The R1E1 tax


Flaherty: No bubble busting 'at the moment'

news “Not everyone is enamoured of the Canadian real estate market. Financial author and former member of Parliament Garth Turner has been talking himself hoarse warning against speculating in what he believes to be a doomed market.

He said the current run in prices is being fuelled by record low interest rates, and any gains are liable to be erased as the Bank of Canada moves rates higher and makes many current mortgages unaffordable for homeowners.

The recession that gripped the world over the last two years was rooted in inflated U.S. real estate prices, as those with bad credit obtained easy mortgages and drove prices to unsustainable levels. Some markets -such as Phoenix – have seen prices fall more than 50 per cent as foreclosures rise and homeowners give up on their houses.

“Currently real estate is a fad, a fetish, a desire,” he said. “It is being bid higher in a bubble by a large whack of new buyers who could not afford a home if rates were returned to historic levels.

“So, an investor in residential real estate today is gambling.”

— Globe & Mail article

In the future (which starts in a few months), inflation, rates and taxes will all rise. The interest rate thing we’ve done to death. The bond market will begin to jump fixed-term mortgage rates in the Spring, and the Bank of Canada will take care of VRMs a couple of months after that.

Inflation will be robust, but modest. No hyper-inflation to make the gold bugs happy (say, where are they this week?). Not enough to impact real estate or make debts easier to pay. Just something less than 5% – enough to erode everyone’s paycheque.

So, what about taxes?

Reader Stan asks: “Please let me know the likelihood of the Government taxing gains on principle residence. It seems this is a very probable place they will look to increase government revenues. What would you guess the tax amount could be?”

Good one, Stan. I actually think this is possible – but only after the next federal election.

To review, Canadians are allowed to declare one house at a time as a principal residence, and you actually have to live there. The gains you make over the cost of acquisition are yours to keep tax-free. This contrasts with money made on, say, a rental property, 50% of which are taxed at your marginal rate – the maximum possible tax being around 25%.

So, home ownership comes with a massive tax subsidy, as well as the big interest rate subsidy currently existing. Of course, this tax-free thing helps to encourage the casino attitude which has emerged lately, as people buying homes with virtually nothing down, planning to sell in a year or two with big gains to throw into another house. This does nothing but encourage speculation and raise shelter costs for everyone.

At least, that’s what they’re thinkin’ these days at the Department of Finance.

In contrast, Americans have long paid a capital tax on house prices with the ability to deduct mortgage interest (and local taxes) from taxable incomes. That’s changed recently so homeowners there can keep the money they make on long-term houses, or easily roll profits into new ones. Plus, they keep their rate deductibility.

So, could we have a house tax in Canada?

You betcha.

The federal government could just eliminate the tax-free status of principal residences, but that’s likely too big a first step. They might continue to exempt a certain amount of the gain from tax if a new home is purchased, but that poses problems as to the amount, since $700,000 doesn’t go as far in North Vancouver as it does in Truro. They might bring in a reduced rate of capital gains tax on residential real estate, say 5% above the adjusted cost base, but that would be vociferously opposed by the powerful realtor and developer lobby as posing a barrier to home ownership. There could be a real estate exit tax, which lets people own a principal residence tax-free for the child-rearing years, then levies a 7% or 10% fee on the proceeds when anyone over the RRSP age (71) sells out. But a tax on Boomers? Pshaw.

No, what is more likely is something like the 15% tax in Germany on profits from real estate someone has owned for less than ten years. Or the Land Speculation Tax that existed in Ontario decades ago that taxed ‘unearned increases’ in the value of development property. Or there could be a real estate version of the financial transactions tax which is gaining popularity among economists – taxing excessive activity. Bidding wars come to mind.

This, in fact, is the most likely – an action done to curb speculation, while raising revenues. Anyone selling a home within two or three years for more than they paid would have the ‘windfall’ subject to capital gains. As I said, that would exempt a minimum 75% of the profit, and leave the rest taxed at the marginal rate of the owner(s). Without a doubt, that would also dampen the market – and might just prove popular among Canadians fed up with flippers, condo liner-uppers, the 5/35 no-equity, no-savings crowd and an industry utterly incapable of moderation.

The point is simple, Stan. The government is so far down the debt hole they’re looking up kangaroos’ behinds. That means taxes must increase since the economy cannot grow enough to solve this. But taxing incomes means consumers will spend less; not good when the economy is 60% dependent on that. Ditto for jacking the GST up again – another blow to consumerism.

Meanwhile billions in equity have been made without effort thanks entirely to the government policy of dirt cheap money.

Not hard to see where this one might be going.


#1 Mark on 12.11.09 at 10:52 pm

Nah. Government will print crazy amounts of money and pump up the stock market, before they try and tax housing gains on principal residences.

The mechamism for doing so and devaluing the Canadian dollar is already embedded into the CMHC in the form of mortgage insurance policies that will most certainly require government bailouts to support.

Devalued Canadian dollar = crazy-high tax revenues from the resource industry and its workers off of illusory ‘profits’.

#2 Kate on 12.11.09 at 11:16 pm

I love the pig. So cute!

#3 Canada's Housing Bubble on 12.11.09 at 11:35 pm

Sorry, but the Canadian dream is under siege

Thomas Walkom

Do your job; raise your kids; have a barbecue. If the American dream is untrammelled success, the Canadian dream consists of decent holidays and a house in Etobicoke.

Alas, the dream is under attack. Middle-class countries can exist only when most are middle-class. But in Canada, that’s increasingly not the case.

#4 CJ on 12.11.09 at 11:36 pm

This could turn out to be a bolting-the-barn-door-after-the-horses-are-gone exercise. If RE prices fall, there won’t be any profit to tax. If indeed there has to be an RE tax, I’d just as soon go for the German model, although the 15% might be modified to 10% and the 10 years to 7 years for our relatively mobile society. And like the HST, the feds could share it wth the provinces …

Unfortunately you’re right about taxes going up. All governments are way way in the hole. I work in downtown Vancouver and for the past month the usual contingent of parking meter checkers has become an army. No coincidence that the City of Van has just discovered a deficit of $26 million or so. But then, what’s $26 million when California is $30 billion in the red? And why is that such a big deal when Ontario, with an economy less than a third the size is out almost the same amount of money? Things are going to get worse for a while.

#5 kitchener 1 on 12.11.09 at 11:37 pm

Sure, im all for it as long as I get to deduct the interest on my mortgage and local taxes, but that will never happen.

What I do forsee in the future between the muncipal/provincial/federal govt is one level trying to “out tax” the next.

Like Toronto already started with their extra vehicle reg tax and extra land transfer tax. Coming to a city or town near you very soon.

Can;t see any sort of real tax coming up on RE in the future, boomers simply won;t have it and they are going to be selling in droves very soon. Or something that might be tax neutral, like claiming mortgage interest and local taxes, but having to pay tax on any realized gains when they sell.

The quandry really is, what happens when the market starts to tank? Do people then get a large tax writeoff or a loss, where the govt actually has to pay out more? what happens in the case of negative equity?

The missed the window on this and with the tide turning, it won;t happen.

Remeber, its a very precarious situation in Parliment with a min govt, any move like this will be suicide and I don;t see any party winning a majority in the next 5 years.

#6 Tony on 12.11.09 at 11:38 pm

A head tax on immigrants would be the #1 source of revenue. Keep Canadian jobs in Canada and stop the OHIP system from imploding.

#7 real_estate_bear on 12.11.09 at 11:46 pm

As much as I agree with the majority of what Garth says; there is nothing to suggest that any government in Canada is considering this. Capital gains on primary residence would be hugely unpopular with the baby boomers, who make up a large portion of the population AND tend to vote.

I think it’s more likely that existing taxes will keep going up instead.

Flaherty has said in the past – (I remeber watching the 15 second newsbite, and sorry I don’t have a link) that there was no interest in pursuing this. To paraphrase he said that “we have our system and the Americans have theirs”.

#8 Sean on 12.12.09 at 12:05 am

I agree with you and think the developers will be very upset with any tax on real estate capital gains. I think that RRSPs and the Tax Free Savings accounts are jucier targets for the finance ministry to go after.

#9 Bogdan on 12.12.09 at 12:17 am

The gains you make over the cost of acquisition are yours to keep tax-free.I see no reason for the gov to add a tax on the gains made from RE (principal residence), as there will be no gains in this area for the next two decades.

#10 Bobby on 12.12.09 at 12:24 am

No doubt changes are on the way.

I work in Hong Kong. After a speculative bubble burst in Hong Kong in the early nineties, the government put into law the requirement to put 30% down on a home purchase. It brought buying quickly to a halt.

Any clown, with the exception of those in bidding wars, can see that this will end badly. Especially for those who borrowed their 5% down. The question is, will the government bail everyone out. The litmus test will be those in Ontario whose alternate financed mortgages are now being recalled. These folks, unfortunately don’t qualify for conventional mortgages.

It will be interesting to watch!

#11 Ted on 12.12.09 at 12:34 am

Might, Could and maybe

Thats a lot of speculation. Not something you generally agreed with.

#12 Nostradamus Le Mad Vlad on 12.12.09 at 1:42 am

“. . . inflation, rates and taxes will all rise. The interest rate thing we’ve done to death. The bond market . . .”

That’s why 2009 is merely a precursor, setting sheeple up on higher pedestals. As to the bond market, see second link, as Canada will probably ride in tandem with the US.

Gold bugs are watching the metal swing like a yoyo, just as the economy will do. Silver beats a sinking piggybank any day!

“. . . jacking the GST up again . . .” — CPC had an open net to shoot at not that long ago. Raise GST to 10% or 12% in conjunction with an automatic income tax decrease, but I guess that was too complicated for their snowflake-size brain.
Well, lookkeee here. The natives are getting somewhat restless! ‘Bout bloody time, too. Second link — third link.
Bonds throw a curveball
Six per cent ( here ) of individuals control 96% of all m$m, so when these stories appear, it is patently obvious they were planted — BS
Anyone remember John Lennon’s Imagine? It’s all about looting, cheating and stealing from people via new taxes — that’s it.
What kind of new stuff are so-called developed countries coming out with?
A little fun and frivolity with a musical time out from the regular stuff. Enjoy!

#13 Dave on 12.12.09 at 2:37 am

Inflation will be robust, but modest. No hyper-inflation to make the gold bugs happy (say, where are they this week?). Not enough to impact real estate or make debts easier to pay. Just something less than 5% – enough to erode everyone’s paycheque.


oh come on, no need for the arrogance. Where are the gold bugs? I don’t come on here saying all these ridiculous things about gold, but I’ll tell you I’m still in the junior gold explorers and even if bullion drops $200 more from here (even though I think it will be going much higher) these explorers are still very profitable.

If you’re looking for people that are up 5-8 times their money from mining sector stocks including gold, some of them are still here.

it’s deflationary environments that make gold mining very profitable. I’m probably better off telling that to a wall, than posting on here though.

#14 Jojo on 12.12.09 at 2:38 am

OK,so what is my benefit because I trust you.
I didn’t buy house because you said in 2008 that houses are overvalued in Toronto Area and Canada .
In Jan/09 semi in north Mississauga was priced $299,000 and today same is $379,000,interest was same in January and now!
Now even interest will going up and we have to pay more taxes? Why? What I did to pay more taxes?
What benefit we got from the goverment, and now we have to pay more taxes?
Beter jobs opportunities? Cash for clunkers? Lower food,clouthes,insurance prices,higher salaries?
I can’t see any stimulus for 99% of Canadians.
Where is the TAX money? One Billion for consulting in Ontario Health, Five billions for Afganistan,40 billions for TSX, RE companies and Bankers? And again why Immigration Canada again has the highest levels of immigration,? “In 2010,We intend to welcome about 265,000 permanent residents” plus 35,000 working visas and 22,000 (refugees statistics from 2008)
Wow, from oct/2008 to oct/2009, Canada had lost over 450,000 jobs and for next year we should create more than 300,000 jobs just for new immigrants?
What about our 450K new unemployed workers?
“As well, the Increase of $ 1.4 billion over five years to fund settlment programs is helping newcomers obtain language training, job counselling and informantion services” from Immigration Canada.
And budget for 2008/09 just for Refugees and IOM was about 2 $ billions.
If you know well the policy of creation of Recession is only new CHEAP LABOUR, but not forever!

#15 solipsist on 12.12.09 at 6:15 am

Ahh, Mr. Turner,

I have been deeply immersed in other things for a couple of weeks (do any of you have MS? Google CCSVI), and have not read you for that time.

Man, you are smokin’ I laughed more than once reading your last few posts. I feel your incredulity. I wrote about it for a few years (the weirdness that negative ions can do to a populace), but couldn’t contain my disgust any longer, and had an exacerbation as an excuse to pack it in. I have read here often since then, but you are doing it now. Is it the Malbec? The medicinal West Coast fog? I can’t say, but thanks for the laughs.

#16 David Bakody on 12.12.09 at 7:20 am

Having said that could the Canadian voter say to Harper & Co prior to an election knowing: they said our Economy is as strong as the Canadian Shield and y;all would not raise taxes: “If elected and you raise taxes within the first 4 years of a majority mandate will all Conservative Members of Government including all appointed Conservative Senator resign” That sir would be using your own words “ACOUNTABILTIY” In fairness to the opposition they do not the truth as we the truth about our countries finances but we could demand it within the first 3 months and act accordingly, other words no spending frenzies like Harper & Co did to the tune of $18B in a heartbeat after receiving the keys to our vault!

#17 gold bugger on 12.12.09 at 7:47 am

Where are the gold bugs this week?
Calculating their 450% gain in the past 7 years.
You’re such a tool.

Proving once again gold investors, in large, are incapable of civil discourse. — Garth

#18 CalgaryRocks on 12.12.09 at 8:35 am

Wow Garth, so many new taxes. You’ve really embraced the Liberal mantra. But that’s ok, those are good taxes cuz you guys know better what people should spend their money on.

Flipping condos, bad, stealing money from people through taxation, good. Got it.

If you think of a couple more tax schemes, Layton will be knocking at your door next.

Please don’t ever mention cutting the size of government. We wouldn’t want to lose any of the services that we are getting. LOL.

We can’t afford to lose even 1 of those precious civil servants that make our daily life sooooooooooooooooooo much easier. Bless them and their little 7.5 hour days (not counting hourly 15 minute smoke break).

And where did I say I endorsed any of this? The point is wise citizens should always try to anticipate government, especially when you’re from a small province with narrow influence. — Garth

#19 Fuddle duddle on 12.12.09 at 8:48 am

And while we are on the subject of taxation, how long do you think it will be before the government starts taxing inheritances???

I’m glad I am at the end of the working part of my life… soon I can enjoy the time of day to myself…

#20 Toronto C9 Renter on 12.12.09 at 9:05 am

Minor tweaking of the Principal Residence provisions perhaps , but an outright capital gains tax is very unlikely.

On Gold: What a yawn! In the last 12 months, Barrick is up 10%, Kinross is up 5%. Compared to just about any other major stock, they are severely underperfoming. Even BCE is up 25% over the same period, and it carries a 6% dividend!

#21 David Bakody on 12.12.09 at 9:13 am

Listening, reading and understanding what has taken place and what is about to happen perhaps most must accept the fact there is little we can do wrt the New World Order. Big business is politics and politics is big business and we are required only at election time. The less people vote the better for those who want to control to invoke their hidden agenda. Many like myself have become skeptic of any major party.

Looking after one’s own interest at a low level and hopping for the best via no debt and sound investment/savings just might be the route peace and contentment.

#22 TaxHaven on 12.12.09 at 9:21 am

#12 Dave…not only will be have modest yet robust price inflation, we will also still have this continuous and pernicious erosion of living standards that has been going on since the early ’70s.

I “bought” more gold – physical bullion – yesterday…2.5 more ounces plus a Liberty Head double eagle, the latter at over $1300/oz. I’m not saving in gold because of concern about next year’s price inflation: gold is a rather imperfect inflation hedge, except in the longest of time frames.

Our greatest threat is that we may never ever be rid of government inrusion into our daily lives and we have little protection against the insane economic policies of those governments.

Gold is a hedge against the state. Gold is the only private money in the world still in circulation and every time we “buy” some we are shorting the Canadian political system.

Perhaps that’s why it’s so appealing!

#23 ALBERTAGUY on 12.12.09 at 10:10 am

Changing tax rules around Principal Residences, RRSPs and Inheritances in that order should pretty much solve the governments debt problem and all without creating one new job.

#24 The VULTURE on 12.12.09 at 10:42 am

“Meanwhile billions in equity have been made without effort thanks entirely to the government policy of dirt cheap money.” (Very well stated by Garth Turner today)

Dear Mark Carney,

This is what I want for Christmas from you. I have been really nice this year as have many Canadians. You have the power to change people’s lives and eventual retirements. You alone, have the power to give hope and courage to citizens of this great country. OK?

1.) I want you to start aggressively raising interest rates from the unconscionable, ridiculous and record setting low rate of 25 basis points (.25%). No mere raising 25 basis points here and 25 basis points there. Smack a 1.25% increase to start next time the Canadian central bank announces the over night interest rate policy. Then each central bank meeting raise interest rates between 75 basis point to 1.00%. This will help cool out the speculators, the foolish young, inexperienced and naive buyers, the flippers and con men. Get over night rates back up to the 5-6.00% range within this coming (2010) year and up to 6-7.00% for the following year (2011) and by the third year 8-10.00%. (2012)

Worried that you will kill the economy, people will stop spending, the Greatest Depression will start? We are already drowning in debt, please don’t encourage foolish and financially illiterate people to go further in debt by leaving interest rates at extremely low positions egged on by literally “free money”. Our financial system is so out of whack right now from too much market and monetary manipulation of the market place. The honorable Mr. Edward Greenspan’s policies of 0-.25.00% interest rates in the U.S. did nothing but contribute to what appears to be the biggest housing collapse on record. I hope you are still paying attention to this! Ultra low interest rates don’t work always the way one would expect them to. They tend to create bubbles. Look to B.C or Toronto. Give people low cost money, and unless they are financially savvy, may do foolish things with the loot. After all, free money is free money.

In return a little sage advice as you spread Christmas cheer and not fear at this time of year. Here is my gift to you Mr. Carney:

“Santa is very jolly because he knows where all the bad girls live.” ~Dennis Miller

Mr. Carney, in your position of extreme monetary power, I plead with you to deliver my Christmas gift to all of Canada’s citizens this year on time. You owe Canadians and humanity a fair shake in life not a desperate climb out of virtual debt poverty for the rest of their lives, paying insane and asinine amounts of money and debt charges for crummy real estate if they can even afford it in the first place. No more no money down loans, no more bidding wars, no more speculation, no more deception, no more 1.25% mortgages, no more condo over nighters , no more no savers wanting to buy homes, no more overtly entitled young couples buying a $750,000.00 (or more!!) home with virtually no money down at insane low interest rates and then not be able to even buy any furniture for the next 5 years. This nonsense has to stop and stop now. LOOK to the U.S. to see the mess their central bank may have inadvertently created.

You may be in a privileged position in life but not everyone is as fortunate as you are. You are obviously a highly intelligent man and very well educated. Be courageous, be a leader and start to bring normalcy and fairness back to the Real Estate market place so your average Canadian family can afford the average house on an average income and be able to afford an average retirement while leading an average life in an average township with average expectations. Do the right thing. Turn away from the power juggernaut. Turn away from politics for now, just this one time at least, raise rates NOW. Canadians buying real estate at these current valuations may be financially crippled for the rest of their known lives and may never be able to pay off their mortgages in their lifetimes.

Merry Christmas Mr. Carney and all of your staff.

Thank you sir for your time, thoughtful consideration and audience…God Bless your family and yourself this holiday season.

#25 Ken on 12.12.09 at 11:07 am

Eliminate the tax free status of principal residences,the best idea yet.rWill discourage speculation and be a scource of revenue for the govt. and help pay off some of the debt.

#26 steven rowlandson on 12.12.09 at 11:23 am

Hello Garth.
The real solution to the debt problem is extreme austerity .


#27 Contrarian on 12.12.09 at 11:24 am

#5 TONY…
A head tax on immigrants would be the #1 source of revenue. Keep Canadian jobs in Canada and stop the OHIP system from imploding.

What is a head tax ??

#28 Chris no longer in England on 12.12.09 at 11:42 am

I do think it is funny when I read so many comments about what will, or won’t, be popular with the Boomers, and what they won’t be prepared to put up with. Look across the Atlantic. The UK government doesn’t give a toss what is, or isn’t, popular with Boomers, middle classes, or anyone for that matter. They tax and tax anyway!

#29 piccaso on 12.12.09 at 11:48 am

#4 kitchener 1

“The quandry really is, what happens when the market starts to tank? Do people then get a large tax writeoff or a loss, where the govt actually has to pay out more? what happens in the case of negative equity?”

No, you would just carry forward a capital loss, same rules as playing the stock market.

#30 Boombust on 12.12.09 at 11:55 am

Wouldn’t the Pareto Principle in action be enough to prick this bubble? If 4% default…

#31 omg on 12.12.09 at 11:56 am

I have been a housing “bear” for years now and put my money where my mouth is by selling my house in Victoria in 2006.

After what we have seen over the past couple of years in Canada I have come to the conclusion that we will not have any major correction in the short term – by that I mean 3 to 5 years unless something major changes in the affordability of a large part of the housing stock.

The people that have bought and may be over their heads during the run up in prices over the past year really only accounts for a very small proportion of Canada’s housing stock. Unless there is a large proportion of housing being forced onto the market there will be no major correction.

The vast majority of houses owned in Canada were bought at lower prices and mortgages calculated at a much higher rate of interest. These people will not have to sell their homes in the event of a minor uptick in interest rates.

So a minor run up in interest rates by 1 to 3 percent over the next year or two will not markedly impact housing. Those small proportion of people in trouble may lose tens of thousands but it will not cause a major meltdown. Further I expect buyers will be jumping in to the market to buy on the dip thereby also supporting prices.

Also so long as the problem is small banks and governments can do things to “help” people in trouble (of course at to cost to those who are still solvent or still paying taxes).

The only way we will see a major correction is if there is major change in the affordability of a large part of the housing stock. This could be caused by a large spike in interest rates, say to 9 or 10 percent or higher which would put a larger proportion of the housing stock underwater. In such a case the problem would be so large that governments and the banks could not backstop those in trouble and flood of homes would come onto the market.

There is no way the BOC will allow interest rate to rise significantly over the next couple of years (to the 9% to 10% level) as that will threaten the recovery. The only way you will see a spike of interest rates in the shorter term will be due to forces from outside Canada that the BOC cannot control such as run away inflation. Run away inflation ain’t likely given the state of the world economy, but could occur over the next decade given the governments’ need to inflate away huge deficits.

#32 Joe Realtor on 12.12.09 at 11:57 am

I don’t think the Government will go for taxing capital gains on principal residences, because presumably, they’d have to allow for capital “losses” as well. Though I’m disinclined to give them much credit for anything, I think even they see the writing on the wall.

If I were the sot that just paid 550,000 for a dump of a semi in a “desirable” area of Toronto this past week, I’d be really nervous. If it weren’t for it being attached to the house beside it, it’d have been a tear down IMO.

Apparently, you don’t even have to rake your lawn of several years of debris to get a half mil anymore in some areas of Toronto. Plenty of fools still out there.

#33 Gord In Vancouver on 12.12.09 at 12:02 pm

I don’t think the Harper govt. will introduce a tax on primary residences right after they approved BC and Ontario HST proposals.

Even if the popularity of such a real estate tax (which I agree with) gains momentum, it’ll face fierce opposition from homebuilder/real estate groups. This powerful lobbying unit recently successfully got the BC govt. to raise the new home HST limit by $200,000.

#34 piccaso on 12.12.09 at 12:06 pm

#13 Jojo

You had better watch this, scary stuff !!

and so true !!

#35 T.O. Bubble Boy on 12.12.09 at 12:32 pm

I can already see Flaherty increasing the dividend tax rate, since dividends are one of the only places the average Canadian makes makes money year-over-year (and – those dollars come in regardless of what happens to the housing market, price of oil, etc.). Easy money for the government.

I would hope that someone takes a hard look at public sector benefits — not for extra tax revenues, but as a place to cut spending. Given that public sector salaries have risen way beyond the rate of inflation in recent years, and these jobs have ridiculous benefits and pensions vs. the equivalent private sector position, it seems like an obvious area to reduce spending.

I personally like the idea of a tax on the profits from the sale of principal residence properties lived in less than say 5 years… if you don’t even make it to your first mortgage renewal, it’s pretty obvious that the property was more of a speculative investment and less of a principal residence.

The government already does this type of thing for stocks: where you can’t claim the capital loss if you re-purchase in less than 30 days.

#36 r u serious on 12.12.09 at 12:37 pm

real_estate_bear: Flaherty has said in the past…that there was no interest in pursuing this.
Just wondering, would that be the same Flaherty who said he wouldn’t tax income trust proceeds?

#37 Future Expatriate on 12.12.09 at 12:59 pm

“No hyper-inflation to make the gold bugs happy (say, where are they this week?).” Garth

Cashed in, Garth, cashed in at peak. Reading Garth DOES increase financial savvy.

Oh, but we’ll be buying again soon. Recovery is still illusory.

#38 Deliverator on 12.12.09 at 1:06 pm

I agree with you and think the developers will be very upset with any tax on real estate capital gains. I think that RRSPs and the Tax Free Savings accounts are jucier targets for the finance ministry to go after.

I doubt that the TFSAs will be under attack, as they are part of the crisis plan to help recaptialize the banks.

#39 JoeShmoe on 12.12.09 at 1:14 pm

This is just plain ridiculous. We are already one of the most heavily taxed nations on this planet. The market will correct itself in due time. We don’t need taxes upon taxes upon taxes. Let’s tax the tax on the tax. Governments need to buckle down and cut unnecessary spending. Duh? One day we will all be working for the government and just pay our wages directly to them in exchange for food,shelter, and toilet paper. This is called slavery and no free and democratic society should put up with this. I fear for our future.

#40 Dan in Victoria on 12.12.09 at 1:29 pm

Post # 30 OMG Very Thoughtful post. But what I am seeing happening as this bubble is spreading in Victoria is more young fellows are starting, plumbing companys, electrical companys, painting, roofing, framing, siding, drywall etc.They have been getting the highest rates ever for their work. There has been no shortage of work / money here.
They think this is the “norm”and have bought 60 k pickups, 30k boats,30 k rv’s.600 k houses etc.
This is starting to become ingrained into other buisnesses that have nothing to do with housing.
So when we have a prolonged expansion like the past 8 years here in Victoria when there is a correction it will just hammer some of these guys.(non construction companys included) The homeowner will more than likley survive in most cases but the support companys, leisure companys, coffee shops, etc are going to get killed.
When the dominos start to fall cheap pickups, cheap boats, rv’s etc.
The work pie will become smaller, ie. more contractors chasing the same work, lower and lower prices, fewer disposable income dollars. Fewer workers, Wholesalers less profit, less toys, less dinners out etc.
We used to generally figure one to three years of good followed by one or two bad, then a couple of years of, inbetween.
It’s self corrected nicely for four decades I”ve been in it. We have to look past just the housing part to see the potential damage that is going to occur.
I feel sorry for some of the new buisness owners when this correction hits, its not them that have done anything wrong. Anyhow just wanted to add a little sidebar to your post.

#41 lgre on 12.12.09 at 2:02 pm

“The UK government doesn’t give a toss what is, or isn’t, popular with Boomers, middle classes, or anyone for that matter. They tax and tax anyway!”

exactly, some still believe that popular demand wins..I guess the HST coming into law still is not enough to convince some of the herd. The’ll learn, the hard way.

#42 wondering on 12.12.09 at 2:05 pm

Those of you bashing immigrants have just got to stop. (You know who you are.)

Canada needs to constantly increase its working age population in order to steadily increase GDP and taxes. Whose money do you think is going to keep paying out for healthcare and CPP as all the boomers retire? Immigrants don’t take jobs – they make jobs. They start businesses, they raise families, they buy things, they pay taxes. Just like other Canadians – you know, the 95+% of us whose ancestors immigrated from somewhere else.

And don’t tell me that the answer is for Canadians to have more kids. It’s not happening and it’s not going to happen – when people can control the number of children they have through birth control, when the likelihood of your children surviving to be adults is an expectation (and not a faint hope, as in developing countries), and when women are free to make their own choices on how to live their lives, the average number of children per woman goes down. It’s happening all over the world (where these conditions exist) and frankly, it’s a good thing. There are enough people in the world already.

But if Canada needs to keep it’s economy growing (more or less) steadily, it needs to keep growing the population. And immigration is the way. As living conditions improve around the world and the rates of world population increase diminish (or the world population actually begins to fall!), we’ll have to figure out more sustainable ways of managing the economy, but for now, immigration is the tool we have. Learn to live with it.

#43 X on 12.12.09 at 2:09 pm

A primary residence tax, if you held the residence for less than a specified amount of time (3 years or so), would definitely cool speculation, and would probably help decrease the chances of a RE bubble in the future.

#44 Ret on 12.12.09 at 2:16 pm

#13 Jojo
As Great Canadians, we should always put the needs of others first. It is the Canadian way! After all, new comers really need and deserve the government’s support a lot more than you do, so get over it. They also need those bountiful, social welfare programs staffed by hundreds of thousands of swivel servants. Each program is custom tailored to meet their every need from day #1. Anything less would be an insult to those sacred Canadian values and less than what has to be legally offered as per Supreme Court decisions. “The Land is Strong.”
Anyone who dares to publicly question any aspect of our seemingly non-existent Immigration policy will be immediately branded an unsympathetic racist, or worse. They will certainly be subject to a CSIS security audit.
(Garth, please don’t give the Feds. my name or e-mail. Thanks in advance, P. Rabbit.)

#45 Medic on 12.12.09 at 2:20 pm

Have any gold bugs ever NOT cashed in at the peak? Or any other type of investor for that matter? I’m waiting for the following type of comment on this blog, “Bought into XYZ industry but sold after 40% loss. Made a bad decision. Will try to do better next time.”
This bravado isn’t impressing anyone. Why don’t all the geniuses out there post their investment statements for the last 5-10 years on-line (minus the personal information of course) and show the rest of us amateurs how it’s done. I guarantee for every outstanding trade, there is a corresponding horrible trade.

#46 bill on 12.12.09 at 2:49 pm

Hi there,
still sorting through the gold jrs and micros. Suddenly there seems to be a lot of people with a hole in the ground that they claim is a GOLD mine…due diligence is a good idea. some of these folk are actually liying about whats in their ‘mine’
It has been my experience that moves in gold are sometimes preceded by a selloff of 50 to 100 bucks or so. Of course this may mean it is going down or up, depending on the economic ,ect outlook. I am betting it is going up in the next little while.

#47 $fromA$ia ( :PY ) on 12.12.09 at 2:51 pm

“Inflation will be robust, but modest. No hyper-inflation to make the gold bugs happy (say, where are they this week?). Not enough to impact real estate or make debts easier to pay. Just something less than 5% – enough to erode everyone’s paycheque.”-Garth

Hardly agree with this, we’ve printed more money than the US (proportionlally per person) and our housing is still rising. Were looking at a greater inbalance than the picture in your head, Garth. Your opinion is less gloomy than mine for once.

#48 brico9 on 12.12.09 at 2:52 pm

Inflation will be robust, but modest. No hyper-inflation to make the gold bugs happy (say, where are they this week?)

Gold bugs are ( At least I am) buying. Buy weakness – sell strength. The gold whipsaw should continue. Buy $50.00 down and sell $75.00 up.

#49 Ottawa on 12.12.09 at 2:52 pm

According to the Mortgage Trends Blog 30,000 Canadians face foreclosure despite never missing a payment (6.5% of this year’s estimated RE purchases):

“Lenders Want A Billion For Subprime Rescue”

#50 Nostradamus jr. on 12.12.09 at 2:53 pm

“””since $700,000 doesn’t go as far in North Vancouver as it does in Truro…Garth”””

…Truro is in Nova Scotia…North Vancouver is in Hongcouver…teenie tiny difference.

Where would you prefer to live…somewhere remote in Mongolia or in Singapore?

Nostradamus jr.

#51 $fromA$ia ( :PY ) on 12.12.09 at 2:58 pm

“Proving once again gold investors, in large, are incapable of civil discourse.” — Garth


This is precisely where you should pick the exact year 1980 and tell all gold bugs that you would have to wait 30 years till you could break even.

Gold is at were it is today because of distrust in FIAT currencies, Governments and Banks around the world.

I think this mind set of owning a home right now is giving security to peoples minds in this time of crisis, thats probably supporting the run up. They don’t know where to stick their BORROWED MONEY.

Care to expand on your thoughts of how inflation will remain within 5% GARTH? I’d appreciate your angle/opinion… still.

#52 Into The Sunset on 12.12.09 at 3:32 pm

Gold will keep on rising

Natural Gas will increase in value !

Two sure things other than death and taxes.

No one will remember this months down the road and when I refresh your memories, it will sound like I told you so.

98% won’t do anything anyway…..and I told you so !!

#53 On the road to Armagghedon on 12.12.09 at 3:34 pm

Why are they buying now ?

Once upon a time…

… As hundred and thousand people those days, I’m going to buy my McMansion. My reasons are simple, the main one is : we will follow the U.S whatever they do, good or wrong, so we can anticipate what will happen in a few years from here, in Canada.

Garth and you guys are 100% right : taxes will go up, interests on morgages will go up, people will default, and people will rent from their government. That’s exactly why I’m going to buy now, because everything will go so much wrong, that I won’t be able to afford anything in the future terrible times ahead.

WE, the people are just too big to fail ! It is as simple as that. Governments will do anything they can to make us stay quiet in our houses or penthouses that we bought with no real money. It’s our turn to make the system work for us, not against us as usual.

Look at those bails out, golden parachutes or bonuses, there is no more real world accountability in the banks, why should I be the only one to make it work to pay my taxes and save money. I hope the next taxes report will say, like for banksters : “if what you find in the right column is too high for you, just put it on the left column, we will understand”. New world accounting rules books and CDs are not in the shelfs actually, so here’s my new way to think about it.

I’m going to overload myself as everybody (almost) out there with the biggest McMansion I can find near town, no regard for the price, biding if necessary, at the best % for 5 years/30 minimum.

Now if :

1/ If the system stays on its legs at 0,25% or near (don’t think so but…) my investment will grow and I should resale with profit, if I want to.
2/ If only the price of houses go down, at the same interest rate and a slow economy, I’m happy with my new house and don’t care. Will see, 5 years…
3/ If the system crash (already passed away to my opinion, but cancer can take long) we all crash, and I’ll be happy my $$ savings are at the right place to endure the future under a roof, and go hunting.
4/ If we change the disney money to another one, who cares, prices will do like in Europe. So what ? We’ll have one Americado for 10.000 bucks, if the bread goes to 2 Americados-cents it’s OK. If the bread stays at 2 old bucks, will be revolution.
5/ If the % loan goes higher in 5 years, I may default like thousand of canadians, WE the people are too big to fail anyway, so CMHC will find a way we can rent (see U.S) and I’ll stay in my McMansion for what I can afford.
6/ If the government decide to cease my house, because I lost my job (with them or not) and can’t find another one with that (!) pay cheque, like thousand of us again, I’ll leave a window open to come back at night to eat and sleep with my family. As I won’t be the only one in this case, there will be memorable neighbours partys in the near future. Even with flash lights around my McMansion chimney ! Some will say “police”, ho no, not a chance, they will be too busy with gangs, drugs, guns, thefts, burglars, crimes, suicides etc. plus (+) their own problems to pay their morgages on time. They will not bother looking after us. (especially in winter, right ? WE are all humans).

What is important to understand finally, is that there is a tsunami of troubles coming our way for so many people. And money can do nothing to stop it. So, forget it. Even a more than safe couple with a 2/3 morgage paid today could be in big trouble with a 20% interest hike, as we all know. We are heading to a civilisation problem. Asking for more taxes ? Your prayers have been eared very well. Be carefull with what you wish, you may regret it sooner than later. Asking for more taxes, ahaha !!! If this is not masochism, what else ?

I’ve got a friend who sleeps better now that he is 1.5 million in debts, why ?.. before he was part of the good people believing in banks. He was working hard and saving, then he turned crasy when he heared the bank will swallow all of his money because of their mistakes. As he says copiing the phrase : ” Now, at 1.5 M, this is not my problem anymore, that’s a bankster problem, or a government run by banksters problem, not mine… ”

And he is bloody right, don’t you think ?

… and they had a lot of houses and little-houses together.

#54 Toronto C9 Renter on 12.12.09 at 4:28 pm

#51 Into The Sunset on 12.12.09 at 3:32 pm

“Natural Gas will increase in value !”

Into the Sunset, you have a 50% chance of being right. NG spot price hit a recent low of $1.82 on Sept 4th and there’s no reason to think it can’t go there again.

The only thing that seems assured is continued NG price volatility, and speculators being severely thrashed.

In any event, whatever you do, don’t use ETF’s to participate in NG. They just decay over time. The issues with UNG are well documented, but our Canadian ETF’s are no better. A good example is HNU which has not risen appreciably since that Sept. low I mentioned. (other than the 1 for 5 reverse split that was required to keep the ETF from evaporating)

#55 $fromA$ia ( :PY ) on 12.12.09 at 4:30 pm

“…Truro is in Nova Scotia…North Vancouver is in Hongcouver…teenie tiny difference.”-Nostradamus jr.


Jr.Nostratard strikes again!

Muhahah…Muhahahah…Pinky in mouth … Muhahahaha!

#56 Jeannie on 12.12.09 at 5:40 pm

#23,Vulture. You’ve wrapped it all up so very neatly; you ‘get it’, the ‘bloggers’ ‘get it’, so what the heck is intellectually lacking in our ‘leaders’ who have yet to ‘get it’.
Will this crazy era be remembered as a time when even the most fiscally ignorant could qualify for the kind of homes and apartments that their grandparents could only dream of.
Parents who sacrificed in order to raise a down-payment on their own modest homes, look on in amazement as their adult children start their newly-wed live’s off with a bang…soon to end in a fizzle?
To me, this is an incredible time, madness reigns supreme. Our ‘safe’ savings are being hijacked, and handed on a platter to those who don’t understand the concept of ‘living within one’s means’ The banks are playing out some weird Robin Hood scenario of robbing the ‘rich’ to give to the ‘poor’.
Lookit that ‘Vulture’, you’ve sent me off on a rant, haha.

#57 Contrarian on 12.12.09 at 8:10 pm

#13 JOJO & #43 Ret…

I agree with you somewhat.

First of all, I am an immigrant , came in 2002 from India.After few years of struggle, finally entered in my profession ( Prof. Engineer). I’m not bitter about my struggle…its a new country, new way of life. Some hardships are inevitable.

Presently I call Red Deer my home.The best place I have lived so far and hoping to stay here for all my life.

I’m not against any race or religion or anyone but
Canada as a nation needs an open debate on Immigration policy.

– Why do new comers need a language training ? When anyone files an application in their respective country, all proofs are required to prove English/French knowledge.
If you don’t know English/French , should not come to Canada…

– Why do new comers need Job counselling?? Most new comers are educated . Internet is easily accessible. Best of all, the Employers in Canada are more open,honest and professional in accepting new people.No one should need job counselling ( at least as much as it is hyped). I have been into these counselling centers in Toronto. They are nothing more than a collection of 50 computers and access to free printing/fax/ etc.There is not any REAL help for a proper job.I found the job , by keep trying, knocking on each employer’s door , constantly improving my resume etc..just as any one ( who is not a new comer) would do it .

– Why do Canada treats refugees different than immigrants? I think they get a lot more social / welfare assistant than immigrants. In fact , I’m not aware of any social/welfare scheme for new immigrants.

On the other hand,

– Everyone has to accept that Canada needs young immigrants to sustain a pool of skilled workforce. If this workforce is not sustained, work will go somewhere else, new development will be in jeopardy.

– Every family who comes as a landed PR , has to bring certain amount of money. A principal applicant is required 10000 CND and all dependents (spouse,kids) require 2000 CND per head.Every new family creates demand in the market for residence,food,clothing etc..

So, there has to be a balance between these two sides of the coin.


#58 Jon B on 12.12.09 at 8:26 pm

Don’t like the sound of a possible/theoretical new tax on mobility. The property transfer tax is bad enough.

#59 eddy on 12.12.09 at 8:45 pm

these links are old but good

a lecture on the disappearing middle class

a 1944 pamphlet by Ezra Pound about the financial causes of WWII
you will notice he doesn’t mention the creation of the fed in his chronology of the US economy. that revelation came a little later with this:

#60 Weston on 12.12.09 at 8:48 pm

Garth, You make snide remarks and expect people not to respond accordingly.

You take digs at Gold bugs etc and expect civil discourse?

#61 Dan M on 12.12.09 at 9:30 pm

#41 wondering

Profoundly limited short-term thinking. Immigration is not and can not be the solution. We are running into the limits of what the world can provide. The whole concept of limitless economic and population growth is a delusion, a lie.

The earth has limited resources. Limited water, limited arable land and thus food production, limited metals, wood, stone, and particularly limited oil. There is a line in the sand above which more production is simply impossible. Particularly as oil starts to run short, everything else will become dramatically more difficult to make. We need oil for absolutely everything. The international community suggests we need to increase food production by 70% by 2050 just to feed all the people. World oil production is likely to decrease from 2013. Do you really think this food production goal is achievable? It’s likely to start going down, not up. Millions of people are going to starve.

Real wealth is productive capacity per unit of population. Being more productive in total while becoming less productive per person is a REDUCTION in wealth, regardless of what the GDP says. Add in the likely event that scarce resources will in fact lead to economic contraction rather than growth, we have a major problem, which governments and populations around the world simply refuse to see. Plugging your ears and shouting “la la la la la” while madly increasing the immigration rate to prop up the failing fractional reserve banking system isn’t a strategy, it’s a completely ignorant hail mary pass, without even knowing what game we’re playing. People will have to get used to the idea of limited resources, or it will bite them in the ass extremely hard. Every nation needs to focus on stopping population growth, and only expanding their economy if it can be done sustainably. Unfortunately sustainable isn’t a word in an economist’s dictionary.

#62 DaBull on 12.12.09 at 9:40 pm

#53 Toronto C9 Renter

The only thing that seems assured is continued NG price volatility, and speculators being severely thrashed.

Hate to break it to you but good NG speculators make more money when the market is volatile than they do when it’s stable. By your above post I know you don’t know much about the commodity markets or how they work, but volatility is a traders best friend. If your a good trader you can make a crap load of money during these times.

PS: Single commodity ETF’s should only be used for short term hedging or short term gains. If you want to play NG… buy a stock.

#63 Ian on 12.12.09 at 10:02 pm

That would be great news since we are all going to take a loss when we sell because of this big bubble we are in. Then we could right off the loss against our income, right? Wouldn’t this tax just cost the government more?

#64 Just Janice on 12.12.09 at 11:37 pm

Taxation is an interesting area – the primary pressures on the fiscal side will be burgeoning health care costs and pensions. There are almost an infinite number of possibilities for governments to repair their balance sheets. I think governments will take a long hard look at what it is they do and the services that they provide, identify opportunities for increased user fees, and imrove the overall efficiency of the tax system.

How this might play out, is that the public school system will might continue to be starved of resources and an incentive will emerge for those parents who can afford it to move their children to the private school system. In BC, the government provides funding to private schools at about 50% of the rate it provides to public schools. In effect the government ‘saves’ about $4,000 per student per year for every student that opts out of the public school system. Public parks are another area where user fees could become the norm. Taxes will shift from less efficient formats to more efficient formats – perhaps higher sales taxes but lower income taxes and a whole litany of other ‘transaction’ taxes. I can’t see government removing much of the incentive for people to put money aside for retirement because, #1 obligations for low income seniors are much higher than obligations for high income seniors – and I would fully anticipate an ever increasing number of government programs and services becomings ‘means tested’. and #2 RRSPs are tax deferral, not tax avoidance, why not allow people to opt out of a relatively low income tax environment now if it is likely that income taxes will be higher in the future? I could also see fairly big shifts in terms of the health care system, potentially with further delisting of services or the introduction of co-payments.

I’d love to see a ‘flippers tax’, hold a property less than 36 months, get taxed. That being said, it would be nice if there was an exemption for a legitimate reason (ie. employment induced moves).

#65 Chris no longer in England on 12.12.09 at 11:57 pm

Here’s an interesting tax – and not even a government one!

#66 tjmikey on 12.13.09 at 12:36 am

#41 Dan M

Actually, you are dead wrong about the earth’s ability to support mankind, arable land, irrigation, etc.

The problem is….supporting mankind is not profitable.

Example, here in Canada, the Pork and Beef industry is pretty much on it’s way out. Many of the current producers are leaving and they are not coming back.

The stupid may think of this type of situation as a “cull”
…to many in the biz…reliance on export markets..etc.

The smart are concerned about our own supply of food.

Think about it….what if the state of California (which is by the way in a drought) decides one day that they can no longer ship fruits and veggies to Canada?

You idiots do realise that we as Canadians do not have the abilty…with all of our land and feed our own people with proper nutrition.

Sorry….Canadians are just plain stupid….seriously.

#67 TJ on 12.13.09 at 12:43 am

Almost half a trillion dollars was wiped out this year through November as housing headed for a third straight annual decline. New foreclosures and higher mortgage rates in 2010 may hinder a rebound, the property data service said yesterday.
“A phenomenal amount of wealth has been erased since the housing bust,’’ Stan Humphries, the chief economist for Seattle-based Zillow, said Tuesday in an interview. “For many households, most of their wealth is tied up in real estate.’’
The net worth of US households at the end of June fell 19 percent from two years earlier to $53.1 trillion, according to Federal Reserve data. Employers have cut more than 7.2 million jobs since the start of the recession in December 2007.

#68 Dave on 12.13.09 at 1:43 am

hey Garth, you like to take jabs at gold (I usually agree with you except for this topic). What do you think of the real price of gold? When you measure gold vs. a basket of commodities and labour, gold nets the miners much higher profit margins. This is very simple to understand. You keep suggesting that the market is over bought. Well, with that attitude, you’re assuming that commodities are over bought as well. This again brings down the price of commodities vs. gold.

Stop using USD as the great measuring stick. The capital costs of mining gold in post bubble contractions is one of the few bright spots to look forward to in this type of economy. Measure energies, metals, labour vs gold to determine whether the gold miners are making money (which they are and will continue to do so) instead of looking at how gold fluctuates on a daily basis versus the U.S dollar.

Someone prove me wrong. I’m sorry, but far too many people cannot grasp why gold is still extremely profitable regardless of what it does in relation to U.S dollars.

At the end of this year, next year and so on, gold mining companies will say “wow, we made a lot of money” and they will continue to do so. I actually hope the price of gold stays where it is so that those that cannot grasp what I’ve said will be baffled as to why gold mining companies make buckets of cash even though gold stayed at $1,100 for three years!! haha

#69 nonplused on 12.13.09 at 2:37 am

Good article:

Houses are already taxed at 100% every 35 years through property taxes, so I think a capital gains tax would be unjust. It would turn us all in to owner/renters, where if you own a house you never sell it, but rent it out if you have to move and then rent a house where you need to live, kind of like the British.

Besides, any capital gains tax is really a tax on inflation. These prices don’t rise for the heck of it. If your house goes up 100% and you sell, you still need to buy another one which is also up 100%, so a tax would be extremely unjust.

Take a simple example like a gold coin. Buy it in 2001 for $270. Sell it in 2009 for $1150. Pay tax? But what if you want to buy another gold coin? The tax money is lost and you have to buy a half ounce and a quarter ounce. You have less gold, yet all you did was buy and sell gold.

And the reason the gold went up is only because the dollar went down in purchasing power. Capital gains taxes are taxes on inflation. If the dollar were held at a constant value, they would be practically non-existent except in the stock market if you happened to own Apple.

What happens if we have hyper inflation and even the price of used cars starts to rise? Are they going to tax the profit you made on your 1996 Taurus too? I guess they’ll tax anything, because they are desperate.

But the key point is: None of us have any money! There is nothing left to tax out here! The more they raise taxes, the less tax revenue they will receive as the negative feedback loop runs through the economy. Government debt default is assured now at some point in the future, no matter what they do. It’s all mathematics from here.

As Einstein said, “Compound interest is the 8th wonder of the world.” He said that because he knew it could not be sustained indefinitely. There isn’t room for infinite amounts of money in a finite world, and all exponential curves go to infinity eventually.

#70 Tallyman on 12.13.09 at 3:36 am

2010 brings the sobering reality of what the HST really means. Tax on pretty everything that was previously untouchable.
And all the while our government is working behind the scenes embracing a looming carbon tax.

Greenpeace on the roof of Ottawa’s parliament buildings last week almost made me puke.
It had to be orchestrated by the govt. itself.
Steve, Mark & Jimmy must have been holding the ladder.

What great fear mongering publicity.
Here we have a govt intentionally doing nothing about climate change to bring about the anger that “forces” them to action.
“Well you wanted it so we did something” they’ll be saying as we’re sold into bondage at the world level.

Get ready for surrender of jurisdiction over our own nation. Bye bye sovereignty.
It’s coming.
Canada will answer to a world govt. and we will be taxed by that world government, via a carbon tax or whatever scam they can dream up.

The capital gains tax is going to be the least of our worries.

#71 Chaostrology on 12.13.09 at 3:48 am

Canada, as compared to an Emergency Dept. patient…

When brought to Emergency in 2008 the patient was in cardiac arrest, with difficulty breathing, showing signs of party drug overdose, hemorraghing in serveral vital organs, with many fractured extremities suffered in a “crash”, 3rd degree burns spotted over the body suffered in the “fire sale” after the “crash” and one eye unresponsive and dialated indicating a possible head injury (it’s possible that this was a previous injury). There are also some signs of “intimate interference” while in a drug induced state of unconciousness.

All the department “experts” were brought in, the patient was too important to lose. There would be hell to pay if this patient went “south”.

There was much shouting and confusion in the E.R. as all of the “experts” went to work to try and save the patient. They tried every treatment in the alphabet and got all the way to W before they managed to stabilize the patient. The “experts went out to the waiting room and told the family that everything is fine, the patient would live, “Canada is the healthiest patient in the world. Yayyyy”. The “experts” all held their breathe and counted the few and far between heartbeats. (They prayed to their golden idol that the patient would survive long enough for them to cash-out their chips.)

Within hours, sepsis set in. The “little” infection was about to go systemic. The “experts” knew that they were down to the final battle. Those “little buggers are going to screw-up all of our work!” the experts all shouted. Years of planning, conniving, pushing, shoving, lying, cheating and stealing, all wasted because of a micro-bacterial organism that “lives off of us”(useless, good-for-nothing parasites was heard to be muttered under many experts breathe) is taking over. (“F*ucking “herd mentality”, F*ucking Dumbasses.”, and other such utterances.)

Nearly hysterical now, the “experts” were on the verge of attacking each other, when the “Big Kahuna Expert” came into the E.R. and took control. He said “Boys, we still have X Y and Z to use”. The “experts” all screamed “but we’ve never used X Y and Z before”. The “Big Kahuna” said (in his westerner drawl) “it’s a lovely day for a Bar-B-Que and a “Beatles song”, now let’s go round up the mirco-organisms and turn this “herd” around before they throw the patient into the abyss of bankruptcy and kill it”. (the “Big Kahuna Expert” is a flatulant speaker) Giddy-up!

The “experts” were now howling uncontrollably, “Oh, “Big Kahuna” how are you going to save us (WHO GIVES A SHIT ABOUT THE PATIENT?) your most loyal and provident supporters?”.

The “Big Kahuna” said (in his westerner drawl) “well partners, I’mah gonna give those monee grubbin’ good for nuthin’ parasitic back stabbin’ sytemic micro-bacterial infectious bastards xactlee what they wants!!”(this is exactly the way the “Big Kahuna Expert” speaks, when he’s not wearing a sweater)

The “Big Kahuna” opened up the “DoomsDay Vault” and pulled out the envelope marked with a BIG RED X. Up until this time the actual existence of this envelope had been a legend spoken of in darkly lit rooms smelling of expensive leather and really good cuban cigars. Heretofore The Big RED X envelope had been a myth, not to be believed, not in a million years. Had it all come down to this? In a word…YES!!!!

The “Big Kahuna” cautiously opened the BIG RED X envelope, (because he’s a cautious son of a b*itch and he didn’t want to get his silk tie dirty if there was some kind of shit bomb in the envelope) and took the instructions out.

The “experts” were moaning in ecstasy now that a solution was so close at hand. What could the solution to this system wide collapse be they wondered? (visions of sugar plums dancing wildly in their heads)
Was Santa Claus going to come. (they’d been such good girls and boys (cross my heart, hope to die))
Whatever was in the envelope, the “experts” knew that it was a “f*uckin hail mary pass” and it better “f*uckin work”, otherwise, they were all out of work.
The parasitic infectious micro-organisms were gaining momentum fast, it was just a matter of time until they would take-over the patient. Then TSWHTF! (jesus another shit bomb)

The “Big Kahuna” quickly scanned the instruction (because in spite of his size, he’s a quick SOB)(his favourite movie…”The Quick and the Dead”) and a smirk came upon his face…he said(in his westerner drawl) “Boys, saddle up, we gotta move fast…the patient needs IV Credit, STAT (I kid you not, that’s what he said) if WE’RE gonna survive!”

The “experts” were now tearing their hair out, and called the “Big Kahuna” a dumsumbitch! Didn’t he know that this would put them out of business, ruin their reputations, destroy their golden parachutes? Didn’t he know that this went against all of their “expertness”. “Didn’t he know this?” (Oh yeah and BTW, PROBABLY KILL THE PATIENT?)(but hey, Golden Parachutes are involved, who really give a crap about the patient?)

At this point let’s give the “Big Kahuna” some credit, he is after all…”THE BIG KAHUNA”. He didn’t get to the heights in his life by being a micro-bacterial organism. No way, he craps micro-bacterial organisms. Anyhoo.

The “Big Kahuna” turned to the “experts” and said (in his westerner drawl) ” Boys CHILLAX, Big K gotts your backs, you’ll be eatin’ beans and fartin’ around the campfire for years to come…guaranf*ckinteeeed!”

GuaranF*uckinteeeed, GUARANF*CKINTEEEED!!! The “experts” were on the verge of fainting. Had they really heard these magical words. Someone crazy enough to guarantee the continued life of the patient?
(I mean afterall, we’re talking about a complicated, unpredictable situation here)(somebody pinch me)

“Yup, youse heard me correctilly partners” said “Big K” (in his westerner drawl), “the dyin’ patient is so hopped up on drugs, he’s a guaranteeing payment for all of your future “expertness” as well as covering yorn big fat asses as far as lyeability is concerned.”

As everyone celebrated their “expertness” and fabulous good luck at having saved the patient and more importantly, their own asses, some silly “expert” wondered out loud what the X Y and Z stood for…
The “Big Kahuna” said (in his westerner drawl)” X is for EXIT STRATEGY cowpokes.” and the WHY is because you priviledged doggies are rich and powerful and we always look after our own.”That’s Y.
And the Z? Why the Z is the patient…
Cue Bruce Willis…”Zed’s dead baby, Zed’s dead.”

Fortunately, the patient is still surviving (how we don’t know, or for how long), discharged from hospital with IV credit and an alchohol enema. When last seen the patient was heating his home with $100 Bills.

The solution to the systemic infection, was to kill the micro-bacterial organisms, with money, and not just any money, but “KILL THEM WITH THEIR OWN MONEY”.
The irony is simply delicious.

This story is purely pulp fiction and any implied reference to a person living or dead is purely co-incidental and unintended.

As I head off to bed, I can hear Willie Nelson singing…

“Momma don’t let your babies grow-up to be cowboys…”

#72 mikef on 12.13.09 at 8:08 am

Truer words never spoken #60 Dan M

Personally I think oil production has peaked right now

It’s interesting to watch how people react to an
economic/housing collapse.

In Greece a lot of screaming,protects,and hot under the collar theatrics.
In the UK a quiet orderly collapse with a “well that’s it then.”
In the USA a spectacular implosion with fireworks and
talk of massive gunplay.
A drawn out muddle through collapse with plenty of finger pointing,and CBC reports with underwater
homeowners sitting on their couch complaining
that the government isn’t doing enough to help them.

#73 David Bakody on 12.13.09 at 8:40 am

We the taxpayers are now in a time of “Retribution” plain and simple. A word of caution if you are middle class or less and think y’all can out smart, out play the boys who own and play the governments be prepare to loose your shirt, car and home. The sad news is the government will throw Mr. Carney’s words at your feet using that wonderful line, we told you all this was happening and because of a few foolish people this all happened so we now have no other choice than to cut more spending and raise taxes even more. Harper/Flaherty/Carney 101 and who’s fault are they? 36% of Canadians who still believe they saved $1000’s of personal money on a 2% GST cut. ( and those are the 36% they will blame as the foolish people) Ironic isn’t it the ones who gave them power will be ones who get the blame for their mistakes ….. Poetic Justice indeed.

#74 Toronto C9 Renter on 12.13.09 at 9:22 am

#61 DaBull on 12.12.09 at 9:40 pm

Thanks for your sage advice on Natural Gas trading, especially “By your above post I know you don’t know much about the commodity markets or how they work”

DaBull, as I recall you’re the save “investment guru” who lied two weeks ago that you made $360,000 on a $4500 investment, yet paid $800 in commission fees that even my 85 year old mother would know is foolish.

You have no credibility but thanks anyways

#75 Ottawa_Tradesguy on 12.13.09 at 9:58 am


This is a really interesting article, already highlighted by the ‘Baby Boom’ phenomenon in North America and Europe. However, this article also points to long run problems with depopulation of the world instead of over population. Should we, in our lifetimes as the article suggest end up with depopulation of the world RE values have nowhere to go but in the tank.


#76 Kash is King on 12.13.09 at 11:24 am

Sorry Garth, a little of topic…. maybe?

All hail King William?

Also, fascinating blog entry by Fulford on Oct 14 2009:

“Queen Elizabeth may soon abdicate her throne”

A snip from the posting:

“The Earl of Wales is the leading contender to be the new King of England”

Nobody knew who the Earl of Wales was? Now looks like it’s the son of the Prince of Wales?

One poster made a comment that made my head spin a bit:

“- since the time of Rolf Ganger aka Rollo the Ganger the Norwegian Jarls have controlled the process of who can become the King of England … ”

Then this week past, we had the Project Blue Beam spiral display out of Norway’s H.A.A.R.P. facility?! wtf?

#77 wondering on 12.13.09 at 10:24 pm

#61 – Dan

I’m showing limited thinking? I’m the one that said that long term, Canada is going to eventually need to learn to build a viable sustainable economy with a shrinking population. But immigration pushes that need off for the short term. That’s why even racist jerk faces like the Conservatives have not turned off the immigration taps. (Though they do love to leave non-white people hanging in the breeze if they get in trouble over-seas. Abousoufian Abdelrazik is a good example. So is Suaad Hagi Mohamud. There are others.)

#78 Alister on 12.14.09 at 11:41 am

OK Garth. You say they are going to add the HST to housing, then we have land transfer tax to buy and Torontos (Miller) little purchase tax to live is such a paradise, the it’s property taxed every year – you say they are now going to tax any capital appreciation to!

Talk about killing the golden goose – but politicians ALWAYS shoot themselves in the foot.
Looks like the RE business with die from taxation soon.

#79 dave from Oakville on 12.15.09 at 2:23 pm

“Rise of China” biggest news story of the decade

Tiger Woods hasn’t even made the list yet. But the financial meltdown comes in at #10

Top 15 News Stories Of The Decade:
1. Rise of China
2. Iraq War
3. 9/11 Terrorist Attacks
4. War on Terror
5. Death of Michael Jackson
6. Election of Obama to US presidency
7. Global Recession of 2008/9
8. Hurricane Katrina
9. War in Afghanistan
10. Economic Meltdown/Financial Tsunami
11. Beijing Olympics
12. South Asian Tsunami
13. War against the Taliban
14. Death of Pope John Paul II
15. Osama bin-Laden eludes capture

#80 dave from Oakville on 12.15.09 at 2:50 pm

“Chinese car market overtakes that of United States”

“China has overtaken the U.S. as the world’s biggest market for automobiles, the first time any other country has bought more vehicles than the nation that produced Henry Ford, the Cadillac and the minivan.”

Do not believe all those stories about China going to crash because of its dependency on US consumption. Many have said this for the last 5-10 years. The US is becoming less and less relevant as their population becomes more and more middle class fueling internal consumption and through the numerous trade deals China is making with other nations.