Shocks

On a foggy afternoon when the stock market shed 200 points, gold lost forty bucks, oil swooned and the loonie crashed, I sat looking at the toes of my cowboy boots. Definitely, I thought, I shoulda polished them that morning.

Normally some dust, dog hair, scuffs and a little dried blood from the slight skirmish with that realtor dude would not have bothered me. But here I was sitting on a raised stage in a fancy Toronto waterfront hotel with a microphone nailed to me and 300 people watching. Being professional accountants they were, of course, noticing my boots. They’re like that.

The event was a sort of debate involving me and a senior economist from Scotiabank, taking place at an annual convention of bean counters. She, Mary Webb, is a very decent and sincere person as well as being a respected academic, analyst and forecaster. But she works for a bank, and therefore was busy hoovering sunshine up the rear ends of everyone in the room. Apparently it’s part of her job description.

Mary told the gang that Canadian consumers have overspent, but are not in too bad a shape. She pointed to a slowdown in housing activity as a sign debt reduction was being taken seriously. She praised our banks for their prudent lending, which prevented a US-style real estate meltdown. And she predicted a ‘slow’ recovery for a couple of years, and then a rebound in which everyone will get a pony.

Well, as you might imagine, I disagreed. ‘Canadian households,’ I helpfully concluded, ‘are so screwed.’

Regular readers know why, of course. There are four things that will not change in the next few years – higher taxes, higher rates, Baby Boomer financial panic and fat household debt. Together they ensure we’ll have a no-growth economy with structural unemployment, less consumer spending and house angst. Meanwhile a high dollar will collar exports as the USA goes through a political tussle ensuring their economy sucks until 2013.

Now if you expect these things and work around them, you can do quite well. For those with a balanced portfolio there’ll be a sloshing of money between equities and bonds that will result in a fine ka-ching. But for those couples and families with lots of debt (especially variable) and the bulk of their equity in real estate, well, plan on getting a second job.

If you need a glimpse of how the best-laid little scenarios can blow up, just reflect on Friday’s markets. The mere rumour of an interest rate increase in China was enough to have gold bugs reaching for their Depends, Canadian resource stocks tumbling, commodities like copper tanking and bond yields flying higher. But that wasn’t the only crisis du jour. Just days after telling the world everything was cool, Ireland is choking. A bond default there seems a lot more credible, and that has rekindled fears the rest of the PIIGS (Portugal, Italy, Greece and Spain) might be porking right behind.

Suddenly the US dollar didn’t look so ugly.

This is the world we now inherit. Steeped in debt, badly mismanaged, full of people with unrealistic expectations, where nations are scrambling to shield their oft-rapacious and delusional citizens from an inevitable reality. Count Canada among them.

There’s no way the federal government in Ottawa will, as it vows, balance the books by 2015. There’s no way we can be shielded from a higher GST, or the economic slowdown and housing plop that will accompany it. There’s no credibility to Mary Webb’s earnest but addled forecasts for slow but positive growth. And anyone who doesn’t prepare for more shocks – China, Ireland, Al Qaeda or Sarah Palin – deserves no slack.

As I sat down after telling the accountants such things, Mary leaned over. ‘So,’ she snarled a little, ‘do you rent?’

What a relief. I thought she’d seen the blood.

239 comments ↓

#1 Chris L. on 11.12.10 at 10:24 pm

Did she assume you otherwise didn’t have a balanced portfolio?

Maybe she doesn’t. — Garth

#2 canali on 11.12.10 at 10:36 pm

love it: just got this from ‘whispers from the edge of the rainforest site’, a link to an article from Fortune Magazine:
”Canada’s Coming House Bust”
http://money.cnn.com/2010/11/12/real_estate/canada_housing_bust.fortune/?section=magazines_fortune

#3 mel on 11.12.10 at 10:39 pm

I have stopped listening to the ‘Experts’ long time ago. Remember, these are the same people who did not see the Banking crisis!

If that is their tract record, should we not trash all of them into the recycle bin?

#4 Hosehead on 11.12.10 at 11:04 pm

“…money between equities and bonds…”

Garth I’m reading in some other places talk of a “bond bubble”. Is there any truth in that? A global bond fund mutual fund I have for the kids’ RESP recently took a hit following QE2. Is this a bump in the road so hang on or is a bond bubble a brewing and time to bail?

There is no bond bubble, however prices will fluctuate according to rates and investor demand. And why would you have that in an RESP unless the kids are about ready to be funded? — Garth

#5 kevin on 11.12.10 at 11:10 pm

His reply was ” Saskatoons growing economy will lead to more house price appreciation. We have better banking. We don’t have subprime.”
My response was” it wasn’t the economy that fueled house price appreciation. Rather it was house price appreciation that fueled the economy.”

Mind set of the average home owner
http://saskatoonhousingbubble.blogstop.com

#6 EJ on 11.12.10 at 11:10 pm

I’ve always wondered which of these paid shills actually believe what they tout out to the public, or if they know they’re leading lambs to the slaughter. I’m sure it’s a mix, but it’s nice to know who’s incompetent and who’s dishonest.

#7 Buyright on 11.12.10 at 11:13 pm

What happened to free Mkts

Listen to the comment at 8.10min
http://www.cnbc.com/id/15840232?video=1633683859&play=1

Listen to comment at 11.35min
http://www.cnbc.com/id/15840232?video=1634228390&play=1

Stock up on canned foods and Depends
This will not end well

#8 Basil Fawlty on 11.12.10 at 11:19 pm

I thought bonds were the biggest bubble in history, given unprecedented risk in debt levels and the lowest interest rates in history, but what do I know?
The volatility in gold is just beginning, it’s going to be a wild ride with QE and the resulting currency induced cost push inflation. Funny this was not on the agenda at the G20, as it’s only the worlds biggest financial issue.

#9 Aussie Roy on 11.12.10 at 11:20 pm

At least you get invited Garth. For a laugh my partner and I attended a property seminar last night. It was the usual buy a few houses and get rich scheme. With lovely slides showing capital growth over the past 10 years and even a happy boomer who is now a wealthy fella, on paper anyway. There were however some prickly questions asked but some non believers, good questions the type of questions you would expect from someone using more than 10% of their brain power. Of course these questions were answered with babble and finished with insults. At this point a number of us stood up and walked out only to be told “there goes some people that will never have the guts to do anything about their future”. On the drive home I reflected on the evening, such delusion, such arrogance, such stupidity. If a sane person ever needed proof that we are indeed in the midst of a housing frenzy there it was I thought. Of course all this great advice is given without any kind thought about its accuracy, just like Canada supply financial info about stocks bonds etc and you will be held accountable but its a free lunch for the RE pumpers.

Aussie Update

http://www.brisbanetimes.com.au/queensland/brisbane-property-sales-in-limbo-20101112-17qxa.html

http://www.smh.com.au/business/tense-nervous-mortgaged-20101112-17r3j.html

http://www.news.com.au/money/property/expect-the-worst-property-auctions-slump/story-e6frfmd0-1225952955621

Irish need to find a few 4 leaf clovers.
http://www.smh.com.au/world/fear-palpable-as-irish-brace-for-worse-pain-to-come-20101112-17r88.html

#10 Taxpayer like everyone else on 11.12.10 at 11:28 pm

For Andrew @78 last blog

“Q: Can you leverage your TFSA assets as collateral
against a loan? I don’t see why not… Is this another
benefit for a TFSA vs. RRSPs?

No. — Garth”

From Pape, page 188 of his TFSA guide:

“Yes. This is one of the major differences between TFSA
and RRSPs. The assets within a TFSA may be pledged as collateral against a loan. However, by doing so you may find that you will be prohibited from making waithdrawals as long as the loan is outstanding”.

How is pledging TFSA assets as loan collateral the same as leveraging them? — Garth

#11 JB on 11.12.10 at 11:29 pm

Garth, I have an RRSP for my one-year old.

It is in a Canadian Dividend Fund.
Is this a good place to put it?

Sorry, no RRSPs for babies. If you mean RESP, the answer is no. — Garth

#12 JB on 11.12.10 at 11:34 pm

I meant to type RESP.

#13 Basil Fawlty on 11.12.10 at 11:40 pm

This is hilarious and frightening at the same time. QE explained.

http://www.youtube.com/watch?v=PTUY16CkS-k&feature=player_embedded

#14 Genghis on 11.12.10 at 11:45 pm

Here is a brief (3 minutes) excerpt from an interview with legendary short seller James Chanos done earlier this year. Commentary on the Chinese economy and the commodities boom.

Title: China’s treadmill to hell.

http://money.cnn.com/video/news/2010/11/12/n_jim_chanos_china.fortune/

He says that 60% of Chinese GDP is construction and real estate, which is unheard of. He talks of the direct connection between this and the commodities boom and recent property booms in Brazil, Australia and Canada.

Chanos was one of the first to point out that Enron’s profits were in fact fiction. He made a fortune about ten years ago by shorting the company.

#15 mid-Ontario on 11.12.10 at 11:47 pm

Garth
How many times do we have to see this over and over before we understand what goes on with the markets.

The G20 was a total failure with the only thing agreed to being that they would meet again next year.

The reaction is as expected. The market computer algorithms kick in and the sell begins and down goes everything picking up stop losses as weak hands fold. Not surprised that it happened on a Friday.

Next time I post (in a week or less), gold will be back up well over $1400 on its way to who knows where.Oil will be pushing $100 and there will be concern in the MSM over …pick a Country…Ireland, Spain maybe…Greece,Italy. The MSM will pick one flavour and away we go.

Meanwhile in good old Ontario, no-one seems to care that premier dad has the biggest deficit ever and his 5 year plan to make it better is a total crock. I hope that he is around to try and triple tuition fees as Britain is proposing.The MSM don’t care, your Greater fools don’t seem to care. Can ignorance and apathy really be so pervasive?

There is very little apparent worry of you saying..”‘Canadian households,’… ‘are so screwed.’
Any reaction from the 300?

Some dawgs understand better than most but I think that the QE+ in the USA and the failure of this G20 to get the USA to act responsibly will bring a rapid change to the standard of living HERE for the unprepared.

The US dollar is doomed my friend.
It was a great ride while it lasted.

#16 RR on 11.12.10 at 11:48 pm

Garth

What is your opinion on RRSP market fund.
Would it be possible to have you sit with us and discuss our financial situation? We do not mind paying for your services. What should we do? Thanks in advance.

#17 Jeff Smith on 11.12.10 at 11:49 pm

Sounds like mary is my type of gal.

#18 Contrarian Canuck on 11.12.10 at 11:58 pm

Ireland seeks EU aid. How did their boom turn to such a major bust? The same way ours will: Too much debt and a reliance on consumer spending for economic growth.

Interesting discussion on the parallels between Ireland and Canada.

http://financialinsights.wordpress.com/2010/11/13/lessons-from-the-now-toothless-celtic-tiger/

#19 bridgepigeon on 11.12.10 at 11:58 pm

I’m sure it was self defense with that realtor dude. You could’ve had a battle of wits with him, but he was probably unarmed…

#20 Ricoh Swahvay on 11.13.10 at 12:22 am

Found this interesting piece in the Lethbridge Herald on investing: http://www.lethbridgeherald.com/2010110847528/local-news/author-warns-of-fraud-schemes-11810.html

#21 Nostradamus Le Mad Vlad on 11.13.10 at 12:23 am


“. . . and therefore was busy hoovering sunshine up the rear ends of everyone in the room. Apparently it’s part of her job description.” — If, by some miracle (The Gods Really Must Be Out To Lunch On This One), everything turns out just hunky-dory in Jan., then the lady called it right. Brownie points for her.

But what if the ship starts sinking a little quicker? Does she get blamed for making a bad call?

“. . . plan on getting a second job.” — Where? Service sector which pays min. wage?

“. . . Canadian resource stocks tumbling, commodities like copper tanking . . .” — Sounds quite juicy for investing in, when the share prices have swooned!

Curious about Ireland. The first vote was a clear rejection of Sarkozy’s plans, so he made them re-do it. No doubt there would have been plenty of spoiled ballots and cheating, but the people — NOT sheeple — liked their independence and wanted to keep it that way. Politicos suck.
*
TBL and Bill (Peterborough) — This kinda goes with what you’ve been saying, and what a lot of us know — economic collapse + FEMA camps = martial law.

80% of Las Vegas homeowners are underwater.

QE2 — Not just your average peanut butter and jelly sandwich. “It’s about saving the country from Greek-like austerity measures necessitated by a burgeoning federal debt.”

Another gold bug says ditch the buck and go to a new standard.

Gas Glut and prices keep rising.

Very telling. Canada is probably not much better.

Bats Humans are not the only ones!

9:43 clip Evidently, none of us are part of the fiscal twerps. Thank hell. I’m heading off to heaven!

Actually, it’s closer to a one trillion dollar shortfall for all pensions. Plus all unfunded liabilities and no social security. America is in great shape!

Economic Warfare on sheeples.

Beck + Soros “. . . as a “puppet master” who is “notorious for collapsing economies and regimes all around the world” and whose “next target” is the United States.” Same as he did to the UK in the 1990s, when he shorted the pound, made a net billion and sent Britain tumbling.

About time the m$m realizes the basics of life.

#22 Jon B on 11.13.10 at 12:24 am

So much uncertainty with currencies, so much volitility with stocks, so much debt everywhere. What a wonderful time to hold cash. Sweet sweet cash.

#23 Paully on 11.13.10 at 12:27 am

RE # 11: So where should someone allocate RESP money for a one-year-old?

#24 timbo2 on 11.13.10 at 12:29 am

Can I use the pony as collateral to secure investment funds ?

#25 TheBestPlaceOnEarth on 11.13.10 at 12:29 am

That Fortune magazine article is hilarious. Love the picture of Vancouver – IT’s TOUGH and BULLETPROOF. Check out those yachts it truly is the pot of gold at the end of the rainbow. The Fortune writer is another wannabe owner of The Best. Anyone watching the markets these days? Inflation coming my friends, gold is going to knock one out of the park!! $1600 next stop
******
Fortune Magazine:
”Canada’s Coming House Bust”
http://money.cnn.com/2010/11/12/real_estate/canada_housing_bust.fortune/?section=magazines_fortune

#26 nonplused on 11.13.10 at 12:30 am

Very brave of you to get in a ring with a bankster!

How are we supposed to get a second job?

I think I have solved the dilemma of why housing prices are not declining while sales appear to be headed to zero. It even seems simple. Most people listing right now cannot sell for much less than asking price. Once you deduct realty fees, they are pretty close to what they owe. Either that or they are retiring, and the resale price was the entire retirement plan, so they view any possible reduction in price as a step towards further impoverishment in said retirement. (I even had a realtor a nasty-gram once from the potential seller when I put in a below list offer, to the affect he was trying to ruin their retirement because he hated them. But the seller and my realtor at that time had a history. However it does give an insight into the retirement plans of many folks: Sell the house high.)

The boomer retirement plan is as follows:

1. Screw GenX and down with CPP deductions to provide a base level income for boomers that GenX and down knows they will never receive even though they have to pay in. For people earning less than $30,000 a year this is in effect an 8% flat tax once you count both employee and employer “contributions”.

2. Screw GenX and down with high house prices and high asset prices through low interest rates when boomers want to sell and move to cash. Let the young suffer when interest rates invariably rise in the future.

3. Screw GenX and down with higher tax rates to fund health care, social services and the like once the boomers income has declined into the twilight years and they don’t show up very high on the progressive tax system. Don’t get me wrong, the boomers paid what I consider to be usury, and the government squandered much of the money on things like the gun registry (keeping the honest folks honest while doing nothing about criminals with guns, but creating a lot of useless jobs). But what the boomers paid is nothing like what they are going to try and stick the rest of us with.

4. Vote in governments who will increase old age benefits, but not until you get there (so this is still to come. In 10 years we will have only governments that are all about tax increases on the working to fund the elderly while the young are collectively going “on holiday” (ie. Into the underground economy.)

So there you have it. The generation that, as Garth once said, “humped and snorted their way into adulthood” and I continue to describe as the generation that “skipped the fence at Woodstock” still thinks there is a free lunch at the end of the rainbow, but of course somebody else should go and bring it back for them.

You can’t trust a boomer to run government, a corporation, or even their own finances because they believe in magic. It’s deeply ingrained in them that somehow “”government” can “provide all things”. It’s magic thinking.

And GenY down is even worse. They think since it worked for the boomers the only choice is to get on board. That leaves GenX alone in feeling very pessimistic, as we always have. We know GenY on down cannot fund what the boomers expect even with our help. But we were the only generation to actually be taught math in school, with the rise of the “science curriculum” after sputnik but before the “new math” once it was realized people who can do math and think skeptically were dangerous to the status quo.

And I’m talking about calculus and exponential equation here, not arithmetic, which the boomers have had in spades. And there are a few boomers who have figured out what 2% growth means and actually taught it to GenX. But they are a minority, and that effort has been prohibited now. No one is allowed to think 2% growth through to its logical conclusion. (Complete subjugation of the entire galaxy within some thousands of years. Hence Sci-Fi)

Relax about the boots, Garth. You and the rest of use are going to be waist deep in crap a lot sooner than we think, and you won’t even e able to see your boots. Unlimited growth is hitting finite resources right now. They know it in Washington too. That’s what all this “climate gate” is about. But if they were really serious, they’d be building electric trains, windmills, and nuclear power plants, not cap and trade schemes.

What’s going down is way bigger than we, or even Garth, thinks. It’s big. Probably the biggest financial event ever.

#27 jh on 11.13.10 at 12:38 am

Have avoided both the leaky condo business in Vancouver as well as the bubble of inflated prices…
and opted to make investments and max the RRSP yearly.

Hoping to find an investment advisor to help balance investments as they are in a number of places… do you have any previous blogs/links?

#28 goldenfox on 11.13.10 at 12:48 am

The mere rumour of an interest rate increase in China was enough to have gold bugs reaching for their Depends-Garth

My rrsp of 100% gold &silver stocks was down 1.5% today. Yawn! In 2008 I lost 59%. The first year I was in 2000 I was down 39%. I have had yearly gains of 118% and 135%. So far this year i am up 51%. Since I went in whole hog in late 1999, for every dollar in my rrsp I now have $9.70. One day I will take profits. But not now. we are in the sweet spot.

#29 goldenfox on 11.13.10 at 12:59 am

Quantative easing explained

http://www.youtube.com/watch?v=PTUY16CkS-k&feature=player_embedded

#30 Timing is Everything on 11.13.10 at 1:03 am

Garth said – “This is the world we now inherit. Steeped in debt, badly mismanaged, full of people with unrealistic expectations, where nations are scrambling to shield their oft-rapacious and delusional citizens from an inevitable reality. Count Canada among them.”

“What is the good life? What is the good man? The good woman? What is the good society and what is my relation to it? What are my obligations to society? What is best for my children? What is justice? Truth? Virtue? What is my relation to nature, to death, to aging, to pain, to illness? How can I live a zestful, enjoyable, meaningful life? What is my responsibility to my brothers? Who are my brothers? What shall I be loyal to? What must I be ready to die for?” – Abraham Maslow

#31 Peter Pan on 11.13.10 at 1:26 am

I wish you would have asked Ms. Webb about ScotiaBank’s “Free Downpayment Mortgage” being advertised these days at branches… I took a picture of these window ads promoting these “prudent lending” practices when I was in Winnipeg recently.

Bankers aren’t only hoovering sunshine up Canadians’ backsides…. More importantly, they are blowing smoke up the same orifices…

#32 virginhomebuyer on 11.13.10 at 1:27 am

Who wears cowboy boots these days?

#33 Brad on 11.13.10 at 1:33 am

Yes TFSAs are a amazing gift when used correctly . This is the sort of topic which should be taught in schools along with fiscal responsibility. Instead we live in a nation of financial idiots hooked on credit and debt. Sad sad sad.

#34 T.O. Bubble Boy on 11.13.10 at 1:50 am

You’ve gotta love how the RE pumpers can combine 2 opposing economic factors, and make them both reasons that the market will go up:

http://www.yourhome.ca/homes/realestate/article/888646–dupuis-canadian-housing-is-pricey-not-dicey

Theory #1) We won’t see a housing drop, because those only happen with extremely high unemployment and interest rates.

“The authors note that previous periods of severe price declines were characterized by double-digit interest rates and high unemployment rates (11.2 per cent in 1982-1985 and 10.8 per cent in 1981-1994), compared to today’s 50-year low interest rates and the unemployment rate of 8.2 per cent.”

Theory #2) We won’t see a drop in houses, because interest rates are low and that makes them “affordable” when you look at carrying costs as a percentage of income.

“Moving forward, home ownership demand will be supported by an improving labour market, a continuation of low borrowing costs and a quickly rising population,” said Shaun Hildebrand, CMHC’s senior market analyst for the Greater Toronto Area.

Do people not realize that the only reason we have historically low interest rates is because the economy would be completely screwed without them? (and, that the sector that is MOST dependent on these rates is housing?)

You cannot argue that the employment picture is great, while at the same time arguing that mortgage rates will stay at all-time lows to keep carrying costs down.

If the economy really is so great, rates will return to normal, and carrying costs will skyrocket. If the economy keeps struggling, you’ll still see the low rates, but unemployment will be a problem (or, in this Flaherty/Harper economy, part-time service jobs will continue to replace full-time jobs).

In either scenario, house prices simply cannot go much higher… we are at or near the peak no matter what you think of the economy’s future.

#35 T.O. Bubble Boy on 11.13.10 at 2:06 am

Interesting to see the convergence of prices between 2009 and 2010:

http://guava.ca/indicators.html

In the spring, you had the 2010 average price $70,000 ahead of 2009 and median price $55,000 ahead of 2009.

Now in the fall, you have 2010 average price $20,000 ahead and median price only $9,000 ahead.

Will November be the month where the price lines cross? (i.e. where average and median prices fall on a YOY basis)

#36 Taxpayer like everyone else on 11.13.10 at 2:12 am

Garth re: 10 – I wasn’t clear either exactly what Andrew meant. Your response was, well, brief, so I gave him that
other reference as well.

#37 Cookie Monster on 11.13.10 at 2:13 am

WooHoo, the drama is exhilarating.
Yes, I’m a renter of a small apartment.
And if all hell breaks lose I’ll be uprooting and leaving Canada for greener pastures, whereever that may be; Texas? Singapore? Hong Kong? South Korea? China? India? New Zealand? Detroit? Buffalo?? Oh no! Haha.

#38 dark sad person on 11.13.10 at 2:20 am

If you need a glimpse of how the best-laid little scenarios can blow up, just reflect on Friday’s markets. The mere rumour of an interest rate increase in China was enough to have gold bugs reaching for their Depends, Canadian resource stocks tumbling, commodities like copper tanking and bond yields flying higher

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

I have no need for Depends and my Colostomy bag wont explode either-if Gold tanks big- cuz-
this is exactly what I’ve been waiting for and expecting-if this “is” the double dip–
This is a once in an 80 year long shot-
High risk-high reward play-

In 1931/32 this happened and i think it “might” happen again-because all the stars are coming into alignment-
http://2.bp.blogspot.com/_nSTO-vZpSgc/RbmMtplgCjI/AAAAAAAAAPk/NtN5JDlwHio/s1600-h/homestake.png

That is the only Miner chart available from that era-but there were other major Miners that acted the same way-
Placer Dome was another-and a few others-but there is no down-loadable data for them-
There really was not a lot of Gold Miners back then-

So if you look at the chart in 1931-you can see the stock price fell from $130 to $90 a drop of about 30%
and from there you can see what it did-

That was happening at the same time this was happening-
http://www.marketoracle.co.uk/images/2009/June/great-crash-1929.jpg

The DOW-after a 60% rally (sound familiar? crashed from 160 to 40 a drop of 25% but-a peak to trough drop in 1929 from 380 to a bottom of 40–
A drop of 95% and it took Commodities and Gold Miners with them but-the Gold Miners held up reasonably well and actually decoupled from the Dow and moved opposite-as is clear from the two charts-

Also this happened–(only use left side of chart–red circle–1930’s)
http://4.bp.blogspot.com/_nSTO-vZpSgc/RbZwf5lgCXI/AAAAAAAAAN0/WJYO6dh-ogg/s1600-h/Gold-CPI-FF-Rate.png
That chart shows Commodity and consumer prices fell–RE and land prices fell–“everything” deflated against Gold
We can’t use the Gold price as an example because Gold was dollar locked-so the price could not move–but–
all prices/CPI deflated against the locked Gold price–
Buying power increased significantly–

I think this has a chance of repeating itself because-
Gold and Miners acted this way under Deflation then and i believe we are in Deflation again-80 years later-
If this works-you have two positive factors at play–
Gold miners rising and consumer prices falling-

This is only my opinion and absolutely not advice–
just a bit of history as i see it-
But you might not see it-cuz-G might not post it-

#39 Larry on 11.13.10 at 2:21 am

More information about Ireland, http://www.rte.ie/news/2010/1112/economy.html

#40 Get Real on 11.13.10 at 3:50 am

Good read for a novice like me

http://www.thestar.com/news/canada/article/890266–walkom-the-g20-failure-at-seoul-and-what-it-means-for-you

#41 BenC on 11.13.10 at 4:44 am

The illusion of Canadian stability has nothing to do with prudence of our banking industry and everything to do with draconian debtor laws. To the banks, don’t get too comfortable with thought of a bailout borne on backs of CDN taxpayer – unlike our free market patriots to the south Canadians might be just as likely to nationalize your asses(ts).

#42 Aussie Roy on 11.13.10 at 5:03 am

Quantitative Easing Explained

http://www.youtube.com/watch?v=PTUY16CkS-k&feature=player_embedded#!

#43 Tony on 11.13.10 at 6:18 am

#11 JB
The stock market will get hammered. Here’s an idea i sold Cue Resources on the venture exchange at 10 cents after buying a wad at 6. It looked grossly undervalued but i thought the US dollar would rally. I was right but the stock keeps on rising. Consider buying things i sell.

#44 somecatchphrase on 11.13.10 at 6:56 am

Glimmer of hope on the horizon for yield starved investors? Peer-to-peer lending: web services that connect borrowers and lenders, while bypassing the banks.

Investors earn rates 9.5% plus, depending on your risk tolerance. Borrowers get rates lower than those offered by banks.

The bad news: As of now, this service is currently only available to US citizens. Does anyone know of any regulatory reason why a similar service couldn’t be established here in Canada?

http://www.lendingclub.com/home.action

#45 Moneta on 11.13.10 at 7:05 am

Perhaps it is because I have just returned from a short trip in the US which left me deeply depressed about the state of neighbour. The degree of manipulation and ignorance is simply shocking.
——
I’ve worked as a PM for a couple of big Cdn firms and a couple of Cdn banks.

I’ve witnessed it all.

#46 Moneta on 11.13.10 at 7:18 am

What a relief. I thought she’d seen the blood.

———–
In that world there are 2 types of people. The ones who don’t get it and the ones who get it and pretend they don’t… There has been too much money on the table for business to stay legit. People are paid to shut up and put up.

If you try to shake the tree, you’re

#47 Moneta on 11.13.10 at 7:29 am

What’s going down is way bigger than we, or even Garth, thinks. It’s big. Probably the biggest financial event ever.
—–
I agree.

Here is a chart that depicts where the US is now:

http://www.ritholtz.com/blog/wp-content/uploads/2010/11/GordonLongCycle.png

Not sure everything will happen in that order but it does show us what has burst and what is left.

What a dumbass graphic. — Garth

#48 Moneta on 11.13.10 at 7:43 am

I’m now working in pension consulting and one thing I can say is that DB (defined benefit) is a wobbly pillar.

Most plans are still using a discount rate well over 5% when the 10 + year is at 2.5% anf the 30 year at 3.5%.

ZIRP might be boosting current assets but it is also boosting future liabilities and making the funds even more underfunded.

Actuaries are pushing for discount rate cuts. That’s the only way you’re going to get boomers 5-7 years away from retirement to fund any of it! Not to mention that many of them have not had to contribute anything for a while. Can you imagine the shock in DB paradise?

Then you have the expected returns on your assets… If your fund is 60/40 and bond yields are 3% and equities can be estimated at 8%, you get 5%. Not very many funds are using 5% as expected returns.

The show is far from over.

#49 John on 11.13.10 at 8:02 am

I don’t disagree with the economic outlook that you put forth. In fact I expect much of what you predict will come to pass. it’s fairly obvious, well at least it is to me.

But Mr. Turner, I really think that your distortion of the facts and your propensity toward blowing smoke instead of reality in support of your position is terribly over the top.

Just to choose two examples of your unabashed warping of the facts:

You said “Just days after telling the world everything was cool, Ireland is choking. ”

The TRUTH is that Ireland has been on the radar in respect to it’s financial dilemma for at least three years. Why are you claiming otherwise? You know that’s untrue.

Secondly, as you should well know if you are the financial maven that you lay claim to being, in the short term the stock market fluctuates, sometimes wildly. Yet here you are, proclaiming the end is near because the markets took a hit on Friday. Where were you when the TSX posted over 13,000 just a few days prior? You ignored that fact, perhaps because it doesn’t suit your agenda?

Which leads me to my question, what is your agenda Mr. Turner?

Surely those thousand seat venues that you effortlessly fill with the dogs of blog don’t come cheap.

Do you really sell enough books at each “gathering of the faithful” to profit by the experience? Or are you just a squirrel eating, cowboy boot wearing, philanthropist at heart?

Inquiring minds want to know. You seem to me to put forth a tremendous amount of effort both online and personally in delivering your message.

While educating people and (hopefully) helping them to avoid catastrophe is commendable, I’d really like to know why you do what you do Mr. Turner.

Perhaps you should share your sincere reasons for doing what you do sometime?

Just a thought…

My comment about Ireland’s government soothing markets before the latest debt crisis was merely fact. Re the markets, nowhere did I ‘proclaim the end’ and have been encouraging a steady migration of money from real assets into financial ones. Stop being a drama queen. Oh, and I sold no books at my event this past week, so you’ll have to keep guessing at my motives. Maybe I’m just trying to meet hot women. — Garth

#50 Brian1 on 11.13.10 at 8:12 am

Moneta; Yesterday I was sweating fear when I made my comment. Thanks for the support. Nobody, but nobody does everything alone. I finally got my answers. You seem, no, are courageous, but this does not mean that Garth could be any less. Look at what we,got away with?, achieved? He let us print this.
You were attacked yesterday in many ways. My limited brain power interprets the logic used by Devore#137 yesterday as that used in blaming suicide bombers for their acts. Are they not victims, tools also? Will it be a stretch to say that when these homeowners realize that they have been taken they will retaliate with violence?

#51 Nutty squirrel on 11.13.10 at 8:19 am

Garth
Just wondering why you think a RSEP is not a good idea? The $500 gift from the gov’t and the money is allowed to grow tax free.
Always keep your shoes/boots polished, not for the bankers to look at, but for the ladies. Apparently it is one of the first things they notice.

I did not say that about RESPs. They are a useful tool and any time the government hands over money, you should take it. And, yeah, I know about the ladies thing. — Garth

#52 eddy on 11.13.10 at 8:21 am

Quantitative Easing Explained in a cartoon:

http://poorrichards-blog.blogspot.com/

#53 bigrider on 11.13.10 at 8:28 am

I sure some of you ETF, cost conscious buyers (cart before the horse people) get some of the greats out there like Eric Sprott ,Eric Lamarche and Rohit Sehgal to run some of your money in your TFSA and RRSP’s

The majority of you do not impress anyone as buy and hold ETF investors or successful traders for that matter.

I am quite certain you will underperform consistently the individuals above

#54 dd on 11.13.10 at 8:47 am

…There is no bond bubble…

Ya. Talk to bond investors taking a haircut over irelands bonds is only the start. Serious adjustments are on the way.

No serious investor would buy an Irish bond. Stop throwing this all in the same blender. — Garth

#55 Blitzkrieg on 11.13.10 at 8:47 am

For RESP in early stages you would want to be in a growth mutual fund or to eliminate MER’s a growth ETF, when your child is about 15 depending on the state of the markets then and your gains/losses you would want to rollover into a bond fund to lock in your gains, eliminate volatility and await the withdrawal period in relevant peace of mind

#56 Moneta on 11.13.10 at 8:48 am

We are not what we think we are.
—–
Regarding free will and recent research on the brain:

http://www.wired.com/science/discoveries/news/2008/04/mind_decision

#57 Billy in Nobleton on 11.13.10 at 9:05 am

Higher G.S.T….LOL

Sorry Garth, Retailers are already struggling, Restaruants are on the Brink.

Higher G.S.T is not in the making.

I don’t think F cares. One way of another, taxes are going up dramatically. — Garth

#58 Amarillo on 11.13.10 at 9:35 am

Most sobering post today could be #14 Genghis (quoting the estimable James Chanos) – re 60% of China’s GDP = construction. Egads! And I thought 60% of China’s GDP was production for WalMart. If China’s real estate stalls — as it will, goodbye commodity prices which will impact Australia, Brazil and Canada, the only 3 countries without a housing meltdown – yet. And so much for the Chinese ‘redback’ competing with the greenback.

#59 Moneta on 11.13.10 at 9:44 am

You seem, no, are courageous, but this does not mean that Garth could be any less. Look at what we,got away with?, achieved? He let us print this.
—-
Are we courageous or fools… I’m not sure yet!

I’ve been laughed at since 2003, when as a PM, I came back from a Goldman Sachs conference and declared the US a giant bubble Ponzi scheme. But then again, I’ve always been the ugly duckling wherever I went, even as a kid.

I was booted out of portfolio management a couple of years ago just like Garth was pushed aside in politics. Well, not really. I could repeat the party line and get a job any day but I walked out when, in 2006, I had to argue for the hundredth time why I did not want Home Depot in the portfolio.

#60 Confused on 11.13.10 at 10:03 am

Sales in Calgary are definitely showing signs of a resurgence this month. I don’t have a clue what’s driving it as virtually free credit has been around for a while now.

#61 The Apocalyptic One formerly Old is Gold on 11.13.10 at 10:17 am

What happened to free Mkts

Listen to the comment at 8.10min
http://www.cnbc.com/id/15840232?video=1633683859&play=1

Listen to comment at 11.35min
http://www.cnbc.com/id/15840232?video=1634228390&play=1

Stock up on canned foods and Depends
This will not end well
———————————————————————
Amen to that! Food will be the ultimate currency; give it another couple of years!

——————————————————————–
#3 mel on 11.12.10 at 10:39 pm

I have stopped listening to the ‘Experts’ long time ago. Remember, these are the same people who did not see the Banking crisis!

If that is their tract record, should we not trash all of them into the recycle bin?

No offense to Garth, but it would behoove all to remember that he too is a ‘Expert’

——————————————————————–

And Garth, just because there’s volatility in the (highly manipulated) metals markets, does not mean that the bull market is over; it ain’t even begun yet! Trade in those boots for what you perceive as useless pieces of silver, it may be your best trade yet!

#62 LHHW on 11.13.10 at 10:21 am

RESPs

Hi Garth,

I noticed some comments about RESPs. In general, do you recommend we set them up with similar investment products you speak to, such as Preferreds, corporate/gov bonds, ETFs, REITS etc., and what percentage should we allocate to growth….more than 60%? Assuming that the kids are still in elementary school. Any general comments on this would be appreciated. Thanks

#63 S.B. on 11.13.10 at 10:29 am

By the way, Nov 24th national op-out of nude body scanner day:

http://www.optoutday.com/

If you are in Canada and are roughly groped, I wonder if you can in civil court (maybe even small claims) for the tort of Battery.

http://en.wikipedia.org/wiki/Canadian_tort_law
http://en.wikipedia.org/wiki/Battery_(tort)

#64 HouseBuster on 11.13.10 at 10:31 am

#56 Billy in Nobleton
Sorry Garth, Retailers are already struggling, Restaruants are on the Brink.
———————————————————-
They are? Says who?

Canadian Tire’s results easily beat analysts expectations for earnings of $1.21 per share on $2.23-billion in revenue.

http://www.ctv.ca/generic/generated/static/business/article1794867.html

#65 HouseBuster on 11.13.10 at 10:33 am

Garth, The US Dollar also declined yesterday. That is why the downdraft was somewhat unexpected.

#66 GregW, Oakville on 11.13.10 at 10:35 am

Hi Garth, fyi, artical and 3min video link

Bernanke’s worst nightmare: Ron Paul
CNN
Nov 13, 2010
http://www.prisonplanet.com/bernankes-worst-nightmare-ron-paul.html

#67 The Apocalyptic One formerly Old is Gold on 11.13.10 at 10:36 am

#53 dd on 11.13.10 at 8:47 am

…There is no bond bubble…

Ya. Talk to bond investors taking a haircut over irelands bonds is only the start. Serious adjustments are on the way.

No serious investor would buy an Irish bond. Stop throwing this all in the same blender. — Garth
———————————————————————

But what happens when all Western bonds (like Germany for instance) begin to look like Irish or Greek ones? Before you respond, remember NEVER SAY NEVER!

Garth has been saying there is no bonds bubble, there will be no hyperinflation, that metals are a bubble for a long time now, even as he has been predicting a RE crash for years that has not yet materialized. We do fully expect the RE crash in Canada to materialize sooner now than later but on some of the other matters, there are many credible sources that make a very compelling case for a bonds / treasuries bubbles, coming massive inflation in food and energy prices + taxes, and metals yet having a long ways to go before entering bubble territory.

Garth is entitled to his views, as are all of us, but they may not all be correct, some of them maybe horrendously off the mark. We wait and see who’s right and who’s wrong but the decisions folks are making now based on Garth’s or anyone else’s views will have long term implications. Best to do your own research and make your own decisions based on your own views, that way there is no one to blame or applaud except yourself.

#68 GregW, Oakville on 11.13.10 at 10:43 am

Hi Garth, still flying? fyi artical

Big Sis Forced To Respond To Nationwide Revolt Against TSA
http://www.prisonplanet.com/big-sis-forced-to-respond-to-nationwide-revolt-against-tsa.html

Furthermore, as the Atlantic’s Jeffrey Goldberg revealed, TSA workers told him directly that they refer to the new body scanner devices as “dick measurers,” and that the more aggressive groping measures had nothing to do with security and were in fact instituted solely to force people to choose the scanner over the pat down.

The so-called “pat-downs,” which in reality fall not far short of sexual molestation, have nothing to do with security. They are about ritualizing the process of making Americans submit to complete degradation at the hands of authority figures, no matter what level of humiliation that process encompasses. If you allow the government to get away with groping your children’s genitals there’s no limit to the abuse they will subsequently engage in.

The Reuters article mentions the example of a father who witnessed his 8-year-old son be selected for “extra screening” by TSA thugs, who proceeded to touch the boy’s genitals.

“We spend my child’s whole life telling him that only mom, dad and a doctor can touch you in your private area, and now we have to add TSA agent and that’s just wrong,” he told Reuters. “At some point the terrorists have won.”

The fact that the TSA and Homeland Security has been forced to respond to the national outrage over groping and naked body scanners is a major victory, but we cannot rest until the groping, not just of children but all passengers, is ended and the

cancer-causing body scanners

are removed for good.

#69 Marty on 11.13.10 at 11:03 am

“gold lost forty bucks” WRONG, the USD appreciated and relatively now change measured in CAD.

Gold was valuable yesterday as the day previous and will have the same value Monday.

Gold doesn’t get cheaper or more expensive, the Fiat paper money does.

Gold is the barometer, you can’t say the barometer is less or more, it’s the temperature (variable value of fiat paper) that you’re measuring using the barometer (intrinsic value of gold – material and monetary).

CAD bank notes appreciated and Gold was cheaper by $29 CAD so this is a great buying opportunity. I’ve been waiting for this pullback, I bought 30oz of gold on Friday and I will not exchange it for paper notes ever.

#70 brett on 11.13.10 at 11:04 am

Garth in 1977 US interest rates were 9% and gold was $100, in 1980 interest rates were over 16% and gold was over $800……The “rumour” of higher chinese rates did not make me wet my pants worrying about gold falling. Gold will rise with interest rates.
I suggest you buy this gold pullback starting monday, it may only have another week to run, the US dollar will probably get no higher then 80 on the USD index.

Good luck with that. — Garth

#71 dm in kw on 11.13.10 at 11:07 am

re: #56

Higher G.S.T….LOL

Sorry Garth, Retailers are already struggling, Restaruants are on the Brink.

Higher G.S.T is not in the making.

I don’t think F cares. One way of another, taxes are going up dramatically. — Garth
———————————————————-

I think increasing the G.S.T. and/or personal income tax is the wrong way to go in terms of generating tax revenue, as it hurts real people doing real things in the real economy. If I were in H’s position and were King of Canada, I would ABSOLUTELY HAMMER investment income (that’ll make me popular on this blog!).
Not only would I tax income trusts, which they’ve correctly done, I would repeal the TFSA (c’mon…if you and your wife can afford to throw 10 grand into an account every year, you can afford to pay tax on the gains). While I was at it, I would also repeal the dividend tax credit and the 50% capital gains exemption…make all investment income fully taxable like interest income is. Finally, I would eliminate the tax exemption on capital gains realized on the sale of residential real estate (on the upside, at least that would give the greater fools the ability utilize their losses if, as predicted, real estate goes into the tank). If those measures were implemented 10 years ago, we’d probably have a $500 billion surplus instead of a $500 billion debt. Investment income is basically money for nothing, most of which goes into the hands of people that are already rich. I think it’s ridiculous that our leaders punish people who go out and work hard everyday, while throwing advantages out to people who don’t need them. Probably has something to do with the fact that most of our politicians and their friends have lots of money to invest.

#72 GregW, Oakville on 11.13.10 at 11:10 am

Hi #21 Nostradamus, re: your food & bat comment.

Not being able to feed yourself and family goes with the plans!
Look up;

“CODEX ALIMENTARIUS”. (stuff on YouTube videos)
and
“In lies we trust” is eye opening.

The bat-white noise syndrom issue is bad/deadly for the bats. They eat lot and lots of moths that then can eat our food crops!

I have been refraining form enjoying cave exploration for a while know, due to my not wanting to bring back/spread WNS to Ontario. But it is hear :(
(The bat house I put up north of Perth had lots of bats this summer, I hope there back next year?)
More on Bat WNS. Can be found at http://www.caves.org/WNS/index.htm

Think of the cost to agriculture, our food supply!
Only possibly good short term if you sell pesticides/toxic chemicals.

#73 brett on 11.13.10 at 11:14 am

I am a serious investor and i would certainly buy Irish bonds over US bonds if a gun was to my head. But i will wait till the yield goes even higher then 8.5%… and after i sell my gold well over its current value.

After QE2, Bill Gross declared the 30 year bull run in bonds over,- he was late by 2 years! The bond bubble burst 2 years ago, its been all down hill since then and will continue with that trend.

#74 vreaa on 11.13.10 at 11:16 am

“I am thick-skinned enough to deal with the social pariah status of being a mere renter. A lot of people here believe that responsible adulthood includes home ownership, so if you don’t own, you somehow don’t make the cut.”

Vancouverites discuss buy versus rent:

http://wp.me/pcq1o-1wP

#75 dd on 11.13.10 at 11:34 am

“No serious investor would buy an Irish bond. Stop throwing this all in the same blender. — Garth”

But that is the story. Risk is moving down the chain. Bonds look good until full value is considered. When non-performace is factored in interest rates will have to increase to compensate for the risk. It is a country today. But it will be many countries tomorrow. And this will drive interest rates up and bond prices down across the board.

That does not mean a bubble. You are still confusing issues. — Garth

#76 dd on 11.13.10 at 11:50 am

“That does not mean a bubble. You are still confusing issues. — Garth”

When Bill Gross (PIMCO) says the bull run in bonds is over, why would I want to second guess. A top is reached. There is only one direction to fall.

Bill Gross says things to move markets to a position he’s already covered. Haven’t you figured that out yet? — Garth

#77 bullion.bunny on 11.13.10 at 11:52 am

Ok……what did I do now? Who did I offend now? Why did you not post the last three?

You are done here. — Garth

#78 BDG-YYC on 11.13.10 at 11:53 am

#26 Nonplussed …

Good Rant ! But as an Xer you should know its not just millions of Canadian Boomers and Y-ers that have been conspiring to screw you and your future. Nope …

Those dumbass Boomers were born into a world of about 2.5 Billion people … by the time you came along there were already about 4 Billion people already trying to figure out how to screw the Xers out of thier futures. And then the damn Yers came along and piled on with the other dumbasses … and now there are around 6 Billion dumbasses all ganged up to piss on Xer electricity. Now if that isn’t already bad enough in your lifetime … there are likely to be another 2 or 3 Billion more dumbasses added to the greedy pillaging mass of humanity that will be trying to take stuff away from our tiny little tribe of Xers.

8 or 9 Billion really “compounds” the equation doesn’t it?

No – Don’t jump ! Step back from the window and recalculate ! :-)

#79 dd on 11.13.10 at 11:56 am

#69 brett

“the US dollar will probably get no higher then 80 on the USD index”

The stated policy of the Fed is a lower dollar (higher inflation). Don’t fight the Fed. The dollar is going lower.

Where did the Fed ‘state’ it has the goal of currency devaluation? — Garth

#80 dd on 11.13.10 at 12:16 pm

“Schwarzenegger Calls Emergency Session as $25 Billion Budget Deficit Looms”

Most states are running out of money.

#81 Herb on 11.13.10 at 12:18 pm

Moneta,

had a chance to read up on yesterday’s discussion only this morning. I will jump into the free will – and marketing – issue in the inevitable next round.

Here is an observation I made last night. Needed some band-aids, went to SDM and spent $6.99 plus $0.91 tax for a pack of 20 Johnson & Johnson “Tough-Strips.” Now, I don’t mind paying 35c for a band-aid that sticks (haven’t found one in recent years), but these were “Made in Brazil.” What would possess an “American Company”, a “Family Company” (as it advertises itself) to outsource band-aid production to Brazil? Obviously cost-cutting, since the attraction hardly was better resources, production methods or labour. And the cost-cutting was not reflected in the retail price of the product (the price of band-aids has gone up, if you haven’t bought any recently). No doubt it came to bear on the company balance sheet and dividends.

And then we wonder about the disappearance of manufacturing jobs, shrinking demand for goods and services, unemployment rippling out to other sectors, and people going under trying to live the (North-) American dream.

I don’t believe that greed is good or that it’s the victims’ fault. Not because I can believe anything I want to (thank you, Garth), but because that belief is indicated by my mind operating on the available evidence.

#82 Blitzkrieg on 11.13.10 at 12:31 pm

79

The Fed will never openly state that, however Greenspan did say literally that on Thursday, it was met with a firm rebuttal by Geithner. It seems as if the elites are slowly loosing control as you would never think Greenspan would speak against the agenda

#83 dd on 11.13.10 at 12:37 pm

“Where did the Fed ‘state’ it has the goal of currency devaluation? — Garth”

This quote was made this year. Note the double talk, however, a subtle change none-the-less.

“We’re not in the business of trying to create inflation,” he said. “I think it’s critical for us to maintain inflation at an appropriate level”… Bernanke.

The last couple of months Bernanke has changed his view on inflation; “A little inflation is good” statements. Don’t underestimate this statement. It is huge.

http://www.france24.com/en/20101106-fed-not-business-inflation-bernanke

Oh, so he didn’t say his goal is currency devaluation. You just made that up. Thanks for clarifying. — Garth

#84 dark sad person on 11.13.10 at 12:46 pm

#79 dd on 11.13.10 at 11:56 am

#69 brett

“the US dollar will probably get no higher then 80 on the USD index”

The stated policy of the Fed is a lower dollar (higher inflation). Don’t fight the Fed. The dollar is going lower

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

I agree the Fed is trying to devalue-the problem for them is they’re not in control of what happens to the dollar-
If people/traders perceive the dollar to be a safe place to hide-it will outperform other currencies-
Maybe instead of looking solely at the US-people need to look across the Globe and then decide which Currencies are the safest-(i don’t like any of them-but)
EUR-Peso-CNY-Yen-CAD–take your pick-
I see USD-CHF and little else at this point-considered safe-other than the King Currency-but that is Verboten to call a Currency here-
Did you see the USD spike higher after the announcement of QE-2?
Tell me Bernanke was able to devalue by printing-based on a floating Currency system-
The CAD fell and the USD gained-

http://www.barchart.com/chart.php?sym=D6Z10&style=technical&p=I&d=X&x=47&y=8&im=&sd=&ed=&size=M&log=0&t=CANDLE&v=2&g=1&evnt=1&late=1&o1=&o2=&o3=&sh=100&indicators=&addindicator=&submitted=1&fpage=&txtDate=#jump

http://www.barchart.com/chart.php?sym=DXZ10&style=technical&p=I&d=X&x=38&y=6&im=15&sd=&ed=&size=M&log=0&t=CANDLE&v=2&g=1&evnt=1&late=1&o1=&o2=&o3=&sh=100&indicators=&addindicator=&submitted=1&fpage=&txtDate=#jump

In fact-I’ll bet Ben felt like he’d been sodomized-

#85 Evangeline on 11.13.10 at 12:46 pm

#22
((What a wonderful time to hold cash. Sweet sweet cash.))

sure but there’s still the question of what currency to hold it in

The one you live in. Duh. — Garth

#86 Evangeline on 11.13.10 at 12:51 pm

#26

((Screw GenX … for boomers …))

GenX has a big advantage in the TFSA long term forward, that is something the Boomers never had

#87 Mel Eager on 11.13.10 at 12:54 pm

Hello Garth,

What was your retort to Mary’s question “Does Garth Turner rent? ” ?
Obviously, she was trying to imply you are a hypocrite.
I don’t believe that you are, and I was wondering what your response was (or would have been, in case you did not answer her.)
Cheers, Mel.

Response: “I have absolutely no problem owning real estate, since we all have to live somewhere. But it should form a minority of your net worth. It’s all about balance, babe.” — Garth

#88 Evangeline on 11.13.10 at 1:16 pm

#66 ((Bernanke’s worst nightmare: Ron Paul
CNN))

And now there’s his son, chip off the old block, Dr. Rand Paul, the newly elected Senator from Kentucky about to double the trouble, (thanks the Tea Party.)

#89 celticmelt on 11.13.10 at 1:17 pm

If the lady in question was interested in the long term financial health of her customers she would put away the hoover and instead expound the virtues of the TFSA for ordinary Canadians.

The TFSA is a huge bright spot for me because I put my speculative stocks in it; I have had a couple have huge runs and now I can access over 100k with only two years contributions, and no tax oweing at all! sweet! Not that I really anything right noewbut if I do take it out it for a house for instance down, it has raised my limit for re-deposit.

Also as I first time poster, long time reader, I should add that cashing out of real estate in 2008 and leasing a ten acre estate with large house for a thousand a month is pretty easy on the nerves, but then I am talking about the bc interior market, land of the econo stealth hummer.

Oh and for the metal/share bots on here; try some due diligence on V.CBs if I may be so bold.

Primo site Garth, thanks, all the best to you and you bunker mates.

#90 BrianT on 11.13.10 at 1:25 pm

#78BDG-more like 7 billion (6.881).

#91 BrianT on 11.13.10 at 1:40 pm

#75DD-Yes. Bonds have done very well because taxpayers have covered potential losses. Bond bulls are selling the story that this taxpayer responsibility for investor mistakes is permanent, even though it is a relatively recent phenomenom and mathematically can’t be sustained. Example: logically, California bonds should be at north of 10% when the risk of outright default is factored in-they aren’t because of the implicit non-Cailfornia taxpayer bailout. Just like Merkel says, this kiting scheme eventually will end because there isn’t enough money out there to pay for all the bad investment decisions.

#92 Jimbo on 11.13.10 at 1:47 pm

NOV 13 and the Brampton Real estate board has still not published Sept and Oct sales stats.

It’s very bad.

http://www.bramptonandarearealestate.com/2010_Residential.html

#93 BrianT on 11.13.10 at 2:02 pm

#13Basil-the funniest cartoon I have ever seen-also outrageous and sad in a way.

#94 Cookie Monster on 11.13.10 at 2:05 pm

Where did the Fed ‘state’ it has the goal of currency devaluation? — Garth
______________
When they denied it, Tim Geithner last week.

#95 Evangeline on 11.13.10 at 2:06 pm

((The one you live in. Duh. — Garth))

Duh yourself. To hold all one’s cash in a Canadian account is kinda dumb, especially when near parity offers a great opportunity to make the contrarian bet that the US dollar, in the not too distant future, will worth a lot more than the Canadian dollar.

Same answer. — Garth

#96 Dorf on 11.13.10 at 2:08 pm

“Mary told the gang that Canadian consumers have overspent, but are not in too bad a shape. She pointed to a slowdown in housing activity as a sign debt reduction was being taken seriously.”

Ya right, walk the streets I walk and tell me that.
Debt reduction is being taken seriously….they seriously can’t pay it !

Everybody is overextended and has stopped spending…guess why ?….they CAN’T spend anymore, the money is gone, the credit is gone, the empties are cashed in, turned all our friends in to Crime Stoppers for the reward money, now the taps are dry.

They aren’t looking to pay off debt, they are looking for new ways to start spending again. They didn’t stop voluntarily, they stopped because the money stopped.

Nobody is interested in paying off their debt, they are looking just to barely service the debt load, in order to retain the ability to borrow and start spending again.

#97 Tom on 11.13.10 at 2:08 pm

re: #56

Higher G.S.T….LOL

Sorry Garth, Retailers are already struggling, Restaruants are on the Brink.

Higher G.S.T is not in the making.

I don’t think F cares. One way of another, taxes are going up dramatically. — Garth

Carney wants Canadians to stop living off debt.
Flaherty wants to reduce Government debt.

Increasing G.S.T. to 6% is a good tool to achieve both.
Of course rebates for renovations. Clean up the underground economy a bit.
Coming next year after the election I suspect.

#98 Coraline on 11.13.10 at 2:32 pm

HouseBuster re Canadian Tire: You have to look a little more deeply than earnings per share. Same store sales were only up 1.4%, which as one analyst noted is “soft,” to say the least.

#99 Timing is Everything on 11.13.10 at 2:38 pm

#32 virginhomebuyer said – “Who wears cowboy boots these days?”

Who wears cowboy boots these days?

http://www.cowboybootreview.com/campfire/post/Cowboy-Boots-and-White-Sundresses-Summery-Style.aspx
—————————————————————
OK, enough of that.

Sightly more serious…

‘The more you rely on things, the more helpless you are when they go away – and the more companies [and gov. and crown corps] can get away with charging you for it.’

Financial talk for the rest of us…

http://www.thesimpledollar.com/2007/03/24/lessons-from-off-the-grid-important-personal-finance-lessons-my-childhood-taught-me/

#100 miketheengineer on 11.13.10 at 2:48 pm

Garth et al:

And the price of gasoline is now 1.09Plus in GTA….

The oil companies, the gouging goons that they are, have us bent over a table and are inserting the gas nozzle.

Talk about rape. They are the number one reason that Canada will go down. No other reason. Blame them and the banks.

Struggling to make ends meet and the price keeps going up and up, so some yo-yo company can make a billion in profits.

I am really upset today……

#101 Koz on 11.13.10 at 2:48 pm

Hi Garth,

BOND QUESTION:

Say a person has 10K to invest in a Bond, so lets assume only 2 options:

1 – He purchases directly a 5 yr Cdn Gov’t bond paying 5%/yr
or
2 – He Purchases 10K into a Bond Fund that manages one Billion in Bonds in the Portfolio. it pays ~5-7%/yr.

If interest Rates start moving up in the next 1-2 years, what is the likely scenario of Risk for each Bond scenario?? this is my thought.

1 – the individual Bond will be worth less (on paper), but the holder can just wait the 5 years and get the 10K back while earning interest in the interim. Little risk…unless you need to cash before 5 years and have to sell it.

2 – the Billion Dollar bond fund paying 5-6% Might see the Holders start taking cash out of the Fund (to get better yield elsewhere), leaving the Fund with, for example, 50% or 500 Million. To pay for this, the Fund would have to sell 50% of its Bonds in its portfolio to cover the sell-off. The sell off is at market value (so lets assume less then face value). This loss will be born by the current holders in the Fund that didn’t sell. If the loss is greater then say 5-7% of the face value (the loss is greater then the return on the yield) then the holders currently in the Fund will show a loss for the year.

Conclusion:
Is it fair to say that given pt 2 above, if you don’t need to sell that portion of your portfolio (so illiquid) and are just looking for a yield on that small portion of your assets for ‘X’ amount of years…. that holding the individual bond is better? Especially given the interest rate outlook.

You are a bond expert. — Garth

#102 Marc on 11.13.10 at 3:02 pm

Looks like the Competition Board is still looking for their pound of flesh from the CREA and MLS.

#103 Canayjun on 11.13.10 at 3:17 pm

There’s an RV business that’s been operating in Langley, BC for as long as I can remember, I’m guessing over 20 years (maybe more), since I only moved here 17 years ago. RV’s are typically something someone buys when they are closer to retirement? Anyway, they are going out of business. Is this because the boomers aren’t doing the RV route so much now? RV’s are an extreme luxury, so one of the first things to drop off the list of “must haves” in dire economic times.

#104 Causalien on 11.13.10 at 3:19 pm

#44

Peer based lending hasn’t been around for more than 5 years. So most of the loans haven’t gone past the most critical 5 year roll over date. In my opinion, the data for these type of lending does not make a good trend yet. I like the fact that this has not migrated to Canada so we can wait and see what happens in the US.

#105 dd on 11.13.10 at 3:39 pm

“Oh, so he didn’t say his goal is currency devaluation. You just made that up. Thanks for clarifying. — Garth”

You are so far behind the news it is not funny. Inflation IS currency devaluation. QE IS currency devaluation. When it comes out in the G&M you will finally awaken.

You said the Fed stated it’s purposefully devaluing the currency. I asked for a reference. You were unable to provide one. Now you attack. The next time you make up facts, be a little more convincing, or a little more humble. — Garth

#106 S.B. on 11.13.10 at 3:41 pm

211k? I hope they have other assets…of course if a house is a cosidered a depreciating assets then the answer may be no

SAN FRANCISCO (MarketWatch) — People who stuck with their 401(k) plan through thick and thin for the past 10 years more than doubled their account balances, according to the latest data from Fidelity Investments on the behavior of 11 million plan participants. But a separate study found that many workers are not faring well with retirement saving.

The average account balance for savers who are now 55 years old or older and have been participating in their plan continuously for 10 years was $211,300 at the end of the third quarter, up from $96,000 a decade ago, according to Fidelity.

#107 Kitchener1 on 11.13.10 at 3:45 pm

Its pretty simple. Taxes are going up, way up. Anybody remeber when Martin was the top finance dude? Those were some tough years. BUT it was in realtive good economic times.

For those in Ontario remeber Mike Harris? Yes he cut to the bone and thats what its going to feel like again.

Big cuts from the Feds and big cuts across all other levels of govt are coming.

Higher taxes, higher user fees, less service and huge job cuts for all govt jobs are coming. Boomers will vote in whoever promises them $1800 a month CPP. Just a matter of time.

Seriously folks, look at the press releases, Harper is already trying to lower expectations and sending out “feelers” to Canadians to expect a tough budget, when was the last time that happened?

When was the last time you ever heard a Minister of Finance and Bank of Canada head be so vocal about consumer debt and prudence?

Depsite what you guys might think about Harper/F/Carney, these guys are smart and shrewd and the most important part is they have access to internal metrics that we as a public will never ever see.

Things are worse behind the scences then even the doomtards think.

#108 dd on 11.13.10 at 3:45 pm

#91 BrianT

…isn’t enough money out there to pay for all the bad investment decisions…

Actually if you have a printing press you have all the money in the world. Let us print out way to prosperity!

#109 S.B. on 11.13.10 at 3:46 pm

China’s Faster Inflation Fuels Speculation Rate-Rise Near

“There’s talk of an interest-rate hike over the weekend,” said Wu Kan, a Shanghai-based fund manager at Dazhong Insurance Co., which oversees $285 million. “It’s quite possible given how inflation has accelerated

http://www.bloomberg.com/news/2010-11-12/china-may-raise-interest-rates-again-after-inflation-surges-survey-shows.html

#110 Herb on 11.13.10 at 3:48 pm

miketheengineer,

gas at $1.09/L in Toronto you say? Congratulations, in Ottawa we are being charged $1.12 (except for a few stations outside the city in places you’d have a hard time getting to if you found them on a map. (http://www.ottawagasprices.com/)

Heck, you can’t begrudge the oil companies the chance to catch up. Look at all the price-raising opportunities they had to forego this summer because of BP’s little problem in the Gulf. We’ll see shortly what $1.25/L does to the economy.

#111 Dorf on 11.13.10 at 4:12 pm

“But she works for a bank, and therefore was busy hoovering sunshine up the rear ends of everyone in the room. Apparently it’s part of her job description.”

Yeah, it’s called the farmhand quiets the chickens, while the farmer sharpens the axe.

In shorthand it’s called “sellout”, “talking head”, “air pollution”.

#112 Moneta on 11.13.10 at 4:17 pm

Herb on 11.13.10 at 12
——–
A couple of years ago (credit crisis time when oil and commodity prices spiked), my father-in-law bought some made in China iron fireplace tools at Cosco. He paid some ridiculously cheap price that surely did not cover the cost of the materials and the shipping.

So it’s pretty clear that China has been subsidizing energy and resource prices for its producers for a while now. But like anything else, they won’t be able to do this forever.

The fact that production is shifting to South America is probably a sign that commodity prices are having an impact and/or that trade with China is getting iffy.

#113 Increasing that 1% on 11.13.10 at 4:19 pm

Re: getting a second job

Person I know just had interview cancelled because the potential employer decided it was a ‘conflict of interest’ since the person was working in another ‘retail’ store
-both jobs are in same mall
-job they currently have is limited to a specific area in a department store and second job would be with different stuff

#114 Devore on 11.13.10 at 4:27 pm

#50 Brian1

You were attacked yesterday in many ways.

You two should start a victims support group!

Attacked? Nobody was attacked. Stop playing the perpetual victim/martyr. Take off those glasses you’re wearing, they’re distorting your view, go outside and get a new perspective.

Regarding free will and recent research on the brain:

http://www.wired.com/science/discoveries/news/2008/04/mind_decision

It’s still your brain, and it’s still you making the decision. It takes time to consciously formulate it and translate to action. For everything you do there is precursor activity in the brain. Whether it’s you deciding which button to push, whether to tell a lie, cross the street before the signal turns green, or smile back when a hunk winks at you on the bus.

Unless you think someone is messing with your brain. But you know, we have something to prevent that from happening.

#115 dd on 11.13.10 at 4:47 pm

Black Swan:

http://www.businessinsider.com/nassim-taleb-the-fed-is-banging-on-a-ketchup-bottle-and-it-could-all-explode-2010-11

#116 UrbanCowboy on 11.13.10 at 4:55 pm

80 dd on 11.13.10 at 12:16 pm
“Schwarzenegger Calls Emergency Session as $25 Billion Budget Deficit Looms”

Most states are running out of money.
——————————————————–
I thought the same happend a year or two ago. How many times are they going to be on the verge of bankrupcy in this state. But it goes to show you California has/had such a vibrant economy with everything going for it. What makes us think any Canadian province is immune to hardship including those with oil, rich chineese, government etc…

#117 Live within your means on 11.13.10 at 5:03 pm

.#49 John on 11.13.10 at 8:02 am

Do you really sell enough books at each “gathering of the faithful” to profit by the experience? Or are you just a squirrel eating, cowboy boot wearing, philanthropist at heart?
……………

I dunno, but when I attended Garth’s ‘seminar’ he didn’t have any books to sell, but he did have one to give away.

#118 S.B. on 11.13.10 at 5:10 pm

#117 Live within your means, yah – I was hoping to buy a book at the event and maybe ask Garth to sign it, for use as a wedding present to a 30-something couple!
But no books were for sale at this “money grab” [sic] (to quote the naysayers) :P

On the cover of this weekend’s Investors Business Daily news paper, headline reads: “Fed, Already Punishing Savers, Now Risks Unleashing Inflation”
‘Money markets returns almost nothing while raw material costs soar’

#119 Makeorbreak on 11.13.10 at 5:10 pm

http://www.politicalgateway.com/news/read/173353?source=patrick.net

#120 Timing is Everything on 11.13.10 at 5:15 pm

#114 Devore

You seem…emotional, today. Maybe it’s ‘hormones.’
It’s just entertainment, for the most part. Everyone plays their part….to perfection.

Man, I’m glad I kept mine…
Sno-cone please.

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

#121 BrianT on 11.13.10 at 5:17 pm

#107Kitchener-Possibly, but it sure hasn’t worked out that way in the US. Government employment has literally skated along almost untouched while the overall economy contracts monthly. California has almost nothing left but guv jobs, while 7 out of the 10 “richest” counties in the US are now in the Wash DC area.

#122 Live within your means on 11.13.10 at 5:18 pm

#51 Nutty squirrel on 11.13.10 at 8:19 am
Garth
Always keep your shoes/boots polished, not for the bankers to look at, but for the ladies. Apparently it is one of the first things they notice.

I did not say that about RESPs. They are a useful tool and any time the government hands over money, you should take it. And, yeah, I know about the ladies thing. — Garth
…………….

Not sure I understand that!!!

#123 Ben on 11.13.10 at 5:36 pm

103 Canayjun on 11.13.10 at 3:17 pm

I think RVing had it’s phase with boomer parents.

#124 Devil's Advocate on 11.13.10 at 5:39 pm

#102 Marc on 11.13.10 at 3:02 pm
Looks like the Competition Board is still looking for their pound of flesh from the CREA and MLS.

Ya, CREA will crumble. But what you don’t understand is how CREA will crumble.

The member real estate boards across this country will opt out of CREA membership and each set up their own Multiple Listing Systems, which each has already by the way (Tarasoft, Matrix, Kinnexus etc). No longer will those stats be shared with the lifeless carcass CREA will become and your government will inherit a useless organization with no members nor any willing to associate with it. CREA will be useless.

Will this affect the real estate industry? On a localized basis hardly at all. Nationally a bit. Will our service to our clients be diminished with the failure of CREA? On a localized basis not at all. Nationally… well there will be no mls.ca or realtor.ca for the public to view listings on the other side of the country. But you will be able to hire a REALTOR who will get that information for you through a co-operating broker/agent.

Oh and the “mere posting” thing you think The Bureau won so that For Sale By Owners could list on MLS for a flat fee which in reality was always an available option… ya you can kiss that one good-bye.

;-)

#125 Devil's Advocate on 11.13.10 at 6:13 pm

Further to my last post you could shake this down to individual brokerages which might band together to form their own exclusive co-operating systems of sharing listings. The two largest franchises of independently owned brokerages across the country RE/MAX and Royal LePage could, on a region by region basis, form their own exclusive systems of co-operation within those regions. As these two franchises in most cities represent a significant majority of the market it would provide a most beneficial resource to and for the buyers and sellers in each region to deal exclusively with them.

As such independent organizations those associations could insist upon a common business model as a fundamental term of association. Granted there would be limits to which they could push this but those limits would be far more lax than those being imposed upon CREA at this time – far more. And there would be no sharing of any proprietary information what-so-ever with anyone they didn’t want to share with.

Think this is impossible? Look south. This is the way it is in the US… the land of free enterprise and organized real estate is still the mainstay there.

There are benefits CREA does provide to Canadians. We and you will survive without them. But I truly do think at the end of the day you will find you would rather they be retained. I know you think them a big spin machine but it’s really not so much the case as you believe. Public sentiment is moody right now and looking for a scapegoat. The real estate industry is an easy target.

But, REALTORS are not going anywhere folks. Yes the internet has changed the way we do business but it has not changed the business. I don’t mean to be smug when I warn; you’d be well advised not to look a gift horse in the mouth. Or would “the grass is always greener…” be a more appropriate saying?

The benefit Canadians gain by there being a national association like the Canadian Real Estate Association (CREA) is far greater than were CREA to cease to exist. Sadly, I think you will find this out in the not too distant future. But then it will be too late to turn back the hands of time.

Oh I know what saying best fits “Don’t be so quick to cut of your nose to spite your face”

#126 dd on 11.13.10 at 6:25 pm

…You said the Fed stated it’s purposefully devaluing the currency. I asked for a reference. You were unable to provide one. Now you attack. The next time you make up facts, be a little more convincing, or a little more humble. — Garth…

You definition of debasement is clearly different from mine. The recent annoucement of $600billion ($2 Trillion for Qe1) in money printing is proof enough. Watch over the next 6 month as the Fed primes the public with 2%+ inflation targets.

#127 Marty on 11.13.10 at 6:31 pm

Oh, so he didn’t say his goal is currency devaluation. You just made that up. Thanks for clarifying. — Garth

You can’t have your cake and eat it. Printing money dilutes the purchasing power of every dollar, period.

Empirically, whenever a state starts counterfeiting its own currency it has always lead to the loss of faith of that currency, and usually a new government takes power shortly thereafter.

If your claim is that QE2 will make the dollar appreciate you need to get your head checked as you may be suffering from fiat paper delusions of grandeur.

Here’s to the dogmatic gold nuts. Woof! — Garth

#128 Real Estate Surrey on 11.13.10 at 6:40 pm

hopefully there will be no big job losses.

#129 brainsail on 11.13.10 at 6:44 pm

#110 Herb

“Heck, you can’t begrudge the oil companies the chance to catch up. Look at all the price-raising opportunities they had to forego this summer because of BP’s little problem in the Gulf. We’ll see shortly what $1.25/L does to the economy.”

Then why are we only paying $2.65 a gallon in Central Texas? That’s about 67 cents a L.

#130 Prem on 11.13.10 at 6:50 pm

Jimbo “NOV 13 and the Brampton Real estate board has still not published Sept and Oct sales stats.

It’s very bad.

http://www.bramptonandarearealestate.com/2010_Residential.html

I hear from a friend sales fall worse then 50% for September and october. Many power of sales and many people go bankrupt and leave Canada. Brampton can become ghost town if many go bankrupt and go home.

#131 the econoom on 11.13.10 at 7:01 pm

The selling price of detached single-family resale homes is dropping, says the Calgary Real Estate Board.

The median price for October was $2,100 lower than the September median of $390,000 — and down $23,000 from October last year, the board says.

The median is the middle of the range of prices and is considered to be a more accurate measure of the resale market than the average price.

Gary MacLean of Re/Max Central has been tracking sales, prices and listings for years — and his numbers are even more telling in terms of how far the median price has fallen.

In northeast Calgary, the median price lost $31,000 from its 2010 high of about $320,000, he says.

In the southeast, after hitting a high of $408,000, the median has fallen back $28,000.

Meanwhile, there is a $35,000 gap in northwest Calgary between a high of $440,000 and where the median was at the end of October.

But the most dramatic decline took place in the southwest, where the median fell $77,000 from a high earlier this year of $515,000.

Read more: http://www.calgaryherald.com/business/Resale+market+slows/3822954/story.html#ixzz15D2dCRgx

#132 dark sad person on 11.13.10 at 7:07 pm

Empirically, whenever a state starts counterfeiting its own currency it has always lead to the loss of faith of that currency, and usually a new government takes power shortly thereafter.

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

Yes-but after the loss of faith in the currency-
“A man on a white horse will appear”
Then-a new government takes power-

#133 Increasing that 1% on 11.13.10 at 7:17 pm

120. Timing is Everything,

It’s the yumm yumm fun that is kool and keen, yeehaw
Time to start thinking about what the ‘retail’ rage will be for Christmas
a departure from the ‘…emotional’, deep..very deep..Maslow quote or reflection-on-human-existence above
One can feel so rich when they can make their own sno cone, or share a successfully made cake from an easy bake oven

#134 marcus aurelius on 11.13.10 at 7:23 pm

#125 – DEVIL’S ADVOCATE = STUNNING LACK OF LEGAL AWARENESS

All sniggering aside, the utter lack of self-awareness of this fool is stunning. He doesn’t seem to realize that it takes a certain degree of ‘knowledge’ to venture outside his usual area of conjob.

Nothin in that post is ‘onside’ antitrust/competition law. If Phil Soper or George Pahud wrote it, the would be immediately rushed into a straight jacket by their handlers. Now multiply this gaseous illiterate by 19,000. That’s how many agents are also just making it up as they go along.

His idea of a good time, as described, happens to be a pretty good description of a cartel abusing a dominant positon, signalling and “cooperating” to limit competition.

That tells you more about the so-called ‘thoughts’ of these real estate lobbies than you are usually intended to know.

33 Million Canadian taxpayers and voters will expect Melanie and her Merry Band to not only prevent the ‘largest franchises’ from circumventing the intent of the recent Settlement, but the next battles to come in the next weeks and months may resolve to what, if anything, will the law do when :

(1) these larger ‘franchises’ again try to smother competitors in the cradle by colluding against them (how many buyer agents will try to boycott RealtySellers’ listings?); and

(2) vendors outside the cartel start to offer as part of their ‘feature-rich’ sites access to public information (collated/offered but not ‘owned’ by any privat(ized) business) : (a) the actual days-on-market data and (b) the actual selling price of a listed property. I.e., if you know a house was really on list for a year (not just the last 10-days of churn the MSM ‘ads’ contain) or that the selling price was more like 85% of List , would you be so hot to spend time with a real estate hooker?

MLS still ‘reserves’ this public data to its ‘Members’ because they don’t want data that assists the consumer to be accessible to the chumps (er, ‘esteemed foreign and native buyers’).

Hard to not see these walls coming down -the sales cartels do not own that data….Like most Canadians, it will feel odd rooting for Rogers (Zoocasa) or others sniping at a market for dissemination of information that is opening up now…

VIVA LARRY DALE!!! VIVA LA REVOLUCION!

#135 BrianT on 11.13.10 at 7:24 pm

Why all these half measures? Anyone who purchases an airline ticket should be thrown into the Gulag-somehow we need to be protected http://www.washingtonpost.com/wp-dyn/content/article/2010/11/12/AR2010111206580.html

#136 RJ on 11.13.10 at 7:27 pm

“Suddenly the US dollar didn’t look so ugly.”

Dude, take off your beer goggles. Put on your silver specs. DX to 81 max. Short, sharp, correction in monetary metal coming, followed by a bonfire of papyrus.

R.E. in Florida mummified. Toronto next.

#137 jess on 11.13.10 at 7:43 pm

Thanks Ricoh for the link. Self regulating indeed

Market gatekeepers?
Has the structure of our equity markets become so complex, (80 alternative trading systems around the country, + BATS and Direct Edge) and has trading become so fast, (more than a billion shares a day/and programed to make a profit of a penny or less, 40m. x’s per day.) Some experts believe there are people out there who have advantages, for example, insiders, the big companies banks, high frequency trading firms.Schapiro and Senator Kaufman concerns are that the average investors have lost faith in the integrity of the system.

http://www.sec.gov/news/speech/2010/spch101310geb.htm
Speech by SEC Staff:
Market Participants and the May 6 Flash Crash
byGregg E. Berman
Senior Advisor to the Director, Division of Trading and Markets
U.S. Securities and Exchange Commission

Location ,speed and size
Larry Leibowitz, the chief operating officer of the New York Stock Exchange, believes its massive new data center in Mahwah, N.J. will help the exchange regain some of the market share it has lost to electronic trading platforms. And he is busy persuading traders to lease space in the center’s stark black boxes for their super computers. The closer they are to the stock exchange’s server the quicker they will be able to get critical market information. And would help the exchange regain some of the market share it has lost to electronic trading platforms.

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

The Kauffman Report basically dings ETFs, saying that they’ve made the markets worse, threatening their stability and impacting stock prices in the way they’re structured. A later NASDAQ report says this is simply not true. That report says ETF’s are not a cause of the crash but merely a victim.
Read more: http://www.thirdage.com/news/etfs-hold-systemic-risk-markets_11-12-2010#ixzz15523wgxJ
http://www.securitiestechnologymonitor.com/news/SEC-schapiro-wants-probe-of-loose-markets-26356-1.html
=

http://www.financialpost.com/news/ETFs+pose+growing+flash+crash+risk/3799130/story.html#ixzz15663ESPu

The Investment Industry Regulatory Organization of Canada launched “an advanced single-window surveillance system” on Wednesday to monitor all equity markets in Canada.

The Surveillance Technology Enhancement Platform, known as STEP, is meant to allow IIROC to conduct cross-market surveillance to keep up with the dramatic growth in the speed and volume of trading on multiple platforms in Canada’s equity markets.STEP can process up to 400 million trades, orders, quotes and cancellation messages per day and is scalable to meet the anticipated growth in the volume of trades and messages, IIROC says. The self-regulatory agency of the brokerage industry monitors an average of about 800,000 trades and 180 million messages daily.
==

#138 Herb on 11.13.10 at 8:00 pm

#129 Brainsail,

because our oil companies are a greedy bunch of bastards who can get away with it due to the silence of us lambs.

I also would think that Central Texas is a lot closer to the Gulf scene of the crime, hence the need to tread softly. It wouldn’t do to have pissed-off people actually demand government action.

#139 Utopia on 11.13.10 at 8:03 pm

#32 virginhomebuyer on 11.13.10

“Who wears cowboy boots these days”?

——————————————————-

Who’s got time for laces when the Realtors with pitchforks show up? All of us old guys wear slip-ons now.

Some of us have ex-wives too and a good reason to avoid slow footwear and laces. Say hello to Velcro!

#140 45north on 11.13.10 at 8:08 pm

Prem: talking about Brampton sales I hear from a friend sales fell 50% for September and October.

you know I haven’t heard from Tony for awhile. Tonya was close but still not Tony.

#141 Hiteclowtec on 11.13.10 at 8:39 pm

Quantitative Easing Explained

http://www.youtube.com/watch?v=PTUY16CkS-k

#142 morpheus on 11.13.10 at 8:48 pm

Jimbo “NOV 13 and the Brampton Real estate board has still not published Sept and Oct sales stats.

It’s very bad.

http://www.bramptonandarearealestate.com/2010_Residential.html”

I hear from a friend sales fall worse then 50% for September and october. Many power of sales and many people go bankrupt and leave Canada. Brampton can become ghost town if many go bankrupt and go home.

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

Can’t this information be extrapulated form the TREB data somehow? I just remember they put a cap of development a couple years ago in Brampton because it was getting out of control. They also have quite a few “subsidized” mortgages in the Northwest area. Anyway, it wouldn’t surprise me if it were ground zero for the GTA crash. Steak dinner for anyone who can dig those numbers up.

#143 Utopia on 11.13.10 at 8:55 pm

To #61 The Apocalyptic One formerly Old is Gold.

Regarding Gold, I hope you have noticed how quickly the bloom could come off the rose after last Fridays carnage.

A measly little interest rate hike (suggestion only) was all it took to take several percentage points off Gold’s luster. In the case of Silver, the drop was a stunning 7% intraday and 5.9% in total at the close.

The gold crowd has a million and one reasons to keep buying and telling everyone else to do the same but at the end of the day the serious sellers can still wipe out your profits and you’re other good days.

I read someone elses comments here today. He was crowing about the success and about being “All In” on gold investments.

Crowing today maybe, but eating it tomorrow.

#144 Devil's Advocate on 11.13.10 at 9:10 pm

#134 marcus aurelius

Want to see what’s coming marcus… look south. That is all I am saying. You do not understand the industry. The industry does understand you though.

What we have in Canada is a good thing. You will realize this when it is gone.

BTW I sell discount brokers listing, I sell For Sale By Owners homes. I sell what ever it takes to get my client into the best home for them within the constraints of their budget regardless who’s is marketing the home.

There is a movement afoot away from CREA toward a US styled system. Those historical statistics are ours. If you want them you can compile them from your local land title offices which are government owned and operated. Only reason not to is there is a readily available collection of them at CREA. But really CREA doesn’t report your local stats your local real estate board does.

The larger the group the greater the opportunity. This is exactly what pisses FSBOs off – pretty difficult for them to do on a one on one basis what we can do en masse for them. Do you want to break it down so we all compete on the less effective model or do you want to maintain access to the opportunity?

No bother… I really do believe you will get what you are asking for in time. And after that in time you will realize how wrong a wish it was.

When it happens there will be no skin off my nose but for you a whole nose off your face.

Again… there is a movement away from CREA by it’s membership. The competition bureau may achieve that which you hope for without so much as lifting a finger. You see… CREA was created by us for you not so much for us. We will do just fine without it.

#145 GoingGagaforGarth on 11.13.10 at 9:13 pm

I was speaking to a friend today who will be listing her house soon. She tried to convince me that there is still bidding wars going on in the GTA!?!?and that there is hardly anything left out there. I find this hard to believe with the crash in sales. Anyone hearing of any bidding wars still going on in the GTA lately?

Curios…..

#146 dark sad person on 11.13.10 at 9:21 pm

The bloom come off the rose-

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

http://www.barchart.com/chart.php?sym=SIZ10&style=technical&p=DO&d=M&x=58&y=12&sd=&ed=&size=M&log=0&t=CANDLE&v=2&g=1&evnt=1&late=1&o1=&o2=&o3=&sh=100&indicators=&addindicator=&submitted=1&fpage=&txtDate=#jump

http://www.barchart.com/chart.php?sym=SIZ10&style=technical&p=MN&d=M&x=50&y=5&sd=&ed=&size=M&log=0&t=CANDLE&v=1&g=1&evnt=1&late=1&o1=&o2=&o3=&sh=100&indicators=&addindicator=&submitted=1&fpage=&txtDate=#jump

http://www.barchart.com/chart.php?sym=GCZ10&style=technical&p=DO&d=M&x=46&y=7&sd=&ed=&size=M&log=0&t=CANDLE&v=2&g=1&evnt=1&late=1&o1=&o2=&o3=&sh=100&indicators=&addindicator=&submitted=1&fpage=&txtDate=#jump

http://www.barchart.com/chart.php?sym=GCZ10&style=technical&p=MN&d=M&x=58&y=13&sd=&ed=&size=M&log=0&t=CANDLE&v=1&g=1&evnt=1&late=1&o1=&o2=&o3=&sh=100&indicators=&addindicator=&submitted=1&fpage=&txtDate=#jump

#147 Timing is Everything on 11.13.10 at 9:36 pm

#133 Increasing that 1%

I think all my ‘needs’ are met.

Schizoid – characterized by or showing conflicting or contradictory attitudes, ideas, etc.

Kinda like investors and traders…and society in general. I hope nobody gets hurt (or worse) on Black Friday this year…

http://money.cnn.com/2010/11/13/news/companies/walmart_black_friday_ad_2010/

http://www.amazon.com/gp/product/B0021VIDOQ/ref=pd_lpo_k2_dp_sr_1?pf_rd_p=1278548962&pf_rd_s=lpo-top-stripe-1&pf_rd_t=201&pf_rd_i=B000R4GO3G&pf_rd_m=ATVPDKIKX0DER&pf_rd_r=1C1Q99FW6HV7VPCZSY93

#148 Leanne on 11.13.10 at 10:25 pm

“Oh, and I sold no books at my event this past week, so you’ll have to keep guessing at my motives. Maybe I’m just trying to meet hot women.” — Garth

I’ll take that as a compliment. Nice cowboy boots, Garth.

#149 M I K E on 11.13.10 at 10:50 pm

“You can’t have your cake and eat it. Printing money dilutes the purchasing power of every dollar, period.

Empirically, whenever a state starts counterfeiting its own currency it has always lead to the loss of faith of that currency, and usually a new government takes power shortly thereafter.

If your claim is that QE2 will make the dollar appreciate you need to get your head checked as you may be suffering from fiat paper delusions of grandeur.”

Hey Matty,

I agree with your points(long term), however(short term) I agree with this article.

“The U.S Dollar has been shunned for most of this year, especially during September and October, and has lost ground against virtually all major developed-nation currencies. It has lost even more against commodity-rich developing ones. Yet following the Republican victory in the midterm elections and the Fed’s infamous QE2 round of quantitative easing (in the form of $600 billion newly-printed dollars), the dollar has held up reasonably well. This means two things; QE2 is already priced, and in fact was being priced during the fall as the markets speculated exactly how large it would be. Secondly, the markets are likely to start looking past QE2 in short order and begin pricing the dollar for higher inflation rates and a rebounding economy. Indeed, the G-20 meeting this week will see a chorus of international criticism against QE2, but we doubt any appreciable downward movement in the dollar.”

Cheers;
Mike

#150 604genX on 11.13.10 at 10:55 pm

More evidence of prudent, conservative, Canadian lending standards: No money down mortgage financing. In Vancouver.

http://www.yourmortgagesource.org/product-information.shtml#OwnerOccupied

Probably some sub-species parasitic entity.

#151 np on 11.13.10 at 11:07 pm

inflation is well on it’s way… it’s silly to think otherwise.

Secret Walmart Survey Shows Inflation Already Here
http://www.cnbc.com/id/40135092

#152 Fred on 11.13.10 at 11:21 pm

GoingGagaforGarth #145

Sales are really down this month and nothing but price drops from a realtor I know. The GTA isn’t doing so well in Nov and so this will mark yet another decline of greater then 20%. Everyone in the RE biz is hurting right now. Many in the biz fear they can not hide the truth for much longer. They have done an amazing job at fooling the masses. They know people are stupid and they laugh about it in private but they know with time the masses wake up to reality.

#153 Nostradamus Le Mad Vlad on 11.13.10 at 11:24 pm


#115 dd — Very interesting link re: black swan.
*
1:23 clip Gerald Celente usually raps on about money and / or the lack thereof. Here he draws on parallels between WW2 to show how WW3 might start.

Bank Dividends — not bank preferreds may be affected by the mortgage debacle. “Josh Rosner: Foreclosure Fraud Nightmare Scenario Could Dwarf The Lehman Weekend”

China “China believes its economic success reflects its superior culture.” Power trip?

Ben Dover and kiss your ass(ets) goodbye!

Any dictionary proves the only definition of the word cult is worship, and all cults, like empires, fall. Hero worship?

BoA is in deep trouble, but they are only window dressing for what lies behind.

Actually dubya, Cheney, C. Rice, Rumsfeld, T. Blair, Powell etc. are all war criminals and should be tried as such.

QE2 is having its desired effect. Plus — MERS “The Congress is about to legalize land-snatching!” wrh.com.

Time this pre-planned hoax was boarded up in a tin box. But they won’t quit, will they? This is the only reason we’re being taxed out of existence.

Repeat: Cycles are shifting from west to east, and the US (or the west) will not prevent it from happening. Plus this.

Deja vu all over again. Reasons inside.

Penny Pinching Hooray! Some sheeple are finally starting to clue in — if it’s too expensive, go without!

JFK and RFK The only reason they were taken out was because they would have taken down the US Fed.

#154 BrianT on 11.13.10 at 11:28 pm

#145Gaga-Yes they exist on some select streets. As Garth has noted, the southern Ontario RE market is generally weakening starting with the periphery. Some single family home streets in TO are still quite strong and choice condos have held up quite well-other posters on this site have commented on the major slowing of Brampton and to a lesser extent Burlington and Oakville.

#155 T.O. Bubble Boy on 11.13.10 at 11:32 pm

Insane REALTOR.ca listing of the day:

http://www.realtor.ca/PropertyDetails.aspx?PropertyID=9417635&PidKey=761922600

On the market 199 days.

$1.33M

Has a current tenant on a lease until 2012 @ $4000/month.

Let’s do the math on that:

$1,330,000 price
w/ 25% down = $997,500 mortgage

@ 4% with 25-yr amortization = $5247/month just for the mortgage payment! (you’re already losing $1250/month before you even get to property taxes or anything else)

Even with a ridiculous 5% down / 35-year amortization and a 2.5% variable rate, you’re looking at over $4500/month just for the mortgage. (still losing $500/month before any other costs are included)

This place would need to drop at least 30% before it sells.

#156 Utopia on 11.13.10 at 11:46 pm

The bloom come off the rose-

**************
That is correct.

I have seen the charts too by the way. Nice charts.
Never forget though that the higher it (gold) goes the harder it falls. It is just forming another bubble that will inevitably end in tears for the unwary and unprepared.

You need a little diversification and balance.

Didn’t you people learn anything from the subprime crisis, Dot-com bubble, US real estate implosion, Enron or even the last gold bubble??

Well, I was there and you can trust me on this, it came as a hell of a shock when the ride was over and almost none of the gold-bulls at the time could see it coming.

And they never do.

#157 Soylent Green is People on 11.13.10 at 11:52 pm

To #145 GoingGagaforGarth on 11.13.10 at 9:13 pm

My ex is a contractor in nice areas of North Toronto, tearing down bung. and building new. He has a friend who does same thing who sold his new build for above list, apparently there was a bidding war, we’re waiting to see for shure on TREB if that was true. This house went for two million. So the rich elite who stole all their money from the poor don’t worry about money and just get what they want when they want it.

~~~~~~~~

With a scheme to sup­port its poor not with work but with sur­plus cheese, Ire­land has returned to its posi­tion as the pathetic drunk of Europe.

http://www.urnews.ca/2010/11/ireland-returns-to-pathos/

#158 Devore on 11.14.10 at 12:04 am

More fun with numbers, putting things in perspective.

Top 20 underwater mortgage cities in US, with Phoenix where 2 in 3 mortgages are under water, and #1 Las Vegas: fully 4 in 5.

Numbers like these are simply beyond comprehension, like trying to imagine what a trillion dollars looks like. I’d think people like these would believe just about anyone who’d come and promise to make things better.

#159 Utopia on 11.14.10 at 12:12 am

#81 Herb on 11.13.10 said…..

Now, I don’t mind paying 35c for a band-aid that sticks (haven’t found one in recent years), but these were “Made in Brazil.” What would possess an “American Company”, a “Family Company” (as it advertises itself) to outsource band-aid production to Brazil?
—————————————————–

You will be seeing more and more of this in the coming years. Many Western companies are discovering it is cheaper to do business in Latin America, India, parts of Asia other than China and even in Africa.

The difficulty now with China is that the astonishing growth there has made them a more difficult and expensive place to do business.

Even the Chinese are now outsourcing to the Third world and textiles have been leading the way. This is one industry that always seeks out the lowest labour cost jurisdictions first. It is bitterly competitive.

Even Mercenary!

#160 Utopia on 11.14.10 at 12:31 am

#100 miketheengineer

And the price of gasoline is now 1.09Plus in GTA….

The oil companies, the gouging goons that they are, have us bent over a table and are inserting the gas nozzle.
———————————————————

So fight back. Walk to work. That will teach em.

#161 Jojo on 11.14.10 at 12:37 am

Wow,Wow,Garth
Did you say Economic Slowdown and on the top next few years – higher taxes, higher rates, Baby Boomer financial panic and fat household debt. Together they ensure we’ll have a no-growth economy with structural unemployment, less consumer spending and house angst. Than WHAT Was the “RECOVERY” money to Create a Bubble even higher than 2007?
Than somebody is “denial”. I want to see Harper and company after 3 years how they can collect moneyback $50 + billions from economic boom,production NOT from highest taxes in the world. We’ll see again recovery and they “must” print more money whatever is a debt level untill of collapse the currency or will see “Depression”.

#162 Utopia on 11.14.10 at 12:54 am

#103 Canayjun

RV’s are typically something someone buys when they are closer to retirement? Anyway, they are going out of business. Is this because the boomers aren’t doing the RV route so much now?
———————————————————-

I have friends that are headed to Texas this week. They could not get a booking into the RV park they always go to every year. There is a six month waiting list too.

The RV park as it turns out has been taken over by locals who have lost their homes or been foreclosed on and now live there full-time.

A sign of the times.

#163 T.O. Bubble Boy on 11.14.10 at 12:54 am

Al Sinclair (the ultimate RE pumper on CP24’s Hot Property) has a great property for sale:

http://www.realtor.ca/propertyDetails.aspx?propertyId=9980530&PidKey=-971793983

As expected, the listing claims this is a “great condo alternative”…

I wonder what he’d say about this place:

http://www.realtor.ca/propertyDetails.aspx?propertyId=9884959&PidKey=284063787

Maybe something like “great play fort for your kids to explore”?

#164 Utopia on 11.14.10 at 1:01 am

Re #107 Kitchener1 comments……

Beautifully stated Mr Kitchener. Well said.

#165 Don on 11.14.10 at 1:05 am

Nonpulsed:

My feelings exactly – Thank you for spelling out that GenX was taught a hgher level of Math.

I know GenX to be a very analytical but silent Generation… waiting to step in and mend the fences. I know many Gen Xers still waiting on the sidelines for the coming house price decreases, we are also the Generation who witnessed our parents go through the last bubble in the early 80’s…that kind of reality can leave lasting impressions on children.

Good luck all! It’s envitable, the laws of science are linning up against the Canadian Real Estate dilema.

#166 stanley on 11.14.10 at 1:57 am

The bloom came off the rose?

Those that paper shorted should hope that they are not called on to deliver the physical metal.

#167 nonplused on 11.14.10 at 2:10 am

#71 dm in kw

You are suggesting aggressively taxing inflation. I say remove head from butt and see what’s going on. Capital gains taxes are only just when the inflation rate is zero. Otherwise the government is simply seizing assets through taxing inflation.

Garths TFSA is a great first step, but it’s small and diversionary. What’s happening here is that the government creates inflation, and then taxes the resulting capital gains, and the result is a capital tax, like a property tax. If Garth had done us a real favor, we would be able to put al of our assets in a TFSA, not just enough to supplement RRSP’s but with no current tax loss to the government.

I’ll use gold as an example, since it quickly gets rid of the ears that will not hear. If I bought a coin, took delivery, and put it in my safety deposit box in 2004 for $400, I now have a gain of something around well its north of $800 but I want to use round numbers.

So on an investment of $400, I have to pay taxes on an $800 dollar gain. But yet the cost of all the things I want to buy have risen by a nearly equal amount. Want to buy a house? Prepare to pay 100% more for it than you did in 2004. Want to buy gasoline? Need I say more.

Capital gains taxes are criminal confiscation unless the inflation rate is zero. At the very least capital gains should be inflation adjusted. And don’t get me going on the criminality of the government declaring the inflation rate. Those guys are out to lunch. The real inflation rate is close to 10%, and GDP is in fact depression like already. But we have to accept their numbers.

#78 BDG-YYC

I am prone to rant. Thanks for noticing. I try to entertain, but alas, no success.

But it peeves me to a point where I am nonplused that so many people continue as if the Ponzi scheme can work so long as we all believe in it. Bernie anyone?

Garth on #79 dd

Actions speak louder than words. If everyone thinks printing money to buy government debt leads to currency valuation, and can sight multiple examples where that action has lead to currency devaluation but none where it didn’t, but the proponent of money printing says that’s not what they are trying to do, only a few conclusions are possible. I offer 2: They are crazy, or, they are, as the German guy said, clueless. Both would be bad.

#86 Evangeline

It’s a small advantage, not a big one, and only those who have already fully maxed out their RRSP limit can take advantage of it with real success. Hence it’s a tiny bone to a small percentage of the population most of whom won’t figure it out or find it worth the time.

#168 Devil's Advocate on 11.14.10 at 2:59 am

His idea of a good time, as described, happens to be a pretty good description of a cartel abusing a dominant positon, signalling and “cooperating” to limit competition. – #134 marcus aurelius

There was nothing expressed to limit competition but rather everything to express competitive advantage. There was no mention of boycotting or excluding beyond acceptable competitive business practices. They would not be monopolistic ventures just competitively advantaged ventures.

Before you know it you will be rallying the troops against shopping malls as they are seen by you to be exclusive and limiting competition.

#169 The Original Dave on 11.14.10 at 3:06 am

I was speaking to a friend today who will be listing her house soon. She tried to convince me that there is still bidding wars going on in the GTA!?!?and that there is hardly anything left out there. I find this hard to believe with the crash in sales. Anyone hearing of any bidding wars still going on in the GTA lately?

Curios…..

———————————-

this is possible. There are areas of Toronto that there aren’t any listings. No reason to be concerned. I believe that sellers weren’t getting the offers they wanted, so many of them pulled their listing and plan to re-list in March/April. I’ve heard people I know talk about this.

Sellers think they’ll be able to command higher prices in the spring just like in 2010. Those people don’t even realize rate drops and looser lending caused the panic purchasing in early 2010. In 2011, all the people that didn’t get their desired price that have listed since June 2010 test the market again. A flood of listings come on board and there is no chance that there’s enough buyers willing to soak the listings up. The usual hot time of spring for real estate will be ugly and then that continues into the summer. Toronto will realize whats happening by then. Listings will continue upwards and no more geniuses saying it’s a good time to buy.

We will see first signs of panic in Toronto late spring. I’ll guarantee the party is over. There isn’t robust sales right now for the available supply even though a lot of the supply has been taken off compared to what it was. It’s going to get really interesting.

#170 timbo on 11.14.10 at 5:32 am

Clarke and Dawe: Lending merry-go-round
lol

http://www.youtube.com/watch?v=5D0VhS8qXT0&feature=related

#171 betamax on 11.14.10 at 5:41 am

#49 John: “The TRUTH is that Ireland has been on the radar in respect to it’s financial dilemma for at least three years. Why are you claiming otherwise? You know that’s untrue.”

There are none so sure of the TRUTH as the ignorant and unread.

http://www.telegraph.co.uk/finance/financetopics/financialcrisis/8131416/Ireland-denies-60bn-bail-out-talk-as-EU-puts-on-pressure.html

#172 David on 11.14.10 at 6:55 am

But unfortunately, as obvious and sensible as these warnings about Canadian housing are, my big-picture view, as a Canadian, is as follows:

We’re hopeless socialists. These mortgages are virtually all CMHC insured, and the Canadian government will, as it always does, quietly absorb all the pain onto ALL Canadians, even those who thought they were smart enough to get off the roller coaster early.

In Canada, financially responsible citizens pay for the financially irresponsible ones, and the political band plays on.

There is really no reward in this country for being anything other than a cheerleader like Mary Webb. And that’s really too bad…for all of us.

#173 Brian1 on 11.14.10 at 7:53 am

O.K. Garth. I just better be straight. I am suspicious of your motives. I think I’ve learned in life that no one does something for nothing. So I thought that you must be working for someone. I thought that it must be the banks especially after you defended them yesterday, but now I’m not so sure. I guess I’m scared to get to the point so I probe and dance around it. Anyway you have never confirmed or denied it and if you are, it may not be such a big deal anyway. There are so many things I don’t understand. If I did I may not be here.
There are some points that make me think as I do. When you get someone to sell their house the seller is encouraged to put the proceeds with the bank albeit indirectly, I think. The new fool now takes out a mortgage with the bank. The other people you save are encouraged to put their money with the bank indirectly, I think. The banks never lose. Even the government protects them to the hilt which makes me think that they are all really one bank with different target goals.
Anyway it is unfair to say you are breaking even since you do prevent a lot of people from buying a house in the first place and I think your investment methods are technically sound, except that I don’t think emerging markets will continue to emerge. For the most part I am just cautiously probing.

I work for myself, no bank. — Garth

#174 jman on 11.14.10 at 8:37 am

#145 GoingGaGaforGarth the tide has turned in east TO (not Scarb or beaches). The house near me listed for 550 went for 565 but three or four others went for about 1 or 2% below asking. All semis about 1100 sq ft. In fact the closest one to the 565 sale was asking 400 and sold for 395 but needed about 100 in renos IMO. I think if the place shows really well and is turn key it will move quickly and for top dollar but these are few and far between. I do believe the market is balanced right now in TO. Don’t know about GTA. But it is the trend which is telling. High strong sellers market has become balanced as it continues to slide down in the future. Glad my home is just that…a home, not a retirement plan.

#175 Herb on 11.14.10 at 9:03 am

#172 David,

We’re hopeless socialists. These mortgages are virtually all CMHC insured, and the Canadian government will, as it always does, quietly absorb all the pain onto ALL Canadians …

Nice assertion that it’s socialism for the rich or banks who take the profits), and capitalism for the poor (who cover the losses of the banks.)

Be careful in what you describe as “socialist.” Just because the term “socialism” is familiar and has been brought into conjunction with “bad” does not make it applicable to all economic mayhem. It hardly is socialism when “financially responsible citizens pay for the financially irresponsible ones” when the latter are “capitalists” who have screwed up. Even some Third World countries, where a small elite might exploit the whole country for its own benefit, would be “socialist” in that case.

#176 Willy H on 11.14.10 at 9:05 am

#172 David on 11.14.10 at 6:55 am

We’re hopeless socialists. ….

In Canada, financially responsible citizens pay for the financially irresponsible ones, and the political band plays on.
_ _ _ _ _ _ _ _
Compared to who? The USA and it’s wealthy plutocracy who like to “socialize” all their losses with bail-outs from the American taxpayer but keep almost all the profits for themselves. Our southern neighbour makes almost all the nations on this planet appear “socialist” using your logic. I much prefer the term mixed-capitalist for Canada. Although we are far from perfect*, I think we have found a slightly better way of doing things.

A few more years of your kind of “GOP” supply-side fairy tale economics** combined with trickle-down austerity*** (soon to be enacted) will wipe out the middle class in America. The financially irresponsible one’s are already toast, don’t worry.

Bay Street Mary is on your side, just like most of the Wall Street fraudsters.

*RE situation in Canada is not unlike the Americans as spelled out by Garth many times.
** Deficit spending (on military, wars, farm subsidies, corporate welfare), uncontrolled government growth, lower taxes for all, and pretending everything is just peachy while the national debt spirals to the heavens. While obese Americans scramble to fill up that low-cost flights to Orlando and shimmy 52″ LCD’s through the front door, China & India rumble right on past. America will soon be in the world’s rear-view mirror, if it isn’t already.
***lower taxes on the wealthy and corporations and pile the burden up on middle class family’s as recommended by the “Deficit Commission” last week.

#177 Blitzkrieg on 11.14.10 at 9:49 am

Koz 101,

You are correct about scenario 1, but your reasoning is faulty under scenario 2.
Bond funds reinvest proceeds daily, rebalance and immunize holdings to be fully reflected of current market conditions. In a rising rate scenario a bond fund will typically be superior to an individual bond as maturing proceeds are reinvested at higher yields throughout the period to reflect changing market conditions. There are numerous hedging/managing strategies to stabilize returns.
It changes under assumptions where you are referring to a special one class speculative bond fund, where trading fixed income instruments is priority and providing an income stream is secondary.

#178 Sail1 on 11.14.10 at 9:50 am

#37 Cookie Monster

And you are how old?

#179 BrianT on 11.14.10 at 10:16 am

Great article on Ireland-the looting continues-http://www.guardian.co.uk/world/2010/nov/14/ireland-economic-crisis

#180 Ben on 11.14.10 at 10:22 am

$139,900

3 Beds – 2 Baths – 2,085 Sq Ft – 0.86 Acres

No reno’s needed, just move in!

http://www.realtor.com/realestateandhomes-detail/1430-Briarcliff-Road_Macon_GA_31211_M67506-36713

#181 Basil Fawlty on 11.14.10 at 10:31 am

#156 Utopia
“I have seen the charts too by the way. Nice charts.
Never forget though that the higher it (gold) goes the harder it falls. It is just forming another bubble that will inevitably end in tears for the unwary and unprepared.”

In my mind gold is the inverse of the real bubble, which is US Treasury Bonds. As James Dines says, “Gold is the hitching post of the economic universe”. It does not change, as much as other financial assets move around gold and it’s price is a reflection of the underlying health of the financial system. The ongoing printing of trillions of dollars by governments indicates a sick financial system and is reflected in the gold price. If the financial system was well managed and gold was at these prices, then we could talk of a bubble.
Gold is catastrophe insurance and one should hope they never have to cash in their policy.

#182 Xnilo on 11.14.10 at 10:38 am

The Game is always simple: socialize debt but privatize wealth!

#183 Betty on 11.14.10 at 10:48 am

145 GoingGaGaforGarth the tide has turned in east TO (not Scarb or beaches). The house near me listed for 550K and went for 503K but three or four others went for about 10 or 15% below asking. All semis about 1100 sq ft. In fact the closest one to the 503K sale was asking 400k and sold for 355k but needed about 50K in renos. I think if the place shows really well and is turn key it will move but not for top dollar anymore since sellers are a dime a dozen but buyers are few and far between. The market isn’t balanced right now as sellers out number buyers in TO and it’s worse for the rest of the GTA. But it is the trend which is telling. Glad my home is just that…a home. Many people are close to the cliff and so power of sales will be on the up and up.

#184 nelson in ktown on 11.14.10 at 10:54 am

http://www.castanet.net/edition/news-story–101-.htm New devlopment in West Kelowna on native land confidence is pretty high here! Half sold out no shortage of greater fools here in Brain washed BC.

#185 Moneta on 11.14.10 at 11:05 am

combined with trickle-down austerity
——
It was called trickle down because the money trickled down. It will probably be more like flow-down austerity.

#186 dark sad person on 11.14.10 at 11:08 am

#156 Utopia on 11.13.10 at 11:46 pm

The bloom come off the rose-

**************
That is correct.

I have seen the charts too by the way. Nice charts.
Never forget though that the higher it (gold) goes the harder it falls. It is just forming another bubble that will inevitably end in tears for the unwary and unprepared.

You need a little diversification and balance.

Didn’t you people learn anything from the subprime crisis, Dot-com bubble, US real estate implosion, Enron or even the last gold bubble??

Well, I was there and you can trust me on this, it came as a hell of a shock when the ride was over and almost none of the gold-bulls at the time could see it coming.

And they never do.

*********************
Maybe you could point out the bubble you see?

Diversification and balance?
Why does everyone “assume” that because you have an investment in gold-that you cannot possibly be diversified?

I never have been able to figure that one out-

I was “there” too during the internet boom and I saw it coming-
The reason I saw it coming-was because i was getting stopped out of positions-

Almost none of the “Gold bulls” saw it coming?
There was “no” Gold bulls during the IT boom-
Gold was still in the last stages of a 20 year bear market-
It wasn’t until after IT’s crashed that Gold signaled a positive buy-
It’s obvious almost none of the people on this board recognized it-

I’m thinking if those gold bulls were savvy enough to see the bottom buy-they will be smart enough to see the top sell and then they will likely short Gold-

Looking at intraday charts and calling the top of bull market is like saying it’s not raining today so it wont rain a month from now-

#187 GregW, Oakville on 11.14.10 at 11:18 am

Hi #100 miketheengineer,

Gasoline last night was 1.11plus in Oakville.

If you mist this;

Have you seen this stand up show?
“Robert Newman’s History of Oil ( 1 of 9 )” on YouTube
http://www.youtube.com/watch?v=kQhhrzHKMhI

And this, If only we were all this intelligent and wise!

“Arithmetic, Population and Energy”
The Most IMPORTANT Video You’ll Ever See (part 1 of 8)
http://www.youtube.com/watch?v=F-QA2rkpBSY

#188 GregW, Oakville on 11.14.10 at 11:44 am

Hi #173 Brian1,

re: I work for myself, no bank. — Garth

Garth once worked for me as my MP, and all other Canadians in our Government! I wish I could say the same for all the MPs and PM.

#189 prairie gal on 11.14.10 at 11:55 am

Devil`s Advocate, what you and your inner circle of so-called `professionals` do not realize is what you are describing violates several provisions of the Competition Act and would thus attract even more attention from the Competition Board, undoing any sort of compromised settlement.

Realtors already skate a very fine line between competitive and anti-competitive behaviour. If you are so smart why have you not figured this out by now? How many hours of study in your six week course is dedicated to competition law? 15 minutes?

#190 Taxpayer like everyone else on 11.14.10 at 12:06 pm

158 Devore. Back in the early 80s the US debt passed $1T. Prez Ronnie Reagan gave a speech. He said if you were a cash millionaire, your stack of $1000 bills (not $100 bills) would be somewhere around 4 inches high. The national debt, he said “is 69 miles high”.

#191 Joe Realtor on 11.14.10 at 12:18 pm

#145
re: bidding wars in the GTA

Yes, they are still happening, though not with the frequency they were. Depends on the area and on how well the property is priced. I haven’t seen anything going for nutso 100K over list like we used to see, but recall seeing a few just this past week that were between 1-10K over.

It’s interesting that some listings still get multiple offers and sell for over list after being reduced in price.

Many sellers still insist on listing their homes well over any comparables (or not prepping it for sale) and big surprise…. it doesn’t sell. Meeting with a potential client next week whose listing is expiring and is in for a rude awakening. i.e. paint the shocking pink and the black bedrooms and reduce your price by 10K.

#192 McLovin on 11.14.10 at 12:25 pm

#184

That new Kelowna development is being built on Native land. Talk about greater fools! I would not buy a house that on Native land. It is never really legally yours and at some point in the future if they decide to blockade the road and kick you out, your gone.

Seriously, haven’t we seen enough problems with Native land for people to stay away?

#193 Tre on 11.14.10 at 12:26 pm

At least Garth you tried to do the right thing. You can’t force a horse to drink the water, sometimes it has to find out the hard way. Boy will people ever learn the hard way. Listening to these shills is the sure way of following the road to ruin.

#194 Sail1 on 11.14.10 at 12:39 pm

#148 Leanne

“Oh, and I sold no books at my event this past week, so you’ll have to keep guessing at my motives. Maybe I’m just trying to meet hot women.” — Garth

We don’t have to guess, just know your political career is dead.

Do you come here to whine and ankle-bite, or is there an actual purpose? — Garth

#195 cellar dweller on 11.14.10 at 12:54 pm

Economist Magazine:
11 Million US housing mortgages are worth more than the houses they were written for( 1 in 4 American mortgages are”under water”).
4 MILLION of these mortgages are worth TWICE the value of the house !
The majority of these will be ready for renewal in the next 18 months. “A slo-o-ow painful recovery” doesnt even begin to describe this fiscal nightmare.
On a totally different subject. Its interesting to see the world wide “election rejection” rout of incumbent parties. EVERYWHERE, parties are being tossed at the federal, state, provincial, municipal levels. The total disgust of the electorate at the ruling parties in all facets of government is truly historic .
The “Rob Ford’s” of the world are inheiriting their positions by default.
Sara Palin for President? Dont laugh, it could happen.

#196 goldenfox on 11.14.10 at 1:18 pm

Inflation-Deflation debate-peter Schiff vs Robert Prector

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

http://www.youtube.com/watch?v=zjyBWKq45sY&feature=player_embedded

#197 Taxpayer like everyone else on 11.14.10 at 1:26 pm

192 McLovin’ – What is now loosely called “native land” may actually be, in a nutshell, one of the following:

1) “New” treaty land where the FN can apply some form
of self government.

2) Reserve land where the fed crown holds the land in a form of trust for the “benefit” of the natives. Can be really complicated to deal with.

3) Provincially tenured land that the Natives have either bought or been granted by negotiation. Can remain as is, or may become 1 or 2.

Do we know which one in this case?

#198 wetcoaster on 11.14.10 at 1:27 pm

Can’t believe people would be so stupid to buy on native land. That group is one of the more dysfunctional groups to deal with. Two families who constantly bicker control the majority of West Kelowna.

40% of 57 homes is misleading from the 1500 the article first states. 20-30 story towers ? The new La La Land= out to lunch. Watch them triple any land fees once your in there like they did to a group on the Island.

#199 Mikey the Realtor on 11.14.10 at 1:29 pm

Bidding wars have subdued but make no mistake blog dawgs, poodles and pups, RE is not going down much more then 5% nationally. We Canadians are hell bent on keeping our houses, I know someone right now whose diet is Kraft dinner just so he can keep his
beloved house.

The party continues and we can keep blogging till the cows come home but nothing will change the market. How are things DA? I have noticed that the intruder has been back today flogging his ethics again.

#200 Right All The Time on 11.14.10 at 1:36 pm

Ya, better pump those TFSAs as that is the only way renters in Vancouver can get some pocket change after missing out for the past couple of years.

For all those Vancouver bears that said a couple days of high sell list ratios meant nothing, I guess you are eating your words…again.

The overwhelming majority of days in October and November have shown extremely high sell list days, contrary to the collapse theory.

Oh I know, ‘sales are stronger in October and November,’February should see the crash,” etc…

Of course, the Olympics have come and gone, as have the new mortgage rules, and the HST, and all that has happened is the market has continued on its steady climb.

Oh and inventory is steadily declining…so much for all those summer 20k inventory parties eh bears?

2011 will mark the THIRD year of waiting for the inevitable decline/collapse/whatever you want to call it depending on the political winds and convenient statistic of the day….

This is getting really pathetic…

#201 Taxpayer like everyone else on 11.14.10 at 1:37 pm

192 McLovin – further to previous – best guess is it is
number 2 – looks like it is within Reserve 10

http://www.regionaldistrict.com/rdco_main/

#202 marcus aurelius on 11.14.10 at 1:48 pm

Devil’s LowIQ (#144, 168); Prairie Girl (#189).

This salesperson from somewhere west of the GTA seems to need smaller words. Let me summarize two predictions again:

(1) vendors other than commission brokers will fill the void in repackaging public non-proprietary data necesssary to lift the veil of lies usually used by commissioned agents/brokers, empowering the consumer;

(2) Full service brokerage compensation will fall. A lot. Unless Devil’s Advocate is a post-op lobotomy patient, he should sense that no one cares about FSBO (unless they live in northern BC, park a trailed out front, and have no teeth). Most of us in civilized markets are simply waiting for competition to drive full-service compensation down to the equivalent (flat fee or commission) of 1-3%. RealtySellers are rebaiting most of the vendor-side comission (under 1%) to the buyer, and even at the current split commissionof 2.5% to the buyer’s agent, the total commission for a full-service listing hsa effectively fallen from 5% +/- to around 3%. Look for enterprising volume full-service providers to work a listing for under that soon.

Prairie Girl – give it up. This maroon is hopeless. He can’t spell ‘anti-competitive practices’, let alone figure out what they might be. Suffice it to say that there will be attempts to circumvent the law by these incorrigibles, and competitors still have battles to fight. Sit on the down payment a couple of years and save over $50K is graft on your next $1M+ purchase ($25K on Toronto LTT, and $25K in total commissions savings…)

#203 BrianT on 11.14.10 at 1:56 pm

#181Basil-Yes-anyone that thinks we are soon returning to a world of low gold and silver prices along with a strong global economy is seriously clueless. The major problems with the world financial system haven’t even been admitted to yet, much less addressed. Obama is prancing around Bollywood talking about the magic of “Globalization” while the US burns-hard to see how the idiot Palin could do worse.

#204 Junius on 11.14.10 at 1:58 pm

#172 David,

You said, “In Canada, financially responsible citizens pay for the financially irresponsible ones, and the political band plays on.” I agree.

However you said this was socialism. How is this socialism?

The people who have benefited from this have been the Re industry and the financial services sector. How many card carrying socialists are among this group.

What you really mean is that we are socializing our costs which is quite different. We are rewarding irresponsibility instead of rewarding prudent economic behaviour.

The reality is that we have a very fake and dangerous type of capitalism in at work in our society. We have forgone innovation and productivity as the drivers of the economy and instead created market bubbles that are gamed by the insiders. This is not socialism or capitalism. It is oligarchical corporatism.

#205 cellar dweller on 11.14.10 at 2:00 pm

@200 – Sail1
According to you the Vancouver market will never drop?
Gre-a-a-at.
$1 million for a 800sq ft leaky condo ?
How are those Olympic Village condos selling?
Like soggy hotcakes ?

#206 Devil's Advocate on 11.14.10 at 2:01 pm

#189 prairie gal on 11.14.10 at 11:55 am Devil`s Advocate, what you and your inner circle of so-called `professionals` do not realize is what you are describing violates several provisions of the Competition Act and would thus attract even more attention from the Competition Board, undoing any sort of compromised settlement.

Realtors already skate a very fine line between competitive and anti-competitive behaviour.

How difficult is it to understand that the MLS is essentially the result of a bunch of sellers who are willing to pay agents to market and sell their homes and those agents have thus created system by which they can share the information on those properties they individually have listed for sale with other co-operating brokers in order to reach the largest possible audience to the benefit of those sellers who hire an agent to handle the transaction for them. It isn’t about the system (MLS) It’s about the collaborative efforts of REALTORS to get the job done for their principles (Buyers and Sellers). It’s a job prairie gal… really if they didn’t pay us to do it we would not do it. It’s a job. J-O-B; Job. Don’t get me wrong I enjoy my job about as much as any but a good portion of it I could do without… that is why I insist on being paid to do it in addition to covering the expenses I incur providing that service.

It’s not about us prairie gal it’s about you and them. It all starts with the seller and ends with the buyer. We are but middlemen who do a good job of bringing the two together the most efficient way possible. There is of course a cost associated with providing this service. We are not a free public service. They are not our homes to sell they belong to our clients and we have a fiduciary duty to do the best job we can for them. We do not control them they control us. If I don’t do a good job for them there is a competitor in the office next door in the same brokerage as me who would be only to happy to take the listing from me. But that competitor, on the other hand might have a buyer for that listing and my seller and I are only to happy to share a portion of the listing commission with him to cover that remuneration the buyer has agreed to pay their agent for finding them the right home.

If the Competition Bureau breaks apart the integrity of CREAs ability to foster the preceding co-operative efforts to the benefit of our clients those individual agents and brokers will undoubtedly go about providing the service to buyers and sellers in a manner closer to that of the US or Mexico. But the business of providing “organized” real estate services to the overwhelming portion of the population which sees value in it will continue in one form or another that you can count on. There is a demonstrated market for it and where there is a market there is always someone willing to bring about some way of satisfying the demand. We are no different than any other good or service people are willing to pay for.

Now there are countries in the world where the government sets the purchase and sale prices of properties and manages the process more thoroughly. Would you prefer such a system as that which they have because I gotta tell ya… a cushy government job with a pension and benefits is something I could certainly get into and I do believe I would be one of those hired. It’d be nice walking into a listing presentation for once and telling an unrealistic seller “Sorry this is the way it is and there isn’t anything you can do about it.” or a buyer and saying “You will pay this or you will live on the street”. Or maybe we should be able to walk up to some of those fully paid for McMansion owners and say “You have 2 hours to vacate as we are turning this into a home for the homeless of the Peoples Republic of Canada.” Hey, it happens… I can point you in the direction of someone it has happened to who moved to Canada in great part because of it. Yes, they bought a house through me and paid me for the service. Actually the co-operating agent and his client offered to pay through the proceeds of the sale the commission my client agreed to pay me.

#207 cellar dweller on 11.14.10 at 2:02 pm

sorry Sail1,
I meant @200 ” Right all the time” aka ” Im Smart, Your Stoopid”.

#208 Junius on 11.14.10 at 2:02 pm

#200 Right all the Time,

Too be ignored. The last hurrah of the pumpers.

RIP.

#209 cellar dweller on 11.14.10 at 2:15 pm

I noticed in the news the Olympic Village was the scene of some “Staging” on Friday.
(Remember Vancouver councillor Susan Anton’s comment of a month ago, “The units arent selling. Maybe we should have some staging events at the Olympic Village to promote it! This, while they close 5 schools for lack of funding).
So, with that in mind. We had the Eco-Friendly, zero emission car “driving around the world” in town . With much media and fanfare it was “off to Seattle”. As it started driving, a cyclist drove his bicycle OFF THE SIDEWALK and crashed into the car. He was taken to the hospital in serious condition. 16000kms into its trek around the world with absolutely no accidents and 1 minute into the Vancouver leg. KA-BOOM!
Kind of like Vancouver condo buyers. Completely oblivious to whats going on around them.

#210 cellar dweller on 11.14.10 at 2:29 pm

@206 Devil Advocate
I’ve great experiences with Realtors and bad experiences with realtors . They are just people.
I dont paint them all with the same brush. The quasi monoply of MLS irked a lot of people.
I think that with the rise of the internet and the ease that people can communicate has drastically changed a lot of sales professions. ie Travel agents, car sales, electronics, etc. ( when I can buy a book online from Chapters and have it delivered to my door 30% cheaper than the same book at Chapters. Big eye opener)
Your profession is on the cusp of a major restructuring. Unfortunately, its at the same time as a lot of people are getting roasted other their own indebtedness.
The survival of good quality sales people is assured
( buyers are lazy) but i think the days of those juicy commissions are so to be over.

#211 BrianT on 11.14.10 at 2:32 pm

#196Gold-great debate-they disagree on everything and only agree on one thing-gold will surpass the Dow ave at some point.

#212 Got A Watch on 11.14.10 at 2:33 pm

Devil’s Adocate – is a very smart guy, compared to the average can of soup. The Realt(ho)rs(TM) are just today’s Brontosaurus, who look up at the bright light in the sky for a moment, and then carry on grazing.

The more vacuous (and illegal) things you say will happen, the less credibility you have, and you had none here anyway. Open your own MLS, I dare you, put your money where your always running mouth is. Only someone as dim as a Realt(ho)r(TM) would spend a lot of money on internet infrastructure and employees to run it, in today’s economy. Please, DA, hurry up and do it. Some desperate Cisco salesman will be glad to hear from you.

“We are but middlemen who do a good job of bringing the two together the most efficient way possible.” Well, DA, apparently you have the internet, or you would not bless us with your wisdom every day, but really? LOL

The simple fact is, Kijiji/Craigslist and 2 willing parties and their 2 lawyers can handle any real estate purchase or sale just fine, and a Realt(ho)r(TM) is really about as useless or needed in that transaction as an ice cube maker in a land where they have no water.

The lawyers do all the real work, and take all the real responsibility anyway, and they charge far less than Realt(ho)rs(TM) do.

But keep on posting man, I need a good laugh these days.

#213 Betty on 11.14.10 at 2:36 pm

145 GoingGaGaforGarth the tide has turned in east TO (not Scarb or beaches). The house near me listed for 550K and went for 503K but three or four others went for about 10 or 15% below asking. All semis about 1100 sq ft. In fact the closest one to the 503K sale was asking 400k and sold for 355k but needed about 50K in renos. I think if the place shows really well and is turn key it will move but not for top dollar anymore since sellers are a dime a dozen but buyers are few and far between. The market isn’t balanced right now as sellers out number buyers in TO and it’s worse for the rest of the GTA. But it is the trend which is telling. Glad my home is just that…a home. Many people are close to the cliff and so we see power of sales on the up and up. Funny how realtors claim houses are selling when we all know sales have been down 20-30% for the past half a year.

#214 jman on 11.14.10 at 2:42 pm

#183 Betty…If you are going to refute a posted statement please do so in the proper format so other readers do not interpret your posts as your words. Secondly, quote accurately ie 565 not 503. Lastly and to clarify, my use of “balanced market” referred to a more normal market than we have seen in the GTA in the past decade where deals settle at a price way over asking. I was referring to a closing in which the property went for slightly below list. I know that sellers out number buyers and did not intend to infer otherwise in
the use of the term.

#215 Blitzkrieg on 11.14.10 at 2:43 pm

I don’t want to a doom prophet but I am not liking what Greenspan has been saying lately

http://news.yahoo.com/s/nm/20101114/bs_nm/us_usa_economy_greenspan_2

that is right after he went against the mainstream agenda of devaluing the dollar,

http://money.cnn.com/2010/11/11/news/economy/geithner_greenspan_dollar/index.htm?section=money_mostpopular

In case if a bond crisis (US) yields would spike in a very short period of time causing unannounced and surprising interest rate hikes. That would kill off the housing market and directly cause the double dip (or since some economists claim we have never left the recession), or push the US into a depression.

The scenario was not probable months ago but with record deficits it might just materialize.

Any opinions?

#216 Devil's Advocate on 11.14.10 at 2:50 pm

#202 marcus aurelius on 11.14.10 at 1:48 pm
(2) Full service brokerage compensation will fall. A lot. Unless Devil’s Advocate is a post-op lobotomy patient, he should sense that no one cares about FSBO (unless they live in northern BC, park a trailed out front, and have no teeth). Most of us in civilized markets are simply waiting for competition to drive full-service compensation down to the equivalent (flat fee or commission) of 1-3%. RealtySellers are rebaiting most of the vendor-side comission (under 1%) to the buyer, and even at the current split commissionof 2.5% to the buyer’s agent, the total commission for a full-service listing hsa effectively fallen from 5% +/- to around 3%. Look for enterprising volume full-service providers to work a listing for under that soon.

It won’t happen marcus. There is a cost associated with providing the service which must be paid in addition to a reasonable return for providing the service or it will not be provided.

The alternative business model which Discount Brokerages provide is spawned from opportunity to sell substandard services which will not bear a full price to bargain shoppers for a discount price. Don’t confuse price with value.

You can buy an cheap bike for your son for less than you can buy a good bike. But that cheap bike will likely end up costing you more in the long run as you constantly incur the time and expense of repairing it because it does not stand up to the rigors and abuse a young teen puts it through on the trails his friends ride on their better bikes.

The bottom line marcus is – you get what you pay for. Only a fool would pay for that which they are not getting. A discount brokerage does not provide the same level of competent service which is why they are “discount” brokerages – if they did not they would get NO business at all. Consumers, as you will no doubt attest, are not stupid. Yet approximately 90% (give or take a couple percent this year to that) of buyers and sellers use a REALTOR and well over 90% of them use a full service brokerage REALTOR at that. Now you tell me how and why it is so? Because they prefer the full service deal… because not everybody shops for discounted merchandise in the bargain basement.

Clearly consumers like the full service and are willing to pay for it.

Oh and those discount brokerages… most often you have to pay for the incidentals and options which are included in the full service brokerage services – which the full service brokerage irrecoverably fronts the cost of by the way – even if your property does not sell and they don’t get paid. That is why it’s called a commission – it only gets paid if the job gets DONE.

Now really I have said it before and will say it again; I have no problem with discount brokerages. Their clients are not those I particularly want to deal with. Actually we tend warm up to one another quite a bit after their discount brokerage listing has expired without a successful sale. But I am happy to sell a discount brokerage listing as I do use Exclusive Buyers Agency Agreements which guarantee I get paid what my buyer and I agree I shall get paid. And those Agreements allow me to work with FSBOs too. Anything necessary to get the job done for my client marcus. What ever it takes as only when I get the job done for them do I get paid. And only through happy satisfied clients will my business prosper. It’s just that simple.

And marcus… I’m doin’ just fine. Maybe we will talk some day after your discount brokerage fails to get the job done for you and you are wanting to explore your options before it’s too late.

Competition? I friggin LOVE competition! The only ones who don’t like competition are the weak who are too lazy to compete or lack or have no skills with which to compete. Competition is survival of the fittest. Competiton is GRAND…

Geez marcus aurelius with a fine Roman Emperor/Warrior moniker such as yours I would expect you of all people must understand this?

#217 Utopia on 11.14.10 at 2:59 pm

#203 BrianT on 11.14.10 said….

“….anyone that thinks we are soon returning to a world of low gold and silver prices along with a strong global economy is seriously clueless”.
——————————————————–

Clueless? That is quite an indictment Brian. Perhaps you did not really read my comments that carefully.

To put you at ease though let me tell you that I too invest in precious metals. I consider myself overweighted at 15% although the run-up has treated me well.

Commodities have actually been a more lucrative play for me however I recognize that this is substantially because of demand out of China and a few other Asian countries that are booming. You will likely also know of the strong coorelation between commodities and the prices of precious metals.

Which brings us to China and the booming Asian economies where the worlds biggest real estate bubble is being blown right now.

Those economies cannot keep up the level of growth that currently exists and are in jeopardy of overheating. The housing bubble in the major Chinese cities is creating a substantial investment risk everywhere. If it implodes then all commodity prices will decline. Substantially. That includes your gold and silver holdings.

You read a real estate blog and so I expect that you should have some insights into how bubbles negatively impact economies. The evidence is overwhelming.

Keep in mind that the current commodities boom is Asian driven in many respects and is being fuelled by stimulus dollars. The outcome of this is that inflation is being exported into booming economies and there is a substantial risk of boiling them over.

So keep that in mind before you buy gold and leave the snooze button off and sleep in because volatility will be high this year and is already on the horizon.

And before you even launch into all the rhetoric about currency problems in the West, bank failures and all the rest I just want to assure you I am already quite well versed in those gold-bug theories. Those aspects are certainly adding flavour to the debate but that is not what has been primarily driving gold buying (yet).

And please do not call me clueless.

I am far from it and all too aware that the steady climb in Golds price will eventually form a bubble, a top and be followed by a sharp sell-off and decline. This is just how cycles work. Gold prices WILL come down again although it is anybodies guess as to the timing. Yours is as good as mine but it is still conjecture.

Note by the way that I said gold would “eventually” fall. I agree that the time is not now however let’s not all be too certain about how the future is going to play out. If you, like one of the other posters on this site today, are “all-in” on precious metals investments then you are not an investor. You are not even a speculator by the correct definition of the term but are in fact a gambler.

And we all know how gambling ultimately pays off.

In tears and regrets.

#218 McLovin on 11.14.10 at 3:02 pm

Is it Christmas yet? It must be Devil’s Advocate is back and making very 10th post.

#219 dark sad person on 11.14.10 at 3:07 pm

#196 goldenfox on 11.14.10 at 1:18 pm

****************
Schiff and Prechtor-

Two smart people-both have it half right-

#220 prairie gal on 11.14.10 at 3:17 pm

DA: instead of addressing the fact that what you proposed consists of illegal behaviour you ramble on incoherently. marcus aurelius was right. hopeless you are.

While the established real estate brokers are frantically scrambling to maintain their dying business model (think: music industry) creative new upstarts will undercut them with a la carte listing and agency services. Biglaw refugees one or two years out of law school don’t even have to take the 6 week course – just pay the membership and ‘tada’ another realtor who can actually perform the legal conveyance in-house! Think of the savings!

#221 Devil's Advocate on 11.14.10 at 3:33 pm

#198 wetcoaster on 11.14.10 at 1:27 pmCan’t believe people would be so stupid to buy on native land. That group is one of the more dysfunctional groups to deal with. Two families who constantly bicker control the majority of West Kelowna.

40% of 57 homes is misleading from the 1500 the article first states. 20-30 story towers ? The new La La Land= out to lunch. Watch them triple any land fees once your in there like they did to a group on the Island.

I’m not a big advocate of buying (leasing) a home on First Nations Land. That being said…

Don’t confuse band business with private business. Troika is the developer of the land which they lease from the Westbank First Nations. The Westbank First Nations is a progressive well managed band. I went to school with Chief Robert Louie who has his Bachelor of Laws from UVic. He is a smart man, a real gentleman and a good chief with a lot more genuine concern for his band than his own wallet as was the case of his predecessors. and he is not nearly so contemptuous of the whites ;-)

On Troika… yes there does tend to be some smoke and mirror action in their marketing – unsubstantiated hype behind their developments which generally are of a lesser quality than many. Certainly not the classiest developer Kelowna has to offer, that being said their ability to have survived this long is some surprising testament to their credibility.

On the native land thing… like I said I’m not a big fan. Native leased land is tends to be the last to rise in value and the first to fall in value. You can not buy First Nations land unless you are a status native. We white folk can only lease it and as such you are little more than renters with a long term lease – granted 99 years. While I don’t think the issues people have had with other bands will be the case with WFN it is native land and they can do what ever they want with it… until this land is taken over by successor to the whiteman – successors who I suspect will have a whole less compassion for the First Nations peoples plight than the white man exhibits today and a similarly a lack of respect for retention of those treaties entered into by the two. Ya it will go down that way of that you can be sure. Point is a 99 year lease is a long, long time if they live up to the terms of the agreement. ;-) Robert Louie may be a fine and honourable man but he won’t be around that much longer.
What West Harbour does have to offer is waterfront access single family homes that will appeal to Boomers. Hell my wife has been workin’ on me for us to take a look at it and I have a long standing aversion to First Nations Lands. I think it’s going to be a hit – if the parties live up to what they say they are going to do and when. If you visit Troika’s website there are many a project that was marketed still on there that have yet to get off paper and into the dirt.

westharbourkelowna.com

http://www.castanet.net/edition/news-story-55954-13-.htm

http://www.castanet.net/edition/news-story–101-.htm

wfn.ca/robert_louie.asp

#222 Devore on 11.14.10 at 3:43 pm

#172 David

In Canada, financially responsible citizens pay for the financially irresponsible ones, and the political band plays on.

There is really no reward in this country for being anything other than a cheerleader like Mary Webb. And that’s really too bad…for all of us.

The people who were financially responsible will still be far better off (look down south if you don’t believe me), although not as good as they may wish to be.

The pain will be downloaded to all Canadians, of there is no doubt. And as is always the case, this will be a very uneven process; some will benefit, some will be ruined. But all we’ll see reported is the “average”.

#223 Keith in Calgary on 11.14.10 at 3:49 pm

There was an excellent documentary show on Global TV last night…….they have a program called “Currents” which is basically a one hour show detailing various things about the different social aspects of life today, versus yesterday. This one was about the credit bubble of the last 30 years and it’s affects on our society.

Credit cards, lines of credit, loans, and student loans were prominently featured, as were mortgages and the proliferation of cash advance places in poor areas.

The mortgage section as about a young couple in Toronto who just had to have $550K house that they bought in a bidding war. basically these folks were making $150K pretax per annum and were flat broke after paying the mortgage and all of their life expenses. 90 days into their first home ownership experience they decided to sell out completely, pay off everything they owed, and live on cash while being renters and saving money.

What was the end result ? Their self esteem was better because they always had money to spend, they could do whatever they wanted whenever they wanted and they felt better because their net worth was actually increasing by saving cash every month, versus the sleepless nights of being home debtors worrying about the housing bubble breaking, rates rising, or one of them losing a job, etc…….

Funniest part of all ? The woman was happier than you’d imagine…..hormones and all that aside, she actually said home ownership was a false sense of security enforced upon you by RE marketers, banks and society in general….and that buying a home versus renting is absolutely no different from as shelter and security standpoint.

Anyways, the show was very intellectually stimulating and those of us here on this blog would not have learned from it because we already know about the problems, but for “Joe and Joanne Consumer” it would have been a very frightening one hour of TV.

#224 Marty on 11.14.10 at 3:51 pm

Please start compiling a list of all the intelligent accomplishments that you give credit to government since 2000.

Your list will be short.

Then you take all your wealth, and you put it in the government’s hands. You think CPI is a measure of inflation. You think Ben Bernanke knows what he’s doing because he studied some books about the past. You believe articles in the New York Times, Paul Krugman and watch television regularly.

You are likely suffering from Stockholm syndrome.

#225 Devore on 11.14.10 at 3:59 pm

#204 Junius

The reality is that we have a very fake and dangerous type of capitalism in at work in our society. We have forgone innovation and productivity as the drivers of the economy and instead created market bubbles that are gamed by the insiders. This is not socialism or capitalism. It is oligarchical corporatism.

Took the words out of my mouth. Some would even call it fascism, but we have a somewhat different breed of beast here. However, due to the extremely low level of general economics knowledge amongst the population, and even less interest, expect plenty of backlash, rhetoric, righteous indignation and finger wagging about the evils “unbridled capitalism” has brought upon us.

#226 Marty on 11.14.10 at 3:59 pm

As George Carlin put it, “The table is tilted folks. The game is rigged, nobody seems to notice, nobody seems to care”

#227 Sail1 on 11.14.10 at 4:08 pm

Do you come here to whine and ankle-bite, or is there an actual purpose? — Garth

No whining, just ankle biting.

At least you’ve found your level. — Garth

#228 wetcoaster on 11.14.10 at 4:20 pm

Wait til Louie writes into the fine print that 25% or more of any construction work/maintenance/stores, etc done has to be provided by native workers and they can’t find any skilled enough. Happened on the big Westbank mall project years ago. It was a joke.

#229 Devil's Advocate on 11.14.10 at 4:28 pm

#220 prairie gal on 11.14.10 at 3:17 pm
DA: instead of addressing the fact that what you proposed consists of illegal behaviour you ramble on incoherently. marcus aurelius was right. hopeless you are.

Because nothing I proposed consisted of illegal behaviour. If you believe so please point out specifically what it is you believe is and I will gladly address it.

There is NOTHING in this country so competitive as the real estate services industry… especially here in Kelowna where there is one REALTOR for every 200 people. How possibly could THAT not be competitive?

#220 prairie gal on 11.14.10 at 3:17 pm
Biglaw refugees one or two years out of law school don’t even have to take the 6 week course – just pay the membership and ‘tada’ another realtor who can actually perform the legal conveyance in-house! Think of the savings! .

Then hire one!

How many times do I have to explain we welcome the competition. It is not about the “cost” it is about the “value” and the value is in the results. They have a different business model than we do. Ours is more costly to provide and we must charge more for it. Ours is a more sustainable model and a more reliable model which has greater benefit to the end user. That is why more people use full service brokerages. You can not have it both ways. You can not expect a full service brokerage to provide full services for a discount price and be able to stay in business to get the job done for you. It’s just not going to happen. What don’t you not understand about the saying “There is no free lunch.”

Prairie gal… you are not going to do business with me and I doubt after an interview I would want to do business with you. You are the reason those discount brokerages exist. Have you used one yet? Have you even bought and or sold a home at all? If you have and they got the job done for you GREAT! You are one of the lucky few.

I’m just here to enlighten you of the “other side” and there is a whole big world over here you ought to open your mind to just a wee little bit prairie girl because they all seem to me to be a whole lot happier than the pups and poodles. Don’t you deserve to be as happy as they? They are not all in blissful denial prairie girl dare I say not nearly so much as the pups and poodles are bitter and scorned blaming others for their lot in life. It’s up to you babe your world is what you make of it.

Are you happy? Because it doesn’t sound like it. It doesn’t sound like too many of the pups and poodles are happy. Most every one of them seem to be not where they want to be – discontent. I think the whole organized real estate thing is to them a conspiracy like so much of their life is – blame that which they have no control over for their lot in life. Fact is you have complete control. You can list your home on MLS with a full service broker or a discount broker or you can sell it yourself or you can hire a lawyer to do it for you. Choices prairie girl they are all yours… you choose to be happy or you choose to be sad.

Ya I’m rambling… maybe though I made some sense and maybe, just maybe it works for you.

Things are not that bad… the economy goes through cycles… everything goes through cycles… this too shall pass.

#230 Junius on 11.14.10 at 5:02 pm

#225 Devore,

You said, “expect plenty of backlash, rhetoric, righteous indignation and finger wagging about the evils “unbridled capitalism” has brought upon us.”

Actually, I expect the opposite. As with the Tea Party movement I expect the forces of corporatism to continue to manipulate the population into thinking that their best interests are served by unbridled capitalism in the forms they prescribe. Then they will continue to create fake choices over non-competitive services like in health care, banking, communications, etc. to maintain the illusion of capitalism. They will continue to use regulation to maintain monopolies and uncompetitive practices to maintain power and status quo. All too predictable and depressing.

#231 Kitchener1 on 11.14.10 at 5:07 pm

Devils Advocate

You are always saying that your service has value and im sure it does as you still have clients.

BUT

why do you think that everyone is discontent because they dont own real estate? Its not the end all be all.

I have owned RE and have made a lifestyle choice not to own RE in the near future. So have many of my friends- as a group, youngest is 27- oldest is 35.

Economy is changing and we want the mobility that renting allows, its a global economy and as a renter I can relocate to were ever I choose for work and be happy.

I enjoy finance and RE and watching market trends. I aslo enjoy reading the white papers from economists etc…

RE is done for a decade in terms of flip and sell. And although you might be looking forward to vulching and a lowered price, it will hurt your business, maybe not you per say, but your business- RE agents will be suffering.

#232 Devore on 11.14.10 at 5:39 pm

#230 Junius

Business as usual, new boss same as old boss.

#233 Sail1 on 11.14.10 at 5:57 pm

#227 Sail1

At least you’ve found your level. — Garth

Garth, you know as well as I do, this blog will eventually lead you back into politics at some level. Doom and gloom guy, just does not suit you. You have to much experience for this nonsense.

#234 Charlie Go Surf point break the system on 11.14.10 at 6:10 pm

Welcome to D.A. show!!!

hopefully Chief Louie will outlast the Devil

wow,
on top of extreme knowledge of real-estate crap
now, drum roll,
the socio-ethnik 101…..

the, 1stnations, Indians, Native, for not using the term aboriginal or Russian-Chinese alutian island immigrants
are progressive…

they, like the white man,
the greed man more likely, lol,
the pillsbury guy,
are ;
walking hand in hand in clearcuting,
beach re-modelling,
pesticide, herbicide and fungicide apllications
toxic’s in food, water, air
on the taxman arm

made in china assembly village,
fancy websites and tax schemes
realtors and more football size advertizing
booze, pills and more booze
it’s ok, Justice says its Legal
forget Morals

reminds me,
this summer,
when for the first time in many generations,
million Sockeye salmon mysteriously swam upstream the Columbia rivers to battle Americans dam and South -Okanagan Canal to finally hit the O.K. Falls wall.

millions of return, the chief’s doing manifestations to rage against the governement for opening rec fisheries
because it’s their fish…
like they have coprights on all living thing a.k.a. realtors own the dictionnary. like the landowner owns planet earth by pieces! or the Queen of England ; Supreme landlord of the Universe.

to send “a very clear message that they do not have any jurisdiction or authority over making decisions with respect to the Okanagan sockeye salmon.”

Phillip said the government is obligated by law and by the rights enshrined in the constitution and the declaration of rights of indigenous peoples that they have a proprietary interest in the lands, resources and waters within their territories.

“It is so important that we continue to remind Canada and the province of British Columbia that we will not tolerate a blatant infringement of our rights. It’s such an important part of our work and our life to continually rise to the challenges when government step out of line, speak out of turn and make decisions overnight that are blatantly opportunistic,” said Phillip.
http://www.bclocalnews.com/okanagan_similkameen/pentictonwesternnews/news/100941219.html

but they do has they been tought in fancy universities, and keep the ship in the same direction.

http://www.osoyoostimes.com/news/2010/09/21/band-votes-in-favour-of-granting-leases-to-developers-of-proposed-housing-project/

more boat slips, less natural land, unique habitat destroyed or shape by a backhoe.

more trust in crown land lease??
than native land lease????
must be a color blinded thing!!!!!
http://thestudyofracialism.org/viewtopic.php?f=11&t=1568&start=0

this message was sponsored by Hypocrites that cant let go their ego’s and just unite.

we are .

:(

#235 Devil's Advocate on 11.14.10 at 6:18 pm

#231 Kitchener1 on 11.14.10 at 5:07 pm
Devils Advocate
You are always saying that your service has value and im sure it does as you still have clients.
BUT
why do you think that everyone is discontent because they dont own real estate? Its not the end all be all.
I have owned RE and have made a lifestyle choice not to own RE in the near future. So have many of my friends- as a group, youngest is 27- oldest is 35.
Economy is changing and we want the mobility that renting allows, its a global economy and as a renter I can relocate to were ever I choose for work and be happy.
I enjoy finance and RE and watching market trends. I aslo enjoy reading the white papers from economists etc…
RE is done for a decade in terms of flip and sell. And although you might be looking forward to vulching and a lowered price, it will hurt your business, maybe not you per say, but your business- RE agents will be suffering.

I have never said one can not be happy without owning real estate. My wife and I own but we may not always own nor have we ever always owned and we have lived relatively happy lives throughout.

We don’t own a vacation property even though we contemplated the purchase of one. But in the end we chose not to tie ourselves to one locale. I am sure many chose the same not just in terms of vacation sites but “home” sites as well.

Home ownership is certainly something good for our economy and our politic as it forms a stable citizenry which is relatively immobile and thus predictable and manageable. That of course has some good points and some bad points as I am sure you can well imagine.

I am glad you enjoy finance and RE. More people should explore such important aspects of their lives with such enthusiasm and an open mind.

I disagree that RE is done for a decade. I agree with Garth that this is not a “double dip” recession. We are thus 2 ½ years into this current period of economic failing. Typically we can expect these correction periods to last 7 to 10 years peak to peak. Some will have differing opinions but I believe so too will this one be so. Given that, if it were a linear fall to bottom and equally linear rise back to the next peak we are but 1 to 2 ½ years from the bottom of this one. Of course we all know that the failing happens quickly, we bump along bottom for a while and then we pick up steam in a nonlinear parabolic manner when and as exuberance returns… right? So given that I do believe, if you are going to vulch, feeding time is just around the corner. But be warned vulching is predatory as those carcasses are not quite dead yet and may bite back. Speculation has it’s risks and, make no mistake, vultching is speculating.

Timing the markets Kitchener1, which vultching is, is difficult which is why I have never gotten into that arena. “homes” and “long term investment properties which are bought for “income” not “equity gain”” are what I market. And that is why I am glad to see these market conditions return, which addresses your last comment – such REALTORs as I will do just fine. We don’t care if prices go down as we are not now nor ever were promising our clients they would forever go only up in the first place. We weren’t selling speculation we were selling homes and investments – still are and soon will be selling more and improving our market share as the ranks are culled.

#236 Devil's Advocate on 11.14.10 at 7:20 pm

#234 Charlie Go Surf point break the system

more trust in crown land lease??
than native land lease????
must be a color blinded thing!!!!!

Good point. But in reality; yes, more trust in a crown land lease, which ALL freehold properties in reality are, than a native land lease. Sorry but the history just isn’t working in your favour.

You might be surprised to learn I am more on your environmental side than not. But really, let’s face it; it really is intellectually dishonest to speak of environmentalism without discussing population control and I don’t think we wanna go there do we? After all, the womb is the greatest environmental polluter of all.

#237 Utopia on 11.14.10 at 8:10 pm

#146 dark sad person on 11.13.10 at 9:21 pm

“The bloom come off the rose-”
———————————————–

You do realize that you misquoted me Dark. My exact quote per above was “….the bloom COULD come off the rose…”. This is a materially significant difference and one you should take note of because it changes the meaning of what was written quite significantly.

#238 S.B. on 11.14.10 at 8:17 pm

#223 Keith in Calgary I think this a review of that TV show:

http://financialuproar.com/2010/11/13/tv-review-global-currents-debt-trap/

#239 Taxpayer like everyone else on 11.14.10 at 8:51 pm

234 Charlie – thank you for the osoyoos link. From th article:

“Van Maren won’t be signing the leases with Stelkia and
Betterton, however, as they will surrender the lands in
question to the federal government due to regulations in
the federal Indian Act.

The developers will sign the leases with the Crown although Stelkia and Betterton will be financially compensated.

Chris Scott, the band’s chief operating officer, said Indian and Northern Affairs Canada must now give its blessing to the final form of the lease and approve engineering plans for the development.”

Just so everybody knows how it works……DA thanks for your input too.