MarkAgeddon

This will not end well - Cowtown edition

The Railway Committee Room sits adjacent to Parliament’s Hall of Honour, sealed from the world by a double set of sound-proofed, leather-covered doors. Countless hours sitting there gave me time to soak in the fluted ceiling with its carved medallions, the columned walls and herringboned hardwood floor. On Wednesday mornings this is where the government MPs gather to caucus. Outside in the corridor a team of plainclothes RCMP officers with bulging waists and wires in their ears keep a gaggle of reporters behind a green velvet rope.

Other days it functions as a committee room, where a dozen politicians sit in a big U, flanked by staff, researchers and interpreters, facing a public gallery watching them question witnesses. Well, ‘question’ might be too strong a word. Actually the MPs make inflammatory little speeches and then pause briefly for a response. It borders on the absurd. I know.

Anyway, one of my old colleagues got off a decent question to Mark Carney, the dude in charge of the Bank of Canada (and the economy) a day ago. Do you think the housing market could collapse here, as it did in the States, Scott Bryson inquired?

Said Carney: I am not predicting a significant drop in prices, but given how far prices have risen and the high level of Canadians’ household debt, an abrupt drop in the housing market cannot be ruled out. Carney also told MPs the bank is limited in what it can do to use interest rate changes to encourage Canadians to reduce their debt.

There is news here. That the gov would admit an “abrupt drop” in the real estate market’s possible is a big deal. It peels off another black, executive-length sock in his ongoing striptease and flings it into the audience. Bit by bit the guy’s revealing to us the extent of his woody worry. A month ago he chastised us for spending more on housing than we have saved for nine years running. “This cannot continue,” he growled ominously. He followed that up with a spate of speeches warning about the level of household debt. And now he’s reduced his outlook for the economy and told us clearly to expect a sucky existence until at least the end of 2012.

Carney’s worth watching since he has more economic data and analysis than anyone else in the country. He tells F what’s going down. He yaks with Bernanke all the time. The guy is wired into everything and, unlike almost every Bank of Canada governor who has gone before, he’s telling you things in advance. Listen.

What does he know?

That the middle class is running on fumes. Were it not for the billions we borrowed in the last 18 months, our consumption would have dropped enough to already cause a deflationary spiral. Now, since the economy remains weak and jobs elusive, the wealth effect which came from rising house values (thanks to cheap debt) is fading. There is no doubt spending will fall as people worry about what they owe and realize their wages are stuck in neutral.

Carney also knows he has to raise interest rates as soon as possible. Because the moment things pick up a little, so will borrowing – unless he chokes it off with higher mortgage and loan costs.

Carney knows his cheap-money policy caused a housing bubble, and that – given the right conditions – it could pop as disastrously as that in the USA. That’s why he reads this blog. To ensure this kind of talk is restricted to the basement-dwelling losers, doomer Armageddonists and squirrel-munching whackjobs who call this pathetic site home. If we try to get out, those horsemen with the bulges spring into action. God help humanity if we ever, bleeding from every orifice, crawled on splintered elbows to, say, the CBC.

Carney knows his best hope, ironically, is the US Fed. If this buying-bonds-with-magic-money thing works (called quantitative easing), and gets the American economy rustling a bit, then demand for Canadian goods picks up and yet our dollar is not goosed higher. Eventually, the gov figures, this will work. Being a Goldman guy, he knows you never bet against America. But the problem for Carney is to duct-tape Canada enough to get us into recovery sans implosion.

It might work. But maybe not. You can keep your house and your big mortgage and pray. Or you can see how well leaders have handled the economy over the last five years, throw up a little, and decide to take cover.

I’ve already told you how. I’ve already done it myself.

170 comments ↓

#1 T.O. Bubble Boy on 10.27.10 at 9:42 pm

Speaking of Goldman guys, apparently there are people questioning if ex-Goldman hires into the Bank of Canada have a conflict of interest, given the close relationship with the private sector:

http://www.bloomberg.com/news/2010-10-27/goldman-sachs-hire-at-bank-of-canada-followed-guidelines-flaherty-says.html

Gee, ya think? Whatever would give someone the idea that ex-Goldman employees working in key posts would result in favourable policy decisions for Goldman?

oh ya – that whole Hank-Paulson-giving-banks-hundreds-of-billions scam called TARP.

#2 TaxHaven on 10.27.10 at 9:52 pm

More and more I’m thinking interest rates won’t be rising in Canada anytime soon.

Carney has just admitted that he is “pushing on a string”. That the BoC is in the same liquidity trap as is the U.S. Fed., and that raising rates would immediately plunge the weak and sickly, credit-dependent economy into plunge mode. And that there is no more room for monetary policy to work.

Would the lenders force them to raise rates? I sincerely hope so but don’t count on it. Bond buyers have been shown to be a spineless lot and it is just possible that incestuous collusion amongst central printers – buying one another’s debt, either directly or through various proxies – could suffice. In any case, expect continued demand for the “safety” of government debt to continue until such time as growth reappears. Hint: not anytime soon.

Carney is no doubt beholden to the Big Five banks just as he is to “maintaining stable prices and promoting employment”. Raising rates would hamper both those goals.

So maybe we can rest assured the Mr. C. will stick his head up his behind AND do simultaneous handstands while bending over backwards to keep rates LOW…

#3 Gary in Kelowna on 10.27.10 at 9:54 pm

Garth,
Does this mean you have sold the bunker and are living in rented accomodation?

Now why would I do that when real estate is under 30% of my NW? This is where the squirrel jam plant is located. — Garth

#4 Gord In Vancouver on 10.27.10 at 9:57 pm

Vancouver Real Estate Bulls Just Changed Their Underwear

A 15% tax cut to British Columbians earning up to $72,000 per year will kill short term revenue. People won’t spend their savings immediately due to economic softness and lack of confidence – a turnaround takes time.

This all but eliminates a 2011 Olympic Village bailout.

http://news.therecord.com/article/801807

#5 BrianT on 10.27.10 at 10:00 pm

#1TO-At this point, it’s Goldman’s world-we are just living in it.

#6 Dan in Victoria on 10.27.10 at 10:01 pm

We’re just getting a review before the exam Garth.
We’ll soon see who payed attention.

#7 T.O. Bubble Boy on 10.27.10 at 10:11 pm

Who loves consumer debt???

The big 5 banks, of course!

http://www.financialpost.com/news/Home+equity+loans+bolster/3736772/story.html

RBC is relying on HELOCs for growth, as other revenues decline.

So, if you’re keeping track here:
1) Thanks to the change to collateral mortgages, TD will automatically allow you to sign up for loans equal to 125% of the purchase price of your house.
2) RBC is milking HELOCs for growth.
3) CIBC and others will give you 7% cashback, and they don’t ask those pesky questions about your self-employment income.
4) Scotiabank already had collateral mortgages before TD – the “STEP” product that they offer.
5) Not to be left out, BMO’s Sherry Cooper is winning awards for economic forecasting, while the rest of BMO is busy convincing 3 waitresses to go in together on buying a house!!!

#8 Contrarian Canuck on 10.27.10 at 10:12 pm

Why our big banks now have to lie through their teeth about real estate:

http://financialinsights.wordpress.com/2010/10/27/why-the-big-banks-have-to-lie-through-their-teeth/

This won’t end well!

#9 Contrarian on 10.27.10 at 10:31 pm

from Red Deer,

Suddenly the listings are increasing and asking price are dropping …I wonder why ?

Garth, how do you know Marc Carney reads this blog?

#10 Marina on 10.27.10 at 10:35 pm

Garth, do you have kids?

#11 Peter Breedveld on 10.27.10 at 10:53 pm

I have been researching houses in Bakersfield California which is about 2 hrs from LA. Check out what 450 K will get you there.

http://www.trulia.com/property/1042909884-1918-Majesty-Palm-St-Bakersfield-CA-93314

Or if you have more modest taste 125 k will get you a nice 4 bedroom 2 bath house in a nice neighboorhood.

http://www.trulia.com/property/3028883901-318-Flintshire-Dr-Bakersfield-CA-93307

Makes you wonder how far prices will fall here?

#12 BetweenTheLines on 10.27.10 at 11:01 pm

Perfectly laid out, Garth…keep up the good work! Just the way I see it too. I believe that house prices will have to fall substantially in order for Canada to remain competitive with the USA. Our cost of living is out of whack…off the scale in some parts of the country. Sad that your quality of comment is missing from so many dailies.

#13 nonplused on 10.27.10 at 11:07 pm

Carnaval Carney has officially declared the party is over. Why didn’t he do that in 2008? Oh well one last push on the rope.

I hope our banks really are in better shape. They’re holding most of my money!

I think the US is headed to a “bank holiday” where ATM’s and Interac don’t work for a few days, due to this mortgage fraud issue. Actually, they were well on their way in 2008 before TARP. If all the banks think all the other banks are insolvant they will stop allowing cash withdrawals from “other banks”, and that soon will lead to a run. But the government stepped in with $500,000,000,000., and said “play nice”.

A bank holiday in the US will cause a massive selloff the next market day in Canada. I don’t know the number but let’s say 30% down for everything. Let’s hope our banks stay open. They should, if the story is true. But don’t count on it. Just because Xurbia.ca didn’t survive the border patrol and their random taxes and inspection fees doesn’t mean planning ahead isn’t a good idea.

Hey Garth, why not reinvent the site as an open ended planning for a bad day site? Even though you won’t make any money, it could give people a forum to discuss what solar solutions work, how to plant a garden, how to save on energy, how to prepare for bad weather or banking holidays, etc.

#14 Devore on 10.27.10 at 11:08 pm

“We just put three waitresses into a mortgage last year,” said Parsons. “They work together. They were all paying rent at $1,200 a month. Why would they not go together? It’s an investment.”

So they can all get fired together when the restaurant closes. Brilliant risk diversification!

#15 Debt's Dark Embrace on 10.27.10 at 11:09 pm

#2 TaxHaven on 10.27.10 at 9:52 pm

BINGO ! You nailed it.
………………………………………………………………………
More and more I’m thinking interest rates won’t be rising in Canada anytime soon.

Carney has just admitted that he is “pushing on a string”. That the BoC is in the same liquidity trap as is the U.S. Fed., and that raising rates would immediately plunge the weak and sickly, credit-dependent economy into plunge mode. And that there is no more room for monetary policy to work.

Would the lenders force them to raise rates? I sincerely hope so but don’t count on it. Bond buyers have been shown to be a spineless lot and it is just possible that incestuous collusion amongst central printers – buying one another’s debt, either directly or through various proxies – could suffice. In any case, expect continued demand for the “safety” of government debt to continue until such time as growth reappears. Hint: not anytime soon.

Carney is no doubt beholden to the Big Five banks just as he is to “maintaining stable prices and promoting employment”. Raising rates would hamper both those goals.

So maybe we can rest assured the Mr. C. will stick his head up his behind AND do simultaneous handstands while bending over backwards to keep rates LOW…

#16 dark sad person on 10.27.10 at 11:16 pm

There is news here. That the gov would admit an “abrupt drop” in the real estate market’s possible is a big deal. It peels off another black, executive-length sock in his ongoing striptease and flings it into the audience. Bit by bit the guy’s revealing to us the extent of his woody worry. A month ago he chastised us for spending more on housing than we have saved for nine years running. “This cannot continue,” he growled ominously. He followed that up with a spate of speeches warning about the level of household debt. And now he’s reduced his outlook for the economy and told us clearly to expect a sucky existence until at least the end of 2012.

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

This is called “cover your ass”
Nothing more-

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Sunday Aug. 30, 2009

Bank of Canada governor Mark Carney took some heat last month for declaring the recession all but over — with only a smattering of hard data to back him — but most economists now believe the evidence is lining up squarely behind him.

The consensus is that the official report Monday will show that growth returned to the economy for the first time in 10 months in June — albeit minuscule growth of 0.2 per cent.

http://www.ctv.ca/CTVNews/Canada/20090830/GDP_report_090830/

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

Carney said he does not believe the central bank should use its power to raise interest rates to discourage Canadians from taking on too much debt, but he added there are other means of achieving the same result.

He noted that policy makers have the ability to influence financial institutions that issue mortgages, both through regulation and pressure, including the ability to change the terms of mortgage insurance.

Last July, Ottawa tightened the rules for government-guaranteed mortgages by limiting the maximum amortization period to 35 years and by requiring a minimum five per cent downpayment on house purchases.

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

“That would be the way to approach it.”

In other testimony to the banking committee, Carney said he was confident Canada’s economy would recover, although weakly, and that private businesses will be in position to carry growth forward once government stimulus spending winds down.

Government stimulus will add about one per cent to gross domestic product next year, one third of the growth projected by the bank, he said.

“Once government stimulus is withdrawn, the bank expects at the beginning of 2011 that corporate investment, private investment will increase,” he said.

“Overall, there will be a subdued recovery, but there will be a recovery.”

http://canadabubble.com/bubble-watch/60-there-are-ways-to-cool-housing-market-if-steps-necessary-carney-says.html

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

There are ways to cool housing market if steps necessary, Carney says

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

lol–The steps-

#1-Lower lending Standards-

#2-Lower lending rates-

#3-Gun Sentiment to delirious heights-

#4-Wait until the pool of greater fools are all in the net-

#5-Fire off a series of verbals that sends Vesuvian tremors through the RE/Credit market-

#5-Pull the net–Cook and can-

#17 karl hungus on 10.27.10 at 11:22 pm

Can we please ban the phrase “this wont end well”? Its getting more annoying by the day.

#18 Got A Watch on 10.27.10 at 11:30 pm

Me, I’m getting crisis fatigue. I started reading about how the bubbles would burst back in late ’05 IIRC, on patrick.net and Dr Housing Bubble Blog and then Mish, then in ’07 Market Ticker, and ’09 Zero Hedge. I started following this Blog 18 months ago or so because it was Canadian, and I agree with Garth on most issues.

So many issued warnings that were brushed aside and ignored as just crazy talk. From Janet Takavoli to David Rosenberg to John Hussman to Ian Gordon to Ian Gordon to Doug Noland and many more, I have read, watched and listened as ‘The Great Recession’ unfolded and the bubbles burst, one by one. Everything that was predicted has happened or will happen, pretty much.

Of late I have sensed a pick up in the pace of events, we are approaching the point where the rubber meets the road, or in this case, the losses meet the sunlight. Because that is all that has been accomplished the last few years in so many nations and regions, a giant game of extend and pretend. No actual resolution of the underlying mountains of worthless toxic paper that are still claimed to have “value” on so many balance sheets around the globe.

But ‘don’t ask, don’t tell’ does not work in finance. FASB or some other “authority” can say the “off- balance sheet” item has “value”, but everyone knows the Emperor is totally naked. Now we are coming to the point where losses must be recognized, and the simple fact of that recognition, due to the epic scale of the problem “debts”, is enough to sink the global Banking system.

In this respect, QE2, whether Benny & The Inkjets go all in or not, is becoming immaterial. There is not enough digital credit on this planet to bail out every underwater asset. Big Banks may still have their signs lit up, but they are not going to be able to help the economy grow for many years. Speculative money may cause commodities to explode in price, that will retard, not promote recovery.

Any “recovery” worth of the name requires the bad debts to be written down and losses to be taken. Despite the best efforts of corrupt Central Banksters, the “senior Bond holders” will have to realize the unwritten losses. In Europe, as Greece, Ireland and Portugal slide over the edge of default, the inter-connected nature of their Bank system debts could end the Euro system. In America, the Big Banksters are going down, FraudclosureGate is the biggest financial crime in history and could employ every attorney in the US for a decade, at least they won’t run out of lawyers.

Thus we enter what I would consider to be the 3rd phase of this crisis, we had the first part ’07-’08, then a false dawn of “green shoots” ’09-’10 that was only the preamble to the main event that looms ahead. The next 5 years or so are the ‘storm of the century’ in my estimation.

In Canada we have our problems, but our fate is mostly out of our hands. The actions of others and the giant bubbles they blew will be affecting us for a decade. Currency wars, trade wars, bank zombification, austerity – the “recovery” will be recovered somewhere far down the road yet, and it will be bumpy.

The ones who pay the highest cost will be the ‘Greater Fools’, as not paying attention to these issues with “I’m just too busy!” could cost them 2 lost decades. Many may never recover, the toll of economic failure on their psyches would be too much.

#19 Westcoaster on 10.27.10 at 11:32 pm

Correct me if I’m wrong here – Quantitative easing = “printing money” dressed up a bit. The stimulus package of mega-$ has had mini-impact. The banks (primary receivers of Q.E.) are self-interested enough to shovel buckets into their own coffers in such a way as to create investments for themselves (invest in banks – much more reliable than gold).
Is there an economist out there who is saying “the emperor has no clothes”? I’m a sceptic.

#20 Bill Grable on 10.27.10 at 11:39 pm

Mr. Carney sees the Tsunami offshore and he is hoping that his bathtub with the gold knobs, will carry him away on the flood.

That’s probably a lot better fate than awaits a lot of people who are carrying a whack of credit card debt and an over leveraged house that is made of equal parts particle board, chinese sheet rock, glue and worry.

What a mess.

#21 Timing is Everything on 10.27.10 at 11:41 pm

Garth said – “God help humanity….”

God helps those who help themselves.
-Benjamin Franklin

Bunkers-R-Us…Just in case…Ya just never know when you’re gonna need it…Applies to lots of stuff.
Economic collapse, earthquakes, tsunami, major long-term power outages, disease, famine, harsh weather, break-down of social order…etc.

Hunker down – to take shelter, literally ; to assume a defensive position to resist difficulties.

By failing to prepare, you are preparing to fail.
– Benjamin Franklin

I know, just quotes…but folks should be prepared…to some degree.

Remember, the most dangerous animal on earth is the human being.

#22 dark sad person on 10.27.10 at 11:42 pm

TORONTO – A U.S. federal judge has dismissed a shareholder lawsuit against CIBC (TSX:CM) claiming that the big Canadian bank misled investors about its exposure to the U.S. subprime mortgage market.
The decision was made by a Manhattan court judge who said the bank was only one of many financial institutions that did not foresee just how great a toll the U.S. mortgage market downturn would take on its bottom line.
District judge William Pauley wrote in his decision that CIBC could not have anticipated “an unprecedented paralysis of the credit market and a global recession” which caused many financial institutions to implode.
“Looking back, a full turn of the wheel would have been appropriate. That CIBC chose an incremental response, while erroneous in hindsight, is as plausible an explanation for the losses as an inference of fraud,” Pauley wrote.
The judge added that the shareholder lawsuit also failed to show that CIBC executives misrepresented any of the information they knew about the market in either financial statements or press releases.
The bank said Wednesday it was “pleased with the decision to dismiss this lawsuit and the court’s recognition that the allegations had no legal merit.”

Billions of dollars of such mortgages were packaged by Wall Street banks and sold to investors around the world. However, when the underlying mortgages proved worthless in many cases, it led to a string of financial collapses that battered several of the world’s biggest banks.

http://www.journalpioneer.com/Business/Personal-finance/2010-03-18/article-1393687/CIBC-lawsuit-from-shareholders-over-subprime-market-dismissed-by-U.S.-judge/1

******************
Old news-
But a reminder of one of the many ways our World envy” Banks fared the Financial crises-

I’ve always thought-that any responsible buyer of any type of Security or Investment-especially a World class Bank would always look at and understood the collateral that underpinned the Instrument you purchased-
It was called due diligence-last i heard and if you didn’t do it-that was called negligence-

#23 poco on 10.27.10 at 11:42 pm

#4 GORD
not a 15% tax cut—–it is a 15% cut to each tax bracket–
2009-level 1 –up to $35,716 of taxable income the BC rate was 5.06
level 2–up to $71,433 of taxable income the BC rate was 7.7%
if it was 15% across the board we could all go out and buy that mcmansion
i guess gordie took some math lessons from Soper and the RE boys of how to try and screw the numbers

#24 Harold on 10.27.10 at 11:51 pm

While walking down the street one day a “Member of Parliament” is tragically hit by a truck and dies.

His soul arrives in heaven and is met by St. Peter at the entrance.

‘Welcome to heaven,’ says St. Peter. ‘Before you settle in, it seems there is a problem. We seldom see a high official around these parts, you see, so we’re not sure what to do with you.’

‘No problem, just let me in,’ says the man.

‘Well, I’d like to, but I have orders from higher up. What we’ll do is have you spend one day in hell and one in heaven. Then you can choose where to spend eternity.’

‘Really, I’ve made up my mind. I want to be in heaven,’ says the MP.

‘I’m sorry, but we have our rules.’

And with that, St. Peter escorts him to the elevator and he goes down, down, down to hell. The doors open and he finds himself in the middle of a green golf course.. In the distance is a clubhouse and standing in front of it are all his friends and other politicians who had worked with him.

Everyone is very happy and in evening dress. They run to greet him, shake his hand, and reminisce about the good times they had while getting rich at the expense of the people.

They play a friendly game of golf and then dine on lobster, caviar and champagne.

Also present is the devil, who really is a very friendly & nice guy who has a good time dancing and telling jokes. They are having such a good time that before he realizes it, it is time to go.

Everyone gives him a hearty farewell and waves while the elevator rises…

The elevator goes up, up, up and the door reopens on heaven where St. Peter is waiting for him.

‘Now it’s time to visit heaven.’

So, 24 hours pass with the MP joining a group of contented souls moving from cloud to cloud, playing the harp and singing. They have a good time and, before he realizes it, the 24 hours have gone by and St. Peter returns.

‘Well, then, you’ve spent a day in hell and another in heaven. Now choose your eternity.’

The MP reflects for a minute, then he answers: ‘Well, I would never have said it before, I mean heaven has been delightful, but I think I would be better off in hell.’

So St. Peter escorts him to the elevator and he goes down, down, down to hell.

Now the doors of the elevator open and he’s in the middle of a barren land covered with waste and garbage.

He sees all his friends, dressed in rags, picking up the trash and putting it in black bags as more trash falls from above

The devil comes over to him and puts his arm around his shoulder. ‘I don’t understand,’ stammers the MP.. ‘Yesterday I was here and there was a golf course and clubhouse, and we ate lobster and caviar, drank champagne, and danced and had a great time. Now there’s just a wasteland full of garbage and my friends look miserable.

What happened?’

The devil looks at him, smiles and says, ‘Yesterday we were campaigning.. ..

Today you voted.’

#25 Basil Fawlty on 10.27.10 at 11:56 pm

It is difficult to comprehend how quantitative easing can “work”, in the sense that creating another cheap money fiesta is not a sustainable solution. This has been said many times, but bears repeating. How can you cure the problem of too much easy money with more easy money? This is the definition of insanity, doing the same thing over and over, while expecting different results. The reason they will continue with quantitative easing is because they have nothing else. It’s effectively “check” in the game of chess, the King can still move around a bit, but the game is over.
The cure is to purge the bad debt, but this means immediate pain, which is not politically expedient. So, they will delay the day of reckoning, through QE and make the eventual debt purge that much worse. Like Douglas Casey says, this is going to be worse than even he can imagine.
Somebody better hang on to his hairpiece!

#26 Be A Man on 10.27.10 at 11:58 pm

As long as Carney is at the helm, Canada won’t suffer a RE bust. Pro reading tip: when someone says that a future (unpredictable) event is ‘a possibility’ it is used as ‘out’ – something that readers of this blog should be very familiar with. Sorry bears.

Inflation is comfortable at around 2% and the U.S. economy has stabilized even without QE2. QE2 is just going to goose GDP growth more. I feel bad for the individuals who are invested in bonds!

FYI 2010 YTD
S&P500 +6.0%
DOW +6.7%
S&P/TSX +7.0%
NASDAQ +10.3%

You can add a few points for dividends too.

Individuals shouldn’t feel bad that the Great Canadian Real Estate Bust isn’t coming. They should take comfort in the fact that by following the advice of RE bears they’ve learned a lot (albiet much ado about nothing), paid rent to help landlords spend into our economy and saved a few pennies here and there in lieu of any real equity!

Best regards!

#27 Dave in Victoria on 10.28.10 at 12:01 am

If a recession does not end for a particular period of time is that not technically depression?

or has the definition been altered on wikipedia?

#28 confused and a little crazed on 10.28.10 at 12:06 am

more stocks vs housing

http://money.ca.msn.com/banking/homebuyersguide/article.aspx?cp-documentid=26113845&page=2

#29 The Original Dave on 10.28.10 at 12:07 am

I’m not sure how any rally saves the Canadian public from what’s going to happen. We’ve made our bed. Debts are at a level and incomes are at a level. There’s no magical surge in incomes in the near future that would help the public pay off their debts. People are still in gourging mode.

So, if QE2 works, and we have a market rally for a bit, credit expands, people will borrow more and put themselves in a worse position. This only makes the problem bigger.

I don’t think Carney cares who reads this blog. He has no control over it. Public awareness when related to economics can only be withheld temporarily. Economies can be manipulated but not permanently fixed. If Carney or anyone thinks otherwise, they’re in for a nice lesson.

#30 The Original Dave on 10.28.10 at 12:22 am

Carney also knows he has to raise interest rates as soon as possible. Because the moment things pick up a little, so will borrowing – unless he chokes it off with higher mortgage and loan costs.

Carney knows his cheap-money policy caused a housing bubble, and that – given the right conditions – it could pop as disastrously as that in the USA. That’s why he reads this blog. To ensure this kind of talk is restricted to the basement-dwelling losers, doomer Armageddonists and squirrel-munching whackjobs who call this pathetic site home. If we try to get out, those horsemen with the bulges spring into action. God help humanity if we ever, bleeding from every orifice, crawled on splintered elbows to, say, the CBC.

Carney knows his best hope, ironically, is the US Fed. If this buying-bonds-with-magic-money thing works (called quantitative easing), and gets the American economy rustling a bit, then demand for Canadian goods picks up and yet our dollar is not goosed higher. Eventually, the gov figures, this will work. Being a Goldman guy, he knows you never bet against America. But the problem for Carney is to duct-tape Canada enough to get us into recovery sans implosion.

It might work. But maybe not

—————————————————-

I have a few comments about the above. I think I disagree quite a bit.

1. What makes you think that Carney thinks things will pick up a little forcing him to raise rates? It’s still status quo – the U.S is treading water for now and there’s no resolution to this all – just band-aids.

2. You’re suggesting that he reads this blog because he doesn’t want the public to share the same sentiment as most of us do here? He can’t control public sentiment. Media outlets, bankers, and everyone else tried in the U.S….didn’t happen for them.

3. After QE1, what makes these guys think QE2 will get them out of this mess? I think they’re just buying time.

4. How the heck is he going to get us into recovery “sans implosion”. Taxes, debts, costs of goods in general are through the roof in this country. “Recovery” to the general public means inflation. So even higher costs is going to get us out of this? Not a chance. The sooner our general contraction comes, the faster we erase our debts and bring sensibility back into our lives. The longer this is prolonged and more attempts at “recovery” (inflation), the more damaged we’ll all be.

#31 Nostradamus Le Mad Vlad on 10.28.10 at 12:35 am


MarkAgeddon is a good call, as he is the captain of our good ship Canaydia which is in the process of sinking.

Has anyone bothered to announce this to the passengers?
*
Plutocracy There once was The American Dream, which included Cdns., Mexicans and anyone else who wanted in. No more. Bill (Peterborough) — FYI.

Plus this as well.

The US corrupt? Are H-F-C full-blown liars? Ask them about Income Trusts.
*
#187 bullion.bunny on 10.27.10 at 9:03 pm — “Watch this….like I said, lots of grease.”

Now, correct me if I’m a tad off.

Suppose I fly to TO, elect myself as a councillor / alderman / ward (whatever), will I be eligible to apply for a grant of $53 QuinQuadTrillion dollars, with no expectation of ever paying it back?

Sounds like a fairly reasonable deal to me — hell, I could even be persuaded to go back into the workforce again!
*
1:57 clip Funny — Laurel and Hardy meet Carlos Santana! Sound up!

7:23 clip A Kelowna farmer speaks about Monsanto, without throwing up.

This doesn’t affect me as (a) I don’t have an attention span anyway, and (b) don’t watch that much TV.

Interesting only because Russia is thinking of the possibility pf selling ‘copters and giving assistance.

Imagine — the m$m reporting this!

22:11 clip So far, Ron Paul seems to be one of the non-sheeple. He doesn’t follow orders and speaks his mind. Dangerous combination. He may be the voter’s choice as Prez. soon.

10 Creepy Mysteries Just in time for Christmas!

#32 Marco on 10.28.10 at 12:39 am

Garth,
I have been reading your blog for over a year in preparation for my move to Vancouver from another bubble market, London in the UK.

I sold up there at the peak (yes, literally the week-end between the time when the RE people were bragging on how well the market was doing and when the market TOLD THEM how it wasn’t) and got 10% over asking price.

The equity I built over 10 years is now sitting in a savings account here. My wife and I are well educated, read up (economist, various blogs, key paper websites etc.) and unemotional about houses.

I live in a $3,7 m home owned by a chinese investor who is on edge about the “market” and pay in rent what would amount to a mortgage for a property about 1/3 in value – so a good deal.

I am seeing the same market behavior here as I saw in London, UK about 1 year ago. The reputation of the market is set by the “investments” made by the super-rich in specific areas of the city (eg. knigtsbridge and arab money, financiers in Chelsea, and so on.), with the cascade effect in to surrounding areas largely at the hands of the RE marketing machine. The market went pop and it is deflating, not in the super-rich areas, but in the middle-class areas (the poor areas are tax subsidized so no probs there – YET).

Now in Vancouver, I hear the word “Asian money”, “Iranian Money” as an excuse for the cost of a very modest plot of land in an area that does not sport the aforementioned demographics. What I do see is a very stressed indigenous population that has a lot to lose, and a whole lot of ignorance about how fickle investors are.

When one has over $5million of disposable cash (the asian / iranian megarich) you can pretty much buy yourself a resident visa in any other G19 country. Investors fundamentally understand mobility, and judging by the number of for sale signs in the areas predominantly populated by said population groups, they’re upping sticks.

A common mistake is that wealth equals intelligence, class and knowledge – trust me after 20 years in the IT industry (.com, .was, .gone etc.) I know it doesn’t, so I expect some to still arrive, some to get burnt, but it is the ones heading out that tell me something is clearly changing the risk/reward equation.

I’m sitting out, teasing the real estate agents with a viewing a month as a cash buyer to keep a feel on the spin and market conditions.

Keep up the good work.

#33 TheBestPlaceOnEarth on 10.28.10 at 12:42 am

From Wednesday’s Globe and Mail
Boston University economist Laurence Kotlikoff says U.S. governmentdebt is not $13.5-trillion (U.S.), which is 60 per cent of current grossdomestic product, as global investors and American taxpayers think, butrather 14-fold higher: $200-trillion – 840 per cent of current GDP.“Let’s get real,” Prof. Kotlikoff says. “The U.S. is bankrupt.”
********
The US is officially bankrupt. You need to get you money out of stocks immediately. The US is finished period. Your only safe havens are Vancouver Real Estate which is the Best Place on Earth and Gold because it is the only true storehouse of wealth other than Vancouver.
Anyone investing in financial instruments of any other type is going to be destroyed, not financially hurting or having difficulty paying a mortgage, stock holders are going to be not just left holding the bag but destroyed.

#34 bruce corell on 10.28.10 at 12:50 am

Trust me as one with an ear to the banks what we are now seeing will last for many many years. The Bubble has officially burst. We received our real estate numbers and the prices on existing inventory are being pressured. November, Dec, Jan and Feb numbers will push prices down 15-20 %. March, April and May will unfold as a Buyers market “As a great time to Buy” Sales will increase slightly but prices will continue to fall. We are now in a midst of what many realtors call (CRASH)
Many thought this would happen gradually but now the banks know we will be hit hard and fast….Make a note of this post and save it…Oct 28th Bubble Pops…Also in a few weeks watch for a press release from banks that late payments on mortgages up up to highest levels in 15 years…I cannot give out my sources….

#35 Schooled by the market on 10.28.10 at 1:02 am

I hoped to sell our old car at market price.
It would cost four grand a year to drive.
Parking, insurance, gas and maintenance.
Got some online tire kickers and jerky boys.
‘I come see car at five.’ No show.
‘I come see car at seven.’ It’s dark outside. No show.
Started to hope someone stole it.
Then I heard a voice: “The market sets the price.”
F*** me! Housing blogs have told me that since 2005.

I priced it under the market to get attention.

It sold the next day ahead of three month old ads.
The sun shone on that last warmest day of the year.

And it snowed the next day.
Lesson learned.

#36 Jody on 10.28.10 at 1:20 am

Carney is just another idiotic Keynesian, those twits have screwed up economies the world over. If we must have tossers called government it would be nice if they followed the Austrian school of economics. The whole ‘create a problem so we can implement our solution to help the rich’ is becoming rather tiring. Don’t get me started on Canadian banks, they should not get any support at all, they, along with the morons in government brought this BS upon us, they should pay. Why bank CEO’s still get a huge pay package astounds me, I would love to see them hung in the town square, utter scumbags. We are being fleeced and none of us has the balls to do anything about it. I predict armed conflict in the US, people are pissed off, really pissed off. When voting doesn’t change things what will people resort to?

#37 summersretreat on 10.28.10 at 1:21 am

How did you know I’m a basement-dwelling loser?

#38 realpaul on 10.28.10 at 2:23 am

http://www.reuters.com/article/idUSTRE69P08020101028

Its not when…its how much over what time frame.

Manipulation of the markets has been brought to the fore by regulators……seems its been going on for a long time. It only took a day to get two class action lawsuits going against JP Morgan and another of the ‘bullion banks that have been keeping hard money down so as not to embarrass the paper pushers.

#39 From afar on 10.28.10 at 2:33 am

Same question in another continent:

French economist Jacques Friggit claims that, since 1965, French real estate prices have remained within a narrow margin (+ or – 10%) of average family income. In other words, prices are statistically simply driven by affordability.
This is known in France as the Friggit tunnel.
There have been 2 exceptions.
First, from 1988 to 1992, when prices came out of the tunnel, only to come back to it by 1995.
Second, since 2001 prices have soared well above the tunnel.
This French article points out that Friggit, who enjoys the status of an economic oracle in French media, predicts a 30 to 35% drop in prices until they get back inside the tunnel again:

http://www.capital.fr/immobilier/actualites/pourquoi-le-marche-immobilier-risque-de-craquer-540353

#40 Aussie Roy on 10.28.10 at 4:35 am

Aussie Update

http://www.news.com.au/money/property/house-prices-slipping-in-most-capital-cities-as-housing-market-stops-dead/story-e6frfmd0-1225944530678

BUT THERE IS NO BUBBLE HERE – OK

http://www.abc.net.au/news/stories/2010/10/28/3050984.htm?site=thedrum

http://www.theage.com.au/business/bubbling-away-house-prices-a-matter-of-perspective-20101028-174n0.html

Atleast your pollies say that a price correction is possible, here in Australia everyone is still in denial.

#41 TS on 10.28.10 at 5:03 am

UK house prices drop for the 8th straight month…. and government spending cuts erode consumer confidence:

http://www.bloomberg.com/news/2010-10-28/u-k-house-prices-decline-to-eight-month-low-nationwide-says.html

As it is often said….history repeats itself….falling home prices and eroding consumer confidence coming to a province near you.

On a separate note the B.C. government has announced a 15% income tax cut for the first $72K of income….an attempt to buy some votes in light of the dramatic opposition to the HST.

http://www.globalnews.ca/money/cent+income/3737280/story.html

#42 Brian1 on 10.28.10 at 5:38 am

People of Toronto;
Sell your houses pronto.

#43 Brian1 on 10.28.10 at 5:40 am

Toronto will eventually have to lay off 3000 police and 3000 firefighters To make up for the shortfall in tax revenue that is about to come.

#44 SaraBeth on 10.28.10 at 6:04 am

There are still some Greater Fools here in Hamilton…house down the block from me has not been lived in for many years…it’s on the market now for $104,000…sold as is… filled with mould.

And there is a bidding war going on over it.

#45 SaraBeth on 10.28.10 at 6:06 am

Ah shoot, forgot to post the link….

http://www.realtor.ca/propertyDetails.aspx?propertyId=10014494&PidKey=1220381114

#46 Brian1 on 10.28.10 at 6:23 am

I was gently reminded yesterday of the purpose of condo development was to provide a larger tax base. So they may not lay off police until they are assured that the population is uder control.

#47 pbrasseur on 10.28.10 at 6:39 am

I’m glag my fellow blog reader is speaking out to warn Canadians, but rather late, so I’m a bit suspicious he might be protecting his own butt here.

#48 morpheus on 10.28.10 at 6:43 am

Garth,

Here is a chart you might find interesting. Maybe this is something Carney knows about already.

http://americacanada.blogspot.com/2010/10/growth-in-consumer-credit-collapses-by.html

#49 bigrider on 10.28.10 at 6:49 am

Garth on previous comments you mentioned having 40% or less of your net worth in RE as acceptable and recently,including today, you have it at 30% or less as recommended amount. Are we to interpret from this that your view of a RE decline has become more dire?

You can assume I just sold a property. — Garth

#50 JO on 10.28.10 at 6:54 am

Oh the hypocrisy. The same Governor who worries about too much debt and excesive spending is the one who payed a major role in how it happened,and continues to enable growth in the societal credit card balance as we speak. Of course, this is done at the expense of savers and taxpayers. The legions of homedebtslaves,save their souls as their delusion of being home”owners” hits reality in the next few years, have been cruelly suckered into the debt based ponzi scheme that is our financial system. Designed to siphon as much a possible from th real economy for the benefit of bank executives,government, and the corporate elite, the debt based, extremely leveraged fractional reserve, fiat money system is in trouble. The excessive, debt driven (heavily subsidized debt for that matter) orgy we’ve had in the last 9-10 yrs has merely pulled a lot of future consumption forward. The huge credit card balance must now be paid. The more it is, the better in the long term, but man is it going to suck for the next few years. By the way, this process i called a credit contraction.

While our Chief of the Money Racket Club worries about how his debt based Ponzi scheme will somehow quietly be put in neutral for a while without putting us into recession, his Minyans south of the border have decided to use another Ponzi scheme, QE 2 (no not Queen Elizabeth !), to help keep the main Ponzi scheme afloat. The entire charade is underpinned by real estate you see. Why not print money and buy assets in the hope that rates remain low enough to reignite the credit card balance because as it grows, the whole scheme begins anew.

QE 2 is in fact putting imense DEFLATIONARY pressure on the global economy. It does not and will not work. It will work if you are a bank trader, bank, or other large speculator. For the rest of us, all it will do is help raise commodity prices in the short term, help increase small/medium business bankruptcies in the US (input costs rising in weak demand situation), and lead to trade wars as non US currencies rise to the point of choking off growth. Lack of demand will lead to a deflationary impact worldwide. Rates will eventually rise because of QE too. Imagine what that will do to the most indebted society ever.

These central bankers are clueless and should not be around. The debacle we are in and will continue to be in for the next 5-7 yrs is largely due to the failed interventions of these folks and gov’t.

Can anyone see the USD dropping into a possible semi panic into March 2011,rates rising as the Fed’s game of chicken with the bond market leads to rising rates, and a weak economy well into 2011 ? I can. Despite the short term inflationary signals, QE2 is setting the stage for the next deflationary panic.

JO

#51 Brian1 on 10.28.10 at 6:55 am

Karl Hungus;How would you want to say it?

#52 bigrider on 10.28.10 at 7:09 am

An article in the Toronto Star states that OREA believes that the confusion over HST is causing the slowdown in RE sales.

These RE salespeople should be lined up and shot.

#53 Darryl on 10.28.10 at 7:11 am

#23 POCO
#4 GORD

About BC’s 15% tax cut.

Looks like BC is about set to install huge user fees. Have to soften up the population first though.

“By leaving more money in your pockets, you’ll have the choices that you want,” Campbell said.

Choices like soccer, swimming, reading, parking, driving, learning. You get the point.

There is no way BC can cut income tax without adding tax or fees to other things.

#54 The VULTURE on 10.28.10 at 7:12 am

Real Estate Is REALLY expensive in Vancouver. Pity the programmers that have recently bought homes in the Vancouver area over the last couple of years. The pink slips are rolling in.

Programmers can make some good money when in demand…but how long will that demand last for? I sure hope those programmers were renting and not home owners!

EA Canada, Black Box reportedly see NBA Elite, Skate development teams cut; up to 100 may have been pink-slipped; EA admits “season roll-offs” of payroll.

Today was apparently a dark day at Electronic Arts’ two Vancouver-based studios. According to a Shacknews report, both EA Canada and EA Black Box have been hit by layoffs. Specifically, the teams behind the Skate franchise and the long-delayed NBA Elite 11, were both hit, with sources saying “as many as 100 employees” were sent packing.

Here is the link:

http://www.gamespot.com/news/6283148.html?part=rss&tag=gs_news&subj=6283148

#55 Tripp on 10.28.10 at 7:25 am

OK, so we have Goldman counselors for Bank of Canada.

What next? RIM outsourcing R&D to Nortel, Environment Canada managed by some oil&gas executives and Garth having Brad Lamb to proof-read his blog postings?

#56 dd on 10.28.10 at 7:29 am

“Carney also knows he has to raise interest rates as soon as possible.”

And what does this mean? Inflation. Commodity prices have steam rolled ahead. This is the effects of inflation. Of course until you read it on the front page of the globe and mail it doesn’t exits.

#57 dd on 10.28.10 at 7:33 am

“If this buying-bonds-with-magic-money thing works”

Dream on.

#58 State of Mind on 10.28.10 at 7:50 am

#32 Marco “Now in Vancouver, I hear the word “Asian money”, “Iranian Money” as an excuse for the cost of a very modest plot of land in an area that does not sport the aforementioned demographics.”

Welcome to Canada mate. I’m in London, UK right now. Not sure why you would want to move to rainly o’ Vancouver though, the weather in London UK is nicer.

You make a good point, Vancouver doesn’t have the “rich asian” demographics at all. There isn’t 1 department store like Harrod’s in BC, and I’m sure you know about Harrods (Knightsbridge). I lived in Knightsbridge and Mayfair and that demographic has money as you said.

Vancouver, not so much.

#59 State of Mind on 10.28.10 at 7:52 am

Mark Carney – If you are reading this blog and wondering what Canada should do to get out of the great recession, I have 1 piece of advice:

WHATEVER THE US IS DOING OR DOES, DO THE OPPOSITE.

#60 Makeorbreak on 10.28.10 at 7:59 am

http://www.huffingtonpost.com/2010/10/27/las_vegas_foreclosures_unemployment_nevada__n_774257.html#165747

#61 CTO on 10.28.10 at 8:08 am

#26 Be A Man

If you were an American you would have voted Obama, why? because he’s SUPERMAN!!!….and of course,…
so is Carney.

Ya,ya, things are stable here in Canada because inflation low, markets rising…and all those 25-35 year 5% down mortgaged, indebted, leveraged people living from paycheck to paycheck, and just like our hero Mr.C said, “vulnerable to the 1st financial shock” , will carry on blissfully innocent………__
You know what? You may be right that it might not be the Halloween horror story that some panicked minds can think of, but…it just might be a lot more painful for the many who a fickle and shallow enough to believe in the MYTH that real estate as a retirement investment is going to put them on easy street…
Could be skid row!

#62 Gord In Vancouver on 10.28.10 at 8:08 am

#23 poco

Thanks for clarifying and adding more detail to my original message, which appeared to state a different type of cut.

I stand by prediction of no 2011 Olympic Village bailout as even a bracket-based tax cut will (according to the article) cost the province $568 million. This figure may be less if stimulus benefits appear immediately but the govt. won’t want to chance it.

#63 pbrasseur on 10.28.10 at 8:14 am

#33 TheBestPlaceOnEarth

You’ve got to be the dumbest thing going.

#64 CTO on 10.28.10 at 8:17 am

#33 TheBestPlaceOnEarth

Hey Gobbles!!! enough already with the propaganda machine! You have spewed all that crap out already 10 times.
My Toronto born nephew says he had a discussion with fellow students from Van and the conscious was Van Sucks!!! He thinks T.O is the best, of course he is over leveraged with condos there.
Me? I think they both suck!!!

#65 timbo on 10.28.10 at 8:39 am

http://www.washingtonpost.com/wp-srv/business/the-output-gap/index.html

why 2% growth is actually a slide downhill.

#66 Gord In Vancouver on 10.28.10 at 8:44 am

#53 Darryl

There is no way BC can cut income tax without adding tax or fees to other things.
_________________________________________

Most likely the latter. Adding taxes will be a more obvious “give and take”.

#67 T.O. Bubble Boy on 10.28.10 at 8:44 am

Vancouver, Vancouver, Vancouver.
(in this case, Richmond)

Will you ever learn?

http://www.yattermatters.com/2010/10/vancouver-community-series-richmond/#more-22248

The Average Sold price in the Aug/Sept was $961,038. In Sept/Oct this increased to $966,899.

The Median Sold price in Aug/Sept settled at $870,000. In Sept/Oct the Median Sold dropped to a total of $852,900.

hmmm… so, the average price went up over $5,000 from last month, but the median price went down over $17,000 (-2%, or over -21% annualized) from just last month.

I wonder which of these 2 stats will get more attention in the Vancouver media?

#68 Old_is_Gold on 10.28.10 at 8:50 am

#18 Got A Watch on 10.27.10 at 11:30 pm

—————————————————————–
Good post! I think we may be able to muddle through for one or two more years as things begin to unravel but come 2013 and through the end of the decade, the whole world, not just Canada, is about to be changed in presently unfathomable ways.

Ultimately the solution may be as simple as to set all digital debts back to zero, there will be some major losers but the majority will win. The debt will disappear but the underlying real assets (not garbage like CDOs etc.) will remain. After all vaporizing the debt will not vaporize the house or the office tower or all the automobiles or the factories. Life would go on and it would lead to the largest increase in the size of the MIDDLE CLASS ever seen in the history of the world.

Regrettably the game all along has been to cull the Middle Class Whether Garth or anyone else believes in conspiracies or not, matters not a bit! What matters is the end result, and as we are witnessing in the USA, Ireland, Greece, the UK, Spain, and soon all of Western Europe and Eastern Europe (at least those countries that had a Middle Class), the MIDDLE CLASS is fast becoming extinct. I believe the process will be completed by the end of the decade to be replaced by a scientific form of Feudalism, think BRAVE NEW WORLD.

In the end people like us who are still in the small minority, even on this blog, will be vindicated for no matter what an average level headed person does, the chances of one’s financial survival are less than zero. The State will make everyone dependent on it, and it will do so by taking away all independent means of generating wealth. The slow transformation has been from CAPITAL FORMATION through savings as the basis of wealth to CAPITAL DESTRUCTION through debt as the basis for impoverishment. Historically people saved their way to wealth (there is no short cut outside of theft or war), but since the beginning of the 20th century, and in a turbo mode since the 80’s, people have been deluded into believing that going into debt makes them wealthy. By people I mean the individuals, businesses, corporations, and governments. By indebting individuals to an extent never before seen in history, even in previously cash only countries like India and China, the stage has been set to turn the debt taps off and bankrupt individuals on a scale never before seen in history. Is all of this accidental that no one could have foreseen the consequences? Bah humbug! It is a plan so devious that most people would never accept its genius as having been a product of mere human craftiness, but the results speak for themselves, since what we are witnessing in the Western World on an unprecedented scale is the death of the Middle Class, planned or not, is irrelevant (to a degree) at this point.

Of course such a revolutionary change will make not come without much pain, all of it to be borne by the proletariat not the upper crust. Look for real revolutions (France and Greece being the trailers), not as a result of mass uprisings but as a result of incitement by the PTB to produce a desired result – the final ‘Mad Max’ break down of society so that the same PTB can offer a wonderful ‘peace and security’ solution. Think Cuba, where the State owns all, including the individual. Maybe I’m just off my rocker, and none of this will transpire, but then again maybe I’m not!

It will get uglier – we ain’t seen nothing yet! Even the people living in tent cities, sleeping in cars will think of these as the ‘good old days’! Call me a DOOMER if you please, don’t bother me one bit!

And yes, as far as I can see, the Apocalypse is working out almost exactly as foreseen by those who have eyes to see, and ears to hear!

#69 timbo on 10.28.10 at 8:51 am

audio from NPR when people who can still make the payments are thinking about taking cover. It’s almost come to a mindset of a bank run but on mortgage debt repayment. QE3 in 2011 as more and more people walkaway.

http://www.npr.org/templates/story/story.php?storyId=130868236

#70 WINNIPEGER on 10.28.10 at 8:52 am

Interesting question regarding property taxes.
Jurisdictions in the USA faced with mounting foreclosures. Do the banks still have to pay the property taxes on the ‘full amount’ owing every year?

On foreclosed homes in Canada is this the case? Who flips the bill? Or is there one?

Winnipeg’s property taxes are it bread and butter not unlike most major cities. We just went through a property tax re-assessment based on 2008 values taking affect in 2010. What happens if the market tanks? Will cities rush to re-access the market price drops? No way!

If Vancouver real estate does drop 30% or more —- who pays the property taxes on those foreclosed crack shacks? Would Vancouver city counsel drop the mill rate to compensate for declining home values?

Would be interesting to know what would occur :-)

#71 Just a Tech on 10.28.10 at 9:19 am

Funny, Bernanke mentioned the same thing. All he can do is manipulate interest rates, buy debt and hope everything works. I doubt QE2 will work, it’s not enough to begin with, and its going to the wrong people(banks). Reserves don’t create lending! they just protect a run. In order to lend, we need real jobs, real wages. To be honest until the FBI or DofJ comes down hard on the fraud that went on at these financial institutions I would bet against the States.

#72 TheBestPlaceOnEarth on 10.28.10 at 9:24 am

Everything will be fine people. Vancouver is booming, condo towers going up and lots more to come. This is the playground for the rich Chinese and Iranians. Does anyone know where Canada’s richest postal code is? West Vancouver, no dummies over here. Oversees rich people are ALL parking their money here. The US will collapse shortly and what you will witness is a tidal wave of cash pouring into Vancouver. People don’t get it, this pace is the BEST. Imagine for a moment a garden hose and the water behind the Hoover Dam breaks and has to fit through that garden house. This analogy is what will be happening to Vancouver soon in the housing market. Millions banging at the door wanting to buy. When the day of reckoning comes watch out cause were going vertical. On a side note London is no Vancouver, never has been able to compete with the Top Dog in the last couple of decades. London Bridge is falling down.

#73 T.O. Bubble Boy on 10.28.10 at 9:37 am

@ TheBestPlaceOnEarth:

I’m finally getting your message… it’s satire, right?

(either that, or you’re referring to London, ON?)

#74 BrianT on 10.28.10 at 9:41 am

All these comments-will QE2 work? It won’t help the economy, etc.etc. Look-cut through all the buzz words and garbage and call a spade a spade. All this is and all this is intended to do is transfer wealth from the overall economy to certain parties. So will it work-YES it will do what it is designed to do-enrich certain parties and push the USA closer to financial collapse.

#75 blase on 10.28.10 at 9:53 am

Summer median Calgary condo price: 280s.

Last week: 266,000.

3 days ago: 260,000.
2 days ago: 259,000.
Yesterday: 258,000.
Today: 256, 500.

Slow burn continues…

#76 BrianT on 10.28.10 at 9:53 am

#33Best-Yes. Most are starting to realize the financial position of the USA is not even close to the MSM spin version.

#77 realTOmarkets on 10.28.10 at 10:06 am

I agree with Garth’s post today.

However, Canada has lots of gold and oil which are the best commodities and will survive inflation, recession, depression, etc. Housing prices will dip somewhat in the next few years. But guess what won’t go down– buy lots of oil and gold! Can’t go wrong!

#78 Herb on 10.28.10 at 10:13 am

Winnipeger @ #70,

you can’t escape death and … well, you know, that other thing.

Property tax would be the first liability against a property until discharged by the current or a future owner. In fact, you could not transfer title to a property until its taxes are cleared. If not already registered as a lien against the property, due diligence exercised on behalf of a buyer would require proof that taxes have been paid. And if the tax debt is high enough – you no doubt have heard the expression “tax sale”.

Falling property values are no problem for a municipality: all they will do is raise mill rates to cover their budgets. And banks foreclosing simply add outstanding taxes to the capital cost of a property to be recovered from the proceeds of a future sale.

Yep, you can’t escape taxes, even property ones.

#79 Scalgary on 10.28.10 at 10:15 am

“bleeding from every orifice…”

Just imagined how would it be..! well said…!

By the way, I am in a Toastmasters club and gave a speech on Comparing Interest Rate Vs House prices in Canada and US from year 2000 and questioned what would stop Canada from having a US type of housing melt down… I got severe criticism about my ignorance and my buddies asked me to read more about housing market…

I will talk to them next year…may be i will repeat the same speech..!

Cheers…

#80 CTO on 10.28.10 at 10:44 am

#72 TheBestPlaceOnEarth

Help! , need specification site for technical help.

Where is the OFF switch for
” machine #72 TheBestPlaceOnEarth”, manufactured by Greater Vancouver Real Estate Assoc.

It is very ellusive and just keeps rambling over and over again realtors propaganda!??

Not sure what wronge with it…

#81 Tom on 10.28.10 at 10:52 am

That the middle class is running on fumes. Were it not for the billions we borrowed in the last 18 months, our consumption would have dropped enough to already cause a deflationary spiral. Now, since the economy remains weak and jobs elusive, the wealth effect which came from rising house values (thanks to cheap debt) is fading. There is no doubt spending will fall as people worry about what they owe and realize their wages are stuck in neutral.
Well said Garth.
A very slow hopefully downward spiral for now as Carney raises rates. A debt based economy is just stealing from the future. That would be our children’s future. How selfish is that?

#82 Shoggy on 10.28.10 at 10:54 am

@ #17 Karl –

I second that motion. “This won’t end well” makes me think of two geezers in their rocking chairs on the porch sucking on pipes, “This won’t end well, I reckon.”

#83 Keith in Calgary on 10.28.10 at 11:07 am

QE in the US won’t work, they are done like dinner……that is the problem……..if the US debt was not already 12-15-17 TRILLION or whatever the real number is not counting social security and health care, they might have a chance if they print another 3-4 TRILLION as is being predicted. But they don’t, because they are already hangin on over the side of the cliff……….and China is holding the other end of the rope.

QE didn’t work last year……..and it won’t work this time around either because of the above, the fact no one trusts government anymore nor the FED, and the sheer spectre of Obamanomics. All of the US business owners I personally talk to on a daily basis thru some other websites are hurting big time and won’t spend a dime nor hire until Obama and the dems are gone for good, spending cuts start occurring, and a major chunk of Wall Street is reformed.

This time you can safely bet against the US because there is nothing left but a government funded ponzi scheme.

#84 BAD on 10.28.10 at 11:24 am


As Carney knows and Garth called, our best hope is the US recovery, a significant recovery. Unfortunately the US Fed is damned if they do QE2 and damned if they don’t. It seems that, as always, we are destined to ride bubbles. It also looks like these bubbles are growing bigger and bigger with time and it will take growing bigger and bigger balls to ride them.

Investors these days know that they will lose money by sitting in a savings account. So speculation becomes very tempting, no matter how risky.

(…)

The trouble is, the Fed has managed to back itself into a corner. Expectations for easing are now so high that anything short of a money bomb drop is going to be a disappointment. All those bubbles will burst over night.

If the Fed won’t print more money, markets could turn very ugly

And RE investing (especially in Vancouver) is not even speculation at the moment but a plain money losing proposition, even worse than a savings account.

Interesting times we live in, interesting indeed.

#85 JB on 10.28.10 at 11:26 am

This will not end well.

Hee hee

#86 Industrial Guy on 10.28.10 at 11:45 am

The growing retirement crisis in Canada is picking up steam …… This won’t end well for a staggering number of people. Raising interest rates and falling house prices will quickly create a national economic disaster for the Baby Boomers.

“A poll by TD Canada Trust released Thursday says 86 per cent of boomers want a smaller home when they retire. However, even though they say it is important to pay off the mortgage before they retire, it turns out less than half, or 43 per cent have actually done so.

One quarter of those boomers have paid off less than 40 per cent of their mortgage, meaning they have a ways to go before thinking about retirement.”

No kidding .. and for those who’s unexpected unemployment over the last 24 months put an end to their plans, the situation is growing more desperate by the week.

Canada will need either huge leaps in GDP or taxation to cover the drain all these unfortunate Baby Boomers will place on Government health and support programs.
Now that Canadians have gotten the message and chosen to pay down debt, the latter is more likely.

There will be lots of great deals this Christmas season. Too bad the credit cards are maxed out, eh?

#87 Sam on 10.28.10 at 11:48 am

Where do you people come from?

This is TOTALLY INVALID. He compares the next 50 to 60 to 70 years of cash outflows with current economic production (one year of GDP).

OF COURSE the numbers will be lop sided.

You call this cr*p “science” ? Holy sh*t.
_____________________
years #33 TheBestPlaceOnEarth on 10.28.10 at 12:42 am

From Wednesday’s Globe and Mail
Boston University economist Laurence Kotlikoff says U.S. governmentdebt is not $13.5-trillion (U.S.), which is 60 per cent of

#88 Sam on 10.28.10 at 11:53 am

#50 JO on 10.28.10 at 6:54 am

Oh the hypocrisy. The same Governor who worries about too much debt and excesive spending is the one who payed a major role in how it
___________________________________
Haven’t you heard? Only the rich were supposed to take on more credit. only those who don’t need it & can easily repay it out of petty cash or the kids’ allowances

The plebes & proles were not meant to get any.

#89 Sam on 10.28.10 at 11:54 am

This will not end well

#90 Sail1 on 10.28.10 at 11:56 am

#52 bigrider

These RE salespeople should be lined up and shot.

Very harsh statement. I’m not an RE agent but it makes you wonder what leads a person to spew so much hate. It is still a choice to purchase real estate or not. Renting, as Garth explains very frequently is still a viable option.

Has any RE agent harmed you in such a way as to deserve being lined up and shot?

#91 UrbanCowboy on 10.28.10 at 12:00 pm

77 realTOmarkets on 10.28.10 at 10:06 amI agree with Garth’s post today.

However, Canada has lots of gold and oil which are the best commodities and will survive inflation, recession, depression, etc. Housing prices will dip somewhat in the next few years. But guess what won’t go down– buy lots of oil and gold! Can’t go wrong!
———————————————————-

And the US didn’t have any of this? And more…..plus technology.

#92 State of Mind on 10.28.10 at 12:01 pm

#72 TheBestPlaceOnEarth “Vancouver is booming,… going up and lots more to come….rich Chinese and Iranians.On a side note London is no Vancouver, never has been able to compete with the Top Dog in the last couple of decades.”

Garth, can we BAN THIS GUY? All he ever does is parrot the same $#@ every day here.

@ TheBestPlaceOnEarth – You have never left Vancouver I bet. After all, why would you? What’s to see outside Vancouver that’s better than where you live?

Seriously, you need to get out. Comparing Vancouver to London UK, you are smoking too much BC Bud.

Take a trip one day, till then, you are just farting in the wind…..

#93 Sam on 10.28.10 at 12:07 pm

#81 Tom on 10.28.10 at 10:52 am

> That the middle class is running on fumes. Were it not for the
> billions we borrowed in the last 18 months

Middle class incomes have been stagnant to down since the 1970s.
therefore spending over & above 1970s levels has been debt fuelled.

Most of the richest have gotten richer because they sit on top of a FIRE (Finance, Insurnace and Real Estate) pyramid. Their riches are the debt of the FIRE economy serfs.

basically, all excess economic activity (middle & high net worth) over & above the 1970s has been from debt, with some genuine improvements due to technology. (not as much as people think, though. The railroads improved the average person’s situation more than the internet, for example)

Have I mentioned, this will not end well?

#94 confused and a little crazed on 10.28.10 at 12:09 pm

guys

” Best place on Earth” is the same person as” Nostradamos Jr” from before
same style of writing very repetitive

#95 Alex on 10.28.10 at 12:11 pm

#72 TheBestPlaceOnEarth: I know you’re being sarcastic (because nobody can be so bizarrely oblivious), but really, “London Bridge is falling down”? The LB was moved decades ago to Lake Havasu, Arizona. Where, BTW, you can now buy a pretty nice house for $100,000, buy a gallon of milk for $2, and live without having to endure seven solid months of rain and gloom each freaking year.

#96 rory on 10.28.10 at 12:14 pm

#18 Got A Watch

Liked the post …please finish it with Part 2 – your plan going forward …would be another good read.

#97 Al Bundy on 10.28.10 at 12:17 pm

http://www.moneyville.ca/article/881923–realtors-blame-hst-for-sales-slowdown

I thought they used this excuse already.

#98 BrianT on 10.28.10 at 12:23 pm

One doesn’t have to be Albert Einstein to realize that turning over the management of the USA to the financial sector has not yielded satisfactory results. Just today Germany’s unemployment rate hit an 18 yr low-the main difference between the two countries is that the global financial powers have not been able to get control of the German economy (or the China economy for that matter) like they have with the USA and the UK. Eventually the average person will wake up to this reality but by that time it will be far too late to fix it IMO.

#99 eaglebay on 10.28.10 at 12:24 pm

# 17 & # 72

This won’t end well… if you don’t leave the “geezers” alone. You’ll get there too so show a bit of respect.
We made this country what it is before you came here.
You don’t like it? You know what to do.

#100 jess on 10.28.10 at 12:26 pm

1 T.O. Bubble Boy

Maybe we will start to hear the chatter again on the logic regarding the North American currency unit -amero

Dodge argued a common would help buffer the adverse effects of exchange rate fluctuations between the Canadian dollar and the U.S. dollar.

2007
On Monday, Bank of Canada Gov. David Dodge told the Chicago Council on Global Affairs that North America could one day move toward a euro-style currency.

=

http://www.thechicagocouncil.org/

#101 Mister Obvious on 10.28.10 at 12:27 pm

#53 Darryl

Absolutely bang on! I saw Premier Campbell’s ‘State of the Universe of British Columbia’ taxpayer funded pep talk last night. While he presented himself as humbly as it is possible for His Excellency, it’s still the same old banter about giving the people of BC ‘more choice’.

Clearly (oh, so clearly) the tax load is shifting from input to output. When nearly everyone worked for the same few large companies in the same few large sectors, taxing at source made a whole lot of sense. Nowadays there are so many ways to get income (many of them illicit) from so many sources. Along with that has come thousands of new ways to avoid ‘rendering unto Caesar that which is Caesar’s’. Governments are anxious to shed complex bookkeeping and the costly pursuit of cheats. The HST is a grand first step toward that end.

To soft sell this concept (and try to mitigate some of the serious damage to his political future due largely to his own egotism) he now chants the last refuge of the used car salesman: “we’re doing it for the children”.

Yep, it seems our problems originate at the grade four level. These particular students are dolts. The government promises, at no expense to parents, to bring the little potato chip and chocolate bar suckers up to world standards for math and reading. The BC Liberals also promise universal kindergarten (to those parents who think that’s a good idea) so that both Mom and Dad are better able to both work thus enabling them to make better decisions about what taxes and user fees they wish to pay.

These measures, together with another round of provincial income tax effective January 2011, will enhance BC’s overall competitiveness, attract new business, put more money in the pockets of British Columbians, usher in a new era of peace and prosperity, heal the sick, raise the dead, blah, blah, blah, blah, blah…

#102 Dan on 10.28.10 at 12:36 pm

bruce corell on 10.28.10 at 12:50 amTrust me as one with an ear to the banks what we are now seeing will last for many many years. The Bubble has officially burst. We received our real estate numbers and the prices on existing inventory are being pressured. November, Dec, Jan and Feb numbers will push prices down 15-20 %. March, April and May will unfold as a Buyers market “As a great time to Buy” Sales will increase slightly but prices will continue to fall. We are now in a midst of what many realtors call (CRASH)
Many thought this would happen gradually but now the banks know we will be hit hard and fast….Make a note of this post and save it…Oct 28th Bubble Pops…Also in a few weeks watch for a press release from banks that late payments on mortgages up up to highest levels in 15 years…I cannot give out my sources….
———————————————————-

I’ve heard from a mortgage broker that late payments has been a problem for a while now as people are maxed out on debt. My understanding is many mortgage holders have the option to skip a payment which has disguised the problem up until now. Mortgage buddy says ” you have no idea” how bad the situation has become. I can only imagine that tens of thousands of people who are trying to sell need to sell before they go bankrupt. The house of cards has started to come down and realtors and bankers know that the US housing crash could happen here and be much worse.

POP……….What was that?

#103 DiGiacomo on 10.28.10 at 12:41 pm

#75 blase on 10.28.10 at 9:53 am

Summer median Calgary condo price: 280s.

Last week: 266,000.

3 days ago: 260,000.
2 days ago: 259,000.
Yesterday: 258,000.
Today: 256, 500.

Slow burn continues…

——————–

I’ve been watching this as well!

the housing info in the last few days has been somewhat weird however…

From “last 30 day data” 4 days ago, we’ve also seen about houses sold increase by 70, but average and median prices are going up very slightly – about $5000 each – the last two are statistically insignificant, however the houses sold up by 70 shows that sells are dumping – maybe the higher end homes first (hence the avg / median increases) but selling nonetheless…

other thing that’s been really odd about calgary data is that I think there’s a lot of churning listings going on that we’re not seeing – every time I take a look, there’s usually about 40-50 “New Listings in the Last 24 hours” – have never seen less than 20, think I saw it as high as 80 once.

Averaging 40 new per day is 1200 per month – when about 800 per month are being sold. inventory should be going up pretty hard, not staying approximately even or declining.

But total inventory hasn’t really been increasing at close to that pace – therefore there must be a lot more places that are either being “churned” (ie listed for a few months, taken off the market, and relisted) or sellers taking places off the market completely and trying to rent

The rent data is flawed because CMHC is only supposed to collect data on multi-unit rentals (who normally are keen to avoid vacancies) – leaving all the empty “for rent by owner” places on the market out of the data set :)

and since they’re not listed as “for sale” they’re also out of RE inventory stats :)

#104 Debtfree on 10.28.10 at 12:47 pm

I see carney is all dolled up for halloween . I think he’s going as the count fangs and all. On the housing front it’s showing some odd spots in the US ie.
http://www.pinnacledigest.com/blog/edminnema/why-rich-people-are-living-tents

How about that randy quaid . Will he be buying in gvrd or renting.

#105 PTDBD on 10.28.10 at 12:48 pm

Garth, your ” If we try to get out, those horsemen with the bulges spring into action.” has me puzzled. Horsemen with bugles maybe? Or….? well I’ll refrain from speculating.

Was anyone else astounded today that the bearded Bernanke, the Wizard’s Apprentice Paperprestidigitizer, the Maestro of Mayhem needs help? The Father of the Mother of all Ponzis is actually canvassing Wall Street on how much QE2 printing they want and for how long? The man is going to people who called him out on his Ponzi scheme and asking for guidance? (I apologize now for saying that he had a little Ponzi)

The man who is shaping the world’s economic destiny asks for guidance? Oh, BTW…whatever happened to his famous “exit strategy”? It’s never talked about now is it?

The paperprestidigitizer has no OFF button say the pigmen with bulges and never satisfied appetites.

“This will not end well” mutter the basement dwellers.

#106 bill on 10.28.10 at 12:58 pm

Hi Garth
does squirrel jam have nuts in it?
thanks
bill

#107 Sam on 10.28.10 at 1:03 pm

Canadian RE prices won’t fall because Canada has recourse mortgages

BWHAhahahahaha !!!!!!!!!!!!!!!!!
“recourse mortgages will prevent price drops”

BWHAhahahahaha !!!!!!!!!!!!!!!!!

http://www.nytimes.com/2010/10/28/world/europe/28spain.html?ref=world

#108 Timing is Everything on 10.28.10 at 1:06 pm

#53 Darryl

Agreed.

“By leaving more money in your pockets, you’ll have the choices that you want,” Campbell said.

Like increased:
– property taxes
– school fees
– post secondary tuition
– transit fees
– fuel/electricity/Natgas rates
– toll roads/bridges (Private sector run of course)
– medical fees previously covered, now private medical system wedging in.
– all kinds of gov user pay stuff coming

Is the BC Gov. going to downsize by 15%. No…That’s for sure.

Get off the grid as much as possible. Be self sufficient as much as possible. Eat/stay healthy. Live simply, but comfortably. It’s not how much money you have, but living within the means of the money (wealth) you have.

You have always had choices, El Gordo did not just give them to you.
There is only one tax payer…You!
‘Avoid’ tax as Garth says…We all know what that means.

A modest, safe, stable environment is all you will need to ride out this ‘unstable’ decade. Are you ready for the opportunities ahead. Winners and losers.
You have about 10 years to think about it…IMO.
Sit back, have sno-cone, and enjoy the show.

I’ll say it again…
It’s never too late to make a better decision.

———————————————————-
How’s about a toll bridge here…

http://www.timescolonist.com/news/Lone+voice+backs+bridge+borrowing+Victoria+council+candidates+forum/3737724/story.html

#109 Jan Etter on 10.28.10 at 1:16 pm

#70 WINNIPEGER
“Interesting question regarding property taxes.
Jurisdictions in the USA faced with mounting foreclosures. Do the banks still have to pay the property taxes on the ‘full amount’ owing every year?

On foreclosed homes in Canada is this the case? Who flips the bill? Or is there one?”

Property taxes are paid by owner, whether the owner is Ward and June Cleaver or Royal Bank. In Ontario, foreclosure generally means the chargee/mortgagee’s equity of redemption is exercised and the bank becomes the owner. In a power of sale the chargee/mortgagee exercises its right to sell the property from the owner (mortgagor/chargor) to a buyer, so the bank never owns it. Banks may or may not bring pay the taxes on foreclosed properties, because regardless of who owns it, if taxes were in arrears and the municipality hasn’t exercised its rights of tax sale, then the arrears continue to accrue on the property until the municipality decides to exercise its tax sale rights or, more typically, the buyer will require the tax arrears to be paid out of the sale proceeds. The bank runs the risk of a tax sale if it doesn’t pay the taxes, but then depending on the value of the home it may not be a risk if, after the house is sold and the taxes are paid, there’s enough left over to pay the o/s balance on the mortgage.

#110 ralph on 10.28.10 at 1:22 pm

Here is another article to cheer you up:

“US foreclosure crisis becomes more widespread”

http://www.bbc.co.uk/news/business-11646439

#111 Kate on 10.28.10 at 1:29 pm

to The VULTURE
The good things about programmer is that most of them (some of them?) can work online for any company from any place in the world. So, do not count them out. But of course, they are not as rich as ‘Chinese, Iranians, etc.’ coming to Vancouver with piles of cash;)

#112 dd on 10.28.10 at 1:30 pm

“The actions of the Fed, led by Chairman Ben Bernanke, will “likely signify the end of a great 30-year bull market in bonds and the necessity for bond managers and, yes, equity managers to adjust to a new environment,” he wrote in a commentary posted on Pimco’s website Wednesday. See Gross’s full commentary.”

Wow. Is Bill Gross suggesting inflation?

#113 Mtl RE Observations on 10.28.10 at 1:31 pm

#34 bruce corell – Also in a few weeks watch for a press release from banks that late payments on mortgages up up to highest levels in 15 years…I cannot give out my sources….

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

That wouldn’t surprise me. In the condo development where we sold, we were told that 25% of owners are four months late in their monthly condo fees. Ironic, considering that most of these 20 – 30-year old owners drive BMWs and other expensive cars, and bought in 2007 when the units were only $150K, so their monthly mortgage payments can’t be that high to begin with.

#114 T.O. Bubble Boy on 10.28.10 at 1:37 pm

“this will not end well” –> “this will conclude unfavourably”?

#115 dd on 10.28.10 at 1:38 pm

“Check writing in the trillions is not a bondholder’s friend; it is in fact inflationary, and, if truth be told, somewhat of a Ponzi scheme,” … Bill Gross.

Well Garth … It is not on the front of the the Globe yet but inflation is on the way. Better read the find print on those preferred Shares. Hope they have a rate riser.

#116 Love this Blog on 10.28.10 at 1:39 pm

#72,

I guess as a Realtor with NO ONE BUYING HOUSES, you have lots of time to be on here, spreading bullpoo, eh?? That’s ok!! The more you are on here, means the more time you have on your hands, and the more the market is falling……………….keep posting bud!! You are confirming everything Garth says with the time you spend here! LOL

#117 jess on 10.28.10 at 1:39 pm

audio from NPR
..wow 1m down to 200k and the couple are thinking about walking from their investment. Interesting , especially if changes are made to the mortgage interest deduction. Supoose they are waiting for Neil Barofsky’s summary in December and who will be wearing the handcuffs?

#118 Frank from Calgary on 10.28.10 at 1:46 pm

I realize that Mr. Carney speaking about individual consumer restraint with debt is kind of like the local crack dealer starting his own, “just say no” campaign, but do I really need someone telling me to be careful how I spend my borrowed money. I recently looked at a 2467 square foot home in Calgary retailed @ $714000 GST in and know that this is over priced. No one told me, I figured it out. So there needs to be some individual accountability.
As for Mr. Bernanke’s QE, money inflation leads to debt repayment and domestic inflation. The American people will pay for the US debt by this Ninja Tax based on the Fed’s ability to print money out of thin air. Time to move the press back to the US treasury and link the currency to silver

#119 Crack Shack Ola on 10.28.10 at 2:00 pm

I’m still giggling about the executive-length sock. You’ve really outdone yourself with that analogy :D

#120 DeeWhy on 10.28.10 at 2:01 pm

TORONTO – A U.S. federal judge has dismissed a shareholder lawsuit against CIBC (TSX:CM) claiming that the big Canadian bank misled investors about its exposure to the U.S. subprime mortgage market.

—————————————————————–

I had read in mid 2009 that CIBC had lost roughly 300 mil
to the subprime debacle and immediately noticed a jump
in the service charges that these SOB’s were implementing
on my monthly statements.
Thanks CIBC-motivated me to find a ethical FA(took me a bit with a lot of research mind you) closed three accounts which were earning squat but left a few k in the chequing account for the necessities and we are just waiting for The Reckoning which I believe is forth coming.
When this thing hits bottom there will be Great Opportunities to amass wealth.

Buckle Up-The Foreclosure mess could Kick Start the Beginning of the End.

My Thanks to Garth and the Blog Dawgs on this pathetic daily Blog for the links and comments that have added to
my daily preparation and amusement.

#121 jess on 10.28.10 at 2:05 pm

Dark Sad

…the words that come to my mind… incompetent omipotence .
BP report on Frontline: The Spill
CUT CUT CUT = death and environmental disaster
http://www.pbs.org/wgbh/pages/frontline/

#122 Mtl RE Observations on 10.28.10 at 2:11 pm

I just had a look at how many units are for sale where we previously owned. One new unit was listed today. That’s the second one this week. That makes a total of 19 for end of October compared to 4 that were for sale in the spring. Did I also mention that the real estate agent who sold our condo, who lives in the building, just put up their unit for sale?. Nope. No panic.

#123 Evangeline on 10.28.10 at 2:12 pm

#19 ((The banks (primary receivers of Q.E.) are self-interested enough to shovel buckets into their own coffers in such a way as to create investments for themselves (invest in banks – much more reliable than gold). Is there an economist out there who is saying “the emperor has no clothes”? I’m a sceptic.))

The timing is very interesting isn’t it? Just in time to pay bankers their mega Christmas bonuses …

#124 DM in C on 10.28.10 at 2:14 pm

There’s nothing to worry about in Calgary!

Majority of Alberta boomers mortgage-free

Tops in country for paying off their homes

CALGARY – Alberta’s boomers are the most likely in the country to have paid off their mortgage in full.

The TD Canada Trust Boomer Buyers Report released Thursday said nearly six-in-10 Alberta boomers have paid off their mortgage versus 44 per cent nationally.

But the poll also said one in 10 Albertans have paid off less than 25 per cent of their mortgage.

http://www.calgaryherald.com/business/real-estate/Majority+Alberta+boomers+mortgage+free/3739956/story.html

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

They may be mortgage free, but are they LOC/HELOC free? That’s not addressed.

If they’re mortgage free, at the top of a bubble market, shouldn’t they be looking to cash out and downsize? Ya think?

The Herald’s schizophrenic reporting makes my head hurt

#125 Yoda on 10.28.10 at 2:31 pm

End well this will not.

Blind are we, if creation of this housing bubble we could not see.

Always in denial are the realtors.

Much ramen noodles realtors will soon eat.

#126 Silenus on 10.28.10 at 2:36 pm

#33/32, BestPlaceOnEarth

You’re funny. I like your style, claims more outrageous at every post. Way to go to keep the debate going, eh?

There a lot of arguments and counter-arguments on this blog, but i kick myself for spending so much time here.

We know what’s coming, and none of us can change anything about it. My personal exit strategy is clear, so i should be on a patio somewhere enjoying the present.

I always come back for Garth’s rants and style though.

Way to go!! So long folks.

Silenus

#127 Jeff Smith on 10.28.10 at 3:05 pm

>#43 Brian1 on 10.28.10 at 5:40 am
>Toronto will eventually have to lay off 3000 police and
>3000 firefighters To make up for the shortfall in tax
>revenue that is about to come

The bad news; no one come to your help if your get robbed.

The good news; you get less parking and traffic tickets.

Can’t have everything can you now?

#128 Devore on 10.28.10 at 3:13 pm

#121 Jeff Smith

The bad news; no one come to your help if your get robbed.

The good news; you get less parking and traffic tickets.

No one will come to help if you’re being robbed today, so what’s the difference?

#129 David B on 10.28.10 at 3:30 pm

America may be down but never out. This is just one of many companies that know how to take a punch. Thank goodness!

GM to Cut Debt by $11 Billion

BY JOHN KELL
General Motors Co. announced a series of actions to reduce debt and improve the auto maker’s pension funding position, adding the actions are expected to reduce net interest cost and preferred dividends by $500 million a year.

#130 RICHARD LICKER on 10.28.10 at 3:41 pm

Mr. Turner. Please look at the link below. Please get back to me on how it is bad/means nothing etc. You will find something negative in there I know it.
BRING BACK THE FEAR!

http://www.calgaryherald.com/business/Majority+Alberta+boomers+mortgage+free/3739956/story.html

#131 TakingResponsibility on 10.28.10 at 4:04 pm

Sharing a tip on a fab investment…

Invest in ‘Special Limited Edition ‘Record Deficit Commemorative Coins’

http://www.youtube.com/watch?v=Y5QUDFZ10Z8&feature=player_embedded

Real Canadian Mint!!

#132 EJ on 10.28.10 at 4:23 pm

#107 Sam on 10.28.10 at 1:03 pm

That’s just horrible, but it is exactly what you would expect to be the law when you let the banks have their way. A lifetime of indentured servitude to the banks just for one financial faux pas. Fleeing the country would be my number one goal if that were me.

In a sane world, you’d think penalties such as this would prevent a housing bubble. Just as I thought the recourse nature of most Canadian mortgages would have put the breaks on the insanity before it got out of hand here.

That’s the funny thing about penalties though. If people think they’ll never be in a position to face them (RE always goes up so I can’t lose!), then they don’t factor into the decision making process.

#133 timbo on 10.28.10 at 4:32 pm

#130 Richard,

Thanks for the link

Sure would like to see the wording on the survey and find out if heloc was considered a mortgage? RBC is making a killing with that 2nd mortgage pig..sorry equity withdraw mechanism.

Here is something interesting:

-Only one quarter of B.C. boomers own their home mortgage-free.
-33% have more than 60% left outstanding.

These are babyboomers 45+ and should be mortgage free. Just amazing that 1/3 feel that equity in the home justifies paying the mortgage past 60+.

Boy has things changed, I remember mortgage burning parties in the 80’s. it was an event.

http://td.mediaroom.com/index.php?s=43&item=1077

#134 Popping Bubbles on 10.28.10 at 4:43 pm

re: #130 Richard Licker

Alberta is better than the rest of Canada? Not bad news but not necessarily good given that

(i) almost certainly a person nearing retirement is substantially more likely to have a mortgage than in the past (hence record high debt levels and record low savings), and

(ii) the article confirms the demograhic headwinds facing the housing market (“Boomers in Alberta are also the most likely in the country to plan to spend their retirement at their vacation home”). Hence they are more likely to ditch their house or downsize.

#135 jess on 10.28.10 at 4:51 pm

Huh? “Too much big government” and the free marketeers

The Past
free land through the Homestead Act.
free public colleges established through the Morrill Act.
http://en.wikipedia.org/wiki/Morrill_Land-Grant_Colleges_Act
Programs for the elderly -Social Security and Medicare.

The Now –
The Matador Cattle Company, whose cows munch for free on public lands
Georgia Pacific -lumber to access forest lands and Taxpayers build the roads cost $1 billion a year–
Ethanol industry — use of eminent domain to forcibly seize private property

One has to ask why spend so much money in Calfornia regarding prop 23
California Proposition 23 (2010) – Ballotpedia
By repealing clean energy laws, Prop. 23 would put many of these … Prop 23 is likely to become a factor in California’s 2010 gubernatorial election.

http://www.prwatch.org/node/9555

#136 DaBull on 10.28.10 at 4:55 pm

#79 Scalgary on 10.28.10 at 10:15 am

By the way, I am in a Toastmasters club and gave a speech on Comparing Interest Rate Vs House prices in Canada and US from year 2000 and questioned what would stop Canada from having a US type of housing melt down… I got severe criticism about my ignorance and my buddies asked me to read more about housing market…

I will talk to them next year…may be i will repeat the same speech..!

What??? And be wrong again, next year. Man your a glutton for punishment. LOL

#137 This will not end well AKA Darryl on 10.28.10 at 5:26 pm

#114 T.O. Bubble Boy on 10.28.10 at 1:37 pm“this will not end well” –> “this will conclude unfavourably”?

LOL … How about,

This is going to suck?

#138 AM on 10.28.10 at 5:29 pm

#130 Dick

“Mr. Turner. Please look at the link below. Please get back to me on how it is bad/means nothing etc. You will find something negative in there I know it.
BRING BACK THE FEAR!”

Hey Dick, I feel for the Boomers who don’t sell now and watch their retirement funds (equity) evapourate. (actually, it’s probably too late) It’s the same Garth Mantra…don’t have all your net worth tied up in real estate.

I’m sorry…you were talking to Garth. Couldn’t help myself.

#139 dark sad person on 10.28.10 at 5:40 pm

#121 jess on 10.28.10 at 2:05 pm

Dark Sad

…the words that come to my mind… incompetent omipotence .
BP report on Frontline: The Spill
CUT CUT CUT = death and environmental disaster

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

Thnx for the link-

“Cuts” can also mean enormous profit-if-you can get away with it-
Lots of times they do get away with it-so-
You need to look at the savings made by risk taking and the costs of what happens when it doesn’t work-
I suspect it’s BP’s best interest-based on Profit that it’s more profitable for them to “cut” and take the chance-

Human lives and the Environment-will always be at the bottom of the list-when Narcissistic People chase profit and power-
To the Neocons-Wars and the loss of life and destruction that’s caused-are viewed simply as a necessary tool-in the quest for self fulfilling gain-

Only need to follow historic Fiat money patterns to see how the story unfolds-

http://1.bp.blogspot.com/_nSTO-vZpSgc/SRVLM8Kif0I/AAAAAAAADs8/Ad1Iwf_fPJ0/s1600-h/base-money-yoy-1.png

http://4.bp.blogspot.com/_nSTO-vZpSgc/SRVN4sw-LCI/AAAAAAAADtE/6EYg40HZUfo/s1600-h/base-money-yoy-2.png

Need to keep in mind-of what tool place in 1913-then the Lusitania and then Gold Standard–
I know ya know

#140 El magnifico on 10.28.10 at 5:43 pm

#129: “America may be down but never out.”
Garth always likes to say “don’t bet against America”.

Well, I would say don’t bet on America either…

“Boston University economist Laurence Kotlikoff says U.S. government debt is not $13.5-trillion (U.S.), which is 60 per cent of current gross domestic product, as global investors and American taxpayers think, but rather 14-fold higher: $200-trillion – 840 per cent of current GDP. “Let’s get real,” Prof. Kotlikoff says. “The U.S. is bankrupt.”

Writing in the September issue of Finance and Development, a journal of the International Monetary Fund, Prof. Kotlikoff says the IMF itself has quietly confirmed that the U.S. is in terrible fiscal trouble – far worse than the Washington-based lender of last resort has previously acknowledged. “The U.S. fiscal gap is huge,” the IMF asserted in a June report. “Closing the fiscal gap requires a permanent annual fiscal adjustment equal to about 14 per cent of U.S. GDP.”
(…)
Prof. Kotlikoff uses “fiscal gap,” not the accumulation of deficits, to define public debt. The fiscal gap is the difference between a government’s projected revenue (expressed in today’s dollar value) and its projected spending (also expressed in today’s dollar value). By this measure, the United States is in worse shape than Greece.
(…)

Without drastic reform, Prof. Kotlikoff says, the only alternative would be a massive printing of money by the U.S. Treasury – and hyperinflation.”

The full article can be found here:
http://www.theglobeandmail.com/report-on-business/commentary/neil-reynolds/the-scary-actual-us-government-debt/article1773879/print/

#141 Tom on 10.28.10 at 5:58 pm

Carney knows his best hope, ironically, is the US Fed. If this buying-bonds-with-magic-money thing works (called quantitative easing), and gets the American economy rustling a bit, then demand for Canadian goods picks up and yet our dollar is not goosed higher. Eventually, the gov figures, this will work.

Fool me once shame on you. Fool me twice shame on me.
http://www.youtube.com/watch?v=X2DRm5ES-uA&feature=player_embedded

#142 Devil's Advocate on 10.28.10 at 6:09 pm

“#72, I guess as a Realtor with NO ONE BUYING HOUSES, you have lots of time to be on here, spreading bullpoo, eh?? That’s ok!! The more you are on here, means the more time you have on your hands, and the more the market is falling……………….keep posting bud!! You are confirming everything Garth says with the time you spend here! LOL”#116 Love this Blog

Well, after having toured some rather expensive areas of the Pacific Northwest (both US and Canada) and speaking to a great many residents along the way, I gotta tell you Blog DAWGs, there ain’t a whole lot of the hurt you are talking of out here. There is one whole big swack of wealth out here that easily trumps the gloom and doom forecast here by the Blog DAWGs. Clearly those with the dough who choose to spend it where they want are choosing to do so here, in the Pacific Northwest. I’d say a whole lot of you are just plain jealous and hoping, wishing and preying things crash and Harper then personally comes to your doorstep to deliver to you a cheque made out in your name for you expected share of that redistributed wealth. Sorry to tell ya, it just ain’t gonna go down that way.

Seriously, you all gotta get out a little more. The sun is shining, believe it or not, and there are a lot of people doing just fine, thank you very much. They just aren’t wasting away their days crying “boo-hoo woe is me” in their rented basement suites. They are taking it upon themselves to do what needs to be done and if you are not on board you best learn to tread water real quick or drown.

#143 Steven Rowlandson on 10.28.10 at 6:20 pm

Garth the real estate market and its financing should be no more a concern of government than some one buying an ice cream cone. Except for the HST to be collected there should be no subsidies, loan guarrantees or government involvement in the financing. Its a private matter. If the banks and the home buyers screw up its their problem only.
As for interest rates I say jack em up untill saving is rewarding.

Steven

#144 Devil's Advocate on 10.28.10 at 6:30 pm

Seriously, what’s happening is that those who actually work are getting tired of paying those who don’t and those who don’t need to get it from somewhere. Where they are getting it from is the middle class and the middle class are now getting quite pissed off about that. The wealthy, of which there are a whole lot of in the Pacific Northwest, know all about Garth’s investment strategies. He’ll I suspect Garth is one of them, just hasn’t caught on to the playground of the wealthy quite yet.

Seriously, do you really think he is in anywhere near a world to yours? Get real. The man might as well be on a different planet from you. Yet you think him the second coming of Jesus. Look at your pathetic lot in life and just imagine how it pales compared to his.

What is my point? My point is there are a whole lot of people out there for whom life is pretty good thank you very much and there is no reason you can’t be one of them. All you have to do is grow a set and take some responsibility for your lot in life. Yes there are those who are taking advantage of you… Because you are letting them! Stand up for yourselves! Don’t let The likes of Garth or me profit from your oppression.

#145 Nostradamus Le Mad Vlad on 10.28.10 at 6:38 pm


4:20 clip Graham Chapman’s eulogy from the Pythons (and others) is one of the funniest (and most spontaneously creative) pieces of literature and song I have ever seen. Enjoy!

*
#16 dark sad person — If nothing else, this proves that the m$m, BoC and the US Fed, the banks, the fed. and provincial govts. are in collusion with one another, to keep real news away from sheeple who will panic and wet their pants at the first sign of bad times. Nice link!

“#5-Fire off a series of verbals that sends Vesuvian tremors through the RE/Credit market-”

Isn’t Yellowstone blowing it’s top a better view?!

#43 Brian1 — “. . . the shortfall in tax revenue that is about to come.”

Which is why property taxes are going to go through the roof soon all over the country, just as Chicago did when they doubled theirs a month or two ago.

#52 bigrider — “These RE salespeople should be lined up and shot.”

I hold a slightly different view. Line up lawyers, politicians and bankers and the like, string ’em up by their thumbs on a rope (like a clothesline) over the Grand Canyon, then cut the rope.

Eventually they will get the message!

#55 Tripp — “. . . and Garth having Brad Lamb to proof-read his blog postings?”

Is Brad really that smart? Surely you jest!

#68 Old_is_Gold — “. . . we ain’t seen nothing yet!”

Good call. Terminology is correct, and it will happen very quickly, without the vast majority of sheeple knowing.

They are still eating their cud, grazing peacefully in the field without bothering to check the F5 tornado right in front of them.

#70 WINNIPEGER — “Do the banks still have to pay the property taxes on the ‘full amount’ owing every year?”

As far as I know, yes which explains why Detroit is being bulldozed, as are other parts of the US.

However, someone feel free to correct the above.

#104 Debtfree — “How about that randy quaid . Will he be buying in gvrd or renting.”

If he and his better half are really smart, they will rent for five years or more.

#120 DeeWhy — “My Thanks to Garth and the Blog Dawgs on this pathetic daily Blog for the links and comments that have added to my daily preparation and amusement.”

Our pleasure! We are here to entertain and amuse all, so please drop in again soon, and whip us with hot, wet and soggy noodles!

We really are a bunch of old hasbeen whacknutjobs!

#124 Yoda — Strangely put!

#146 Prof ANON on 10.28.10 at 6:39 pm

@ 142 Devil’s Advocate

Usually I get what you are saying, and many times I even agree with you. However, saying there is a whole lot of wealth in the Pacific Northwest? C’mon. I drove the Pacific Coastal Highway from Seattle halfway through California this summer. Most of the towns in Oregon and Washington are in a world of hurt. Didn’t you notice the shuttered motels and the pealing paint? Perhaps you didn’t bother to talk to folks selling oysters and crabs? Maybe your definition of Pacific Northwest is only affluent neighborhoods in Vancouver and Seattle?

#147 45north on 10.28.10 at 6:58 pm

recourse mortgages: Recourse mortgages are only of interest to the banks in the case where the borrower has significant assets outside the house.

In the US, lenders cannot seize retirement savings (401K) in case of foreclosure. I think that lenders are severely constrained by what they can actually seize so they don’t. I think that in Canada the lenders are also be severely constrained.

In Canada, once a lender threatens foreclosure he should be forced to go through with it within 12 months otherwise he would lose any claim against the house.

Such a policy would drive down house prices, making it cheaper and more effective to provide housing. The policy would maintain housing stock by reducing the period where houses are not maintained.

#148 Nemesis on 10.28.10 at 7:04 pm

RE: 142’s attempt to BrightSide you all…

This development on Washington Boulevard in the City of Angels (that’s right – two blocks from Venice Beach/DelRay pier)….

http://tinyurl.com/2e62fy9

is still empty and unloved…

and these people…

http://tinyurl.com/23g5a6r

are now looking for a new place to park overnight.

And yes, I was there…

#149 Behavioral Finance on 10.28.10 at 7:37 pm

I guess Laurence Kotlikoff assumes that US will chill like Greece in the future. Also he fails to see that US if it wanted to can print itself out of this problem and Greece can’t since its tied to Euro brotherhood.

#150 eddy on 10.28.10 at 7:38 pm

The aptly named Mr. Carney has had TWO employers in his career- Goldman Sucks (our blood), and the Stank of Canada. And his overwhelming ‘desire to serve’ compelled him to take a PAY CUT, just to become Our Governor at The Stank of Canada. Friends, what we have here is just an old fashioned Illuminati hand puppet

#151 kabloona on 10.28.10 at 7:44 pm

So everything’s hunky-dory in the Pacific Northwest, eh?

That’s funny….watching PBS News Hour tonight and they listed Seattle foreclosures being up 71%……yikes!

I remember just a few years ago when the prognosticators proclaimed Seattle was “immune” from falling U.S. home prices.

So…….I guess this means “It wasn’t Different There”.

;-)

#152 Bailing in BC on 10.28.10 at 7:49 pm

#130 RICHARD LICKER

May I call you Dick?

The main point I got from that article is that 40% of Alberta Boomers are screwed. Did you read it different?

#153 Behavioral Finance on 10.28.10 at 7:52 pm

dark sad person,

Say what you will but creating the Fed was a very smart decision as it propelled the US economy that much quicker into the 20th century. The Fed has other roles that it plays besides setting interest rates and printing money on behalf of Congress.

I just love how today’s society cannot face natural business cycles. There were always recessions (depressions) and times of prosperity regardless of the type of medium of exchange used.

#154 Nostradamus Le Mad Vlad on 10.28.10 at 7:55 pm


Globalization sucks (the jobs out); maybe that’s why it was quietly introduced.

New Money “The U.S. dollar is dead. There … I’ve said it.” — Christopher Barker / and / “To put it bluntly, the dollar’s days are numbered and its demise is inevitable.” — Vasko Kohlmayer.

Baby Boomers — Awaken from thy slumber!

CC fraud “This confirms that the financial centers have been playing the same fraudulent “bundling” games with credit cards as they have with home mortgages! Did they also do it with school loans?” wrh.com.

US Fed Why JFK and RFK were assassinated, and not by L.H. Oswald and Sirhan Sirhan.

Silver Money “A return to sound money is urgent…” Plus — Silver Manipulation “Beliefs are chains that hold free minds slaves. Time for freedom.” wrh.com.

High Frequency trades.

Obama’s backdoor route to end the right to bear arms, ‘tho it’s not him — it’s the elite who don’t want people to have arms. That’s why gun and ammo sales have increased.

Happy Climate Fools Day!

Cholera Epidemic The unanswered question is — Who is blocking the aid, and why? The US military was conveniently located close by when the ‘quake struck, now they control the whole country.

John Mellencamp — “And the walls come crumblin’ down . . .”

Split between the EU and US? “So much for “sanctions that bite”: the EU and China have created an opening so big in these alleged sanctions that you could drive a convoy through it!” wrh.com.

BP and recirculating oil, with more adding to it.

A smaller version of the stun-gun was on 60 Minutes not too long ago.

Sarkozy, like Obama is fleecing citizens of France.

Agriculture balls-up.

#155 seemac on 10.28.10 at 8:08 pm

Pretty colourful stuff Garth.

You were smoking some salmon before you wrote this one I bet!

#156 Devil's Advocate on 10.28.10 at 8:31 pm

Maybe your definition of Pacific Northwest is only affluent neighborhoods in Vancouver and Seattle? – #146 Prof ANON

Must be. And let me tell you, lookin’ out my window right now, there are a plenty of them.

#157 RICHARD LICKER on 10.28.10 at 8:49 pm

Mr BC Bailer
I didn’t know what to get from that article.
I was just fishing for negativity. This blog is the best place to find it. I have such a happy life I have to come here to have all the rainclouds, sinkholes, and schleprocks bitch slap me back to reality.
No offence…….this blog is reality.

Thank you

#158 Devore on 10.28.10 at 8:55 pm

#130 RICHARD LICKER

Mr. Turner. Please look at the link below. Please get back to me on how it is bad/means nothing etc. You will find something negative in there I know it.

So more than 40 percent still have a mortgage, and they plan to retire in the next 10 years or less? How much savings do they have outside their house (will they have to sell to have any income)? How many of the ones that “own” have massive HELOCs taken out to pay for granite, hardwood, landscaping, kids education, kids house downpayment, new Cadillacs, vacations, trips, cottage, etc?

Houses aren’t free, you know. There’s taxes to be paid, utility bills (those Alberta bungs leak like sieves), repairs, maintenance, and the snow doesn’t shovel itself, roof will need replacing soon, water heater is on its last legs, heater is older than the boomers, and oh yeah, that Canada pension is paying $400 a month.

Sounds like a plan to me.

BRING BACK THE FEAR!

The fear never left town.

#159 timbo on 10.28.10 at 9:15 pm

A deep dark forecast on what is to come.

http://gonzalolira.blogspot.com/2010/10/signs-hyperinflation-is-arriving.html

And a speech by helicopter Ben on the depression and causes. We, not by choice are following the same paths as in the 20’s and 30’s.

http://www.federalreserve.gov/boarddocs/speeches/2004/200403022/default.htm

“The finding that leaving the gold standard was the key to recovery from the Great Depression was certainly confirmed by the U.S. experience. One of the first actions of President Roosevelt was to eliminate the constraint on U.S. monetary policy created by the gold standard, first by allowing the dollar to float and then by resetting its value at a significantly lower level. The new President also addressed another major source of monetary contraction, the ongoing banking crisis. Within days of his inauguration, Roosevelt declared a “bank holiday,” shutting down all the banks in the country. Banks were allowed to reopen only when certified to be in sound financial condition. Roosevelt pursued other measures to stabilize the banking system as well, such as the creation of a deposit insurance program. ”

Remember if your hording precious metals that the RCMP confiscation squad is training. National emergencies confiscate and price fix things quickly if gold gets out of control. Every country is saber-rattling but behind the scenes the power knows what has to happen and we are all in this boat together.

#160 DaBull on 10.28.10 at 9:32 pm

#152 Bailing in BC

The main point I got from that article is that 40% of Alberta Boomers are screwed. Did you read it different?

I read it as 60% have their equity under the mattress and are not making a single penny from it, while the smart 40% are using the equity in their home to make a nice fat 10% a year. Just like Garth recommends.

I guess it really is how you read it. Some see the glass half full, like me, and some see the glass half empty, like you.

#161 Cory on 10.28.10 at 9:37 pm

People in BC forget how million dollar mansions were boarded up and left to rot in the mid 90’s, Richmond comes to mind. All of the Asians these stupid people keep talking about saving the real estate market in Van packed up and went home. Houses were literally boarded up and grass/weeds taller than the window heights. I saw it with my own eyes.

It can happen, it has happened, and most likely will happen again.

#162 Devil's Advocate on 10.28.10 at 10:05 pm

“So everything’s hunky-dory in the Pacific Northwest, eh? That’s funny….watching PBS News Hour tonight and they listed Seattle foreclosures being up 71%……yikes! I remember just a few years ago when the prognosticators proclaimed Seattle was “immune” from falling U.S. home prices. So…….I guess this means “It wasn’t Different There” #

Ya know, I just didn’t see any of that. I looked, really I did look, but didn’t see it. Saw some “other side of the tracks areas” talked to some who said “real estate is “flat””. Cab drivers and rental car guys, but non ne who said anything like what I was led to believe I would hear of or see garTh or the Blog DAWGs. I’m serious.

Also, BTW, FYI, found the Yanks, as always, way friendlier than so many of us second Brits. We really ought ta learn to be less snotty.

But really I was curiously seeking evidence of that which I so often read on the blogs and just couldn’t unearth it. I’m sure it’s there, but no more there than here. It’s that vocal pissed off minority. They have reason to be that way but no one to blame but themselves.

#163 Devil's Advocate on 10.28.10 at 10:09 pm

Before ya go critiquing my literary skills or lack there-of, Sorry small iPad keyboard and fat fingers

#164 Dodged-A-Bullit-in Alberta on 10.28.10 at 10:25 pm

Greetings: # 146 [Prof Anon] and # 151 [Kabloona]

I too did a driving trip to the Oregon coast this summer, spent two days in an ocean front motel, and spent some time driving around some of the communities. There was an amazing amount of homes for sale within these communities. Many were right on the top of the huge dune overlooking the Pacific Ocean and these were nice homes. Just back of the dunes where there was no view, but more sheltered from the wind, one often saw 4-6 smaller homes for sale within the same small subdivision. Many appeared to be un-occupied. We drove up one small mountain into a development of huge homes with awesome views, saw two where construction had been abandoned and obviously fairly new construction with “for sale” sign on them. My conclusion, Devils’ Advocate is sucking wind!!!

#165 Dirty Socks on 10.28.10 at 10:38 pm

One main factor that apprently is overlooked is the demographic factor and why we all will get sucked into a spin so vicious it will take a decade to escape. When the end of world war II – there was this incredible pent up demand for so much and the greatest shift in American history was taking place..thats right..the baby boomers. This massive movement changed the landscape – as this group first exploded in schools – creating massive financial burden – also eventually created an economic force that won;t be seen again….This massive group – spending at will – living life and essentially dictating consumer appetite – has now been shaken to the core – Greenspan knew that this massive voting machine was in trouble when they pumped massive amounts of money into the stock market, only to watch it overheat and implode. Greenspan, nervous that the entire financial system could be at risk created a new bubble – the housing bubble – his first intentions were to afford the boomers to buy a quaint 2nd retirement home – but that changed quickly and thus a massive real estate bubble grew. Now, there are many side factors to the reason for the downfall of real estate – but stop and watch Japan – 20 years and counting and they are still stuck in neutral – and they at least have the advantage that the majority of their debt is bought by themselves – Japan, which is noted, is approx. 20 years ahead of the demographic curve the US is currently experiencing. No amount of stimulus, hand outs, forgiveness will matter the least. We have reached an end to a cycle that began in the early 80’s and has finally tapped out. With this massive demographic force facing dire consequences for years of “living large”- they now face serious consequences for their actions. Most probably believe that the government will have nothing within 10-20 years in SS or Health benefits..its gonna be the survival of the fittest (fiscally solvent). So, we all are facing something never written in history books before – the Western industries are about to embark on a financial storm that will wipe out almost all but the few lucky ones. Garth, your books are outstanding and I say kudo’s to you – but no amount of bottle water, generators or flashlights tucked away is gonna save us from a lfie of incredible hardship and depression. I wish only that as a human race – we one day forged ahead and build a better system that all can live in financial bliss.

#166 Devil's Advocate on 10.28.10 at 10:46 pm

#165 Dodged-A-Bullit-in Alberta

I guess one can always find that which they are looking for if they try hard enough. I just choose to look in the direction of a glass half full rather than half empty. Call me an optimistic idiot if you like… All I can say is it’s workin’ for me. How’s that “glass half empty” thing working out for you?

#167 nonplused on 10.28.10 at 11:13 pm

#159 timbo

Bernanke’s out to lunch. All they did in the 30’s was remove gold from coinage and revalue it. Big stuff I know but the gold standard held for another 40 years in setting the value of the dollar internationally, and therefore internally. And they were already on a “fractional” standard in the 30’s which meant they could print as much money as they wanted as long as there wasn’t a run on the reserves. The 30’s was a revaluation. The purpose of the so called seizure was so that you didn’t have a bunch of $20 coins in circulation now worth $35, which would have been awkward to say the least and also caused them to go underground, much as silver cons have now.

The US government did not “leave the gold standard” until 1971. Then they closed the foreign gold window, to stop outflows of gold to other countries, particularly the French, who thought that Nixon was printing money to fund the Vietnam war and had a large trade surplus with the US at the time.

Gold jewelry was always and is still legal, so there was plenty of gold available to Americans who wanted it, it just wasn’t minted and therefore subject to assays and all that jazz when you wanted to sell. They never seized gold jewelry or numismatic coins. Only the circulating gold coins were seized. Rumor has it that the bulk of the gold in Fort Knox is this gold melted into bar form, but still 90% gold 10% copper (coins were alloyed with copper to make them strong enough to withstand circulation). Why did the treasury keep it? Well, some people think they didn’t, but I think that’s unlikely. The guys at the top know what they are doing (running a Ponzi scheme) and they also know they might need it again one day. It’s not worth enough to sell considering they may have to mint coins out of something worth more than zinc and nickel again one day to get them accepted. So if the dollar really does collapse, fear not, they will have a $100 dollar gold coin maybe about the size of a loonie but maybe only 5 to 10 karat gold out in weeks and all will be well. They can re-establish financial transactions that fast if need be.

The US coin base remained on a “silver standard” until 1968. Most people alive today should remember the old dollar coins (In Canada, they had an explorer and his Indian guide in a canoe for most runs). Every once in a very long time you even still find a beat up silver coin in your change (with a Moose, the design hasn’t changed just the metal). The melt value of that quarter is about $5 now so on the very rare occurrence that I find one it goes out of circulation and I keep it as a lucky charm.

Fact is folks, write it down: Money is worth what you can buy with it. So when times are tough, all through history governments have minted currency out of a metal that had intrinsic value to put a floor in the market for what it could be worth if the notional (paper in the last 300 years experience) system collapsed, as it is prone to do. That metal has historically been gold for inter-government transactions, silver for the populous, and copper for the poor. More recently it’s zinc and nickel, but those still have intrinsic value, just less. PS in the metals world, scarcity = intrinsic value, which is why arguments that gold “has no use” have no validity. Tell that to my wife. It’s very hard to get yet very easy to detect a forgery, therefore it shows well around the neck in polite company.

Oh ya, and back to the great depression. It was caused by the credit crises that resulted from the 1929 stock market crash and subsequent real estate crash. Mortgages were rare back then, but a lot of margin had been extended for stocks and it took the banking system down. Sound familiar? The reason they had to revalue the currency was otherwise the banking system could not be saved and savers would get 0 cents on the dollar rather than the 60% they got after inflation. Tough choice but probably appropriate.

Besides, high purity gold circulating as coin amongst the commoners has always been very rare historically. The US experience with gold coin is not common. Silver is for the average man, copper for the poor, and gold for the rich. It came about due to low population and lots of new gold in the new world. It couldn’t have lasted as the population grew. Of course our new poor trade zinc and nickel, but the industrial revolution really did make things generally cheaper and more available, so that is not entirely without explanation. An iPhone in 1968? $200,000,000 dollars, if it could be gotten. Progress in production as compared to wages has happened.

#168 BrianT on 10.28.10 at 11:16 pm

#128Jeff-you forgot the other good news-maybe you can survive crossing the street http://www.thestar.com/news/article/882716–a-week-s-pay-for-grandmother-s-life?bn=1

#169 Timing is Everything on 10.28.10 at 11:31 pm

#158 Devore

Some fear is a good thing…keeps ya alive. Our brains have not changed much since running around the Serengeti….but the world we live in has.

A little paranoia helps too. Just a touch.

This blog is kinda like ‘reality TV’….You characters play your parts perfectly. Yes, me too. We have no choice. Ha! Garth, you also.

I did not read this blog for 2 weeks while in MX, and will not go back and read them…and I missed absolutely nothing…but it still amuses me.

You will find no ‘answers’ here, just opinions.
Some responses may be useful to YOU, most mere entertainment.

Just my opinion.

Now, ‘break a leg’.

#170 AnotherLowlyRenter on 10.29.10 at 8:17 am

Here’s a good article explaining how quantitative easing working. Choice quote:

“Quantitative easing is like birthday gifts from grandma. Just because she keeps giving you underwear, doesn’t mean you’re going to wear it.”

http://www.arrowhedge.com/ca/downloads/Commentary/Arrow_Q3_10.pdf