The sure thing

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There was a murder the other day in a part of Toronto realtors say is hot. Houses which used to sell for two hundred in a good market now fetch eight. Families move there because it’s considered safe. I mean, it has to be, with $800,000 houses, right?

Anyway, a kid got gunned down. The neighbours apparently take comfort in the fact it looked like a surgical hit. Maybe a pro job. That’s good. Means it wasn’t just a random act of violence which might then impact property values. A poignant story about it was published here.

I mention this as another small example of the mania of our times. People on Gough Avenue probably rationalize the taking of a human life on their street because it doesn’t fit. They look around and see gentrification and wealth. Others can drive through and not really notice how this is so different from the next neighbourhood where too many people are destitute. It’s the thing about real estate, once you buy in. Very blinding.

As we all know, the best current example is Vancouver. I listened to a fellow podcaster over at HoweStreet.com hours ago. Michael Levy, who is also a gold company principal and BC business TV and radio broadcaster (cheaper than hiring a journalist), was asked about a market in which the average SFH costs over $730,000, and sales have increased 100%.

“This is not a bubble here,” he said defiantly. “It’s a healthy market.” When asked what money advice he would give new university grads, he was unequivocal. “Pool your resources and go out and buy real estate. You gotta bite the bullet…”

Human nature being what it is, the more people have gambled and risked and gone deep, the more they’ll defend the intrinsic value of their actions. The more they’ll encourage others to mimic their decision. It’s as if when everyone’s put a dwarf on their lawn, removed their clothes, or bought a goat, that it’s normal and desirable.

Bidding wars for houses in Vancouver at their peak price is akin to folks lining up on Yonge Street to buy gold when it last soared (then crashed and burned for 20 years) or soccer moms stuffing their RRSPs with Nortel at $130 a pop (it was bankrupt nine years hence) or a Dutch skilled labourer spending 2,400 florins – equivalent to 16 years wages – on a tulip bulb in 1635 (the market collapsed two years later).

This is Nasdaq all over again. In the Spring of 2000, that tech-heavy index was at 4,572. Within twenty months, it had lost 74% of its value. Down with it went an army of know-it-all day traders and millions of shocked investors, supported by a sycophantic media and self-dealing ‘experts.’

This is why I am a contrarian. The herd is seldom right. I’ve seen this too many times.

Say, can I interest you in a bulb?

HOWE STREET BANNER

Garth`s latest podcast is here.

100 comments ↓

#1 T.O. Bubble Boy on 11.04.09 at 10:54 pm

“Pool your resources and go out and buy real estate. You gotta bite the bullet…”

That’s pretty shady, even for a realtor.

Toronto’s a big, intermingled city – crime can happen anywhere. I’m sure a few crime stories like this one will make the Milton/Vaughn/Stouffville/Aurora builders happy, as the fear of urban living scares people to buy in whatever the latest burb is.

No mention of the Conservatives blowing up the gun registry Garth?

#2 dd on 11.04.09 at 10:59 pm

Not in Vancouver. There is no bubble here. Just ask N Jr.

#3 Gord In Vancouver on 11.04.09 at 11:22 pm

Michael Levy, who is also a gold company principal and BC business TV and radio broadcaster (cheaper than hiring a journalist), was asked about a market in which the average SFH costs over $730,000, and sales have increased 100%.

“This is not a bubble here,” he said defiantly. “It’s a healthy market.” When asked what money advice he would give new university grads, he was unequivocal. “Pool your resources and go out and buy real estate. You gotta bite the bullet…”
____________________________________

I’ve followed Mr. Levy’s career for over 20 years and, until now, held the man in very high regards.

What disappoints the heck out of me is that this man is old enough to remember when Vancouver’s real estate market died in the early 1980’s. When a person his age pumps real estate, he’s either a soon-to-be-retiring baby boomer who’s desperate to ditch the empty nest or a suffering senior citizen who needs cash now.

#4 prairie gal on 11.04.09 at 11:40 pm

What a weird news story. Linking real estate values to a targeted shooting. Its hard to imagine that people actually view the world this way. Sorry, but just because you pay a million dollars for a house it doesn’t mean you now live in ‘Pleasantville’ where life is all rainbows and unicorns. Reality does tend to creep in.

#5 Confused on 11.04.09 at 11:42 pm

Garth quick question (not related to the article). Is it possible for the Bank of Canada not to raise interest rates in 2010? I am assuming:

1) The inflation rate remains below 2%.
2) The CMHC keeps shelling out easy credit.
3) The US-FED keeps its rates low.
4) Mark Carney remains … himself.

Wouldn’t this keep house prices elevated well into 2011?

#6 Einsam Solo on 11.05.09 at 12:13 am

Michael Levy is an associate of Michael Campbell and Ozzie Jurock which minimizes his credibility in my view.

#7 nonplused on 11.05.09 at 12:18 am

No interest in a bulb but a goat might be in order to mow the lawn. Kind of like an outdoor “Rumba”.

#1,

Thank Dog they are killing the long gun registry. $1 billion per year to keep honest people honest who already need to be licensed up the ying yang to buy it in the first place isn’t helping anything, especially the deficit. Hand guns remain registered and restricted and assault weapons remain illegal so all we will loose is another costly big brother nuisance.

I know a couple where the husband deals (used to) in collector rifles from the second world war. He registered all the weapons he acquired, fixes them up, and trades them or sells them to other responsible collectors. He also ran a small operation maintaining guns for Fish and Wildlife officers. The RCMP squat team raided his house in a full operation, had him, his wife, and their 2 children pinned on the ground at gun point, seized all the guns in the house (including 2 that belonged to Fish and Wildlife), and laid charges. Of course, the only guns he had that weren’t registered were 2 he had just acquired that weekend at a swap, and one that wasn’t his that was brought to him for cleaning. All the charges were dropped after a lengthy trial, but it cost him $40,000 in legal fees for which he was entitled to no compensation. It came out in the trial that the police were acting on a “tip” from a “neighbor”, and did no investigation before launching the raid. It’s just a big witch hunt.

#8 kitchener1 on 11.05.09 at 12:18 am

A few weeks ago I was in Toronto visiting some friends, on the way to see an old univeristy buddy in High park, I stopped by an open house in the “junction” area (Runnymede-Keele on dundas)

The asking price was laughable, and the realtor kept telling me its an “up and coming neighbourhood” LOL.

I heard the same thing 10 years ago while attending U of T.

Toronto it full of these “up and coming neghbourhoods”
Stockyards, Junction, Lakeshore (might actually be), North beaches,Corktown, Cabbagetown , even heard that rexdale and Malvern are now “up and coming” In vancouver, think of east Van.

10-15 years ago, these areas were all marginal and still are, they are not up and coming and will not be in the foresable future.

Its all semantics, to the first time home buyers on this blog, here is what you check:

1. school disricts, #1 priorty
2. demographics (local) are there single family homes or multi tenant properties (rooming houses), if its a prime neighbourhood, they will be SFH.
3. Check with local police to view maps and petty crime stats, this info is available
4. Cars and property upkeep, year and model not important– what condition are then in? Is the property in the area been maintained?
5. Average income of the voting district, will filter the true top teir neighbourhoods,
6. Proximty to community housing…ya, ya, ya, say whatever you want but it effects neighbourhood price

When buying look it at like a commodity or a stock, review finacials, directors, market forecast, potential etc… Because a blue chip is always (90% of the time anyway) better then a penny stock

#9 rp on 11.05.09 at 12:20 am

Hey, don’t knock the herd. Being a lemming is great: just follow everyone, no need to beat your own path, everyone agrees you’re doing well. It’s everything a person could want, except that little matter of the drop at the end.

#10 Wealthy Renter on 11.05.09 at 12:22 am

I agree fully with T.O. Bubble Boy. People who long ago moved to the GTA suburbs forget how “intermingled” Toronto is. I wrote about this before, but it fits with Garth’s post today.

We live in West Toronto in a luxury Condo, but the area is a hellhole. It is only minutes away from where my wife works.

Within the last 2.5 years and within 1 km from our home, we have had 7 shootings (4 in 1 coffee shop, amazing nobody died,) 3 stabbings (with 1 high profile death), a woman raped, a gas jockey’s head smashed on the pavement (over $50) and a car jacking. I can’t make this sh?t up. I am not that creative, and I keep links of the new stories.

For the golfers out there, we are a solid 3 iron away from $500 to $700K homes. There area has pockets of 2 to 3 million homes.

We have had the means and the motivation to buy a home for several years, but picking a good location is a daunting task in a city where neighbourhoods can go from bright to blight in a few short years. Gentrification is a myth.

In Toronto, you pretty much have to drop 800K to a million dollars to be relatively secure and insulated from the “gang bangers.” We truly don’t want to drop our life savings into a home in a dodgy area. There are plenty of expensive homes on the market in Toronto, which literally border on gang war zones. (I hate using that term.)

I am not some paranoid Neo Con – just realistic. Toronto has haves and true have nots. The young man shot outside my Condo in October over a bad drug deal falls into the latter category.

#11 Soylent Green is People on 11.05.09 at 12:23 am

Maybe a dim bulb…

plenty of them around ;)

in real estate

Fav. comedy show on t.v. – Property Virgins, what a howl, Sandra is very professional R.E. Agent, she NEVER lets on your’re making one of the biggest mistakes of your life, I’ve never seen anyone as slick as her.

#12 Chaostrology on 11.05.09 at 12:34 am

Micheal Levy is a [email protected]#$%^&*:”}{@#&*****

Whenever he is running his yap on the tube I switch channels.

Whenever Bill Good let’s him rant about the hot real estate market I leave the room.

Fortunately, let haven’t let him on Traffic 730 yet, I’d hate to run my car off the road to get away from this guy!

#13 G. on 11.05.09 at 12:52 am

The gun registry was crap.
Years ago I used to ride my bike outside of Winnipeg city limits around the floodway dike.
And more so at the time when my best friend was found frozen in a ditch south of the city.
I wanted to understand how he got there, that cold April night.

I was accosted one day in the summertime by two large dogs.
Big dogs.
The kind you could rest your elbows on while you still stood.
They were playful but there was a little more than sport in them.
And I had to ease myself away.
But I could have just have easily panicked and rode away uphill. And lost.
I had a sense of their game.
A good bang would have dispersed them.
They clearly had me at the time if they had wanted to do me in.

That’s my touchstone for the gun registry.
And that day my belief that only the weather in southern Manitoba could kill you was done.
Not much else can there.

I could have used a gun there that day.

And when I got back to the city it would have been a different story.

#14 Jim on 11.05.09 at 1:00 am

Not only are the prices divorced from the fundamentals in Vancouver- there are few high paying jobs. There are more head offices in Calgary, a city half the size of Van. Who have we got here? BC Hydro, Telus, a few dying forest industry companies, low paying tourism jobs, and what else is there? I’d like to know what people do here to bring in the big bucks, they can’t all be growing dope.

Jim

#15 Elle on 11.05.09 at 1:14 am

Garth,

..The days of mania are upon us, ……affecting how we
think, how we drive, how we (don’t) communicate and
most perplexing……how and where we’ll find a roof to put over our troubled little heads!

“This is not a bubble here,” he said defiantly. “It’s a healthy market.”

I live in Bangcouver area where Mr. Levy closes his eyes to what is really going on, and makes the statement, “it’s a healthy market”, …..just makes me want to weep in frustration …..Reading in every newspaper that, as we speak, RE still climbs higher and ever higher…
really? …..it’s a healthy market?? Huh!

elle

#16 kansai_92 on 11.05.09 at 1:42 am

Here’s another herd mentality for ya.
Regular healthy people trying to jump the queue lining up for H1N1 vaccines.
How many people die every year from heart disease?
Yet I see no line ups at the gym.

#17 Nostradamus Le Mad Vlad on 11.05.09 at 1:44 am

“. . . a random act of violence which might then impact property values.” — God forbid! OUR property values will go down? Perish the thought!

Wot a greedy bunch of vampire-leeching bloodsuckers! Kind of interesting how some like to use the comparison of current RE values to human lives.

Nevermind. Eventually, they’ll learn.

“. . . it had lost 74% of its value.” — ‘Spose a $675K home, within three months, lost that percentage of its’ value, the owners had a $480K mtge. then both their jobs are shipped overseas?

Is this when CMHC steps in and, using taxpayers’ money then hands the keys to a high-powered banker?

Shit. I should have been a financier / broker / banker; I’d have been using $100 bills for tissues!
——
This may have something to do with all the stuff that’s happening. Anyone seen this — US – Chinese Military — in the m$m?

A little ‘net chatter (whether it’s accurate or not is unclear) re: Obama ceding US sovereignty (again, to whom is not clear but China would be a good bet, as they are buying more and more US paper, and probably have quite a lot of influence) — Space.

There is a whole pile of other stuff happening way behind the scenes which none of us knows little, if anything about. There is a powerful right-wing faction (dubya’s dorks) still involved, as compared to Obama’s group.

Therein lies one of the main problems — the left- and right-wing nutcases still trying to gain power (screw elections — they’re just fluff), at the expense of the taxpayer, which indirectly leads to other countries engaging in similar fiascos. — Taiwan

And speaking of the m$m, at least one of them is calling it correctly. How are Canada and the US doing? Possibly the preceding link re: US-China militaries (esp. in space) — is beginning to pay a larger role in this. — Brokeback Britain
——
A new trend may be here shortly — Bartering vs. Banking
——
More to this pandemic stuff than meets the needle — Big Blue

#18 Onemorething on 11.05.09 at 1:57 am

Michael Levy is a typical self serving manipulator by the sounds of it. He blatantly pimps GOLD and therefore in line with GOLD he knows the only reason it is moving is the USD.

He then likely has coffee with his PONZI RE buddies and they either convince him that the demise of the USD can only be good for Vancouver, not for the Rest Of Canada.

They also in their wisdom assume the Olympics will drive the RE values up even further. Never in any lifetime has this helped RE values for the hosting city…the very opposite! But they know that, own too much of it in Whistler!

We then find out he has lunch with Nostradamus Jr. and he has enough content to come up these both ridiculous forecasts and has the nerve to push them publically on first time home buyers.

Shame on yourself Mike! You are nothing but a selfish enabler. For most of us here, you are only a nuisance, but when you lead the young people to the slaughterhouse, you are much more than that!

Now get on a plane and fly to India and hug the government! You know you want too!

#19 Dave on 11.05.09 at 1:58 am

i love the tulip mania story

#20 Greg ... on 11.05.09 at 2:43 am

hey Garth

you are right. the herd is never right, but I have thought the herd has been wrong since 2003 when I first considered entering the Victoria real estate market.

Thinking “these real estate prices are irrational, way out of line relative to historical personal income/price ratios… I’ll wait this out and move in when prices return to reality”

However, as I sit in my rental, seven years later, it strikes me as a more than bit ironic that my decision to be rational when everyone else was not could in fact be seen as an exceptionally “irrational” decision since I missed out on the biggest asset price boom in history. Should have run with the herd.

I start to doubt that RE prices can really correct to historical price-income levels in a reasonable period of time (although I wish they would) without taking the Canadian economy/banking system down at the same time.

Love your site but …. still renting in Victoria…..

#21 Munch on 11.05.09 at 2:55 am

Garth is correct, again!

But WHEN she cried? When?

#22 Happy Renter in North Van on 11.05.09 at 3:05 am

Michael Levy is nothing more than a dressed up street walker for the REBGV (Real Estate Board of Greater Vancouver, for you non-lower mainlanders). He’s bent over frontwards so many times for the local real estate industry, he probably now enjoys it…

#23 Mark in Japan on 11.05.09 at 3:21 am

Is Japan is drifting towards a fiscal crisis? As the title of this article states, shoulde we be worring about Japan and not America?

http://www.telegraph.co.uk/finance/c…t-America.html

Japan is drifting helplessly towards a dramatic fiscal crisis…

The rocketing cost of insuring against the bankruptcy of the Japanese state is telling us that the model has smashed into the buffers. Credit default swaps (CDS) on five-year Japanese debt have risen from 35 to 63 basis points since early September. Japan has suddenly decoupled from Germany (21), France (22), the US (22), and even Britain (47)…

“Markets are worried that Japan is going to hit a brick wall: the sums are gargantuan,” said Albert Edwards, a Japan-veteran at Soci騁・G駭駻ale.

Simon Johnson, former chief economist of the International Monetary Fund (IMF), told the US Congress last week that the debt path was out of control and raised “a real risk that Japan could end up in a major default”…

“Can these benign conditions be expected to continue in the face of even-larger increases in public debt? Going forward, the markets capacity to absorb debt is likely to diminish as population ageing reduces saving,” said the IMF.

The savings rate has crashed from 15pc in 1990 to near 2pc today, half America’s rate. Japan’s $1.5 trillion state pension fund (the world’s biggest) has become a net seller of government bonds this year, as it must to meet pay-out obligations. The demographic crunch has hit. The workforce been contracting since 2005.
Japan Post Bank is balking at further additions to its $1.7 trillion holdings of state debt. The pillars of the government debt market are crumbling. Little wonder that the Ministry of Finance has begun advertising bonds in Tokyo taxis, featuring Koyuki from The Last Samurai. If Japan’s bond rates rise to global levels of 3pc to 4pc, interest costs will shatter state finances.
No one knows exactly when a country tips into a debt compound trap. But Japan must be close, even allowing for the fact that liabilities of the state Loan Programme (FILP) have fallen by 40pc of GDP since 2000.
“The debt situation is irrecoverable,” said Carl Weinberg from High Frequency Economics. “I don’t see any orderly way out of this. They will not be able to fund their deficit. There will be a fiscal shutdown, a pension haircut, and bank failures that will rock the world. It is criminally negligent that rating agencies are not blowing the whistle on this.”
Mr Hatoyama inherited a country that was already hurtling into sovereign “Chapter 11”. The Great Recession has eaten up 27pc in tax revenues. Industrial output is down 19pc, even after the summer rebound; exports are down 31pc; the economy is 10pc smaller today in “nominal” terms than a year ago ・and nominal is what matters for debt.

Tokyo’s price index fell 2.4pc in October, the deepest deflation in modern Japanese history. Real interest rates have risen 300 basis points in a year. It reads like a page from Irving Fisher’s 1933 paper, Debt Deflation Causes of Great Depressions…
“This is incredibly dangerous,” said Russell Jones from the RBC Capital Markets.
“The rate of deflation is shocking. The debt dynamics are horrible and there is the risk of a downward spiral.”

#24 TheBigLebowsky on 11.05.09 at 3:39 am

Levy is a wierd duck at the best of times. I saw him on bctv news over the summer almost in tears at the prospects of the BoC raising interest rates . he was later on howestreet.com touting that gold was way overpriced and should correct to $700 u.s , yet he is in the business of selling gold. This Guy seems like he is on the government payroll or something and my instincts scream weasel everytime I hear him speak. Anti-gold and pro bubble economy, doesn’t that sound like a person who is some how strapped onto the government? You would have to be criminally insane or knowingly ignorant to not see the bubble in real estate

#25 North Van Dude on 11.05.09 at 3:43 am

on the topic of Tulipmania, here is a quote from Manias, Panics and Crashes (a must read for anyone following this madness) describing only the down payment on a tulip bulb:
“and for a single Viceroy (rare tulip bulb) valued at 2500 Florin, two lasts (measure that varied by commodity and locality) of wheat and four of rye, eight pigs, a dozen sheep, two oxheads of wine, four tons of butter, a thousand pounds of cheese, a bed, some clothing and a silver beaker”.

Puts things in perspective doesn’t it. I can just imagine some tulip seller telling young Dutch graduates to bite the bullet.

Mark Twain said it best- when you find yourself on the side of the majority, it’s time to pause and reflect.

#26 BCR on 11.05.09 at 7:16 am

Please keep the gun registry discussion off this forum – idiotic comments like “This is not a bubble here,” he said defiantly. “It’s a healthy market.” are grist enough for our mills.

So what was Levy’s justification for this conclusion? Presumably the usual macro bollox about rich Chinese people knocking down the door, the Olympic effect and inbred Vancouver smuggery about how it is the “best place in the world”?

#27 Mike (Authentic) on 11.05.09 at 7:26 am

My investment advisor is advising to buy into the market as he thinks between now and 2 years it will go up as much as it has in the past 10 months. I don’t know…I’m a little unconvinced.

About Gough Ave, maybe it should be renamed “Ghoul Avenue” as the people there seem to be blinded to human life and suffering, more considered collected coloured pieces of paper.

Gold in the 1980’s, good example. It did crash 50%+ quick too (within months) and a lot of people lost more than 50% of their “investment”

Mike

#28 MrC on 11.05.09 at 8:02 am

Three things that are being floated in the Toronto / Ontario region:

– Dalton Days (Unpaid time off for government workers)
– 11 – 15% TTC fare hike
– City sales tax for Toronto

Looks like the TTC fare increase is a done deal, but it will be interesting to see if the other two items come to pass. With Ford pulling out of St. Thomas and the dollar staying close to 93 cents, it makes me wonder if Ontario will slip back into recession.

#29 Stop Puttin Down Boomers on 11.05.09 at 8:06 am

#86 Emma on 11.04.09 at 6:36 pm
#75 & 77 Bill-Muskoka

You’re right, most of those places were death traps – including one with extension cords run OUTSIDE from another unit to fix a ’shorting out’ problem. Two exits?? I can’t remember ever seeing two exits in any of them!

Then there was the guy who charged 3 girls one third of the rent each and when one had a boyfriend move in, he decided the boyfriend would pay an equal, fourth rent (thus raising the rent 33%). Didn’t get away with that one though.

My friends did claim their rent and get tax credits for them – but no one at CRA ever put two and two together. Hence my future job – on a small commission, I could make a killing!!!

…………

Just got around to reading the above from Garth’s blog yesterday. Does this mean that a university student anywhere in Canada can deduct their rent on their income tax return? If so, I assume that it only applies to a separate rental unit. My niece is sharing?a condo with an owner of the condo. She pays $450 per mo. plus half of the heating. Would she be able to ask the owner for a receipt for her payments?

#30 David Bakody on 11.05.09 at 8:14 am

When one person speaks up above and against the crowd is the man wrong and the crowd right or is the man right! example “Lynch Mobs” case closed.

Thanks once again Mr. Turner. Your advice and predictions ( not far off base) have helped many steer a prudent course.

One quick note on last nights vote …. a radio talk show was discussing how to spend the $3 Billion saved ….. HELLO? our AG said it would save $3 Million! so look for the deficit to rise $5 Billion …. any bets?

#31 greyhound on 11.05.09 at 9:15 am

Maybe we could all learn from Baron Rothschild, who when asked why he was so wealthy, answered “I always sold too soon.”

#32 Boombust on 11.05.09 at 9:38 am

“Michael Levy is an associate of Michael Campbell and Ozzie Jurock which minimizes his credibility in my view.”

Exactly.

And don’t forget the another buddy in the ol’ boys network…Premier Gordon Campbell.

These people make me want to retch.

#33 Jonathan on 11.05.09 at 9:39 am

It’s not that the herd usually isn’t right, it’s that they are generally wrong. That is, if money is involved. That’s because people use their emotions to rationalize their behaviour.

The beauty of emotions is that they can change almost instantaneously. Look at the United States. They loved their housing. They thought they were in tremendous shape, their economy was good, unemployment was at 5%, things were looking up and up.

Then consumer mentality changed. Within a couple months, the mass mentality had changed. All of a sudden the homes didn’t seem such a great deal.

#34 miketheengineer on 11.05.09 at 10:18 am

Garth et al:

This is what I see for Ontario.

Bubble go boom, by end of June. It will become even more evident that Ontario is going for broke. They will not be able to hide the numbers. All those high paid automotive workers, that are now in “second career” will graduate from their programs, only to discover that there are still no jobs, for what they trained for. EI runs out, no good paying job, they will be forced to Welfare. I can’t see them buying homes. I only see more selling due to panic. Hey it costs to live. Those programs are “loaded”

Then you have the fact, that by July the GST HST kicks in. I bet a lot of the buying and selling right now are people, desparate to sell, and people desparate to buy, as to avoid the additional costs once the new taxes kick in.

Anyone who pays 700k for a home, and can carry it, jolly for you, for you are sure are blessed right now. I bet you work for the “City”.

By July, we see a sellers market, flip back to a buyers market, slower sales, more balanced in nature. Sorry Real Estate people….slower times are coming, the days of multiple offers is about to come to an end.

I am 100% certain of this.

It will be nice to see the Real Estate pumpers take a slow down, like all the rest of us.

I can’t see how the price of fuel can go up. Ontario must be swimming in Gasoline, due to the quantity of people out of work. We are being “ripped” off big time here.

#35 mattbg on 11.05.09 at 10:23 am

A couple of years ago, I worked at a Canadian bank with a Muslim fellow in Toronto who was about to earn a college diploma in IT.

His plan, however, was not to work in IT. Instead, he planned to marry his first of four wives (he was planning the wedding to the first while actively looking for the second) and then send them out to work while he stayed at home and flipped real estate.

At the time, the US housing market was imploding and he was not aware of it. He essentially did not read the news and wasn’t aware of world events outside of his own sphere of interest — Facebook was his newspaper.

But, trying to crawl inside that mindset, is real estate just the only perceived sure-fire way to make money these days? You obviously can’t indiscriminately make money from your capital in any other way. That in itself should be a warning. On top of that, anyone who has an interest in doing things modestly — with a 25-year amortization, and with serious money down — should be fully aware that they are competing in a market that has been driven up in price by people who are willing to take on a lot more financial risk — ironically, driven up in price by the people that can least afford it. These people also have a demonstrably poor notion of value, because low downpayments and 35-year amortization show a lack of interest in value for money.

So, to me, this market is priced appropriately. The returns are very high because the risk is so great, as with most other risky investments. Most people will not win, but I’m not sure they realize that. As with most other risky investments.

#36 Watched Bubble Never Pops on 11.05.09 at 10:42 am

#15 Elle

“I live in Bangcouver area where Mr. Levy closes his eyes to what is really going on, and makes the statement, “it’s a healthy market”, …..just makes me want to weep in frustration …..Reading in every newspaper that, as we speak, RE still climbs higher and ever higher…really? …..it’s a healthy market?? Huh!”

I’m not sure why you would be weeping? The people are telling you that it’s a ‘healthy market’ and the corresponding prices in RE are rising.

If one needs a reason to weep, it would be to read about the supposed downfall of RE for years only to have it be proven wrong time and time again.

“Three economists went out hunting, and came across a large deer. The first economist fired, but missed, by a meter to the left. The second economist fired, but also missed, by a meter to the right. The third economist didn’t fire, but shouted in triumph, ‘We got it! We got it!'”

Man, you`re tedious. — Garth

#37 Watched Bubble Never Pops on 11.05.09 at 10:45 am

#20 Greg

“However, as I sit in my rental, seven years later, it strikes me as a more than bit ironic that my decision to be rational when everyone else was not could in fact be seen as an exceptionally “irrational” decision since I missed out on the biggest asset price boom in history. Should have run with the herd.”

Your post sums up the years that the doomsayers have predicted the RE crash and the results of their forecasting.

“Economists have forecasted 9 out of the last 5 recessions.”

#38 Watched Bubble Never Pops on 11.05.09 at 10:48 am

#26 BCR

“So what was Levy’s justification for this conclusion? Presumably the usual macro bollox about rich Chinese people knocking down the door, the Olympic effect and inbred Vancouver smuggery about how it is the “best place in the world”?”

Perhaps Levy’s justification is the fact that RE prices in Vancouver have risen for over a decade.

Why are the doomsayers justification that this is wrong? (beside a handful of chirping crickets)

“The First Law of Economists: For every economist, there exists an equal and opposite economist.
The Second Law of Economists: They’re both wrong.”

#39 Bill-Muskoka (NAM) on 11.05.09 at 10:59 am

The herd is seldom right. I’ve seen this too many times.

Sheeple seldom think for themselves. Odd how that works because one of the most fundamental things we have in a democracy is freedom of thought. Granted, it is a very pleasant thing to believe that ‘someone else’ is taking care of things, but not checking on their competency is how atrocities, such as the current financial meltdown’, occur.

I could quote a myriad of philosophical quips to illustrate the point, but history tells me mankind needs hard lessons to awaken. Look at the Dark Ages where the Catholic Church literally outlawed free thought and then imposed the Inquisition against those who dared to think calling them ‘heretics’. Yes, they certainly were because the very word means to disagee with the herd mentality.

The powers that want to maintain control for their own narcissistic benevolence then add other terms like ‘anti-christ’, ‘apostate’, ‘traitor’, and their favourite ‘blasphemy’. They are experts at pointing out the ‘differences;’ of those who disagree with them, but never introspectedly reflect on their own intents and actions against the others. They are called Hypocrites.

It is the heretics that usually change the world for the better of all of us. Yes, even the mindless Sheeple who continue to graze, in oblivious and placid rectitude of their own stature, upon the pastures grown by the blood of those who took a stand for their well-being.

I am a heretic and PROUD OF IT!

Remember! Remember those who have couragously taken a stand for you and your future. Remember the likes of William Wallace, and the myriad of others who refused to simply allow despots to continue to rule. Remember you can and must make a difference regardless of recognition, fame, glory, or reward. That is what valour and honour are about, not the size of your monetary holdings. It is called ‘Content of Character.’ As the plague on the U.S. Marine Corps Iwo Jima monument reads ‘Uncommon Valour was A Common Virtue.’ So it should be in all freedom loving people. Semper Fi

As we begin Remembrance Week, let us not merely remember the soldiers, but the thousands of brave souls who have Stood Up against tyranny and corruption. They walk amongst us today. Are you one or a Sheeple?

#40 ant-626 on 11.05.09 at 11:07 am

Garth, please comment this. Anti-Christ is coming to us?

“The injunction of Jesus to love others as ourselves is an endorsement of self-interest,” Goldman’s Griffiths said Oct. 20, his voice echoing around the gold-mosaic walls of St. Paul’s Cathedral, whose 365-feet-high dome towers over the City, London’s financial district. “We have to tolerate the inequality as a way to achieving greater prosperity and opportunity for all”.

http://www.bloomberg.com/apps/news?pid=20601109&sid=aySZ9TS.aODA&pos=11

You`re spending too much time with the goat. — Garth

#41 Bill-Muskoka (NAM) on 11.05.09 at 11:27 am

#29 Stop Puttin Down Boomers

The deduction occurs on the Provincial portion of your tax return. Look at lines 6110 on Form ON479. The deduction shows then on Line 13 of ON 479.

If you use a tax program like Quicken it will guide you through all the entries.

Note you must enter the name and address of your landlord and the amount of rent paid. That is how they track landlords who scoff at claiming their rental income. Do you part and they will do their’s.

For those age 64 and older there are other property tax deductions. The 2008 rules increased the deduction from $250 to $625.

If you have your own business then the rent can be deducted as a business expense as well using Form 2125, or others depending on what your business type is.

#42 TheComingDepression on 11.05.09 at 11:28 am

Michael Levy should be held accountable and sued for every person that buys a condo or house in Vancouver when it collapses. Its like saying go and rob that bank and I’ll sit in the car and watch

#43 X on 11.05.09 at 11:33 am

I know CMHC is supposed to help home buyers to qualify for homes. However when I read their website, it almost sounds like naive home buyers could be easily misled into buying more house than they should.

http://www.cmhc.ca/en/co/buho/hostst/hostst_002.cfm

#44 X on 11.05.09 at 11:40 am

Thousands of borrowers on the verge of foreclosure will soon have the option of renting their homes from Fannie Mae, under a policy announced Thursday.

The government-controlled company, through its new “Deed for Lease” program, will allow borrowers to transfer ownership to Fannie Mae and sign a one-year lease, with month-to-month extensions after that.

This has exactly nothing to do with helping “homeowners.”

It is entirely about Fannie not having to recognize the written-down value of these houses – that is, allowing them to hold the “mark” on the loan at it’s original value, rather than recognize the loss.

The rental program is designed to help homeowners who don’t qualify for a loan modification under the Obama administration’s plan, but still want to remain in their homes. Fannie Mae is not planning to market the homes for sale during the one-year rental period.

Fannie won’t sell the properties because then they would have to recognize the mark.

This is nothing other than yet another scam to avoid recognition of bad paper Fannie took on their books and has a HUGE embedded loss.

To qualify, homeowners have to live in the home as their primary residence and prove that they can afford the market rent, which would be determined by the management company. The rent can’t be more than 31 percent of their pretax income.

Oh, so the rent can’t be more than 31% of their pretax income, but the original note’s payment was, right? After all, if it wasn’t then the homeowner wouldn’t have been in foreclosure in the first place!

That’s the key paragraph, and tells you that:

*
This is simply an attempt to avoid mark-to-market on the properties.

*
The rent charged will be insufficient to meet the PITI (Principal, Interest, Taxes and Insurance) on the original note, as by definition if it could the “homeowner” wouldn’t have defaulted in the first place!

This is yet another scam folks, all courtesy of our government who will do anything to avoid admitting the extent of the liabilities that are now in Fannie and Freddie’s portfolio (and by extension, partially in The Federal Reserve as well!)

But the economy is getting better, right?

That’s why we keep seeing scheme after scheme, scam after scam, all intended to do one and only thing – avoid a true and accurate accounting of losses that have already occurred.

And the market roars – it spiked a full 1% on this announcement – on yet more government-sanctioned and legalized fraud.

IF the economy was truthfully improving we wouldn’t need any of these schemes. Honest profits would be sufficient to both support the housing and stock market. The fact is those honest profits simply do not exist, and neither does the value of these “assets” support the loans outstanding against them.

IF the government gave a damn about these homeowners they would instead reset the loan to the discounted cash amount of that market rent and re-write the loan at that same 31% of the homeowner’s income. Of course that would force recognition of the fact that the property isn’t worth anywhere near what the loan balance is, and thus force Fraudie and Phoney to EAT the bad paper they’re holding.

Scam scam scam scam scam – it’s all good for the banks and oligarchs, while the average American is dispossessed of his house!

Karl Denninger

#45 Bill-Muskoka (NAM) on 11.05.09 at 11:48 am

14 more Wall Street insider trading charges: FBI alleges $25M in illegal profits

Wow! Doesn’t this just make your trust and confidence SOAR and want to give your hard earned money to ‘investment firms’? I know I just get that warm, fuzzy (similar to dementia) feeling every time I read such reports. Where are the Bay Street arrests? BTW, how is Earl Jones doing these days?

#46 Downsized and Delighted on 11.05.09 at 11:52 am

I believe that you think you are a contrarian Garth, but a contrarian actually has a plan – he doesn’t simply disagree with everyone else. So what is your plan? (three weeks ago it was sell your house, or borrow against your house and put it all in the tse, wasn’t it?)

One plan does not fit all. And it`s the S&P TSX. — Garth

#47 Bill-Muskoka (NAM) on 11.05.09 at 11:54 am

Also, Today’s Pun.

In democracy it’s your vote that counts, in feudalism it’s your count that votes.

#48 CalgaryRocks on 11.05.09 at 12:02 pm

Three things that are being floated in the Toronto / Ontario region:

– Dalton Days (Unpaid time off for government workers)
– 11 – 15% TTC fare hike
– City sales tax for Toronto

Geez, how’s electing a bunch of socialist union butt kissing gasbags working out for TO. I don’t remember when Toronto hasn’t had some type of tax increase. Good or bad times they keep coming.

This is a great example for us redneck westerners to point to every time we get accused of voting too conservative.

#49 Calgary Rip off on 11.05.09 at 12:04 pm

Garth,

there isnt any security in investments. That’s a reality. That includes homes in good neighborhoods. All a person really has is today, that’s it. Plan for the future of course. Interest rates will raise and there will be foreclosures.

In Alberta the people deserve what they have gotten-they have voted in incompetent conservatives again, and its no wonder the province is governed improperly. There are uneducated persons at the helm. The Wild Rose party is even worse. It’s time Alberta got with it and joined the rest of Canada. Or continues to be the joke of Canada. This means voting the party most likely to get rid of Harper and Stelmach. Nevertheless voting wont deny the coming high interest rates by 2012.

#50 AM on 11.05.09 at 12:07 pm

“With Ford pulling out of St. Thomas and the dollar staying close to 93 cents, it makes me wonder if Ontario will slip back into recession.”

Are we currently out of recession? I would define being out of recession only after the ecomomy shows growth for more than three straight months.

About this Levy guy, there are so many media types caught up in real estate investments and they obviously have the means of spreading their own hype and opinion to the masses to keep this bubble inflated. Unfortunately, the sheeple suck it in like it’s the gospel truth.

Where’s a good prick when you need one. We need to return to reality.

#51 Ginger on 11.05.09 at 12:07 pm

Garth, as a 1st time poster, I wanted to let you know how much my husband and I really appreciate your website and how you show us what’s really going on behind the msm headlines.

#14 Jim
As for jobs in Vancouver, I think the new-agish health industry is big out there, my sister used to be a yoga teacher there, but after being away for a few years, was unable to get back into it because of saturation in the market. Her income from waitressing has gone down too. Her partner seems to be doing well in therapy/personal growth work, but they sure can’t afford a house! And these are 2 people with university degrees. I guess the beauty and climate make it worthwhile.

#52 conan on 11.05.09 at 12:21 pm

Re 29

It is just a provincial tax credit that renters qualify for and is not a direct deduction on their income.

Receipts are nice but the main thing is to have your neice claim her rent payments and disclose the persons name who she paid the rent money to.

This deduction is worth a couple of hundred dollars every year.

If your neice was self employed with an office somewhere in the condo then the deductions would become meaningful.

#53 knucklewalker on 11.05.09 at 12:46 pm

I have been following this blog for a few months now…I did spring for Garths last book (not bad but not nearly ominous enough).
Most on here blatantly miss the forest for the trees. Is there a real estate bubbly in parts of Canada….only a true moron couldn’t see it. Will a bunch of stupid folks lose their shirts…yep…

But compared to the large scale macroeconomic changes occurring worldwide…all driven by the 2005/2006 peaking of crude oil and the 2008 peaking of all fossil fuel derivatives…..the real estate market in Van and Calgary are just pimples on a very very large womans ass :)

We are now in the T2 phase of M Bakharatis slippery slope in petroleum decline. The future does now look just dark…it looks Medieval….

We will drop from 85 million barrels per day down to 55 million barrels per day over the next 11 years…..that spells catastrophe for our entire way of life. Anyone that thinks that our “petrodollar” status here in Canada will protect us from the worldwide geopolitical convulsions that are starting now….just doesn’t get it.

Its just to bad that people cannot really “get” anything until they are starving, cold, in pain or destitute…and even then they usually look for a “corn pone” dictator (hat tips to J H Kunstler) to give them the easy answer that their little minds can accept.

Sorry for the rant folks…need more coffee….

#54 Bill-Muskoka (NAM) on 11.05.09 at 12:52 pm

#29 Stop Puttin Down Boomers

Further to my earlier reply, the applicable law depends on the Province/Territorial Law. I can only give you the info for Ontario, but try using CANLII which is a search engine for all Canadian Law.

#55 wondering on 11.05.09 at 12:54 pm

@ #29 Stop putting down the boomers

Just got around to reading the above from Garth’s blog yesterday. Does this mean that a university student anywhere in Canada can deduct their rent on their income tax return? If so, I assume that it only applies to a separate rental unit. My niece is sharing?a condo with an owner of the condo. She pays $450 per mo. plus half of the heating. Would she be able to ask the owner for a receipt for her payments?

It depends on the province. From earlier comments it appears this is true in Ontario, but in BC, for example, it hasn’t been true for about 15 years.

#56 The Great Gazoo on 11.05.09 at 1:06 pm

Whats happened to the Danforth is whats EXACTLY happened to College St. (formerly little Italy). They both USED to be great areas for dining and hanging out in cafes, attracting a calm, classy crowd. Clinton St. on College was rated by an american magazine as top 10 ten coolest places in North American. College St. last year had a shooting right at that intersection.

Both Danforth and College St are the same, a few bars start popping up, quick money, then some “lounges” pop-up, which are really downsized clubs. As my friend aptly called “Danforth and College lounges… where overaged partiers go to retire”. Next thing you know you start getting drugs, thugs and drunks…. its not even about the shootings .. just the trash. Went to the Danforth for a quick bite a month ago and was amazed at the transformation to sleaze joints.

There’s nothing like the smell of urine, cigarette butts and vomit in the morning of your $800K house.

But hey thats Toronto, the greatest city in Canada.

#57 Bill-Muskoka (NAM) on 11.05.09 at 1:23 pm

#51 conan

The ‘couple of hundred dollars a year’ may just be the ticket you need for dropping to a lower tax rate. I always use every penny in doing our taxes. Likewise, I have no problem paying my share as long as it is fair and honest, but using the law to one’s advantage is both wise and intelligent.

Unlike many, I run my books using Quicken and every single transaction is broken down, categorized, and entered. At the end of the year I only need to generate reports for computing my taxable income. Also keep track of things like returns, Canadian Tire Money deductions/refunds, and you will save money, and also have a verifiable record of your tax claims.

If you are in business your GST/PST/HST amounts are also there and taken care of. I never throw away a receipt until it has been entered, and then retain them for the six years. By using Quicken Tax you can automate your information right into the tax forms as well, but that requires very specific setup of the categories to have an accurate result.

You then can do carry forwards/backs and average out your income tax wise where allowed. I find most ‘business’ people are NOT! They only care about making money and their record keeping practices are truly abhorant. Oh, well, it keeps accountants employed and charging money anyone could save.

#58 Genghis on 11.05.09 at 1:36 pm

According to this WSJ article there is definitely a global bubble in selected asset classes. The US Federal Reserve is taking the lead and they appear to have no plans to do anything about it.

http://online.wsj.com/article/SB125729703390626817.html?mod=rss_Today's_Most_Popular

Regarding residential real-estate, the situation in Australia seems to be pretty much the same as what is happening in Canada. Prices have surpassed the early summer 2008 peak in major markets. This despite recent interest rate hikes down there.

As stated in this blog many a time, this is not going to end well.

#59 Bill-Muskoka (NAM) on 11.05.09 at 1:44 pm

#47 CalgaryRocks

By all means let us further divide our country by using regional whining and extreme Left/Right labels rather than coming together for our common good.

There is a place known as the Centre where balance and fairness preside over in your face confrontation. It is commonly known as civlity. Try it…It really does work.

If your ideology doesn’t make life better for all then perhaps it needs review and revision?

#60 hal smith on 11.05.09 at 1:50 pm

I’m glad that I’m not the only one who thinks that Michael Levy is an idiot. He lives on a different planet and in a different economy than I do. Nothing he says really makes sense to me. And guys like him run and influence our economy? Geez, it’s scary.

#61 jess on 11.05.09 at 1:51 pm

satyam cooked books for years
Satyam, which means “truth” in India’s ancient Sanskrit language, had “inflated profits over a period of (the) last several years,” Raju said in his letter, which was released to the Bombay Stock Exchange.
==========
http://www.cbc.ca/money/story/2009/01/07/satyam.html

Satyam, which means “truth” in India’s ancient Sanskrit language, had “inflated profits over a period of (the) last several years,” Raju said in his letter, which was released to the Bombay Stock Exchange.

========
“changing actuarial assumptions.” I guess that word ‘potential’ didn’t fulfill the expectation

Cēterīs paribus

#62 Bill-Muskoka (NAM) on 11.05.09 at 1:52 pm

#54 wondering

Just FYI, albeit not related to BC Tax Law, here are the links to both the BC Residential Tenancy Act and decisions made by the BC Board.

Residential Tenancy Act [SBC 2002] CHAPTER 78

Board Decisions

#63 Stop Puttin Down Boomers on 11.05.09 at 2:04 pm

#40 Bill-Muskoka (NAM) on 11.05.09 at 11:27 am
#29 Stop Puttin Down Boomers

The deduction occurs on the Provincial portion of your tax return. Look at lines 6110 on Form ON479. The deduction shows then on Line 13 of ON 479.

If you use a tax program like Quicken it will guide you through all the entries.

Note you must enter the name and address of your landlord and the amount of rent paid. That is how they track landlords who scoff at claiming their rental income. Do you part and they will do their’s.

For those age 64 and older there are other property tax deductions. The 2008 rules increased the deduction from $250 to $625.

If you have your own business then the rent can be deducted as a business expense as well using Form 2125, or others depending on what your business type is

……

I was curious because someone from Winnipeg made a comment, IIRC, and said this was available in Manitoba & was already be looked into my the CRA. I live in NS and have used Quicktax for several years, but am not aware that our prov. offers such a tax credit.

….#51 conan on 11.05.09 at 12:21 pm
Re 29

It is just a provincial tax credit that renters qualify for and is not a direct deduction on their income.

Receipts are nice but the main thing is to have your neice claim her rent payments and disclose the persons name who she paid the rent money to.

This deduction is worth a couple of hundred dollars every year.

If your neice was self employed with an office somewhere in the condo then the deductions would become meaningful.

…..

Thanks Conan – My niece is doing her Masters in Ottawa & based on what was said it sounded like the credit was only available to university students. Someone also mentioned about such a credit in Quebec where she obtained her BA. I have never heard about any such a credit for either univ students or renters. I wonder when it came into existence? Anyone know?

I have my doubts that if the credit is very low that my niece would ask her ‘landlord’ for a receipt which might jeopardize her friendship with her new girlfriend. My niece’s boyfriend from Mtl. stays at the condo every other weekend.

I do thank you both for replying.

#64 PeckedToDeathByDucks on 11.05.09 at 2:45 pm

@X – that “Deed for Lease” program sounds like a real winner for the pretend economy. I hope that Canadian parliamentarians are paying attention so we can join the synchronized socialism.

Will each transfer be counted as a home sale to pump the stats? Will the properties come with “garden maids” to maintain the properties? Will the government pay the property tax to the municipalities? Will rents be subsidized once extended unemployment benefits run out? Is there no end to the paperprestidigitizer?

#65 Duane on 11.05.09 at 2:55 pm

Garth, in your HoweStreet.com interview yesterday, you stated that the US dollar will “go up strongly next year”. With everything the US is doing to debase its currency, not letting the markets work themselves out, increasing its spending programs, its social transfer payments increasing, world USD reserves going from 2/3 to 1/3 in favour of real, yen, euro, etc., petrodollar being replaced with petroeuro and others, WHY would the USD index be increasing so rapidly next year and gold be done for? Gold is a barometer of how poorly the current currency is doing, and expected to be doing, in a country. Can you explain please?

I said the Americans would have no option but to support their dollar with higher rates, or risk a trade war. — Garth

#66 dd on 11.05.09 at 3:05 pm

#48 Calgary Rip off

“there isnt any security in investments.”

What?

#67 Chaostrology on 11.05.09 at 3:10 pm

Re: Income from Illegal Suites, Declaration of Income From Illegal Suites, Monster Houses in North Surrey and Canadian Reveue Agency.

The CRA regional office is situated smack dab in the middle of this crime. These govt. workers have to drive these streets to get to work every day. Single family homes with 5-8 cars parked in front of them are a dead give away that rooms are being rented out illegally and maybe should be investigated.

BC Hydro helped to shut-down illegal grow-ops in Surrey, perhaps the CRA can help to shut-down illegal Suites-Ops and the resultant destruction of single family neighbourhoods.

Just my opinion, Mayor Watts apparently can’t find the jam to back-up her By-Law staff and prosecute the Scoff-laws that currently have been identified.

In Micheal Levy’s world, everybody should be “investing” at the top of the market and then rent that property out to maximize ROI.

Here endeth the rant.

#68 wetcoaster on 11.05.09 at 3:44 pm

“Michael Levy is an associate of Michael Campbell and Ozzie Jurock which minimizes his credibility in my view.”

You mean the 3 Stooges ?

Levy was calling for a real estate crash three years ago and the market continued to climb another 20% higher. He is on some meds in my opinion, he flip flops to whatever suits his needs at the time. Zero credibility.

Honestly, “bite the bullet” ? “Pool your money ?” You’ll be biting the big one alright.

#69 Comfortable in a coma on 11.05.09 at 3:45 pm

#38 Bill-Muskoka

Following the trial, on 23 August 1305, Wallace was taken from the hall, stripped naked and dragged through the city at the heels of a horse to the Elms at Smithfield. He was hanged, drawn and quartered — strangled by hanging but released whilst he was still alive, emasculated, eviscerated and his bowels burnt before him, beheaded, then cut into four parts. His preserved head (dipped in tar) was placed on a pike atop London Bridge. It was later joined by the heads of the brothers, John and Simon Fraser. His limbs were displayed, separately, in Newcastle upon Tyne, Berwick-upon-Tweed, Stirling, and Aberdeen.

I guess that ended well for him? Sometimes being the heretic can mean you wind up on the wrong end of the stick, so to speak.

#70 brico9 on 11.05.09 at 3:52 pm

re: Michael Levy

I follow and respect Michael Levy as far as his views on gold and even the economy. Spoken with his a few times in person and Border Gold is A1.

I find this out of character for him. I know he lives in White Rock. Someone must have put the “Kool-aid” in the drinking water.

This is the worst piece of advice I have ever heard. Even if RE is healthy and the right thing to do – The idea to Pool your resources (go in together to buy a house) is plain stupid. Partnering up in RE is a nightmare – especially in the Graduate demographic (going to get married, student loans, room mates etc.).

Grads: Listen to Garth. Save your money, pay off debt, rent and the time will arrive that you’ll be able to buy Grandma and Grandpa’s house at a great discount (if you even want to).

#71 BAD on 11.05.09 at 3:58 pm


Seems the statistical tools used to measure various numbers are inadequate in today’s world of globalization. Consequently they distort the results.

Let me get this straight. We have a collapse of the housing and construction sector, massive layoffs in almost every part of the economy, a sharp downturn in consumer spending, and bank failures on an astonishing scale—-and the numbers show an increase in productivity?

It defies common sense.

Economics Unbound: Financial Crisis Creates Productivity Bonanza? No.

We are all in the dark…

-“There are none so blind as those that will not see.”-

#72 Emma on 11.05.09 at 4:26 pm

#29 Stop Puttin Down Boomers

Further to Bill-Muskoka’s response – this link lists all the credits so you can check your province, if it’s not Ontario.

http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/prvncl-frms-eng.html

#73 jess on 11.05.09 at 4:31 pm

Just as you were saying Garth
the sheeple or the unbanked and copy cat wite collar crime.

Overspending on Debit Cards Is a Boon for Banks (The New York Times)
September 8, 2009

Prepaid, but Not Prepared for Debit Card Fees (The New York Times)
October 5, 2009

A Free Credit Score Followed by a Monthly Bill (The New York Times)
November 3, 2009

“The card issuers could do anything they want,” Robert McKinley, CEO of CardWeb.com, tells FRONTLINE of the industry’s unchecked power over consumers. “They could change your interest rate. They could impose an annual fee. They could close your account.” High interest rates along with more and more penalty fees drove up profits for the industry, Bergman finds, as the banks followed the lead of an aggressive upstart: Providian Bank. In an exclusive interview with FRONTLINE, former Providian CEO Shailesh Mehta tells Bergman how his company successfully targeted vulnerable low-income customers whom Providian called “the unbanked.”

“They’re lower-income people-bad credits, bankrupts, young credits, no credits,” Mehta says. Providian also innovated by offering “free” credit cards that carried heavy hidden fees. “I used to use the word ‘penalty pricing’ or ‘stealth pricing,'” Mehta tells FRONTLINE. “When people make the buying decision, they don’t look at the penalty fees because they never believe they’ll be late. They never believe they’ll be over limit, right? … Our business took off. … We were making a billion dollars a year.”
frontline
The card game nov24th.
FRONTLINE correspondent Lowell Bergman examines the future of the massive consumer loan industry and its impact on a fragile national economy. In a joint project with The New York Times, Bergman and the Times talk to industry insiders, lobbyists, politicians and consumer advocates as they square off over new regulation and the possible creation of a consumer finance protection agency. How are the credit, debit and pre-paid card industries repositioning themselves to maintain high profits under the new rules? The stakes couldn’t be higher as many fear the consumer loan industry could be at the center of the next crisis.

================

WATERLOO REGION — Police are warning business owners and employees to keep an eye on their PIN pads after about 100 people were ripped off by a new high-tech scam.

The new scam involves Bluetooth transmitters that are now being used by criminals to swipe bank card numbers and passwords via wireless means.

#74 Emma on 11.05.09 at 4:50 pm

# 63 Stop putting

“I wonder when it came into existence? Anyone know?

I have my doubts that if the credit is very low that my niece would ask her ‘landlord’ for a receipt which might jeopardize her friendship with her new girlfriend”

Personally, I first claimed the credit in 1992 so it’s been around for a long time…it’s for low income earners, a category that most students fall into.

Bill Muskoka’s point yesterday was – friendship or no friendship – more importantly than your niece getting the credit, someone should be claiming that rent as income!!

#75 Watched Bubble Never Pops on 11.05.09 at 4:55 pm

#42 TheComingDepression

“Michael Levy should be held accountable and sued for every person that buys a condo or house in Vancouver when it collapses. Its like saying go and rob that bank and I’ll sit in the car and watch.”

You mean like how actor Nicholas Cage is trying to sue his manager for putting him into ‘bad investments’?

I doubt that the courts will set the precident of removing investment responsibility from the buyer; to put it on the broker.

#76 Watched Bubble Never Pops on 11.05.09 at 4:58 pm

#60 hal smith

“I’m glad that I’m not the only one who thinks that Michael Levy is an idiot. He lives on a different planet and in a different economy than I do. Nothing he says really makes sense to me. And guys like him run and influence our economy? Geez, it’s scary.”

So people who scream “RE is overpriced! RE will crash!” while prices climb year after year makes more sense to you?

I get it.

#77 Emma on 11.05.09 at 5:01 pm

#69 Comfortable in a coma

Isn’t that the beginning of Discipline and Punish?

You left out he best part – how some said the torso still moved as the cart took the body away!

We all have to go out somehow – will you choose a bang or a whimper?

#78 T in Calgary on 11.05.09 at 5:02 pm

Look what Fannie is doing down south.

http://news.yahoo.com/s/ap/20091105/ap_on_bi_ge/us_foreclosures_rentals

#79 Bill-Muskoka (NAM) on 11.05.09 at 5:17 pm

#72 Emma

Thanks for posting that link. If everyone started sharing useful information rather than merely opinions imagine how fast the people would become educated in reality?

#80 Emma on 11.05.09 at 5:18 pm

#8 kitchener1

I think people should stick to neighbourhoods that they know – I am not against your research techniques but if a first time buyer is so unfamiliar with a location, they should just go and rent a place in that neighbourhood while they’re waiting for this bubble to pop.

I am so sick of hearing people complain about their new neighbourhood and how they’ve joined some campaign to close something in the neighbourhood down – like a 200 year old slaughterhouse, or even a 25 year old crack den! Just stay the hell in candy land if that’s what you are accustomed to.

My hood wouldn’t pass your tests but it’s a helluva lot tamer than where I grew up…oh but I also don’t come home late at night in heels trailing holt renfrew bags! Luckily, that’s not in my nature.

#81 Comfortable in a coma on 11.05.09 at 5:23 pm

#77 Emma
“Discipline and Punish?”

I just liked to remember that going against the herd is tough and we need to remember that there can be a price to pay. Many people that have spoken out about the excess of the financial gurus, have been “hung and quartered” for their views.
I don’t think that Garth is quite there yet, but it is obvious that the political scum that run things are not impressed with other views. I don’t just mean the ones that run for office, but also the ones that run the political offices from behind the scenes.

It takes guts and a willingness to burn your bridges to change the direction of the herd.

#82 Vancouver_Bear on 11.05.09 at 5:48 pm

#76 Watched Bubble Never Pops on 11.05.09 at 4:58 pm

So you suggest load up on as much RE as possible?

#83 Bill-Muskoka (NAM) on 11.05.09 at 5:48 pm

#69 Comfortable in a coma

True! However, Wallace, as with Jesus Christ, Ghandi, and a myriad of other historical figures, including little Rosa Parks who refused to sit in the back of a bus,changed the world for the betterment of mankind. We should not belittle their actions but the actions of those whom they brought from the shadowy darkness into the Light.

Wallace’s bravery was followed by Robert The Bruce becoming King. Also in play were the Knights Templars who, having escaped the death orders of King Phillip ‘The Fair’ of France, lent much needed aide at the Battle of Bannockburn, which interestingly was fought on the Summer Solstice also known as St. John The Baptist Day. In 1328 England finally recognized Scotland as a free nation.

King James VI of Scotland went onto become King James I of England, their first Stuart King. The same one who authorized the King James Version of the Bible that has changed the world…For better or worse remains to be determined?. Had Wallace not stood tall for his country and principles James would never have acquired the throne. In fact, it was King Charles that almost took Scotland back under English control

Having fought in combat I can say this…If every soldier thought of the possible consequences they would all run from the fight. Then where would all the Sheeple be?

Our personal actions day to day seem meaningless most of the time, but we never know how an act will affect the future of our fellow mankind.

#84 Bill-Muskoka (NAM) on 11.05.09 at 5:52 pm

Everyone have a pleasant evening. Time to go relax!

#85 Bill-Muskoka (NAM) on 11.05.09 at 6:09 pm

#75 Watched Bubble Never Pops

Quickie before I head out. That will all depend on what Cage’s instructions to his investment agent were.

Remember, he is the U.S. of A. (Unlimited Silliness of Assholes) where idiots get $3 million for putting a hot McDonald’s coffee between their tender thighs while passing through the drive-thru. Never underestimate the U.S. Court system.

Like the old question goes ‘What do you call a lawyer with an IQ of 60?’

A: ‘Your Honor!’

#86 john m on 11.05.09 at 6:30 pm

The future considering all the factors is predictable……….the actions of gullible people will never be………..

#87 Stop Puttin Down Boomers on 11.05.09 at 6:36 pm

#72 Emma on 11.05.09 at 4:26 pm
#29 Stop Puttin Down Boomers

Further to Bill-Muskoka’s response – this link lists all the credits so you can check your province, if it’s not Ontario.

http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/prvncl-frms-eng.html

…..

Thanks Emma – I did check our prov. and we have no such credits. Did not check PQ, however. I’ve done my own income tax since I was a teenager & have lived in PQ, Ont. & NS and have never seen that credit listed. Guess that credit didn’t exist when I lived in the first 2 provs. eons ago. Thanks again.

#88 Jeff Smith on 11.05.09 at 6:40 pm

>#34 miketheengineer on 11.05.09 at 10:18 am Garth et al:
[stuffs snipped]

>I can’t see how the price of fuel can go up. Ontario
>must be swimming in Gasoline, due to the quantity of
>people out of work. We are being “ripped” off big time
>here.

I think the reason is that gas company has to keep the profit level the same. So lets say back in 2007 they made $1billion selling to X canadians with jobs at a price of $0.nn a liter. Now 2009, in order to make $1billion in profit selling to (X-n) canadians with jobs, where (X-n) << (X) they have to do some drastics mathematics. To keep everything equal they have to sell gas at ($0.nn+$0.mm). Get the idea??

#89 T.O. Bubble Boy on 11.05.09 at 6:45 pm

Back to one of Garth’s other favourite topics: why governments will need to raise bond yields.

I saw this article today on how investors in Japan are no longer buying government bonds (because of the ridiculously low yields):

http://seekingalpha.com/article/171475-japanese-investors-saying-no-thanks-to-government-bonds?source=hp_wc

Can Canada Savings Bonds be far behind?

#90 confused in to on 11.05.09 at 6:46 pm

How does that song by the Byrds go?? Turn, turn, turn, there is a season turn turn turn…

All of the wisest people in the world mention that there are times that we live and be merry!, and times be purge life’s excesses. I think just about everbody on this site understands this reality of life but it is clear that there are millions driving the market, oblivious to the risk and consequences of their decisions. They seem to lack the virtues, common sence and wisdom that their parents tried to instill in them.
Housing market in Canada? If something is too good to be true, it usually isn’t!

#91 Nostradamus Le Mad Vlad on 11.05.09 at 6:56 pm

Strange how constellations, stars, nebulas, the planets align all at once, then crash into and obliterate one other; then, re-birth.

Of course, I refer to a line from #71 BAD’s excellent link which says — “. . . I’ve got a subprime bond to sell you.”

Then add in a few lines from The Daily Reckoning’s Bill Bonner today — “Bonds are soft…so is the dollar…Gold is headed towards $1,100…”

Everyone knows that the higher one flies, the harder one falls. So gold may hit $2K – $5K (just like Nortel Rising), sheeple load up on the stuff like there’s no tomorrow, and then — BOOM!

Most sheeple, none of which come here anyway, will not have seen the link I posted a few days back, when a report suggested that there will be a glut of gold when China and India dump all their holdings in a few years. To whom, it didn’t say.

Bonner further says — “. . . The Chinese have seen what happens when you rely on dollars for a reserve. You’re stuck. Because your reserves can wilt fast. . . . so are all the world’s markets…led by Asian stocks. China is booming…with its stocks up 4 days in a row…”

Note to Garth and others: Bonner also writes — ” Speaking of old friends, Marc Faber says he’s long the dollar. Faber thinks the buck is over-sold. It could rise 10% in this last quarter.” — and — Rally – Crash

It is way too complicated for me to comprehend; when I think, smoke billows out from my ears! As far as bonds, they are not my cup of tea so there is little I know of them, but it does make for good reading — better than a thriller, as this is real life, and no one has much of a clue anymore!
——
Situation in Ukraine — not great. Don’t count Martial Law out.
——
On wrh.com, there is a link which says “. . . half of our country’s (US) kids will be on food stamps before 20 . . .” and the editor’s sign-off line is “. . . the rest in the army.”

North America — what a great continent!

#92 Onemorething on 11.05.09 at 6:56 pm

Watched Bubble Never Pops, you should change your handle to Watched Blog Never Leaves!

Step Off! I’m sure the sheeple will open their arms!

#93 Soju on 11.05.09 at 7:11 pm

I read an article in the newspaper stating that the average home in Vancouver is expected to go up $25,000 in 2010.

By God, then it must be so. — Garth

#94 Emma on 11.05.09 at 7:37 pm

#81 Comfortable in a coma

Sorry about that. I got excited and jumped the gun, a little. Here’s a link to the first few pages of Foucault’s Discipline and Punish – a great historical read on how societies are reflected by their treatment of criminals. You can see how I might have made the link…but it’s obviously time for me to reread it!

http://foucault.info/documents/disciplineAndPunish/foucault.disciplineAndPunish.torture.en.html

I think that for some people (like Garth-hope I’m not being too presumptuous), the price of silence is more painful than anything other people can inflict! We are just lucky to have him!

#95 john m on 11.05.09 at 8:45 pm

“By God, then it must be so. — Garth”………..lmao :-)

#96 eddy on 11.05.09 at 8:59 pm

CalgaryRocks asked the question

“Geez, how’s electing a bunch of socialist union butt kissing gasbags working out for TO.”

Well Mr. Rocks, thanks for asking, it’s not working out at all. my own city councillor, Sandra Bussin, does not even know who her employer is! I know it’s hard to believe. She called in to John Tory’s radio show a few weeks ago and identified herself as “Sandra”, and began berating the host and praising her boss, David Miller. The hosts must have recognized her voice and asked her 3 times ‘Sandra. do you work for the city?’ and 3 times she answered ‘no’. Repeatedly lying in public, talking shit, and cashing regular paychecks issued by “City of Toronto”

http://network.nationalpost.com/np/blogs/toronto/archive/2009/09/30/councillor-outed-as-mystery-phone-in-caller.aspx

#97 Soylent Green is People on 11.06.09 at 10:50 am

@ #47 CalgaryRocks on 11.05.09 at 12:02 pm

The City of Toronto is the most important level of government for people – providing services that impact them on a daily basis, yet the Provincial and Federal level of government deny them appropriate levels of financing.

This is simply not fair as Toronto provides more tax money to the nation then they get back and they are saddled with services at a much higher level than outside city areas e.g. ESL for immigrants, homeless, etc. etc.

Don’t blame Toronto for raising taxes when the Prime Minister constantly keeps us in an under funded state, constantly forcing us to go begging around town in a hat to collect some coins.

Or just keep bashing Toronto / Mayor Miller because that’s so much easier to do than reading and researching the facts.

jmho

p.s. I worked for the city for well over a decade in many different departments, 95% of the employees are extremely hard working good people but hampered by nutty political tactics totally and completely out of their control.

Sure the salary and benefits were fantastic, but working for crazy bosses who make you look incompetent for their own purposes is a daily hellish frustration on a whole other level.

Pros and cons whether you work for the city, private company or yourself.

.

#98 CalgaryRocks on 11.06.09 at 2:27 pm

The City of Toronto is the most important level of government for people – providing services that impact them on a daily basis, yet the Provincial and Federal level of government deny them appropriate levels of financing.

Well, since we have a 24B deficit at the provincial level, and 50B+ at the federal level I wouldn’t hold my breath for the rest of the country paying for our newest welfare queen.

Also, I don’t buy it that the reason for massive and constant deficits (in good and bad times) is providing ESL to immigrants and shelter to homeless people. Sorry.

#99 Soylent Green is People on 11.07.09 at 12:44 pm

Well, you’re not very good with HTML so I don’t think anyone will bother to listen to what you have to say.

#100 Dark Wettler on 11.09.09 at 2:45 pm

I read an article in the newspaper that America will finally go back to the moon next year, scaling up on a stack of dollar bills.

To compare what is taking place in global finance today with 1980’s gold or tulip bulbs is idiotic.