile, and those of us waiting to buy personal residences at vaguely ‘normal’ price levels will be rewarded.
I know of three long-term bears who have recently capitulated and bought, all signs of a sucker rally top.
Despite free money and bull euphoria, we haven’t been able to take out the summer 2008 highs.
So we’re now facing the winter, the damp-squib Owelympics, and the rate hikes (in that order).
There is a feeling of ‘now or never’ in the bear camp.

Check out VREAA, the ‘Vancouver Real Estate Anecdote Archive’, where we archive good anecdotes reflecting personal experiences from ‘the bubble’. Some of them are ‘harvested’ from Garth’s invaluable blog (with links and credits). We expect some rather good stories in the next year or two. We aim to complement the RE blogs by acting as a first/second-hand anecdote repository.
http://vreaa.wordpress.com/

#78 GregW., Oakville on 10.21.09 at 10:52 am

Hi Garth, FYI, 7min

10/20/2009 Ron Paul talks Economics on CNN American Morning
http://www.youtube.com/watch?v=tHGzWFyYGNw

#79 Nathan in Edmonton on 10.21.09 at 10:54 am

Garth, I’m also labeled a gloomy guy, even by my family. I think it’s funny that anyone not spouting the mainstream mantra that everything is rosy is labeled gloomy or doomer. I’m actually fairly optimistic and happy person. Thanks in part to advice by you and others, I have minimized debt, and made other decisions that help me sleep easy at night.
However, I do believe we are heading into a depression, it’s unavoidable now, the drain on public funds will turn into a drain on private, through all the things you have mentioned here, taxes, rates, fees, and loss of investments and pensions. That being said, I still remain optimistic–I probably will be poorer in the future than I am now, but that doesn’t mean I wont be happy. The people that cannot adapt to change and value money and materialism above everything else will be the ones in despair as they desperately try to hold on.

#80 jess on 10.21.09 at 10:55 am

Did anyone watch Frontline ,”The Warning” where all are equal but “some are more equal.”

“In our society and in our economy, we think of innovation as an almost unmixed blessing. Innovation brought us bar codes, EZ passes, the Internet, on and on. The unfettered price competition you get through the Internet has certainly been terrific for consumers. But in the financial field, I wonder if we haven’t had enough innovation, because innovation takes place basically to benefit the innovator, not the buyer or user of the innovation. People make a lot of commission on CDSs, on CDOs, and other obscure financial instruments. And the users of them lost a lot of money. That strikes me as not a very good credential for an ethical system that ultimately has to be based on trust. We can’t say, there will be no more innovation here. But we can say that it ought to be demonstrated somewhere along the way that this innovation will benefit the persons that use the innovation and not just the marketer of the innovation.

Warren Buffett has this wonderful saying that every new idea goes through three stages: first the innovator, second the imitator, and third the idiot. So this thing spreads like a virus around the land and the last people that get in really lose money.

MM: What do you think about a financial transactions tax to slow speculation?

Bogle: I love it. It’s going to be very hard to get, but I love it. The financial institutions that control 75 percent of all stocks are tax free. Pension funds are tax free. Mutual funds are about half tax-deferred, but the other half is run by managers who pay no attention to taxes. So we’ve got these two giant industries basically operating without any frictional costs when they trade stocks back and forth. The tax costs to traders are basically zero, and the commission costs are half a penny a share or something like that. So we’ve taken the frictional costs out and that helps explain why we’ve had this orgy of speculation. “

#81 Mike (Authentic) on 10.21.09 at 11:03 am

#58 Davinci “Gold is money and nothing else…blah blah”

Actually, gold is just a mineral.

Salt has actually been more valuable than gold longer than gold has been more valueable than salt.

Mike

#82 Seilfworcehtsa on 10.21.09 at 11:23 am

#57 Bill

Yes, Bill and dying is the high of our lives; that is why it is saved ’til last.

Politics is considered by many to be the worlds second oldest profession and by the wise as being the oldest. The Liberals behave as politicans and Garth expresses shock. Why am I not suprised?

Garth has put the fear of the lord into the real estate crowd and now he has the morticians shaking in their boots because the plethora of seniors that they were counting on for expensive funerals have no money. Awful, isn’t it?
And we worry but for what. It doesn’t make us any happier or add a whit to our lives. And the more we know, the more we know we don’t know. Today’s wise men are too often tomorrow’s fools.
Low interest rates rob savers and inflation rewards debtor and inflation is coming big time. These are exciting times we live in and most of us will adjust as our forefathers before us did and we will be better people because of it. The saying is: ‘the hotter the fire the stronger the steel.” As my grandfather said about the WW1: “it was bloody awful but I wouldn’t have missed it for the world.” Great to be a human being, isn’t it?

#83 jess on 10.21.09 at 11:24 am

Tax Avoidance and the corporate world

“Ottawa, Ontario (AHN) – Finance Minister Jim Flaherty plugged the loopholes on Tax Free Savings Accounts which has been abused by some Canadians”

.. the problem is that ‘ some’ translates to large sums to the few at the expense of the many.

Does anyone know the stat on how many Canadians in terms of years are behind?

So as an individual with outstanding income tax to pay, the interest meter goes forward increasing debt but the corporations have time to ‘readjust’? And what about those corporations that kept their ‘overpayments ‘ to collect more interest from the greater numbers of poorer tax payers.
Read more: http://www.allheadlinenews.com/articles/7016755321#ixzz0UaMLHxM6
close tax loophole by 2012
Mon May 14, 2007

A transition period until 2012 before the ban takes effect is fair, he said.

“I think given the length of time that this tax avoidance opportunity has been there that it’s reasonable to give some more time to let the corporate world adjust to the change,” Flaherty told reporters after the speech.

#84 beau on 10.21.09 at 11:28 am

Home prices could hit new highs in 2010

Low mortgage rates are driving the market to pre-recession levels, credit union economist says

By Derrick Penner, Vancouver SunOctober 21, 2009

http://www.vancouversun.com/business/home+prices+could+highs+2010/2124533/story.html

argh….

#85 ant-626 on 10.21.09 at 11:47 am

Garth, don’t be too pessimistic about Canadians. There are some, like ex-Soviet inhabitants, who live wisely now. The reason is simple – because they lost everything at least twice in the last 2 decades. OK, not exactly everything. After collapse of SU in 1991 we’ve lost jobs, medicare, currency, ideology. I remember my parents along with grandparents had opened a saving account for me when I was six and put 10 thousands rubles in it (the average salary used to be 2000 rubles a year). By the legal age (16) I supposed to the owner of 16 thousands. Well, I turned 16 in fall of 1992. I’ve bought a snickers bar for 7000 rubles and it was bitter sweet. I would not say we were starving – half a kilo of buckwheat and some potato used to be a diet for millions those years. But I was young, so after 3 years of hyperinflation we got a new stable ruble. Little did I know about economy those years. Another 3 years passed, it was 1998. I’ve managed to save 3 thousands in US dollars. But by the summer 1998 I was stupid enough to trust our government and, lured by high interest rates for deposits in rubles, I converted my greenbacks to rubles (woody we call it). Well, in 2 months Russia defaulted, and by the end of 1998 the exchange rate RUR/USD hiked from 6 to 25.
I’ve learned that lesson. I never keep more than a half of my saving in a single bank, and I don’t trust CDIC (why I should since FDIC is already in red). In the event of any of big 6 crash CDIC would be insolvent. Sure, the gov will print the money to cover a deficit. But we should keep in mind the biggest difference between US and Canada: sure, US is also printing money. But they are printing world’s currency – so all inflationary risks are distributed somehow around the globe. Quod licet Jovi, non licet bovi.
And now I see the consumption fever (I do consider buying a residential property for living as a sort of consumption). Feast in time of plague. The only thought is in my mind: this nation should’ve been taught a lesson. The lesson that a debt is nothing more than a claim on future income. The more booze you drink at once the more hangover you have to withstand. Enjoy it.

#86 Daystar on 10.21.09 at 11:49 am

Gold is whatever humans believe it to be.

Some believe it is a color. Others believe its money. Others believe it to be a precious metal commodity. Some believe it to be an advantageous excellent conductor of electricity. And then we have those who believe it makes for excellent jewelry and fine false teeth!

Still, there are those like myself who believe gold represents wisdom, an intangible far more precious than any mineral I know of and I know I’m not alone.

#87 tony on 10.21.09 at 11:58 am

Keep up the great work Garth. Intelligent people are listening to you and appreciate your truthful approach. We have to get it somewhere!

#88 saanichtonian on 10.21.09 at 12:04 pm

#17 nonplused
“I understand interest payments are still one of the largest components of the federal budget, even with the low rate environment. Without the debt, the budget would be much easier to balance. Just roughly, I figure if the debt is about $500 billion (http://www.debtclock.ca/) and the interest rate is 5%, then we must be paying about $25 billion a year just to service the interest payments. That’s about half the forecast deficit. So the interest is definitely compounding again.”

If I remember correctly, last years payment was 34.5 Billion. This does not include provincial interest on interest payments.

In 1933, a fellow by the name of Gerald Grattan McGeer
(Mayor of Vancouver, elected MP for Burrard South in 1935) appeared before the MacMillan Commission. (Lord Macmillan was a Director of the Bank of England).
He had some interesting things to say about our currency system.

“By changing the issue and circulation of national currency and the conversion of public credit into purchasing power from a privilege of private monopoly to a public utility, the disastrous cost of interest now incurred in financing governmental enterprise by borrowing private bank credit and private finances can be eliminated.

By changing the regulation and control of the circulation of money and credit purchasing power from a banker’s licence to a public trust, we can, through the maintenance of an adequate volume of consumers’ purchasing power, avoid the movements of the credit cycle and the evils of inflation and deflation.

The adoption of a national banking system does not mean that the mismanagement of public credit by private enterprise will be followed by the public management of private finance. It does mean, however, that the issue and management of public credit and finance will be restored to the government as the trustee of the people, where it properly should be. The private banker can carry on under proper regulation the legitimate business of the merchant banker, namely that of financing private enterprise with his own and his depositors’ funds. But he cannot issue private bank credit as the purchasing power of bankers. That is a profit-making privilege that belongs to the people. It is part of the public domain which no government has the right to hand over to a private monopoly.”

More at http://www.yamaguchy.netfirms.com/7897401/mcgeer/mcgeer.html

As regards debt under the present system, paying it off is mathematically impossible, as the moment that money is borrowed into existence, there is more owed (with compound interest attached) than exists.

For further a little more updated view, might I suggest

The Crime of the Canadian Banking System
http://www.youtube.com/watch?gl=CA&hl=en&v=O8Zl1Wax8MI&feature=related

The other 2 parts are linked on the right.
Canada’s Great Experiment: 1935-1974
and
Gerald Grattan McGeer

The ’93 federal auditor general’s report:

(http://www.oag-bvg.gc.ca/internet/English/parl_oag_199311_e_1157.html), specifically chapter 5

“5.41 The cost of borrowing is the third area that affects the annual deficit. In 1991-92, the interest on the debt was $41 billion. This cost of borrowing and its compounding effect have a significant impact on Canada’s annual deficits. From Confederation up to 1991-92, the federal government accumulated a net debt of $423 billion. Of this, $37 billion represents the accumulated shortfall in meeting the cost of government programs since Confederation. The remainder, $386 billion, represents the amount the government has borrowed to service the debt created by previous annual shortfalls.”

My favourite line though is:
“5.14 Experts will, of course, realize that there are complexities we did not touch on, but we hope that they will agree that there are significant barriers to dealing with them until there is a better and more widespread level of understanding.”

I’m baffled by the Orwellian concept that ‘debt is wealth’.

“Banking was conceived in iniquity and was born in sin.
The Bankers own the earth.
Take it away from them,
but leave them the power to create deposits,
and with the flick of the pen they will
create enough deposits to buy it back again.
However, take it away from them, and
all the great fortunes like mine
will disappear and they ought to disappear, for
this would be a happier and better world to live in.
But, if you wish to remain the slaves of Bankers
and pay the cost of your own slavery,
let them continue to create deposits.”

Sir Josiah Stamp
(1880-1941) President of the Bank of England in the 1920’s

Banks create money. That is what they are for. . . . The manufacturing process to make money consists of making an entry in a book. That is all. . . . Each and every time a Bank makes a loan . . . new Bank credit is created — brand new money.
– Graham Towers, Governor of the Bank of Canada from 1935 to 1955

“Once a nation parts with the control of its currency and credit, it matters not who makes the nations laws. Usury, once in control,will wreck any nation.
Until the control of the issue of currency and credit is restored to government and recognized as its most sacred responsibility, all talk of the sovereignty of parliament and of democracy is idle and futile.”

William Lyon Mackenzie King
(1874-1950) Prime Minister of Canada

“The most powerful force in the universe is compound interest” ~ Albert Einstein

#89 Two-thirds on 10.21.09 at 12:09 pm

As a natural-born contrarian, I have found a great hang-out place here.

Garth, I’m thankful for the work you do and most importantly, for doing it for free and without an agenda.

I will continue visiting the site, contributing when I have something worth sharing, and doing a lot more learning.

What’s the title of the new book, BTW?

(I need to know to put it down on my letter to Santa this year…)

#90 Genghis on 10.21.09 at 12:13 pm

Re: #57 Daystar

Interesting to see archival footage from the day of Oct ’87 stock market crash, however I am not following why you think this is significant.

Any intelligent person who is old enough to remember that day realized that we were at that point in unchartered territory. It was truly frightening. Most financial analysts and commentators were very, very concerned. Garth reflects this in his interview and this should not be no surprise.

Yes, in hindsight the crash of ’87 was insignificant, however very few people involved in finance would have confidently predicted that the day of the crash, or the day after, or even weeks after.

#91 Kelly McMae on 10.21.09 at 12:36 pm

Nice summation Garth. Where the hell are the taxes going then? If not for schools and hospitals, what else. Bloating government, war mongering, corporate bailouts, hookers and blow?

What a shit show.

#92 Daystar on 10.21.09 at 1:02 pm

#89 Genghis on 10.21.09 at 12:13 pm

Seeing as how its Garths blog, I thought I’d give him a little reminder of what he looked like back in the day ;-)

As for drawing any lines to whats happening today, it wasn’t my intention. Oh, I suppose I could have. I posted an audio interview from 87′ by Garth telling listeners to stay leery of mutuals for chuckles a few days ago. Clearly, Garth knew there was a market bubble or he wouldn’t have given the advice he gave.

How long a bubble goes on for, it can go until whatever feeds it stops and that can be hard to predict, especially if its a government that is purposely feeding it. If you want a parellel, there it is. Garth is giving pretty much the same advice today only this time its an asset bubble and again, it will continue to grow as long as its being fed (low interest rates, loose lending mortgage regulations). And yup! A good chunk of us won’t get the message for whatever reason, just like those who owned stocks in Oct of 87′. Wanna get in late and get out at the peak? The top? Fish for an extra 10%? Only 10%? This is how people lose their shirts.

I believe there are some other parellels if one looks for them. Back on that fateful day of 87′, the markets were in a bubble. They had hit heights not seen before, smashing record after record new highs in both the DOW and TSE. What happened last year? The TSX hit record highs! Was it a bubble? Absolutely! So there are comparisons in a sense that both markets were in bubbles, but 08’s bubble also came with it joined at the hip a bubble of U.S. debt. Thats the biggest change. In 87′, the U.S. was the #1 empire of the world. Now, its a mere empire in serious decline because it is and is and regardless of what people say, U.S. currency reflects it. Our future as a result will be much different than the future past ’87.

And today? 09′? This is Canada’s year of major debt and we seem to love debt, love governments who rack up debt as the polls reflect, and somehow have a love affair with major debt to come in the future and do I think my fellow Canadians are crazy to support anyone, party or other who runs a belief or platform based on massive debt? Maybe not crazy… ignorant is a better word for it. No different than americans, truth be told.

The U.S. empire thought they could just… borrow til’ the next century. And the next century came and they just kept on borrowing with some idiotic belief that they can continue to borrow without ever paying it back. Idiots. The world is keeping track. Ugly, costly wars have been known to begin this way. And for some reason, it looks like this same idiotic belief, that we can borrow and never have to pay it back, has infected a large minority of Canadians, maybe even the majority and I have to be brutally honest when I say there won’t be much sympathy from me when our lessons learned come… the hard way.

#93 char on 10.21.09 at 1:28 pm

A must see video on the perils of climate change !

http://www.youtube.com/watch?v=5ndHwW8psR8

We must sound the alarm ! Global disaster is looming !

#94 Munch on 10.21.09 at 1:33 pm

Brilliant!

Again!

Thanks, Garth!

#95 Munch on 10.21.09 at 1:35 pm

to #88

Sorry pal, but there ain’t no Santa – he got outsourced to India

#96 blobby on 10.21.09 at 1:44 pm

I personally think deflation is worse than they make out.

Basing it on groceries – say they look at (i dunno) ketchup which cost $2 last year, and $2 this year.. they’ll say no deflation or inflation took place. However they dont look to see that this year it’s being sold in a 1.5litre bottle compared to 1 litre a year before.

(if you get me).. this also works in reverse.

#97 Alfred Burdett on 10.21.09 at 2:04 pm

“And do you know what the public pension system in Canada pays you when the work runs out? The combined total of CPP and OAS is just over $16,000 a year. So what, exactly, are eleven million pensionless families going to be living on?”

Let’s see: at $16,000 a piece, a couple will have $32,000 a year (maybe slightly less, if a couple receives less than two singles) guaranteed from the Government, not counting healthcare benefits.

That compares with less than $18,000 per year for someone working at minimum wage. Frankly, I don’t see the problem, unless it is that insane Government generosity is inculcating a mentality of total irresponsibility among Canadians who need never care for the future.

#98 Kitchener1 on 10.21.09 at 2:17 pm

Regarding retirees and their pensions, watch for that to be the next big election issue in the next 2-4 years.

16000 works out to approx 1350/month per person. Not to bad if you have a couple but terrible if the person is alone (divorced or widowed).

My view is that many boomers are going to be moving out of large population centres to smaller communites where there $ will get them more. In case of the GTA, look at areas like Oshawa, Barrie, Kitchener/Waterloo/Cambridge/Guelph etc.. as they sell off their large homes in Toronto and want to get something smaller, in all of the places mentioned, 250K will get you a very nice SFH, they can even be had for 200K but those need work.

Areas like Niagra falls/St Catherines/Welland are even cheaper, for 150-200K you can have your pick of really nice homes.

I see a lot of people moving to these areas as if the boomers were smart, they can sell off their homes, buy a house for cash in the above mentioned areas and live a nice quiet life. That is the only hope for the areas mentioned, they are all a part of the new manufacturing rust belt forming in SW ontario.

#99 Shawn on 10.21.09 at 2:28 pm

I read this blog daily and I contribute. One of only two that I check daily. It’s a great blog.

How can anyone crticise Gath’s reasoned opinions? They are just opinions and he tells us the logic. We are free to ignore if we don’t agree.

#100 Bobby on 10.21.09 at 2:36 pm

If there is one thing I’ve learned, it is if Canadians are buying, it is time to get out.

I pulled much of my money out of the market in September 08, just before the crash, as I read that Canadians had invested record sums in mutual funds in August 08.

Now I hear Canadians are returning to the markets after the TSX is up by 45% plus. Again, it is time to get out.

Of course, there is the rush into real estate. The statistics say that the majority of new purchases are 0$ down and 35 year amoritizations. I think it is time to sell my house and rent.

What Canadians are doing is a better guage than any financial adviser!!!

#101 Shawn on 10.21.09 at 2:39 pm

On Bond Yields.

I would argue that central bankers do have an impact.

Every investment is priced relative to others. If short-term rates were 4%, no one would invest in long-term bonds today around 4%.

The very low short-term rates set by Carney, Bernaeki, and other central bankers do exert some gravitational pull on the returns on all other financial assets.

So you may find bond rates stay unexpectly low.

Cental bankers in the States even buy their own debt. (And I suppose they drink their own Kool-aid) The Fed buying long-term bonds from the Treasury. Hillarious but true.

The Social Security program uses I believe all its assets to buy U.S. Treasury bonds.

These actions and especailly when central banks directly buy bonds pull down bond rates.

having said that:

Regression to the mean is a powerful force.

Bond yields will eventually return to more normal levels (rise) as Garth predicts.

As Buffett says in these matters, it is easy to predict where things will head long term. But Buffett always avoids any prediction of the market in the short term.

Blog readers want short term predictions. Blog writers may oblidge but the short term is always extremly unpredictable.

Only immature readers get upset when blog writers turn out not to have crystal balls. Even Garth with his heart-covered boxers does not have any crystal balls.

(Though he is a tad sensitive at times)


Enough speculation about my professional equipment. — Garth

#102 Grantmi on 10.21.09 at 2:52 pm

Just got this from TD!! Yup! Rates are going to be low FOREVER and EVER!!!!

“Move along.. Nothing to see here!!”

__________________________________________

TD Bank Monthly Pay Step-Up Extendible Notes, May 2010 to November 2015

Short Description: Offering of Extendible (at Issuer’s Option) Step-Up Notes
Maturity: May 10, 2010
Coupon: Year 1 @ 2.50% s/a
Year 2 @ 2.75% s/a
Year 3 @ 3.25% s/a
Year 4 @ 3.75% s/a
Year 5 @ 4.25% s/a
Year 6 @ 5.00% s/a
Price: $100.00 CDN per $100 par value.
Yield to Maturity: 3.56% semi-annual ; 3.59% annual
Settlement: November 10, 2009.

#103 Bill-Muskoka (NAM) on 10.21.09 at 3:35 pm

#81 Seilfworcehtsa

LOL Yes, that about sums things up. I survived the 1980’s fiasco, then the 1990’s fiasco, not to mention Viet Nam, and now here they go again.

The Die Hard (Probably the only time in their adult lives they have had a ‘hard’ experience) Believers in unregulated everything, limitless growth by mere acquisition and inflation, and the ‘inevitability’ of global economics over ruling national and local interests without question.

Reality tells a much different story, but like any Funnymentalists they live like Egyptians, in Denial!

As to those poor funeral directors, well, ashes to ashes and dust to dust. We come, we live, we die. That is one inescapable reality everyone must accept.

Have a good evening, eh!

#104 Bill-Muskoka (NAM) on 10.21.09 at 3:37 pm

Enough speculation about my professional equipment. — Garth

SO! AHA! Now we know the TRUTH! LMAO! You are a RE agent for sure if that is categorized as ‘professional equipment.’

Have a good one Garth!

#105 Nostradamus jr. on 10.21.09 at 3:39 pm

Mish agrees with Gart…

“”Death of the ‘Soul of Capitalism’

Here are the Top 20 reasons American capitalism has lost its soul:

1. Collapse is now inevitable

Capitalism has been the engine driving America and the global economies for over two centuries. Faber predicts its collapse will trigger global “wars, massive government-debt defaults, and the impoverishment of large segments of Western society.” …….

continued…

http://globaleconomicanalysis.blogspot.com/

…General Motors will now take down Central Ontario/Toronto just like it did Detroit.

Nostradamus jr.

#106 David Bakody on 10.21.09 at 4:01 pm

It is now being reported on TV that the rise in stock market was indeed achieved on the backs of middle class who lost their jobs via restructure using Stimulus money. Hence the White House is going to set CEO’s wages and claw back money. So what about Canada wrt to Stimulus spending? All this on both sides of border has a dramatic effect on RE. As for any of the above who think they can predict any type of Bank rate wrt investments ….. great! Now would you post the 649 winning lotto number for future draws. Banks know investors are also spenders so what the right hand may appear to give the left hand takes and taking is a sure thing while giving is always subject to tax in one form or another and sometimes multiple.

Note: There are now articles and radio shows talking about the pending senior boomers and just how they might survive in retirement …. the article said most who do have RRSP’s only have 2 years saved! Hello MSM we here have been talking about if for past couple of years as affordable housing is an essential ingredient to retirement.

#107 Bill-Muskoka (NAM) on 10.21.09 at 4:48 pm

Thought for today: ‘The person you are following may be lost as well’

#108 Robert Stanley Adams on 10.21.09 at 4:55 pm

Garth…
Your comments are so good. For work related reasons we sold our Toronto, Leslieville house for good money and moved to Hamilton. We are sitting on lots of cash, now renting a fabulous 4 bedroom home in a nice district in Hamilton and learning to wait patiently until we buy a new home perhaps next year or even the following year. And a very low price may await us here and we pay in cash and get an HELOC. We will ‘green’ the new house. Peak oil, climate change challenges and the coming demographic tsunami are all gigantic havoc wrecking elephants in the room. Keep up the excellent work. Your last book is so important for us as you bring a Canadian perspective and focus to the issues and proposed mitigation and solutions.
Thank you.

#109 Jojo on 10.21.09 at 4:55 pm

So GARTH,
Your body from USA also politician admited yesterday:
Biden Declares U.S. Is in a Depression

http://www.moneynews.com/streettalk/biden_us_depression/2009/10/20/274507.html?s=al&promo_code=8EA6-1

And by the way today oil price hit $ 82 and $ US is going in toilet.

#110 Bill-Muskoka (NAM) on 10.21.09 at 5:28 pm

#104 Nostradamus jr.

Au contrare, Real capitalism is fine, but the Globalism ideology is a failure. The very concept that economics overrule national and local interests (aka the people’s interests), and our governments is a pipe dream only drug addicts could accept as reality.

GM’s primary failure is due to adhering to the philosophy that Bigger is Better. It is NOT! Competent is better.

The managerial and technocrats have FAILED. Time for real innovation and investment, not mere shuffling of wealth via internal invoicing and writeoffs to evade taxes.

#111 Jojo on 10.21.09 at 5:34 pm

So GARTH,
Your body from USA also politician admited yesterday:
Biden Declares U.S. Is in a Depression more than 15 mil.
unemployed?

http://www.moneynews.com/streettalk/biden_us_depression/2009/10/20/274507.html?s=al&promo_code=8EA6-1

And by the way today oil price hit $ 82 and $ US is going in toilet.

#112 David Bakody on 10.21.09 at 5:37 pm

When the Washington says: ” The chances of American slipping into another recession in 2010 is uncomfortably high” would that effect the strength of the Canadian Shield wrt Harper’s & Flaherty’s analogy of our economy?

#113 Nostradamus Le Mad Vlad on 10.21.09 at 7:05 pm

#31 Rob and #32 Tanya — Excellent posts!

#44 Kash is King — The last link re: the IMF in trouble goes with Rob and Tanya’s posts, as one one thing always leads to another. Good post and link.

#45 miketheengineer — “. . . to get outa debt. Credit Card, line of Credit, etc. . . . and use it to invest.”

Great (free) advice. Put “Lifestyles of The Rich and Famous” on hold for a few years, and slam dunk debt into nothingness. Thanks!

#62 Artisuseless — Portugal legalized some, if not all drugs in 2001 and a lot of their problems disappeared. I understand Holland is going the same route.

#64 PeckedToDeathByDucks and #67 Daystar — “certain wealthy individuals were able to throw $100,000 or more into the thing, buy warrants for pennies and then collect the million dollar reapings as the stock is manipulated up.” . . . Harper also said we would not run a deficit if elected last fall, so we shouldn’t worry.”

Aha! Wealthy individuals (such as Harper and friends) dump loadsa moolah into TFSAs secretly, then says don’t worry, be happy as we’re all being flushed down a new sewage system now! Hotdamn, d’ya feel the love? Man, I feel really clean!

#72 Gregor Samsa — Another excellent post! Imagine what Siddartha Gautama (Buddha), Allah, The Christ and many others see when they look at the deceptive, manipulative and thieving ways humanity has devised for itself.

Guess they shrug their shoulders and carry on — nothing they can do.

#81 Seilfworcehtsa — “. . . inflation is coming big time . . .” — Wholeheartedly agree. As day follows night, it will be interesting to see how this de- / inflation charade unfolds.

Won’t happen for a while, but when it starts to pick up, that’s when rich, savvy investors turn to other investments.

BTW, “. . . dying is the high of our lives; that is why it is saved ’til last.”

Right on! Had my first out-of-body experience when I was ten (now mid-50s), and still remember it — an utterly gorgeous experience; leaving one’s sack of clothes (body) behind is about as complicated as blinking one’s eyes.

#104 Nostradamus jr. and #108 Jojo — Essentially, that is what Larry Edelson (Uncommon Wisdon) said last week — the US is defaulting on its’ debt obligations.

Another variation of the October Surprise?
——-
For those who, like moi, sometimes forget the most inane things. — Lost and Found
——
Interesting for a couple of reasons. Part of the story says: “. . . Hitachi Develops a New RFID with Embedded Antenna µ-Chip” — canadiana
—–
For those who were unaware, this from John Thompson’s column on Castanet.net Tuesday:

“I just received the trusty Old Farmers Almanac Canadian Edition 2010. The first thing I always do is go to the weather charts for Canada. The editors swear there is no folklore used in their prediction, just technology, the Sun and a secret formula. Their long-term forecast is gradual cooling of the atmosphere. For the immediate future, it is predicting a chilly winter, with above average snowfall throughout most of Canada.”

There have been hardly any sunspots for a while now, and they do seem to play a role in the cooling / warming of the planet. How big, I’m not sure.

#114 Onemorething on 10.21.09 at 7:09 pm

#69 SMV,

OIL is battling GOLD as a hedge but the difference is when the USD rebounds again as flight to safety ONE MORE TIME, Oil will climb to $100/b maybe before the end of the year. Gold, Stock Market, RE will tank.

History will repeat itself (history taught one year ago).

This time is will suck the real wealth out of us the question will be quickly so we can begin to find areas to recover or a long drawn out scenario which I am affraid is more money printing, sideways deadly market, deflation for 3+ years, no bottom in RE and no end to Unemployment.

This is my contrarian world and it may not be yours but its a plan!

For all of you who know a first time buyer in RE, whether family of friends, and you have at least 30% of your mortgage paid, and you dont live in TO or VAN, get ready to have some guests!

#115 Mel Eager on 10.21.09 at 7:40 pm

So I pulled the trigger!

Locked in my 3.05 % VRM, into a 5 year fixed @ 3.89 %

C’mon Bond Market, influence those rates, I dare ya!!!!

Thanks Garth!

Mel.

#116 eddy on 10.21.09 at 7:52 pm

“That means Ontario is launching a review of its spending”

LOL, this cannot be true. Dolt On e-Guilty is the LAST person in Ontario, with the possible exception on David Miller, to give half a shit about out of control government spending. “after exhaustive analysis, review and consultation, we’ve decided to TAX AND SPEND AND EXPAND GOVERNMENT- that’s it! The shows over, “I think I’ll spend more time with my family”

Ontario house sellers, don’t forget to order your mandatory voluntary energy audit

#117 X on 10.21.09 at 8:17 pm

Financial Post article comparing CMHC to Fannie Mae and Freddie mac:

http://network.nationalpost.com/np/blogs/francis/archive/2009/10/21/cmhc-canada-s-freddie-and-fannie.aspx

#118 Denis on 10.21.09 at 8:42 pm

#83 beau on 10.21.09 at 11:28 am

Great Find! I like the Great Input from a respected RE Professor at Sauder: “Real estate tends to be a leading [economic] indicator,” Somerville said. “It’s not that you need to have employment numbers recover for real estate to recover.”However, June’s boom in sales was stronger than he would expect given the state of B.C.’s labour market and of the global economy.”Obviously, first and foremost, [the rise in sales] is about mortgage rates,” he said. “From a housing perspective, if the economy is not recovering, there really can’t be a substantive recovery in your housing market,” – Tsur Somerville, director of the centre for urban economics and real estate at the Sauder School of Business at the University of B.C.

#119 Chris on 10.21.09 at 9:24 pm

Garth check out urbansurvival.com..everything your saying is in total alignment with Buddies web-bot predictive linguistical insights..

#120 Aizlynne on 10.21.09 at 9:29 pm

See Garth … I knew your retreat from the belief in political parties would set you free …. now we only have 33 million other Cdns to convince!

#121 Kash is King on 10.21.09 at 9:36 pm

Garth: “I live by my own rules. And since deciding a few days ago to forever shun the hypocrisy and compromise of party politics, I even have a pure soul.”

Even 3-4 months ago I would have been the first to poopoo this kind of stuff in this youtube video, but now?

It’s for Garth, he’s been a wayshower for many.

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

#122 cons and pros on 10.21.09 at 9:41 pm

Fall Brings New Fears about the
Economy for Canadians – Angus Reid survey

https://www.angusreidforum.com/MediaServer/3/documents/2009-09-23-econoENG.pdf

#123 dd on 10.21.09 at 9:51 pm

.#7 Eduardo

…Yeah well it’s a good thing I didn’t say that it would be higher than 6…

Hey great call. Hope you loaded up because it is really a crap shot on weather at this point. Demand on the industrial side still is decreasing. Look at electicity pricing – down 1/3 from last year. However, once hedges roll off then drilling activity will really slow down and then I will be more positive on the outlook for gas on the medium to longer term.

I am long a couple of gas companies and I hope I am wrong, again.

#124 Davinci on 10.21.09 at 10:36 pm

#80 Mike, Salt is useful and plentiful, that few of the many reasons it’s not not money, however anything can be money useful or not.

Money is a unit of account and through out history humans have used many things as a unit of account including salt. For the past 6000 years and all monetary experiments gold remained money and still is today. Just because many people decide to use small amounts of arsenic for food never changes the fact that it’s poison! Same applies to paper money or electronic money the mass acceptance never changes the fact that it’s a fraud designed to rob you of your wealth eventually.

Madoff was running a ponzi before and after he got caught, ask any of his investors if before he got caught and they would tell you for 28 years he as been legitimate.

Same with paper money right now it is a fraud you refuse to see, but the fact remains.

Excerpt from an article named PaperBugs…
“If you don’t trust [G]old, do you trust the logic of taking a beautiful pine tree, worth about $4,000 – $5,000, cutting it up, turning it into pulp and then paper, putting some ink on it and then calling it one billion dollars?”
http://goldversuspaper.blogspot.com/2009/10/paperbugs.html

#125 Mike (Authentic) on 10.22.09 at 3:28 am

#108 Jojo “US Vice President Biden Declares U.S. Is in a Depression”

Wow. Glad someone over there in power is realistic and open about the real economic situation North America is in.

Mike

#126 JJ on 10.22.09 at 6:18 pm

Consider Feb 10, 2010.
The bank machines no longer dispenses cash and the world financial system and the US dollar in particular enters a crisis far beyond what we have seen in 2008. Shortly thereafter you can no long rely on gas available at the pumps!
Wild speculation yes; but what would you have to do to survive in this world? Has it happened before, YES! Russia, East Asia, Argentina Mexico etc.
The question is not the predictions of prosperity or ruin for the US/Canadian dollars. You buy life insurance and health insurance for emergencies. What must you do to protect your family against financial paralysis in your own country should that day arrive?