If you are reading this, you are one of the few.
This site is being disrupted by a major issue.

A week after a homophobic political ruffian convicted of breaking conflict-of-interest rules becomes mayor of the largest city in the country, the Premier of BC quits. Only hours after bringing in a big tax cut. The same day the feds crush a $40 billion takeover deal – the largest on Canadian history – a week after signaling it would go through, shocking business. Also on this day the US Fed says it will create $600 billion to buy its own bonds, less than 24 hours after the American president was hobbled because he spent too much. Just a year ago he was a rock star.

In short, there is little that’s predictable. The consequences of some recent events will be hard on your money. Are you ready?

These things are the manifestation of an economy in far worse shape than people realize or leaders will admit. We’re on a deflationary path which will punish homeowners and people with debts, while rewarding those smart enough to load up on bonds eight months ago (when I suggested you do it). The effect on the middle class could be withering. And after that, thanks to soaring taxes and higher rates, we end up in an inflationary funk, and advancing equity markets.

In a world like this, many are making decisions they’ll regret. Some already do.

I’d like you to meet Rick, who emailed me last night. He lives very close to a new condo development which opened a few days ago in Calgary, called University City. With deferred downpayments and instant financing, it appeals to buyers who don’t have money (and apparently can’t read news). Here is what happened on opening day:

Who are all those people in line?

According to the developer, they are students, parents of students purchasing condos for their kids, local university workers and investors. Together on Saturday and Sunday they bought all 216 units in the 18-storey first phase of the development – at a time when Calgary real estate sales have been plunging. By yesterday, pretty much all of the second tower was gone – in total, more than 400 units which are years away from being lived in. They sold for between $160,000 and more than $300,000.

To put 400 sales in three days into perspective, in all of Calgary in all of October only 310 condos found new owners. As one of the University City buyers told a reporter: “The main reason I looked at it was my son will be graduating high school in a couple of years and the location is perfect for a university kid. The university is right there. And if he decides to go somewhere else to school I’ve got a place I can rent.”

So this brings us back to Rick. He wants you to know this:

Hello Garth: I am a family man in my mid-thirties with two kids.  I own a modest bungalow in a older part of Calgary in a neighborhood where my family and I can walk to school, bank, shopping, etc and love it.

Three years ago I got the crazy idea to “expand my holdings” and buy a rental property with the equity that we gained in our house.  We were good little beavers and paid down our mortgage to where the end was almost in sight.  At the recommendation of a friend I borrowed against our home to buy another and rent it out.  Not 12 months later the market fell in Calgary and we saw 20% of our equity disappear in a matter of months.  To add insult to injury now both houses were worth 20% less so if you do the math on two $550,000 homes, thats a loss of $220,000 on $1,100,000.00 worth of real estate (ouch, I know).  Things only got worse, when the market fell and the rates were low, the renters we had went off and bought a house of their own. Rentals started to flood the market and rental rates fell, couldn’t rent the house so on the market we go.  We did move it fairly quickly so avoided carrying cost but took a $110,000 less than what the bank appraised it at only 16 months earlier.

We are still in our house but having to carry a lot bigger mortgage than what we ever had before.  I know I am not the only one out there that did the same or something similar and that many quietly suffer emotionally and financially as I do. I can’t help getting a little steamed when you read all the ridiculous babble spewing from the mouths of these bloated house-slinging half wits.  It is a bit terrifying that thousands of these 8-weeks Real Estate Phds, are running around preaching this balanced market bullsh*t that is enlisting a whole new group of greater fools into the market.

Sorry for the long winded email but I have been reading your site ever since the “incident” and although it was too late for me, the information on your site has given me the tools to help others to not make the same mistakes that I did. Also, attached is a link to a website setup for a development that opened around the corner from where I live. As you can imagine, lined up around to block on opening day (Oct. 30, 2010) and over 80% sold already:

The real kicker is on this page, please read question 26.

Regards, Rick.

By the way, according to Jennifer Carter, sales manager for the project, last weekend, “was madness. It was really busy, really busy.” So many fools, so little time. Such looming consequences.

Here’s how Jennifer posed for the Calgary Herald. Isn’t she perfect?


#1 Buyright on 11.03.10 at 9:23 pm

You are a Canadian Dr R Shiller
We look forward to tomorrow’s blog like a great thriller

Most think you are funnier than Colbert or jon stewart
So guide us through this mess and hopefully we remain unhurt

(Can the blawg dogs complete)

#2 Bilbo on 11.03.10 at 9:35 pm

Following this second ~20% wave down, prices should stabilize for awhile by mid-2011 in most Canadian cities before the final third wave down begins. Historically, housing corrections average 6 years and often include 3 larger waves (equity investors understand these waves well). I suspect the final and most likely largest wave down won’t begin ‘til 2012 for the following reasons:
* interest rates won’t pressure enough owners refinancing & new buyers ‘til 2012 when record levels of both residential and commercial refinancing occurs (demand for money will peak in late 2012/2013 = higher rates are a given)
* stock markets usually perform fairly well in the last half of the US presidential cycle (wealth effect)
* late 2012 will finally usher in US austerity as Republicans regain control. Advanced nation austerity should then dominate until debt levels are brought back into balance. To catch a glimpse of our future look to the UK. 2013 and 2014 should see even higher levels of debt deleveraging. I also think these years will see the biggest shift in psychology towards real estate as Canadian boomers, well past their peak spending & investing age in 2013, continue preparing for retirement.
* there is still a large pool of renters who missed last decade’s run willing to capitulate in 2011 after this current second leg down leaves property ‘seemingly cheap’
* many other reasons, but one final reason is commodity-rich Canada should have at least one more year of ‘relatively’ high commodity prices. The chart in the link below hints at what I’m referring to (ie. reveals the 30 year technology-driven producer cycle – previous commodity cycles peaked in 1920, 1951, 1980):

#3 dmc on 11.03.10 at 9:41 pm

Speaking of consequences, the first home buyers, suckered in by the free money to buy houses in Australia, are now finding their brand new suburb ain’t smelling like roses any more. It’s time to run! Oh just to make it clear, despite 6 interest rate rises since purchase date they’re not selling because of mortgage stress… suuuuuuuuuure

#4 Jeff Smith on 11.03.10 at 9:43 pm

God, I probably would buy a property from jennifer anyday.

#5 dd on 11.03.10 at 9:44 pm

#1 Buyright

Knock it off.

#6 dd on 11.03.10 at 9:49 pm

“there is little that’s predictable”

There is a lot that is predictable. Keep your ears open and you might be able hear it before it hits the front page of the Globe. But of course if you need this kind of comfirmation it will be too late to make a move.

#7 Patz on 11.03.10 at 9:49 pm

Yesterday THS said
“Superior Court precedent decision on terminating unit at Trump Tower in Toronto. Could make things interesting as market tanks.”
And he posted this link.
(THS suggest you Google ‘tiny url’ then use it).

I read the case and it was indeed heartwarming. Richard Schneeberg put up over $200K in deposits for a $700+K condo in the Trump Hotel/condo deal. The developer was late in meeting the closing date and the buyer wanted out. He got out not because the developer was late but because the developer (his lawyer actually) had vague terms in the contract on what would happen if the closing was late. So the court ruled for the (lucky) buyer, Schneeberg, and he got his money back.

But it was a case of sloppy lawyering on the developers part and when that happens the court employs *contra proferentem* meaning that it’s the one who writes the contract who takes the hit if it’s ambiguous.

So it’s not a precedent setting case and I’d be willing to bet that the buyers at University City ain’t gonna get that kind of luck or sloppy lawyers.

#8 Cowboy_aka_My_View on 11.03.10 at 9:59 pm

{They sold for between $160,000 and more than $300,000}

So the high end greater fools “all in” monthly cost. A 300k 5/25 mort. @ 4%, taxes, insurance & maint-aprox. $2300/month.

{the renters we had went off and bought a house of their own. Rentals started to flood the market and rental rates fell,}

Hmm, how much was the Rent$ + insurance? And would you live happier ever after in that rental?

#9 TaxHaven on 11.03.10 at 10:09 pm

#26 is predicated on rather a lot of dubious premises…

…that governments can continue to borrow cheaply;
…that the supply of working, wealth-producing taxpayers will not dry up;
…that the supply of deep-pocket students and sickies will persist;
…that central banker-manipulated interest rates will not rise;
…that future dollars maintain the same purchasing power as today’s dollars.

Rather a lot of ‘ifs’ for me.

OT, I’m still to be convinced that the yields of your bonds, preferreds, CDs and the like will be spared the effects of deflation. After all, they ARE financial, as opposed to REAL, assets.

Very recently (Reagan budget director David) Stockman said,

“I invest in anything that Bernanke can’t destroy, including gold, canned beans, bottled water and flashlight batteries.”

…doesn’t include anything denominated in depreciating currencies, does it?

#10 vomitingdog on 11.03.10 at 10:10 pm

Except for the Botox, she’s perfect.

#11 Buyright on 11.03.10 at 10:13 pm

Re #5
OK moderator “dd” , not

#12 unbalanced on 11.03.10 at 10:15 pm

Mr. Garth

What type of bonds did you recommend 8 months ago. Just wondering and keep up the great work you are doing educating the PEOPLE.

Corporates. Plus preferreds, then yielding 6.15%. — Garth

#13 45north on 11.03.10 at 10:18 pm

Not 12 months later the market fell in Calgary and we saw 20% of our equity disappear in a matter of months.

well at least he got out

BrianT: I listened to Catherine Austin Fits. There is a trend towards centralization. I see it in the Federal Government. The reason given is cost savings but I see the opposite. The opposite.

Pugnacious: You can call a market balanced, but 3 months of declining sales isn’t a sign of a balanced market, it’s the sign of frailty.

that’s what it is (frail)

#14 Utopia on 11.03.10 at 10:20 pm

Not so sure about Jennifer. She has too many teeth.

Just like a shark.

#15 Ahsan Zaman on 11.03.10 at 10:26 pm

There is no market correction. I want there to be but there is not. Toronto numbers released today are a continuation of the old story. Double digit sales decline single digit price decrease. I know. The average price is a BS number that can be skewed by the mix of housing being sold. But at some point one should expect even this number to moderate. At that point we will have an outright correction. At the moment we do not. And with interest rates probably held steady for some time, I do not see a genuine correction in the near future.

#16 Dominic on 11.03.10 at 10:28 pm

WOW. The censorship on this blog has reached obscene

And so have your handles. So far, Dominic, Bond Bull Done, Sherri, MetalHead, A nine-bagger, ATV, Shylock, The Honourable John Embry, Jeff Rubin, Dirk Diggler, Just Sayin’, On Garth, Alan Greenspan and Joey LeBone. Try ‘Loser’ next. — Garth

#17 Don on 11.03.10 at 10:29 pm

#1 buyright

Did you click to the wrong page? In the wrong blog?

Can you back up what you spout with factual unbiased evidence put into context considering human nature?

Then you are in the right spot, or you can choose to join the ranks of ‘Devil’s Advocate’, he’s the one in the corner with a picture of his Beamer.

Nice to have you aboard, the more the merrier! Word seems to be getting around.

Thanks Garth.

#18 John on 11.03.10 at 10:30 pm

Jennifer is enough to make you forget the math, and buy the condo anyway.

#19 Utopia on 11.03.10 at 10:35 pm

Second try should be a charm.

Here’s the Talking Heads wierd video “Burning Down The House”.

As they say……. “We’re in for nasty weather”

#20 InvestorsFriend (Shawn Allen) on 11.03.10 at 10:38 pm

Garth mentions bonds and the gains that have been made. Nobody can deny that bond buyers have made out fantastically as interest rates drop they keep getting capital gains on their bonds.

An interesting question is, can that keep happening?

With interest rates at record lows is there still room for big gains as interest rates fall?

I have done the math.

The answers are interesting and surprised me.

A perpetual risk free bond (hard to find admittedly) would actually continue to double in price everytime interest rates on perpetutites fall by half. And interestingly no matter how low such a rate got it could still in theory continue fall by half an infinite number of more times. (And so double in price infinaitely)

But in the real world of 10 and 30-year bonds, there really is not that much upside left. Even if those rates fell to zero the capital gains are now more limited. The really juicy gains on 30-year governement bonds are in the past.

Check out the math here:

The Article is called the Amazing power of Zero Interest Rates

Bonds are primarily held for return and capital preservation. Capital gains are a bonus. Your argument confuses this. — Garth

#21 Dominic on 11.03.10 at 10:41 pm

Wrong on Joey Lebone, On Garth and Loser.

The rest? YES.

#22 Old_is_Gold on 11.03.10 at 10:44 pm

Dear Garth:

It is with great regret that I have to inform you that I will not be able to make it to Mississauga on Tue. to enjoy your talk. I had reserved 2 spots. I have some business arise that will prevent me from attending. I am sure you will be more and more in demand as the SHTF big time, so hopefully I’ll catch you another time.

The Apocalyptic one aka Paul Sandhu

Too bad. I planned on announcing the End of Days. — Garth

#23 Tyler on 11.03.10 at 10:45 pm

Garth what do you think of this:

“At the end of the day, all this deflation talk is a red herring. The true purpose of QE 2 is to disguise the decreasing ability of the Treasury to finance its debts. As global demand for dollar-denominated debt falls, the Fed is looking for an excuse to pick up the slack. By announcing QE 2, it can monetize government debt without the markets perceiving a funding problem.”

#24 Love this Blog on 11.03.10 at 10:45 pm

#17 John,

I get the humour…………..but she isn’t THAT hot. Not worth trading 35 years of freedom over.

#25 Timing is Everything on 11.03.10 at 10:46 pm

#18 John said – “Jennifer is enough to make you forget the math, and buy the condo anyway.”

Rent it…High maintenance.

#26 Mean Gene on 11.03.10 at 10:47 pm

Jennifer has a nice contrived smile.

#27 For Sale: Canada on 11.03.10 at 10:48 pm

Is Jenny smiling or grimacing?

#28 Buyright on 11.03.10 at 10:49 pm

RE #16
I think you have taken my post #1 in the wrong light.
I think Dr Shiller is a very smart Economist and think Garth is bang on when commenting on Real Estate with a some great humour

#29 Wealthy Renter on 11.03.10 at 10:52 pm

I don’t know if it is just me, but that condo is U-G-L-Y. Usually the artist renditions of new condos are slick and picture perfect. Even the website look amateurish.

I will get to see that spot in a few weeks. I am going to U of C in a couple weeks for work and then a conference in Banff. It is my first time going to either of these fine places – though I hear there is a chance it might be cold. :)

#30 Defrauded2 on 11.03.10 at 10:57 pm

Garth as usual your story tonight is interesting as it demonstrates the true nature of humanity.

Consider last nights CBC story about the Canadian Florida land grab….

Could this ever happen here? Maybe one day Americans will be travelling up north for that dream condo near Banff where skiing is year’round from that dream lodge condo, only minutes away, located in the historic University of Calgary district.

Perhaps one day consumers will wake up to the smell of Java, and no longer be defrauded!

It could never happen here…
Really cheap swampland, (ski chalet?)
I wonder where they all are moving too?…….
Toronto, Calgary, Vancouver?

Buyers could lose homes years down the road

Read more:

#31 concessionman on 11.03.10 at 10:57 pm

Funny in that picture of Jennifer you can barely see the horns…

#32 junius on 11.03.10 at 11:05 pm

I am going to lose the bet with Mom.

She’s going to rub my nose in it for the next decade.

Woe is me.


#33 toastmaster on 11.03.10 at 11:05 pm

343 Sq Ft for the low end at $160,000. Even as a student that is claustraphobic for an expensive frat house thats’ bound to be destroyed a few times over. I guess cleavage sells.

#34 Timing is Everything on 11.03.10 at 11:06 pm

ST. JOHN’S, Nov. 3 – Is Canada’s large and growing household debt a crisis?
Action Canada Fellows to Host Public Forum on Household Debt…

#35 Peter Pan on 11.03.10 at 11:06 pm

Jennifer is the type of bleached-blond, perfect-toothed, pneumatically-enhanced Stepford Wife which is preferred in Alberta.

They are especially popular with aspiring politicians hoping to become Progressive Conservative MLAs…

#36 dark sad person on 11.03.10 at 11:08 pm

I don’t believe the USD will go much lower-
The US 600 Bil. will give H-F-C the room to print 60 Bil. and Germany with a debt slave population of 80 Million can print 160 Bil. and so on down the line-
20% per debt slave-pegged to the US-
Currencies/Bonds will react erratically for a bit-but when the dust clears-we’ll probably be about where we are now-in terms of the Currency exchange and Bond value weightings-
So-imo–the World will continue devalue on a competitive bases-no Hyper-inflation-but likely another Stimulus boost for the Stock Market “if” the US goes ahead with this-
There’s some questions being raised now-about Congress maybe not passing it-
But-the market took it as good news going by the reversal after the news release-
Have to keep in mind though-
Markets like to crash on good news-

#37 Are You Kidding Me? on 11.03.10 at 11:09 pm

Is Canada retarded or something? Holy sh*t, I cannot believe how dumb Canadians are acting. All you have to do is watch the rest of the the god damned world to understand where your market is heading, yet you continue to stick your f*cking heads in the sand as if it is different there. Just remember that whatever goes up MUST come down. That only means the Canadian housing market is going to crash harder than Janice Dickinson after a night on the 200′ yacht and 2 kilos of coke. Jesus Christ, stop debating it already and GET REAL. This is why Canada will ALWAYS be a follower and NOT a leader in the world. You THINK your banking had regulation (which it clearly did not) and you THINK you’re “different,” yet you have followed the rest of the world, lagging by YEARS. It is the LAG that made you APPEAR to be healthy. This is a game, and it is not going to end well for Canada. How sad and pathetic.

#38 nonplused on 11.03.10 at 11:16 pm

All of the points Garth raises today are worthy of raising the hair on your neck, but I am particularly nonplused by the BHP – Potash Corp – Government announcement story.

We live in a Socialist-Totalitarian-Democracy. We already knew that. If it isn’t forbidden, it’s compulsory, and the rules compound every day.

But with this ruling, we are making new inroads to government interference in private property rights and laws.

Not that it hasn’t been done before, but this time there is a new scale involved.

The government has rejected a “hostile bid” for Potash Corp based on the surreal measure of whether it’s “good for Canada”, whatever that means, and whoever the psychopath who presumes to know what that means is.

First of all, hostile takeovers are never hostile to share holders. Share holders are not forced to sell at any price until a certain number of shares are acquired already, usually well above 60% and often close to 90%. If the share holders on mass do not believe the price is good than they can just not sell on mass. No takeover until the price is right, and thousands of individual investors, fund managers, and insiders involved in the decision.

However, hostile takeovers are often very hostile to the current management and board. A lot of benefits are about to evaporate, including all those options they keep cutting themselves and the outlandish salaries and benefits.

So we know who encouraged the government to block the deal, and it wasn’t shareholders because no force on earth can compel them to sell if the price is too low. It was management. Management who also makes political contributions. And the union.

So this is what it means to be a share holder in Canada now. Yes, you own the shares, but no, you do not have the right to dispose of those shares as you see fit. You must have approval to entertain the offer from the “consensus”, which is heavily influenced by the corrupt political process.

In other words you don’t own anything. The “consensus” decides which rights you have when enjoying or discharging your property, and not anyone else, including you.

What’s next? The government setting minimum prices for housing sales and limiting sellers to particular target buyers? Actually, the slippery slope of this decision is that the government decides who owns all property in Canada and at what price.

Plus this will send chills through the international investment community. Sure, this could have been an attempt to stall foreign investment and remove some upward pressure on the dollar, but shocking the international investment community may add a perception of political risk in the international investment community that we may later learn to regret. All to save a few overpaid VP’s, an overpaid CEO, an overpaid union, a few board members, and some political funding. What a complete travesty.

Why would anybody buy Canadian shares now, given the precedent that it will be up to a government official to decide whether or not you are allowed to sell them in the future? Say good bye to the TSX. Not because there are no willing sellers, but because the government has clearly indicated they will filter the buyers. So you can’t sell, even if you want to, unless they say so.

#39 Lonnie Gerber on 11.03.10 at 11:17 pm

It is said state of the country when the real estate developer is touting proximity to government owned facilities as a stable source of revenue.

What about free enterprise? How about building large stable, dynamic enterprises at the forefront of innovation (not just digging stuff out of the ground).

Canada, for the next generation, will not be a land of plenty if government and mineral firms are the employers of choice – the Asian countries are climbing fast and will soon leap-frog us in terms of innovative industries – I am hoping more for my son than wearing a mounties outfit to pose for tourists.

#40 Tonya L on 11.03.10 at 11:22 pm

Devil’s Advocate said – I am going to abstain from these blogs now for the balance of the year. Might check back after Christmas some time… might not.

Is that a promise or a threat? Have you changed your meds?

#41 Real Estate Deal or No Deal on 11.03.10 at 11:23 pm

Delicious is the word, I would use.

#42 dutch4505 on 11.03.10 at 11:25 pm

Calgary aka “Siberia South” Edmonton is “Siberia North” Born and raised in Edmonton…happy to be living in Washington state even if our housing prices are going down down down and down. (just a few years ahead of the canadian market)
Wondering about the rules if rentals are allowed in the new condo towers?? I know a few buddies of mine got stuck trying to flip new condos. Unable to sell and then found out about the rental restrictions. Condos in Kelowna BC now sitting empty. ouch

final note…the people in the line up??? new canadians?

#43 S.B. on 11.03.10 at 11:27 pm

General economic malise: Harper cons sold out the internet. Monthly bills will rise. War on Middle Class.,0

Metered Internet usage is on the way in Canada. The CRTC decried its final decision on how wholesale customers can be billed by large network owners.

Federal regulators on Thursday gave Bell Canada the approval to implement so-called usage-based billing to wholesale customers — usually smaller internet service providers that rent portions of its network — within 90 days. Under the plan, Bell will charge wholesale service providers a flat monthly fee to connect to its network, and for a set monthly usage limit per each ISP customer the ISP has.

#44 Crash Callaway on 11.03.10 at 11:32 pm

To Rick,
Reading about the lineups you witnessed brought the word
“intervention” to mind. These people are wacko. Like kids playing with butcher knives.
As a fellow Calgarian I feel for your situation and I echo what a poster above noted; you got away and will have a chance to regroup. The recent buyers are screwed. Hopefully when this assembly line of greater fools buying depreciating overpriced property ends Calgary will return to the great city is was 15 yrs ago.

To Garth: Where do you keep finding those pics!
Seeing those fireman pose for a pic while Rome burns is priceless and reflects the carefree attitude in today’s real estate.
Yes Sir… and as I shouted at the wife to put the squirrel back in the freezer “it’s for Sunday” my eyes came across that other pic of the Real estate bimbo.
Well I tell ya…
My doctor told me never to mix up my medication but I was so overwhelmed with laughter & excitement I mistakenly took my Alzheimer and Viagra medication at the same time.
A major faux pas…
and now I don’t know if I’m coming or going.

PS: to all the offended I apologize in advance.
I’m not myself today.

#45 Devil's Advocate on 11.03.10 at 11:33 pm

Don’t you worry none Mickey, I won’t leave you! You young men like you that make me proud to be a professional sales agent. Selling houses for living has made me a lot of money, just like that lady from the Calgary condo development. It’ll make you a lot of money too if you do what realtors like her are doing. It’s not her responsibility to tell these people the truth about their investment.

Also, forget what I said about leaving…I was just kidding around. I love you guys. The love I get from people on this site is overwhelming sometimes. Remember, the key is to learn the selling techniques.

You need to learn to overcome the objections of the buyer. Show them how ridiculous their concerns around real estate really are. You’ll get the hang of it in time.

The market is nicely balanced right now. Most of all…keep your head up…keep your stick on the ice and always, always, always…remember the gipper!!!!!!

P.S. – If that imposter says anything more about how being a real estate agent is not about selling, you just turn the other way. You’re on commission. You get paid to sell, not to show. You need to get the prospect to buy, buy, buy.

#46 nonplused on 11.03.10 at 11:34 pm

PS, I forgot to add that the only “fair” thing for the government of Canada to do now is to offer to buy any and all shares of Potash Corp. tendered by thee rightful owners at the price last offered by BHP. Yes, it’s socialization of corporate assets, but it’s the only fair thing to do, so that those who might have wished to sell can get the last fair price offered to them. It was the government’s decision, and they have that prerogative, but they cannot justly stick the current shareholders with the consequences of their recklessness.

#47 Mark on 11.03.10 at 11:40 pm

$187k + condo fees, for a 343 square foot bachelor’s room?

I think I’m gonna puke.

#48 Utopia on 11.03.10 at 11:51 pm

#16 Dominic on 11.03.10 blithered hopelessly……..

“WOW. The censorship on this blog has reached obscene heights”.

Sorry to hear the complaint Dominic et al but it is not censorship you should be concerned with. You are just on the wrong blog and have finally discovered that grand-standing, conspiracy whack-job ideology and gold nuts are almost all lost causes here.

This spot is still reserved for Real Estate discussion and Canadian investment strategies in a world where the other guys are hanging their privvies out to dry in public places.

Maybe try Zero-Hedge next time.

#49 Nostradamus Le Mad Vlad on 11.04.10 at 12:06 am

“Just a year ago he was a rock star.” — Obama is a marxist, with a marxist agenda. He is doing what he is supposed to be doing, and doing it very well.

“. . . there is little that’s predictable. Are you ready?” — Ready as we’ll ever be. What’s the worst that can happen? Everything becomes predictable again? That is a boring world to be in, akin to watching paint dry!

“. . . of an economy in far worse shape than people realize or leaders will admit.” — Should have been pluralized to ‘economies’, as we’ve all been flushed down the same latrine.

“. . . and advancing equity markets.” — That’s the plus side, because for each down there must be an equal and opposite up.

If an unexpected inheritance (I don’t play lotteries) ever comes by our way, I wouldn’t hesitate investing with our CFP in equities.
1:03 clip Spoken in Chinese, English subtitles. Why do the great civilizations fail? Cycles change #1; they bring it on themselves #2.

TBL and others — You may be on to something. Harper leaves, Campbell steps in.

Manipulators are being chased. Time for gold / silver to fly like eagles? Yet . . . QE2.

Speaking of US debt . . . then Cdn. debt.

Good for a giggle (unless it happens).

A link some time ago said the US Fed and WH were keeping the stock market artificially high for a short while, then the carpet would be pulled out. Bernanke seems to admit this, so watch for the fireworks show!

#50 groundzeropat on 11.04.10 at 12:34 am

Response to: #2 Bilbo on 11.03.10 at 9:35 pm

Absolutely agree with your view that there will be 3 legs down and we should buy at the end of the 3rd leg. Stock traders nick named this the “3 soliders” on candlestick charts. It works the same going up too and traders will sell their stock at the top of 3 legs. Sadly too many people will still buy after the 1st and 2nd leg down. What is really scary is the US is entering the 2nd leg just now after the 1st leg alone cost them 30-40% in equity.

I find there are lots of impatient bears asking when is the drop and how fast and how hard–and don’t laugh. In our society everyone wants everything right away which is why they refuse to wait and buy now on credit and suffer later. The greater the patience the greater the reward. I know it’s hard to stay on the sidelines after reading about 300 condo units being sold in a couple of days. Trust me I know it’s hard because my brother says real estate only goes up and he has a 2nd mortgage to build a 2nd house on another lot for a combined 1.3 million of debt while I rent. We are in opposite situtations so things will get interesting for one of us.

If you are wondering why the real estate ship is still rising eventhough some are saying the real estate ship is sinking take a look at the movie titanic and watch the part where the ship splits in half and the aft goes way up with a pile of people on the rudder and propellers. Right now I see Garth trying to save as many people in his lifeboat.

#51 Tim on 11.04.10 at 12:36 am

Little that’s predictable? Who would of thought that a Premier who so far has escaped unscathed from the BC Rail deal would resign? Imagine that two stool pigeons took the rap for the corruption in the BC Rail deal, basically got off free, while we taxpayers pay for their legal fees. They decided not to go after their assets-why? This is outrageous and Campbell should be held accountable. Down to 9% in the opinion polls, he’s so arrogant he didn’t resign until he was all but forced to by his own party. A stool pigeon of big business who continually rewarded his construction buddies while cutting services for the poor. He has done nothing for the people. What has he done for the people of this province? The only reason he got a third term was because we have a completely incompetent opposition leader. If Carole James is still at the helm, then the “Liberals” will regain power again. I think by resigning, Campbell made the best decision he’s ever made.

#52 Jody on 11.04.10 at 12:46 am

I reckon there is enough plastic in Jennifer for a new bathroom suite. My money is on her having moved to Calgary from Toronto in 2007 or so.

We must,
we must,
we must develop our busts,
the bigger the better,
the heavier the sweateer,
the boys are depending on us.

As far as real estate in Calgary, don’t you people know we just elected a knew multi-cultural mayor, prices must go up, the local news said there will be more drilling this summer, prices must go up, someone famous takes a shit in Calgary, prices must go up, etc. etc. I thought that university development had not even been approved yet, council still has to give it the final go ahead, what the hell are they doing selling units? Location, location, location!!!!!!!

#53 Get Real on 11.04.10 at 12:51 am

The real kicker is on this page, please read question 26.

Loved question #35 and #37 LOL

#54 AxeHead on 11.04.10 at 12:54 am

Do they teach how to do that ‘Jennifer’ photoperfect political smile in the 8 week Real Estate PHD class?

Rick, thanks for the honest statement of facts, and warnings to others that are walking face first into the same train.

#55 InvestorsFriend (Shawn Allen) on 11.04.10 at 1:07 am

Garth says in reponse to me at number 20

Bonds are primarily held for return and capital preservation. Capital gains are a bonus. Your argument confuses this. — Garth
Well yeah, hate to confuse people with some actual math… I don’t have an argument here really, just irrefutable facts.

And so what are capital losses on bonds? According to you (in many past posts) losses are irrelevant as bonds are bought for return. So, gains are bonus and losses are irrelevant?

Try tellin’ that losses are irrelevant story to your broker who will send a statement showing losses if interest rates rise.

Just sayin’ that’s the math.

#56 Get Real on 11.04.10 at 1:09 am


Being a medicine man, I know more about human psyche than, alas, finance or economy.

What you see in the “university city” example is herd mentality, or the power of suggestion, howsoever counterproductive it may be.

We as humans follow the path of least resistance, wherein lies our downfall

#57 Aussie Roy on 11.04.10 at 1:26 am

Just like the salesperson its all lovely on the surface but whats underneath is far more important. Have any of these purchasers even thought about their rental return, probably not, just like here in Oz cash flow doesnt matter coz capital gains will make up for the loss on holding the property – CRAZY. Lets get something straight if you are relying on capital growth to break even or make a profit, you are speculating. Most of these so called investors are really speculators they just dont know it – yet.

Aussie Update

Relying solely on property to fund your retirement can be risky.

Poster kids for the First owners grant in 2008.
Stressed home owners sell up

The Australian Bankers’ Association, the industry’s main lobby group, today attributed worries about Australian house prices on overseas markets as part of the reason for any extra rate hikes by its members.

“Over the last few weeks, we’ve had a lot of international investors asking very detailed and probing questions about why it is Australia thinks it doesn’t have a housing bubble,” said ABA’s chief Steven Munchenberg.

#58 taylor192 on 11.04.10 at 1:51 am

I know someone who is upside down $10Ks on an Albertan property who is also quietly suffering by not making a big deal out of it.

Rick is correct, there are definitely more suffering silently out there.

#59 US Investor on 11.04.10 at 1:57 am

So I ask myself, if I know that inflation is always and everywhere a monetary phenomena, then why ha all this QE not caused inflation? I find my answer in my ol Econ textbooks, because inflation is a product of the quantity of money supply times the velocity of money. So recently we have had a flood of new money, but it isn’t moving fast, it is being hoarded. I don’t see deflation as the biggest threat. As soon as all the various entities hoarding cash get a whiff of inflation they will move out of cash and bonds quickly. I think the velocity of money has the capacity to spike very quickly. Am I missing something?

#60 Get Real on 11.04.10 at 2:15 am

Herd mentality=blindly following the ass%#$& in front of you

#61 Aaron - Melbourne on 11.04.10 at 2:21 am

My copies of “Greater Fool” and “After the crash” just landed down under. While reading “Greater Fool” on the tram today i had many people curiously peering at the cover. Take that as a compliment Garth.

More on the same couple linked via tassie real estate blog to be found at…

Does this sound familiar to you Canadians?
How far behind Canada is Australia? 6 months?

#62 Behind the Numbers on 11.04.10 at 3:24 am

Well, there goes ALL the pent-up greater fool condo demand for the next few months in Calgary in one shot.

And if you will notice in the developer’s FAQ, they pay ZERO fees to Realtors.

Not to mention that’s 400 condos, average $200k with no fees = $2.8 million out of Realtors pockets, plus an additional 20% drop in prices for these buyers next year.

The funny part is for $200k you can buy a detached SFH in Calgary, but the kid will have to take a short bus ride.

Greater fools. Gotta love em.

#63 Brian1 on 11.04.10 at 5:17 am

I too hate the rich, but taxing the richest 1% at 10% seems like just another bailout plan solving nothing.

#64 Prof ANON on 11.04.10 at 5:26 am

That girl spends more on grooming than I do on housing. My kind do not like her kind.

#65 Keith in Calgary on 11.04.10 at 6:12 am

At least it indicates that the real estate market is not dead. If she can sell condo units so can I. My open house with squidly’s girlfriend is for sat & Sun 2-4 pm.
I’m excited to get a first sale.

#66 Leith on 11.04.10 at 6:44 am

All. A couple of days ago I wrote an article comparing the housing assets to GDP ratios of Australia, New Zealand and the UK (all bubble housing markets). I have now added Canada’s housing market to this analysis.

#67 McSteve on 11.04.10 at 6:55 am

Jennifer looks like a TWA stewardess circa 1968…

#68 David B on 11.04.10 at 6:59 am

Strange I was thinking how could post withe comment this before I openned this morning;

Canada Slaps Down BHP’s Potash Bid


Albeit this is a complex issue and not a straight money issue. Canada as well as other partner nations must understand “When you enter free-trade status there is always a win/loose situtation” most here would agree that there are many trade deals that have taken with others where Canada got the long end of the stick. Think about sports and free agents, some go on to greatness ….. most do not.


Having said that, a home has now become a place to hang your hat and store stuff (store stuff is not for a garage). you can save thousands by storing your car there, sell the junk! nuff said.

If our government can not understand and deal with big business world wide they will not deal with them. And when our markets fall or fail to work at the best we all loose. Canada is a natural resource base country …. so best this government get it’s act together …. soon those 0/40 & 5/35 ers are going to kill years of home investments for all. The sad fact is few know it is en route!

Note on the picture ….. the blonde’s looks will fade and the building will be a run down beat up overpirced appartment far too soon. And few if any will give them a second look. And that y’all can to the bank!

#69 T.O. Bubble Boy on 11.04.10 at 7:01 am

This scheme (selling parents on the “investment” of getting a condo for their kid) was promoted in the Montreal Gazette in September:

“Montreal real-estate developers are benefiting from the growing number of well-off Canadian parents buying condos for their children.”

This is yet another ‘trend’ that highlights the entitlement culture that is pushes debts to the moon: why can’t a kid just share a rental house with 4 roommates @ $400-$500/month? Why does a student need a concierge and a rooftop patio?

I agree that this could be a reasonable income investment in areas where there is a lack of student housing: for example, buying a burbs house next to the new UOIT in Oshawa, ON (where there is a dire need for student housing), but pre-buying a condo because your kid might need it in a few years is downright idiotic — especially in a city like Calgary, where Garth clearly points out that condo prices and sales are on a downward trend (and peaked in 2007-2008).

#70 Brian1 on 11.04.10 at 7:23 am

Ahsan Zahman depressingly, seems to be correct. Most of us here have gambled that we are right, but Toronto seems too formidable. Signs are there but no proof.
I know it will happen, but when? When it does will we be able to gloat. That is the thing we really never wanted to do, I think. All we really want is to get this over with, but the forces at play keep it going. Patience is a positive attribute but does not apply. I’ve had fun on the blog but it is all about waiting really. I fear that the winter will be a long one unless the stock market (the ultimate confidence indicator) crashes, but I think those same forces won’t let that happen. Is that a good thing?

#71 Keith in Calgary on 11.04.10 at 7:59 am

Looks likes someone has been impersonating me on your board Garth.

Anyways……on the subject of this thread……..

Selling condos in a concrete high rise building, across the street from a university and a huge hospital, and on an LRT line, when they are priced at….***$100,000 LESS***….than the average condo price based on October’s results ($284K) is a no brainer.

It just goes to show that real value will sell and that the balance of Calgary’s condo market made up of the cardboard and toothpick firetraps on the periphery of the city, as well as the concrete downtown high rises are still way overpriced by the standards set by this development and a few others that are to come. Sales figures and existing inventory prove that point.

Having said that, I certainly would not want to live there as it will be a modern day “renter’s ghetto” in a few years……….

#72 Gordon Gekko on 11.04.10 at 8:03 am

I remember in the mid 80’s just getting out of College and the Condo markets in Toronto taking a hit – the biggest factor was that 40% of condo owners were investors – just a few years back, a claim that the Toronto market was being purchased by individuals who were direct tenants – not investors (speculators). Well, low and behold – a report in the Globe took note of a tenant (renter) who hates living in one of these concrete jungles and notes that most tenants are renters and the building is a mess. So, moral of my story – those “half-truths” that are exposed seemed to go unnoticed by the media – well should we be surprised, who contributes to the advertising dollar in papers – one hand washes the other –

Great Job Garth, look forward to next week’s presentation!!

#73 luketheduke on 11.04.10 at 8:04 am

Garth,stop fighting the central bank you will be crushed

#74 Nibs on 11.04.10 at 8:09 am

Sales are down 20-40% across the country

The big boards are getting nervous!

#75 Moneta on 11.04.10 at 8:17 am

But with this ruling, we are making new inroads to government interference in private property rights and laws.

If you look at what is happening in the US right now, can you really expect much different in Canada over the next few years?

I do get your point in terms of government mettling, but at the same, I can’t stop wondering why we don’t just start negotiating an annexation with the US or China before we have no negotiating power left and they actually economically take us over.

It’s not as if we are a sophisticated player. We keep on getting screwed over time and time again. For example, when our dollar tanked and our forest products became more expensive. The US blocked us calling us dumpers. What about GM asking us to help? Now they’re going to IPO it, robbing Peter to give to Paul. It’s not as if the car industry has really fixed its problems. There’s overcapcity coming out our ying yang. And the list of bad deals goes on. Most big corporations have been doing well BECAUSE of government support. This whole free trade meme is based on a an illusion.

In my experience, free traders aren’t loyal to their countries but to their pockets.

#76 bigrider on 11.04.10 at 8:24 am

All Jennifer did was borrow 6 grand for her , shall we say, “assets” and voila , a successful RE agent.
Chinese men love to buy from women with these “assets”

#77 Hiteclowtec on 11.04.10 at 8:25 am

Since we are hot on blonds today . Here is one that was also long on bonds many months ago when the MSN was menacing about the bond bubble.

Stephanie Pomboy

#78 bigrider on 11.04.10 at 8:26 am

Ok Garth you censored my Jennifer comment. You’re right ,might have started a riot among women on the blog, and howling laughter among the men.

#79 Behind the Numbers on 11.04.10 at 8:28 am

#55 InvestorsFriendAnd so what are capital losses on bonds? According to you (in many past posts) losses are irrelevant as bonds are bought for return. So, gains are bonus and losses are irrelevant?”

I wondered the same thing myself but I get it now where Garth is going on this.

It’s for when you don’t need the capital but need the income (ie. those retired). You keep your money in there “forever” and live off the income you get from the preferreds/bonds and you don’t touch the captial.

But for those who need the money, I don’t know, you sure need to protect your capital investment..

#80 Herb on 11.04.10 at 8:33 am


you confuse me with your nos. 38 and 46.

What does the protection of management, boards or shareholders have to do with socialism? That pejorative normally is used to tar something else.

Or did you really have “socialism for the rich” in mind?

#81 Sail1 on 11.04.10 at 8:33 am

#45 Devil’s Advocate

Do you sell plots? I hear they are a good investment. Lots of granite, hardwood. They also have the heated condo type. If you hang on long enough it can be very lucrative on resale. I think it may be an attractive niche for you.

#82 Another Albertan on 11.04.10 at 8:33 am

Y’all aren’t realizing that Jennifer isn’t really a “sales agent”. She’s a hired model and marketer. She runs a model and promotional agency.

For anyone who needs confirmation that sex sells, this is it. Don’t tell me that 400 units sold solely because of “transit oriented development”.

Everyone else’s mileage may vary.

PS – oh, and Nikki Harrison – the Calgary realtor babe from months ago – is running a photography studio now on the side, citing having a “lot more time on my hands”.

#83 BrianT on 11.04.10 at 8:34 am

#59US-what you are missing is that a large % of the assets are currently being listed at a fantasy valuation, not an actual market value-literally trillions of dollars of overvaluation based on fantasy-many do not realize that accounting standards circa 2010 would have been considered fraud circa 1990. So-yes, inflation is monetary but you can still have asset deflation where the current listed asset values are fraudulent (and eventually the market value is realized). They don’t even call this accounting fraud any longer-the new term is “extend and pretend”.

#84 BrianT on 11.04.10 at 8:41 am

#48Utop-Privies? Other guys? Who are you talking about?

#85 Mike B on 11.04.10 at 8:45 am

To say this blog has run its course is truly an understatement. To say this blog crosses the line by trashing the likes of Rob Ford is like saying the US is just a little in debt. Either Garth has gone soft or he is buddies with Smitherman, whose political resume leaves alot to be desired. Either way, one can only imagine how the curvy mind of a book huckster can equate mayors and premiers with real estate. People in general Garth are fed up with paying taxes into a giant sink hole and seeing no end in sight. The HST in both Ontario and BC will likely be the death of the Liberals for at least a decade. Mayor Miller was behind the building of the homeless shelter in the heart of the entertainment district, shelling out 11.5 million of our tax dollars to renovate.. more than double the original estimate. This price tag does not include the cost of the land of course. So most people should not wonder why the more fiscally responsible, albeit conservative minded, are swinging into power in both the US and Canada. Spending more money than you take in and bilking taxpayers is cool as long as you don’t get caught. Maybe one day Garth will get this… if he ever leaves his bunker . (god help us)

Of Mayor Ford, I said, “a homophobic political ruffian convicted of breaking conflict-of-interest rules.” Please correct me where I erred. Second, if you cannot see the connection between voting patterns, investor and taxpayer sentiment and economic consequences, then it is indeed time you stopped reading this. Your head will explode. — Garth

#86 Basil Fawlty on 11.04.10 at 8:54 am

Speaking of consequences, does anyone out there think it is just a coincidence that after the announced $600B continuation of quantitative money printing, the $US index is down .56, oil is up $1.76, silver is up $.66 and gold is up $30? Had the US announced the end of QE we would likely be seeing the reverse trend in these prices. Of course, they are out of policy options and QE will continue.
Increasing energy prices spill over into the prices of most everything.

#87 BrianT on 11.04.10 at 8:54 am

#23Tyler-most understand the funding problem-what Ben’s move has done is label US treasuries as a bad deal (i.e. the interest rate is artificially lowered)-it appears he has said to China, Japan or any other holder-look-we don’t want to stick you with this garbage so sell it to me and I will stick it with the schmuck US (and possibly Cdn) taxpayer.

#88 Toronto McMansion on 11.04.10 at 9:36 am

That is not the only puke we will see. Who will want to buy/rent/live in that building with rowdy university students living in <350ft apartments?

I can bet that there will be fights, beer bottles and yes– puke in the hallways every Friday/Saturday night. If I remember correctly from my university days even Wednesday night was a regular big drinking night. Pre-drinking party at University City apartments!

#47 – MArk

$187k + condo fees, for a 343 square foot bachelor’s room?

I think I’m gonna puke.

#89 C on 11.04.10 at 9:41 am

I’m starting to get the feeling that the real estate bears in Canada are getting whishy washy about the “ok” September and October stats.

Patience friends. If you go to you can see that Toronto average prices are still below the May 2010 highs. Also notice how November-January tends to be weak for prices so prices should start to move back down again. Plus comps from Jan 2011-June 2011 will be going against red hot numbers from 2010.

A while back a block dog posted a great chart of the Las Vegas market at Notice how sales peaked mid 2005 while prices kept rising until mid 2006. Then it was night night for Vegas. As Garth keeps referring to, sales have declined in Toronto yr/yr by more than 20% for 6 months in a row now. So if the past is a potential guide, a much softer real estate market for Toronto should be on our doorstep.

#90 Brett on 11.04.10 at 9:47 am

Garth, Bill Gross, the manager of PIMCO, the big bond fund has said the bond bull is over, essentially giving a sell signal on his own fund. Cash is trash Garth, and that goes for the loonie as well….and her treasury bonds.

I wonder when institutional money is going to wake up and pour their cash into the DOW….maybe today is the day, DOW up 170- cash is trash, dont fight it, hold anything other then cash . gold going to 1400, maybe at 1450 the banksters pull the plug for a nice correction to roast the price chasers, perhaps you will have to wait for that event to load up on gold.

#91 Timing is Everything on 11.04.10 at 9:51 am

#46 nonplused said – “It was the government’s decision, and they have that prerogative, but they cannot justly stick the current shareholders with the consequences of their recklessness.”

They ‘just’ did.

#92 Devore on 11.04.10 at 10:04 am

#38 nonplused

Why would anybody buy Canadian shares now, given the precedent that it will be up to a government official to decide whether or not you are allowed to sell them in the future?

Stop being so dramatic. Sure, it was a travesty. But by the same reasoning the US stock market should be a smoking crater after what the government did to, say, GM stock and bond holders, where actual laws were broken (which was perfectly legal, because the government did it), and now GM is IPOing.

#93 Chris no longer in England on 11.04.10 at 10:18 am

Are You Kidding Me #37:

“You THINK your banking had regulation (which it clearly did not) and you THINK you’re “different,” yet you have followed the rest of the world, lagging by YEARS. It is the LAG that made you APPEAR to be healthy.”

The lag that made Canada appear to be healthy …

I moved here last year from an England where house prices were steadily eroding (it took almost a year to sell my house for 50,000 pounds less than it had been valued) and arrived in a Canada where house prices were rising. Since then a noticeable blip has occurred and prices are now going down where I live. Not all, of course, but certainly those properties that have been languishing for months, sometimes a year or more (I know, because I track the price changes).

Meanwhile, back in England, prices rallied somewhat and I was able to sell a second property for a higher price than would have been achieved last year. Again, a blip – but in the other direction.

Now today, see the Daily Mail:

Look to the lag. It’s coming.

#94 JB on 11.04.10 at 10:24 am

so beautiful.

I forgot…what was this site about, again?

#95 BDG-YYC on 11.04.10 at 10:26 am

Now there’s a line up of saavy investors if ever there was one. :-) They are retail bagholders. Thier future?

In a couple years the same line up plus friends, relatives, and sympathizers will be demonstrating in front of that building, on campus, dowtown, perhaps in front of the legislature, and around the construction site carrying signs that read: CROOKS, SCUMBAGS FEEDING ON POOR STUDENTS, WE WERE MISSLED, GOV’T DO YOUR JOB AND GIVE US $$$, INNOCENT VICTIMS, WE ARE NOT STUPID, POOR STUDENTS DESERVE A DO-OVER, CMHC BLOOD SUCKERS, WE WON’T PAY.

And of course, they won’t be signing off on taking possession, and the lawyers … ooooo the lawyers.

#96 Mike B on 11.04.10 at 10:30 am

Of Mayor Ford, I said, “a homophobic political ruffian convicted of breaking conflict-of-interest rules.” Please correct me where I erred. Second, if you cannot see the connection between voting patterns, investor and taxpayer sentiment and economic consequences, then it is indeed time you stopped reading this. Your head will explode. — Garth

Conflict of interest?? That is nothing compared to the 500 million to 1 billion blown by Smithy on e-health and its previous name with untendered bids . That is a crime. Sorry Garth… cannot detach my brain from my head like you so want your followers to. When you cross the line you loose what little cred you have with those of us who can smell a political sore looser. What.. was Smitherman going to give you a job down at city hall. What we need at City hall is an auditor. Too bad the mayor has to do that now. Not sure Ford can even clean up the mess left by Miller in his short 4 years in office.
As for reading, using the term loosely, this blog… I’d rather stick a sharp stick in my eye than waste time on this meandering book promoting rant.
Time for Garth to pull back the black curtains from the Mansion bunker and see the sunlight . Maybe some vitamin D might do you some good? … unlikely

Thanks for confirming my statement was correct. Good luck with that ‘tude. — Garth

#97 Got A Watch on 11.04.10 at 10:32 am

Garth, you are sounding like a bitter Lieberal there: “Of Mayor Ford, I said, “a homophobic political ruffian convicted of breaking conflict-of-interest rules.” ” Straight out of a Smitherman campaign ad. We get you don’t like Ford but give the guy a break. You did not add the words “but he was elected by a landslide by angry voters who are sick of too much Government spending” which is the simple truth. Thus, your criticism is entirely irrelevant to voters who don’t live left of reality in the downtown core. Popular anger trumps Lieberal talking points every time. Next up for annihilation: Dalton McDipshit and his free spending ways. And public sector unions in general.

How about some more truth: Toronto has a massive debt with a shrinking economy, and austerity is the only viable alternative now. Or total collapse, like Greece or US cities and States, where they refused to cut spending and kept lying about the true situation for years. until the problems became so large they had no other choice. Are you in favor of ever-increasing deficits forever? Keynesianism is discredited already, this is the last gasp. Austerity at all levels is the future for this decade, until the credit bubble excesses are worked out of the economy, one way or the other.

For a guy who was a “Minister of Finance” you can sure sound awfully clueless at times. There is NO alternative to austerity once the debt gets too big. If our towns, cities, Provinces and Federal Government did not have such large debt, there would be room for “stimulus spending” as Keynes originally envisioned. But he also advocated cutting Budgets and spending during ‘good times’ in order to create the fiscal room for ‘stimulus’ during the ‘bad times’. Something that our politicians have never been able to accomplish. We only “cut” when there is no other alternative, and it never lasts for long until free spending to buy votes begins again.

The usual pattern is to spend wildly until you can’t spend anymore, and then credit cards are cut off. Would you suggest that is the wise thing to do now, with massive debts and deficits at all levels? Then I guess you think Ben Bernanke knows what he is doing too. Good luck with that.

QE2 will drive massive commodity price increases, which won’t be reflected in the bold faced lies that are “CPI” or other”Government Statistics” because of “hedonics” and “substitution”. But it will be felt at street level and the grocery stores, and will fuel more voter anger at current economic policies.

Bond “yields” won’t keep pace with that in a ZIRP world. Canada is more likely to lower interest rates now than raise them. We’ll have to, as every other currency on the planet races to a debasement bottom. Carney said as much just last week. Or see the CAD $ rise to way over parity with the US $, and our exports and economy will be crushed.

Right now I can see massive inflation for the near term in things you need, unreported in “statistics”, then pervasive deflation afterwards as the bubble bursts. Think of this as the party in the Ballroom of the Titanic carrying on, after the iceberg was struck. Eventually, interest rates will rise, and then the party will truly be over, there will be no capacity to pay higher rates for ordinary citizens who are unemployed or didn’t get a raise to keep up with soaring costs in the real world.

It won’t feel deflationary to consumers. Real estate going down while groceries and gas soar is deadly toxic to a consumer economy. The fact is this is a Zimbabwe style Bubble building on a declining US $ value. A Quadrillion $ note will buy a loaf of bread, for about a month, then the economy will implode, just like Zimbabwe. Ben is a complete idiot, but that does not deter him a whit, all he is trying to do is ‘Save the Banksters’.

In this environment, better to gamble and join the party. Why ask why, if you don’t, by the time sanity starts to return, your “life savings” will buy you 1 cigarette at a native store. Holding “safe” assets won’t get you the return you need to pay the ever rising grocery bill and gas prices. Of course Government “statisticians” will recommend you just switch to cheaper things, like cat food for dinner, and those rising prices won’t be a problem for you. That will go over well with voters, or not.

You might say “I’m just talking my book here” as I am long miners and commodity trades at the moment. But I might sell them all tomorrow, and the economy will still suck. You have to separate the macro-economic direction (down, down, down) from your investment posture. I just hold my nose and carry on, it’s not like my views (or yours) carry any weight with Zimbabwe Ben. He don’t care what we think.

The inflation will be really seen in places like China and India and Korea, where they will over-heat wildly and then collapse as the US $ falls and commodity prices rise while export markets stagnate at best. I expect currency wars and trade wars to only intensify.

Every Boom carries the seeds of the next Bust, this time will be no different.

#98 Tom on 11.04.10 at 10:35 am

I really have to admire your research. The perfect link is a classic.

#99 BrianT on 11.04.10 at 10:38 am

#86Basil-actually Gold is only up $44 today on the good news.

#100 steve p on 11.04.10 at 10:40 am

the lineup for condo’s is essentially a put and call option

put down 5% on condo (buying call option)

if condo goes up sell it make money.
if condo goes up hold on to it take money out as home owners equity (buying put) so if it goes down you walk away keep home equity cash only cost is interest on refinanced amount.

if it keeps going up hold onto it

but with this put and call system you can bet on condo prices

#101 Fuzzy on 11.04.10 at 10:43 am

Don’t fight the Fed … right, just jump in and get sucked into another bubble. Right now we have a bubble in bonds, bubble in equities, bubble in commodities, bubble in emerging markets.

Sheesh, at this point, choose the lesser of evils and hope you (or your advisor) didn’t choose the most over-inflated bubble. Stupid FED and fiat money, this will end badly.

#102 realpaul on 11.04.10 at 10:43 am

Devaluating currency may cause real estate prices to rise….of course its all just zero’s and not real value…which is why commodities and such are taking off in value……most charging ahead several percent every week….bad timing if you’re cautious and stuck in fixed income…..or 100% in real estate.

#103 Moneta on 11.04.10 at 10:44 am

People in general Garth are fed up with paying taxes into a giant sink hole and seeing no end in sight.
You really think people like Ford will fix the problems?

He’s never demonstrated any sense of cohesion and suddenly he’s going to look at the big picture and bring people toegether for a win-win solution?

He’s going to cut holes in the safety net and then hand it over to us and tell us to go catch our own fish.

Our tax bills are high because of decades of living above our means, bad investments and unfunded promises. Ford is not going to save us from that.

#104 Devil's Advocate on 11.04.10 at 10:45 am

I stand behind everything I ever posted on this blog. I have always tried to provide an alternative balancing but truthfull opinion. There are readers who know my true identity and I do not want them to confuse my imposters words as those of mine. Consequently to avoid such confusion I will no longer participate in these discussions. From here on forward, any comment posted under the moniker “Devil’s Advocate” is not mine.

#105 45north on 11.04.10 at 10:45 am

BrianT: talking about Ben Bernanke: it appears he has said to China and Japan – look we don’t want to stick you with this garbage so sell it to me and I will stick it to the US

that’s what it appears

#106 dark sad person on 11.04.10 at 10:47 am

#59 US Investor on 11.04.10 at 1:57 am

As soon as all the various entities hoarding cash get a whiff of inflation they will move out of cash and bonds quickly. I think the velocity of money has the capacity to spike very quickly. Am I missing something?


I think you’re missing the fact that only a few % of the overall population has any amount of real cash to move-
The rest of the crowd-the vast majority-must have credit to spend and a job to furnish the credit and a willingness to borrow and spend it-

Banks are tightening lending standards-
People and people around them are losing their jobs-
This has changed peoples sentiment from borrow and spend-to pay down debt and save and that is what has a downward effect on Velocity-
Credit must flow first-before any spike in Velocity can occur-
This is thee most important factor-when gauging whether we continue into deflation or if we reverse and go back into inflation-
Other then Governments just guaranteeing credit or mailing everyone a check-i see no other way to spur Velocity-

#107 Chaos on 11.04.10 at 11:01 am

Well I’m so glad that we’ve all been introduced to Jennifer…

The next time we see her…

She’ll be the new premier of British Columbia.

#108 AlbertaBound on 11.04.10 at 11:03 am

Yup, Blond hair and big guns will get you a long way in sales…..

#109 Joe Q. on 11.04.10 at 11:04 am

#16 Dominic on 11.03.10 at 10:28 pm writes: “WOW. The censorship on this blog has reached obscene

Garth owns this website and pays for the hosting fees. He gets to decide what appears on it and what doesn’t, and that includes comments.

It isn’t censorship when Garth doesn’t post your comments, just as it isn’t censorship when a newspaper doesn’t print your letters to the editor.

#110 Reasonfirst on 11.04.10 at 11:11 am

Hi Garth,

Is the burning house from Kemano?,_British_Columbia

#111 Kitchener1 on 11.04.10 at 11:26 am

QE2 is pushing up the price of oil, if it hits $100, then watch out for 1.25-1.30 per liter and then the fun starts.

Had some time last night/this morning so I checked out MLS for Brampton/Durham/Barrie. Things are looking very bleak, stuff I remeber when I last checked those areas (6 weeks ago) still there and lots of price reductions. Those areas are crashing in slow-mo.

Out here in Kitchener, Ive seen a lot more for sale signs popping up, I dont track inventory numbers out here as I am not planning on buying, just seems there is a lot of inventory out there right now. Also curious as to why people would list now instead of Sept?

#112 SwampLily on 11.04.10 at 11:30 am

Putting aside all the financial reasons not to buy a crappy little condo that’s not even built yet, I agree with #29 Wealthy Renter ’cause boy is that building UGLY!

“University City” looks like a bunch of dated apartment buildings here in Victoria that were built in the 60’s and 70’s. Can’t they come up with buildings that are a little sleeker and up-to-date? Or maybe they don’t plan to really build them at all. *Trying to get The Brady Bunch theme out of my head.*

#113 Marina on 11.04.10 at 11:48 am

If you say Jennifer is pretty you probably have never seen realy beautiful women; Jennifer is just ok, aroung 35 y.o. good looking woman. That is it !
If you want to see really beautiful females go to Russia – you will be shocked how many amazing, charming, extremly pretty girls are over there. Canada has a shortage of pretty women. Indeed.

#114 jimmy on 11.04.10 at 11:52 am

I love the picture of all the students drinking coffee like it was a pub or nightclub. Ya right Starbucks really looks like that. Get over it wholesome Alberta students drink alcohol. Maybe if you buy your kids a condo they will stop drinking and will find that special someone at a Starbuck party! Yahoooo

#115 ralph on 11.04.10 at 12:01 pm

Listened to Premier Gordon Campbell’s press conference on his resignation. He plans on sticking around for awhile longer. He has resigned, but just quite not yet.

Partly, he claims his low popularity was due to a poor job of explaining the HST to the sheeple of BC. It doesn’t occur to him that perhaps they didn’t want the HST in the first place. What arrogance!

#116 Devil's Advocate on 11.04.10 at 12:03 pm

#108 Joe Q. on 11.04.10 at 11:04 am
#16 Dominic on 11.03.10 at 10:28 pm writes: “WOW. The censorship on this blog has reached obscene

Garth owns this website and pays for the hosting fees. He gets to decide what appears on it and what doesn’t, and that includes comments.

It isn’t censorship when Garth doesn’t post your comments, just as it isn’t censorship when a newspaper doesn’t print your letters to the editor.

And CREA owns the MLS and it is not anticompetitive when they will not post your For Sale by Owner upon it for anything less than the terms and conditions it’s individual members might be willing to grant collectively or individually.

Damn it… I couldn’t resist… now I’m gone. Damn this habit is hard to break.

#117 dale in van on 11.04.10 at 12:13 pm

#37 maybe we’re not kidding…

last wknd i went to ride dirtbike trails in princeton bc, a small mtn town that i’d never seen before. called hotels , all full. suprizing..finally found one, got there not a soul to be seen. 6-7 pm and EVERY room has 2 millwrights/elec etc
one worker tells me all rentable houses in town, and all the rooms in the next town are full too
Big Copper mine closed yrs ago is getting a new mill – game on.

Australia is raising rates. Again.

Try comparing prices vs the amount of resources any particular country has to sell to CHIN(DI)A.

bc goes down less is all i’m sayin’.

#118 Moneta on 11.04.10 at 12:21 pm

You did not add the words “but he was elected by a landslide by angry voters who are sick of too much Government spending” which is the simple truth
Are you kidding? People aren’t sick of government spending they just don.t want to pay for it!

#119 Joel Toronto on 11.04.10 at 12:22 pm

sales down 21 % in Toronto–toronto-home-sales-down-21-per-cent-in-october

#120 Moneta on 11.04.10 at 12:24 pm

You did not add the words “but he was elected by a landslide by angry voters who are sick of too much Government spending” which is the simple truth
There’s no free lunch. If we don’t pay taxes, they’re just going to start QE here too. Same cost, different day.

#121 Timing is Everything on 11.04.10 at 12:33 pm

#107 AlbertaBound said “Yup, Blond hair and big guns will get you a long way in sales…..”

Those are ‘bolt ons’…artifical, just like the ‘investment’ on that hi-rise chicken coop.

#122 Hoon on 11.04.10 at 12:52 pm

It’s November now. Did it happen?

#123 TorontoBull on 11.04.10 at 1:04 pm

“Toronto has a massive debt with a shrinking economy,”
Toronto does have a massive debt, but the economy is not shrinking. So this is not a fact and therefore your analysis is flawed. Just like all those economist who assume perfect competition, perfect information and then wonder why their models were wrong. BTW little known fact about Toronto region is that it has witnessed the largest % and absolute growth in population since 2000 in North America. Which leads me to another fact that population growth is positively correlated with economic growth.

#124 D.A. in G.B. on 11.04.10 at 1:05 pm

I’ve noticed a lot of for sale signs in my neighbourhood. Sales seem to have disappeared.

It doesnt seem like scotia bank is to concerned.

“Canada’s economic advantages” bla bla bla

Good write up about the report over here

There are only a few good sources speaking the truth. Thanks Garth.

#125 dradak1 on 11.04.10 at 1:14 pm

#21 Dominic on 11.03.10 at 10:41 pm

” Wrong on Joey Lebone, On Garth and Loser.

The rest? YES.”

You just proof that Garth was right for “Loser” too. :-)

#126 TS on 11.04.10 at 1:25 pm

Great link to a CBC expose on the dangers of buying a foreclosure in the US:

#127 Devil's Advocate on 11.04.10 at 1:34 pm

116 – Fake Devil’s Advocate…

Damn it… I couldn’t resist… now I’m gone. Damn this habit is hard to break.

Stop trying to make me look like an idiot! I can stop if I want to, it’s not that hard. You seem to be consumed with trying to get all the readers on this blog to think I’m just some blow hard. I’m not a blow hard, blow hard.

I barely got any sleep last night due to the frustration you’ve caused me. I am dearly attached to this moniker of bringing objectivity to this blog.

You had the nerve of trying to discredit the advice I gave to Mickey the Realtor. How dare you? I have always been in complete agreement with what Garth has to say on this blog.

If we’d only all remember what John Lennon said about peace we wouldn’t have all these problems getting along.

I also stand completely behind any of my public trashing of posters on this blog. I admit, sometimes I did apologize for my behaviour, as recently as a few weeks ago, but they deserved it. I mean…that guy pretending like he was all knowledgeable and some big shot. He was just hiding behind a facade, unlike me. I don’t hide behind a facade, I just lay it all out there for people to think about.

And this stuff about me quitting this blog. I know I’ve said muliple times over the last few days that I was going to quit this blog. Those were just words. Surely you guys don’t have a problem with someone who doesn’t say what they mean or mean what they say?

I mean, why should my flip flopping on subjects have any bearing on how someone views the rest of my posts? Cut a guy some slack!!

Like I said regarding my poor behaviour a couple weeks ago…if I get out of line, make sure you guys hold me to my new commitment. This also goes for me quitting this blog. If I come back again after publicly stating multiple times the exact opposite, hold my feet to the fire.

Remember the gipper!

#128 Fish Bait on 11.04.10 at 1:36 pm

Devil’s Advocate,

In the words of Daffy Duck – “what a moroon, what a nin- cow-poop”

#129 Davis on 11.04.10 at 1:59 pm

Garth, you make some very good points… but look at Jennifer, she’s hawt!!

#130 Got A Watch on 11.04.10 at 2:01 pm

Moneta – huh? I don’t see your point. Rob Ford only had 1 campaign slogan and 1 theme “End the Gravy Train!”. Even some leftists I saw on CBC grudgingly admitted the City had maybe spent just a liiiiittle too much money. For them, that was like saying Marx was all wrong, it must have pained them that much.

I doubt voters are as stupid as you think they are. Anyone who manages their own household finances knows you can’t go on spending way beyond your income forever. Only leftists seem to believe that myth. That’s why they never discuss where “tax dollars” come from, except to call for higher taxes on “business”. Like businesses exist in a parallel universe, where they can just happily pay ever higher taxes forever with no repercussions.

There is only 1 taxpayer, and where I sit, they are angry about Government spending too much and not wisely. The NDP and the left can go on about “fairness” or “social equity” or whatever noise they want to use as cover for a nanny state, but it simply can’t be afforded anymore. Period. Even Sweden learned that lesson years ago, only clueless leftists in Canada did not. Or how about the UK?

Does a Government in your universe ever cut spending because they have to (ie they spent too much in previous years)? Perhaps you have never heard of Greece and their rapidly vanishing “economy”? They aren’t cutting spending because they think “its’ the right thing to do!”. They are cutting because if they don’t things can only get worse, and even with cutting, it will still get worse for a while. But their economy cannot “recover” until the excesses of the past are worked out of the system, whether politicians like it, or not. There is no cure to too much debt but reducing the debt. Or refuse to pay the “Senior Bond holders” and go Iceland (which is really the right thing to do, for ordinary citizens, not Banksters).

This is the inevitable end result of decades of reckless spending. The “credit bubble” has burst, and it takes 10-20 years to repair the damage. Whether voters like it or not. The fact that Toronto, home to so many smug leftists (who likely work for Governments, or depend on Government $ in some way), was able to reject the usual Liberal tax and spend agenda is significant to me. Would not have happened even 2 years ago. The “downtown elites” are wildly out of touch with reality.

This sea change represents the “social mood” shift that is a necessary part of the generational change that will see previous “normal policies” turned upside down and rejected by the public. A process that has years to run, and whose effects have hardly been felt in Ontario yet. It is the Kondratieff Wave in action, and surfs up. The wheel of history turns, whether we want it to or not.

Austerity is just a program for next year, so far. Wait till the City, Province and Federal levels all cut budgets sharply at the same time. Yes, the economy will contract, if you can call a “Sovietized” mess wholly dependent on ever rising taxes a viable economy. Look what happened to the Soviet Union in the end – collapse. Leftists and NDP will take to the streets, just like in Greece and France. And their cries will be ignored, because they have to be. That is the cold reality of it all. Yell and protest all you want, it does not matter a whit when the credit cards are cut off.

Or maybe we’ll elect an NDP Government. Remember Bob Rae and then David Peterson – the geniuses who wanted to increase Government spending heavily going into a recession. That worked out so well. Ok, I lied. We got Mike Harris as a result, and he cut hugely, which saved the economy. Well, soon we’ll look back on the Harris years and realize things were pretty good back then compared to today. I LOL when I see some leftists complain about Harris, as they still do today. When he was elected, deficits were out of control courtesy of those same Keynesian policies promoted by idiot leftists. But you never see them admit they were the ones who racked up the deficit that Harris had to cut. Oh no, no truth allowed in that tent.

Toronto Bull – LOL. I know numerous businessman who do actual business in Toronto, and they all report their end of the economy is shrinking. If Government spending is the economy, well then it hasn’t shrunk yet, for Government workers and those dependent on them. In the real world, the one you don’t seem to visit very often, things are bad and getting worse. Welfare rolls are way up, food banks are under pressure with record demand etc etc. Don’t let any inconvenient facts get in your way now.

Government statistics are rear facing, they lag reality. At street level, the economy in Ontario has been contracting for about 3 years or more that I can see. The real estate bubble was the last bubble, there are no more to be blown. Stock markets could go up to infinity, that won’t create any jobs on Main St.

Toronto is still located in Ontario, where things are about to take a marked turn for the worse in all regions. It’s called ‘Austerity’ and it’s coming to a theater near you. Get back to me in a year about that “growing economy”, will ya? You sound like a Government worker.


Personally, I have to thank Banana Ben. His idiocy is good for my net worth. Carry on Ben. Long digital ink! QE to infinity, and beyond! We boldly go where no debt and deficit has gone before! Yayuss!

But his abject stupidity will be bad for all of us in the end. I’m just trying to survive, so I hold my nose and trade with the flow. I suggest you do the same.

#131 mid-Ontario on 11.04.10 at 2:11 pm

Todays action in the markets just prove that inflation is on the way. Oil up to over $85 with everything else following -wheat, grain,corn,sugar,coffee. You cannot print money forever (QE2) without consequences. The FED like Garth thinks deflation is the big fear. QE will ruin the world money markets. Inflation will follow QE in 1-2 years.

When real inflation hits, taxes, service costs, food,energy costs and all toys will move upwards squeezing merciless all Greater Fools and their overpriced mcMansions. Eat or have a roof over your head – what a choice.

The drop in housing prices will slow new housing to a crawl and put people on the street. The spiral will continue downward as we follow the US into an economic era that none of us have lived through.

Garth is bang on about future housing prices. I think that it will not be just due to downsizing boombers, higher interest rates or slowing immigration.

Rather, I believe that inflation will stop this country cold in its tracks when it arrives.

#132 Mike B on 11.04.10 at 2:16 pm

Thanks for confirming my statement was correct. Good luck with that ‘tude. — Garth

Nope counsellor no agreement with your statement as I cannot find anything to substantiate your claim HOWEVER plenty of info regarding Smitherman and how he dropped the ball on his watch. But alas I am sure facts don’t always matter here DUDE !

Why would anyone vote for Smitherman? — Garth

#133 Prof ANON on 11.04.10 at 2:33 pm

@ #133 Mike B

Check out the criticism and controversy section. All of the cited incidents are public and confirmable. Sounds like a homophobic political ruffian to me…

#134 Mickey the Realtor on 11.04.10 at 2:56 pm

#104 Devil’s Advocate

Don’t be such a poopy bum DA, Mickey needs you now more then ever, I just printed my biz cards today and setup a little workstation in the office. Now I just need customers, how do I do it? I had some ideas, I’m thinking of setting up in a busy street with a bullhorn and just keep pumping RE, I think with all the sheep walking around I’m pretty much guaranteed a few customers out of it, what do you think DA?

#135 rory on 11.04.10 at 2:58 pm

I have to go back to my old respective standby position, and believe it or not, it is about fairness.

Cut all .gov, at all levels, salaries and pensions by 20%. No one gets laid off, we (the taxpayers) save a ton of money, we get back to more affordable .gov. –i.e. less deficit. Plus the pain is spread over millions of people (not just some) …of course, minimums will be applied to the less fortunate.

Public and private salaries become more closely aligned – less inequality in the system which is good and fair.

As always if anyone in the .gov complains they can move anywhere in the world + the .gov people can always check out the private sector …like maybe 3 would. Of, course IMO.

My opinion is getting closer to maybe being real. Check out the British gov – they are just going to fire 500K …take your pick.

Yes, house prices and a lot of other things will fall drastically but the rebalance is needed. The saying ‘no pain no gain’ really does apply here.

All here talk but the call to any kind of action/solution is really muted.

#136 CREA Circle Jerk on 11.04.10 at 3:23 pm

Good Gawd! Silver is up over 6.5% at $26.42/oz and gold’s up $44.50! Copper & platinum are up 3.3%; soybeans up 3%, wheat 3.4%, corn 1.55%, although live cattle is flat. The stock market is going gaga.

Just insane how anybody thinks we’re in a deflationary environment right now. As long as things get priced in USD, even if end demand is slack, prices in ‘need’ good will rise. Banana Ben is also doing a hell of a fine job exporting inflation, which will increase import costs.

It’s just insane what’s going on right now. Real estate may not fall nominally in price all that much, but will lag drastically in price over ‘need’ commodities. And RE will get CRUSHED when interest rates eventually get forced higher; crushed as real wages lag inflation by a hefty degree. If I had money to invest, it wouldn’t be RE although as a forced savings mechanism it may not be all that bad – especially mortgage or near mortgage free.

There is no correlation between precious metals prices and residential real estate. — Garth

#137 TorontoBull on 11.04.10 at 3:35 pm

your argument of “a friend of a friend of mine” is quite strong. I was ONLY pointing to the FACT that the Toronto economy IS NOT

#138 TorontoBull on 11.04.10 at 3:36 pm

(continued from previous post) That Toronto economy is Not shrinking.
Sorry for the 2 responses

#139 Eviee1973 on 11.04.10 at 4:31 pm

When I left Waterloo, Ontario after a decade there in 2007, there was one of these student condo complexes to be developed on King St between University Ave and Columbia, marketed to parents as an investment. Any tri city people able to say what has gone on with this development?

#140 BrianT on 11.04.10 at 4:32 pm

It is hard to say for sure if Ben’s mandate is to destroy the US economy, but if it is he is very effective at it-even without the foreclosure fraud mess I wouldn’t be too eager to jump on the RE of places like Phoenix because if you love those places you might be able to get homes for literally a song once crude oil rolls past $150 a barrel thanks to Uncle Ben.

#141 Sam on 11.04.10 at 4:50 pm

Why would anyone vote for Smitherman? — Garth

Confused him with Smithers from the Simpsons?

#142 Sam on 11.04.10 at 4:53 pm

Re: Ruffian Rob Ford

What’s the technical difference between ruffian and hooligan?


In other words, what makes Ford a ruffian, not a thuggish redneck prone to hooliganism?

I’d appreciate knowing.

#143 AlbertaBound on 11.04.10 at 4:55 pm

I live in Calgary and am currently doing my MBA at UofC, where these condos are being built. I think there is definitely a demand for close proximity apartments. I’m sure 85% of the buyers will be in it to rent to students…or they are being bought by people with a few hundred to spare who want something for their kids when they are ready to go to University.

Either way, there is LOTS of $$$ in Cowtown.

#144 VICTORIA TEA PARTY on 11.04.10 at 5:24 pm

Consequences indeed:

When you spend OPM (other peoples’ money), which is what QE2 is all about down at the Fed, while fear awaits just around the corner, all Hell breaks loose, on Main Street, in the greed camp.

Here’s the story of today’s markets:

–the Dow way up by over 200 points;

–commodities up to crazy levels. Gold, for example, was up $55.00 US to nearly $1,400.00 an ounce. Silver was closing in on $26.00!;

–US bond yields down because prices are bidding up;

–currencies. All up against the Greenback including the the Loonie which is overpar.

In other words, the Federal Reserve’s decision to unleash $600-billion of hard cold cash over the next months wrought today’s market outcome.

Many made money, but, there is NO GOOD NEWS HERE, FOLKS. Why? Inflation down the road is why; too many confabulated bucks chasing too few goods and services, because people are BROKE and can’t afford to buy stuff right now.

So, with all that in the background, Garth gives us the privilege of letting us view the real estate insanity at two condo tower projects in Calgary.

It’s especially insane given who’s apparently buying these largely unbuilt concrete boxes in the sky: university students financed by their parents, who are probably also university grads!

As a taxpayer, I WANT MY MONEY BACK from these financial illiterates!!

Just what does academe produce these days?

–grads from such courses as how to feel good at a latte cafe in summer?

–treating arthritic Blackberry fingers?

–flying cattle-class to sunny Mexico for Christmas because the seats are cheap and peanuts delicious?

–getting a PhD because of low self-esteem factors?

What the Hell!?

They’re lining up to buy their dopey kids stupid condos that you can’t swing a dead cat in, for a price that is out of all proportion to reality in a basically collapsing real estate market and economy!

These are not Greater Fools; they’re the Greatest Idiots!

Hope none of the little darlings are taking diaper-change courses for busted old geezers like me! Yikes! Where’s MY latte? My self-esteem?

#145 Foggy on 11.04.10 at 5:36 pm

These condo offerings are all bait-and-switch. People fixate on the 160K price, do some rudimentary math (25 yr @5% =$930/month) maybe and then go stand in line. There are only 18 of these “studios” available so by the time you’re at the table they’re sold or so small they’re impractical. So let’s look at the one bedroom, honey. Hmm it’s a little more than we budgeted but….oh let’s go for it. We’ll manage.
Besides it’s a great investment…

#146 timbo on 11.04.10 at 6:31 pm

#68, David B,

Are you trying to say that corporate interest trumps voters in a democracy?

look at the date from bnn. People who lost money in the stock were not listening to what was going on.

This was election material, the provincial and federal gov knew what would happen if the deal was approved.

keeping industries local is the way to go, China and Japan can tell you that. They after all have all the money.

#147 Evangeline on 11.04.10 at 6:40 pm

#97 ((will recommend you just switch to cheaper things, like cat food ))

geez have you checked out the price of catfood lately?

#148 David B on 11.04.10 at 7:39 pm

It appears not is all well in Vancouver with this news, perhaps another reason Campbell quit.

Plans for selling the Olympic village’s 480 empty condos have ground to a halt because the City of Vancouver is refusing to approve a new marketing plan with drastically reduced prices until the developer proves it can make up the $100-million to $200-million loss that could result.

#149 Basil Fawlty on 11.04.10 at 8:32 pm

At the same time that the economy is slowing and hence government tax revenues are less, governments federally and provincially are cutting taxes. In 2006 the federal corporate tax rate was 22.12%, which generated $33B. In 2012 the rate will be 15%, which will turn the $33B into $22.3B, all else being equal.
My point is there is more to the story than just laying off public servants. As another example, why is there no conversation about withdrawing from Afghanistan instead of federal layoffs. It always seems that as soon as the economy gets bad the civil servants are to blame.

#150 Burnaby Boy on 11.04.10 at 8:37 pm

Redneck? This is a RE site so keep your racist crap to yourself.

#151 Utopia on 11.04.10 at 8:57 pm

#38 nonplused wrote…:

“All of the points Garth raises today are worthy of raising the hair on your neck, but I am particularly nonplused by the BHP – Potash Corp – Government announcement story.

We live in a Socialist-Totalitarian-Democracy”.

Hi nonplused,

There was no conspiracy of insiders at Potash Corp, the unions, government insiders etc that squashed the BHP Billiton deal yesterday.

There was in fact overwhelming support from Saskatchewan residents, both major elected parties in that Province, the business community along with all the Western Premiers plus a multitude of supportive voices in Ottawa itself.

Together, they overwhelmingly supported the Brad Wall government and his endorsement to reject the hostile takeover bid by BHP Billiton. It was a good decision and I too stand with the Conservative Government for having the courage to reject what is in fact the largest takeover bid in Canadian history.

Canadian history is filled with examples of foreign takeovers of our industries and resources and the dissapointment and broken promises that follow these events. They have in the past virtually always just been rubber stamp events. This situation is different though and happily all the good minds got together andd agreed regardless of political stripe. The have acted in the Nations best interests and that is progress.

Perhaps you are a shareholder of Potash Corp and feel frustrated now but what is at issue here is of great public concern and our policymakers have recognized how the world is changing, how resource rights and commodities are being snapped up across the globe and how Canadian interests can be negatively impacted by the trends that are now shaping the markets.

I was relieved as well to hear the Prime Minister say today that he believed a review of the Legislative Acts surrounding Canadian resources and foreign ownership is in need of being amended and updated. All the Provinces are on board and supportive of policy changes that enhance and strengthen control over domestic resources.

This was a terrific day really. I was over the moon.

#152 Utopia on 11.04.10 at 9:27 pm

#66 Leith regarding real estate and GDP ratios…….

Nice work Leith.

#153 timbo on 11.04.10 at 9:29 pm

#150 , basil

It always seems that as soon as the economy gets bad the civil servants are to blame.

good point,

deflection about the true fault of a downturn is always in the cards. Unions, Ottawa and the small guy are always villains. Privatize everything, reduce taxes and remove regulations and all will be well.

Now where is that local wal-mart that adds so much wealth to our local community.

#154 Sam on 11.04.10 at 9:38 pm

144 AlbertaBound on 11.04.10 at 4:55 pm

Either way, there is LOTS of $$$ in Cowtown.
Do you mean there’s still credit for some; I doubt that there’s a lot of real ca$$$$h.

CANNOT be much in Calgary – all of it (ca$$$$h) is in Chinese suitcases, headed for Vancouver condo sales offices & bank branches to pay off the balances on $10MILLION home mortgages

#155 Sam on 11.04.10 at 10:49 pm

that thing about Olympic village suites not selling because of the po’ folk … doesn’t hold water

If that were a good, valid reason, Toronto’s “one Cole” condos in the old Regent Park area would still be empty instead of almost sold out.

So … back to the drawing board, Van RE pumpers. PLEASE try, try in vain to think up excuses that comport to reality just a TEENY TINY BIT.

#156 Patz on 11.04.10 at 10:50 pm

#38 nonplused, spoken like a true comprador and old cold warrior. Socialist? Yeah, if you’re a car corp or bank corp.

#157 Brynn on 11.05.10 at 2:11 am

sorry charlies,

supply and demand. There is still demand as evidenced by the Calgary thing…

As you know Garth, we were kicked out of the real estate market for being fools and SELLING…townhouses are now going for the price we sold our single family home for…the market is going nowhere but up.
sorry rick, anyone who cant sell their package has a substandard piece of real estate…anything decent sells..

#158 Slice on 11.05.10 at 9:10 am

119 Joel Toronto on 11.04.10 at 12:22 pm
sales down 21 % in Toronto–toronto-home-sales-down-21-per-cent-in-october

Notice how the Star blocked comments on thsi story.

#159 Slice on 11.05.10 at 9:11 am

119 Joel Toronto on 11.04.10 at 12:22 pm
sales down 21 % in Toronto–toronto-home-sales-down-21-per-cent-in-october

Notice how the Star blocked comments on this story.

#160 YEG on 11.05.10 at 10:19 am


The problem I see is you delved into the world of being a landlord without really knowing what you were doing.

First off it is a long term play, you don’t enter into it unless you are prepared to be in it for the long haul cause the benefits come in having someone pay for the property for you which is not going to happen in one year.

Secondly, you never ever buy a rental property unless you have reasonable monthly positive cash flow. That positive cash flow will allow you to ride out the hard times when rents drop, hopefully not leaving you in a negative cash flow situation when you are forced to drop your rents; but even if it does in dire situations, hopefully it is minimal and short term.

Lastly, you don’t worry about the “lost” equity since it isn’t lost until you sell. And if you follow my point number one, in your particular case if you were truly in it for the long term who knows what the property would be worth if you sold 10-15 years later. Also, over the long term, you likely would have had enough of the property paid for by your rental income that it shouldn’t matter. Any appreciation in the value of the property is just gravy.

Obviously, everyone’s situation is different. But I think people delve into buying “rental” properties because it is “the thing to do” without really knowing what they are doing or without having the stomach to withstand the ups and downs.

I’m no expert, but these are points I learned before I bought my first rental.

#161 DARLENE on 11.05.10 at 10:31 am

Eviee1973 on 11.04.10 at 4:31 pm
When I left Waterloo, Ontario after a decade there in 2007, there was one of these student condo complexes to be developed on King St between University Ave and Columbia, marketed to parents as an investment. Any tri city people able to say what has gone on with this development?
Drove past last night and it still not quite completed not that I was looking that hard. There’s another one supposed to be started on the corner of King and Columbia. I did a ton of work in student housing this year. I couldn’t believe the amount of units available. All I can say is that if someone is considering buying a unit to rent it out, they better do their due diligence. There was a ton of new student units that were available this September.

#162 Slack-jawed on 11.05.10 at 3:55 pm

I’m in love.