Road kill

While many people think he’s a towering dork, I admit to a fondness for Brad Lamb. After all, it takes a certain cowboy metrosexualness to shave your head, dress in black, drive a 21-foot-long Rolls, worship money and call reporters jerks.

Lamb, Toronto’s self-anointed Condo King, has also shown a flare for turning former ghettos into cool hoods, launching new projects as if they were space missions and making people within 200 feet feel inadequate. And he brags. Bigtime. “I have helped make people hundreds of people millionaires many times over,” he says. “Many of these people came to me with $20,000 of money borrowed from friends and family. Their adherence to my philosophy made them rich.”

Isn’t that so 2008?

Actually, Lamb’s tone has recently taken on a desperate tinge as the Toronto real estate market continues its melt. This week, for example, came news that new home sales in the GTA crashed by 45% last month from year-ago levels, while condo sales have just been reduced by a third. If it continues – and why not? – then this is a developer’s worst nightmare.

Shoots back the King: “Does anyone really believe Toronto’s real estate market is due for a large correction? This is the most patently absurd  theory I’ve heard in 10 years. Those of you sitting on the sidelines are going to miss the boat again, as you have for the past 19 years. I suggest you wait until you get a clear sign that you should buy, however, you may be interrupted in the meantime by death.”

Yeah, I know. Towering dork talk. But I think the King has no clothes. This market is sick.

In addition to cratering new home sales, deals for existing houses are also tanking. In the first two weeks of this month they were down 22% from last autumn, and that followed a 34% crash in July. In fact, we are heading into what will be the fourth consecutive month of bummer sales in the country’s largest market.

And this is but one indicator of rot in the Kingdom of Lamb. New mortgage originations have taken a dive, meaning there’s less money in the deal pipeline. Builders have scaled back on new projects, which should tell you something. Mortgage lending standards are tighter while recent interest rate jumps have hiked variable rate mortgages – the sustaining nectar of first-time buyers. Unemployment in Toronto is 9.1%, a full point above the national average and close to the US level. Family debt’s a mess and wage gains are non-existent.

In short, Toronto is no place to start with a borrowed $20,000 and dreams of being a real estate millionaire. Instead, the condo towers are fraught with danger.

Now some point to the fact the average home price in the GTA, at $412,000, is still ahead of last year by 5% as proof all this doomer talk is groundless. Says the Toronto Real Estate Board: “Under current lending standards, the average selling price is affordable for a household earning the average income in the GTA. The annual price growth we have been experiencing has been justified by this positive affordability picture.”

But to put that into context, it now takes 5.5 times the average income to afford the average home. Compare this to the 4.6 times income level at which the US market collapsed in 2006. Also take into consideration that mortgages are still dirt cheap by any comparison, and destined to increase over the next few years as the Bank of Canada tries desperately to curtail borrowing. Also missing from TREB’s justification is the reality of existing debt – now that Canadians owe $1.45 for ever buck earned – accumulated by listening to people who’ve told them debt is good. Greed is better. Give me twenty grand, and I’ll reward you with a million…

(By the way, I’ll remind you of the mid-town house I bought in 1998 for a little over $500,000. I sold it a couple of years later for a profit of a hundred thousand. Recently it changed hands for $1.2 million – the same house, unchanged, no garage, no privacy, on a 30-foot lot, now missing the majestic tree in front since the basement wall caved in and had to be replaced.)

The last time real estate crashed in the GTA followed a mildly delusional bubble in 1989. It took 14 years for the average price to recover, during which any investor who bought at the top was too embarrassed to admit it. The losses on condos were catastrophic. Investors could not rent them to cover taxes and monthly fees, even when there was no mortgage to pay.

Today there are 19,000 new condo units coming to market in 2010. The city’s economy is torpid. Small business and manufacturing is suffering, and meanwhile stubborn, cocksure vendors cling to bubble prices, just ensuring the trip down will be faster and harder.

There’s no doubt a correction is in its formative stages, gathering force and momentum. The real question is when it impacts prices, how deep the damage will be, and what happens in 2011 and beyond.

After all, early vultures could end up road kill. Nailed by a wild-eyed, naked bald guy driving a Rolls.

I will have more to say about this November 9th at my Toronto speech.

202 comments ↓

#1 goldenfox on 09.23.10 at 9:40 pm

Deflationist Knuckleheads:

snippet;
The Deflationist Knuckleheads have undergone a learning experience, finally and thankfully. All things needed will cost more, while all things desired will be valued less. The former are necessities to survive, while the latter are derived extensions from busted asset bubbles. GOLD IS NOT A COMMODITY; IT IS MONEY; WHEN ASSETS ARE BURNED, VALID MONEY IS KING. Most chaotic inroads are caused by food price explosions. The US is seeing precisely that. The killer to the USEconomy remains to be the property sector, residential housing and commercial property. They lifted the USEconomy from 2002 to 2005, with all the fanfare inherent to asset bubbles and public glee, helped along by cheerleading like from Mr Magoo (err, Alan Greenspan). My ears still ring from his high praise to off-loaded risk in sophisticated leveraged financial instruments. These proved to be weapons of mass destruction.

http://www.financialsense.com/contributors/jim-willie/permanent-zero-percent-on-road-to-ruin

#2 Jeff Smith on 09.23.10 at 9:51 pm

Yeah Garth, I have always been afraid of that guy. I don’t know why. Maybe it’s because when I was a little kid watching Superman cartoons and seeing a familiar looking evil dude lob kryptonites at superman.

#3 Bill ( Peterborough) on 09.23.10 at 9:57 pm

Today there are 19,000 new condo units coming to market in 2010.
*******************************************

Insane. There will be alot of good deals in the future/ distress sales. I feel sorry for the sheeple who pre-bought a year or more before the ground was even broken.

Maybe McGOONTEY will buy a few buildings , with tax payers money of course, and turn them into government subsidized co-ops.

That way when the sheeple get wiped out they can still have the illusion of a luxurious lyfestyle . And be right down town with a lake view.

Looking forward to hearing you speak Garth.

#4 Will Shakem on 09.23.10 at 9:58 pm

Succinct confirmation of what Garth has been warning us about in this article written by Zuckerman written in U.S.News:

http://politics.usnews.com/opinion/mzuckerman/articles/2010/09/23/the-american-dream-of-home-ownership-has-become-a-nightmare.html

How are we so different, except a little later?

#5 Jeff Smith on 09.23.10 at 10:06 pm

>#3 Bill ( Peterborough) on 09.23.10 at 9:57 pm
>Maybe McGOONTEY will buy a few buildings , with tax
>payers money of course, and turn them into
>government subsidized co-ops.

Not really, that fantastic deal already has a customer lined up; CMHC.

#6 Contrarian Canuck on 09.23.10 at 10:19 pm

Give em hell in T.O Garth. Wish I could be there.

http://financialinsights.wordpress.com/2010/09/23/dashboard-lights/

Keep pointing out the obvious…

#7 Jsan on 09.23.10 at 10:20 pm

He reminds me of another very arrogant Real Estate guy from the US that also beat his chest in front of the media loudly proclaiming that the US Real Estate Boom would continue to the end of this decade and beyond. He mocked those that suggested a Bust and chided those that were missing out on it. But than what should his US counterpart know? After all, he was only the Chief economist, the big Kahuna of the US National Association of Realtors, surely he knew the US Real Estate market better than anyone, right?

Here is one of his books. I pity those that took advice from the fool.

http://www.amazon.com/Are-Missing-Real-Estate-Boom/dp/0385514344

Oh yeah, here is another fool who said back in 2005 that there was no US housing Bubble to go Bust. But than again, this guy is only the Chairman of the Federal Reserve, what would he know about the economy?

http://www.washingtonpost.com/wp-dyn/content/article/2005/10/26/AR2005102602255.html

.

#8 dark sad person on 09.23.10 at 10:21 pm

1 goldenfox on 09.23.10 at 9:40 pm

Deflationist Knuckleheads:

snippet;
The Deflationist Knuckleheads have undergone a learning experience, finally and thankfully. All things needed will cost more, while all things desired will be valued less. The former are necessities to survive, while the latter are derived extensions from busted asset bubbles.

******************
lol–typical hyper-inflationist-asshole-BS-Goldbug-
Has no clue what Inflation is–
Has no clue what Deflation is–
Has no clue what Hyper-inflation is–
Not even worth reading–ever–

***********************

Most chaotic inroads are caused by food price explosions. The US is seeing precisely that. The killer to the USEconomy remains to be the property sector, residential housing and commercial property.

*************************

How many “Trillion” $ has been lost in the US housing “mortgage market” alone?
How many tens of “Trillions” has been lost in the CDO/CDS market”

How many “Billion” dollars has the overall food price increased?

Why–i wonder-does he not do a simple comparison?
If he did or even could–
I wonder how-even with his total misunderstanding-of Inflation and Deflation–can he come up with Inflation-when weighing housing “price” declines-with “increased” food costs?
geezzuz–

#9 cashman on 09.23.10 at 10:23 pm

It looks good on Brad Lamb that condo sales are falling back to earth faster than a speeding meteor. That thud sound you heard was Brad Lamb being tossed out on his rump by his former subjects looking for a new emperor. Oh Mark Carney called and said he is calling in your loan Mr. Lamb on all your outstanding projects. I am sure you can get enough investors to support you, but they would be fools to do it now. lol

#10 Frank K on 09.23.10 at 10:24 pm

Appreciate your work Garth, your lates book is a good read.
Many have commented that the prediction of the Candian housing bubble pop is not possible due to the fundamental differences between the Canadian home market and that of the US. We did not have sub prime and an option market that relfects the US experience, therefore our housing is much safer of an “investment”

What about the declining value of real estate in Europe? European countries had borrowing standards closer to Canada than the US. Europes banking system was more stable than that of the US. But guess what, their housing market bubble burst and is contiuing to bust. So, is it viable to assume that we will be the only country in the G8 not to go through some sort of housing deflation?

#11 T.O. Bubble Boy on 09.23.10 at 10:24 pm

I noted this phenomenon a long time ago, but I think it’s worth repeating (given the Brad J Lamb topic):

The #1 sign that an industry is about to see a downturn is when the leaders move into shiny new offices!

It happened to all of the dot-com companies in Silicon Valley and Ottawa (and even Toronto), it happened to the mortgage/financial companies in the US, and it will happen to the realtors.

Brad J Lamb moved into his new place in late 2009…

Then 2 of his projects were rejected in the spring of 2010.

Then, there were rumours that he’d sell his business and he started stating that “it’s difficult if not impossible to make money in the downtown condo market”.

He also started criticizing some of his past projects (or at least the city planning around them).

It will be interesting to see what happens with some of his current projects… i.e. if they even get built.

#12 Alan on 09.23.10 at 10:30 pm

The story will slowly begin to turn into great condos at discounted prices with incentives and lowest interest rates in a quarter century. The inventory will sell, builders will become more careful as lenders will require more pre-sales for any future construction loans and there will be less building over the next 3 years. Inventories will stabalize, some outlying areas sensitive to low income earners will stay under pressure for longer period but in general developers will sell at a discount to move inventory and this may prove to be a great time to buy or the next few months. I truly believe government will not allow a severe housing decline due to the much larger implications to the Canadian economy and will act to stimulate. Allowing real estate to crater will affect all business in Canada, -something Harper cannot let happen and like Ben, will follow his lead in stimulative action.

#13 Nebbio on 09.23.10 at 10:31 pm

Last time I saw him he was driving a black Rolls Royce.

#14 T.O. Bubble Boy on 09.23.10 at 10:32 pm

Vancouver Bulls… have you seen this month’s stats?

http://vancouvercondo.info/forum/topic/september-data/page/2

(September projection = -38.6% from 2009)

#15 Kevin in Winnipeg on 09.23.10 at 10:35 pm

Garth, no Winnipeg date yet?

#16 Nebbio on 09.23.10 at 10:37 pm

Apparently, Brad has found enough greater fools to sign on to his project at 90 Broadview. They are finally breaking ground on this disaster 6 months behind schedule.

#17 dmc on 09.23.10 at 10:41 pm

ah yes! the buy now or forever be resigned to the financial dust bin – because there’s no way you’d be able to afford tomorrow.

http://tasmanianrealestatetrouble.blogspot.com/2010/09/believe-it-or-not.html

#18 Bilbo Bloggins on 09.23.10 at 10:44 pm

Saw huge lineup at Library Square today in Vancouver.
I go see what the fuss is all about.
Oh, it’s a little job fair. People waiting hours in line to apply
for $12/hr jobs so they can take out their first mortgage.
Buy now before these people do.

#19 T.O. Bubble Boy on 09.23.10 at 10:48 pm

@ #13 Nebbio:

A Rolls now? Did he get rid of the Bentley coupe?

#20 Prof. ANON on 09.23.10 at 10:49 pm

I’ve been thinking about this for awhile, but a post from yestertday got me questioning. What happens to the equity markets as boomers age? They will sell. Pre-mortum as they fund their health care. Post mortum when their progeny get their windfall.

So…here is the (perhaps) dumb question. Does demand for stocks go off a cliff because the boomers sell and the xyz generations are too financially disillusioned/oriented/broke to pick up the slack?

The opposite. — Garth

#21 Bigboy on 09.23.10 at 10:55 pm

Just got my car insurance renewal today. Last year I paid $1,100.00 with ” grey power” This renewL is $1,485.00! Thank you for low rates for geezers! WTF!!! Perfect record, over age 55. Where is the so called deflation, just went on line and got a quote for $857.00. Pays to shop. Thank you Garth, I sold my condo and am renting so I do not have to suffer Hydro’s profit grab! Man we are screwed.

#22 Patz on 09.23.10 at 11:00 pm

Listened to the Bill Good show this am in LaLaLand by the Sea. Whereupon he and sidekick of the morning, Man on Money/Man on the Market, (I swear to God that’s what they call him and not just once or twice either) Michael Levy, chortled their way through a same old/same old on Vancouver RE. Don’t they even get tired of hearing themselves trot out the same old cliches about this town (which should have kept the name GASTOWN, it is so fitting).

“Everyone wants to live here. We have people buying property here from all over the world and it’s not even expensive to them. Oh sure we’re slowing down a little—to be expected in slower economic times but things have turned around and will be going up again anytime now.” Twiddle Dumb and Twiddle Dumber!

Meanwhile our Olympic Athletes Village is beginning to look a lot like a certain Olympic Stadium in Montreal.

Our Minister of Tourism was also on the radio crowing about the wonderful results in tourism since the Olympics. Mr. Good tossed him a couple of smurf–balls and he hit one right out of the park: tourism from Brazil is up 126% WOW! ‘Course that’s only on about 3500 visitors out of 3.5 million but hey give ’em a break. In fact tourism is up a measly 5% YTD for all the hundreds of millions spent on the Olympics and yet more to come. Maybe we could house tourists in the Athletes Village.

Visit Vancouver/Relive the Olympics. If you’re Chinese you’re welcome to stay and buy an overpriced house—please oh, please.

#23 Basil Fawlty on 09.23.10 at 11:00 pm

Today, Jim Willie of GoldenJackass.com, presented the following five reasons that will keep the US from increasing rates:

1. Pinprick the USTreasury Bond bubble, loaded with too much short-term issuance
2. Deliver a louder death sentence to the housing market, crippled and falling again
3. Kill off several major banks, all of which are deeply insolvent
4. Send the US stock market into a powerful bear market, even with a PPTeam
5. Light the fuse for a credit derivative explosion, centered upon Interest Rate Swaps.

Willie suggests that the US is trapped in a 0% interest rate policy and has no exit strategy.

#24 Hovering on 09.23.10 at 11:02 pm

ee gods I love these wacky gold bugs

DZZ – dbl short golf !!!

P.s. you’re qoute “I have helped make people hundreds of people millionaires many times over,”

seems to be missing a comma or two (but i forget everything i learned when i got my english degree)

perhaps it should read “I have helped make hundreds of people millionaires many times over,” ??

and the last line of you post has been cut off

“• Balanced strategies for an unbalanc”

??

#25 Hovering on 09.23.10 at 11:03 pm

ee gods I love these wacky gold bugs

DZZ – dbl short golf !!!

P.s. you’re qoute “I have helped make people hundreds of people millionaires many times over,”

seems to be missing a comma or two (but i have forgotten everything i learned from my english degree)

perhaps it should read “I have helped make hundreds of people millionaires many times over,” ??

and the last line of you post has been cut off

“• Balanced strategies for an unbalanc”

??

#26 Hovering on 09.23.10 at 11:08 pm

lol

that’s gold

not golf

too many tiger woods stories

#27 Not Wondering Anymore on 09.23.10 at 11:10 pm

Some good information on this month’s stats on this Victoria based web site.

http://househuntvictoria.blogspot.com/2010_09_01_archive.html

#28 SpaceMonkey on 09.23.10 at 11:10 pm

@120 in response to 207

Although I don’t like the guy’s attitude, I have to admit that I see the point made in #207 re the misuse of the words there/their/they’re, your/you’re and to/too/two.

I’ve been surprised and curious about this since I started reading this blog. This is the first financial sort of blog that I’ve followed closely. The other forums which I read are international (with many ESL members)and relate to topics like surfing, rock climbing and photography.

The misuse of the above words seems much less common on those boards. If you misuse the above words on a surfing forum, you’re likely to get called a retard.

My intention isn’t to put anyone down. I’m sure a lot of people who have misused the words are ESL speakers and they can speak english a lot better than I can speak any other language.

I guess I’m just expressing my surprise and confusion about why there is so much of it on this forum. Maybe surfers aren’t that dumb after all? Or is that I’ve inaccurately stereotyped the blog dawgs as well educated? Perhaps it’s both or neither. Anyone else out there share my curiosity?

#29 april on 09.23.10 at 11:11 pm

#12 Allan, your dreaming. Zero % rates didn’t help the US, Ireland, England etc, as Garth has often stated.

Realtors are telling people not to list as there’s no buyers but at the same time their encouraging people to buy even though prices are dropping. I guess their trying to reduce the supply so the demand/supply ratio is narrowed. MANIPULATION? … of course. Some fools will be convinced to buy.

#30 Patz on 09.23.10 at 11:13 pm

Alan # 12 sez:
“Allowing real estate to crater will affect all business in Canada, -something Harper cannot let happen…”

Alan your faith in Harper’s power is kind of touching in its naiveté. If Obama, hands on the levers of power of the greatest economy in the world, could not do it, how is Harper going to? Perhaps SH could take his throne to the water’s edge and command the sea to retreat for an encore.

#31 InvestX on 09.23.10 at 11:17 pm

Speaking of the condo market, this was interesting to read:

“Condominiums continue to drive the GTA’s housing market with 48% of all new homes sales in August falling into that category.”

Read more: http://business.financialpost.com/2010/09/22/more-cracks-in-toronto-housing-market/?source=patrick.net#post-11053#ixzz10PneN8o0

#32 Soylent Green is People on 09.23.10 at 11:19 pm

snip snip: Nailed by a wild-eyed, naked bald guy driving a Rolls.

Really?

Be still my beating heart.

#33 Dan on 09.23.10 at 11:30 pm

Alan # 12

You are a dreamer or a greater fool if you think the government is going to save the housing bubble. The US could not save their housing bubble which was not as big as Canada’s bubble. The WHOLE world could not stop their housing bubble and Canada will have a bad housing crash. Sales are down 25% for the last four months and prices are now in the GTA on average $35,000 in just four months which mean anyone who bought in the past four months is not underwater on their mortgage. The housing crash can not be stopped and many will lose their homes and go bankrupt. My only wish would be a debters prison to punish those greaterfools.

POP……………………….

Alan…………..What was that? No really what was that? Canadian government please help me!

#34 nonplused on 09.23.10 at 11:38 pm

A quote or two from Nissam Taleb to help you on your way with the tour:

“You will get the most attention from those who hate you. No friend, no admirer, and no partner will flatter you with equal curiosity.”

“Corollary to Moore’s laws: every ten years, collective wisdom degrades by half. ”

“A good foe is far more loyal, far more predictable, and, to the clever, far more useful than any admirer. ”

“”Evolution does not teach by convincing, but by destroying.” [Fat Tony on why Robert Merton, univ tenures in econ, and bailouts are dangers]”

“The Stoic sage should withdraw from public efforts when unheeded & state is corrupt beyond repair.[Seneca] Wiser to wait for self destruction.”

“They will envy you for your success, for your wealth, for your intelligence, for your looks, for your status –but rarely for your wisdom.”

“We ask “why is he rich (or poor)?” not “why isn’t he richer (poorer)?”;”why is the crisis so deep?” not “why isn’t it deeper?”. ”

“My problem of knowledge is that there are many more books on birds written by ornithologists than books on birds written by birds. [OPACITY]”

“I now take a hot bath after reading emails from businessmen or journalists; I then feel purified from the profane until the next email.”

“We worry about “too big”, but the biggest error-prone centralized top-down institution in the world is the US Gov. It is getting bigger.”

(The Canadian government is pretty big too by the way, bigger compared to total economic activity in the country. And the first time in forever that they actually tried to reduce the size of government, by scrapping the absolutely useless long gun registry, it got voted down. Actually the long gun registry law is worse than useless. It causes SWAT raids on legal gun owners, as they look for “unregistered” but legal guns. This has died down a bit as law enforcement agencies have begun to see the futility in such action, plus the harm it was doing, but for a while it was a problem.)

#35 Devore on 09.23.10 at 11:48 pm

#8 dark sad person

Has no clue what Inflation is–
Has no clue what Deflation is–
Has no clue what Hyper-inflation is–

Seeing as you’ve said hyperinflation has already happened, I’d say that neither do you.

Supply of money is but one thing to look at. And you know as well as I do, there are about a dozen ways to count money supply, and all of them will give you different numbers and trends, and all of them have their supporters.

Like with statistics, -flationists pick the numbers that support their case.

Funny, this deflation, with inflating stock market, inflating bonds, inflating gold, inflating commodities, inflating staples, inflating corporate coffers, inflating bank profits.

Biflation, get used to it, or keep looking at your myopic charts, maybe you’ll be right one of these decades.

#36 squidly77 on 09.23.10 at 11:48 pm

Calgary condo sales are down 40% YOY.

Leverage is a bitch when it works against you.

Gold-bugs will meet the windshield sooner than they think.

#37 dark sad person on 09.23.10 at 11:58 pm

#23 Basil Fawlty on 09.23.10 at 11:00 pm

1. Pinprick the USTreasury Bond bubble, loaded with too much short-term issuance

Willie suggests that the US is trapped in a 0% interest rate policy and has no exit strategy.

*************************

How friggen far out is looking?
He’s been spewing the same drivel for years-
He is likely correct about a derivative meltdown-but-
how in hell does he see that-as Inflationary–
It is Deflationary-
If “any” of it was Inflationary–don’t worry–
Ben would be milking it all the way–
In case any of you Inflationists haven’t noticed-
Ben’s been trying to get-something-anything-everywhere-to try and spark some “real” Inflation-since 07 and the poor Fed can’t find a bubble to blow anywhere-
You see the problem is–Sentiment–it’s simply shifted-
This can be seen in the credit market-the savings rate-GDP-which was 70% consumer driven and the only thing that’s keeping the numbers from collapsing-is a few trillion $ printed and of course their bastard wars–

Why-he sees a Bond Bubble (unless he’s looking way out) is beyond belief–
The reason he sees a Bond bubble here-is because he actually believes the Fed has the power to Inflate-

Sorry Jim–
Sentiment ate your dumb ass-just like it’s doing to the equally delusional Bernanke–

Consumers have an overall view (by survey) of cutting spending and of spending less and saving (paying down debt) in the future-as can be seen in collapsing M1 Velocity-which I’ve showed a gazillion times–

Same for borrowing as can be seen in credit velocity-which I’ve showed a gazillion times-

Students coming out of University’s-loaded to the gills with Student loan “debt” a degree in 10 subjects and are flipping patty’s at McDonald’s-

Unemployment at record highs-does not produce paychecks-

House prices/net worth continue to fall–

Boomers are heading into retirement-with basically what they came into the world with-not to mention a shaky bankrupt pension system-so-where will any spending come from there?

Here’s Willy’s Bond bubble and how that’s going for him-

*******************

Treasury Auction Bids Rise 18% to Record as Investors Surpass Bond Dealers

For the first time since the government started collecting the data, central banks, mutual funds and U.S. banks are buying more government securities at Treasury auctions than Wall Street’s bond dealers.

Foreign and domestic investors bidding directly at note and bond auctions bought 57 percent of the $1.26 trillion in Treasuries sold by the government this year, up from 45 percent during the same period in 2009 and as little as 32 percent for all of 2008, according to government data compiled by Bloomberg. Bids compared with the amount of debt sold, the bid-to-cover ratio, rose 18 percent from last year’s 14-year high, according to data that Treasury started collecting in 1994.

Biggest Buyers

Investment funds and U.S. banks have been among the biggest direct buyers of Treasuries this year. Banks held $1.48 trillion in Treasuries and agency debt as of June 30, up 2.1 percent from the end of 2009, according to Fed data.

Depository institutions bought $1.2 billion of the $13 billion in 30-year U.S. bonds auctioned on June 10, $3.1 billion of those offered on March 11 and $2.7 billion of the $16 billion sale on Feb. 11, Treasury data show.

“There is definitely a sense that banks are reluctant to lend and are parking reserves either at the Fed, in Treasuries or other non-consumer lending assets

Banks have tightened their standards and even if their standards remained the same, the position of consumers has deteriorated with the economy under stress. It’s more difficult to get a car loan, it’s more difficult to get a mortgage.”

http://www.bloomberg.com/news/2010-07-18/treasury-auction-bids-rise-18-to-record-as-investors-surpass-bond-dealers.html

***********************
Someday-there will be a Bond bubble-
Today-Wall street is littered with Jim Willie type Bond bears-
There will be many more die along the way-because they do not understand Deflation-in a Credit money system–
The US-is still the best looking piece of bread in the dumpster-

#38 Tom on 09.23.10 at 11:59 pm

Other than the past 6 years, has a condo ever been a good investment? You don’t own the land and the asset depreciates the moment you buy it. The fees constantly go up. There is no end to new high rises. Some bald dork in TO has only been lucky because of this absurd market, where anyone could have made money if they bought 5 years ago. If they buy now, they’ll lose their shirt.

#39 nonplused on 09.24.10 at 12:04 am

More Taleb:

103- The translational gap

How long can something be held as wrong before its practice is discontinued? A long, very long time, much longer than we think. We’ve know that “modern finance” and economics represented a danger to society [since 1961, with close to 400 blowup episodes including the crash of 1987] to no avail –and this blowup of the banking system will not bring any relief. Even the fact that I may have made the point in what may turn out to be the ALL TIME bestseller in economics and philosophy of science [ and the mother of all empirical evidence] might not help displace the charlatans. Some ideas from the history of Medicine (Medicina, soror philosophiae!).

Noga Arikha “Just Life in a Nutshell: Humours as common sense”, in The Philosophical Forum Quarterly, XXXIX, 3:

When William Harvey demonstrated the mechanism of blood circulation in the 1620s, humoral theory and its related practices should have disappeared, because the anatomy and physiology on which it relied was incompatible with this picture of the organism. In fact, people continued to refer to spirits and humors, and doctors continued to prescribe phlebotomies, enemas, and cataplasms, for centuries more –even when it was established in the mid-1800, most notably by Louis Pasteur, that germs were the cause of disease.

See also Arikha’s book (it was swallowed by my uncatalogued library so I am …reordering it).

The most complete compendium is in Wooton Bad Medicine: Doctors Doing Harm Since Hippocrates.

p 184 […] why doctors for centuries imagined that their theories worked when they didn’t; why there was a delay of more than two hundred years between the first experiments designed to disprove spontaneous generation and the final triumph of the alternative, the theory that living creatures always come from other living creatures; why there was a delay of two hundred years between the discovery of germs and the triumph of the germ theory of disease; why there was a delay of thirty years between the germ theory of putrefaction and the development of antisepsis; why there was a delay of sixty years between antisepsis and drug therapy. [he explains elsewhere that there was no money in microscopy, which delayed implementation…]

Elsewhere Wooton shows how surgeons resisted anesthesia (because it was considered cheating), how doctors in France were still bleeding patients at the end of the 19th century, yet: In 1851 […] Dietl showed that bloodletting tripled the death rate in a pneumonia.

p 240- Pasteur had a sensible distrust of doctors. p 14 I took it for granted that in an open argument, good ideas would always defeat bad ideas. […] Peer group pressure often halt progress in its track.[…] Despite the brilliant work of philosophers and historians of science, no one has really worked out how to write a history that takes account of this. p 293 Shapin tells us that “The Harvard biochemist L.J. Henderson [1878-1942] was supposed to have remarked “that it was only sometime between 1910 and 1912 …that a random patient, with a random disease, consulting a doctor chosen at random, had, for the first time in the history of mankind, a better than 50-50 chance of profiting from the encounter.”‘

Also, something that explains why I am going nuts.

By 1861 [Semmelweiss] was denouncing those who had not adopted his views as murderers.

James Le Fanu: The Rise and Fall of Modern Medicine (1999) talks of “collective deception”.

I call this the translational problem because of a great paper by Ioannides (my hero) et al. Life Cycle of Translational Research for Medical Interventions in Science (Sept 5, 2008) –they show how long it takes from initial scientific paper to implementation –and how the cycle is lengthening. But my problem is that the gap knowledge/practice is not curable –the arrow goes from practice to knowledge.

New books on medical history: Gloria Origgi have me a book on Semmelweiss by … Louis Ferdinand Celine! (merci mille fois). Also Francois Lebrun Se soigner autrefois Médecins, saints et sorciers aux XVIIe et XVIIIe siecles, Georges Vigarello Histoire des pratiques de santé, Jackie Pigeaud La maladie de l’ame, Collectif (Centre Jean Palerne): Rational et irrationel dans la médecine ancienne et médiévale. I also got a long paper by Gerd Gigerenzer on medical practice and conditional probability (I guess it is the misunderstanding of Type 2 error that is costing us so much).”

—————————–

To note from that Garth; if medical history is of any use understanding the human mind, science cannot quickly disperse magic, and myth. People today are still using homeopathy (however you spell that), acupuncture, prayer, and other tried and true failures with no basis in science to cure their ills. To think that you can get the majority of real estate get rich quick people to convert is the hieght of foolishness. They will not, until they have spent their last until they bankrupt themselves all on their own.

Also I consider the work of Gary Taubes (and soon the book by Art DeVany) as documents in the history of medical errors.

#40 Bill Gable on 09.24.10 at 12:05 am

*** Michael Levy is also involved with a company that sells gold and silver.
Just thought that an interesting juxtaposition with his comments on CKNW.

Now back to Mr. Turner and his cautious warnings that we could see interest rates rise with surprising agility, with the expected disastrous results for many homeowners.

In a speech on Wednesday night to the Cardiff Business School, Mr Dale sought to silence the “dangerous voices” questioning the Bank. He stressed that policy-makers have “not gone soft on inflation” in a stark rebuttal of City suggestions that they are turning a blind eye to their central remit.
“We lose our credibility at our peril – once the genie of inflation credibility escapes it is costly to put back,” he said. “The response to a possible loss of credibility is clear – monetary policy would need to tighten, possibly aggressively so.”

http://tinyurl.com/2w44u9d

#41 Wise Guy on 09.24.10 at 12:11 am

I do periodically get emails from Mr. Lamb and/or his associates attempting to sell me on one of his condos here in Toronto.

One such email told me not to miss out on the HOT CONDO market!

I’m thinking that unless you are on top of things, paying attention to the latest housing figures, reading this blog…etc, you might fall for this crap!

Below is one such email:

Hello,

It has been a while since we touched base on any real estate related matters for the HOT Toronto Condominium market.

I wanted you to know that we are working on a major INVESTOR FRIENDLY pre-construction condominium project in downtown Toronto with great incentives for our regular VIP clients. At this time, for the first 5 clients, we will be able to offer:

DISCOUNT of $18,000 to $28,000;
DEPOSIT of only 10% (instead of 25%);
FLIP PERMISSION (save over $5,000);
CAPS on closing costs; and
FREE PROPERTY MANAGEMENT (save $5,000 to $7,000).

If you are in the market for the purchase of a pre-construction condominium in Toronto’s downtown core, please contact the undersigned ASAP for details and an update on availability.
Kind regards.

#42 Debt's Dark Embrace on 09.24.10 at 12:15 am

#20 Prof. ANON on 09.23.10 at 10:49 pm

I’ve been thinking about this for awhile, but a post from yestertday got me questioning. What happens to the equity markets as boomers age? They will sell. Pre-mortum as they fund their health care. Post mortum when their progeny get their windfall.

So…here is the (perhaps) dumb question. Does demand for stocks go off a cliff because the boomers sell and the xyz generations are too financially disillusioned/oriented/broke to pick up the slack?

The opposite. — Garth
………………………………………………………………………

Garth, I think the prof is right. Why do you disagree?

#43 specuskeptic on 09.24.10 at 12:17 am

@ Basil

“Willie suggests that the US is trapped in a 0% interest rate policy and has no exit strategy.”

Reset your clocks to 1992, and have your Japanese guide books handy. It doesn’t repeat, but it rhymes.

#44 Tonguestump on 09.24.10 at 12:18 am

This is what a realtor blogged me back in the comments section of his real estate thread in small town B.C. “again, we are on different pages. I will freely admit that I am no expert in ETFs, REITs or lots of other acronyms. If people want to find out about those vehicles they should consult a trusted financial advisor.
However, I will comment that a HELOC (Home Equity Line of Credit) is structured so that you never pay down principal, therefore you never get out of debt. At my age (let’s just say “over 40″) that no longer is appealing.
By putting 60% of your cash into growth assets, you are certainly assuming some risk (remember what happened two years ago?) and with gold near $1,260 an ounce is that a good investment, or is it in a bubble?
For the long term, I prefer my money in real estate.
Son, this is off topic for what I am trying to convey in this blog, so let’s not get into an ongoing discussion on investment vehicles or strategies

#45 Nostradamus Le Mad Vlad on 09.24.10 at 12:24 am


“Road kill — Brad Lamb.” — Only read about him here, and that’s enuff for moi, merci!

“Towering dork talk. But I think the King has no clothes. . . rot in the Kingdom of Lamb. ” — Are dorks offsprings of The Borg? Does King LambBorg wear no clothes? Questions, questions all around!

“Today there are 19,000 new condo units . . .” — When they don’t sell, what are the builder’s options? Turn them into affordable renting condos, where people can rent instead of buying? Rentable timeshares for winter treats, mebbe?
*
#136 Bill (Peterborough) on 09.23.10 at 9:36 pm — Interesting link. A couple of months ago, I posted a link about St. Malachi (10th or 11th C.) who prophesied there would be 266 popes, and that would be it (for the Roman Catholic church — not overly sure about the Protestants, as they were not around then).

The present pope is supposedly the 265th, which is the physical embodiment of Lucifer or Satan. It is better referred to as the negative force, the dark side of the positive force.

It does seem that the Protestant side will stay alive, but for how long no one knows. Everything has a best by date here!

The Unseen Sea A short, colorful clip — 2:52 — that has nothing to do with anything, just nice. Sound up!

Lotsa oil in these two areas.

Throw another spanner into the gears!

The first part is what all those well-established, know-it-all money men are saying. The second part is the scary reality. Who do you believe?

Gold Bugs This is for you.

#46 Mark on 09.24.10 at 12:26 am

#21, Gramps, “Grey Power” isn’t cheaper because you’re older and are a safer driver, “Grey Power” is cheaper because prehistoric people drive less.

No insurance company can give you a better rate because you’re older. But working with an insurance company to find insurance that is tailored to your actuarial risk will almost always give you a better rate. For instance, engineers and university alumni usually enjoy a considerable advantage on insurance rates compared to construction workers.

#47 grumpy on 09.24.10 at 12:39 am

Garth, traditionally and still standing is the price/income ratio….in the US, Euro Zone, Aus and UK it refers to a single family home priced at a multiple of an individuals average wage. SINGLE FAMILY HOME ON A PLOT OF LAND. It has become mistakenly interchangeable with condo ownership in Canada…this a wrong. The price/income ration do’s not and has never been used to evaluate condo ‘affordability’.

Saying the average ratio in TO is 5.5 is referring to condominiums…a condo is not a SFH and so this ratio is not valid. The pimps have attempted to sell this in Vancouver where the traditional ratio became so outrageous at 21.5 times average earnings ( one milliuon average price and 67500 average income) and had to change the ratio to include condo’s so that the ratio could be sold to an already price shocked public.

Please do what you can to right the misconception that condos form the value factor of the price / income ratio…..they do not. Le3ts compare apples with apples when we compare this to the US, Aussie etc where the calculation refers only to SFH’s and NEVER condo’s.

#48 TheFirstRick on 09.24.10 at 12:54 am

At the TO speech I envision Brad Lamb sitting in the back row. A ‘Silence of the Lambs’ of sorts?

#49 Foggy on 09.24.10 at 1:08 am

Well Mr Brad, as far as waiting on the sidelines for 19 years, the average house price in Toronto fell from $390K in 1989 – to $240K by 1996. A drop of 38%. That’s an average of all housing types, so condos could have been worse than that. You clearly know nothing of past cycles and history. Which I find “patently absurd”. You’re in the business of forecasting the future value and saleability of your product. It would be rather silly to purchase city land at a premium today, plus a lot of fees and construction costs to build a condomimum and market it in 2013, when prices wwill be well down compared to 3 years prior when you planned this whole thing. That’s just a money-losing propostion. And interest rates will not be 2% but much higher, so your clients will have more trouble qualifying. And the last wave of first time buyers has bought. They’re done. It’s simple forecasting, isn’t it?

#50 Peter Pan on 09.24.10 at 1:14 am

Brad Lamb should re-visit the rise and fall of the last self-annointed Toronto “Condo King”… Harry Stinson.

Harry had to file for creditor protection in 2007…

Hubris has a way of catching up to you… And the people who you see on the way down are the same you saw on the way up…

#51 Peter Pan on 09.24.10 at 1:19 am

“I have helped make people hundreds of people millionaires many times over”
———————————–
I wonder if Brad Lamb will man-up and accept blame when his rat-box buyers lose all their leveraged money?

#52 Alan on 09.24.10 at 2:10 am

TO bubble boy

2186 sales for the month of September?

If I am reading this correctly, there are sales despite what everyone is suggesting. Where there is a buyer there is a seller…those that choose to hold on to higher pricing is there own perogative.

Nothing new here. When sales slow down, prices come down to buyers expectations.

Those that don’t care one way or the other just keep on living in the same place making their mortgage payments.

#53 blase on 09.24.10 at 2:41 am

Just for shits and giggles I searched for the most expensive property on mls in Toronto, which brought up a mansion in Rosedale? for 18 mill. Then I google street viewed it. What a let down. The place looks like a couple mill place, tops. Google street view rocks, and will be another nail in the coffin of realtors.

#54 Tony on 09.24.10 at 4:10 am

Garth remember to tell them the obvious, Mississagua and Brampton will be the last two cities in the country to tank. When these two cities tank it’s over.

#55 This is Wonderland on 09.24.10 at 6:34 am

I remember the one and only time I watched Brad Lambs show, for some reason they were following him and his 20 year old girlfriend around. The word Sleazy Snake hardly even starts describing the old fart. I wouldn’t buy a pack of gum off this guy.

#56 Captlou on 09.24.10 at 6:40 am

Could you almost be saying: “If you’d like to be there, Brad, reserve a seat now (below)”

#57 oilsand eddy on 09.24.10 at 6:49 am

Read the blog every day and loving it. Just had someone put down a deposit for my Saskatoon house. Getting out.

#20 Prof ANON
Does demand for stocks go off a cliff because the boomers sell and the xyz generations are too financially disillusioned/oriented/broke to pick up the slack?

The opposite. — Garth

I understand bond yields needing to rise to find purchasers, but wouldn’t the stock markets do the opposie as borrowing becomes costlier? Could you please elaborate on this for me?

#58 Sherri on 09.24.10 at 6:57 am

How is your Oil is better than gold inflation (QE) trade working out Garth?

NOT.

The world needs oil. It does not need gold. This will turn out as I suggested. — Garth

#59 Moneta on 09.24.10 at 7:06 am

I remember reading a few years back ar article in La Presse on the future need for old-age homes.

They were saying that everything that was being built was priced at more than 350K when most retirees could only afford 800$/month.

With the oversupply, I guess in the next few year, those retirees will be living in luxury for 800$.

#60 X on 09.24.10 at 7:13 am

A new sales home opened near my neighbourhood recently. I went in just to see what types of floorplans they were going to have. These houses close in 2011, and the builder is selling them at prices that factor in about another 10% of appreciation in the RE market. Crazy.

I did find their selling pitch humorous, as I played the role of a new home buyer. The sales guy was explaining how much easier it is to buy a new home (you just leave post dated cheques, and sign paper work) than it is to buy a new or even a used car (as they will actually do a credit check).

#61 Bullion.bunny on 09.24.10 at 7:21 am

#1 goldenfox on 09.23.10 at 9:40 pm

Jim Willie makes for great entertainment, the rants are fantastic! That said he just about clueless went it comes to markets and his followers……..wow….talk about nutcakes. Well what do you expect from a PHD?

#62 X on 09.24.10 at 7:23 am

Rosenberg sounds an awful lot like someone else:

http://www.theglobeandmail.com/globe-investor/investment-ideas/experts-podium/bubble-or-not-canadian-markets-in-for-rude-awakening/article1722246/

#63 fancy_pants on 09.24.10 at 7:25 am

Lamb’s implication has no leg to stand on… just because the RE boat has been heading north the last 19 years is not evidence in itself it will continue in that direction. That is his stated implication ~ and understandibly so as his bread and butter is married to that direction.
Denial is the initial response when your hide.. er, wool.. is on the line. Stop and take a look. The boat has turned around. Oh, and in case you haven’t noticed it is now serving lambchops on the menu ;)

#64 T.O. Bubble Boy on 09.24.10 at 7:30 am

@ #52 Alan:

Yes, there will still be thousands of sales done in Vancouver this month… but 35%-40% fewer than just last year. (which seems like a rather large drop?)

Those who have posted here that Vancouver is not a part of this correction are delusional… and the stats show it.

#65 S.B. on 09.24.10 at 7:33 am

Lamb’s Leslieville Lofts were sold to people and then this project was cancelled (some zoning or use issues I heard?). Project was actually in Riverdale, on Broadview just N. of Queen E.

His State East lofts in Leslieville, 2 years later, are still just a sign on an auto repair shop at Queen/Leslie.
Google street view captures this sign:

http://tinyurl.com/2bpsae4

#66 S.B. on 09.24.10 at 7:42 am

What about the new 20% downpayment rule for investment properties? If many of the Toronto condos are bought for “investment” purposes, then this new rule would hit the area hard. HST’s impact is a lot less than paying an extra 15% (vs. 5% down) of a $350,000-500,000+ condo.
How many of Lamb condo millionaires got by with 0 or 5% down ‘back in the day’? 20% down is a game changer.
I look forward to seeing Garth and the blog dawgs on Nov 9th.

#67 CTO on 09.24.10 at 7:44 am

12 Alan

Nice Theory

Please list the tools that our great Canadian government has at hand that they can use that will NOT be DAMAGING to our countries finances (public, private, commercial), now or later??????????

They may try like the GREAT AMERICA did but they will hurt a lot of prudent tax payers in the process! Just like our brothers have so far….

Let the natural course of events low like a river, instead of foolishly tampering with force they don’t understand.

#68 Bullion.bunny on 09.24.10 at 7:49 am

While many people think he’s a towering dork, I admit to a fondness for Brad Lamb. After all, it takes a certain cowboy metrosexualness to shave your head, dress in black, drive a 21-foot-long Rolls, worship money and call reporters jerks.

While this may be true, you cannot argue with success! Selling hundreds of millions of RE to greater fools takes talent, would you not agree? I’m sure Brad Lamb would agree that selling RE beats working in the engineering world!

#69 CTO on 09.24.10 at 7:50 am

Oh, buy the way Al!

Lowest interest rate in 1/4 centry…have you not been paying attention to what’s happening??? They already had rates at 0 and it did 0….

#70 JET on 09.24.10 at 7:59 am

The bald one’s full diatribe is here:
http://email.bradjlambmarketing.com/Sept2010Newsletter

#71 grouchpeach on 09.24.10 at 8:00 am

#54 Tony

“Mississagua and Brampton will be the last two cities in the country to tank”.

Why is this?

#72 T.O. Bubble Boy on 09.24.10 at 8:15 am

Mark Carney will be interviewed in CNBC today:
http://www.cnbc.com/id/39340588

I wonder if he’ll be answering questions using the Harper/Flaherty spin machine (which is the expected behaviour on CNBC), or giving honest answers like “no, we’re not different, just 3-4 years behind in the cycle” and “actually, our banks did get a bailout”.

The Globe and Mail has several bubble-bursting articles today:
The Housing Boom is Over, Really. and Canadians in for a Rude Awakening (on their debts). Even Paul Krugman – the champion of the bailout movement – warns Canadians that our debt loads are too high (at the same CBA meeting where Flaherty warned about how apparently elections are the worst possible thing for economies, not debt, not deficits, not consumer confidence, and definitely not government-fueled asset bubbles)

And, some familiar words from Sacramento, California where 43% of houses are “underwater”:
The process of securitizing the loans – packaging them into investment products – worsened the problem because the original lenders didn’t have to fret about the loan going bad, experts said.
(psssst: CMHC – that’s exactly what you do too!)

#73 dark sad person on 09.24.10 at 8:15 am

#35 Devore on 09.23.10 at 11:48 pm

#8 dark sad person

Has no clue what Inflation is–
Has no clue what Deflation is–
Has no clue what Hyper-inflation is–

Seeing as you’ve said hyperinflation has already happened, I’d say that neither do you.

Supply of money is but one thing to look at. And you know as well as I do, there are about a dozen ways to count money supply, and all of them will give you different numbers and trends, and all of them have their supporters.

********************************

No-there is not “many” ways to count money supply-
There is only “one” way-
Your problem is–
You don’t know any better then Jim Willie-how to separate credit money from cash money-nor-how credit in reverse has a total different money supply dynamic then credit in expansion–

“Prices” do not count as “money supply”

#74 Got A Watch on 09.24.10 at 8:15 am

““I have helped make people hundreds of people millionaires many times over,”” – As a Grade 3 graduate too, with full honors. He probably can’t spell “real estate boom and bust cycle” either. Maybe he’ll have time to go back and finish Grade 8 now.
——————————————————–
“Mississagua and Brampton will be the last two cities in the country to tank.” – Tankage already starting it looks like to me.

Who is this real estate broker “New Price!” and his brother “Reduced!”? They have almost every listing now. More listings than all others combined!
——————————————————–
goldenfox – If you can state your argument in a coherent manner, people might agree with you. When you cite a complete idiot like Jim Willie (“The Golden Jackass” – now there is some real truth in advertising!) it just damages your own credibility. Really, did you read the words he wrote – he sounds like he’s been out in the Caribbean sun too long without his jester hat. But then he always sounds like that, even when he is talking about something routine, and has for so many years now.

There are a lot of smart commentators who can argue inflation, or deflation, or make some accurate predictions about the future direction of the economy. Jim Willie is not in any of those groups. Sorry.
———————————————————-
“I truly believe government will not allow a severe housing decline due to the much larger implications to the Canadian economy” – no doubt Elvis told you that on the steps of his double wide. ROFL. You can clearly see how well that worked out in the USA and the UK and pretty much every other real estate bubble in history. Yeah, it’s so obvious.
———————————————————-
Today, there are 2 worlds, Planet Earth and MSM Planet Spin:
Bloomberg – “Demand for Capital Goods Rebounds”
Market-Watch – “US durable-goods orders drop 1.3%; stock futures extend gains”

Zero Hedge – “August Durable Goods come all over the place – total number is a major miss to expectations, but stripping away transportation and aircraft, these beat. As expected, the market will cherry pick what it likes and surges on the news.

* US Durable Goods Orders (Aug) M/M -1.3% vs. Exp. -0.1% (Prev. 0.3%, Rev. to 0.7)
* Durable ex. Transportation (Aug) M/M 2.0% vs. Exp. 1.0% (Prev. -3.8%, Rev. to -2.8)
* Non-def Cap ex. Aircraft (Aug) M/M 4.1% Exp. 3.0% (Prev. -7.2%, Rev. to -5.3)

Perhaps someone should point out to Boeing and all US defense companies that Nondefense aircraft and parts shipments and new orders plunge by -13.5% and -40.2% in August. ”

LOL. “defense spending” = Government Debt spending. The real economy, that is the small part that is not wholly dependent on the Government to stay open, is shrinking. Good news! Green shootyness!

The US GDP prints are likely to turn well negative soon – that is a minus sign on the front end. Otherwise known as a negative realized gain on a non-optimal vector. Time to smoke another green shoot.

#75 Old_is_Gold on 09.24.10 at 8:17 am

#54 Tony on 09.24.10 at 4:10 am

Garth remember to tell them the obvious, Mississauga and Brampton will be the last two cities in the country to tank. When these two cities tank it’s over.
_______________________________________________
In my opinion these will be the first places to tank and big time at that, far sooner than Toronto. Brampton in particular is a powder key just waiting for a match. People of my ethnic persuasion bought on the premise of the lowest monthly payment, based not on the income of just one couple but in many cases multi generation of families, and in some cases in the hopes of having rooms rented out to newly arriving immigrants. Despite the media BS most of the new immigrants from India, Pakistan, Bangladesh and Sri Lanka arrive here with not even two nickels to rub together. All these people work in low paying service sector jobs or as taxi drivers. I personally know an airport limo driver whose business is down 35-40% from the boom years.

So even a slight change in the equation; a lost job, a rise in interest rates, unexpected expenses for repairs, new cars etc. and the whole house of cards comes tumbling down like dominoes. The majority of these folks are the 0 down variety and have 0 savings to tide them over, remember the 60% that live paycheck to paycheck, these poor souls live paychecks to paychecks, one check goes missing and so will the mortgage payment, after all one has to eat, right?

The truth of what is being desperately hidden by the powers that be and the media will out one of these days, and I reckon that the day of reckoning is no more than a year to two away at best.

#76 Old_is_Gold on 09.24.10 at 8:22 am

#47 grumpy on 09.24.10 at 12:39 am

Thanks for the info; it makes sense.

#77 Ryan on 09.24.10 at 8:25 am

hey garth when we register for the Toronto speaking event does that guarantee us just one seat? I want to bring my GF and show her that their IS downside to buying in this market? Are you assuming when someone registers that its a +1?

Come. Until we reach capacity, everybody (and a friend) who receives an email confirmation gets in. — Garth

#78 Some Articles on 09.24.10 at 8:28 am

Gotta love David Rosenberg. To me, he is by far the top Canadian Economist. Here are his views on housing below.

Even if this correction in housing is only a fraction as harsh as was the case south of the border, the economy, and the financial markets are likely in for a rude awakening in coming quarters.

At the peak of our own mania last fall, home prices soared more than 20 per cent on a year-on-year basis and home sales skyrocketed 70 per cent. These data points all have a “U.S.A. circa 2005” feel to them.

http://www.theglobeandmail.com/globe-investor/investment-ideas/experts-podium/article1722246.ece

#79 andrewS on 09.24.10 at 8:49 am

Toronto Condos:

Look at the Statscan profiles for downtown Toronto. The average household incomes are not terribly high; in the mid-60’s usually. Many downtown condos- around half – are occupied by people that live alone and have an income on average of 45k, so the median is actually quite a bit lower than the mid-60s. Most are late-20s and early 30s, not exactly peak earning years. They certainly don’t have much of a downpayment unless daddy generously gave them 100k.

Now, try and find a condo downtown for under 300k (5x average income) in a decent neighbourhood. That is, not that nasty bit of vertical sprawl around Skydome (I refuse to endorse the company that renamed it).

The dual-income-no-kids cohort that can actually afford these things at less than 4x income are not the dominant group. That 30 year old single guy/gal that makes 55 k a year is. There is no way he’s not overextended.

Demographics don’t support the downtown market at its current levels. Add in the huge number of units coming to completion in a down market and the fact taht only about half these units are owner-occupied.

Ever seen those old Gary Larson comics? “trouble brewing”.

#80 Off the Leash on 09.24.10 at 8:59 am

“The last time real estate crashed in the GTA followed a mildly delusional bubble in 1989. It took 14 years for the average price to recover, during which any investor who bought at the top was too embarrassed to admit it. The losses on condos were catastrophic. Investors could not rent them to cover taxes and monthly fees, even when there was no mortgage to pay.” – Garth

And so the world turns. History, if not repeating itself then, rhymes. That these things happen on generational timeframes mitigates the recollection that they are about to happen again. Only the few, taught by their elders to old now themselves to fully take advantage of their foresight based on hindsight, prosper. The young unwilling to learn from the veteran bound to make the same mistakes themselves becoming themselves the veteran learning too late what was will be again.

“Nothing new here folks… move along.”

But it is that “nothing is new” which is the greatest lesson of all.

If history does not repeat it rhymes. Ying and Yang, Garth and Lamb, Summer and Winter… each has their day and will again.

#81 C on 09.24.10 at 9:00 am

#64 JET

Just read your post which had Brad Lamb’s Sept. newsletter.

I have a real estate buddy, who calls me a doom and gloomer too. I guess when you start saying the real estate market is overvalued/due to go down you are called a negative doom and gloomer.

This is not a garden variety recession. Past recessions (82/90/02) were all dealt with by cutting interest rates and adding more debt.

The debt machine is now broken and deleveraging is now occurring. The US is further ahead of us Canadians in deleveraging. We haven’t even started. They have just started. That is the game changer this time. Deleveraging vs adding more debt/refi’s.

Look at what has happened in the USA?????????????????

For the life of me why don’t Canadians open their eyes and see what has happened to the largest economy in the world???

On another note, my wife asked me last night who is our Prime Minister. God love her. I gave her a look like are you kidding me and said “you really should know who are PM is”. She is 27. I think this sums up where most Canadian’s heads are at. They are more interested in following Snooki from Jersey Shore than reading about what is going on in Canada/US/World.

That’s why at least 95% of home buyers haven’t got a clue about what is going on under the surface in the Canadian housing market. It really isn’t rocket science to figure out, but with shows like Jersey Shore on why get informed? You wouldn’t want to become another doomer now would you ;)

#82 Off the Leash on 09.24.10 at 9:05 am

Oh… and shaven head is the new comb-over.

#83 Brad Lamb would say on 09.24.10 at 9:09 am

“I’m not bald, I’m just too tall for my hair.”

“God only created so many perfect heads the rest he covered with hair.”

“Solar panel for a sex machine.”

“Hat say ye, Garth my bearded friend?”

#84 junius on 09.24.10 at 9:16 am

#12 Alan,

You said, “I truly believe government will not allow a severe housing decline due to the much larger implications to the Canadian economy and will act to stimulate. Allowing real estate to crater will affect all business in Canada, -something Harper cannot let happen and like Ben, will follow his lead in stimulative action.”

Didn’t Flaherty just say he was not concerned about this?

What, pray tell, are they going to do? The US tried everything from new home tax credits to trying to force the banks to restructure mortgages.

You people who think that the gov’t will just keep intervening simply do not understand the credit markets. The gov’t did their best last year and it worked for a time. However they are out of ammo.

#85 Cameroni on 09.24.10 at 9:18 am

I can’t be too hard on Brad either. He has Moxy. But this line of his you quoted today really made me laugh. He said:

“Does anyone really believe Toronto’s real estate market is due for a large correction? This is the most patently absurd theory I’ve heard in 10 years”.

The irony of course is that 10 years ago saw the bursting of the Dot-Com bubble. So Brad has called it just about right.

Because nobody believed that would happen either!!

#86 Brass Balls on 09.24.10 at 9:26 am

#36 Squidly 77

“Calgary condo sales are down 40% YOY.”

Calgary condo median price Sep 2009: $265,000

Calgary condo median price Sep 2010: $265,000

What’s your point? Sales are down, price is the same.

How many times do we have to spell it out? Sales drop first, prices months later. It’s called human nature. — Garth

#87 brainsail on 09.24.10 at 9:28 am

Sorry for going off topic.

My wife, who is a lady and never curses except when trying to do online banking with Scotiabank. She is trying to manage her father’s accounts (POA) from Texas. Too many problems, many phone calls plus extra charges to review check details. Very archaic compared to what we are used to. Which Canadian bank has superior online services?

#88 C on 09.24.10 at 9:45 am

I know I did a grammar mistake. Our vs are. oops.

#89 C on 09.24.10 at 9:47 am

On a day equity markets are blazin, Rona down almost 1%. (ron.to). Hmmmmmmm????????

#90 rory on 09.24.10 at 9:53 am

Hey all … a good, quick read on the state of the US empire that includes lots of facts and numbers and mirrors a lot of consensus found on this blog…they/we have definitely lost our way?

http://economicedge.blogspot.com/2010/09/graham-summers-forget-recession-empire.html

#91 squidly77 on 09.24.10 at 9:55 am

There’s something very strange going on in the stock markets – Whats happening today shouldn’t be.

Somethings up.

#92 dark sad person on 09.24.10 at 10:02 am

#88 squidly77 on 09.24.10 at 9:55 am

There’s something very strange going on in the stock markets – Whats happening today shouldn’t be.

***********************

The market isn’t acting the way “you” think it should-
Typical clueless comment from you-

So-why don’t you enlighten the board-as to what “should” be happening–

#93 Brass Balls on 09.24.10 at 10:10 am

“How many times do we have to spell it out? Sales drop first, prices months later. It’s called human nature. — Garth”

Calgary sales in Sep are going to be higher than Aug. This has NEVER happened before.

BTW, how many months does it take for prices to drop? Sales have been going down for many months, yet the average price of sfh is up $18,000 this month.

#94 45north on 09.24.10 at 10:11 am

Tony: Mississagua and Brampton will be the last two cities in the country to tank.

you wish

It’s pretty easy to figure out. Pick half a dozen commercial plazas in Brampton. Every month check to see how many spaces are vacant. Report back here once a month.

#95 BrianT on 09.24.10 at 10:16 am

#58Sherri-not as Garth states-the global economy cannot sustain extremely high oil prices-there is an effective ceiling on oil prices for this reason. Gold is not trading as a used commodity as oil is.

Dreamer. — Garth

#96 Bottoms_Up on 09.24.10 at 10:17 am

I saw Brad Lamb on “Property Shop” a few weeks ago.

He gave Tatiana great (and conservative) advice.

She was looking to expand her agency and open a shop in L.A. He told her to conquer Montreal first.

I thought he was very reasonable, listened well, and gave sage advice.

#97 AnotherLowlyRenter on 09.24.10 at 10:19 am

Mr. Lamb’s comments seem less than brilliant. I mean that as a great compliment. I’ve worked as an equities analyst and a hedge fund manager. And if there’s one thing I’ve learned over the years: it’s better to be stupid than smart when it comes to investing. In other words, it’s very smart to be stupid.

Markets are driven by herd mentality. Bull markets last for very long periods of time. Assets move from cheap to fair value to over-valued to expensive to crazy-expensive to tuiip mania-expensive.

Now, if you’re smart or have been around the block a few times, your tendency is always to sell too early — because things are ‘expensive’ and you’ve “seen this thing before.” I sold way too early during the internet bubble and left a lot of money on the table. Brilliant of me, eh?

So in every new bull market, the guys who make the most money are the guys who are young, naiive, opinionated or just plain dumb. Only they have the courage of their convictions to hang on when the going gets rough.

However – while it’s better to be stupid than smart through the bull market, it’s disastrous to be stupid when you are at the turning point. If the turning point is now, it would be rather stupid (and loss-making) to buy a condo now.

#98 Kevin on 09.24.10 at 10:22 am

The reason why the thing you need will be more costly and the things you want will cost less.

The following is a chart of the crb index (commodities). It crashed with the stock market in 2008 but has been continually rising since and is now not far off it highs. This is without the participation of Oil which has not been rising lately.
http://www.crbtrader.com/data.asp?page=chart&page=chart&sym=BZY00

This is not caused by excessive demand but by an increase in the money supply from the stimulus spending. The added cost of these materials will be passed on to consumers. When consumers are faced with higher costs they will re-channel there limited income to the areas of most necessity and cut back on their discretionary spending. The things we need will have pricing power and the higher costs will be paid by the consumer. The thing we want will not be bought and the manufacturers will be under pressure to cut their margins.

This is cost push inflation.

When you add higher taxes to the above mix higher costs for necessities is guaranteed.

#99 VancouverGoinUP on 09.24.10 at 10:24 am

Toronto, wouldn’t touch that place. Anyone around in the early 90’s, way way way overpriced. Check out Miami if you want some cheap condos as well. The other day someone on the board was ridiculing me for my Rare Earth stocks being one of the gold winners along with Vancouver Real estate and gold. Anyone following the Rare Earth stocks today? Unreal.

#100 Prof. ANON on 09.24.10 at 10:30 am

@ #87 Brainsail

Check out RBC. They can set up both American and Canadian checking accounts and it is super easy to transfer funds between them. I’ve dealt with HSBC and Scotia, the RBC system is definately better.

#101 Bottoms_Up on 09.24.10 at 10:36 am

#87 brainsail on 09.24.10 at 9:28 am
—————————————
I’ve had success with TD, RBC and PC.

#102 bullion.bunny on 09.24.10 at 10:38 am

http://www.businessinsider.com/david-rosenberg-forget-gold-1300-its-going-to-3000-2010-9

Gold $3,000…….well maybe? Gold is doing what it does in every credit contraction; filling in the void that the credit contraction leaves in its wake.

.#92 dark sad person on 09.24.10 at 10:02 am

Sad & Dark, keep up the great examples! I find it astounding that most people on this blog cannot see the link between credit markets and the real economy. Even with overwhelming evidence that you provide, the debate rages on when it should be over. Everyone should think back to the 1970’s, how many people paid with credit cards? That’s right, almost none. Most people used cash; if they did not have cash they did not spend! In fact the savings rate was 22% back in the 1970’s, what is it now (-22%)? Now most people credit cards and pay the min. balance. This is a prime example of credit expansion out of control! God help us all, I do not want to live in a world of $3,000 dollar gold………there will be nothing left!

#103 Bottoms_Up on 09.24.10 at 10:39 am

#89 C on 09.24.10 at 9:47 am
———————————-
We’ve covered this before. RONA is a crappy company, hence the crappy behaviour of their stock price.

#104 Kenny on 09.24.10 at 10:45 am

Real estate agents should ride the panic bandwagon. They could make a ton of money convincing people to downsize while there are still greater fools out there.

#105 blobby on 09.24.10 at 10:58 am

Any thoughts on this garth?

http://www.cbc.ca/money/story/2010/09/24/carney-rates-fed-cnbc.html

It’s blowing my mind!

#106 Jeff Jones on 09.24.10 at 11:11 am

>>> The world needs oil. It does not need gold. This will turn out as I suggested. — Garth

Hang in there Garth, someday you will be right.

However, i you want to make money investing, you need to be right at the correct time.

#107 jess on 09.24.10 at 11:12 am

Security bubble
930m/1.24 b

Is that fence reuseable?

Own the podium?
,g20+g8 +olympics

Read more: http://www.cbc.ca/politics/story/2010/09/23/g20-g8-summit-costs.html#ixzz10SCA9Bjc

Let them eat that fish!
Harper vowed: “We must get results. We must all be held accountable. And people in the developing world must see that we deliver on our word.”
“We must get results. We must all be held accountable. And people in the developing world must see that we deliver on our word,” he said.

Accountability:
“Winston sank his arms to his sides and slowly refilled his lungs with air. His mind slid away into the labyrinthine world of doublethink. To know and not to know, to be conscious of complete truthfulness while telling carefully constructed lies, to hold simultaneously two opinions which cancelled out, knowing them to be contradictory and believing in both of them… – (Orwell, New American Library, 1981, p35)

#108 Jeff Jones on 09.24.10 at 11:18 am

>>> The world needs oil. It does not need gold. This will turn out as I suggested. — Garth
————————————–
Hang in there Garth, someday you will be right.

However, if you want to make money investing, you need to be right at the correct time.

#109 dark sad person on 09.24.10 at 11:24 am

#102 bullion.bunny on 09.24.10 at 10:38 am

Even with overwhelming evidence that you provide, the debate rages on when it should be over.

******************

BB-
Yes it should be over-
When you lay the money supply data out-no one touches it-but-
they’ll come back in a few days screaming Inflation-cuz-
eggs went up-a dime a dozen-
This has been a horrible year for food supply-
Weather has devastated crops around the world-
So-food prices have reflected the acute supply shortage-
This makes sense-to some-
Then-in come the Inflationists-with their assbackwards definition of Inflation and blame crop damage or peak oil for “somehow” increasing the money supply-
Why bother trying-when we have Jim Willie-of all misguided fools-being used to explain Hyper-inflation-
So-yeah–lets just ignore the credit market and watch all those Americans pushing wheelbarrows of cash down the street–

Guess what Hyper-inflationists?
There is “no such thing” as credit or debt-in a cash money Hyper-Inflation-
You talk about Hyper-Inflation-i suspect-cuz-it has a sexy ring to it-but-
hearing you talk about it-proves-you have no idea-what it is-how or why it starts-or doesn’t start–
Always hearing–push-pull or drag-whatever that means-
And especially-they do not understand what a credit market really is-or how it functions in expansion-or contraction-

#110 Grandpa Grinch on 09.24.10 at 11:24 am

Brad Lamb…walking proof you can’t polish a turd. That Tatiana chick is a head case and I can’t wait for her “career” to crash and burn with the rest.

Rosenberg’s $3000 gold analysis is conservative but bang on. That’s why all my holdings are in precious metals, oils & uranium. I don’t plan on outliving my money and want steak for dinner, not Purina.

#111 jess on 09.24.10 at 11:26 am

chasing deposits

Citibank Payroll Card.

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Click here to see the pay options allowed in each state.

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Please note that the Citibank payroll card as a pay option is not available in California, Illinois, New York, and Vermont.

#112 David on 09.24.10 at 11:28 am

Brad Lamb clarifies the issue of real estate ownership turning into a pathology.
Basic shelter sounds so phooey and lame.
No point dragging your body out of bed to actually do real work when you can become a millionaire with only $20K down.
This insanity had to stop sometime. Time to declare the party officially over. The bubble is now bursting.
If Garth’s seminars are packed these days, it might have a whole lot to do with real estate reality setting in rather than gloom and doom talk.

http://counterpunch.org/whitney09172010.html

#113 VICTORIA TEA PARTY on 09.24.10 at 11:28 am

TEA AND BISCUITS WITH THE BELLWETHERS

“Get the door dear,” Lizzie yelled.

Eagerly I welcomed in two long-time acquaintances, the Bellwethers. I called them the “ageless couple”. I couldn’t tell how old they looked. Just had a kind of well-preserved quality about them. Highly cultured.

“C’mon in, Fred, Janet. How are you doing? Been far too long. Staying well?”

Fred stared back with tired, steely grey eyes. “Fine, Charles. We’ve been a bit busy lately, so much to do. So little time in which to do it; this time out. Not like certain past events.”

“Past” and “events?” I thought. I felt a little spooked and
tried to perk things up. “Well, Lizzie’s made you your favourite biscuits, and then there’s those pies you ordered; they’re ready to go!”

My wife came in and we all sat down for tea. Lizzie offered biscuits, scones, jam. Ah, the jam. The Bellwethers do like jam or was that “a jam”? Hmm. Someone else being in a jam, maybe? My mind wandered back as Janet started up.
“Charles, Lizzie, what have you two been up to?”

I replyed, “Well, Janet, we took your advice, moved out of real estate, consumer durable and into the metals: some gold, silver, platinum; coins and and so on. Can you believe how they’ve done?”

She nodded. “Told you so, Charles.”

Fred always managed to fill a room, inspite of his slight stature. It was just a presence or something, a foreboding, a foreknowledge; spooky, Janet too. What a pair!

They travelled a lot, interestingly always ending up in some place which was just about to “blow-up” as Fred always would say; generally an economic blow-up. Lately, the grey-haired rovers were in Ireland; earlier, Greece and Spain. Two years ago, they were on Wall Street for Lehman’s collapse, and so on. Fred also spoke “knowingly” of the Roman Empire’s collapse. Could they have…? The couple looked so, you know experienced, especially when they spoke of that earthquake in a Roman colony; money changers died; so did a young Martyr…hmm.

“We’ve rented a mansion in Detroit, Charles,” Janet suddenly perked up.

“Detroit?” I replied with surprise. “Isn’t it toast, a real ruin of the American dream?” Of course they’re moving to Detroit, I thought. Where else?

“What’s shaking there, Fred?” I asked.

“Triple digit and more,“ he said morosly. I choked on a small piece of scone. Lizzie turned pale as she mouthed the words “triple digit…”

I enquired further.

“Inflation’s picking up steam,” said Fred, emphatically.
“We chose Detroit, because the “landlord”, of this old mansion, wants someone to stay with the armed guards who’ll now have someone to talk to,” Fred continued. “In fact, the owner’s paying us to stay, $2,000.00 a month all found and with food, especially the food! What’s not to like about Detroit?”

I asked further about the triple digit comment. “Hyperinflation, Charles. It’s coming, and we always like show up, in time for the party. This will be some hoopla,” he said.

He continued, “The US dollar index is closing in on ’25’ and the Chinese will curtail 30 per cent of their shipments to the US starting tomorrow. That’s the whisper out of Shanghai. And the Chinese navy will be escorting that big US aircraft carrier “Eisenhower” out of the Yellow Sea all the way back to Pearl. Chickens coming home to roost. Empirical hubris.
Time to bail from all markets. This will end in tears.”

The visit was drawing to a close. Lizzie presented Janet with two neatly wrapped small cardboard boxes secured tightly with old fashioned twine.

“Here, Janet, just as you wanted. This one’s humble pie for your former client, Jacques Public?” she said. “Yes, Lizzie. He never took our advice.”

“What’s the crow for,” Lizzie asked handing Janet the second box.

“Oh, for an economist friend of our’s; Ben. He has had a bit of indigestion recently. Some warmed up crow may help. Did you put the feathers in a separate envelope? They make such nice gifts.”

#114 rory on 09.24.10 at 11:35 am

Hey all …an article that reinforces what this blog says … I think his mean of 4.1x is a little high?????

http://www.oftwominds.com/blog.html
Housing Prediction: Bottom in 2014, Then a Decade of Stagnation

#115 goldenfox on 09.24.10 at 11:36 am

dark sad person on 09.23.10 at 10:21 pm
I dont know what planet you live on, but every time i go to the grocery store prices are up, my auto ins is up. So is my house ins. and utilities. Tuition, restaurants, cable, auto repairs are all rising. Gas has levelled off, but is still considerably higher that a few years ago. Even housing with a future decline of 30% is still higher than it was a few years ago. The only thing going down are the things I dont really need to survive, like another tv. Commodities are skyrocketing, what do you think that is going to do to the price of things. All my life I have seen only inflation. I have been waiting patiently for deflation as true deflation means a rise in the standard of living.

#116 EdmontonJim on 09.24.10 at 11:38 am

I just have to say this; Gold may be a store of value but it isn’t currency.
I can’t pay my rent in gold
I can’t buy groceries with gold
My boss can’t pay me in gold
I can’t pay my taxes in gold
I can’t pay for gas with gold
I definately can’t pay my bills in gold

On top of that, if society collapses I can’t eat gold and I can’t burn gold. So if you are really afraid of a total currency collapse, don’t hoard gold; hoard grain, canned food, and bullets. Those things will always have demand.

#117 BrianT on 09.24.10 at 11:57 am

#105Blob-we pay his salary, but he definitely doesn’t work for this country.

#118 blobby on 09.24.10 at 12:01 pm

@Brass Balls : I know you’re not the smartist cookie in the jar.. So i’ll try to explain this slowly.

Sellers set prices. I can set the price of my small run down condo for $5million if i like, but it doesnt mean it’ll sell at that price.

If sales are down, and no-one is buying – sooner or later i’ll have to lower my price to something more reasonable to get people to buy.

Therefor it’s not the house prices you should be looking at, but house SALES. If no-one is buying then prices will have to come down.

This is not rocket science.

Oh, and can i add, that anyone buying into gold at the moment (which a lot of you seem to be suggesting), is a complete moron. “Buy low, sell high” is so simple, but it seems to be lost on so many people!

#119 blobby on 09.24.10 at 12:02 pm

(drat forgot to put after “smartist”)

#120 blobby on 09.24.10 at 12:03 pm

(sic).. seems that putting words in between “less than” and “greater than” signs remove them – must think it’s an html tag

#121 Mister Obvious on 09.24.10 at 12:05 pm

Fascinating! A full page ad on Page 5 of this week’s Georgia Straight: The pie-in-the-sky “Wall Center at False Creek” (still a gravel pit across the street from the embarrassingly empty Millennium Water development) is now offering 120 units at $349K versus the original 99 units at $400K. That’s 41.88 million gross versus the original 39.6 million. Way to make a little extra something out of nothing, fellas!

I had no idea an entire building’s worth of Barbie Doll floor plans could be re-factored into broom closets overnight at the drop of a market. Makes me proud to be a Vancouverite. I’d like to see Cowtown or the Big Smoke top that.

#122 Basil Fawlty on 09.24.10 at 12:07 pm

“Gold-bugs will meet the windshield sooner than they think.”
They keep printing, we keep buying.
Dark Sad One
“Guess what Hyper-inflationists?
There is “no such thing” as credit or debt-in a cash money Hyper-Inflation-
You talk about Hyper-Inflation-i suspect-cuz-it has a sexy ring to it-but-
hearing you talk about it-proves-you have no idea-what it is-how or why it starts-or doesn’t start–”
Hyper-inflation is a currency event, it’s not deflation and it’s not inflation, although it shares debasement of the currency with inflation.
Garth you say the world needs oil, but does not need gold. I think the world does need gold, the same way we need financial markets. The use of gold keeps politicians honest, since it measures the fundamental dishonestly of their monetary policy of printing money.
People get their knickers in a knot over the increasing gold price, however in reality gold is not changing, currencies are falling in value relative to gold.
Finally, I know you are a student of technical analysis,
” the trend is your friend”.

#123 PTDBD on 09.24.10 at 12:19 pm

On “Fast Money” yesterday one of their financial pundits put forth two solutions to the American malaise:

Housing – To turn around the mind-set on house purchases invite immigrants into the country with the proviso that they purchase a home. :-) Sound familiar?

Pension shorfall – convince future Pension and Social Security recipients to settle for 50% less. He called for patriotic sacrifice similar to that of WWII.

Greed knows no bounds.

First they make outrageous profits by specualting. When the theft becomes obvious they pass the losses onto the taxpayer. They keep on getting huge bonuses. Finally, when contracted obligations cannot be met because of the huge government debts, they tell the same victims to be patriotic and forego 50% of their survival income.

Then Buffet comes strolling along and tells the taxpayer to “get over your anger”.
:-) we are not going forward, going forward :-)

#124 bullion.bunny on 09.24.10 at 12:21 pm

On another note, my wife asked me last night who is our Prime Minister. God love her. I gave her a look like are you kidding me and said “you really should know who are PM is”. She is 27. I think this sums up where most Canadian’s heads are at.

Most women don’t care about, investing, politics and/or “The real world” until it’s too late (around age 45). Most of them are busy watching TMZ, Access Hollywood and E-talk daily. Sad but true!

P.S. This can also be extended to Men…..too busy looking at the sports channel.

#125 bullion.bunny on 09.24.10 at 12:25 pm

#109 dark sad person on 09.24.10 at 11:24 am

This has been a horrible year for food supply-
Weather has devastated crops around the world-

Yes very true, but the vegetable crop from Ontario is looking good. The red peppers are super cheap and very tasty, best ever this year!

#126 PTDBD on 09.24.10 at 12:30 pm

If Carney and the USA are concerned about the supposedly low pseudo-inflation, they just have to keep on pushing for the Yuan to go up. They’ll soon see inflation, tootdesweet.

Greenspan, Bernanke, Carney —-> most excellent policy innovators for gold. Keep it up boyz. Unfortunately, their policies have been rather lacking for the people.

#127 Jeff Smith on 09.24.10 at 12:33 pm

>#21 Bigboy on 09.23.10 at 10:55 pm
>Just got my car insurance renewal today. Last year I
>paid $1,100.00 with ” grey power” This renewL is
>$1,485.00! Thank you for low rates for geezers! WTF!!!
>Perfect record, over age 55. Where is the so called
>deflation, just went on line and got a quote for $857.00.
>Pays to shop. Thank you Garth, I sold my condo and am
>renting so I do not have to suffer Hydro’s profit grab!
>Man we are screwed.

Sounds like you “Grey Power” is some kind of group policy. So even though you have perfect records etc, the other geezer(s) probably filed multiple claims, and so due to the law of averaging your price also go up. If anyone here thinks life is fair, please put your hand up.

#128 bullion.bunny on 09.24.10 at 12:35 pm

#97 AnotherLowlyRenter on 09.24.10 at 10:19 am

No such thing as brains in a bull market!

Same goes for equities analyst;

In a bull market who needs them! In a bear market who wants them?

Much the same can be said for RE agents.

#129 junius on 09.24.10 at 12:37 pm

#97 anotherlowlyrenter,

Good post. It reminds me of the Dot Com era. A blind and unyielding belief does tend to serve some people well as the bubble tends to last longer than logic would predict.

The only caveat is that this group is also very bad at guessing the top of the market. If they haven’t been realizing gains through the rise they will crash the hardest.

I certainly know a few RE pumpers here in Vancouver who will be among the most surprised and the most damaged.

#130 Purrfect on 09.24.10 at 12:38 pm

I bought at/near the peak in 1988 and while not an “investor” of real estate, I realized that a few years later that the idea that real estate can only go up is a myth.

#131 TheBigLebowski on 09.24.10 at 12:48 pm

#20 Prof. ANON- So…here is the (perhaps) dumb question. Does demand for stocks go off a cliff because the boomers sell and the xyz generations are too financially disillusioned/oriented/broke to pick up the slack?

The opposite. — Garth

Combine that with the fact that the U.S criminal cartel aka U.S Congress is trying to float the idea of forcing people to role their 401k’s into government annuities. They basically want to steal people’s retirement money to continue to fund the governments over indebted fiat ponzi scheme. They are going to force retirement plans to purchase government debt backed by absolutely nothing and loosing purchasing power by the minute. Asian markets might do well longer term but they at this point are way overleveraged and tied to China’s future at this point. And China pumped almost 2 trillion into their economy and have created massive bubbles. The West is going to have a stagnant economy at best for the next 5 years or more and probably worse. Stocks might go up in nominal terms to reflect the debasement of fiat currencies but will still lag inflation overall. Inflation may only last 2-3 years. But eventually the quantitative money printing will lose any effect and the plug will be pulled, and the world will sink into a deflationary spiral. The only place a person can maintain their finances and possibly make money with what is unfolding is gold/silver related assets.

#132 CTO on 09.24.10 at 12:59 pm

#80 Off the Leash

Nicely put comment!!!!

#133 TheBigLebowski on 09.24.10 at 1:02 pm

#102 bullion.bunny-God help us all, I do not want to live in a world of $3,000 dollar gold………there will be nothing left!

I agree with your posts, except gold would just have to reflect inflation at that price, I don’t think anything financially catastrophic would have to occur. I would just be coving the money supply at that price. Anything over $10,000, well they you have to start asking where your happiness ends with your investment.

#134 CTO on 09.24.10 at 1:04 pm

#99 VancouverGoinUP

I agree with the rare earth stocks, but Van????

Hey Van boy…I vancouvers got rare earth minerals, then maybe it got something good to sell. However I don’t think there is any of that in BC…just the same ol, same ol…

#135 TheBigLebowski on 09.24.10 at 1:17 pm

http://www.cbc.ca/money/story/2010/09/24/carney-rates-fed-cnbc.html
Bank of Canada will follow Fed in any devaluation

There is something else people will say they didn’t see coming. Except people like myself have been screaming this competitive devaluation/race to the bottom by all fiat currencies. How did I know this was the course we were on, because I am a clairvoyant? No. Maybe because I have learned how to read chicken bones, nope. Its because I know how to read think tank documents like the CFR, Tri- Lateral Commission, Club of Rome etc. They stated it was time to lead the west into a post industrial society where all heavy industry will be shipped out to slave labor economies. We are live through a Script, nothing that is occurring is happening by chance

#136 VancouverGoinUP on 09.24.10 at 1:23 pm

Don’t waste your money on Toronto Condo’s. Those 4 bedrooms in Vancouver sure look sweet this past decade.
No end in sight to going UP!. Whine all you want about bubbles, rain, costs , the FACTS don’t lie; people want to live here and will pay whatever it takes to attain the dream ofliving in the best place in the world; think about that for second we are talking about a place that is independandtly ranked the best place on earth.
This news article from todays Sun

Metro Vancouver comes out as startlingly expensive in comparison to other areas of the country when it comes to four-bedroom, two-bathroom homes.

A report issued this week by real estate firm Coldwell Banker compared average prices across the country of detached four-bedrooms, and found the average price in Metro Vancouver to be well over double that of the next most expensive region, Calgary.

The going rate for this kind of home in Metro Vancouver was $1.3 million. In Calgary, that price was $551,920. Metro Toronto was even lower, at $495,398.

Looking for a bargain? Try Windsor, Ont., at $158,242.

The next cheapest city is Moncton, N.B., where a four-bedroom goes for $201,522.

A comparable property in Kelowna is $916,697, while Saskatoon came in at $484,000 and Winnipeg at $343,160.

Read more: http://www.vancouversun.com/Metro+Vancouver+priciest+market+four+bedroom+homes+Canada/3574714/story.html#ixzz10TITfmoy

#137 Al B on 09.24.10 at 1:24 pm

#54 Tony said “Garth remember to tell them the obvious, Mississagua and Brampton will be the last two cities in the country to tank. When these two cities tank it’s over.”

There are currently 2 townhouses for sale in my Erin Mills (Mississauga) townhouse “complex”. One is asking 620K, the other 550K. Monthly maintenane fees in this complex are about $400/mth, and property taxes about $300/mth, so $700/mth just to “live” there. I’m currently renting (the entire unit) in the same complex for $1700/mth (signed lease in June). So I’m basically renting a $500,000+ townhouse for $1,000/mth. Who in their right mind would buy one of these right now? Something’s gotta give…

#138 bullion.bunny on 09.24.10 at 1:38 pm

#133 TheBigLebowski on 09.24.10 at 1:02 pm

I agree with your posts, except gold would just have to reflect inflation at that price,

No……credit contraction, 1720,1770,1825,1873,1929,2000…..always the same thing. Once “credit notes” turn to dust, people move to the most liquid assets, T-Bills and gold. You still fail to see the link between credit markets and the real world. Read “Sad & Darks” posts……he gets it and does a great job of assembling the data.

P.S. The “authoritarian government” that you worry about so much will fall apart once the money is no longer in place to fund it. The revolt across the planet has started. Just look at Toronto, we are about to elect “Rob Ford”! What is Mr. Ford’s platform? Simple “fiscal responsibility” as the poor tax payer can no longer pay tribute to the political class. This reform will sweep across the planet, “sanity is about to be restored”.

#139 Coraline on 09.24.10 at 1:54 pm

I hate Brad Lamb because he’s a constant reminder that psychopaths are successful in our culture. He tries to be “nice” in interviews now, but check out this old Globe article. He admits to stealing flags from military graves and selling them to other kids when he was only 10 years old. He also says that “coffee is for the weak.” He’s in a power struggle with inanimate objects.

http://tinyurl.com/2avh72p

#140 Alan on 09.24.10 at 2:01 pm

I appreciate your comments on how the Canadian Govy can make any difference and what tools they may have to stimulate a faltering economy. First, they just print more money like the US -quantative easing. This eventually becomes inflationary and the value of your property may actually go up because you need more money to buy the same house.

Most importantly, we all have alot to worry about if Canada takes the same path of the US regarding housing prices and activity. This becomes a much larger problem than just the prices of houses and you should be very worried about any kind of a housing implosion. It means massive layoffs and whether you own a home or not, this will affect you and those people around you.

I do not believe or see any evidence of a US style housing correction in Canada. This has been discussed on this blog a thousand times and yet everyone seems to think it will or can happen here. This is not possible unless we see a wholesale world-wide recession that causes GDP to shrink en masse. We see GDP in most of S. America and Asia in the 5-10% range. Europe is slowing but not in decline. There is growth and no where near as bad as people think. That is why we are seeing stocks across all markets in general move up.

I take a balanced approach to the situation and agree that we will see softness in real estate and there will be pockets of real estate that will suffer, some places more than others -But this will not be the case for the majority of real estate Canada.

Canada is uniquely positioned longer term with everything most of the rest of the world wants. This will keep the wheels greased along with quantative easing.

#141 bullion.bunny on 09.24.10 at 2:02 pm

#99 VancouverGoinUP on 09.24.10 at 10:24 am

The other day someone on the board was ridiculing me for my Rare Earth stocks…….

Not ridiculing you, just stating that asset prices are dependent on credit expansion. The world has MAJOR over capacity in the manufacture of devices that use rare earths! Once the credit taps are turned off, the price of rare earths will fall.

P.S. you are right they have had a great run, sold my rare earth positions today.

#142 dark sad person on 09.24.10 at 2:09 pm

#115 goldenfox on 09.24.10 at 11:36 am

dark sad person on 09.23.10 at 10:21 pm
I dont know what planet you live on,

*******************

It’s called earth-stop in sometime-

http://www.youtube.com/watch?v=GPIRzu14viA

#143 Basil Fawlty on 09.24.10 at 2:10 pm

#116 EdmontonJim “I just have to say this; Gold may be a store of value but it isn’t currency.
I can’t pay my rent in gold
I can’t buy groceries with gold
My boss can’t pay me in gold
I can’t pay my taxes in gold
I can’t pay for gas with gold
I definately can’t pay my bills in gold”

Sell a coin for cash and buy what you want, the same way you would sell any other investment for cash. What is your current investment plan, to put all your assets in canned food and bullets? It is no harder to sell gold than it is preferred shares or corporate bonds. While governments do not recognize gold as a currency, many people recognize it as money, as evidenced by the escalating price.

#144 goldenfox on 09.24.10 at 2:14 pm

blobby on 09.24.10 at 12:01 pm

I remember a few years ago a hot-shot fund manager on BNN laughing at John Embry . With the price of gold around $400, Embry had opined that gold was on its way to $600. With laughter of derision, he said my grandchildren will never see $600 gold. Well I guess he was right in a way. His grandchildren never will see $600 gold. Gold would have to rise to $2500 just to equal its inflation adjusted high of $800 in 1980.

#145 mikey on 09.24.10 at 2:22 pm

I hope the Toronto area(GTA) crashes 40% by 2011

Mikey

#146 jess on 09.24.10 at 2:41 pm

“I have helped make people hundreds of people millionaires many times over”
=======================
… i thought the lottery/game shows were the efficient way to create millionaires

#147 AnotherLowlyRenter on 09.24.10 at 2:41 pm

My personal view for what it’s worth is that the Canadian housing bull market is over. (It’s certainly massively overvalued at this point even if the bull market hasn’t ended).

But I’ve made enough mistakes in my investing career to worry that I might be wrong. My biggest fear is that Canadian/global interest rates stay at these all-time lows for a very long time. This would certainly hinder my bubble-ending scenario.

Nine months ago my girlfriend sold her condo and moved in with me.

Now I’m new to Canada. I very seriously considered buying her condo as an investment. That way I would have some exposure to real estate, just in case the market keeps going up.

But then I did the math and decided not to.

You see if I bought her condo and rented it out – my pre-tax gross yield would have been 3.4%. So I bought some apartment REITs instead – with nearly twice the free cash-flow yield.

The way I looked at it, I was buying some protection. You see if the housing bubble continued, in all likelihood my REITs would show some correlation. At the same time, if housing prices crashed, I would probably see less downside on my REITs given their high yields/lower valuations to start.

Even after their recent rises. REITs still have significantly higher yields than housing.

#148 Bottoms_Up on 09.24.10 at 2:46 pm

#116 goldenfox on 09.24.10 at 11:36 am
———————————————
With all the increases in expenses, I have started to really prioritize where my money goes.

1) reduce eating out at restaurants and bring lunch to work.
2) reduce # of channels on t.v.
3) wear older clothes longer.
4) reduce gifts to family members/friends
5) use furnance/dryer/ac less; live with higher temps in summer, lower temps in winter
6) reduce alcohol
7) reduce enrolment in sports/exercise programs

If the above isn’t enough, the next stage is to:

8) consider eliminating internet from home because I have access at work
9) consider selling the car and using transit/car share programs
10) eliminate tv.
11) eliminate all non-essential expenses

Then, if this isn’t enough, sell the house and downsize/rent.

The Canadian economy is toast.

#149 Real Estate Realist on 09.24.10 at 2:50 pm

#99 VancouverGoinUP – Ah geez, here we go again..

Liar liar pants on fire ! You dirty rat. Toronto in the early 90s saw one of the largest real estate crashes in history. All of Ontario did actually. I was too busy cleaning it up to pay attention to the other Provinces. Residential lost 25% and Commercial lost up to 50%. Decimated lives everywhere, whole towns collapsing. Banks and media kept a lot of it to themselves. Oh, wait a minute, BC is coming back to me….memba?

You can’t get away with making comments like that little dude. Talk about out in left field! And I’ve rarely met a person from BC that’s actually been here. They hate Toronto based on…well….nothing. At least Torontonians have to have gone somewhere to form an opinion about it….and welcome people from everywhere without “attitude”, like BC seems to carry around on their hips about “from Toronto”. Give me a freakin’ break sunshine.

Anyway, quit lying. That crosses too many lines. If you like BC, if that floats your wee boat, hey, cool. Now find your paddle and have a nice day. : )

#150 Real Estate Realist on 09.24.10 at 2:57 pm

Dark Sad Person ~ you’re right on point I think BUT you’re spending too much time here. You should be sailing ! Systematic collapse of Western civiilization as we know it? Fogettabowdid !

Sailed to this song before…crank it! (and make sure the dolphins are tagging along, yeah, that part also rocked…sigh…..) Garth! You should try it !!! : )

http://www.youtube.com/watch?v=j9NkBxxHxAc

#151 bullion.bunny on 09.24.10 at 3:00 pm

#144 goldenfox on 09.24.10 at 2:14 pm

That was the Gold Bull/Bear debate on BNN, the year was 2003. John Embry was the “Gold Bull” and Brian Ackerman was the “Gold Bear”. To quote Brian Ackerman “John your grandchildren will never see $525 gold! Allen GreenSpan and Ben Bernanke have their hands on the monetary dial and know how to prevent $525 gold. Brian Ackerman went on to recommend “Fannie May” and “Freddie Mac” as rock solid investments at a price of $50.00 U.S. Brian at the time was recommending this to his high net worth clients. John Embry’s response was “Fannie & Freddie” will go bankrupt! Well we all know how that turned out, don’t we!

P.S. One can only hope Brian’s clients have moved on to greener pastures.

#152 Jeff Smith on 09.24.10 at 3:00 pm

>#146 mikey on 09.24.10 at 2:22 pm
>I hope the Toronto area(GTA) crashes 40% by 2011
>Mikey

Nah, it will be at least 2013/2014 before it will reach that level. I think by 2011, the crash would be around 20% already.

#153 jess on 09.24.10 at 3:24 pm

“freedom fund”

http://dealbook.blogs.nytimes.com/2010/09/24/cerberuss-freedom-names-nardelli-as-chief/

Freedom, – guns and ammunition.
…”In pushing Freedom to go public, Cerberus was seeking to capitalize on gun owners stocking up in case President Obama sought to change firearm ownership laws. The company reported nearly $849 million in sales last year, up 17 percent from 2008, and a $54 million profit, a turnaround from a loss the previous year.”

#154 brainsail on 09.24.10 at 3:28 pm

#151 Real Estate Realist

He wrote that song while sailing Lake Travis, TX. We sail our boat on the same lake. It is cooler here now, so tomorrow we start the sailing season.
__/)

#155 OnlyTheBankersLaugh on 09.24.10 at 3:35 pm

Vancouver Going Up… seriously, dude, you were smart enough to come to this site for a view of things to come. Don’t be delusional and continue to buy more leveraged RE in Van. You will financially implode. I know that you think things only go up but there is something called exuberance in market cycles and despair when it acts the other way. They have juiced the market as far as they can with free money. Smart money is cooling its heels in specific ETF and pref dividends for a little bit. Vancouver has done this before….. see many other peaks and valleys. I lived there for 10 years and loved it but it has some downsides, too. Nothing is perfect…

#156 Nebbio on 09.24.10 at 3:36 pm

Have never seen a Bentley. Only a black Rolls Royce. It makes him easy to spot in traffic.

#157 EdmontonJim on 09.24.10 at 3:39 pm

#144 Basil Fawlty
I need to work on my sarcasm. My investment strategy is to live within my means and invest in things that I think will grow. I do have some gold, but I harbour no illusions that it is any more “safe” than any other investment.
I don’t think we’re headed for a currency crisis but I do have food storage. I consider that safe because if I can’t sell my investments, or there is any natural disaster that disrups our fragile food supply, I don’t have to rely on someone else’s preparedness to feed my family.

Duh.

#158 dark sad person on 09.24.10 at 3:41 pm

#151 Real Estate Realist on 09.24.10 at 2:57 pm

Dark Sad Person ~ you’re right on point I think BUT you’re spending too much time here.

*********************
Other then my bad trading habit-the only reason i hang out here is-cuz-
you said-i had to wait 3-5 years for you to come sailing with me–

http://www.youtube.com/watch?v=HIil8k5QnFU

#159 Northern Dirt on 09.24.10 at 3:42 pm

#146 mikey

HAHA.. looking to buy next year?

#160 VancouverGoinUP on 09.24.10 at 3:44 pm

Facebook founder a renter

CHICAGO — Facebook founder and chief executive Mark Zuckerberg joined the ranks of openly philanthropic billionaires Friday with a 100-million-dollar grant to a troubled New Jersey public school system.

He made the announcement on the Oprah Winfrey show, accompanied by the mayor of Newark and governor of New Jersey, who vowed to turn the city’s failing school system in a national model of excellence.

“I’ve committed to starting the Startup: Education foundation, whose first project will be a $100 million challenge grant” to Newark’s public school district, Zuckerberg said.

Zuckerberg, 26, jumped to the top ranks of Forbes Richest Americans list this week with an estimated net worth of 6.9 billion dollars, which made the Harvard drop-out the 35th richest American and second-youngest self-made billionaire.

Facebook is the world’s most popular social networking site with about 500 million users — or about one out of every 14 people on the planet — using its platform to connect with friends, social causes and businesses.

Valued at an estimated $23 billion, Facebook derives much of its revenues from online ads.

Zuckerberg said in a conference call that he is too busy with Facebook to devote significant amounts of time to philanthropy but did not want to wait until he was older to start giving back.

With this gesture Zuckerberg is joining forces with the likes of Bill Gates and Warren Buffett, who earlier this year launched a campaign to get other billionaires to donate most of their fortunes to charity.

Gates appeared in a video on the foundation’s Facebook page thanking Zuckerberg for his contribution and urging him to devote time as well as money to the effort.

“Your involvement in the years ahead — your thinking, your energy — will be even more important than your resources,” Gates said.

“Improving education in this country is the key to its future, making it a just place, achieving the full potential of all students. There’s a lot to learn.”

Oprah repeatedly chided Zuckerberg for wanting to make the donation anonymously, saying his shyness and desire for privacy should not outweigh the impact of a public announcement.

“He needs to make this public so that more people will join in and give money,” the talk show diva and noted philanthropist insisted, to the applause of her studio audience.

Zuckerberg’s act of public generosity comes a week ahead of the October 1st release of “The Social Network,” a Hollywood film on the birth of Facebook that casts a harsh light on its founder.

Promises of elitism, geekdom, betrayal and greed are fueling anticipation for the film and early reviews have mentioned the potential for it to be a contender in the Academy Awards.

Facebook and Zuckerberg have not sanctioned the film, which takes viewers back to Harvard, where Zuckerberg was a student with dazzling computer skills who didn’t fit in at the status-conscious elite university.

Zuckerberg downplayed the film as an act of fiction.

“Oh, well, I mean, it’s a movie. It’s fun, you know what I mean? A lot of it is fiction, but even the filmmakers will say that they’re trying to build a good story,” he told Oprah.

“And I can promise you, this is my life so I know, it’s not that dramatic. The last six years have been a lot of coding and focus and hard work, but maybe it will be fun to remember it as partying and all this crazy drama.”

Zuckerberg allowed Oprah’s cameras into the modest rental home he shares with his long-time girlfriend — a school teacher he met at Harvard who inspired him to get involved in educational reform — in Palo Alto, California.

He said he chose Newark — a city to which he has no significant ties — because he believed in the leadership of Mayor Cory Brooker — whom he met at a conference in July — and Governor Chris Christie.

“I’ve had a lot of opportunities in my life, and a lot of that comes from, you know, having gone to really good schools,” Zuckerberg said.

“And I just want to do what I can to make sure that everyone has those same opportunities.”

The five-year grant will help reform a district of 40,000 children in which last year only 40 per cent of students could read and write at grade level by the end of third grade, only 54 per cent of high school students graduated and just 38 per cent enrolled in college.

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Mark Zuckerberg, founder of Facebook, announced on “The Oprah Winfrey Show” that he is pledging $100 million to Newark, New Jersey schools September 24, 2010.
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Read more: http://www.vancouversun.com/Facebook+Zuckerberg+unveils+million+school+gift/3575587/story.html#ixzz10Tskk69M

#161 bullion.bunny on 09.24.10 at 3:45 pm

#117 EdmontonJim on 09.24.10 at 11:38 am

I just have to say this; Gold may be a store of value but it isn’t currency.

Not yet……but soon!

Never. — Garth

#162 Vancouver_Bear on 09.24.10 at 3:56 pm

#99 VancouverGoinUP

Hey Nosty Jr. we didn’t miss you here at all, as your comments added no value to the discussion, they were pure SPAMming.

You might consider changing your name to VancouverGoinDOWNTOILET, as least it will be more realistic. After you change your name don’t forget to cancel your internet service, this way you will help the blog to be SPAM free.

After receiving a fat envelope from a realturd, yesterday I got a phone call from him. The guy wanted to see if I wanted to use his services, I hung up on him. Looks like he is about to become a poggey collector. RE in this city is so freaking not “hot”…..even reaturds started cold calling looking for job!

#163 bigrider on 09.24.10 at 4:10 pm

#70 Jet

Powerful newsletter from Brad Lamb. I can see how people can get sucked in to that.

#164 Live within your means on 09.24.10 at 4:34 pm

.#87 brainsail on 09.24.10 at 9:28 am

I’ve been with what is now TD for 25+ years. Do all our banking online, etc. Received exceptional service from them. Years ago when they wanted to start charging us for every transaction my husband spoke to the bank manager and said we’d move our accounts to another bank and said many of his colleagues would do likewise. End result no charges to us and hubby’s colleagues. They make enough off of us now. Hopefully we’ll soon be making money via their preferred shares.

#165 James on 09.24.10 at 4:39 pm

Hi Garth,

I’ve heard the “average price to average income” multiple statistics before, shown as Toronto vs USA, or Vancouver (9.3) vs USA.

Would it be more rigorous to compare city-to-city? How bad are Toronto and Vancouver compared to San Francisco, Phoenix, Miami pre-crash?

#166 malbadon on 09.24.10 at 4:58 pm

Hey Garth you had mentioned you were coming back to Calgary October-ish but don’t see it on the list. A private gig I assume?

#167 Jeff Smith on 09.24.10 at 5:06 pm

Garth, does Lex Luther read this blog?

#168 Bill ( Peterborough) on 09.24.10 at 5:06 pm

The only reason their is a so called food shortage is because they are squeezing every little farmer out of business.

All we will have very shortly is huge corporate / monoplolized farms . Selling us genetically modified products at the store( which they are already doing).

The only way to stay in the farming business for the smaller guys is to be in debt to your eyeballs, having the illusion of a good lifestyle througfh debt.

Same with the lumber industry. In general the big guys are only around, small guys are gone. That way
the big guys can cut back the supply and keep prices high, without fear of going under.

Scene this coming with the big box stores . Service was good in the beginning , until they got rid of all their smaller competion. Now services sucks, they don’t have to give a shit. Where else are you going you go.

What is going to happen shortly is the contraction of food supplies, to keep the prices high, so as to further decimate the middle class.

We will see the cost of neccessities in life increases, while the so called toys decrease.

So call it what you want, but it’s all manipulated on purpose to get us on the fuedal system.

#169 Old_is_Gold on 09.24.10 at 5:25 pm

Where have all the real men gone???

Since the 60’s Americans and Canadians have become neutered ‘cojone’ less pussies. With all the crap that governments have been pulling off here, I am amazed that we don’t have Greece / France style protests and everyone raising hell. They just keep drinking the Kool_Aid fed to them by the media; even on this site most people don’t have a clue as to what is coming (and soon.)

Pay attention to Big Lebowski and others like him, and don’t think it can never happen here. The worst case scenario is always that one that ends up being the right one, that is what history proves!

http://www.bbc.co.uk/news/world-europe-11395363

#170 junius on 09.24.10 at 5:26 pm

#141 Alan,

You said, “This eventually becomes inflationary and the value of your property may actually go up because you need more money to buy the same house.”

Really? You keep saying this but what about the impact of interest rates on the prices? If inflation comes back then interest rates will go up to 10% or beyond. Welcome to the 80s. House prices will fall like a rock.

You said, “Canada is uniquely positioned longer term with everything most of the rest of the world wants.”

Here we go, it is different here. Baloney. Our trading partners are all suffering and we will suffer as well. It is all happening now as our economy slows.

#171 junius on 09.24.10 at 5:29 pm

#163 Vancouver_Bear,

I have just stopped reading him. It is all just mindless drivel.

#172 bill on 09.24.10 at 5:29 pm

this is for vangoup

http://en.wikipedia.org/wiki/The_Elements_of_Style
you could tighten up that last mess a bit…..

#173 Basil Fawlty on 09.24.10 at 5:45 pm

A radio program today quoted Stephen Harper as saying that if the US devalued their currency Canada would do the same. Can anyone confirm if this is true?

#174 Nostradamus Le Mad Vlad on 09.24.10 at 6:15 pm

#48 TheFirstRick and #63 fancy_pants — “A ‘Silence of the Lambs’ of sorts?” and “. . . now serving lambchops on the menu . . .”

Ooohhh, nice! Naughty, nasty, sly but nice!

#80 Off the Leash — “Ying and Yang, Garth and Lamb, Summer and Winter… each has their day and will again.”

Well pointed out. The depressions that happened before will happen again, but one thing has to added in to the mix — the cycles are shifting from west to east, and the west doesn’t comprehend that.

Chindia, Vietnam, Russia, Singapore, Malaysia, N. and S. Korea are taking centre stage, and will soon call the world’s shots.

#83 Brad Lamb would say — Damned good!

#114 VICTORIA TEA PARTY — Scones and jam, with a spoonful of whipped cream on top. Nature’s way of creating healthy, natural food! Esp. peach or boisenberry jam. Yummm!

#115 rory — “Housing Prediction: Bottom in 2014, Then a Decade of Stagnation”

2015 is when the boomers start to retire (or keep working until dead).

Not gonna be pretty, that’s for sure.

#132 TheBigLebowski — “. . . forcing people to role their 401k’s into government annuities.”

The last act of a fiscally bankrupt country is to loot the taxpayers, and keep inventing new excuses for more wars. There is no other alternative.

#146 mikey — “. . . Toronto area(GTA) crashes 40% by 2011”

That would be shock and awe, which has also happened before and will again.

Esp. for those who are mortgaged and indebted to the hilt plus rising taxes and food costs.

#175 wetcoaster on 09.24.10 at 6:22 pm

“This is the most patently absurd theory I’ve heard in 10 years.”

That’s the most patently absurd head shot I have seen in ages. But then again I have a habit of serious mistrust of white guys in the 40 range with chrome domes who claim to be multi-millionaires. If they are that loaded then why not try the hair implants?

White boys don’t do bald lids Brad, first impressions last forever.

Then again maybe he’s got that stress disease where you lose all your body hair… even in your nether regions. Knew a guy who had that, looked just like Brad.

#176 robert in london on 09.24.10 at 6:27 pm

Bottoms_Up #149

I’m with you on everything except #6. Why reduce alcohol when you can make your own for a fraction of the cost?

#177 wetcoaster on 09.24.10 at 6:29 pm

Just saw a listing in Victoria, prime time Rockland/Fairfield area where all the yuppies live. Listed at 989,000 a month or so back, dropped to 889,000 a week back, just sold for $818,000. That’s a $170,000 kick in the arse. Can you say Victoria Melt Down in progress ?

#178 The Original Dave on 09.24.10 at 6:48 pm

#97 is a fantastic post. The 2nd paragraph is completely bang on.

#179 Nostradamus Le Mad Vlad on 09.24.10 at 7:16 pm


Poisonous Economy “The economy is to serve the people, not the people to serve the economy — Manfred Max-Neef”

Four min. clip Is the recession over? YES! Is this a depression? YES!

11:36 clip America is collapsing.

Threats From America With Love, while Homelessness soars.

The US drops out of the solar system.

Easy Al Greenspan The Mudder Ov All Bubbles.

Five Reasons to ignore collection agencies.

He sure has a way with words. NOT politically correct, but correct nonetheless!

Global Governance by 2025? Beam us up, Scotty!

Apparently, the Queen is not as wealthy as once thought.

Obama “I can make a firm pledge. Under my plan, no family making less than $250,000 a year will see any form of tax increase. Not your income tax, not your payroll tax, not your capital gains taxes, not any of your taxes,”

President Obama, September 12, 2008

“Beginning January 1, 2013, ObamaCare imposes a 3.8% Medicare tax on unearned income, including the sale of single family homes, townhouses, co-ops, condominiums, and even rental income.”

#180 dark sad person on 09.24.10 at 7:19 pm

#123 Basil Fawlty on 09.24.10 at 12:07 pm

Hyper-inflation is a currency event, it’s not deflation and it’s not inflation, although it shares debasement of the currency with inflation.
Garth you say the world needs oil, but does not need gold. I think the world does need gold, the same way we need financial markets. The use of gold keeps politicians honest, since it measures the fundamental dishonestly of their monetary policy of printing money.
People get their knickers in a knot over the increasing gold price, however in reality gold is not changing, currencies are falling in value relative to gold.
Finally, I know you are a student of technical analysis,
” the trend is your friend”.

**********************

Of course Hyper-inflation is a currency event-what else could it be–
I have to assume-that when most of you talk about Hyper-Inflation-the target is the USD-

You see-here’s what all Hyper-inflationist’s ignore-
All Currency floats and competes-they rise and fall against each other because of a hundred different reasons-
Political-favorable or unfavorable–
Carry trades–
Interventions (printing QE trader buying or selling)
Lots of reasons-
The problem is-in a competitive devaluation via printing-means just that–competitive-
Which means-everyone wants a weak currency-in order to draw trade-
So-say for example-the US announces it will print $1 trillion-
Of course-this would cause the dollar to weaken-which is what they want and trade will run to the weak currency-but-the Euros aren’t stupid and cannot afford the loss of trade-so they will announce a matching amount-likely based on per-capita or GDP-
This will put the EUR on devaluation balance with the USD and all other Currency has no choice-but devalue in sync-
So-do you see-it’s all relative-Currency all floats and competes-
To Hyper-inflate–it has to Hyper-inflate against “something”-it has to have a peg-none of it does–

Gold is moving higher-“in part” because of weakening currency-but the big one is “risk”
Credit risk/default–

#181 brainsail on 09.24.10 at 7:25 pm

#100 Prof. ANON

#101 Bottoms_Up

#165 Live within your means

Thank you for your inputs!

#182 dd on 09.24.10 at 7:35 pm

#58 Sherri

…It does not need gold. This will turn out as I suggested. — Garth…

No. The world does not need more paper (and inflation). Of course you missed that one. You had to read it on the front page of the globe that central banks were printing money and changing mandates. Gold is not the evil. Pie in the sky promises are.

That was not the issue, so don’t quote half sentences. My words were that the word needs oil. It does not need gold. — Garth

#183 David B on 09.24.10 at 8:29 pm

It ain’t over till its over eh. Fr. WSJ

Credit Unions Bailed Out
U.S. Backs $30 Billion in Bonds to Stabilize Key Institutions; Subprime Legacy .

—————————————

So my concern is simple …. When is it Canada’s turn to really feel the heat Garth?

#184 vancouversuburbanite on 09.24.10 at 8:33 pm

re #20
I’ve been thinking about this for awhile, but a post from yestertday got me questioning. What happens to the equity markets as boomers age? They will sell. Pre-mortum as they fund their health care. Post mortum when their progeny get their windfall.

So…here is the (perhaps) dumb question. Does demand for stocks go off a cliff because the boomers sell and the xyz generations are too financially disillusioned/oriented/broke to pick up the slack?

The opposite. — Garth

Maybe the boomers will sell their homes, which is their major asset, and invest in equities. But where will they live?

#185 Sail1 on 09.24.10 at 8:39 pm

How many times do we have to spell it out? Sales drop first, prices months later. It’s called human nature. — Garth

Seems like I have heard this before, just haven’t seen it.

#186 goldenfox on 09.24.10 at 8:41 pm

Deflation: Reality or Urban Myth?

Snippet:

On the other end of the spectrum, and in stark contrast to the deflationist camp, many prominent market participants (Paul Tudor Jones, John Paulson, Jim Rogers, Marc Faber and Peter Schiff) are now warning about high inflation or even hyperinflation. According to these people, the large fiscal deficits and massive debt overhang almost guarantee runaway inflation.

It goes without saying that such conflicting views are extremely strange when you consider that all these highly experienced and successful people are reviewing the same economic data! Well, everyone is entitled to their opinion, but as far as we are concerned, deflation is an urban myth and the global economy will have to contend with very high inflation.

http://www.safehaven.com/article/18307/deflation-reality-or-urban-myth

#187 Taxpayer like everyone else on 09.24.10 at 8:49 pm

166 James – go to demographia.com and review their housing affordability studies from the last 5 years. IIRC both SF and LA hit multiples of over 10. Cant recall phoenix or miami.

Just remember the figure is a multiple, not actual price, and the info is for anglophone countries only.

#188 dark sad person on 09.24.10 at 9:34 pm

187 goldenfox on 09.24.10 at 8:41 pm

Deflation: Reality or Urban Myth?

Well, everyone is entitled to their opinion, but as far as we are concerned, deflation is an urban myth and the global economy will have to contend with very high inflation.

**********************

Ask anyone of them-if they’ll buy real-estate-in fact ask yourself that question-cuz-
if the answer is no-then
they and you-have no ground to stand on(pun intended)

Point out-
1 {ONE} time in all of history-when real-estate fell in a Hyper-inflation–
Do you see the absurdity in what you’re trying to pump?
Can you imagine-for 1 second-people walking around with gobs of “cash” wheelbarrows full-as is “always” the case in a monetary Hyper-inflation and real-estate becomes cheaper-as money supply and Velocity spiral out of control?
lol
I know this question is a real stickler-for you Hyper-inflationists-
NONE-of you can answer-that one-without swallowing-

Inflationist’s are dead meat–

#189 wetcoaster on 09.24.10 at 10:03 pm

After reading that article there is no doubt Lamb is a nutbar/psychopath. Anyone so fixated against a coffee bean as if it’s some sort of anti-christ needs some serious mental help.

#190 marcus aurelius on 09.24.10 at 10:16 pm

#50 Peter Pan,

Funny point. In the late 90s I met Brad Lamb when he tried to sell me some ‘new loft’ boutique on Niagara Street (lovely park view of the druggie shooting gallery). Doubtless he’d tell you that these whole-floor units would have made me richer. But all I remember is mentioning the Candy Factory (the first loft conversion that actually completed, at the time) and his look of disdain when he told me Stinson’s nom-de-guerre was ‘Harry the Snake’.

It’s hilarious that these guys have no self-awareness when they diss their own dopplegangers…..

#191 eddy on 09.24.10 at 10:20 pm

“The real question is when it impacts prices, how deep the damage will be”

around 1990, in TO it dropped 25% after the stock market crashed. it was preceded by a rapid run up in prices, speculation, flipping etc.
around that same time the GST came in and exacerbated the bad market. Today we have HST, (plus Miller Land Transfer Tax in TO). That correction was followed by flat prices for about a decade, so i expect something at least that bad, but likely worse.

rates were high, prices low. today prices high, rates low. either way the bankers win – you loose, unless you’re buying with cash

re 45% volume drop in TO. That’s an average. However, it’s accurate. Leaside, (above average neighborhood) is down that much

Our interest rates should stay low, as long as we pretend that our wars are to ‘protect freedom and spread democracy’, and pretend that Arabs did 911, and pretend that Rothschild controlled central banks are not criminal counterfeiting ponzi-casinos. If the pretending ever stops, the bankers will, at worst – kill us, at best- give us interest rates from Hell (their place of origin)

#192 S.B. on 09.24.10 at 10:26 pm

#191, to be fair if you had bought that Lamb boutique condo on Niagara Street in the late 90’s it would now sell for $500+ per square foot .

#193 brainsail on 09.24.10 at 10:31 pm

#186 Sail1

Pretend your car is a Saturn and you are trying to sell it.

#194 This is Wonderland on 09.24.10 at 10:34 pm

#190 Westcoaster

LOL…Amen!

#195 Patz on 09.24.10 at 10:49 pm

#116 goldenfox
“All my life I have seen only inflation. I have been waiting patiently for deflation as true deflation means a rise in the standard of living.”

The greatest bout of deflation we’ve had in the last 100 years was during the 30’s Depression. It did not coincide with a rise in the standard of living. Nor is that what we’re headed towards.

#196 mel on 09.24.10 at 10:51 pm

Bullion Bunny #125

A man that looks to his woman, and tell the world she has no clue as to what is going on around the world, is looking at himself.

Just exactly what does it tell about you? You picked her? If a man respects his partner in life, he is respecting himself. Remember that !

#197 The Original Dave on 09.24.10 at 11:29 pm

The greatest bout of deflation we’ve had in the last 100 years was during the 30′s Depression. It did not coincide with a rise in the standard of living. Nor is that what we’re headed towards.

——————————–

it didn’t coincide with a rise in the standard of living because something kind of changed things…WWII. Try looking back to previous deflations.

#198 The Original Dave on 09.24.10 at 11:35 pm

How many times do we have to spell it out? Sales drop first, prices months later. It’s called human nature. — Garth

Seems like I have heard this before, just haven’t seen it.
—————————————————–

that’s probably because you spend your time waiting for action in the real estate market rather than paying attention to other assets, other markets, other years.

If you remove the tunnel vision, you just might see it as common sense.

#199 Timing is Everything on 09.25.10 at 12:12 am

Why bother wasting blog space on this guy? He’ll be forgotten soon enough. Ignore him. He’s a shnook hunter.

http://www.ifc.com/videos/web-2-this-lamb-sells-condos.php

#200 TheBigLebowski on 09.25.10 at 3:24 am

The world needs oil. It does not need gold. -Garth

Gold is the only thing standing between the average person and complete and utter slavery to the sociopathic banking elite. Without gold as a barometer to fiat money printing, the bankers would already have printed us into financial slavery and transferred complete control to themselves and their government bootlicking officials. Without gold, free market money can’t exist, and this is where we are. We are trapped between a banking elite hell bent on herding us into abject servitude. And on the other hand the gold price rising, therefore shining a light on their corrupt money printing.

#201 Taxpayer like everyone else on 09.25.10 at 10:16 am

198 O Dave – nobody’s left from deflations before the 30s
to verify! I heard lots of stories from my late father about the “dirty 30s”. Definitely no rise in the living standard at that time. And WW2 didnt start til ’39, so I don’t see the connection.

#202 James on 09.25.10 at 5:38 pm

@188 Taxpayer: Thanks for the pointer!