Ready?

Rescue1

Have you stored your nuts yet? Split and stacked several cords of seasoned hardwood? Sold those ETFs? Listed your house?

If so, sweet. It’s time, I’d say, we got ready for winter.

The stock market has careened enough this week (600 points) to warrant a bead of sweat. GMAC, the financing arm of General Motors, has gone back to Washington for a bailout. Its third. Another country (albeit a dinky one, Norway), raised interest rates. US new home numbers are dismal. The US is on the verge of extending its $8,000-per-buyer real estate subsidy. And a new report says the affordability of Canadian houses has taken a dive.

Those things may not seem to have much connection, but there is much. They point to a potentially difficult winter in which we should expect an equity market pullback after months of torrid gains, a deterioration in the American economy causing job grief here, and the beginning of the end of the beaver bubble in real estate.

Why such predictions? Simple. You can’t build an economic recovery on duct tape and faerie droppings. At least, not for long.

The facts seems obvious to me.

The auto business is in just as bad shape as it was last winter when it was weeks away from collapse. That’s despite $70 billion in government money from Canada and the US. Car sales are down almost 40%, and the only bright spot came when Washington gave people $4,500 each to secure a new vehicle. The result of that genius move should have been clear to a grade schooler: If you pay people to buy stuff, they will. When you stop paying them, they stop buying.

The same logic is being applied in Canada with things like the Home Reno Tax Credit, which the feds claim has been a bonanza for the trades. So, let’s contemplate what happens at midnight on February 1st, when it ends. Yeah, in the middle of winter. More genius.

Ditto with the US grant of $8,000 tax credit for first-time homebuyers in the States. That’s been credited as the only reason resales have been going up, even if prices haven’t. But that ends in six weeks. What then?

And how about the artificially low, engineered interest rates? I mean what, exactly is Mark Carney trying to tell us? (Hint: rhetorical question.)

OTTAWA (CP) – Bank of Canada governor Mark Carney has repeated his concern that Canadians may be getting in over their heads in the purchase of homes, saying the government has ways of slowing the market. Carney told a Senate committee Wednesday afternoon that the central bank is conducting an analysis of whether Canadians are taking on too much debt, particularly in buying homes.

Canada’s housing market has rebounded more strongly than other parts of the economy with sales at times hitting record levels, although prices remain depressed from last year.

The central banker said “exceptionally low” mortgage rates are luring Canadians into taking on mortgage debt to purchase homes. Deputy governor Paul Jenkins said the effective variable rate is currently at 2.25 per cent, a post Second World War low…..

….Carney said he was speaking hypothetically, but added: “If this were to persist, there are other options. The housing market is subject to considerable regulation and policy influence.

“That would be the way to approach it.”

There you have it. More evidence the real estate asset bubble is being recognized for what it is – a giant debt trap with the potential to do to our middle class what it did to the American one. As I’ve been saying (and Mark has been reading), when people borrow at rates which will only go up to buy houses that will only come down, this won’t end well. Especially when most new buyers have basically no money, and wouldn’t even qualify if interest rates were not a third of what they should be.

But even so, as the Desjardins Bank report tells us this week, housing affordability is eroding in Canada as prices rise. Less affordable houses mean fewer buyers. Less demand, less bubble. So the only question is whether the regulators will let it die on its own, or move in and squish it. Or both.

Finally, it’s always instructive to look south, even when you’re a superior Canadian. American houses prices are back to 2003 levels, which means anyone who bought in the last six years has lost money. In some cities, like Cleveland and Detroit, they’re at 1995 levels. And this is after Americans have been showered with tax credits, tax rebates, low rates, corporate bailouts, mortgage relief programs and so much public spending that people not yet born will be paying for it.

So either governments keep it up. Or they stop. Or they extend. And then they stop.

Either way, same result.

So pass the axe.

123 comments ↓

#1 JB on 10.28.09 at 10:09 pm

Have any of these “free enterprisers” in government and the BOC ever thought of just letting the market work itself out? They’re impatiently intervening and hovering with OUR money like a bunch of Swedish “nanny-state” meddlers.

#2 CalgaryRocks on 10.28.09 at 10:14 pm

American houses prices are back to 2003 levels, which means anyone who bought in the last six years has lost money. In some cities, like Cleveland and Detroit, they’re at 1995 levels.

Geez, I guess shipping all of their manufacturing, IT, Engineering, etc overseas isn’t working out for the US.

Unfortunately most Americans are too dumb to figure out that a handful of traitors have exchanged their future for quick short term profits, bonuses and stock options.

#3 Iain on 10.28.09 at 10:24 pm

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

#4 Onemorething on 10.28.09 at 10:25 pm

Born Ready Garth!

Let’s get on with it!

Another 25% down to go in the USA, back to post high tech dayz???

If the Canadian Market shed’s 25% nationally and 40-50% in VAN and TO we might consider ourselves lucky!

Sorry, from here on in the only RE worth considering is in emerging markets, well balanced economies where wealth is growing, not being destroyed.

Take a good look at your neighborhood, turn back the hands of time to the 50’s and get ready.

#5 Future Expatriate on 10.28.09 at 10:44 pm

“duct tape and faerie droppings” – Garth

Priceless! And here’s some more bad news… even WITH the $8000 tax credit still in effect, NEW HOUSING SALES DROPPED “UNEXPECTEDLY” in the US.

Bombs away

Unexpectedly, eh? For WHO!?!?!??!

Ah… idiots who believe in “duct tape and faerie droppings”, no doubt.

#6 kc on 10.28.09 at 10:48 pm

Hey Garth i just heard your podcast (post olympic haircut) and you have to do yourself justice on the stage with Mr Levy. ask him point blank how he can justify Vancouver and the GVRD not being in a housing bubble. He was blabbering on CKNW last week stating we are not in a bubble. I would love to hear that conversation. Funny how all the calls after the bubble question were about how great 2.5% bank rates were and how it is a great time to sign in.

Great podcast!!! You do tell it like it is, however, even with a 25% drop in prices, don’t you think that it is still too high when you factor in wages, rent to buy ratios and the such?

cheers

#7 InvestorsFriend on 10.28.09 at 10:49 pm

New Canadian Mortgages in Arrears Figures

The Canadian Bankers Association today released the arrears figures for August.

http://www.cba.ca/contents/files/statistics/stat_mortgage_db050_en.pdf

They are basically unchanged from July and still very low. Less than 1 in 200 Canadian mortgages is in arrears more than 90 days.

I keep expecting this to rise… For example in March and April 1996 we were at 1 in 100. And in the 1992 recession we got to 1 in 125.

I continue to think many unemployed people are paying mortgages by getting deeper into debt elsewhere. In any event if interest rates rise materially then these arrears figures are going to rise. (The 0/40, 5/35 crowd on floating rates has little room to absorb increases)

A possibility is that these days banks have more programs available to skip a payment or maybe to renegotiate a lower payment by increasing the amortisation. If that is the case then some defaults will be shifted into the future.

If someone can’t pay their mortgage and it gets rolled to a new loan with lower payments that kind of masks the problem. Warren Buffett has observed “A rolling loan gathers no loss”(es).

#8 Elle on 10.28.09 at 11:06 pm

Boy oh Boy…..

“Carney told a Senate committee Wednesday afternoon that the central bank is conducting an analysis of whether Canadians are taking on too much debt, particularly in buying homes.”

Huh !! Captain Carnage (as ‘Onemorething’ calls him)
is not sure that Canadians are over their heads in RE debt? He needs to analize it to death? Did he just crawl out from under a rock! ……. He’s just hoping someone else will stumble along and take the blame …….while he pretends to be busy….You know, with the analysis.

Am I ready for winter? Well, the old woodpile will have to wait awhile, ditto for the root cellar …… but yes, I’m listed, sold and waiting for the sound like a rocket shot high into the sky on the 1st (or 4th) of July ….an oohhing & aahhing at the dizzying smoky red display……..sizzling POPPING and a screaming as it spirals down………down…………………….down.

elle

#9 Joseph on 10.28.09 at 11:23 pm

Excellent post.

#10 Patsan on 10.28.09 at 11:49 pm

#2 CalgaryRocks
just to finish your last paragraph:
… and exceptionally wise and prudent Canadians have kept all intellectual jobs in Canada and, moreover, started producing end product from all extracted commodities instead of exporting them ‘as is’.

#11 Elevator fart on 10.28.09 at 11:50 pm

Do you think Mr. Carney’s a master of the “elevator fart”? You know, when youre stuck in the lift with a bunch of people ya cant let that big gas bubble rip because everyone will know who it is.

So you let it out oh so slowly. Easily. Bit by bit. No sounds, just the gentle ease of “deflation” as everybody rides to the bottom. It still stinks, but with luck, you can avoid getting blamed.

#12 Rich in Calgary on 10.29.09 at 12:01 am

Great post, Garth.

Hopefully the forum won’t be hijacked by the nutjobs this time…

#13 Patsan on 10.29.09 at 12:02 am

An interesting observation.
I have been a reader of Garth’s and VancouverCondo blogs for long time and noticed that at “interesting times” (e.g. last winter and now) the blog traffic intensifies. During summer time a rare post collected 100 comments; now some posts capture close to 200 remarks. Coincidence? Quality of blogs? Provocativeness and topicality?

#14 kc on 10.29.09 at 12:14 am

Just what the US homeowner’s market needs to contend with now… and heads up for those in here who might want to buy that cheap house in FLA. do your research

http://money.ca.msn.com/banking/mortgages/article.aspx?cp-documentid=22419270

Toxic drywall? Goodbye, insurance
Some U.S. buyers are finding their homes were built with tainted materials from China. Yet when they turn to their insurers, they get dumped — and could face foreclosure.

During the height of the U.S. housing boom, with building materials in short supply, U.S. construction companies turned to Chinese-made drywall because it was abundant and cheap. An Associated Press analysis of shipping records found that more than 500 million pounds of Chinese gypsum board was imported from 2004 to 2008 — enough to have built tens of thousands of homes. The materials are heavily concentrated in the Southeast, especially in Florida and areas of Louisiana and Mississippi hit hard by Hurricane Katrina.

#15 Nostradamus Le Mad Vlad on 10.29.09 at 12:41 am

“Ready? . . . an equity market pullback . . .” — When it plummets, that will be a great time to buy in. Except I don’t have any spare moolah!

Re: home sales. About a half-dozen have been sold in our area of Kelowna over the past month, but two of them were on the market for nigh on two years. Nice homes, too and were probably way overpriced to begin with.

Isn’t it some sort of anniversary today?
——
Earlier, I mentioned the one-currency idea went to the great loonie in the sky (Jimbo). A different take. — One Currency?

US charts are pretty (bloody awful). Can’t find any Cdn. ones, ‘tho. — Charts

Evidently, this has happened before, albeit on a much smaller scale. — Same old, same old

An awful lot of US citizens have lost their jobs and / or homes, sleep in tent cities, shelters or on the streets. The Pentagon is the world’s biggest spender on defence with slightly under 42% of the world total, and China is second with less than six per cent.

Who is the war machine? — Military Defence

#16 Robert1 on 10.29.09 at 12:51 am

Mark Carnage ….

Stephen Sharpster ….

Jim Flatulence ….

Your collective legacy to the people of Canada is coming to fruition. I trust you three fools are justfiably proud of your accomplishments.

#17 Happy Renter in North Van on 10.29.09 at 1:12 am

Post #1, JB… completely agree with you. The Conservatives inherited the government as a bunch of raw red-meat troglodyte capitalists and they will eventually exit as pansy tempeh-eating Keynesian Interventionists…

#18 G. on 10.29.09 at 1:26 am

The Home Reno Tax Credit is the one of these things that doesn’t belong here.
You have to spend ten grand to get thirteen and a half percent back.
(Better returns if you put that money toward your unused RRSP contribution.)
I doubt the granite counter top crowd is going to stop at ten grand on a kitchen reno.
You need receipts to claim your modest prize at tax time, so the government gets to smoke a few of those under the table deals onto the tax radar.
I can’t substantiate it with numbers but my hunch is to call it a push.
———
When I was a kid my Dad told me that US banks were forbidden from paying more than 5% interest on deposits. He said it was the law. Even if they charged 15% on loans and inflation was greater than 5%.
He said that was why everyone had money in the stock market.
Was that true?
And is it still true?
My kid years straddled the 70’s and the 80’s.

#19 Daystar on 10.29.09 at 1:57 am

So true, so true Garth. Its good to hear/see Mark Carney state the obvious.

“If this were to persist, there are other options. The housing market is subject to considerable regulation and policy influence. That would be the way to approach it.”

As well as you stating the obvious, Garth.

“As I’ve been saying (and Mark has been reading), when people borrow at rates which will only go up to buy houses that will only come down, this won’t end well.”

Its a recipe to lose money, or a debt trap that will burden some, for life. I believe the housing report Mark Carney is referring to is supposed to be ready in December. It will be interesting to hear what the report has to say concerning the extent of the housing bubble, the level of risk and the plausible recommendations concerning government policy/regulations, as well as the governments reaction in the months ahead.

#20 TheBigLebowsky on 10.29.09 at 5:09 am

Its a game of musical chairs being played. The maestro is all the bailouts and spending packages, coupled with crazy mortgage rates. When the maestro finally calls her quits, the music will stop. Canada is like a drunk at a party where there is free booze . Its the best party in the world while it lasts but that hangover is going to be one heck of a doozy.

#21 SadManAtWork on 10.29.09 at 5:12 am

Carney brought the interests rates down to 0 for what and for who? For the private sector? For the housing market? It has distorted everything. Nothing seems to have value except for people’s homes. Homes, I do not own one, that people , like my co-workers, who continually brag of their values. And in the meantime, my parents savings cannot generate much returns on these low interest rates without taking on lots of risk. It is time to jack the rate a least a full point and end this national obsession, for the good of all Canadians.

#22 Munch on 10.29.09 at 5:32 am

Yeah!

#23 David @ SC, Qld on 10.29.09 at 6:26 am

“Less affordable houses mean fewer buyers. Less demand, less bubble.”

Fewer “rational” buyers, but they seem to be in short supply right now or would get out-bid every time. The “irrational exuberance” that fuels the current speculative bubbles in housing and equities mean higher prices, and ever higher demand.

#24 pbrasseur on 10.29.09 at 6:38 am

JB #1

“Have any of these “free enterprisers” in government and the BOC ever thought of just letting the market work itself out? ”

I believe they love the free market only for one reason: they can blame it when they screw-up

#25 jess on 10.29.09 at 6:41 am

Reverse suburia

The concept of “shrinking cities” is not new. The idea is to bulldoze entire neighborhoods. The smaller city would then be cheaper to run and help pave the way for better times ahead, advocates say.

In Flint they can knock a house down in fifteen minutes.
http://www.npr.org/templates/story/story.php?storyId=106492824

unlike this dozer driver who worked for nothing but created 7m. dollars in disaster capital
http://www.youtube.com/watch?v=qlZh9-NQEyI&feature=player_embedded

#26 The Vulture on 10.29.09 at 7:38 am

HEY DADDY, WHY IS OUR BACKYARD SO SMALL?

#27 Mikey on 10.29.09 at 7:48 am

Garth, Can you answer this question? is it possible that the housing market in the GTA could drop 40% over the next couple of years?

Mikey

Of course. But I am not predicting that magnitude, and the timing will be impacted by events we cannot yet know the timing of. But the direction is clear. — Garth

#28 OttawaMike on 10.29.09 at 8:14 am

Here’s a woman who got to keep her $460k foreclosed house because the banks lost the mortgage paper trail:
http://www.dailyfinance.com/2009/10/27/who-owns-your-home-lost-paper-trail-allows-borrower-to-keep-her/

How about playing the Barclays VIX ETF as Kevin O’ the Dragon guy suggests?:
http://www.marketwatch.com/story/investments-based-on-fear-index-creating-a-stir-in-the-market

Anybody think this is a safer hedge than inverse ETFs?

#29 The Vulture on 10.29.09 at 8:19 am

HEY DADDY, WHY IS OUR BACKYARD SO SMALL?

“Thoughtful question son…”

“The farmer needed some money for retirement so he sold his property for the most amount of money that he could get for it. Pretty smart I say.”

“The developer buys the land from the farmer and then sells sections of the land to various builders.”

“If a builder can construct and sell 50 houses on a particular street will he stop there if he knows that he can pack in another 15 houses in and sell them why not, son? Pretty smart I say son.”

“Why would they do that daddy? Every kid should be able to have a swing set, bar-b-q and pool in the back yard as well as some property to pitch a baseball around in and toss a football around in the summer. Heck daddy, build a skating rink in the winter.” “What do they want us to do, play out in the streets?” “Our dog was almost run over and an aggressive real estate women destroyed my street hockey net with her Cadillac Escalade SUV going to fast down our street.”

“The more homes they pack in side by side and literally on top of each other, the more money they can make. Pretty simple logic if you ask me. Land is really expensive to buy from the greedy farmer you know. Pretty smart I say son.”

“Who else benefits daddy, we sure don’t?”

“The municipal government now has more properties to tax my son. The more people per square km and the greater the quantity of homes on a particular street, the more tax revenue they can acquire. Pretty smart I say my son.”

“Daddy, why do people buys these homes then if you can’t put a pool in the back yard, skating rink in the winter, swing set in the summer, toss eggs at the neighbours at Halloween, roll joints when I become a teen in the summer, have my first kiss from a girl under the big ol’ apple tree, drink my first beer?”

“Good question son. I am sorry I do not know the answer to that question. Since we bought one of these properties ourselves I have been pondering that question ever since.” “Boy, you have me stumped son.” “I guess it was the engineered hardware floors and the granite counter tops that sold your mother on this huge home with such puny property. I hate it myself and want to get out but all the boats have since risen with the tide if you know what I mean. But to wit, one perk I know of, I can spy on the neighbours daughter in the shower with my new telescope.”

“I guess people just love money nowadays son. We live to work and buy lots of useless toys. Such a shame, really. There is so much more to life than love of oneself. Selfishness and greed rule the roost now rovers. Greed is good. Selfishness is sanctity. Toys are for adults too.”

“When I grow up. I want to buy a home on some property, not a home with 2 feet between the houses and a 7 foot deep back yard Daddy. Maybe I will be that farmer and have some real land, until then we are going out to play knicky, knicky nine doors on our neighbours. I guess being packed in this neighborhood is not so bad, more candy at Halloween, makes delivering newspapers easier, egg tossing is a cinch, crank doorbells cool too, we can hear the neighbours fighting and watch our neighbours movies for free, swim in their pool when they are on vacation as well.”

Greed is good and good is great at this time and date mate.

#30 mariaboombah on 10.29.09 at 8:19 am

Hi Garth,
Thanks for all your efforts, and I am kind of glad to see you spared from the political ring for now….I appreciate your candor and insights a lot.Big fan since your days as pundit with Tor Real Estate news..
With all the recent comments about boomers, I was hoping you could spare a thought or 2 for me as another “example”….I’m 53 yrs happy divorced gal, 1 child age 13..After years of living as a nomad, some free spending, buy and sell couple of places, expensive divorce, now renting, debt free, with $160k cash andTBills in my “house fund” and 300K in retirement diverse portfol. Sold the last house when I thought too much cash going into it and not enough into savings, so changed my strategy, unfortunately just as the RE boom was really taking off….so missed out on some increased equity that way.Too bad. But happily, during the same time my income increased a lot and now make $200k per annum in very secure sit’n (family doc).
The sad little rat in my mind cage says “I want house”, “wait for big correction” “now I’m getting too old for mortage” “low interest rates offset increased prices”…you know some of the sneaky ways the mind can trap a woman!
Any thoughts for an aging boomer gal wanting a house and to prepare for the future (not so far away!!)?? We live in a great midtown TO locale, walkable, close to transit, but anything house even worth considering is 500K+…that hurts!
1-2 lines would be greatly appreciated, Swami Garth..
Big Fan

Obviously you could put every dollar of wealth you have into a home in that hood and end up with (a) a mortgage of $200K, (b) absolutely no liquidity, (c) zero diversification and (d) a smug rat. So, who wins then? If your practice sinks, you get sued, the housing market stagnates or mortgage rates double (or triple), you’re in trouble. Whereas now, you’re just fine. Get some Warfarin. — Garth

#31 The Vulture on 10.29.09 at 8:20 am

Fact of Life – The Birds and the Bees

Father and Son

HEY DADDY, WHY IS OUR BACKYARD SO SMALL?

“Thoughtful question son…”

“The farmer needed some money for retirement so he sold his property for the most amount of money that he could get for it. Pretty smart I say.”

“The developer buys the land from the farmer and then sells sections of the land to various builders.”

“If a builder can construct and sell 50 houses on a particular street will he stop there if he knows that he can pack in another 15 houses in and sell them why not, son? Pretty smart I say son.”

“Why would they do that daddy? Every kid should be able to have a swing set, bar-b-q and pool in the back yard as well as some property to pitch a baseball around in and toss a football around in the summer. Heck daddy, build a skating rink in the winter.” “What do they want us to do, play out in the streets?” “Our dog was almost run over and an aggressive real estate women destroyed my street hockey net with her Cadillac Escalade SUV going to fast down our street.”

“The more homes they pack in side by side and literally on top of each other, the more money they can make. Pretty simple logic if you ask me. Land is really expensive to buy from the greedy farmer you know. Pretty smart I say son.”

“Who else benefits daddy, we sure don’t?”

“The municipal government now has more properties to tax my son. The more people per square km and the greater the quantity of homes on a particular street, the more tax revenue they can acquire. Pretty smart I say my son.”

“Daddy, why do people buys these homes then if you can’t put a pool in the back yard, skating rink in the winter, swing set in the summer, toss eggs at the neighbours at Halloween, roll joints when I become a teen in the summer, have my first kiss from a girl under the big ol’ apple tree, drink my first beer?”

“Good question son. I am sorry I do not know the answer to that question. Since we bought one of these properties ourselves I have been pondering that question ever since.” “Boy, you have me stumped son.” “I guess it was the engineered hardware floors and the granite counter tops that sold your mother on this huge home with such puny property. I hate it myself and want to get out but all the boats have since risen with the tide if you know what I mean. But to wit, one perk I know of, I can spy on the neighbours daughter in the shower with my new telescope.”

“I guess people just love money nowadays son. We live to work and buy lots of useless toys. Such a shame, really. There is so much more to life than love of oneself. Selfishness and greed rule the roost now rovers. Greed is good. Selfishness is sanctity. Toys are for adults too.”

“When I grow up. I want to buy a home on some property, not a home with 2 feet between the houses and a 7 foot deep back yard Daddy. Maybe I will be that farmer and have some real land, until then we are going out to play knicky, knicky nine doors on our neighbours. I guess being packed in this neighborhood is not so bad, more candy at Halloween, makes delivering newspapers easier, egg tossing is a cinch, crank doorbells cool too, we can hear the neighbours fighting and watch our neighbours movies for free, swim in their pool when they are on vacation as well.”

Greed is good and good is great at this time and date mate.

#32 HJ on 10.29.09 at 8:22 am

Is a home an investment?

http://globaleconomicanalysis.blogspot.com/2009/10/is-home-investment.html

#33 X on 10.29.09 at 8:26 am

Rates will have to rise. I hope bankers were more careful with interest-rate based derivatives than they were with mortgage-backed securities. But am doubtful.

#34 PeckedToDeathByDucks on 10.29.09 at 8:51 am

So either governments keep it up. Or they stop. Or they extend. And then they stop.” says the Garth.

Governments will keep it up. The paperprestidigitizer will not be stopped. It will spew paper, smoke, and bafflegap in ever increasing quantities. Not only is the home buyers tax cedit being extended, it is now being broadened to include not just first home buyers and also more expensive homes. To go along with that it is piggy-backed on yet another unemployment insurance extension.

Costco will be accepting food stamps.

#35 S on 10.29.09 at 8:52 am

I am now for the first time NOT regretting not buying a condo back in 2006 when I was shopping for one. Or better yet, not giving in to greed and increasing my rejected offers on condos. I was looking in the Lawrence and Dufferin area in Toronto, where there is a townhouse complex (Liberty Village I believe is the name). There was this 1+1 bedroom that I really liked. I offered $195,000, but it got rejected, even after being on the market and empty for 5-6 months. The sellers wanted to get a 2 bedroom price for the 1+1, because the den was enclosed. Since then, I’ve had an agent that sells a lot in that complex send me automatic listings every time a new one goes for sale. I had been watching the prices go up over the years and was kicking myself. But, today I see he’s listed this: 1+1 bedroom, enclosed den, listed for $220,000. Assuming the seller gets asking price for it, after commission (5%), he’d get $209,500. Then deduct closing costs… Not much profit to make on a place in three years. I would have been stretched thin for years without much to show for it (renting downtown versus buying there was $500 cheaper)

Now here’s an unrelated question. Half of my RRSPs are in mutual funds dedicated to natural resources, which was great for seven years until the crash last year wiped out all of my gains. Now they’ve recovered quite a bit (not fully), but I’m wondering if you are expecting another crash, should I maybe get out of these funds? The other half of my RRSP are in a savings account (making no money, but not losing any either)

#36 RS on 10.29.09 at 9:06 am

Okay, so here’s my question. With all these people making so much money right now from selling their homes – won’t the market bounce back when these people are ready to spend their hoards
of cash???!!!!

#37 Grantmi on 10.29.09 at 9:08 am

#16 Robert1 on 10.29.09 at 12:51 am

Come one Robert… we’re talking the Three Stooges here!!!

http://i38.tinypic.com/j74wh4.jpg

#38 crystal ball on 10.29.09 at 9:12 am

to post #2 – Calgary rocks:

“Geez, I guess shipping all of their manufacturing, IT, Engineering, etc overseas isn’t working out for the US.

Unfortunately most Americans are too dumb to figure out that a handful of traitors have exchanged their future for quick short term profits, bonuses and stock options.”

You might read an article by an old American, and conclude that they are not all dumb.

http://chomsky.info/articles/200910–.htm

#39 Another Albertan on 10.29.09 at 9:14 am

#18/G –

Part of your answer is here:

http://www.pbs.org/wgbh/pages/frontline/shows/credit/view/

#40 Bill-Muskoka (NAM) on 10.29.09 at 9:16 am

Funny thing how when one stays with intelligent and mature, seasoned and wise principles, all the roller coaster market trends are unimportant…unless you are a Player (aka, gambler) impatiently seeking more and more.

Life is good, and verrrrrrrrrrrry interesting!

What we are seeing is simple, the death throes of the Globalist movement and a return to more localized reality. Just remember that Greenspan and Rubin headed up the biggest vapourization of investment money in human history to the blaring tune of $27 TRILLION USD.

Yes, indeedy doo! Wimpynomics is it for sure. ‘I’ll gladly pay you Tuesday for a hamburger today!’ (Translation: ‘I’ll hopefully pay you in the future for instant gratification today!’)

Keep playing folks, because ‘You can’t win if you don’t play!’ (Note: the other side of the coin reads ‘You can’t lose, if you don’t play!’)

Have a wonderful day.

#41 crystal ball on 10.29.09 at 9:17 am

I read yesterday (in Financial Times – London?) that the Americans are extending the lst time home buyer tax credit.

Yet to be voted on. But it will happen. That’s the point of the above post – the economy is on ventilator. — Garth

#42 Gord In Vancouver on 10.29.09 at 9:34 am

#36 RS

Please read Garth’s previous post:

http://www.greaterfool.ca/2009/10/26/terrorists/

#43 Hiteclowtec on 10.29.09 at 9:38 am

#3 Iain
Great link !! Peter Shiff explains exactly what owning a house is all about. It`s about speculation and depreciation not investing. Fine if you need a place to live or a bunker but it`s not investing.

#44 PeckedToDeathByDucks on 10.29.09 at 9:44 am

Total cost per car to taxpayers for “cash for clunkers”…
$24,000 per vehicle.
http://online.wsj.com/article/BT-CO-20091028-715225.html

Total cost to taxpayers for “home buyers tax credit”…
???

Hey, but look at the upside. Home prices are staying up.

#45 miketheengineer on 10.29.09 at 9:47 am

Garth et al:

You said:

“Have you stored your nuts yet? Split and stacked several cords of seasoned hardwood?”

Thoughts for today.

If you did, you are lucky. If you did not, check out Food Basics before Friday. Primo Pasta is 0.88 per bag, and the tomato sauces is the same. No Frills has Unico pasta sauce at 0.63 per can. Good way to stock up your nuts, without spending a ton of cash. For about 60 bucks, you can have one decent meal a day for a month. And never leave your home if there is a crisis.

Think about it people, and good luck to all.

#46 Toronto C9 Renter on 10.29.09 at 9:52 am

#36 RS said: “With … people making so much money right now from selling their homes – won’t the market bounce back when these people are ready to spend their hoards of cash?”

RS, they will lose at least 4.5% on RE fees; another 4% on closing costs on their new home (in Toronto at least); and at least a few thousand in moving expenses.

So the process of liquidating RE likely costs at least 10%. So perhaps even the lucky ones that sell at peak won’t have all that much more to invest

#47 Stop Puttin Down Boomers on 10.29.09 at 10:00 am

#29 The Vulture on 10.29.09 at 8:19 am

Thanks for my laugh of the day Vulture. Unfortunately, its so true. I live in an older 30-35 yr. development where yards are large in comparison to new ones. Ours is almost 13K sq. ft. – considered a single lot. A younger development, block above us, with much larger & more expensive homes, originally had fairly large lots, but all in front, to give the appearance of affluence. When that street expanded, with similar sized houses, lots became much smaller, but still 3/4 of the land was street front. When they extended our street, (crescent) min. prices started at $350K with 1/2 sized lots. One sold for $550K 2 yrs after it was built. You’re so right, municipality collects more taxes by decreasing allowable lot sizes. What’s irrational is that on our older end of the street a double lot is evaluated at the same price as a single one. BTW, I live in Dartmouth, NS not the GTA.

#48 TAO on 10.29.09 at 10:00 am

The middle class is being squeezed out of existence

The demographic that once owned a single family home is either going to share the house with another family or move to an apartment.

Corporatism, ( big businesses and big government) while conspiring protect their interests are destroying the prosperity for future generations.

The working class in North America will need to adjust and make do with less.

Welcome to the new feudalism.

#49 s33knges8 on 10.29.09 at 10:26 am

It is mind boggling that the TSX can lose 600 points and gets little coverage. 5 years ago a 100 point drop would signal the end of the world. I see lots of price changes coming through on re listings. May the (avalanche) games begin.

#50 The VULTURE on 10.29.09 at 10:34 am

Thanks for your kind and thoughful comment #47 “Stop Puttin Down Boomers”.

Pretty depressing out there right now. It is truly insane and asinine as well!

2 ft between the houses with that gravel stuff instead of grass…great to take a pee pee through my wee wee…

#51 Bill-Muskoka (NAM) on 10.29.09 at 10:43 am

#46 Toronto C9 Renter

Oh my, you are making their lives tedious, to say the least, by bringing up the Bottom Line after all the costs. They just see pure profit, not the details of costs for each move they make. They all have the ‘right’ you know to become millionaires because someone else did. Unfortunately, most so-called ‘millionaires’ are only on paper, not in the bank as fluid funds.

There is a difference. Perhaps they should recall the last time their credit card was denied for being OVER THE LIMIT?

As to what is happening, it is an ‘adjustment’ similar to that experience most have had from going from drunk to sober. BTW, I note the speculators are, again, playing the oil markets…Gas prices UP! We need a NEP, but that will not happen because the Bozos in power can’t deal with the concept of a national ‘good’!

Back to earning a REAL LIVING here.

#52 Bill-Muskoka (NAM) on 10.29.09 at 10:46 am

#48 TAO

Au contrare, the REAL Middle Class is coming back. The sane ones who understand cost versus value. We never left, we just got out of the way of the Yuppies. Seems their rope has reached the END? YANK!

#53 Downsized and Delighted on 10.29.09 at 10:50 am

Mr. “Do as I say not as I do” Garth: Have you listed your house for sale?

I sold three months ago and bought a POS eight months ago. Regardless of that, the key is not owning real estate or not, it`s how much of your net worth is in this one asset. How many times do I need to say this? — Garth

#54 Ken on 10.29.09 at 10:52 am

In my opinion corporate and financial has govt. re BOC etc. in their back pocket eg. .025 interest rates creating a huge bubble which will eventually burst.This will create a problem in the future real estate market,look at USA. and Greenspan.

#55 Soylent Green is People on 10.29.09 at 10:55 am

re #8 Elle on 10.28.09 at 11:06 pm Boy oh Boy…..

Am I ready for winter? Well, the old woodpile will have to wait awhile, ditto for the root cellar …… but yes, I’m listed, sold and waiting for the sound like a rocket shot high into the sky on the 1st (or 4th) of July ….an oohhing & aahhing at the dizzying smoky red display……..sizzling POPPING and a screaming as it spirals down………down…………………….down.

~~~

That was beautiful!

Very visual writing.

#56 prairiegopher on 10.29.09 at 10:57 am

The IMF just released a report saying Alberta and B.C. markets are 8% overvalued. Sorry I don’t have the link.

I read the report, and it’s based on information provided last March. Junk. — Garth

#57 Stop Puttin Down Boomers on 10.29.09 at 11:06 am

Last year a German we know decided to buy a rental property in Cape Breton as an investment. Both he and his partner love CB. He came here for 2 mos. bought a used SUV type vehicle (so he could sleep in it part time) & finally bought an old 3 unit rental in Port Hawkesbury for $80K+. He spent a mo. here & just left the other day. Turns out there were water problems/mold, etc. in the basement. Cost him $$$ to get it fixed. Neither the RE guy nor his lawyer knew that, as a non-Cdn citizen, he’d have to pay 25% of, IIRC, net revenues to the govt. He owes the govt. & still hasn’t sorted it yet. Plus, his vehicle (rented from someone in a Hfx. apt.) was vandalized, etc. We also found out the 3 apts. are rented to people on social assistance. And, tho the power corp. provided him with the previous year’s power bill (before he bought), the power bills doubled this past year. He is not rich by German standards, but had a dream to retire here. Much more, but won’t go into it. Buyer beware. Many years ago we thought about buying a rental property, but heard so many bad stories of renters trashing the places, leaving in the middle of the night, while owing 3 months back rent. Life is too short, unless that’s your primary income, are a contractor & can devout your time to it.

#58 who guess on 10.29.09 at 11:11 am

To the person who said:

“Total cost per car to taxpayers for “cash for clunkers”…
$24,000 per vehicle.
http://online.wsj.com/article/BT-CO-20091028-715225.html

Total cost to taxpayers for “home buyers tax credit”…
???” ”

Here is an opinion by Simon Johnson, Washington Post, USA:

“the Calculated Risk blog calculates that this means the government is paying $43,000 for every extra house sold (since most sales would have happened anyway). According to the Wall Street Journal, Goldman Sachs estimates 200,000 new sales, implying a cost of $80,000 per marginal sale. ”

http://www.washingtonpost.com/wp-dyn/content/article/2009/10/27/AR2009102703791.html?nav=rss_opinion/columns

#59 David Bakody on 10.29.09 at 11:21 am

CBC Headline News:

GDP growth suggests end to U.S. recession

So let the bells ring, the birds sing, and the champagne flow …… the good times are rolling …. fly south and buy American stocks.

#60 Stop Puttin Down Boomers on 10.29.09 at 11:21 am

#46 Toronto C9 Renter on 10.29.09 at 9:52 am

I recall about 20 years ago people (?) used to say that with closing, moving, transfer deed costs, etc. one would have to stay in their home for at least 5 years in order to break even.

#61 Larry on 10.29.09 at 11:29 am

The TSX is up and down like a prostitutes knickers.
Too much intervention by govts and central banks has only screwed this up even more. Carney’s concerns about consumers taking on too much date is a classic case of bolting the stable door after the horse has gone.
I mean c’mon man asking Canadians to be rational and carefull about their debt load lol. The average person on the street wants stuff now and if they can get cheap money they will. Banks are a disgrace by lending money to people who will be under water 12 months from now but heh the taxpayer backs all mortage loans anyway. Yet the stupid savers out there are being offered 1% what a fking joke.

#62 RJD on 10.29.09 at 11:54 am

#36 RS

It is still money based on a big pile of debt.

#63 Bill-Muskoka (NAM) on 10.29.09 at 11:55 am

2 ft between the houses with that gravel stuff instead of grass…great to take a pee pee through my wee wee…
#50 The VULTURE

Yes, but look at the cost savings! You no longer need to buy porn mags or flics, just look out your side window into your neighbor’s and watch what is going on. Besides, only a third as many will need BIG POWERFUL sound systems because you can ‘enjoy’ your neighbor’s choice of noise music! And no grass to mow, just get your ‘grass’ from your neighbor. ;-)

And you can enjoy their renter’s vehicles filling up the street parking so you can avoid having any family or company over.

Only real problem is ‘Where do I pile the snow?

Such a deal for $350K+, eh?

#64 My_View on 10.29.09 at 11:58 am

I just love it. Whatever negative post this blog spills out the night before, the markets do the complete opposite. Keep it coming….

If you form an opinion based on 3 hours of trading you deserve what the future delivers. — Garth

#65 JeffinPickering on 10.29.09 at 12:08 pm

“Carney said he was speaking hypothetically, but added: “If this were to persist, there are other options. The housing market is subject to considerable regulation and policy influence.”

Call me daft, but what exactly?

Seems to me strategies like running up rates, changing the rules (no more 0/40, 5/35, or 0/35 mortgages, or changing the rules for the banks re:what portion of income they can lend you), etc. become a moot point when everyone is already in?

Like you said, bursting of the bubble can’t be stopped. Better for those schmucks to just stay out of it at this point.

My concern is what is the gov’t going to do when the bond market runs the mortgage rates up and the 2% rate 5 down/35 year am folks can’t make their payments.
Please tell me the BOC won’t get into playing with the money supply to make your income suddenly magically higher so you can make those payments? Mr C has said playing with the money supply isn’t desirable or beneficial in the long-term, but since when has a politician type ever thought or acted for long-term interests?

#66 $fromA$ia "Marc Carneys Conscience" on 10.29.09 at 12:19 pm

Bill-Muskoka (NAM)”I note the speculators are, again, playing the oil markets…Gas prices UP! We need a NEP, but that will not happen because the Bozos in power can’t deal with the concept of a national ‘good’!”

Bozos in power are looking at national stability with our achilles heal weaknes of over blown bubble real estate.

Now they print money=inflation. Oil is used to move everything around the world. If you want to push inflation up, buy Oil and make it expensive to force U.S. $ down and make the cost of everything that has to be moved world wide cost more :).

Bill, you got money? Then you can position yourself for what is expected. (inflation)

If you’ve got a house. Oh oh, finding someone to sell it too will be harder and harder from here on .

Liquidity is key. Get ready to move!!!

Good luck everyone.

#67 jess on 10.29.09 at 12:23 pm

predates Roubinism

Georgist
Fred Harrison (1944 – ) is a British author, economic commentator and corporate policy advisor, notable for his stances on land reform and belief that an over reliance on land, property and mortgage weakens economic structures[1] and makes companies vulnerable to economic collapse. …

warn of what he considers to be the dangers of using land and real estate as the primary drivers of economic growth. His work links economic policy to social reform. Harrison’s macro-economic analysis is based on the theory that business conforms to a pattern of 18-year cycles, determined by the unique characteristics of the land market. According to Harrison, economists erroneously “assume that the health of the property market depends upon the condition of the rest of the economy. In fact … property is the key factor that shapes the business cycle, not the other way around.”[7]

#68 Daystar on 10.29.09 at 12:32 pm

#2 CalgaryRocks on 10.28.09 at 10:14 pm

Its not working here either. :-(

#69 Nostradamus jr. on 10.29.09 at 12:55 pm

Nostradamus jr’s prognostications keep coming true.

…Said…Sell Atlantic Canada….Today, Quebec effectively bought New Brunswick.

U.S. announces today Recession officially over.

…Now the Depression starts.

Ontario and Atlantic Canada are heading into Depression.

To my Anglophone friends, transfer ASAP from Eastern/Atlantic Canada to Western Canada…as Western Canada will secede from the rest of Canada…sooner or later.

…and the safest place to live in the world!…is….Vancouver’s North Shore…the safest privately gated community in all of the world!

Access only by way of two bridges and one highway from the North.

peace,

Nostradamus jr.

#70 Hiteclowtec on 10.29.09 at 1:00 pm

Millions fewer visitors coming to Niagara in 2009 !

http://www.niagarathisweek.com/news/article/284108

Tourism has been tanking, 7000 tourism-related jobs lost since 2001.
So I guess the 5/35 pups can`t afford a honeymoon.

#71 TheBigLebowsky on 10.29.09 at 1:02 pm

#36 most of these people selling their houses are turning around and jumping into another house. Alot are taking on aa more expensive dwelling thinking they can now afford it with these low rates. So it is a zero sum game and actually increasing the average debt load for Canadians.

#72 My Calgary house value is down on 10.29.09 at 1:19 pm

This article does a great job, showing the greed vs. blindness of our have it now mentality. CNN Article And yet Calgary Realtors like this seem to remain in a state of bliss. I don’t get it???

#73 Devil's Advocate on 10.29.09 at 1:26 pm

TSX 5 year performance graph is looking a lot like classic Elliot Wave B cresting.

#74 Robert1 on 10.29.09 at 1:40 pm

Went out for a cruise last evening:

Stop #1. DOLLARAMA – packed
Stop #2. WALMART – packed
Stop # 3. THRIFT STORE – packed
Stop # 4. VALUE VILLAGE – packed

OK … OK ….. Hallow’een is happening on Saturday. I’m sure all those pricey mall merchants were packed as well. Still lottsa cashola kicking around…. Right Carney, Right Harper, Right Flaherty ?

This Triumvirate of Stupidity has to go !!!

#75 happy renter on 10.29.09 at 1:42 pm

Not planning on buying any time soon – but with rates going up I thought I’d pre-apply for a mortgage to protect an interest rate for 120 days, just in case. I was introduced to a new mortgage broker and received a good rate. A few days later they mailed me a thank you note, including a $20 gift certificate, just for applying for a mortgage. You know something is wrong with the system when they are effectively paying you to just pre-qualify for a mortgage ….

#76 Elle on 10.29.09 at 1:56 pm

Come the New Year, a lot of guys will be freaking out, Garth…….

“The same logic is being applied in Canada with things like the Home Reno Tax Credit, which the feds claim has been a bonanza for the trades. So, let’s contemplate what happens at midnight on February 1st, when it ends. Yeah, in the middle of winter. More genius.”

My kids are in the trades. For more than a decade until about 2003 the pay scale for their profession was abysmal.

Due to actual volume of housing being built in those days…….jobs were scarce, and immigration brought in a large, fierce competition for the sparce new construction. The short of it was….whoever could afford to bid the lowest …….got the work!
Most of the men (& a few Wmn) packed it in and headed for Calgary, Edmonton and OMG Fort Mac in beginning of 2000.

The Trades have done well, on the west coast, since 03, … til last fall (pun intended) when construction took another hit and ground to a halt temporarily over winter of 08-09…….incomes dropped probably 30% ….then wonder of wonders, against all reason, ….the “Bubblett” this summer and another little construction Boom. A lot of guys, not thinkin, bought RE.

So yeah, in the middle of winter. More genius.

# 55 Soylent Green Is People-

thanx for your kind words!
elle

#77 David Bakody on 10.29.09 at 1:58 pm

More breaking News once posted here no ?

National Post to close Friday without court support

#78 Downbytheriver on 10.29.09 at 2:02 pm

@#70 Hiteclowtec on 10.29.09 at 1:00 pm

Funny, not one mention of the impact due to the rise of the Canadian dollar vs the USD in that article but there’s no doubt in my mind that’s one of the biggest factors. When the CAD hovers near par it’s no longer cheap for US travellers to come here – especially with gas prices still being pretty high.

That, and the nearby states have been some of the hardest hit when it comes to job losses.

#79 supersocco on 10.29.09 at 2:14 pm

Headline on bnn today: U.S. economy grows 3.5%, recession ends

#80 David Bakody on 10.29.09 at 2:14 pm

Mr. Turner:

Perhaps we should re-name this blog “Back to Canada’s Future”

Not to be unkind but allow me to paraphrase Mr. Mark Carney …. Many Canadians should not have overspent on Real Estate due to historic low interest rates during a period of a soft economy. They should have been well aware interest would rise putting them into dangerous territory ….. Mother of sweet “J” who was I/C of the Bank of Canada and with a snap of his finger could have called a National News Conference
( even CTV would have attended) and said I have just instructed all banks to ensure they take into consideration interest will not stay low for long and that could easy be 6-8% in 5 years and only lend mortgage money accordingly!

This would not only been the prudent thing to do, it would have put a halt to overpriced homes but more important it would have saved thousands of Canadian families from financial disaster and dare I say broken marriages and family breakups. Thank you Mr. Carney … when you were needed most you failed a Nation.

#81 nonplused on 10.29.09 at 2:15 pm

Ok, first things first:

“People not yet born” aren’t going to pay for anything. You cannot monetize something that may or may not ever exists and of which you know nothing of the productive capability seeing as how it’s at least 20 years off.

The people who are going to pay off the debt are the same ones who incurred it, either through grinding inflation, reduced or eliminated services, reduced living standards, or debt default. Someone is going to loose, and those someones are alive today. There will be no passing those obligations down the road. It’s a nice notion to think that it might be possible, but it’s never been done before so I’m betting it either can’t be done or the unborns simply refused to pay when it’s been tried.

The debt crises is coming to theaters much sooner than people hope.

Back to Blathering Carney,

There is no chance they are going to use regulations to tighten up lending in the housing market. It was his interest rates and the aggressive underwriting by CMHC that caused the bubble in the first place. In other words they did it intentionally. There is no chance they are looking at it now in complete surprise. I have to believe he’s smart enough to have been able to forecast what would happen if you combined 2.5%, 35 year amortizations, variable rates, 5% down, and unlimited government loan guarantees. And that horse has now left the barn. Reasonable regulation now would cause a collapse bigger than 1982. Even moving towards reasonable regulation would cause a collapse. It’s too late and he knows it.

What he is doing is called propaganda. The target is not the banks, as I’ve speculated before he communicates with them directly. The target is not home buyers, who obviously have no idea whether they are getting in over their heads or not and never will. The target is “the markets”. He is merely trying to assure the markets in general that there won’t be a US style banking and solvency crises in Canada because he’s on the case. He’s trying to stop a run on the bank. He probably knows darn well that the opinion of foreign investors is that Canada’s housing bubble is completely unsustainable and will not hold. Some of them might be starting to put 2 and 2 together and realize that you need a government guarantee to get 4 these days, so they are getting nervous. Some of them might even be starting to short Canadian banks and REITs. These are the people he is talking to, not home buyers or blog readers and writers. Which is the main reason I find his comments so darn alarming. He would not be talking and drawing attention to this issue unless something had his knickers all in a knot. My opinion of course.

Spot on with the rest of it though. The government’s strategy for fixing the problem so far has been to cover it up. Unfortunately rot doesn’t stop growing just because it’s covered. In fact usually it grows faster.

14 kc

Whenever I read about some article critical article with “China” in the headline I think “trade war propaganda”. Not that I’m saying the drywall isn’t contaminated, I have no idea. But I would suspect the law would be against the insurance companies in the case that is was. They should have factored that risk into their premium.

#82 Mark Carneys brotherinlaw on 10.29.09 at 2:17 pm

Well thank-you so bloody much, Mark my bro, for cutting down granny’s Canadian savings bonds magnanimous 1.85% (2008) interest rate to a pitiful .4%.

Last year the extra 1.45% resulted in a yearly 1000 dollar income and in doing so cut her off from the guaranteed income supplement. Next year she will be able to claim the CP GI Supplement of $389.67 X12 = $4676.04.

Now Granny has not only chucked out her kibbles and bits but in celebration of these new facts has started drinking the brandy from Garth’s St. Barrnard’s barrel.

Oh sheesh bro, I gotta go now, it is getting pretty ugly around here, she is starting to kiss your photo and singing the Goldman Sachs company anthem.

#83 miketheengineer on 10.29.09 at 2:27 pm

#69

Hey Nostradamus jr.

Only one highway out of there too….. What happens when the big quake hits? All those people trying to leave, and help trying to get in?

#84 oortog on 10.29.09 at 2:34 pm

“I sold three months ago and bought a POS eight months ago. Regardless of that, the key is not owning real estate or not, it`s how much of your net worth is in this one asset. How many times do I need to say this? — Garth”

And my point is.. it won’t matter what your money is in.. Equities, real-estate, bamboo tiki’s… they will find a way to take your money… by legislation, crashes, or theft…

Income trusts?

HST?

It won’t matter. The milking has begun. One way or another, they will take your money. We haven’t had a real wage increase since the 70’s.

The only way to win is not to play.

#85 nonplused on 10.29.09 at 2:34 pm

ha ha, new name for the Dow chart formation: “bungie jumping”

#86 PeckedToDeathByDucks on 10.29.09 at 2:41 pm

Understanding the paperprestidigitizer:

The Fed bought an additional $18 Billion of net agency mortage backed securities during the last week to “support mortgage and housing markets”. This brings their total to $977 Billion since January.

– A FAQ at the NYFed site asks if there is risk to this.
Answer: “Assets purchased under this program are fully guaranteed as to principal and interest by Fannie Mae, Freddie Mac, and Ginnie Mae,…” so risk is minimal.

Heh, heh, they do have a sense of humour.

#87 Nostradamus Le Mad Vlad on 10.29.09 at 2:43 pm

Received an interesting e-mail a couple of days ago (still got it, but can’t post it) — Hiroshima and Nagasaki then and now, before and after 64 years ago.

There was a lead-in color pic of the mushroom cloud, and two black and white photos of the utter devastation. Then, a series of color pix (the “now”). and what had changed.

Talk about stunning! Taken from the air at night, those cities are a testament to humanity’s intestinal fortitude, never give up attitude.

Then pix of present-day Detroit, after NOT being hit came. Great lesson in what goes around, comes around.

In 1945, Detroit was the economic powerhouse of the US. Now it’s almost a ghost-town, looking eerily similar (except the buildings are still standing) to H&N then.

64 years is not even an average lifespan anymore (about 85 years). How times change.
——
Other stuff — Money! / Booga booga! I guess the two have to be combined, ‘coz with the western economy in a downward spiral, govts. need distractions here, there and everywhere.

#88 Davinci on 10.29.09 at 2:44 pm

I’m ready I have my gold and silver ready and you have your paper saved so when I need to make some change I know where to go. lol :)

Three Stages of Truth

“All truth passes through three stages.

First, it is ridiculed.
Second, it is violently opposed.
Third, it is accepted as being self-evident.”

I look forward to the day when the public thinks how foolish people where to think paper and ink created by someone’s promise to pay is valuable. It’s obvious that only a real thing is money not a promise.

Got Gold?

Where’s the pain-in-the-ass stage? You seem stuck there. — Garth

#89 kitchener1 on 10.29.09 at 3:12 pm

Truth is that not a whole lot has changed since last year this time. Excpet that we do not have the fear factor as by this time, people are more used to the current economic situation.

My inidcators were showing a mild decline is a little bit overdue in the markets, I thought with the earnings coming out we would see some drops in the stock market. We did see some, but nothing to cry about.

I have revivised my outlook, if we do not see a huge market changing event or mini crash in a months time, the markets will continue to stay calm, no serious gains or losses for years to come.

As far as RE is considered, considerable price movements (to the downside) and inventory building in outlining areas of the GTA (Kitchener-waterloo-cambridge, Oshawa, Whitiby to some extent etc..)

Only RE that is moving are units that are priced right and in good shape, other stuff just sits on the market. A lot of sellers still dreaming.

In Toronto, anything in a good location is selling. Funny thing I am noticing in GTA area (Toronto, Miss, Milton, Pickering etc..) is that the units that have rentable basements or second floors are selling fast, looks like a lot of 5/35 people are banking on rental income to carry the property.

On the resdential rental side, things are very slow, lots of apartments have vacancies for months, and a few property investors I know in Kitchener/Guelph/Toronto are telling me its a tough market, they have reduced their rents and their units still sitting empty. Looks like a lot of the big REIT companies are offering all kinds of discounts, half month/full month free rent/free parking etc.. just to get people in the door.

I don;t know if its because of the real estate boom or the fact that more and more couples are moving in together or more single people in their late 20’s/early 30’s are moving back in with their parents??? But rental vacancy rates are moving up and rentals price is coming down.

#90 Dan in Victoria on 10.29.09 at 3:14 pm

Post#2 Calgary Rocks and Daystar #68. Yeah, this idea of manufacturing and selling Cheez doddles and Piggy puffs to each other is not going to work out.You actually have to create and sell someting of value.

#91 nonplused on 10.29.09 at 3:14 pm

This article uses Britain as an example and I think it supports my case that government debt is always paid off in real time through default or inflation:

http://howestreet.com/articles/index.php?article_id=11310

Especially look at the chart comparing British government debt in nominal and real (inflation adjusted) dollars. The debt doesn’t go up when you account for inflation. This means it was paid for through higher prices for everybody.

#92 jess on 10.29.09 at 3:26 pm

What have WE learned?
250 words 15 voices and a new agenda for america
http://www.henryckliu.com/page202.html
http://www.newdeal20.org/?author=23
Many institutions were playing the game of regulatory arbitrage, the practice of taking advantage of a regulatory difference

Read more at: http://www.huffingtonpost.com/2009/10/29/post_270_n_338107.html

#93 Stop Puttin Down Boomers on 10.29.09 at 3:41 pm

#63 Bill-Muskoka (NAM) on 10.29.09 at 11:55 am

“Only real problem is ‘Where do I pile the snow?”

Oh how I wish I knew how to imbed a photo of my BIL’s place last winter. They had no more place to pile the snow.

My husband is annal rentative about snow clearing, to the point one has to see the asphalt – nary a bit of snow, ice – and he’ll destroy any of my perennials that creep onto the driveway or walkway. Our upper deck has to be totally cleared and even some lawn areas after every snowfall. Yep, he’s got a snow blower & every kind of snow shovel. Oh well, at least the Posties appreciate us. I’ve seen him out there at 11 pm & then 4 am clearing the snow. I know some other neighbours laugh at him, but he laughs at them when they have problems getting their cars out of their driveways.

#94 jess on 10.29.09 at 3:44 pm

rather than indexes that look forward or back up or down maybe a look under?

If men are wearing threadbare jocks – or worse, undies with holes – the nation is in real trouble, according to a growing number of economists who say the condition of men’s underwear is a valuable fiscal indicator.

In fact, many argue it is an even more reliable barometer of the state of the economy than the century-old Hemline Index – which suggests women’s hemlines rise in good times – and the Lipstick Index – which holds that when times get tough, lipstick sales soar as women seek comfort in affordable, feel-good items.

First touted by former US Federal Reserve chairman Alan Greenspan, the men’s underpants index, or Manty Index as some have called it, reasons that because hardly anyone sees men’s underpants, it is one of the first things men stop buying in tough economic times.

By extension, the theory also suggests that the pent-up demand means that men’s underwear sales should also be among the first to soar when the economy picks up…

http://www.smh.com.au/executive-style/style/the-undies-index-20090601-bsdn.html

#95 Iain on 10.29.09 at 4:15 pm

John Stossel on why governments should not prop up housing – “why is it automatically a good thing – it’s good for the seller but what about the buyer”?

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

#96 popeye the sailor man on 10.29.09 at 4:42 pm

# 11 ; I LOVE YOUR COMMENTS. FUNNY BUT SOOOO TRUE!

#97 Bill-Muskoka (NAM) on 10.29.09 at 4:52 pm

#66 $fromA$ia “Marc Carneys Conscience”

At my age the only ‘positioning’ I am going to be doing is putting my arse on the couch, feet up, and enjoying a lifetime of work. We have a HOME, not merely a house, and it will be the next to the last place we are, after the funeral parlor.

You go and have fun!

#98 Opportunity on 10.29.09 at 4:57 pm

Just listed my condo in Vancouver. Waiting for the fools to come bidding.

#99 Ottawa Mike on 10.29.09 at 5:12 pm

to people who write disparaging things about Garth Turner:

http://www.reuters.com/article/industryNews/idUSTRE59S3JI20091029

#100 CM on 10.29.09 at 5:13 pm

“I don;t know if its because of the real estate boom or the fact that more and more couples are moving in together or more single people in their late 20’s/early 30’s are moving back in with their parents??? But rental vacancy rates are moving up and rentals price is coming down.”

Yep, same thing is being seen here in Calgary. I keep an eye on the data over at rentfaster.ca and the median price has dropped over 8% since summer.

Also starting to see a *lot* more ‘rent reduced’, ‘move in incentive’, ‘one month free’, etc, in the ads.

Listings jumped noticeably in the fall, but seem to have stayed about the same in October.

#101 Justin on 10.29.09 at 5:13 pm

#52 Bill-Muskoka (NAM) on 10.29.09 at 10:46 am

Many men and women today are living within a self created, self serving, superficial construct.

They appear to be uninterested and unthankful as to where and how their sustenance is derived and further fail to understand that they are subject to laws of nature.

Well Ken and Barbie, an intrusion from reality, what goes up must surely come down. Death follows birth and when you are no longer here your footprint over time will completely vanish.

Clearly your self importance is over rated and your ever increasing mania is undoubtedly contributing to the speedy collapse of our society.

In the end I’m comforted in knowing that nature truly does prevail over such arrogance.

#102 CM on 10.29.09 at 5:15 pm

Bank of Canada’s Jenkins to Step Down in April 2010

http://www.bloomberg.com/apps/news?pid=20601082&sid=a4IQsPm9ZDgY

#103 charliegosurf da R E V O L U T I O N on 10.29.09 at 5:20 pm

NOSTRA

slack the blazing, and go cheer your flame arrival in Victoriain…, big party with our taxmoney, she flew first class, as for the next 3 months!!!! who cares about climate change really, not vanoc for sure. buy chinese red mits and hourah, scream, WELCOME WORLD IN the BEST PLACE ON PLANET EARTH!.

wats yur point, safest gated hood in world, you probably forgot all the logging road who litters the north- shore in your green dream. the water supply, can easely be tainted…

i guess floaties, boats on beaches, bccrapferries,lol, growupchoppers are not a mean of access to invade greedland, why if its so good, would you invite the country, must be that french joiedevivre. or a desire to find ultimate fools to unload crappy 60;s mold infested houses of …. lol

safe from what??? beside, seems like it’s more the oppposite, it would be so easy to isolate the precious shore, blow 2 bridges and a good landslide on the sea to sky, and the empty friges of the british properties would only echo their empty beemers, TM, lol, fuel tanks. ECHO, quaratained them, the shore is filled with contamination to not swine but HOG flu,lol, im1northshoreis1, type, hahaha

dont mind to ask, but as always vancouver is ready for another of their foolish winter being ; NOT, as borat would say, ready for even a simple fact as snow, when they host winter games…go figure that out!!!!ouch

duh,i get it, you guys aint Canadian, youre speciale spatial, with a british accent..lost in a mountain forest waitin as usual for sar to rescue yur gold booties.

and shouldnt Canada become a country first before it can secede itself, i mean, that screams logic, ever noticed that lady in your pocket next to mr zig…

i proposed you as the n-van citizen who should carry the torch thru the trafficfull blvd among intrawest executives, and gordo’s choosen one. keep your head up tougth, some of us need a giant shinny new ligther to burn the past away……….

let the gonnnnnnnng show begin

http://vancouver2010.blogs.nytimes.com/2009/10/29/vancouvers-first-doping-scandal-involving-a-greek-hurdler/

#104 Nostradamus jr. on 10.29.09 at 5:32 pm

Gold bugs….not good news…other countries will soon follow…China, for food!…

“”MOSCOW — Finance Minister Alexei Kudrin said Wednesday that Russia is considering selling gold on world markets to cash in on high prices as the government faces its first budget deficit in a decade.””

http://www.gata.org/node/7941

peace

Nostradamus jr.

#105 Jeff Smith on 10.29.09 at 5:36 pm

LOL

.#29 The Vulture on 10.29.09 at 8:19 am
HEY DADDY, WHY IS OUR BACKYARD SO SMALL?

“Thoughtful question son…”

“The farmer needed some money for retirement so he sold his property for the most amount of money that he could get for it. Pretty smart I say.”

[snip]

#106 Nostradamus jr. on 10.29.09 at 5:37 pm

charliegosurf da R E V O L U T I O N

…Where you from…Oshawa or Oakville?

#107 Burls on 10.29.09 at 5:58 pm

Bank of Canada Governor Mark Carney is warning consumers not to get in over their heads in the real estate market, and asking that bankers take care with the mortgages they offer because interest rates will eventually move up.

The central bank is concerned about the strength of the Canadian housing market, Mr. Carney said yesterday in his first significant comments on the market’s rapid rebound.

We expect prudence from lenders,” he said. “We expect, and we have confidence in, prudence from Canadians. We remind people that borrowing is for the period you are going to borrow, not just for the moment you take out the loan.”

This is such CRAP!!
Carney is starting to realize the housing mess he has helped create and he is trying to blame borrowers and lenders for being imprudent.
Doesn’t he know that Banks are and have always been shameless money-sucking leeches?
With the CHMC policies in place, banks have absolutely NO INCENTIVE to give loans prudently.
Guaranteed of recouping everything, the impersonal money-suckers could only be expected to give loans to anyone and everyone who meets the most minimal of requirements in times of SUPER LOW interest.
The taxpayers bear all the risks and the banks get all the profits – risk free!
Great plan!!

#108 grumpy on 10.29.09 at 6:03 pm

Garth , absolutley agree with you on real estate never forming more than 40% of your NET worth. But, jeez, here in BC the prices start at 600K and go up from there. For the most part people can’t save a nickel for retirement. The number of seniors who are running out of cash because of the zero return policy of the BOC are going to have to sell to keep the cat food on the table.

There is a ceiling to reverse mortgages after all and then what?

I’ve noticed another phenomena and thats ‘granny bashing’ where adult kids are sponging off the parents like never before for downpayments , money for the kids daycare, car payments, groceries etc etc , all while the ‘kids’ try to keep up the appearance of owning a home and two cars.

I have noticed a huge upswing in the number of ‘kids’ tagging along with granny and granpa on vacation. Guess whos paying?

Carney blew a shot across the bow regarding interest rates today and I think he’s signalling a sucker punch coming. After all Aussie and Norway have broke ranks and raised domestic rates. With inflation on consumer edibles and beddables going through the roof I think the jig is up for the BOC and the phony ‘stimulus’ campaign.

#109 Nostradamus Le Mad Vlad on 10.29.09 at 6:40 pm

#74 Robert1 — “This Triumvirate of Stupidity has to go !!!”

Unfortunately, there are plenty more in the background to replace these jackasses. It’s akin to replacing one clueless lightbulb with another — nothing works upstairs!
——
In unison with my post earlier, re: Detroit being a ghost town, the first couple of sentences are indicative of that. — We’re Screwed!

First para. is good. — Wealth Gap

An update to a post another poster put up a few weeks ago.– Lonely Mall

One of the coming effects, stemming from the fiscal downturn. It may lead to a greater form of police state in the UK. — Timebomb

Who is the bad one here? — Desperate For War “. . . by stoking up instability in the Caucasus. Why? To be able send its peacekeepers there to ensure the safe transportation of Caspian oil and gas. And here the American contingent in Romania and Bulgaria may come in very handy indeed.”

West Coast is closing a mill in Kitimat, B.C., laying off 500 or more. Kelowna is also losing another small manufacturing plant to Vancouver. Freightliner, which used to be one of the biggest employers here, moved to Portland a few yeas ago, but is now moving to Mexico.

#110 Devil's Advocate on 10.29.09 at 6:41 pm

88 Davinci and Garth

After the Dot-Com fiasco people headed to “bricks and mortar” buying up real estate thinking that it was a “safe bet”. After all, we all need real estate. We all need a roof over our head… we all need shelter. It was a sure thing.

You can’t live in gold, you can’t eat it, you can’t really do much with it but hold it. Why the hell would gold be any kind of investment? For all the reasons anything else is… because we believe the demand for it is going to rise proportionate to the supply.

And so it will be with GOLD. It will rise, just as houses rose. It will fall, just as houses fell. But GOLD will not keep you warm on a cold night or satisfy a hunger unless you find someone willing to give you what you need in exchange for your GOLD or your fiat money for that matter.

It’s all consumables man… GOLD, fiat notes, real estate… you don’t own them they own you… none are any good but for the needs they satisfy first and then only maybe the wants… “A man only needs so much money, the rest is just for showin’ off”.

There are a lot show offs out there most of which are showin off with money they don’t own.

#111 BAD on 10.29.09 at 6:41 pm


From Statistics Canada:

Payroll employment, earnings and hours

Ready?

#112 Onemorething on 10.29.09 at 7:09 pm

#88 Davinci

The cost of GOLD, anywhere between $250-$1150/oz

Where’s the pain-in-the-ass stage? You seem stuck there. — Garth

Garth’s comment, priceless!

#113 Marc on 10.29.09 at 9:01 pm

We have a HOME, not merely a house, and it will be the next to the last place we are, after the funeral parlor.

#97 Bill-Muskoka (NAM) on 10.29.09 at 4:52 pm

Hey, you can now buy your casket from Wal-Mart online! If that is your desire

http://www.walmart.com/search/search-ng.do?search_constraint=0&ic=48_0&search_query=caskets

#114 Future Expatriate on 10.29.09 at 9:37 pm

#113…. you laugh… funeral parlors are going to have to find something else to slap their 100-500% markups on now, truth is out.

#115 Watched Bubble Never Pops on 10.29.09 at 9:37 pm

This particular blog post and the responses are like Groundhog Day all over again.

The RE boom continues…

#116 Future Expatriate on 10.29.09 at 9:39 pm

#112- The price of an ounce of gold in a years’ time in US Dollars…

PRICELESS.

#117 Devil's Advocate on 10.29.09 at 9:52 pm

Chapter 19 of 20…

http://www.chrismartenson.com/crashcourse/chapter-19-future-shock

Well worth your time to watch all 20

#118 pjwlk on 10.29.09 at 10:39 pm

#84 oortog on 10.29.09 at 2:34 pm said:

“They will find a way to take your money… by legislation, crashes, or theft…”

My thoughts exactly, and history has proven that time and time again.

Hey, don’t forget about the line up of family and friends you’ll also need to lend a helping hand to during the hard times…

#119 Jojo on 10.29.09 at 10:58 pm

Ouch!
I told you so,
After the GM and Chrysler bancruptcy I said:

Ford is next, because Ford doesn’t like to pay it’s invoices either….

Ford has a total of 41,000 workers represented by the UAW in the United States.

Workers at two more United Auto Workers locals overwhelmingly rejected changes to their contract with Ford Motor Co. on Thursday, casting further doubt on whether the deal will be approved.
Workers at a parts-making plant in Saline, Mich., west of Detroit, voted 75 percent against the deal, while research and engineering employees in Dearborn, Mich., voted roughly 90 percent against the deal.

Ford is the only Detroit-area automaker to avoid bankruptcy protection and not take aid from the U.S. government. But it has a far higher debt load than Chrysler and GM, and higher labor costs could hurt efforts to make a comeback.

So about of timing of the stock market crash and RE crash in Canada again you are wrong. Would be in Feb/2010 after that Global War in 2011 and collapse of world economies in 2012.

#120 nonplused on 10.29.09 at 11:27 pm

#99 Ottawa Mike

Good! The MSM has become nothing but a big infomercial for their sponsors. They haven’t been telling us the “news” for years! I’m surprised anyone still watches/reads them.

119 Jojo

If there is a global war in 2011 the global economy in 2012 will be hunter-gatherer. It doesn’t matter how you run the scenarios nuclear Armageddon is almost certain once the big boys square off with each other. Both sides have “pre-emptive” strike rules now, both have tactical devices meant to be used if they are loosing a conventional war (to take out the other sides conventional armies), and both sides will be tempted to launch a “decapitation” strike. Let’s hope it doesn’t come to that.

The good news is neither side has the money to start a major war any more. Typically wars are started at low levels of debt and lead to high levels, whereas we already have high levels now so I don’t know how much more could be borrowed.

More likely we get a limited war in the middle east that leaves all the oil fields under 6 inches of radioactive dust.

#121 Bill-Muskoka (NAM) on 10.30.09 at 8:38 am

#113 Marc

Wow, that is DEAD ON for price, eh? Personally, I will either handcraft a nice pine casket or just have my ashes scattered so I can haunt those who pissed me off during my time here in this dimension! LOL

All that ruffles and flourishes are for the people who haven’t passed through the portal. The occupant could not care less at that point. I especially liked the ‘4 inches wider’ one so there is room to roll over and provide elbow room’ Yeah, there is a reality alright!

Funny how multi-billion dollar industries come about for death events like marriage and funerals, eh?

Just kidding about marriage being a ‘death event’, it is actually a Three Ring Circus: Engagement Ring; Wedding Ring; and Suffering, or so my father-in-law said at our reception. We all cracked up. (My wife and I have a great and loving marriage, so do not think I am am anti-marriage.)

How the heck people can spend $20K+ on a wedding, then buy a house, and new car, have kids, and luxury vacations including a honeymoon is beyond my rational thinking. It seems to be some form of Last Meal before reality sets in?

Of well, the Madison Avenue Marketeers have trained them well since birth. ‘Gotta have!’, ‘I want!’, ‘But, Johnny has one!’, ‘You don’t love me!’ Oh, and the most pressuring ‘You are not someone unless….fill in the blank!’

This society make lab rats and trained seals look like geniuses.

#122 Bill-Muskoka (NAM) on 10.30.09 at 8:44 am

#101 Justin

Amen! Like Yogurt said ‘Merchandising! That’s the secret!’

I can see it now ‘Greater Fool: The Lunchbox’; ‘Greater Fool: The Backpack’; ‘Greater Fool: The Running Shoe’; ‘Greater Fool: The Condom’; ‘Greater Fool: The Mortgage Calculator’.

Garth you can send my royalty cheques via email, eh? LOL

#123 Stop Puttin Down Boomers on 10.31.09 at 8:18 pm

#113 Marc on 10.29.09 at 9:01 pm

I’ve already told my hubby & family that I’ll do cremation as my parents did. We had awake for my Dad & a small ceremony for my Mom with a Salvation Army Minister. She wanted Amazing Grace sung so we accomodated her. I’ve instructed my hubby & my family that I want ABSOLUTELTY NOTHING – not even an obit. Just cremate me & throw my ashes in the sea. But, I’d like, if possible, for my hubby to recoop all the gold in my mouth – I’ve lots of it & I’m not kidding. Not sure if it’s possible – but why should the crematorium gain.