Hos of recovery

Bernanke

“You,” she said, “are a contrary old bastard. Which is exactly what I like in a man.”

“I watch the dollar, I watch the markets and I listen to my own instincts. I am a small businesswoman in Victoria BC and I know what my customers are buying (or better yet, not buying) quarter by quarter. I know by my results what corporations are willing to spend right now and who is bucking down and why.”

Her email continued: “That’s why I am selling my house. I owe less than half of what I’ll get for it. I’m going to rent for a bit…. And then jump in again before the interest rates really start taking off. In the meantime, I am going to enjoy a long awaited and much deserved 1 month holiday in an exotic and far-away locale. Signed: anticipating gazing at dollar signs on my sand-covered, painted toenails.”

Smart woman. Good eye for men, too. But mostly with a well-endowed sense of timing.

I mean, how can you argue with the logic of selling off an over-valued asset when it’s at the top of the curve? When some greater fool’s happy to come along and give you more than the home has ever been worth before, mostly because he’s all hopped up on cheap narco-bucks from the bank, and because everybody’s doing it?

Like you need any more proof we’re in the bubble phase:

  • average price of a home in Victoria last month: $619,936
  • average price the month before: $596,498
  • one-month price increase: 3.9%
  • annualized price increase: 46.8%
  • increase in sales from last September: 50%

This is why people like Painted Toenails are so prescient and wise. Ditto for those who write me daily crowing about their new locked-in, sous-4% five-year mortgage. They understand housing is now at the top, and rates are at the bottom. This can be a life-altering discovery. Too bad so damn few get it.

And that brings us to guys like Ed Yardeni and Dennis Gartman and others now warning anyone who’ll listen that there may be a shock coming.

carney1

Here’s the scenario: Central bankers and politicians desperate not to be in Wikipedia for the wrong reasons decide to take desperate measures to prevent the economy from tanking on their watch. They used unprecedented amounts of government cash to bail out failing companies, put billions directly in consumers’ hands and rescue imprudent banks while plunging into new debt and keeping interest rates at the lowest point in history.

And, mirabile dictu, the sucker actually works. Sort of. No depression. But in its place, something else – bubbles.

After all, should we be surprised, given what’s happened, that stock market investors are raking it in? The TSX in Toronto has mushroomed from below 8,000 seven months ago to more than 11,000 today – a climb of some 40%. The Dow has roared ahead even more – gaining 50% since the dark days of late winter. (As predicted here, BTW.)

And this is hardly based on sustainable corporate profits. Instead companies ‘recovered’ by firing a huge chunk of their workers, slashing overheads, liquidating inventories and burning the furniture. Investors know this is crap, but they keep buying equities. Why? Because central bankers and governments are egging them on, flooding the streets with cheap money, sucking up their own bonds, talking up those ‘green shoots’ and becoming the hos of recovery.

So, a financial bubble. And, as you know (if you visit Victoria this week) in Canada we also have a housing bubble.

Both are bad. In fact, if central bankers were acting normally, they’d be doing the job they are paid for, which is to (a) keep inflation in a narrow and predictable range through market interest rates, (b) maintain a stable money supply and (c) protect the value of the currency and prevent erratic exchange rate movements.

So far this year, these guys are 0 for 0. But, no depression.

And that brings us to the inevitable conclusion: Bubbles do not go away on their own.

The US needs to attract trillions of new dollars to support its new debt, and that means interest rates will have to rise. The stock market has turned into a born-again casino, and that needs to be addressed. The housing market in Canada needs to be deflated, lest it pop as the US one did. The Canadian dollar needs to fall (and the Euro, and the yen), and that will only happen when the greenback rises.

The inevitable conclusion is that when Ben Bernanke thinks the moment is right, he’ll drop the bomb. If he doesn’t, he becomes Alan Greenspan – the central banker who went before him and allowed cheap money to inflate a housing bubble that destroyed large swaths of the middle class, and the global economy.

Trust me. S’coming.

Which is why Ms.Toenails is so righteous.

101 comments ↓

#1 Kurt on 10.21.09 at 10:23 pm

I take it that “the bomb” is the first interest rate increase? I don’t think the “right moment” will occur on his watch – which is another way of saying I don’t think he’s got the guts required.

#2 john on 10.21.09 at 10:35 pm

Why is that I find it difficult to listen to stock market analysis by experts who have a vested interest in an upward trajectory?

Why is that I find it difficult to listen to real estate professionals who stand to benefit from upside?

Why is that I find it difficult to listen to government that simply fog scenarios to paint a rosy picture?

Why is it I find it difficult to read the newspapers or tv newscasts smeared by many who are influenced by government and investors to brainwash people to feel confidence?

While last year there was a flow of reality of the problems that really existed and while there is still plenty of negative economic newsworthy stories it is clear that government, investors, real estate professionals, financial related industries are ensuring the spin is positive rather than negative.

Last year this time Auto makers terrible recent sales numbers would be leading off news media rather than the rise in the share prices at Apple but not now. Let’s stop and think: If you were the producer or editor what is more newsworthy and significant? I thought so. So why is Apple batting lead off and the Auto Industry batting ninth?

#3 Dean-oh on 10.21.09 at 10:36 pm

People want reasons as to why almost all assets and equities prices have been going up in the last several months after the initial collapse last year. Experts give us all kinds of reasons, everyone has their own opinions as to why this is happening. However, if you study bubbles this is exactly how they always unravel. A
major wave down followed by a correction up, then another big wave down followed by a smaller correction up, and so on. There really isn’t anything new here. If you study all the bubbles throughout history you will see it’s so. From the Tulip mania, to stock market manias, stamps and coins, beanie babies, real estate, collectable cars, etc, etc. “There is nothing new under the sun”.

http://seekingalpha.com/article/167060-the-greatest-depression-is-coming?source=article_sb_popular

#4 Tom J. on 10.21.09 at 10:45 pm

OK. I am waiting for the Bulls extant to pound you again, Garth.
I take your bearish view of Real Estate and Painted Toenails pulled our scenario.

The abuse we took is near Epic.
Maui is NICE in February.

Now, if there is anyone who doesn’t get what’s happening, I have to grab this ‘off the wire’. *Ask Garth.

15 Bells.

It’s from Reuters.UK

http://tinyurl.com/yjx2ygh

A $29 billion trail from the Federal Reserve’s bailout of Wall Street investment bank Bear Stearns ends in a partially deserted shopping center on a bleak spot on the south side of Oklahoma City.

The Fed now owns the Crossroads Mall, a sprawling shopping complex at the junction of Interstate highways 244 and 35, complete with an oil well pumping crude in the parking lot — except the Fed does not own the mineral rights.

The Fed finds itself in the unusual situation of being an Oklahoma City landlord after it lent JPMorgan Chase $29 billion to buy Bear Stearns last year.

That money was secured by a portfolio of Bear assets. Crossroads Mall is the only bricks and mortar acquired through bailout. The remaining billions are tied up in invisible securities spread across hundreds, if not THOUSANDS (*caps are mine) of properties.

#5 HouseBuster on 10.21.09 at 10:59 pm

The key word is bomb. There’s no way that they’re raising rates anytime soon.

Let’s talk again in a year.

#6 Nostradamus jr. on 10.21.09 at 11:01 pm

“”The TSX in Toronto has mushroomed from below 8,000 seven months ago to more than 11,000 today – a climb of some 40%. The Dow has roared ahead even more – gaining 50% since the dark days of late winter. (As predicted here, BTW.)

Garth””

…Yes you did predict that and many others too.

1/
Will your next book discuss how Canada should protect its borders from the hundreds of thousands from the 3rd World desperate to seek refuge in Canada and how the above affects RE $$$ in Canada?

2/
Will you be discussing the logic why Western Canada will secede from Eastern Canada?

3/
and will you be discussing why Vancouver will become the new Western World’s Financial, Trade, Culture and Leisure Capital?

tia

Nostradamus jr.

#7 X on 10.21.09 at 11:12 pm

Good Post. And good timing.

Might just bring some reason to the overconfidence currently in the markets.

#8 Mark on 10.21.09 at 11:13 pm

The stock market is down by 30% from the peak, and you’re calling this a ‘bubble’?

I don’t know about you, but most stock market investors I know are still licking their wounds, quite upset that their portfolios have shed crazy amounts of purchasing power. They’re certainly not out there spending money, that’s for sure, with the kind of losses incurred.

Maybe if you invested at TSX = 8000, you’ve made decent money, but most Canadians made their investments in the stock market gradually, over the years, and haven’t even broken even this decade, after the expense of mutual fund fees and brokerage commissions have been incorporated into their investment returns.

#9 LS on 10.21.09 at 11:15 pm

Yes the Victoria housing market is insane, I know I’ve been glued to it for the past year, but let’s not go crazy with month to month stats. They go either way and extrapolating an annualized increase of almost 50% is meaningless. From June to July the average price dropped about 20K, so is Victoria crashing?

Hey folks, it was 5 degrees yesterday and 10 degrees today. If these trends continue we’ll all catch fire by the end of the month!

Let’s bring some reality to the situation.
Victoria housing prices stats.. http://www.vreb.org/pdf/vrebgap.pdf
From the peak last April we dropped about 15%. Then we rose back to within ~1% of the peak amidst record sales. The truth is crazy enough without exaggeration.

#10 InvestorsFriend on 10.21.09 at 11:40 pm

A basic law of fiannce is that a $1.00 of cash flow (roughly estimated as $1.00 of earnings since any earnings not dividended to you are retained for growth) to be received in perpetuity is worth:

$1.00 divided by the required rate of return.

So, if required rate of return is 10%, a $1.00 per year forever is worth $10.00 ($1.00 / 0.10)

If the required rate of return falls to 5% because the central banker drags shorter term rates to 0% and causes all competing interest rates (including bond rates) to fall…

Then our $1.00 per year is worth $1.00/0.05 = $20

So you see it is an imutable law of finance that when interest rates fall then a given level of earnings is worth more. This drives up stock prices.

So… stocks are higher partly because of lower interest rates and particularly because the rate is expected (by the market) to stay low (how else to explain the 30-year bond yields at around 4%).

Another reason and perhaps a bigger reason for the higher stock prices is an expectation of earnings recovery.

Both factors are at work.

If long-term interest rates rise, stock prices will fall along with house prices.

The insanity of 0% interest rates will end, but it’s hard to guess when.

#11 InvestorsFriend on 10.21.09 at 11:45 pm

We are now into Q4 of 2009 and the Q3 earnings reports are rolling in better than expected although generally below the Q3 last year.

In Q4 last year the earnings were horrible. It will be very easy this year to beat the comprable earnings from last year.

All else equal that could keep markets strong.

Somehow though I don’t think all else will be equal. Stocks are probably already anticipating strong earnings recoveries over the nest year or two in the V shaped recession.

If as is very possible the recovery is weak or stumbles then it will be realised that earnings are not going to recover as fast as hoped. In tthat case markets would fall.

Personally I am keeping a large allocation in cash just in case of a crash.

#12 Pitaking on 10.21.09 at 11:47 pm

Garth, the other factor is the surge in commodities, oil at $100 will crush the average consumer, especially in commuter areas like California. If the US dollar doesn’t rise, it will break the back of it’s citizens, even if it hurts wall street.

#13 Ultraman on 10.22.09 at 12:01 am

Well put me down for righteous. I too sold my condo, completion Dec. 1 and I’m still not 100% sure that the RE market won’t crash so hard and fast that the buyers wouldn’t go through with it. So fingers crossed.

The short of it, we bought early 2003 in trendy Yaletown of Vancouver. Net profit after all fees $240k. I haven’t made $240k after taxes in the 14 years I lived in Vancouver. We bought a 5 acres piece of land in southern Quebec ($65k) and eventually we’ll move and build a house there. We sold now because, like many I think that this unreal RE market will crash hard and when I’m ready to move I want to be able to give a month notice an not have to worry about how many years it will take for the value of my condo to recover. Anyway, one thing about money and profit, you have to take it when it passes.

#14 nonplused on 10.22.09 at 12:05 am

Right on post today Garth, but I offer a contrary point of view on at least one point:

Bubbles do eventually deflate on their own. The tulip bubble deflated once all forms of tulips were readily available. Sooner or later the house builders will make enough houses too. Vacancies continue to rise, which means rents will fall, and then people will be more reluctant to buy.

Plus lowering interest rates is like pushing on a rope. As long as there is future demand to move to the present, the rope is tight and takes up the slack. But at some point even at zero interest and a 35 year am the principle repayment itself becomes a limit to borrowing more. We’re still a long ways from that dark nightmare (2.5pc) but there is a hard limit. After that, no more can be borrowed. Then the $hit hits the fan.

The only choice is, stop the insanity now, or stop it later. Or hyperinflate. But I know Garth does not believe modern bankers would hyperinflate, and he might be right, so that one might not happen.

#15 Bogdan on 10.22.09 at 12:28 am

And that brings us to guys like Ed Yardeni and Dennis Gartman and others Let’s see the others… this guys are in for something, not like you (this is who you are: http://www.greaterfool.ca/2009/10/20/contrarian ). It’s not easy to find humans that are doing it for free and are having a donate button in the footer of their website. They are the real values, true geniuses. BTW, maybe your finances are okay, but I suggest you to add a donate button on your website. You do deserve it and it will do well… at least to your own soul.

As for the today’s post, what would you expect? Of course everyone will take all the necessary measures to be sure they are not the last, as the last persons to get the office will shut off the lights… and Wikipedia will discredit them, if it will exist by then. This is where some of your forecasts doesn’t show any liability whatsoever for any direct, consequential or indirect irrational decision that people in office, now or in the future, are going to make in order to save their asses. Few humans can do this (see in time what the leaders will do) and only randomly. But when one can see it, for sure he get the timing right. Even fewer from the ones that might get the timing, have the guts to bet on it ;-)

#16 kc on 10.22.09 at 12:29 am

This is for the indepth thinker, the ones who question everything and the ones who could be labeled (whacks), however you want to look at it or judge yourself, if you think intelligently about what may be coming down the road… here is a long read. If you are too young to know who Don Mc Clean is some of this might pass you by, however, the history is good.

Exploding U.S. National Debt Means Bye Bye Miss American Pie

http://www.marketoracle.co.uk/Article14397.html

#17 Gord In Vancouver on 10.22.09 at 1:07 am

The inevitable conclusion is that when Ben Bernanke thinks the moment is right, he’ll drop the bomb.
____________________________________________

America:
– has already gone to he** economically.
– no longer views low interest rates as a huge novelty.
– has business media that expects a rate hike.

Most of the bomb’s impact will; therefore, be felt in Canada where:
– people see low interest rates the way a 16-year-old views a case of beer.
– media outlets repeatedly use the rising dollar to negate the possibility of a rate hike.
– proper banking rules and results from resource-based (oil, mining) companies kept things respectable.
– real estate didn’t have a chance to correct.

#18 Grumpydawgs on 10.22.09 at 1:50 am

Dianne Francis mentions you in her great piece in the Nat Post today. Its too bad the press wouldn’t have given you the same attention and time some months ago. I emailed her and thanked her. I asked her to press the issue and to try to get into Question period so that the lickspittle media would get on the story and embarrass the crap out of the government. Anyway, good going Garth. Lets hope you started the snowball rolling.

#19 Onemorething on 10.22.09 at 2:01 am

And what else is coming Garth is taxes which the avg. Canuck has never even seen before.

The avg. Canadian will have to work for the government until Thursday afternoon and take home Friday’s pay only when its all said and done.

The only people buying CAN RE right now are first timers and brain dead loosers. Those with less than 30% down and locking into 5 year low interest rate mortgages might only be okay if they live outside of VAN and TO only.

Deflation is here, salary haircuts, job sharing, shorter work weeks if you are lucky to have a job, matched with those huge taxes may be enough to put a default scenario in front of you tomorrow let alone trying to pay off as much as you can next 5 years at low rates.

My point is, as your RE values come crashing down, as your work week deminishes or your salary gets cut by 20% and your taxes go through the roof, how can you even afford your 5 year mortgage at low rates in the near future let alone a layoff.

U3 will go to 15% easy and U6 will be the number to watch as it correctly will reflect WHO IS ACTUALLY UNEMPLOYED will hit 25%+.

Our Government is to blaim for not regulating the banks. Now that they will be forced to do so there will be WAR…Government vs. Wall Street with Main Street on the sidelines getting killed.

THE HOUSE ALWAYS WINS! Hit the beach! Oh but wait, you have all your cash in your home ready to disolve, hit the skids!

#20 Mike (Authentic) on 10.22.09 at 3:02 am

“I eat because I’m unhappy and I’m unhappy because I eat”

Sounds like the perfect line for what the gov’ts are doing to save the economy and watching people fall head over heels for it all. No thought of the future, no contemplation of what has happend in the past, no sense of moral hazzards or responsibility for future generations let along their own.

Put the growing Mt. Everest of personal, corporate and gov’t debts aside, take a step back and just think; how did “our” morals ever allow us to put short term greed ahead of everything else that is truely more valuable?

Mike

#21 Guan-Di on 10.22.09 at 5:52 am

Ms. Toenails has a wondrous moment to look forward to: the moment the agent calls with the “winning” offer. We recently sold our house in Ottawa complete with leaking basement and an attic chocked full of asbestos (both of which were in plain sight on two house inspections) for three times what we mortgaged it for less than ten years ago. Every time I look back and remember the day the offer came in I laugh like a giddy school child… enjoy your month off, I’m betting you’ll be laughing your butt off between the Mai Tais!:)

#22 ca on 10.22.09 at 6:41 am

Garth —

The Fed has never raised rates until employment has increased for 6 months. Do you think it will be different this time? If so, what will be the reason?

#23 Jojo on 10.22.09 at 6:57 am

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

#24 AJ on 10.22.09 at 6:57 am

Ahhh…. hot cup of coffee and Garth. What a great way to start the day.

#25 Jonathan on 10.22.09 at 7:08 am

You can’t gently deflate a bubble. By being gentle – all you do is spend taxpayer money making the correction long and arduous. What would have taken a couple years to correct can take decades. In that time all the buyers who buy end up in negative equity.

Gently deflating a bubble is absolutely the most evil thing you can do to your country. It’s that narrowness of a short-term political mentality that is wrong with this country.

Having said that the US was very careful when raising interest rates to avoid popping the bubble. Look how that turned out. It seems to me that a 2% rise in interest rates crushed both Japan and the United States housing markets – and by all measures, the US’s market fell just as hard.

#26 Jojo on 10.22.09 at 7:15 am

Just watch the video:
http://geraldcelentechannel.blogspot.com/

#27 JO on 10.22.09 at 7:19 am

Like most of what is taught about economics and central banking in school, it is clearly absurd to think that central banks are suppose to keep inflation low and contribute to full employment. What nonsense. The facts speak for themselves. What do we have today ? A society of debt slaves, the likes of which the world has never seen with record Debt to GDP ratios, and record debt to disposable income ratios too. How much did your weekly groceries cost you 10 years ago ? Even 5 yrs ago ?…The inflation adjusted wage is about the same it was in the early 80’s..imagine, there has been no real economic gain since the early 80’s. The world has been and still is an illusion of debt…a wicked mountain of money and debt that has grown around us..lowering the value of the existing money in circulation and raising nominal/stated asset prices to make fools think they’re rich…what is the real unemployment rate today ? In the US it is close to 17 % if you measure it the same way before Clinton altered the formula to hide the truth.

The Fed, upon which most of the world’s central banks are based philosophically, is privately owned and governed at the regional bank level, the a board of governors in Washington made up of the President’s hand picked goons..the real shots are called from the NY Fed…go on their website and check how the governance system works..do you think these people have yuor interests in mind or their own bonuses/executive comp in mind ? The facts are obvious.

Central banking, a form of gov’t intervention and slavery, is one of the main fundamental problems. It is not over yet. The end of a highly leveraged fractional reserve, fiat money, debt based system is deflation then high inflation or even hyper inflation..these systems end in a tragic debacle, a real farce. This is what we face economically at some point before 2015. Central banks and big government need to be overthrown because many “children” are already waking up homeless on the continent their fathers conquered. Read the wisdom of many warning statements made by the founders…read between the lines and look at the objective data.

JO

#28 Al on 10.22.09 at 7:20 am

“That’s why I am selling my house. I owe less than half of what I’ll get for it. I’m going to rent for a bit…. And then jump in again before the interest rates really start taking off.”

I want to flag something here. Ms. Toenails, you should wait until interest rates have taken off. The higher the better. As interest rates go up, prices will go down. People who have to finance most of their purchase will be at a major disadvantage compared to people like yourself with cash. Your current plan would see you jumping in too early IMHO.

#29 613 Happy where I am on 10.22.09 at 8:18 am

I like Ms. Toenails’ spunk!!!!

As for me, I wish I could sell my house now and rent… I live in downtown Ottawa and do what Ms. Toenails is doing… The only thing that is stopping me is that I know I wouldn’t get a better place than where I am now by renting.

I love my little place, its location and the fact that it is completely manageable for me, financially and in the practical sense… I have a disability and cannot drive so I am most fortunate to be where I am and not to be up to my eyeballs in debt.

The others on here that all think anyone who owns house or condo should sell and rent don’t take into consideration that there may be other factors involved which play more into the scheme of things than just making a quick buck…

Oh! I understand the attraction of making a quick buck but, unless you are prepared to make a drastic change in lifestyle, renting may not be a viable option. There are some people in this world who care about more than just money…

#30 Guan-Di on 10.22.09 at 8:26 am

#23

Biden Declares U.S. Is in a Depression more than 15 mil.
unemployed?

No, what he said is that from the point of view of those 15 million who had lost their jobs it must feel like the US is in a depression. Gotta love FOX News!

#31 $fromA$ia "Garths Nugget Boy" on 10.22.09 at 8:53 am

I like to get people opinions on RE. Really interesting conversations. All Pro RE. It’s amazing how many RE worshipers there are out there. BTW Garth, in my adventures in RE speculation when I brought your name up, you have been called aFLAKE and an IDIOT.

You just should knock RE. it’s peoples lively hood. It seems its all your fault. :p

All I get now is that we are different that the US. Our banks are way better. Vancouver is out of land. Everybody in the world wants to live here. The recession unemployement is only affecting Ontarios Manufacturing sector not Vancouvers and that 10% unempoyment is not here.

Oh and get this one, the 0/35 pill is not that comparable to the US interest only and that only a few Canadians are exposed to the 0/35 not like the US.

Can you please put some thought into their comments?

You might not want to Seminar in Vancouver anymore, lol.

ROOF ROOF GRRR

#32 Bill-Muskoka (NAM) on 10.22.09 at 9:04 am

LMAO! All the hoopla about Bob Rae’s idea of Rae Days to save jobs seem to have recycled.

As Ontario’s deficit soars, restraint looms
McGuinty warns belt-tightening — and maybe even unpaid ‘Dalton Days’ — will be the new normal

Maybe now the LPC will allow Bob Rae to assume the helm and get their party moving again?

Actually, the idea has great merit and saves jobs, pensions, senority, and benefits. Far better than the harsh LAYOFF which terminates one’s employment.

#33 dd on 10.22.09 at 9:19 am

Ms.Toenails might be righteous however she is going to jump in before the interest rate shoot up? Why? All she will be doing is paying the real estate broker if she is in and out of the market.

#34 Bill-Muskoka (NAM) on 10.22.09 at 9:37 am

#25 Jonathan on 10.22.09 at 7:08 am

You can’t gently deflate a bubble. By being gentle – all you do is spend taxpayer money making the correction long and arduous. What would have taken a couple years to correct can take decades. In that time all the buyers who buy end up in negative equity.

Until the banking industry lets go of the Protestant belief in ‘moral debt’ they will merely give billions to each other and lawyers attempting to wring blood from a turnip. Same goes for international foreign debt like Africa’s.

None of them can admit that they erred or that their system is plagued with usury, especially credit card interest rates which are one of the primary reasons for debt defaults.

Realize also, that the idea of national bankruptcy has been presented time and again at DAVOS only to be shuffled off to the back room of forgotten realities.

Recall the 1980’s when the U.S. finally acknowledged that Mexico’s debt was never going be paid. The banking industry, ratyher than dip into their own coffers, raised interest rates as high as 24% and literally brought on a worldwide depression. They, of course, never used the ‘D’ word because it is just to harsh for their delicate widdle minds to take.

They still haven’t learned, and until governments take back the reigns of public control from the transnationals, hedge funds, and speculators, the cause will continue on.

What can the individual do about it? Read, think, and act in their own long term best interests. I don’t imagine this view will be very popular among the majority of commenters here because they are still True Believers in a failed economic theory and system.

Things are, however, turning around because the political price of social inequality is too strong and harsh for politicians to ignore.

Then consider the assessment given of Canada’s state of affairs. Why does Canada cling to British colonial roots?

Lord Moran wrote dismissively of Canadian

“One does not encounter here the ferocious competition of talent that takes place in the United Kingdom … Anyone who is even moderately good at what they do – in literature, the theatre, skiing or whatever – tends to become a national figure, and anyone who stands out at all from the crowd tends to be praised to the skies and given the Order of Canada at once.”

He is right, and those who promote a low dollar to uphold lazy exporters of our natural resources are the ones holding back our potential for real growth and stability. We could be the basis for Les Miserables’ whining all the while ‘Please Sir, May I have some more?’ from the States.

#35 Popeye on 10.22.09 at 9:40 am

Inflation.

Isn’t the “keep-the-inflation-thing-in-check” a little bogus anyway, since house values aren’t included in the calculation?

If housing was included as a measure of inflation, no housing bubble would ever be allowed to form (because mortgage rates would be sky-high).

Change the calculation, change the game.

#36 pbrasseur on 10.22.09 at 9:54 am

Stock market bubble? Last time I looked the S&P500 was still at mid 90’s level…

http://finance.yahoo.com/q/bc?s=SPY&t=my

Raising interest rates is not a bomb, it’s normal when there is a recovery.

The trick is to raise them soon enough to prevent asset bubbles but not to soon.

Canada is in a complicated situation, inflation in quite low due in part to $CAN but real estate bubble is raging in some areas. Not an easy job for the BoC.

#37 miketheengineer on 10.22.09 at 10:02 am

Garth et al:

Squirrel List Stuff

I was cleaning out my books, packing up the good ones, tossing out the old ones. I came across this one, which quite frankly, I forgot I owned. I purchased it from “Lee Valley”. The book was published in 1895 and reprinted by Lee. Inside are methods to preserve food, fruits. How to make foods, etc. Refrigeration wasn’t all the good back then, and they did things quite differently. Lots of reciepes in it. I am a chemist and chemical engineer, and I had to use Google for some terms.

I thought it is worth looking at, especially for the “historical aspect”. Lots of formulas to make stuff at home.

Lee’s Priceless Recipes – 3000 secrets for the home, farm, laboratory, workshop and every department of human endeavor. ISBN 0-921335-17-2.

#38 MPM on 10.22.09 at 10:05 am

Finally, the word of disaster is starting to spread. A good article in the Vancouver based web paper Tyee.ca.

http://thetyee.ca/Opinion/2009/10/22/BubbleWillBurst/

#39 Basil Fawlty on 10.22.09 at 10:14 am

Bernanke is likely to not change course, if recent history is any indication. Here is a quote from Eric Sprott Tuesday Oct 20, 2009:
” Bank bailouts and other dramatic efforts by central banks have stopped the world “going into the abyss,” Sprott said during a presentation at the Value Investing Conference in New York.
The “grandaddy” of all those bailout efforts is quantitative easing, in which central banks in the U.S. and U.K. especially, buy government bonds to keep interest rates low, Sprott said.”
Any change from this policy spells “the abyss”. Bernanke knows this and is taking the path of least resistance. Current policy is inflate or die. It’s a beggar thy neighbour policy of competing currency devaluations through increasing money supply, which keeps interest rates low.

#40 taylor192 on 10.22.09 at 10:28 am

The stock market has tons of activity lately: selling.
The housing market has little activity lately.

Oct has finally come, just a little late.

#41 Calgary Ratt rocker on 10.22.09 at 10:36 am

Hi Garth.

I anticipate a healthy median of $800K for Calgary in the next 6 months. The median of $500K for shacks worth $180K doesnt phase anyone here, why not increase it a couple hundred grand? Then add double digit interest, no worries, people will still buy houses. Calgary is a major city now, pseudo London pseudo New York City with class and the lack of education to match. Look for the latest Calgary Herald comments from Mario Toneguzzi and Marty Hope illustrating the facts why $600K houses should be the norm in Calgary. You too can experience keeping up with the Joneses. Did I forget to mention that your food will consist of Top Ramen, you wont be able to get winter tires, and all your family will be able to do is watch black and white tv in an empty house with no furniture.(They’ll sleep on inflatable mattresses) and forego toilet paper. Birth control will be too expensive so there will be lots of kids running around too.

Look for the future of quality living in Calgary, Alberta. Buy now, or be priced out forever.

#42 Mike (Authentic) on 10.22.09 at 10:37 am

Another 530,000 jobs lost in the USA.

“Jobless recovery”, is that the same as “borrowing your way out of debt?”

Because I’m sure they both end up at the same conclusion.

Mike

#43 Herb on 10.22.09 at 10:42 am

WARNING – Political content!

Michael Moore has published a plan of “subversive” actions to get control of the USA back into the hands of the people:

http://michaelmoore.com/words/mikes-letter/michael-moores-action-plan-15-things-every-american-can-do-right-now

Much of this action plan would be useful right here if we ever got curious and annoyed enough.

#44 smw on 10.22.09 at 10:50 am

One thing that will come of all this in Canada is the soon to be household term, “Moral Hazard”.

#45 PeckedToDeathByDucks on 10.22.09 at 10:57 am

Trickery and Deception – Shadow Budget

Reality & Shadows

Fool us once, shame on us. Fool us all the time, fill our need. We are idiots. We need the fake reality because we cannot function any more in the real world. The paperprestidigitizer hums in the background piling debt upon debt. As long as it turns, it projects blue sky and green grass images onto the backdrop of our daily life. Slowly, the sluggish communal mind has awoken to its constant noise. People see the smoke coming out of the machine and mutter tentative, uneasy questions. Can it continue? Are we overdrawn? Will it lead to inflation? They feel the truth, yet yearn for the continuing lie.

The paperprestidigitizer is the only source of wealth. It cannot be turned off. Behind the curtain, shadow budgets are being set up. Another paperprestidigitzer is plugged in but hidden more from view.

The beast mind turns over, smiling in its slumber, wrapped in new layer of lies, it sleeps secure with mouth agape, as the paper falls quickly, ever-quickly falling to smother the world.
:-) going forward :-)

#46 Ian on 10.22.09 at 10:57 am

Invest in real assets, forget paper, gold and silver are up 45% and 85% respectively since last October.
Commodities rule!

#47 Seilfworcehtsa on 10.22.09 at 11:03 am

Well endowed lady with the painted toenails come fly away with me. Valparaiso has great beaches, friendly people,sumptuous foods and wine to die for. It is true to its namesake…paradise valley. And you don’t have to worry about jet leg. By the way, how far back in the line-up am I?

#48 nonplused on 10.22.09 at 11:35 am

“Let them eat cake.”

http://www.economicpopulist.org/content/goldman-sachs-vice-chair-people-must-tolerate-inequality#

How much longer until “Off with their heads!”???

#49 Anon on 10.22.09 at 12:14 pm

Garth, you got this one wrong:

“the job they are paid for, which is to (a) keep inflation in a narrow and predictable range through market interest rates, (b) maintain a stable money supply and (c) protect the value of the currency and prevent erratic exchange rate movements”

Regarding (a)- inflation at any level is wrong, and anybody paid to maintain inflation is wrong too. “Market interest rates” should be set by MARKET, not by somebody paid to do it. “Narrow and predictable range” is absurd- market rates should be whatever they must be as per the market, whether the range is narrow is not possible to manage in a true market system and it would definitely not be “predictable”. Regarding (b)- it contradicts with your (a) because stable money supply means no inflation. And (c) is redundant- there is nothing to protect the currency from, except for the central bank themselves who are driving inflation by making money supply unstable.

Do you not get this???

#50 Mike (Authentic) on 10.22.09 at 12:15 pm

#46 Ian on Invest in real assets, forget paper, gold and silver are up 45% and 85% respectively since last October. Commodities rule!”

Why not invest in the REAL economy since you are in the stock market? GAMBLING! The gov’t is doing it, the banks are doing it, why not everyone! We can’t manufacture anything anymore, but we can gamble away!

NYSE:LVS
Las Vegas Sands Corp
Up 192% since October! Gambling, better than gold.

Wynn Resorts, Limited (Public, NASDAQ:WYNN)
Up 80%

Ameristar Casinos, Inc. (Public, NASDAQ:ASCA)
Up 158%

MGM MIRAGE (Public, NYSE:MGM)
Up 108%

Boyd Gaming Corporation (Public, NYSE:BYD)
Up 128%

Mike

#51 Repatriated Expat on 10.22.09 at 12:40 pm

Given all that has transpired since the Con’s took power, I wonder if the con’s would support a non-confidence vote against themselves?

#52 David Bakody on 10.22.09 at 12:50 pm

#5 HouseBuster on 10.21.09 at 10:59 pm

Thinking back to 1982 …. I remember owning a home
(not mortgage free) and had to move to Kitchener from Dartmouth ….. interest rates were up to 18-20% and quite frankly I was not really aware of just how fast they got there. I am sure Sir/Madame it did not happen overnight … “BUT” they did and it was quick. So if you are home safe and sound, fine, but the market and banks prey on the unsuspected and that Sir/Madame is why thousands tune in here and other sites. Will they act in time who knows, but I suspect far too many are more concerned about their next pay check.

From CBC News Desk.

Central bank forecasts 3% GDP growth in 2010
But strength of dollar threatens to slow growth

This from the guy who’s picture is posted above.

Now …. Stark difference South of Border where they have stated 2010 will see another recession ( like they are out now!) they are still loosing jobs and the unofficial unemployment rate is 17% ! even the fat cats on CBC’s Dragons Den said last night Vegas is in deep deep trouble, hello people do not even have gambling money and we know many will gamble their last quarter for a chance at a jack pot and often do.

C’s coming bye …. and that you can bank on. Latest poll sees Harper down about 5% so people are rethinking something ….. but I feel good not because of that because quite frankly Charlotte I do not give a dam. Let the other half vote as they wish ….. label me independent stay at home. Do I have dislikes “YES” just some more than others.

#53 GregW., Oakville on 10.22.09 at 1:00 pm

Hi Garth, FYI, (you probably already have seen this?)

On Wednesday, the TD Bank said in a report that federal and provincial governments will end up $90 billion in the red this year and that they cannot depend on growth alone to balance budgets in the future.
http://www.ctv.ca/servlet/ArticleNews/story/CTVNews/20091022/flaherty_loonie_091022/20091022?hub=Canada

Could that smell be tax increases, or something worse?
(I hope it’ll help the GMO free vegetable gardens grow.)

Anyone know where the Canadian Government(s) total det is at presently?
What does that work out to for each person?

#54 Hovering on 10.22.09 at 1:04 pm

if you were king Garth (perish the thought – he he), what would you do ?

regulate realtors?
muzzle bank economists?
require 20% down payments?
limit the # and type of properties a person could own?

it seems to me our current situation is showing that real estate needs to be regulated much like the stock market. there’s talk again of a nation wide securities regulator what about a property regulator to stop the madness?

#55 GregW., Oakville on 10.22.09 at 1:05 pm

Hi Garth, FYI, free public meeting Nov 6th

‘Disarming the World’

is the title of a panel presentation to be given on
Friday Nov 6th at 7:30
at S. Jude’s Anglican Church 160 William Street Oakville.

The panel will consist of Professor Richard Preston, who will talk about the Ministry of Peace Project; Grant Birks from Project Ploughshares who will talk about the global control of small arms and Terence Young,
the MP for Oakville South, who will respond from the government’s perspective.

Questions and comments will follow.

The meeting will be held in the Helen Poole Memorial Library and will be free.

#56 The Vulture on 10.22.09 at 1:05 pm

UNBELIEVABLE, SIMPLY, UTTERLY UNBELIEVABLE

++ WELCOME TO HORSE S**T TAX LAND (HST) ++

Ontario’s government said on Thursday it will run a record budget deficit of $24.7-billion this fiscal year as it battles to pull the Canadian province’s export-oriented economy out of recession.

The deficit projection is 76% above the forecast for the 2009-10 fiscal year that the government made in its March budget. This is also the second time the government has bumped up the figure. Ontario is Canada’s most populous province and the hardest hit by the global economic slowdown.

#57 GregW., Oakville on 10.22.09 at 1:11 pm

Hi Garth, FYI, link for Nov. 1 Solar tour and more in Halton.

http://www.ourpower.ca/post.aspx?portalid=22&postid=210

#58 Pjwlk on 10.22.09 at 1:30 pm

Garth, just wondering, how many flirtatious proposals you get in a week you ol’ hound dog?… lol

#59 GregW., Oakville on 10.22.09 at 1:37 pm

Hi Garth, FYI

Ron Paul: Senators Merkley, Corker Plan Bill to Sabotage Audit the Fed Bill

Infowars
October 22, 2009

Wall Street, Goldman Sachs are desperate to distract the American people from their criminal behavior.

http://www.infowars.com/ron-paul-senators-merkley-corker-plan-bill-to-sabotage-audit-the-fed-bill/

#60 young & foolish on 10.22.09 at 1:40 pm

dd #33 could be right …. Ms. Toenails is playing “time the market”. Will she really score big after paying fees, renting somewhere, then trying to jump back into another place which will probably need upgrades and renovations.
Like, how low will RE values go if interest rates jump 3-4 points? And if high inflation comes in, will not RE be a hedge against it?
RE is not a “liquid asset”

#61 Investor on 10.22.09 at 1:47 pm

Once tulip real estate mania ends in Canada the weakness in the lending practices and extension of credit will be exposed. Here is a good example how that may unfold.

http://paper-money.blogspot.com/2009/10/prime-bomb-hudson-city-bancorp-prime.html

#62 Mikey on 10.22.09 at 2:02 pm

Canada’s central bank forecasts slower recovery

Mikey

#63 jess on 10.22.09 at 2:10 pm

Jojo
i listened to Mr. Biden and he was referring to the unemployed americans who were feeling the emotional effect of job loss -depression.
and leave it to fox news to take things out of context.

#64 Nostradamus jr. on 10.22.09 at 2:34 pm

Why citizens keep their money in homes in Canada

From Zero Hedge…

http://www.zerohedge.com/

“””just from anecdotal many people I know in their 50s and 60s are done with the market, period. It could go up 300% from here. A – they don’t have any more money to risk and B – they’ve been burned twice in a decade. And that does not include real estate bubble in between A and B.

We have an equity culture that is taken for granted. In Japan about 3% of people own stocks, its a rich man’s game. Here its now a computerized man’s game… funded by the peasants who are told put your money into the market. Which leads to 1 of the largest scam of all, 401ks. (& RRSPS in Canada?)”””

#65 David Bakody on 10.22.09 at 2:50 pm

Enlighten me please!

Ontario deficit could reach $24.7B: Duncan
Provincial GDP expected to decline by 3.5 per cent

But Bank of Canada and the man pictured above say

Central bank forecasts 3% GDP growth in 2010

That ladies and gentlemen (journalist included) is a differnece of 6.5% albeit one province but hello One hell of a big province.

#66 (IHNM, WMM) I Have No Money, Where's My McMansion? on 10.22.09 at 2:51 pm

I am yet to figure out how someone who bought a 300K house for 600K with 95% mortgage is able to pay for cable, cellphones, internet, city sewer and water, hydro, gas and oil, food, gifts for wife/parents/kids, friends, extra food for dinner parties, car, auto insurances, home insurance, gas, maintenance, new furniture, movies, lcd tv, speakers, computer, laptop, school loan, lunches, dinners – I was recently invited to his house for a party!

#67 David Bakody on 10.22.09 at 3:23 pm

No bidding war here ….. stop and think, if you are a professional with children and want a home surrounded by good schools a city with five universities… think?

http://www.homesacrosscanada.com/cgi-bin/WebObjects/cps.woa/wa/ListingDetails?board=SSNS&key=3731737&tm=822400

#68 GregW., Oakville on 10.22.09 at 3:35 pm

Hi Garth, FYI health issues

Have you heard of “CODEX Alimentarius”?
(Does your MP know? Does your Medical Doctor know?
Do your friends know?)

They don’t want you to know, but it will effect your families health!

Codex Alimentarius P1 (P1 to P5, see all 5 parts!)
http://www.youtube.com/watch?v=VmrF9KjlGsc

After see the above, you should watch on youtube site,

-Global Vaccine Agenda – Mercury and Autism 1 of 10

-In Lies We Trust Part 1 of 16

-Brain Neuron Degeneration via Mercury. (~4min)

-Smoking Teeth = Poison Gas (~8min)

-Dentist Speaks Out Against Fluoride (~5min)
(FYI, brital water filters do not remove fluoride!)

What a MAD world we live in.

#69 Nabil on 10.22.09 at 3:43 pm

The largest sub-prime lender in the world is now the Canadian government…..

http://thetyee.ca/Opinion/2009/10/22/BubbleWillBurst/

#70 michael_bolton on 10.22.09 at 3:45 pm

I don’t think Bernanke has the guts to raise interest rates. If he’s too afraid to do it now, what reason would there be to do it later after the US government and its citizens have gorged themselves on even more cheap debt?

If the US raises intrest rates, they’re screwed. If they stay on their current path (cheap debt and massive deficits) they’re screwed too; it will just take a little longer.

#71 Kash is King on 10.22.09 at 4:28 pm

Um, I think this could be huge?

This has been interesting to follow along for a while, but I think it may have just happened?

Quote:
“I understand the world went to commodity based currency officially
yesterday and the US was going today. Ok so this is like the setup for
deliveries, as when people start accessing they will be doing so into the
new banking system. Also just learned as of 10-19-09 the world is no
longer accepting FRNs. We must pay in gold bullion until the new currency
is engaged. Expecting deliveries to begin about any moment now. Some
recent receivers of their docs were told in their letters they’d have
access by the 28th which means our deliveries would have occured because
we are the key to them being able to access.

p
“http://nesaranews.blogspot.com/2009/10/poofness-1022.html

Anyone able to confirm this with other sources ????

As well, big news … looks like Australia pulling out of the Afghan war asap.

Link:http://english.pravda.ru/world/australia/22-10-2009/110070-australia-0
Link:

#72 Bill-Muskoka (NAM) on 10.22.09 at 4:32 pm

#63 jess

Fox News is the ‘Top’ news organization. ‘Top’ as in spin that is. They are Masters of propaganda of which Goebbels would be so very proud.

#73 Keith in Calgary on 10.22.09 at 4:46 pm

http://www.debtclock.ca/

#74 Bill-Muskoka (NAM) on 10.22.09 at 4:47 pm

Well, well, looky here!

Finally there is some graphical representation of the coming BF McGuinty worked out with Harper to get back OUR tax dollars from Oddawahaha!

A Whoremanized Sales Tax (I wonder if K-Y Jelly and Vaseline are exempt?)

And here we find some very fine whine from the Nagatya Region, better known as Queen’s Park 2009 Ontario budget highlights

But, alas, there are those pesty Doubters who just will not sing the tune the Leader of The Band (No offense to the great Dan Fogelberg intended) wants to sing. Doubts raised over forecast
Ontario admits ‘unusual degree of uncertainty’ over economic outlook

‘Unusual degree of uncertainty’? Well, now there is an interesting term I am sure we paid at least $25K for some consultant to quip up!

Oh, and will they go get back the insulting and assinine Golden Parachute the moron CEO of Hydro One got for messing everything up? (We are still be billed for that fiasco…REMEMBER!) How about Dim Jim’s Eco-magnificence of Manglement as FinMin leaving us in the HOLE to %5.6 BILLION?

Not being a ‘certified economist’ (aka Lieing POS with a Quija Board), just a long time businessman, I suppose I should run my company and life like they do, eh? ‘Oops, what’s that? Oh, I have to PAY for my screwups?’ Well isn’t that just a fine kettle of rotten fish?

#75 Bill-Muskoka (NAM) on 10.22.09 at 4:51 pm

#62 Mikey on 10.22.09 at 2:02 pm

Canada’s central bank forecasts slower recovery

Boy, oh Boy, did I make a good pick on the Magick Eight Ball I bought. It says exactly the same thing, and for a lot less money than all those ‘experts’! I can hardly wait to confirm it with my Super Duper Crystal Ball (No, it does not belong to Garth!)

#76 hal smith on 10.22.09 at 5:16 pm

I heard Michael Levy, an economist and regular guest on the Bill Goode radio show today in Vancouver. He said emphatically , several times, “There is NO housing bubble”. So there you go people, it’s settled. We are all frickin’ nuts here on this blog. Next time I go outside I’m gonna wear a hat cause there’s squirrels out there……

#77 nonplused on 10.22.09 at 5:30 pm

There is no place like home…
There is no place like home…
There is no place like home…

http://www.theglobeandmail.com/globe-investor/moodys-place-bmo-debt-on-review/article1334569/

#78 Nostradamus jr. on 10.22.09 at 5:35 pm

Our Canadian Govt must initiate new steps to attract as many Educated and Wealthy Foreigners!

…Canada should only allow a small number of unskilled immigrants and refugees.

…Why you ask?.

….Because Toronto already has too many unskilled workers!

…Since the Canadian Govt has all but guaranteed CMHC, effectively a partnership with all Canadian Citizens, to protect its current citizen’s rights it must attract as many wealthy and educated foreigners as is possible.

It is the only way I see how Canada can protect its Manufacturing Economy…and our current level of “safe” lifestyle.

Face it…Canadian manufacturing cannot compete with China.

But also Face the fact…China will still require Canada’s Resources.

…If this doesn’t make sense to you then I fortell Western Canada seceding from Eastern Canada.

Nostradamus jr.

#79 jess on 10.22.09 at 6:13 pm

Phantoms and why they never deliver
whether shares,votes,bonds, t-bills, etc…

“From the sale of stocks and bonds that are never delivered, to the purchase of default insurance worth more than the buyer’s assets, we no longer have investment strategies, but rather investment schemes.”

http://www.newgeography.com/content/00436-blame-wall-streets-phantom-bonds-credit-crisis

#80 Dan in Victoria on 10.22.09 at 6:22 pm

OH NO say it isn’t Soooooo…..BC”small”business may have competition from California.Ha! wonder how this will pan out. Shows what type of money is out there. http://www.miller-mccune.com/business economics/the-buds-of wrath-1506

#81 Dan in Victoria on 10.22.09 at 6:28 pm

HMMM.You’ll have to type the whole link in, after the word business,interesting read .

#82 Skye on 10.22.09 at 6:32 pm

So far we’re right on track…

http://www.housepricecrash.co.uk/graphs-bubble-lifecycle.php

#83 Boombust on 10.22.09 at 7:08 pm

Garth,

Please do a post on how the Feds?CMHC have been working hand in glove to enable the banks to lend reckless amounts of money in order to try to stop the housing bubble from popping.

The banks, through CMHC ” mortgagae insurance” are not on the hook for any amounts they lend.

In the end, it’s us as taxpayers who will be left holding the bag when the 5%/35 crowd defaults.

What a scam.

#84 Nostradamus Le Mad Vlad on 10.22.09 at 7:09 pm

“. . . when Ben Bernanke thinks the moment is right, he’ll drop the bomb. . . . Trust me. S’coming.”

Which comes first — Christmas or the bomb (or together for a really big present?)

I’ll take my chances and trust you. Bernanke, not so much!
——
#64 Nostradamus jr. — “Which leads to 1 of the largest scam of all, 401ks. (& RRSPS in Canada?)”

A while back, I read an article entitled “The Slow Death Of The RRSP”, prior to the IT swindle so I guess kids today should investigate non-registered plans, possibly maxing out TFSAs.

The poster who commented about the rich putting $100K (or more) into a TFSA, paying the penalty (minimal) and reaping the benefits (maximize) into short-term high interest investments is right — pay the penalty, but take the profits to invest in non-registered accounts while ignoring RRSPs.

The CPC has done it before; no doubt they will pull a similar stunt sometime in the near future in order to generate more income. They can also raise the GST back to 7%, which they should have left alone (or increased while cutting income taxes) in the first place.

#71 Kash is King — “. . . Australia pulling out . . .” You are right.

Oz is hightailing it back down under, and since Japan elected a new govt., they are gonzo ASAP. They want nothing to do with that war, and have since cozied up to China, Russia and Iran.

The WH is slightly pissed off at them for doing this. Hmmmm. Wonder why?

#76 hal smith — “We are all frickin’ nuts here on this blog.” — Thanks! I needed that reassurance!
——
Commercial RE — crunch1 crunch2 and McHotDogs
——
For those who are contemplating the H1N1 shot(s), this — Pigs In Space Comment by wrh.com.:
“Why? And is the same thing going on here in the US?”
——
Read the cutline beside the pic of how Al Gore magically made water from nothing, so he could have a good photo-op in a canoe done. Other links are funny! — Saint Al and 5:24 clip

Finally, Gordon Brown has stated the obvious, and adding to The Farmer’s Almanac predictions for a colder and snowier winter, this — Sun is sleeping

Another memorable pic. See if y’all can figure out who is with the Taliban, third from left. — Reagan and Taliban

#85 moneyman on 10.22.09 at 7:16 pm

To those who think of solving our problems with immigration of the educated and wealthy, I say think again.

The educated who wait in line get too old before they get in; the system only pretends to want and need them. The Catholic Immigration in Ottawa would tell you that they too often have no option but to drive taxis if they ever make it in the country.

But those although smart and willing are not wealthy. If they were they would stay home.

The wealthy of the world are sought after by all the governments of the world. But if they are not crooks, they have no reason to leave a country that allowed them to get and stay rich. If they must leave for any reason, they can go anywhere for a luxurious and often nearly income tax free life.

In 2007 in Calgary, I saw those who had jumped the immigration line; ignorant & poor peasants from India, Afghanistan, Eastern Europe, Syria etc. But the men worked and the women got pregnant. They will not leave, they will produce, buy houses and pay the mortgage for the privilege of guaranteed food, health care and a roof.

Canada is great for them; for those who already have that, they remain stuck with nowhere to go like most of us.

I think it has been decided that no more is needed for an economy that consist more and more into moving around the Chinese thrash.

“Simple minds are easy to manage”.

#86 Toronto C9 Renter on 10.22.09 at 7:17 pm

Re: #77’s article about BMO debt review…

Gotta wonder how Moodys has maintained any credibility after the banking crisis — does anybody actually listen to them??

Pretty ludicrous in my opinion. In any event, I hope it knocks BMO down a couple of points over the next few days since I was planning to accumulate some more before x-dividend

#87 john m on 10.22.09 at 7:20 pm

Personally i think the crash is inevitable its coming! The business ventures that create jobs for long term employment are practically non-existant.Billions of taxpayers dollars have been spent to create a false economy and …….sadly enough it appears the majority of this bailout money has been spent on a number of showplace projects which will never put a meal on anyone’s table or create any long term jobs. The recession has created an opportunity for our vote buying government to borrow billions and use it to create popularity in their ridings……….???????………if this is concern,good management for our countries future or wise use of our tax dollars…..could someone explain to me how?? My biggest fear now is how much more will they borrow and put us further in debt to keep this bubble from popping for a few more months?? Prosperity and a future is not a “God Given” right it requires concern for all and good management practices. I sure wonder how many unemployed,cashed out taxpayers will be lining up to buy tickets to enter the approximately 1/2 billion dollar showplaces(combined) at the Calgary Stampede grounds and the Northlands Colliseum ……..or even better yet the 1.7 million dollar community center in my small town of approximately 70 homes??

#88 Not Garth on 10.22.09 at 7:35 pm

Garth dude on BNN this morning predicting the Cdn$ hits 1.20-1.30 vs the USD by Spring – what do you think? Sounds crazy to me….

#89 JoeK on 10.22.09 at 7:51 pm

Re: #76 Hal Smith

Yeah – I heard the same show & I nearly fell off my chair when I heard that. He should know better, but then he said that he talked to his contacts in the banking industry and they all assured him “There is no housing bubble” in BC.

Conflicts with the other commentators featured on HOWESTREET.COM. Or… is CANADA realy THAT different? ;-P

#90 Alex on 10.22.09 at 7:54 pm

I am sure our banks are shorting our house market as there is no tomorrow, so when it crashes they will make nice bucks and get money from government(taxpayers). It is highly unmoral that government ( I am sure those who benefit from this are in the government and parlament) through CMHC punishes, prudent people through these loose credit practices.
I am an immigrant from former Soviet Union.In 1960s My father told me ( I was too young to remember)it was very honorable to serve in the Soviet army, then by early 80s every 18 year old was buying papers that they were sick and wouldn’t get drafted. What happened next is people stoped to vote , next was finding all possible ways to not pay taxes. Idea is, if people fill they are cheated by their government they will do the same in retaliation. It is all moral issues and they are hardest to heal.

#91 TheFirstRick on 10.22.09 at 7:59 pm

#66 (IHNM, WMM) I Have No Money, Where’s My McMansion? on 10.22.09 at 2:51 pm I am yet to figure out how someone who bought a 300K house for 600K with 95% mortgage is able to pay for cable, cellphones, internet, city sewer and water, hydro, gas and oil, food, gifts for wife/parents/kids, friends, extra food for dinner parties, car, auto insurances, home insurance, gas, maintenance, new furniture, movies, lcd tv, speakers, computer, laptop, school loan, lunches, dinners – I was recently invited to his house for a party!
+++++++++
Check that cleverly concealed room in the basement by following your nose to the scent of skunk.

#92 David Bakody on 10.22.09 at 8:29 pm

#88 Not Garth on 10.22.09 at 7:35 pm

Well now …. not sure of that ever Sir/Madame but this I do know $1.10 will do just as much damage and then some. Buying American means no sales tax or HST and most Internet sales already cover those costs plus free shipping with blanket sales. And the car dealers here will sell imported used US cars in a heartbeat as they did last summer when our dollar hit $1.10.

#93 TaxHaven on 10.22.09 at 9:16 pm

I agree with painted toenails and with this post completely. But..beware. Irrationality can go on far longer than anyone expects…years longer. Steve Keen in Australia, where they now have sky-high house prices, $16-min. wages and rocketing price inflation, told everyone this was coming about five years ago.

His advice then? Sell your house! Get the good price now!

The result? Five more years and doubled house prices.

TIMING is everything. Economies are not markets.

#94 dd on 10.22.09 at 9:39 pm

#78 Nostradamus jr.

…Canada should only allow a small number of unskilled immigrants and refugees….

Too late. I see vancouver will open their arms to all the unskilled refugees that landed on the shores the other day. God you BCers have a big heart.

#95 Real Estate Deal or No Deal on 10.22.09 at 9:40 pm

Garth Dude,

It was great news the day I read about your decision to leave Federal politics.

I always believed you sought truth, and chose to expose it for the better of everyone.

I always thought you were an independent thinker, choosing to express your opinions.

I always knew that independent thinkers who tried to do what was right wouldn’t survive in Ottawa anymore cause each party culture doesn’t permit individualism, and free thinking.

Shame really, cause you are the kind of guy this country needs more of.

But, glad to know you will be looking broad across the time horizon and writing about it so another contrarian like myself can have his thinking confirmed.

At 42, I paid off $65 K of debt last year, am renting and socking away money in TFSA and RRSP’s for the sale of the century coming up.

I might have been suckered into the low interest rates if it hadn’t been for your column.

So thanks for wearing your frilly underwear, riding a harley, being a lumber jack and letting Ottawa kiss your back side cause free and willy is where you should be!

#96 Cordoroy Cowboy on 10.23.09 at 1:19 am

Garth. This is off topic (doesn’t seem to deter half the posters on your site, lol.) but if I may, I would like to ask you if you will be getting the H1N1 flu shot? Have you ever gotten a flu shot? I hope you will deign to answer this most personal question. In light of the doom and gloom of some of your books (yes, I know, it’s called realism) and with the talk of a possible financial holocaust and all that it encompasses as well as the addition of other scenarios of chaos and the like, I would enjoy your views on the much touted pandemic and your preparations for such an outcome. Dunka.

Next week, when it’s available. — Garth

#97 Cert Bhapman on 10.23.09 at 3:51 am

“This is why people like Painted Toenails are so prescient and wise. Ditto for those who write me daily crowing about their new locked-in, sous-4% five-year mortgage. They understand housing is now at the top, and rates are at the bottom. This can be a life-altering discovery. Too bad so damn few get it.”

Sorry, I admit my stupidity, because I don’t ‘get it’. And I would seriously like to.

Can someone explain to me how buying an overpriced house with cheap money is a good idea? I always figured a reasonably priced house at an average (7 – 8%) was a better choice since the house has more room the increase in value. Loosing money on a house because credit is cheap doesn’t make much sense to me. Can anyone help me out? No sarcastic tone is intended, I really don’t get it.

Thanks in advance

#98 Jeannie on 10.23.09 at 12:02 pm

96.Cordoroy cowboy. Dr, Mercola has several articles on this subject.
An interesting video interview with Barb Loe Fisher, Founder of the National Vacine information center.

#99 Debtfree on 10.23.09 at 2:10 pm

after reading calgaryherald.com re section I can understand why calgaryrocks hasn’t posted for awhile . The comments an the articles are telling . The real estate agents are feeling heat from the well informed …. I can’t wait for your next book . Your after the crash book has already saved my two sons making the biggest mistake of they lives in the okanagan …One in ticton and the other in kelowna . I get a weakly report from them . They tell me if you look at the re lists you get a distorted view . If you look at the private sales it’s a whole different story . When I told them to be careful they hummed and hawed . When they read your book they stood up and payed attention . I will be buying three copies of your next book as well …. will it be out before xmas . 35, 40 , why not 70 , 80 year ams still can’t believe how crazy it sounds.

#100 GregW., Oakville on 10.23.09 at 5:05 pm

Hi Garth, re: “Next week, when it’s available. — Garth”

It’s nice you and most of us still have a choice to get the shot or not. But what about the human beings being force to choose between the shot or losing there jobs?

Since becoming convinced water fluoridation need to stop, after see the science, and wondering why it’s still happening. I find it easy to see that the additives in the ‘shot’ might not be the wises thing to be injecting into your blood stream.

But I’m glade you still have a choice.
I’m not very reassured that some others need to choose between there lively hood and getting the ‘shot’.

History has shown,
If they can do it to them they can do it to us next.

I hope those that choose to not get the shot and are being coerced to or lose there jobs mount a charter challenge to keep there lively hoods.

If we lived in a so-called free society, informed consent and choice should be a priority, not coercion or forced consumption like in water fluoridation, or lose of lively hood if you choose to say no to the shot.

I hope when you make your choice next week regarding getting the shot you consider the information that can be found thought the comment #68 above.

Now if we can just not be force to drink and bath in fluoridate water with it’s additional impurities.

Just my two cents.

#101 GregW., Oakville on 10.23.09 at 5:36 pm

Hi #98 Jeannie, thanks for the info, on the video info, to web search for, about the ‘shot’.