So what?

Many people don’t share my views. Most, in fact. Almost all of them, I imagine. Not a day goes I don’t receive notes with suggestions on various acts I might perform. At least I get mail.

Fact is, all my words won’t change much, human nature being what it is. And the consequences of people’s actions will play out pretty much the same, regardless of the bearded maniac in the camo Hummer.

Was reminded of that days ago when I sat with a 30-year-old toddler who was asking for real estate and financial advice. I reminded him of the last housing meltdown in the early Nineties, the one that took 14 years to recover from. “So what?” he said. “I was twelve.”

And that reminded me nothing actually exists until somebody experiences it. That’s why it’s always ‘different this time.’ And the real estate version is, of course, ‘it’s different here.’

Doug from Vancouver just emailed this:

“Garth. A close friend was tasked to sell her mother’s home, built in 1938. It was listed at 1.58 million. On the market for two days her realtor received 24 offers, all Chinese, and all serious. After it was all said and done, it went to the highest bidder for 1.95 million. Yes, perhaps the lower end markets may be dipping, but the scuttle out there is that the upper end will do quite nicely in 2011.  And what do you make of all this? I still feel Vancouver may not fit your overall perspective on Canadian real estate.”

Let’s juxtapose that bit of silliness with an interview just shown on Sixty Minutes. The speaker was Ben Bernanke, head of the Fed, America’s central bank. Asked about the controversial policy of using public money to buy back government bonds, he was unmistakably clear. Without it, he said, the demon would be deflation. The US economy, he added, is likely not self-sustaining, and without trillions in bail-out money the American jobless rate would be at ‘Depression levels…25%.” Even with the torrent of money, it will take “four or five years” for unemployment to fall to the 6% range.

And one more thing. There’ll be no double-dip recession, Bernanke says, because the housing market’s so weak right now there’s nowhere to fall.

So what?

The average family in Toronto makes $96,000 and in Vancouver $83,000. The average Toronto SFH costs $600,000, or 6.2 times income. In Vancouver the ratio is 10.8. The American housing market collapsed in the Spring of 2006 when houses topped out at 4.6 times. The Canadian national average is now 5.2.

In the simplest terms, the real estate market is unsustainable even if our major trading partner were not on its knees. But it is. This should have been clear to everyone in the trade deficit numbers a few days ago. For the last two years we’ve seen our exports wither and cheap imports swell, and every time that happens, a chunk of the middle class drifts out to sea.

Down the road from me some people bought a little house with a nice view a year ago. Their shiny black Cayenne always looked incongruous sitting in front of the former cottage. Then one day it was gone, and in its place soon rose a two-storey particle board palace towering over the home next door.

Work stopped a month ago and wags say the contractor took over the project after the owner ran out of money and gave up. Word is his chain of appliance stores is now kaput. Of course, the people who made washers and dryers in Cambridge and TVs in Kitchener long ago lost their jobs. That stuff all comes from Asian factories. But now a few more Canadians who just sold stuff are out of work. Plus the folks who shipped those Chinese microwaves and blenders. And with a dollar at par and Americans in no position to buy what we have to sell, just what’s sustaining this economy?

It’s consumer spending. Sixty-five per cent of all activity starts there. And yet with unemployment barely budging, wages stagnant and debt at record levels how can this be maintained?

With cheap money. Which brings is back to Bernanke and all those Chinese offers kicking an overvalued $1.58 million house in Vancouver to $1.95 million.

Interest rates are almost at zero because we’re almost in deflation. This could get a lot worse before it stops. Canada isn’t immune, and those among us who don’t look, won’t see.

The Chinese fools who pay too much in a doomed market are bested only by the greater fools here who think this means something.


#1 buylow on 12.05.10 at 11:21 pm

where are these Chinese getting the money? And why is it just them spending so much?

#2 AxeHead on 12.05.10 at 11:22 pm

Hmm, when during ‘recovery’ job stats start to get worse (i.e. 9.6 to 9.8)…and those are the ‘official’ numbers…I wonder if there is any recovery in sight at all. Vancouver Chinese buying that Blandcouver house for 2M – what idiots.

#3 Jon B on 12.05.10 at 11:27 pm

As a kid I remember playing soccer near the appliance factories in Cambridge and driving past the Electrohome factory on the way to Fairview Mall in Kitchener. Of course, by the 90’s they were all empty shells. All these jobs exported to places where houses cost a fraction of what they do here. Perhaps we will export our housing affordability index to China in the future as they prosper.

#4 dd on 12.05.10 at 11:28 pm

“There’ll be no double-dip recession, Bernanke says”

He didn’t say that. Watch 60 minutes again. He said it doesn’t seem likely but there is a risk.

#5 Contrarian Canuck on 12.05.10 at 11:31 pm

“Interest rates are almost at zero because we’re almost in deflation. This could get a lot worse before it stops. Canada isn’t immune, and those among us who don’t look, won’t see.

The Chinese fools who pay too much in a doomed market are bested only by the greater fools here who think this means something.”

Classic line. Absolutely sums up the current situation.

Another take on the deflation to come:

“So let’s understand this about deflation: Since the money=debt in our fractional reserve banking system, when deflation (a contraction in the money supply….i.e. a contraction in debt demand) hits a country, assets that are heavily reliant on debt to be purchased will be crushed when the underlying debt is denominated in the local currency. Thus, expect real estate to be hit much harder than most people realize when the money supply and velocity of money begin to normalize here in Canada.”

#6 nonplused on 12.05.10 at 11:40 pm

Well, I suppose there might be some rich Chinese people trying to get money off shore at any price. But if so, why? What do they see coming down the pipe that’s causing them to bid so veraciously? Is it a backup plan? I can’t see how it would be an investment plan.

The Chinese are funny. They will build a whole high rise condo, sell every unit, and then nobody moves in because that lowers the resale value.

Back here in Calgary there have been a couple of price reductions on the houses I have been watching but nothing serious. The big news seems to be the reduction in the number of listings. Areas that would have 10-15 a few months back are down to 2. But I don’t think there has been a flurry of sales. I think it’s the time of year.

Some stuff is selling though. I have observed at least 2 high end homes that finally sold for 30% off the original list price. Due to the paradox of the denominator, that means the original listing was 50% higher than the house finally sold for. So it seems as if some people have been throwing literally any number out there when deciding on a list price. On a “per square foot” basis, they both still went for more than replacement cost. But it’s always hard to figure what the lot is worth. (House 1: original list $1.4 mil, sale $930k. House 2: original list also $1.4, last list I saw $995k, did not check final sale price because I hated the house once I saw it and wasn’t interested. Glad I didn’t have $1.4 to throw around on a house though! It would take a long time to get that $470k back!)

#7 OttawaMike on 12.05.10 at 11:42 pm

213 Taxpayer like everyone else on 12.05.10 at 1:19 pm

Interesting link on energy input to car manufacture.

I worked in the auto sector during the 80’s and the high energy input rumour was touted then. I wonder if that website considers the total energy to build the facility and the manufacturing machinery?

Recycling economics are similar, you can slice and dice the stats endlessly to suit your agenda.

#8 Bullion.Bunny on 12.05.10 at 11:44 pm

It’s consumer spending. Sixty-five per cent of all activity starts there. And yet with unemployment barely budging, wages stagnant and debt at record levels how can this be maintained?

With cheap money. Which brings is back to Bernanke and all those Chinese offers kicking an overvalued $1.58 million house in Vancouver to $1.95 million.

You are right on this point, people as spending their guts out. It’s full blast, I think everyone now knows the hole is so deep they will never escape. My wife works in retail in Ontario and the spending for X-mas is outstanding! At the same time 58-> 65 year olds are begging for jobs at $10.65 an hour. The beggar’s come complete with degrees in engineering, science, math, management etc. Some even come on their knees crying, it’s a sight to behold. It makes you want to throw up! This is the end.

#9 wetcoaster on 12.05.10 at 11:49 pm

Somehow I can’t see every Asian coming to Vancouver actually having a spare couple of million handy for an over priced west side shack bidding war. That has to be money from borrowing against their grossly overpriced/ over levaraged Chinese real estate that is soon to implode. The chain reaction is going to be brutal when the taps are shut off soon and their loans are called in.

BTW Garth, your site is so fricking slow to open the past week or so I’m beginning to think you have become the WikiLeaks version of Canadian real estate. The forces-to-be prefer your site to be on some similar Swiss cheese server as that is about the speed of it lately. At least you aren’t on Interpol….yet. ;)

#10 Jsan on 12.05.10 at 11:50 pm

This generation has not yet caught the sniff of housing fear. They still believe the non stop Real Estate Industry brainwashing fed to the public via the Main Stream Media. The same media that packages real estate ads and passes them off as news. Telling them that no matter how much you pay for a house, it will always go up in value, “It’s an Investment”. Once this generation gets a hint of fear, fear that they could lose a ton of money in what they thought was a guaranteed money maker, the tide will sharply turn in Real Estate and than there is no stopping the downward momentum.

Again, you only have to look at the US to understand where this will all eventually end up.

“House hunters are too scared to buy despite low prices”


#11 april on 12.05.10 at 11:53 pm

Surely it’s the same in every boom or bust. The rich, at least some rich, will buy homes if they want to regardless of what the housing market is doing. So just because a few homes get sold for an outrageous amount seems to me has little bearing on the average home buyer. Most of us are not in that league. It doesn’t indicate to me that the boom is going to continue on and on. Please correct me if I’m wrong.

#12 Jsan on 12.05.10 at 11:55 pm

Here is an interesting read on “The Great China”.

“China’s credit bubble on borrowed time as inflation bites”

The Royal Bank of Scotland has advised clients to take out protection against the risk of a sovereign default by China as one of its top trade trades for 2011.


#13 UrbanCowboy on 12.05.10 at 11:55 pm

For some of these Chinese it could be double jeopardy, very likely they own property in China too which I understand is under preasure. Just don’t understand where they are getting all the money. Can’t be all borrowed from banks.

#14 Kevin on 12.05.10 at 11:57 pm

It’s an illusion of wealth based on a pile of credit. We just can not time the down fall.

The Saskatoon Advantage

With real estate prices and debt at record levels, is there any wonder why food bank usage is at all time highs and charity donations are falling sharply?

#15 Aussie Roy on 12.05.10 at 11:58 pm

Aussie Update

Property price slump: how LOW can Brisbane go?

Its ok, market is going down slowly, listings rising quickly but NO NEED TO PANIC.

House listings to take year out with a bang. Classic, rising listings are good it wont effect prices. LOL

RBA assistant governor Guy Debelle last week gave a considered paper on mortgage securitisation which included this warning on trying to go further than the Australian Office of Financial Management effort to buy residential mortgage backed securities to keep that market alive during the GFC:

“In thinking about the AOFM support for the RMBS market, I believe the AOFM program has a number of advantages relative to alternative means of support: it can be easily tailored to help specific types of institutions; it can be phased out easily; the likelihood that the government loses money on its investment is very small; and there is no ongoing contingent liability to the government from providing the support. If instead a government guarantee of RMBS were provided, it would be difficult to phase out, creating a commitment that could generate a large contingent liability for the government.”

That alternative doesn’t sound all that appealing. It was the moral hazard of rampant turbo-charged securitisation and government guarantees that gave us the GFC.

One more time: Swan’s mortgage concern just an act

China’s credit bubble on borrowed time as inflation bites

#16 TheBestPlaceOnEarth on 12.05.10 at 11:59 pm

I’m interestedin hearing the response from Pro Renter Vancouver Bear and Junius (and yuea Junius it was a 50% rise). Let’s see you get 400 grand over ask with 24 OFFERS!!!!! Key words ALL SERIOUS. Meanwhile house renter paying 4 grand a month is out of pocket 48 grand for the year. Home owner up 400 grand and that’s just the gravy!! InflationDeflation China is coming and the gravy train just keeps on rolling. GodBlessTheBestPlaceOnEarth Beautiful British Columbia The Crown Jewel of Canada and the World
It was listed at 1.58 million. On the market for two days her realtor received 24 offers, all Chinese, and all serious. After it was all said and done, it went to the highest bidder for 1.95 million

#17 Boombust on 12.06.10 at 12:00 am

Well, like I said before, I wish this crash would bloody well get going. This has lasted a lot longer than saner minds would ever have predicted…

#18 Cowboy_aka_My_View on 12.06.10 at 12:08 am

Watch out when the Martians start buying homes. This will never end…..

#19 Geoffrey Laxton on 12.06.10 at 12:20 am

#20 T.O. Bubble Boy on 12.06.10 at 12:28 am

watch for Silver tomorrow morning… the JP Morgan naked short story continues….

meanwhile, I’m still thinking back to Garth’s last post that referenced $169,000/yr income as the entry point to be in Canada’s Top 1%.

If you were to go to CMHC’s own affordability calculator (, and punch in $14,000/month income with a $100,000 downpayment, the most expensive house you should be able to buy is around $950,000 (@ 3% / 25-yr / and some property taxes thrown in there).

So, the 246,000 people that make $169k+ wouldn’t even be able to afford this wonderful place at Yonge & Sheppard in Toronto or this dump in Vancouver

#21 Can't Spell; Won't Stop Me on 12.06.10 at 12:34 am

The Fed likely will have the pedal to the metal until another bubble blows up.

…bubbles have happened over and over again. Will the next one be Emerging Markets? Chinese property? Gold? Thai Brothels?

His latest 60 Minutes interview (and some choice editorial) highlights the risk:

The man’s confidence amazes me. Unfortunately, overconfidence is a sin when it comes to investing.

Also check out this video on currency failures and inflation…a must watch:

#22 Basil Fawlty on 12.06.10 at 12:37 am

The Ben Bernank tells us that without the massive bailouts the world economy would have collapsed. Well, the Ben Bernank was the same individual that told us there was no housing bubble, so why should we believe him now? He could have paid off every Americans house and given every kid a college education (with beer budget) on the money he has paid out to failed business institutions. It’s not that there were no prudent, well managed banks in the USA. One need look no further than the massive bonus money currently being paid to a pack of scoundrels, to see that Bernank is not laying all his cards on the table.

#23 Debtisforever on 12.06.10 at 12:38 am

I’ve been saying for a long time that it doesn’t matter that the Chinese are buying overpriced real estate (not that I really believe the story about “rich chinese buying for cash”, but anyway). Why doesn’t it matter? Because the rest of us have to live here, and the rest of us have taken out massive mortgages to buy those expensive houses. And guess who is going to bring down the market when 1) rates go up 2) we lose our jobs 3) people stop buying real estate and the market freezes or 4) a combination of all and many other factors. That’s right. Us poor mortgaged-to-the-hilt sods are going to suffer. If the Chinese are really so rich that they bought that ugly Vancouver special for 1.5 million, well boohoo for them. They can go cry a river, but in the end the rich don’t really care, and they can continue to live in that ugly house forever if they want. But the indebted will bring down the market. And I do believe there are more of “us” than there are of “them”.

#24 Ret on 12.06.10 at 12:42 am

Lots of luxury high end Mercedes and BMW’s being driven by new Canadians in the thriving metropolis of Hamilton/Ancaster. Most of the drivers look terrified, like they have never driven a car before.

If someone in the US was stupid enough to believe that I was a rich Canadian investor and give me a million dollars for a luxo home and auto, I’d take it. If things went sour, I’d just head home. See ya later. Draw your own parallels to what is happening in Van and TO.

The banks must be writing up huge mortgages for these people. CMHC guarantees the mortgages. Bring on the robo-approvers.

The new arrivals probably wouldn’t have a chance of getting big loan numbers in the US so they come here.

They all come in with sacks of money? I don’t think so but it is a great story. Pass it on!

#25 Aussie Roy on 12.06.10 at 12:50 am

TheBestPlaceOnEarth on 12.05.10 at 11:59 pm

MMM let me see. You only win if you sell, I agree with that, hope you are selling and many more take the opportunity to take the cash and run. Always best to sell into a rising market.

Garth I agree with other comments here that this site over the past few days has got slower and slower to load. Today its very slow.

#26 Genghis on 12.06.10 at 12:54 am

Prices have generally been stable or on an upward trajectory for 15 years now, save for a very brief downward blip a few years ago. Many Canadians are apparently convinced that this is the new normal for real estate. I have talked to so many people over the last few years who are convinced that you just can’t lose, as long as you buy into a good neighbourhood in a major city. This seems to be a normal reaction to following their local markets closely for 10+ years.

Essentially these people have been fooled by how long this boom has been going on and that is unfortunate. Those that have fallen for this fallacy have no idea that historically price bubbles have gone on for many, many years. Nor do they realize that the busts than inevitably follow often last just as long, or longer.

#27 Wildroseblogger on 12.06.10 at 12:54 am

I wonder if the chinese were snapping up houses in the us sun states like CA and FL before the crash. If not, then we have to ask “why Vancouver” and debate what this means to the future of real estate there, and if yes we have an end to the debate.

#28 kitchener1 on 12.06.10 at 1:02 am

30 year old toddler, LOL, thats close to my age but yet so true.

Dude, its always different, as Im sure that an old guy like yourself has seen in many times. Just like property in Ireland/Spain/Florida etc.. was different.

Here is the deal:

Its tough to find people who agree with Garths views cause its in there financial interests not to. 7 out of 10 folks own homes, its in there best interests that the market keep rising. There will, very soon, i expect 2011 or 2012 to be the year that a 10 year fixed rate of 5%ish is going to be a great buy.

First we will see low rates BUT, when they start to rise, it will be very fast. Even deadbeat govt of countries like Greece/Ireland- countries that are insolvent can still borrow at the DIRT CHEAP rates of 6-7%. Come on, the ability of these countries to repay that debt is ZERO so 6-7% is a bargain. When rates start to rise across the bond markets, watch out

#29 prairie doll on 12.06.10 at 1:03 am


Don’t you realize that the Chinese fools are playing the game of “head, I win; tail, you loose”?

Thanks to CHMC, they can gamble here with no money down, fresh off the plane. And when the chips are down and they get back on that plane, no one will get them to pay off these mortgages. So, taxpayers, if you can find out where to go to escape from holding the bag, let me know. I would love nothing more than to head out.

#30 Patz on 12.06.10 at 1:05 am

So what did the Chinese, local and offshore do in the meltdown of the early 90s? Well of course the sailed into the wind and kept bidding prices up—NOT!

No matter where they’re from and/or what their acculturation tells them about housing, they may be greater fools now, but they won’t stay stupid forever. DISCLAIMER. This is not to say I think Chinese are any more stupid than anyone else when it comes to RE. It’s a mindset based on the historically long run up. And as another poster said it can turn on a dime once the rout begins.

Remember the bust? Do you also remember that literally days before the market crumbled ‘experts’ were giving enthusiastic buy recommendations.

This is the hardest time to be patient because you know it’s coming but it seems to be taking so long. Trust me, in hindsight it will seem like Speedy Gonzales.

#31 cellar dweller on 12.06.10 at 1:13 am

@#16 Thebestplaceonearth

In this unstable economy, to ignore all the warning signs in Europe, the US, AND China’s massive trade imbalance with the rest of the world.
A skirmish in North Korea, Iran, etc, should be more than enough to get oil over the $140/bbl price range. (Remember the summer of 2008?) THEN we’ll see what happens

Your endless prattle about BC being the only place that will avoid a real estate reckoning is ridiculous.
As if BC creates its own wealth, jobs,etc. PUH-LEASE

All I see when Asian Buyers are foolish enough to pay 1.95 million for a house is proof they are just as stupid as caucasian buyers that ignore reality staring them in the face.
Just keep singing “Happy days are here again….” all the way to the trustees in bankruptcy .
See ya in the rental office

#32 Erikson on 12.06.10 at 1:19 am

About money nature:
It may be the old stuff for someone, but it was informative for me.

#33 a prairie dawg on 12.06.10 at 1:23 am

“Why are the Chinese showing up with large amounts of cash?”

1. Huge economic growth in China for 10 years running.
2. Over 1 billion people contributing. (BILLION)
3. Fortunes being made by Chinese politicians, business men, and criminals. (no pun intended)
4. When you make a fortune in a communist country, it’s best to hide it outside that country if you ever want to see it again.

Seems pretty straight forward.

#34 robert on 12.06.10 at 1:25 am

Nice post but I would add the adjective ‘mindless’ to “consumer spending.”

Did you get the snow tires on the Hummer yet?

#35 dark sad person on 12.06.10 at 1:28 am

So the question is, were there any savings in the town when everybody was in debt? It would be great to read your reasoned answer, then hear what blogger Shawn
thinks. TIA.

I remember the story-

Of course someone produced something-of course they all earned and owed $100 through their labor/services/consumption-

But-the debt was essentially zero amongst the town-all of it had an underpinning-

The tourist was simply the money supply-

Consumption happened-Debt was incurred-Labor was rendered-debt was settled and the Bank/Tourist was paid back-

All the $100 did-was “act” as a medium of exchange-
(an excepted note of final settlement)

Where or how the Bank/Tourist came up with the $100 is immaterial-

I have no idea how this relates to Investor Shawns pipe dream that there is a dollar of savings/cash for every dollar of debt-

The fact is-that this Debt was “Sentiment” driven by easy Credit and and caused a Greed Consuming mania which caused house prices to rise “and” then fall and has now left “the whole Town with Debt hanging in the air and no underlying collateral–
No past earned labor to back it or no new fool buyers to underpin it and no means of final settlement to extinguish it–

What’s happened today is more of a Mass Psychological driven event-
Not one bit different then the outcome of the Tulip Mania-

Where is the Tourist that comes to Town in this picture?

Will he be another John Law or an Adolf ?
I wonder–

Whoever he is-we know he’ll be riding the same White Horse-

#36 TheFirstRick on 12.06.10 at 1:29 am

Since we are talking about downtown Vancouver^^^

The deluded say “it is like this in all cities.” Maybe so, but in most cities people don’t pay 3/4 of a million dollars to live in this filth. (i.e. Woodwards) This was filmed less than 2Km from the Olympic Village.

Don’t fret, with the social housing aspect of The Olympic Village, she is soon to be a neighbour of the owners.

It is different here!!!!!!!

#37 cellar dweller on 12.06.10 at 1:33 am

Just read that the worlds’ population will reach 7 billion in 2011. Only took 11 years to add another 1 billion people to the Earth.
Lets invite all of them to TheBestPlaceOnEarth so that it becomes a traffic jammed, smoggy, crack infested, capaccino slurping, nauseatingly self absorbed, souless, BIG CITY.
Wow! It already is !
Never mind.
Go away
the end.

#38 Contrarian on 12.06.10 at 1:40 am

ever been around a lotto kiosk?????

#39 dark sad person on 12.06.10 at 1:54 am

#8 Bullion.Bunny on 12.05.10 at 11:44 pm


Good post-Good to see you back–

G old buddy-

You’ve had my pal “Bill” in Petersbouro or “some” town down east-under house arrest for quite some time-
Maybe you could put him on Day parole?
He did add a lot to this board and he knew some good tunes-

#40 Nostradamus Le Mad Vlad on 12.06.10 at 1:57 am

The ‘So what?’ attitude that plenty of young ‘uns have will arrive when us ol’ geezers break on through, and a number of us will leave debt loads to be repaid via the legalese being sorted through — that’s what they will inherit.

“Many people don’t share my views.” — A lone wolf not afraid to stand up and take the opposite view, which is why a lot of us are already here. I couldn’t give a monkey’s about what others say I should / shouldn’t do. They can go play with themselves.

“. . . when I sat with a 30-year-old toddler . . .” — Has society gone downhill that quickly? When know-it-all psychologists, shrinks and psychobabblers started squawking on about how individuals needed counseling after some ‘traumatic’ event in their lives, it was clear then that people had lost control of running their lives, and instead, they were taking a back seat approach and letting their emotions run their lives.

These dipsy-doodles have no concept on the reality of life anymore — they have become so addicted to materialism but soon they will have to forfeit their “Lifestyles Of The Rich and Famous”, as the money and cycles are shifting.

As for Bernanke, 60 Minutes and the m$m in general, the headphones go on and I become oblivious to what they are barking about — Bernanke.
#9 wetcoaster — “. . . your site is so fricking slow to open . . .” — Same here. Could be lotsa zombiesheeplewoofs tinkering with stuff they’re not supposed to be!

#21 T.O. Bubble Boy — “watch for Silver tomorrow morning… the JP Morgan naked short story continues….”

JPM is up to their necks in it, plus they were the ones who bought 80% of the copper in London last Thurs. / Fri. Something stinks on this planet, and it ain’t sewage.
The second clip has ordinary people telling it as it is — US unemployment benefits running out, having to sleep in their cars, etc.

Dope is not just for getting high anymore!

10:23 clip The US debt — who is it owed to, or who owns

Some banks are nasty pieces of work.

Re: China’s bubble — Don’t ferget disinfo.; the US and others in the western hemisphere must keep their verbal jousting alive, to keep pressure away from our own problems. Shift the problems to another country!

Obama So much for a new Free Trade Deal.

The dominoes begin falling, as they should (T.O. Bubble Boy).

Global BS Ice age near?

#41 MKUltra on 12.06.10 at 2:05 am

No one is omnipotent in their decision making and their ability to predict the future – no single human, no company, no culture, no ethnic group, no country, no religion, no one.
People who think ‘rich Chinese’ are omnipotent in their business acumen – don’t know any ‘rich Chinese’ or rich ANYONE for that matter! LOL All groups can commit ‘herd thinking’ even if that group is small, educated, and financially elite (us blog dogs are no exception).
Anyone can make a bad investment – rich Chinese are no exception.

My next point…

The fact that rich Chinese are arguing over an over-inflated home is COMPLETELY irrelevant to the price of “average home Canada”. Did anyone pay attention in European history class in high-school??? The rich can be dining with silverware and gold-plates while 95% of the commoners outside can be eating cabbage stew from the same gawd-damn dirty bowl.

Translation: The average Canadian shouldn’t concern themselves with the rich Chinese and their million-dollar homes because the neighbourhood YOU live in can go to crap in the coming years – and while the rich Chinese are still dining with silverware and gold-plates – you’ll be struggling with a declining asset and one step closer to a hearty cabbage stew — bon appetite.

#42 Jeff Smith on 12.06.10 at 2:19 am


#43 Jeff Smith on 12.06.10 at 2:23 am

>#1 buylow on 12.05.10 at 11:21 pm
>where are these Chinese getting the money? And why
>is it just them spending so much?

From the manufacturing sector exporting toy, electronics good, etc. to Canada. So then they funnel the money back into the Canadian real estate at ridiculous prices. Seems fair to me! I mean the US was able to grab Chinese money using similar instruments called securitized mortgage instruments. We didn’t even need to disguise our product using insanely invented words. Keep it up!

#44 Midas on 12.06.10 at 2:29 am

China is the #2 economy in the world. Lots of new multi-millionaires every day. Sure, there’s going to be a bubble. But don’t ask where the buyers of Van RE are getting the money from. There’s no mystery to that.

Deflation: bring it on.

#45 JC on 12.06.10 at 2:31 am

My cultural heritage is Chinese and I can tell you with absolute certainty that collectively there is no special “advantage” to being Chinese… be it academic or financial.

Growing up I watched family acquaintances lose their shirts on almost every asset bubble imaginable… whether its buying a T.O. condo for 750 large in 89, or maxing out on Bre-X stock @ $200 and riding it into the ground.

What I DO suspect though (and backed by my own personal observations) is that the Chinese mentality is more pliable when it comes to leverage for Real-Estate. There is a certain “under-dog” attitude amongst 1st generation Chinese Canadians that is quite pervasive. Part of this underdog attitude is about climbing the pillars of the social hierarchy. Since many newcomers of the modern Chinese diaspora don’t speak English they tend to congregate in their own communities… and… how can I put it?…. these communities are not the most sophisticated when it comes to sound financial planning (except maybe for the saving part).

#46 AA on 12.06.10 at 2:47 am

Not sure about the chinese…but as a well educated immigrant who makes 120k a year….i cant afford a house at the price things are….or in other words if things continue the way they are i am already considering moving from Canada now…..i luv this place…but its getting too expensive..forget just housing…overall cost of living is headed in a direction where i have started questioning all the things i continue to go through at times….its not easy planning for the future…and if the present is a direction things continue to move in…it’s not going to be pretty…..btw…i have made my 5 yr plans…i have started planning an exit 3-5 years from now….when i wont be able to afford much unless i borrow …it’s sad the way things are….and its not the banks fault…..Its the people… stupid!!!

#47 The Original Dave on 12.06.10 at 2:50 am

#189 The Original Dave on 12.05.10 at 5:40 am

I can’t believe some of you still insist on arguing with Dark Sad Person in regards to his deflation argument.

ok. so why haven’t stock prices collapsed like Japan?? why isn’t the Dow/ SP down 75% like in Japan? why isn’t the Dow to 3500?

i’ll tell you why. because this isn’t deflation. plain and simple. anyone that thinks so, is clueless.


You know what it is about the hyperinflationists, they tend to confuse themselves as their argument just doesn’t make sense. This is why most of them come across as being scared.

Deflation occurred to Japan alone at the time. There isn’t a specific loss that has to be reached for an economy to be considered in deflation, we just have to see a contraction in the overall combination of both printed money and credit money. The loss in credit is far greater than what is being printed. This brings down prices. I don’t know how far but it is clearly happening in the U.S.

I’ll try to make this fun. Lets say you have a friend that opened a little business selling Uggz boots. Her network expanded and she has a few hundred family, friends and extended friends buying these boots from her. She now commands $200 for a pair.

Everything is rolling along and she does okay for a part-time thing. Slowly but surely the economy softens and some of her network lose their jobs. It’s the crash of 2008. There isn’t as much credit available either to these people. As her business is softening and there’s less sales because there’s employment issues and credit issues, the banks get bailed out…yay. Money goes from government to the bank. The Uggz selling woman still has less sales though. She’s not involved in that transaction at all. She still has to drop prices or go out of business. The banks don’t care if they got free money, they’re capitalistic in nature and if the Ugg selling lady isn’t making decent enough sales, they’re not going to take a chance lending her money just because they got free money. How does money “printed” and being passed to the banks help her sales? How can she keep selling Ugg boots for the same price? Her friends are worried about their jobs and lending institutions are tighter with their lending.

You say inflation. Tell me how small business can raise prices and stay in business when the public has less physical money and less credit?

#48 Tre on 12.06.10 at 3:07 am

Hey Garth, it does mean something, they just bought a house of pain!

#49 The Original Dave on 12.06.10 at 3:08 am

The problem with this argument is that you can not just give up essentials. If you quit buying food you starve.
Be sure to watch The Ben Bernank on 60 minutes tonight.

ah, so you buy exactly what you need? People survive in some poorer parts of the world and even in this country and they buy less than a lot of us. When push comes to shove, and people have to tighten their belt, they will.

If I lose my job today, that next glass of milk I pour won’t be that tall one I’m not sure I’m going to finish, it’ll be that smaller one I’m sure I’ll finish. People tend to be less wasteful. I’m sure that’s happening now. The price declines in Canada aren’t happening as much because there’s still inflation here (far too much credit) and with that credit comes spending and competing for goods. If there’s competition for goods, prices stay firm. This is obviously concludes when you look at people’s debt levels. They’re at a point that they cannot finance their debts and live their costly lifestyle. The debts will be paid or people will default and their costlier lives will get cheaper because they and many others will not keep prices firm. The public will consume less. Less demand will soften prices and force business to compete with each other to get sales levels up. More businesses and jobs will be lost because of that. Deflation feeds off itself. Lower prices are coming.

#50 Peter Pan on 12.06.10 at 3:09 am

You are the Julian Assange of the Canadian Real Estate Industry…

Those who speak the truth are usually despised by those who profit by having it supressed.

#51 dark sad person on 12.06.10 at 3:33 am

This Bank has been reading my book


Royal Bank of Scotland Says China’s Credit Bubble on Borrowed Time, Warns of Sovereign Default by China
As it happens, Fitch Ratings has just done a study with Oxford Economics on what would happen if China does indeed slow to under 5pc next year, tantamount to a recession for China. The risk is clearly there. Fitch said private credit has grown to 148pc of GDP, compared to a median of 41pc for emerging markets. It said the true scale of loans to local governments and state entities has been disguised.

The result of such a hard landing would be a 20pc fall in global commodity prices, a 100 basis point widening of spreads on emerging market debt, a 25pc fall in Asian bourses, a fall in the growth in emerging Asia by 2.6 percentage points, with a risk that toxic politics could make matters much worse.

If there is a hard-landing in 2011, China’s reserves of $2.6 trillion – or over $3 trillion if counted fully – will not help much.

#52 hobbitt on 12.06.10 at 4:05 am

Where are the asians getting their money????

#53 Lemonhead on 12.06.10 at 5:02 am

Oh no, Carioca Windbag has ported over his bloviating nonsense from the Alberta and Vancouver doomer blogs.
Next episode, he tells us he lives in the Caribbean.

#54 GTAInsider on 12.06.10 at 5:15 am

Aussie Boy and all on this post : This is where it summarize the reason for a 1.95 mil vancouver home being sold to Azns..

“Diana Choyleva from Lombard Street Research said the money supply rose at a 40pc rate in 2009 and the first half of 2010 as Beijing stoked an epic credit boom to keep uber-growth alive, but the costs of this policy now outweigh the benefits.

The economy is entering the ugly quadrant of cycle – stagflation – where credit-pumping leaks into speculation and price spirals, even as growth slows. Citigroup’s Minggao Shen said it now takes a rise of ¥1.84 in the M2 money supply to generate just one yuan of GDP growth, up from ¥1.30 earlier this decade.

The froth is going into property. Experts argue heatedly over whether or not China has managed to outdo America’s subprime bubble, or even match the Tokyo frenzy of late 1980s. The IMF straddles the two. ”

Lots of $$$ flows thru from the Central bank of China are flowing out to every parts of the world…The Chinese are doing similar to US…using homes as ATM’s and re-amortizing their overpriced homes and let the communist party and their banks and shareholders holds the bag…

Also, the Chinese are so crazy on buying overseas homes at crazy prices when most of these uneducated peasants, farmers who sold their granny, ancestral owned lands to the developers for ten’s and millions of RMBs when they owned them at $ 1 RMB from the 50’s, 60’s,70’s until now creates lots of wealth effects to the economy…People can use those monies to flip tons of homes, undeveloped areas, stocks and even commodities…

Also, take note that the Chinese govt wont let GDP lower than 8 % every year so that means they will…print more money to put into the ppl’s hands and make ppl to borrow, leverage more, have more ppl to load up real estate, push cities and towns to create world class projects but it was rubbish projects and those companies will mull those funds overseas ($ 50 mil project becomes $ 100 mil and the other 50 mil goes somewhere in the world where Mr.CEO will buy a nice bung in Van for 2 mil CAD thanks from the Chinese Govt)…

#55 Utopia on 12.06.10 at 5:33 am

Hmmmmm. So let me get this right.

There are many hundreds of thousands of Chinese millionaires today who have not yet had the wonderful, delightful and orgasmic opportunity to experience Millenium place and it’s fabulous waterfront location first hand.


It must really be a great development after all.

Hundreds of thousands of Uber rich Chinese versus a pip-squeak 454 empty units in Vancouvers waterfront Millenium place.

Are they all crazy to ignore the great opportunity there?


Or could it be that the maybe they are not so stupid as some of you Realturds (R) think they are. That maybe they have figured out the market is already way over the edge already and on it’s way down.

Why do you house-pumping Realturds (R) always assume the Chinese are stupid with their money anyway?

Game. point. match.

#56 HouseBuster on 12.06.10 at 6:18 am

A lot of Chinese were buying in the US too. How did that work out for them?

They won’t be able to stop the housing crash that is coming. And it really won’t be a crash, just a return to 2003 price levels.

#57 john m on 12.06.10 at 6:43 am

Great post…… one should consider how many thousands of BC mcmansions can be purchased from the billions in drug money in that province.Price is of little importance when laundering money.I wonder what background checks are made into where these wealthy immigrants got their coffers full of cash?

#58 Chris on 12.06.10 at 6:53 am

OH It represents Canada alright… In that its overpriced… and its overly expensive for anyone right now living in Vancouver.

#59 Chris on 12.06.10 at 6:58 am

Will you make the tax payers money back?

Condo King “No”

Cut to politician “Yes”

haha… wow. Vancouver is so screwed on that olympics deal. Will they need a bailout?

#60 Chris on 12.06.10 at 7:02 am

@TO Bubble Boy

I was trying to use that calculator and found that it didnt matter what numbers i punched in…

#61 Carol on 12.06.10 at 7:02 am

I always wondered where the Chinese get all this money. A couple of examples for you, Garth:

1) A friend from Mainland China who just bought a $425K house in the summer in Richmond Hill. Down payment was given by her mom (still living back home) and it was 35%. She’s in charge of the mortgage. The reason for the purchase is solely as an investment for her mother and herself.

2) An University classmate living in Vancouver who just told me this weekend that she bought a condo and spent “thousands of dollars” refurbishing it. What the hell? I’ve redirected her to your website multiple times, but she won’t listen to me.

Great post, as usual! However, something is up with your RSS feed, since I haven’t received the past 3 posts in my Google Reader.

#62 Melissa on 12.06.10 at 7:47 am

Here is an excellent article on the risks of a China crash and its implications for Australia and New Zealand. The themes could apply equally to Canada, particularly Vancouver (given the high number of Asian buyers).

#63 SaraBeth on 12.06.10 at 8:01 am

With the unemployment benefits in the U.S. not being extended, there are going to be a lot of people who sell things hurt too. You cannot sell what others cannot buy.

#64 BrianT on 12.06.10 at 8:33 am

#27Orig-Re the Dow and Nikkei aves, measured in gold or silver the performance of the Dow over the last 5-6 yrs is not that dissimilar to the Nikkei performance of the early 90s.

#65 dd on 12.06.10 at 8:49 am

Bernanke’s Mentor:

“In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value…The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves. This is the shabby secret of the welfare statists’ tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists’ antagonism toward the gold standard.” Alan Greenspan, 1966

#66 jane54 on 12.06.10 at 9:09 am

Garth help please.

My hubby is 60 in March. Should he grab his CPP now with the 30% cut in payments or wait another 5 years to turn 65 and get 100%.

Our concern is that in 5 years time so many baby boomers will be drawing CPP that we might lose the 30% anyway.

Thoughts please and thanks.

PS – If you are a resident of the UAE as I am then Barclays bank (British) is offering 9% annual interest on a one year deposit and you can choose for the account to be in dollars, pounds, euros or local currency!!! Give me some help dogs, which should I go for?

Never take early CPP unless you are starving. Are you starving in the Emirates? — Garth

#67 dd on 12.06.10 at 9:13 am

#64 SaraBeth

…With the unemployment benefits in the U.S. not being extended…

Oh, that will go over well with the public when the Bank of American is getting $Billions a month from the Fed to keep it afloat.

#68 Aussie Roy on 12.06.10 at 9:15 am

GTAInsider on 12.06.10 at 5:15 am

Yes, this credit expansion in China is what really kept Aus out of recession.

IMHO this is the tail end of the global stimulus effect.

This undirected (lend for any purpose) credit just creates a speculative mania, the problems will only be known when the effects of this easy credit wear off.

The soft spot in the chinese plan is “food prices” with price rises in double digits their response has been to slow credit and increase rates. I believe this wont change, so they are very unlikely to once again consider an easy credit policy while food inflation is rampant. The people wont tolerate it, the ruling party fear it.

I have many Chinese friends and deal with many companies looking for Australian suppliers and partners mainly in food and wine industries. Its been good business for nearly two years, however now things have slowed quickly and there is a level of concern about the near future being expressed to me. I was not surprised hidden in our GDP numbers the only performing sector was the farming sector, all last years contracts being executed (shipped). Current demand is weak has been for 3 months or so this will show up in our GDP next year. My son works for a large miner here, other than a few commodities, orders are drying up and the futures market for shipping prices is also softening indicating a slowing of demand for vessels.

I think if they do stimulate again it will be targeted towards productive investment not easy credit for all.

#69 BrianT on 12.06.10 at 9:27 am

Zerohedge makes a good point today-35 years ago no one was calling publicly for the murders of Woodward and Bernstein (e.g. Flanagan, Leiberman and many others)-times have really changed quite a bit, and not for the better

When we first heard of the latest Wikileaks “cablegate” fiasco, we speculated that Hillary Clinton may be forced to resign for what is rapidly becoming the biggest crisis for US foreign policy since the Bay of Pigs. Today, in an interview with Spanish El Pais, Julian Assange goes one better and says that if it is proven that he approved the spying on UN officials, then Obama should resign. As a reminder as per one of the released cables, US Secretary of State Hillary Clinton asked for UN personnel’s telephones, emails, credit card details and frequent flier numbers. Let’s recall that Nixon resigned to avoid impeachment under somewhat comparable circumstances. The only difference is that back then Woodward and Berstein were not on the receiving end of what is becoming an endless barrage of death threats for doing their journalistic duty. This time around, the “deep throat” is the target of an international witch hunt, where however is moot: the early attempt by the like of Joe Lieberman to censor the internet is doomed from the beginning. However, it does show that in the past 40 years little has changed at the top echelons of power when the sordid truth of “Standard Operating Procedures” are revealed. And, unfortunately, things have only gotten worse. Also, keep in mind that Wikileaks has so far released only a small fraction of the 250,000 cables that will ultimately be declassified by Wiki. One wonders just how long the world can maintain the damage control before foreign relations between both friends and enemies are terminally frayed.

#70 TS on 12.06.10 at 9:41 am

latest news out of the US has 13.78% of all mortgage loans in deliquent or foreclosure status…..don’t expect any recovery in the US market for quite some time.

the number of banks on FDIC’s watch list continues to grow…..

the debt crisis is escalating for US cities and states that issue bonds…. creating a higher risk of defaults and higher interest rates as a result…..

Our southern neighbour is very, very sick economically and as it is often said….Canada sleeps with an elephant…when it rolls over we get crushed… as the sickness spreads north it will have a negative impact on employment here…and when people aren’t working they can’t make mortgage payments. At that point the bubble in Canadian real estate breaks…. June perhaps? Who knows….but it does creep ever closer.

#71 Nibs on 12.06.10 at 10:10 am

Boomers feeling the retirement pinch…..not saving enough…..too much home equity, not enough financial assets. A ticking time bomb!

#72 CTO on 12.06.10 at 10:13 am

#46 JC on 12.06.10 at 2:31

“My cultural heritage is Chinese and I can tell you with absolute certainty that collectively there is no special “advantage” to being Chinese… be it academic or financial.”

Thanks JC for that interesting and useful piece of information.
These are the comments i like the best because they come right from the community that is either affected or affecting the market.
No myths, no BS, just clear observations or insight, that represents the true story that you will not get out of the “advertiser heavy MSM”.

#73 randman on 12.06.10 at 10:16 am

Latest posting from Mish…….

Australian and Canadian Chicken

The Reserve Bank of Australia played its own games of chicken, letting property bubbles get sky high in order to prevent a recession in 2008. Now, in spite of still rising commodity prices, Australia is on the brink of recession, with 3rd quarter GDP falling to .2%.

Those plowing into Australian dollars in belief it is a safe haven just may have another thing coming when the Reserve Bank is forced to cut rates to combat a recession it refused to allow the last go around.

Australia is finally poised to crash with massively rising housing inventory and multiple failed property auctions. The Australian economy will be in shambles when housing collapses. Imagine what happens when China slows and commodity prices sink as well. The Australian stock market could be in for one nasty spill.

Canada has its own property bubble to reckon with, much the same as Australia. Indeed, most Canadian and Australian housing proponents are in their own Fantasyland bubble chanting “It can’t happen here.”

It will.

#74 randman on 12.06.10 at 10:19 am

And this lovely tidbit as well…..Chicken End-Game

From Bernanke to Trichet, to China, to Australia and Canada, to hedge funds and investors, to currency and carry-trade speculators, very few understand the inevitable end-result of chicken.

It’s called a crash.

We are in a currency endgame that no one on this planet can be sure how or when it ends, or who blows up first. I highly doubt the US is first, and certainly none of the above suggests US hyperinflation. Nonetheless, the order in which things blowup is very important, depending on which side of each trade you are on.

If that was not bad enough, the odds of a multiple simultaneous crash (or rapid series of crashes) is high and growing as central bankers pull out ever-increasing, counter-productive, and clearly destabilizing bazooka-stops, hoping-against-hope to keep a lid on things.

Is it any wonder the price of gold keeps soaring?

In the meantime, various pressures mount. At some point the global pressure cooker will blow sky high. I suspect the Eurozone or Japan will be the first of the big boys, but any number of scenarios are possible. When this complicated mess does blowup (and it will), all the “sure thing” traders on the wrong side of a bet will realize too late, that they played one game of chicken too many.
s well

Have a happy Monday everyone!!

#75 CTO on 12.06.10 at 10:33 am

#47 AA

Not sure where you live.
A lot of immigrants I know live in T.O. They complain endlessly about the cost of things and the lack of services. Well,…they aint seen nothin yet!!!

When i tell them i grew up in a small town 150 miles N of TO, they look at me with this look of…”how did you get here!?” Where did you get educated and how did survive!?

I tell them i loved my childhood and would like to live in that town again. After much experience in both worlds i’ll tell you people outside of the city are:

more self sufficient(they can change their own oil,etc)
nicer to each other
Look out for each other and their nieghborhood
Have a full range lifesyle (which includes city things)
Have more space
Not nearly as pretentious
Better money managers
Have So many more things to do that are free
Never stressed
Gas is cheaper
Houses are 1/2 the $.
Oh ya ,and now that TO has a 10% unemplyment rate…
I could go on forever about how hugely over-rated the City is but what’s the point.

#76 seemac on 12.06.10 at 10:40 am

You actually get hate mail.

So much for real estate and emotion. Man…

In the land of the blind, the one eyed man is king.

#77 Boombust on 12.06.10 at 10:42 am

er, that Chinese story has been going around in circles. It is an urban tale that Vacouverites fall for every time.

Pssst! “Iknow someone who…”, “A friend of mine told me the other day…”

Just like poodle in the microwave, or the baby in the oven stories, don’t pay it any attention.

#78 Incognito on 12.06.10 at 10:51 am

All I can say is…

A fool is not limited by his race, creed, religion or color.

#79 PTDBD on 12.06.10 at 11:22 am

Notes from the Underclass

– That Unemployment Report was conveniently bad just as tax extensions for the rich are being voted on. Those tax extensions are to be bundled tit-for-tat with an extension of unemployment benefits. It was no coincidence. Obama is reportedly favouring permanent tax cuts for all now. The debt ceiling has been forgotten.

– The Bernank appearance on 60 Minutes was no coincidence either. He advocated extending the tax cuts for the rich saying the economy was too fragile to do otherwise. The Fed should not be commenting on tax legislation.

– Bernanke dropped the not surprising fact that he would continue to stoke the paperprestidigitizer. There is no off button.

What never gets mentioned:
Bernanke’s main mandate is that the fiat currency system retain its its full faith and credit. Once that is lost we rocket into hyperinflation. When institutions and the wealthy see that their money will buy only buy a fraction of what it did yesterday there will be a spending blizzard for hard goods that has never been seen before. Did you gain confidence from watching The Bernank yesterday? I didn’t. How many times did they rehearse that orchestrated puppet show? Both Bernanke and his interviewer (watch his leg) looked extremely nervous.

It’s scary when the most powerful man in the world looks nervous.

#80 housedoc on 12.06.10 at 11:48 am

When Bernanke speaks, it seems clear to me that he’s lying, almost on the verge of tears. Is it just me?

#81 Kuwaiti on 12.06.10 at 11:52 am

Hi Garth, I love your blog, as a 4th year engineering student, I see last year’s grads pile on the debt for their first homes while I pile on the silver.

I did not understand one thing though, what is a particle board palace? Please explain (from “…and in its place soon rose a two-storey particle board palace towering over the home next door.”)

#82 Oasis on 12.06.10 at 11:53 am

Interest rates are almost at zero because we’re almost in deflation.

i see. we’re almost in deflation. that’s why gold is at $1400+ and silver at $30. Oil at $90, … cor over $5, soy over $12, copper over $4, cotton, cocoa, etc etc..

sure that’s deflation …

#83 Incognito on 12.06.10 at 11:59 am

Calgary RE pain in the News:

Calgary building permits dramatically fall
60.1% off last year’s pace

Statistics Canada reported today that building permits in the Calgary census metropolitan area totalled only $237.4 million which was down 11 per cent from the previous month and by a whopping 60.1 per cent from October 2009.

In Alberta, the federal agency said building permit value of $835.9 million was down 2.1 per cent from September and by 42.9 per cent from a year ago.

#84 Phil on 12.06.10 at 12:00 pm

Chinese maybe making bad decisions, however, this, has nothing to do with average wages in Vancouver. They have the money to buy these places

#85 somejerk on 12.06.10 at 12:01 pm

not sure what 60 minutes you were watching #22( Can’t Spell; Won’t Stop Me) Look to me that Helicopter Ben was shaking in his boots most of the interview…

#86 Got A Watch on 12.06.10 at 12:13 pm

Garth, as other commenters have mentioned, this website is often “unavailable” (not even an error message, just…nothing), and other times takes a looooong time to load. No doubt a DDOS attack. You’d think the hackers would all be busy attacking Wikileaks, or something, but there are some still for hire I guess. A side note, 1 Russian guy recently arrested in the US, was said to run a massive ‘bot-net’ and been responsible for around 1/3 of all global spam sent in the last few years. That’s 1 enterprising ‘New Internet’ entrepreneur.

btw, when I talk about deflation and how we are in a deflationary deleveraging crisis period that could run for another decade yet – I am referring to the massive unrecognized debts contained in the ‘Shadow Banking’ system, which are not in public view. The massive mountains of toxic paper held at 95%-100% of “face value” on the ‘books” (cough) of the world’s biggest Central Banks, private Banks, Pension Funds etc – aka the ‘bagholders’. The debt everyone knows, but few will admit out loud, like “Irish Bank Bonds” that is worth about 0%-30% of the claimed value, on a good day. The debt that remains held as ‘money good’, when in fact it should be moved to the blue rectangular box file on the floor. The derivatives: CDS, CDO, CDO^2, CDO^3, MBS, MBS^2 held by ‘Funds’ and ‘Funds of Funds’ etc. Multi-Trillions upon Trillions, who knows the true total – I only know it is a Mt Everest of bad debts that overhangs the global economy.

The mere ‘recognition’ of which, if it ever occurred, would instantly vaporize every large Bank etc in America, Europe, Asia and beyond. So we are instead forced to ‘Extend & Pretend’, as all that bad debt continues to exist in the shadows, unloved but still held. There has been no resolution to most of this toxic paper, and there won’t be, as long as pro-Bankster scum like The Bernank is in charge, whose only interest is to save his Bankster cronies at all costs, all other effects be damned. Thus, this crisis drags on and on, and will only begin to end when the shadow debt is dealt with, one way or the other. 3 1/2 years into this crisis, and we are barely ahead of the beginning, mired in the mud of fictional accounting and magical thinking.

This is why you can see the fear and weariness in Zimbabwe Ben’s eyes – he knows how bad things really are, he just can’t say it out loud. So he plays semantic games, advocating more idiocy like QE3, because he sees no other alternative. Letting the Banksters go, to meet their deserved fate, is not an option for him, so we all must suffer instead. It’s not like QE2 or 3 or 4 or whatever will actually do anything positive for the economy, it’s just a band-aid to supposedly placate financial markets.

Ben and the interventionistas will fail in the end, they always do, but that long extended process of trying to deny reality will just doom the global economy to more years of stagnation. We need to see deflation for an “extended period” (my guess, 2-3 years) in order to move to correct the financial imbalances and to resolve the problem of too much debt that won’t be repaid, ever. By trying to drive inflation before that resolution has happened, all that is achieved is to create speculative bubbles in many commodity sectors, like food and oil for example. Which act to slow the economy over time, the exact opposite of Benny’s claimed goal. And the deflation will have to happen anyway, as “stimulation” is reaching the end of the rope, there won’t be any more possible in a year or two.

The stupidity of Central Banksters, first blowing bubbles, then trying to deal with them via wrong policies, sentences us all to a bad economic decade, maybe longer. All of this could have been avoided, if they only had a brain and some morals – but sadly there were, and are, none available. The moral hazard is immense, now “investors” are convinced “Benny can save us all with just one more pump job!”, and the train to nowhere rolls on.

#87 ken on 12.06.10 at 12:23 pm

Ten years or so interest rates were at 1% or thereabouts and held at that level until now,creating greed corruption and childlike behaviour in the financial industry and the general population eg. real estate,corrupt lending by the financial industry,on and on.If interest rates had been at more normal levels most of the problems would not have occured to the same degree.Bottom line interest rates held for that period of time have created most of the problems.

#88 Gord In Vancouver on 12.06.10 at 12:26 pm

Rich Asians In Vancouver?

Donations down at Rogers Santa Claus Parade
Less than half of what people donated in the past–donations-down-at-rogers-santa-claus-parade

#89 Gord In Vancouver on 12.06.10 at 12:28 pm

Rich Asians In Vancouver?

Donations down at Rogers Santa Claus Parade

Less than half of what people donated in the past–donations-down-at-rogers-santa-claus-parade

#90 pbrasseur on 12.06.10 at 12:32 pm

Actually it is entirely possible, likely even, that the currently huge property bubble in China is spilling over in Canada, in Vancouver in particular.

Obviously that should be no comfort to anyone.

All bubbles pop, bigger bubbles pop harder.

#91 GregW, Oakville on 12.06.10 at 12:33 pm

Hi Garth, I help sell another book of yours on Sat.
To someone that looked like they might really have need it!

On the weekend my wife’s family was down from Ottawa area for x-mas shopping. (I even got to say hello to Esther in a check out line.)

In the Chapters book store I picked up the only copy of your book left on the shelf ‘Money Road’ , and as I contemplating whom would find it of use under the tree.

When a guy walk up next to me and picked up the
‘Real Estate Investing For Dummies’.
I could not resist,
I handed him the last copy I had in hand of your book.
And put in a few good word about the book & blog.
(I throw in some added info about fluoride in the water and mercury in the flu shot! for his FYI) Then walked away.

I still wanting to get your book for family, so I
Walking by that guy later, he was buying your book.
I then pointed him to the last copy of your
book ‘After the crash’ still on the shelf.

I did manage to find a copy of your book ‘Money Road’ at ‘Coles’ book store (they had two copies on the shelf) for that special person in my extended family.

Can people still order your books through this site in time for x-mas? Is there still time and stock?
Might you have another book out soon?

#92 BrianT on 12.06.10 at 12:35 pm

IMO these comments about Ben Bernanke totally miss the point. Ben has transferred trillions of dollars from the US taxpayer to connected banks and hedge funds. That is his responsibility-not putting a chicken in the pot of J6P. Ben is going to end up an EXTREMELY wealthy individual, so he might be nervous like Bernie Madoff was nervous, but he isn’t losing any sleep worrying about the future of the USA.

#93 AG Sage on 12.06.10 at 12:42 pm

#1 buylow
>where are these Chinese getting the money? And why is it just them spending so much?

The Chinese government, in Nov 2008, dumped the equivalent of $600 billion US into the Chinese markets/industry/banks to prop things up as the West faltered. Using some (very) rough math, that’s about $450 per person. (Which might not sound like much, but this is a country that just ten years ago this was half the GDP per capita for an entire year.)

Assuming income distribution of the stimulus mimicked that of the wealth distribution of the economy itself, the top 1% got 41% of the stimulus. (I don’t think this is a crazy assumption, given how linked politics and business is in China.) That means 1.3 million people split 41% of $600 billion, roughly. That’s $460,000 US dollars per person. (In actuality, the same distribution probably happened within the 1.3 million . . . but let’s keep this simple.)

Add in a multiplier effect from fractional reserve banking and the number only goes up. (Except, actually, investments in Vancouver and Australia represent leakage from this multiplier effect. As long as the house being sold is not also owned by a Chinese family still doing their banking back in China.)

This stimulus was a temporary one-shot deal, and the Chinese announced they are going to spend the first part of 2011 withdrawing liquidity, repeatedly, until things calm down. So this party is going to run out of whip-its and everclear, at some point. (Am I dating myself?)

#94 $froma$ia on 12.06.10 at 12:43 pm

About this A$ian Vancouver home purchase.

I wonder how much of this was mortgaged?

What’s to stop an immigrant comming here and maxing out a load from the Canadian bank to purchase a home.

I mean, if it doesn’t work out they can just run back to A$sia.

Don’t get me wrong, I know the families that do come here have the ca$h and would like to have more than one child so Vancouver is a must have…

But really, I’ve seen this Inflated RE and A$ian migration in the early 90’s here in Richmond (Ground Zero) and Believe me, Richmond is Ground Zero again!!!


#95 dark sad person on 12.06.10 at 12:46 pm

Complaint filed over call to assassinate WikiLeaks founder

A B.C. lawyer has filed a complaint with the Vancouver police, urging them to investigate whether Tom Flanagan, a former campaign manager for Prime Minister Stephen Harper, broke the law when he said WikiLeaks founder Julian Assange should be assassinated.

Gail Davidson, a co-founder of the group Lawyers Against the War, wrote in the complaint that, on Nov. 30, Flanagan “counselled and/or incited the assassination of Julian Assange contrary to the Criminal Code of Canada,” while commenting on the CBC program Power & Politics.

Read more:

#96 GregW, Oakville on 12.06.10 at 12:47 pm

Hi #80 PTDBD, re: Ben, lies, the fed-private bankers,
paper money from nothing and charge interests on it, taxing the rich top 1%-10%, international corporations taxes.

from ‘star wars’ movie;
“these are not the droid your looking for”.

#97 Mean Gene on 12.06.10 at 12:56 pm

I didn’t know there was such a thing as a chinese polar bear ;-)

#98 jess on 12.06.10 at 12:57 pm


watch the hondo line with just robots …i wonder what their energy bill is? and imagine tax/energy concessions to build plants that are maned by robots.
“You probably know that most cars are made with less than 24 hours worth of human labor. The rest is all done by automation. Machines building machines. It sounds simple, but you have to watch it to really understand what it means.”

The US Bureau of Labor Statistics expects automotive jobs to decline 18% by 2018


Hatsune Miku. She’s a Japanese pop diva who’s just started to play massive stadium concerts to sold out crowds. Her hair is blue, she dresses like Sailor Moon, and she’ll only appear in concerts via a 3D ‘hologram’. Oh, and did I forget to mention that she’s completely fictional?


a chunk of the middle class drifts out to sea.”
statistical arbitrage at the planetary scale,
..”the building of statistical arbitrage trading nodes across the Earth’s surface.”

The person who discovers the price difference the quickest has the most chance of making the deal and collecting the rewards.

by Alex Wissner-Gross and Cameron Freer, Physical Review

Seller Advantage?
… use “flash trading” to send out automated sell offers at higher and higher prices until one comes back with no buyer. The program then drops back to the highest acceptable price and sells at what the buyer set as his maximum limit. This allows Goldman to always obtain the best possible selling price, while the buyer loses the normal give and take of bargaining. In the case of large orders, such as those from pension funds or mutual funds, this can cost the buyers a small fortune.

Federal prosecutors have argued that the general public should not be allowed to observe the trial when details of Goldman’s trade secrets are discussed. They also asked that any documents related to Goldman’s trading strategies be sealed.
How Goldman Sachs Made $100 Million a Day in a Flash
Wednesday, April 28, 2010

…”buyer loses the normal give and take of bargaining. In the case of large orders, such as those from pension funds or mutual funds, this can cost the buyers a small fortune.”

#99 GregW, Oakville on 12.06.10 at 1:10 pm

Hi #77 seemac, re: ‘You actually get hate mail.’
You might find this interesting. Wikipe Artical and a Youtube video

“The Analogy of the Cave, Plato’s Cave”
‘Return to the cave
Socrates next asks Glaucon to consider the condition of this man. “Wouldn’t he remember his first home, what passed for wisdom there, and his fellow prisoners, and consider himself happy and them pitiable? And wouldn’t he disdain whatever honors, praises, and prizes were awarded there to the ones who guessed best which shadows followed which? Moreover, were he to return there, wouldn’t he be rather bad at their game, no longer being accustomed to the darkness? “Wouldn’t it be said of him that he went up and came back with his eyes corrupted, and that it’s not even worth trying to go up? And if they were somehow able to get their hands on and kill the man who attempts to release and lead up, wouldn’t they kill him?” (517a)’

YouTube, 7min (just one of a few interpretations of Plato’s, The Analogy of the Cave.)
The Allegory of the Cave

#100 Debtfree on 12.06.10 at 1:21 pm

Funny how canadian msm has kicked this under the carpet or is it ?

#101 dark sad person on 12.06.10 at 1:25 pm

#48 The Original Dave on 12.06.10 at 2:50 am

ok. so why haven’t stock prices collapsed like Japan?? why isn’t the Dow/ SP down 75% like in Japan? why isn’t the Dow to 3500?

i’ll tell you why. because this isn’t deflation. plain and simple. anyone that thinks so, is clueless.


You know what it is about the hyperinflationists, they tend to confuse themselves as their argument just doesn’t make sense. This is why most of them come across as being scared.

Good points Dave-

I can’t understand why Hyper-inflationists who hold Gold and insist we are not in Deflation can’t be bothered to listen to what Gold is screaming loudly to them-

They are so focused on the USD that they skip over the greatest Barometer there is-

ok. so why haven’t stock prices collapsed like Japan?? why isn’t the Dow/ SP down 75% like in Japan? why isn’t the Dow to 3500?

i’ll tell you why. because this isn’t deflation. plain and simple. anyone that thinks so, is clueless.
I think so-cuz-
Gold says so-
Listen to it scream–

#102 Stevie b. on 12.06.10 at 1:41 pm

#103 GregW, Oakville on 12.06.10 at 1:51 pm

Hi #41 Nostradamus, Thanks for the links.

#104 GregW, Oakville on 12.06.10 at 1:56 pm

Hi #33 Erikson, Thanks for the link

#105 Utopia on 12.06.10 at 2:00 pm

“My hubby is 60 in March. Should he grab his CPP now with the 30% cut in payments or wait another 5 years to turn 65 and get 100%”.


I was just talking to friend this morning who recently claimed his CPP. He was relating that the woman in the bank told him if he had waited to apply for his CPP next year he would recieve 12% less. In other words, his current application is good at the old rates but for those next in line the benefits are being reduced.

I have not had time to confirm if that is true or not so I am throwing it out there for the retirees to comment on. Are benefits declining for new applicants now?

I guess that would confirm the system is running out of money and CPP has acknowledged it.


I think I may have already commented here on the prices of commodities and futures markets but think it is useful to repeat in this one case……

Food inflation!!!

Yes it is coming to a store near you. Most people I have talked to still have not made the connection between the sharp rise in commodities over the past months and what their food bill will look like in the future.

The commodity price boom is telling you to stock up now because much higher prices are on the way. So this is a heads up for anyone still not paying attention.

Profits have been paid already in the speculative markets. Consumers will now have to dig deep to pay that bill and it is coming due now.

Just as one single example. Coffee is up some 70% I think this year. Now you might still be paying the old price which is based on the previous years inventory but that will not last.

The price of Coffee is escalating and it will be relentless. Expect prices to be as much as double this time next year if the commodity boom does not cool off.

My point here is really directed most to seniors and those on fixed incomes. It is a warning of things to come. Prices of food are sharply on the rise as a result of speculation in commodities markets.

So what do you do?

Pretty simple really. Next time you go shopping, don’t buy a kilo of sugar. Buy a sack instead. Don’t choose the small pricey instant coffee…go in bulk and buy case-lots on sale. Same for flour and most baking goods.

The list is endless. If it is food and you can store it long term you want to buy in bulk now to head off the risk of rising costs and food inflation.

In other words, this is a good time to stock up before the full force of the price increases are reflected in the stores. It is money in the bank to have bought cheap.

Actually, many of you will have already noticed the retail prices for food are on the increase. It is going to get worse too. A lot worse.

So start stocking the larder. And when you hear on the six-o-clock that the next leg up in the commodities boom has begun then think seriously about taking cover and filling the pantry.

It never hurt anyone to have a nice big food inventory. Even squirrels are smart enough to do that.

#106 GregW, Oakville on 12.06.10 at 2:08 pm

Hi #26 Aussie Roy, Yes something is up, Garth site seems unusually slow today.
Lots of traffic, or ???

#107 ttyl on 12.06.10 at 2:18 pm

I just got offered a retirement package. Lump sum of $600,000 or a monthly payment of $42,000. Sums approximate. I’ll be 62.5 years old when this hits. Nervous about trying to generate enough income by investing the lump sum. Nervous about institution (University) defaulting on their promised pay out. What would you do?

I hope you meant $4,200? — Garth

#108 Brian1 on 12.06.10 at 2:20 pm

housedoc; yes, he does appear shaky. Too much coffee?

#109 HALIFAXBOY on 12.06.10 at 2:27 pm

I was reminded yesterday while checking out some new houses in our area.Yes they were nice only 465,000.00 and yes we could bargain for some upgrade,but what surprised me the most was the comment I heard from a visiting gentleman from Vancouver .He in his mind believed the prices were going up there ,yes for million dollar homes .People have lost there focus of who is really working around them .Who serves them their coffee in the am,cleans their offices,checks out their groceries,makes their doctor appointments ,hooks up their telephone and so much more for 11.00 $$$ and hour .(or less)DO YOU EVEN THANK THESE PEOPLE YES GARTH THEY SITLL DONT JUST GET IT THANKS !!!

#110 Buyright on 12.06.10 at 2:29 pm

RE #81 & 86
You both nailed it !
You can see it in his face and hear it in his voice
HE IS SCARED if all this Fed pump priming fails
Then what, more printing ?

This will not end well

#111 dark sad person on 12.06.10 at 2:50 pm

#105 Utopia on 12.06.10 at 2:00 pm

It never hurt anyone to have a nice big food inventory. Even squirrels are smart enough to do that.


Yes-everyone should have a surplus of food/necessities stocked up-
I’m not sure the reason should be in expectation of higher prices but at the very least in case World Trade freezes up because of the very real possibility of an all out Trade war-
Deflation always brings out Tariffs/Protectionist policies-

I think that Commodities are in a blowoff and will reverse in time-availability could cushion falling prices somewhat-but in the end-it all comes down to Purchasing Power by the Consumer-

Long term-Commodities will be the Investment for the long haul-but I wouldn’t be going all in on any of them-
That said-I do like Uranium here-but in no way am I saying People should be speculating on what I say-

What brought the Chinese to the Hyatt on Nov. 24 and 25 was a hunger for the latest technology. What brought the foreigners was money: According to Michael Kruse, consultant on nuclear systems for Arthur D. Little, the Chinese are ready to spend $511 billion to build up to 245 reactors. “The market is being driven by the construction of new reactors, and it is no secret that most of those are right here in China,” says Fletcher T. Newton, an executive vice-president of Uranium One, a mining company.

#112 bridgepigeon on 12.06.10 at 2:51 pm

I also grew up in a smaller city Ont. After 20 years in the big smoke, ready to return to a smaller city. One thing that scares me here is the sports thing. You want your kids to be active and healthy and participate in (probably) hockey (my favourite sport; I don’t watch it, only play it).
I know many dads who, if their kid has a game in Mississauga at 7pm, leave the east end two hours early to sit in traffic, sucking back some take out crap in the car, many nights of the week. It’s madness. In fact, so many people here, no matter what their job is, are spending hours a day sitting in traffic. Talk about stress and a complete waste of time off your life. It doesn’t seem to be getting any better anytime soon.

#113 EdmontonJim on 12.06.10 at 2:51 pm

I wonder. Who is it selling these overpriced properties to the Chinese.
Suppose afew things:
Chinese people are as smart as Canadians
Rich Chinese are likely smarter than average
Rich Chinese are taxed alot- unless they are corrupt.
If they are corupt, then they need to launder money overseas.
An effective way to launder money has always been to buy an asset without a fixed cost, and then sell it to yourself (or your cousin, or a shell corporation) for a different price. Then cook the books.

Anyway, forgive my tinfoil hat, but I wonder how many ‘Asian investors’ are actually criminals just trying to hide the loot. Meanwhile Canada doesn’t care because it boosts the market.

#114 AG Sage on 12.06.10 at 2:59 pm

> I still feel Vancouver may not fit your overall perspective on Canadian real estate.

There is short term and there is long term. I charted the detached sales for the last five years. If the trend line holds up at all this will be a record December out of the five years.

The pain will be epic. But when it will start, no one knows.

>#105 Utopia

Food commodities are up because China is buying every spare bit of them to feed 1.3 billion potential protestors. That’s not inflation, per se. Third world countries have suffered this for centuries: foreign money coming in and buying up their necessities. You probably reaped the benefits of the opposite for years and didn’t even know it. Shoe’s on the other foot now.

It also doesn’t help that the U.S. turns 20-40% of our farmland over to creating a ridiculously expensive automotive fuel. The rise in corn and soy originally corresponded to mandates on ethanol. We could fix this in a heartbeat by dropping these boondoggle mandates and subsidies (which would not only lower the price of everything from corn chips to catfish, but would save the taxpayers a boatload of $).

#115 Utopia on 12.06.10 at 3:08 pm

To #12 Jsan………..Thank you.

That really is an eye-opening article and while I do not agree with all the conclusions I do agree that Ambrose Evans Pritchard has written an excellent article worth noting.

To all: Read it now.

So if any of you did not already click on the link, I am reposting it again. Take note, there IS a huge and developing risk in Asian investing that is now on the rise and unless you can time this bubble well you might want to keep your risk to the minimum.

And of course, this is essentially a real estate story too, same as the R/E bubble story all over the rest of world.

The Chinese are simply the last to the party and with the flair they have shown lately are going to prove they can out-do all the rest of us by several orders of magnitude.

So this is a cautionary tale. A prediction. A glimpse into the future you would be foolish to ignore. Take heed.

And just for fun, here is a second story of interest. This article discusses how and why the booming commodity markets and the rise in oil prices function like a tax on the whole globe and could harm consumption patterns for years.

#116 Pr on 12.06.10 at 3:12 pm

Fact is, all my words won’t change much, human nature being what it is…

You wake up pepole more than what you think and you have a positive effect in a lot life.
One by one, day after day.

#117 poco on 12.06.10 at 3:13 pm

#67 Jane
#105 Utopia re:CPP
changes take effect in 2012 for those claiming if under 65
presently if 60yrs of age claiming early, the penalty is .5% per month=6% per year or 30% over the 5yr period

starting in 2012, when claiming early,you’ll lose a small %-it’s a sliding scale downward for 5years to a total of7.2% or 36% over 5yrs

try Serice Canada website they explain it better


whenever i post a gov’t web site it never seems to work–sorry in advance

ps–get it while you can

#118 Macrath on 12.06.10 at 3:15 pm

I`m 100% confident that the Bernank and associates lie cheat and steal !

“Maguire had been told by J.P. Morgan commodity traders that the bank was manipulating the price of silver and subsequently reported this to the CFTC. He also gave the CFTC two days’ notice about an impending silver manipulation that would take place around the Nonfarm payrolls number on February 5, 2010.

The manipulation played out EXACTLY as Maguire had predicted. Shortly after this information came to light, the whistleblower was involved in a bizarre hit and run accident in London which caused him and his wife to be hospitalized.”

#119 Timing is Everything on 12.06.10 at 3:17 pm

Just sayin’…last gasp?

#120 BrianT on 12.06.10 at 3:17 pm

Pretty funny- Jamie Dimon/Hitler is upset when silver climbs over $500 as per Max Keiser’s grand scheme

#121 MikeT on 12.06.10 at 3:39 pm

@ #82 Kuwaiti: Marhaba wa ahlan-wa-sahlan to this site. (that’s all my Arabic :) )
The particle board palace is a big house built with materials made of particle board.

#122 Sue on 12.06.10 at 4:12 pm

Hi Garth,
Just wanted to thank you for your blog. I have posted a few times asking advice about my housepoor bf. He has a 40K debt (had for 8 yrs, no budge in pricincipal). He doesn’t think he’s house poor. I wanted him to sell and rent (total selfless move there). NOPE, NOTHIN DOIN. He says he will sell in 5 yrs if he has to…lol that won’t be pretty. This blog has made me realize we are not compatible…movin on. I am a wealthy, happy renter and waiting buy back in a few years when I’m convinced things are at bottom. Thanks for making me realize that I need someone who can read/learn and APPLY.

Another relationship shattered. You do this blog proud, missy. — Garth

#123 dark sad person on 12.06.10 at 4:17 pm

Investor Shawn–

Texas Ratio Definition

The Texas ratio is a measure of a bank’s credit troubles. Developed by Gerard Cassidy and others at RBC Capital Markets, it is calculated by dividing the value of the lender’s non-performing assets (Non performing loans + Real Estate Owned) by the sum of its tangible common equity capital and loan loss reserves.

In analyzing Texas banks during the early 1980s recession, Cassidy noted that banks tended to fail when this ratio reached 1:1, or 100%. He noted a similar pattern among New England banks during the recession of the early 1990s.

#124 HouseBuster on 12.06.10 at 4:36 pm

#123 Sue – Some things are more important than money. You’ll realize that one day.

#125 Pat on 12.06.10 at 4:41 pm

#108 ttyl:
“Lump sum of $600,000 or a monthly payment of $42,000.”

Would the monthly payments be indexed?

#126 Junius on 12.06.10 at 4:42 pm

#120 Timing of Everything,

The one constant throughout all the market trends, statistics and data is that every market thinks it is fundamentally different for some reason. They are not similar but different.

#127 Junius on 12.06.10 at 4:45 pm

#114 EdmontonJim,

You assume that the information being peddled here by the Asian Horde Info crowd is acurate. Don’t. That is the fawlty assumption.

It is being wildly exaggerated by a small but manipulative group of pumpers trying to breath enough air back into the bubble to keep up their lifestyle.

#128 dark sad person on 12.06.10 at 5:02 pm

#30 prairie doll on 12.06.10 at 1:03 am


Don’t you realize that the Chinese fools are playing the game of “head, I win; tail, you loose”?

Thanks to CHMC, they can gamble here with no money down, fresh off the plane. And when the chips are down and they get back on that plane, no one will get them to pay off these mortgages. So, taxpayers, if you can find out where to go to escape from holding the bag, let me know. I would love nothing more than to head out.


I know the exact place to go-

The people told the IMF to get stuffed-

The people told the PM to get stuffed-

The people told Icesave = CMHC to get stuffed-

The People have saved their kids future-

Go Iceland!


Iceland’s former Prime Minister has become the first politician to face charges over the financial crisis, after the Icelandic parliament voted to bring negligence charges against him.
Iceland’s former Prime Minister Geir Haarde faces negligence charges

Mr Haarde faces charges relating to his role leading up to the collapse of Iceland’s banking sector in 2008, leading to economic meltdown for the country.

He was Iceland’s Prime Minister from 2006 to 2009, before his coalition government crumbled in the face of protests over the collapse.

He will now face charges at a sitting of the Landsdomur, a special chamber set up in 1905 to try government ministers accused of crimes.


Notice how Professional their Police Force is-
Nothing at all like the goon squads Harper unleashed against Canadian’s during a peaceful Protest-

#129 GregW, Oakville on 12.06.10 at 5:02 pm

Hi Garth, fyi, Have you connected to dots?
Just somethings to think about, and YouTube ‘in lies we trust’ is interesting.
Still think the Government will give you ‘informed choice’ first in the near future? Whom will decide for your family? Much like mass medication/force water fluoridation?

Health officials call for national immunization registry
“Lynkowski says collecting immunization data in such a country-wide registry would modernize the way jurisdictions communicate patients’ immunization records and would help ensure high coverage rates…”
(How will this ‘ensure’ high coverage rates exactly???)

The Secret Behind Ted Turner’s Call For A Global One Child Policy (links in link)

#130 realpaul on 12.06.10 at 5:26 pm

In intrest rates. The government is so indebted and addicted to ZIRP that it can neither raise no lower rates without triggering mass default. The massive deluge of paper dollars is here to stay. The rising value of assets is et to go up…way up….not because they’re gaining in price or value….only becasue the purchasing power of each paper unit is plunging. Why has gold, zinc, copper, lead etc etc …even real estate continued to be valued in higher dollar terms? Read on

#131 GregW, Oakville on 12.06.10 at 5:26 pm

Hi Garth, fyi at least the USA unemployment number chart seems to have started decreasing, going up. I hope it continues that way for everyone. Full time livable wages would also be a plus, but that isn’t on the cart?

artical with cart

#132 Rich Renter on 12.06.10 at 5:33 pm

Carney leaving rates as is but will no doubt try and lecture the delinquents about money management LOL.
Interesting scenario we have here with the bond market dictating fixed rates, the way things are going vr mortages will be higher than fixed.

#133 GregW, Oakville on 12.06.10 at 5:48 pm

Hi #129, Thanks for the links. Iceland is starting to looking better all the time for quit a few reasons like the ones that you mentioned.

Did you here ‘F’ moved the budget balancing issue back again. But don’t answer the question of taxing the top 1%-10%, and corporations anything, or even some.

I forgot ‘question period’ is not ‘answer period’.
‘F’ gets quit red in the face sometimes in ‘non-answer period’, for his families sack, I hope his blood pressure is ok.

#134 Live within your means on 12.06.10 at 5:52 pm

#67 jane54 on 12.06.10 at 9:09 am
Garth help please.

My hubby is 60 in March. Should he grab his CPP now with the 30% cut in payments or wait another 5 years to turn 65 and get 100%.

Our concern is that in 5 years time so many baby boomers will be drawing CPP that we might lose the 30% anyway.

Thoughts please and thanks.

PS – If you are a resident of the UAE as I am then Barclays bank (British) is offering 9% annual interest on a one year deposit and you can choose for the account to be in dollars, pounds, euros or local currency!!! Give me some help dogs, which should I go for?

Never take early CPP unless you are starving. Are you starving in the Emirates? — Garth


I attended 2 retirement seminars years ago. At the time we were told that the break even year was 67. I gather that in the last few years the break even point has been reduced. I started collecting it at age 60 for reasons I don’t want to discuss here. IMHO, it all depends on one’s circumstances.

#135 VICTORIA TEA PARTY on 12.06.10 at 6:03 pm

Gnomes and other assorted bumps in our long dark economic night…

For anyone earning an annual mid-five figure salary or wage to want to buy into the Canadian real estate market at this time is a fool. Note please that tired old phrase about a fool and his money soon to be parted, even if the money is borrowed!

Headless garden gnomes have more common sense, for crying out loud, than wannabe suburbanites, right now.

What will bring this whole carnival of witless, ego-driven property nuttiness to an grinding halt will be, wait for it, HIGHER INTEREST RATES!

If you want to know when they’ll be creepin’ up YOUR back stairs, just take a boo at US central bank boss Ben Bernanke’s CBS Sixty Minutes interview Sunday with Scott Pelley, on the sick US economy. The answer is soon.

In a sixteen or so minute Q and A, Mr. Bernanke had but one message, that he repeated over and over again concealed in his classic Bernanke-speak: “WE’RE SO SCREWED AND I’M NOT TO BLAME…”

After overseeing the printing up of trillions of US dollars, both the Fed and the US Treasury have not been able to rebuild a shattered Humpty Dumpty economy. But Big Ben still has hopes, with QE 2 and maybe more QEs after that! QE 1 was a disaster!

These financial actions and reactions foretell higher rates thanks to a toxic combo, destined to show up soon, of US currency degradation, market worries about US debt, no confidence in the US bond market, inflation; in other words the really BIG things over which Victoria RE types, as an example, have absolutely no control, no matter how swollen their viagra-laced egos.

This international economic angst would, naturally, filter into Canada in the twinkling of an eye resulting in a bear-mauled bond market, resultant pumped up mortgage rates and RE dream destruction for untold thousands, followed by whines for government bailouts.

While this scenario is quietly working up its head of steam, we go over to observations of the moribund Happy Motoring culture in the USA.

Weekly I read American observer and writer JH Kunstler’s blog. This week he comments on his country’s so-called economic recovery. Following is one sober idea about the future context of work:

“…Sorry. There’s no way the USA can ever ‘recover’ to that lush breeding ground of swindling, fraud, and childish irresponsibility. The hardships of today do not represent a dip in some regular cycle of financial push-me-pull-you. This is a systemic, structural change in the socio-economic ecology of human life. Those who have been shuffling from one office to another with their dog-eared resumes, and clothing pressed under the mattress while sleeping, are bound to be disappointed. The very idea of a ‘job’ may be obsolete, in the sense of bureaucratically organized endeavors complete with a ‘human resources’ department that can just plug in human components like diodes in an engineered system….”

Downsizing, offshsoring, cost-cutting, retraining; been hearing about it for years, now. Inspite, we STILL have a sack of change coming our way that too many of us will find way too unsettling to cope with successfully.

We must remember the simple things in life, therefore, all rolled up in one neat phrase that starts this long process to individual financial redemption, legitimacy and wholeness: “Pay off your debts!”

#136 april on 12.06.10 at 6:05 pm

MKULia #42
Junius #128

Right on both of you.

#137 JC on 12.06.10 at 6:12 pm

Its hard to articulate what is going on in the minds of people these days but the best example to illustrate this would be the death of Arthur Hewel (Nazi Deputy Foreign Minister). Having escaped the bunker, surviving the “trial by fire” that so claimed many of his colleages, fleeing to the edge of Berlin AND having diplomatic immunity (he was a legit diplomat) he instead elected to shoot himself.

Dr. Schenk (one of Hitler’s attending physicians) later described it as a “repressed hysteria”… that is after experiencing the madness of a situation the human psyche is able to compartmentalize it but eventually it gets out… even after the madness has subsided. This causes people to do things that are extremely out of character.

I suspect that this analogy could explain some of the sales numbers we are seeing in the major centers. I can imagine that some real-estate bears who are looking for an entry-point into the market, for some reason or other, have “flipped out” and made an illogical decision to buy @ the top. Seen that before too.

Mind you, it doesn’t change the outcome…. and these people are easy to identify in hindsight because they will “rationalize” their actions after the fact instead of having acted on carefully considered due diligence.

That “angst” is likely the core factor of the human condition which explains greater than 90% of the typical “mania”.

#138 etreamar on 12.06.10 at 6:41 pm

Two Part Question about deflation, ETFs, and house ownership risk. If I have been understanding the information you have been posting, it is that we should invest in ETFs with our TFSA and RSP accounts. This I have been doing already before finding this blog and fortunately it has been working well. Thanks for the confidence booster. You also speak about deflation in this blog. Are these investments equally at risk along with the housing bubble? If so, is there a wise course of action?

Furthermore, I began purchasing a house 3 years ago, I do not live there as I rent it out. Instead of paying down the mortgage, I focused on maxing out my TFSA and RSP as stated above. I will technically have paid off the house at the end of next year, however, the funds are in TSFA and RSP. My plan was to rent out the house for the long term and move into it at a later date. In any case, presently, my bi-weekly payments are 10% of my income. I am trying to take this information you have been graciously providing and apply it to my situation. I do not think I am over extending myself. Am I being a fool by thinking that I should safe to keep the place? Perhaps I have made an improper assessment and I am a “WHAT NOT TO DO” example.

#139 Mr. Plow on 12.06.10 at 7:28 pm

#138 JC…

Did you just say that buying homes at the peak of the market is analogous in its madness, to that of the madness of a suicidal ex-nazi deputy minister?

Wow this blog has reached new lows.

Yup I just read it again, I had to read it like 3 times to be sure, but I’m pretty sure that is what you were saying.


#140 Mr. Plow on 12.06.10 at 7:39 pm

#139 etreamar

To me owning a rental can be a great investment, but it needs to be a long term investment not a short term flip and it has to generate income, which it sounds like yours does.

If you essentially have the ability to pay it off, depending on what kind of financing you have on it, I would actually take it a step further and take out more cheap money against it to fund your liquid investments and have your renters essentially pay for that. If you can get a loan against your property at 3% and are investing that loan into income generating investments to the tune of 6-7% then you are likely making out pretty good since your loan is actually being paid by your renters.

Or pay it off, and use your monthly income from your renters to fund your liquid investments. That would be less risky I guess, but providing you keep enough equity in the property to cover off fluctuations in the rental market you should be good.

That is just my opinion, but I would use the asset to generate more savings for yourself.

Best of luck.

#141 Steven Rowlandson on 12.06.10 at 7:40 pm

Good news Garth.
Salvation for the polar bear is on the way. I read some where on the net that we will be getting severe winters for the next 30 years. Can you say mini ice age?
Good news for humans? Not unless you have the precious metals. Silver just went over $30 to day and there is still no bubble in sight.


#142 NorthOf49 on 12.06.10 at 7:47 pm

Been awhile since I last posted an update from this little nook in Ancaster.

A couple of houses in the high $300s have sold recently. They both went on the market as FSBO but after a couple of weeks of silent torture, the owners wised up and listed with agents. Sales prices took a 5% haircut and realtor fees on top before selling. Three listings refuse to budge though. Seller A listed early in the summer at $389K and went most of the summer with no offers and multiple agents trying to move it. It was repriced early in the fall at $369K but still no offers. Seller A has tossed the agent and brought in a new agent from the Toronto area. No idea what the new price is but it wouldn’t surprise me that he lists it higher.

Sellers B and C around the corner from each other both listed their homes with the same agent for $524K three months ago. No offers. Seller B dropped his price to $499K after two weeks and then $479K a month later. Seller C has yet to budge on price. Both sit mobidly silent with nary a visit during open houses.

A new listing around the corner from me came on the market yesterday. Same model and floor plan as the taj mahal I’m renting. My landlord wanted $460K for this house 3 years ago when I moved in, realistically it was worth $360K because it needs about $100K in repairs (windows, doors, driveway, landscaping, fencing, showers, etc.). Anyway, the new listing around the corner was priced at $630K!!! and its a dump. Needs serious updating and landscaping. The same Toronto agent as Seller A is flogging it. I think he’s going to be for a rude awakening cause this aint Toronto.

Article in the local paper said that its the “perfect storm” for new building permits in 2010 for the Hamilton area, as new builders purchased more permits than usual to beat the HST. Most of these have yet to break ground. What’s evident in Hamilton though is that there is lots of newly constructed housing and tons of existing lots going begging. Most of these are way overpriced and some have outrageous lot fees attached. 2011 looks to be a “perfect storm” in a negative way as there will too much oversupply forcing prices down. More updates to come….

#143 dark sad person on 12.06.10 at 7:55 pm

#131 realpaul on 12.06.10 at 5:26 pm

From your link-

I see all sorts of things in that that I don’t agree with-but will touch on a few-

In the end we think there’s only one outcome. Monetary inflation is the only politically practical answer because most voters are debtors, and most debtors would greatly benefit from having the burden of repaying their debts inflated away.

I don’t believe their priorities lie with the Voter at all-
And you especially from your posts “know” the new boss is the the same as the old boss-
It’s not in the Banker Lords best interest to blow up the loot they steal from robbing Taxpayers of the only real wealth on the Planet
ie: The extraction and selling of Resources and Manufacturing and the Labor involved in doing so-

In a fiat system there is no formal capacity constraint on money creation, and so in Western economies, where policy is dominated by Keynesian political economists mandated to actively solve economic problems, there is literally no mechanism to limit money creation.
I disagree again-
There is such a thing called the Bond Market and should it Revolt-
Game over-

Have you asked yourself how the gold price has climbed for 10 years when consensus has been there’s been no price inflation? We think it’s because confidence in paper currencies has been dropping as their supplies have been increasing. Individual investors, hedge funds and now central banks have begun to dabble. Institutional investors are sure to follow. Goods and service providers and wage earners across the globe will continue to demand increasingly more paper for their goods and services.


I don’t believe that’s what’s powering Gold at all–

Here is what Gold is looking at-imo-

Not a piddly 2,000 Billion in Currency-

#144 Oasis on 12.06.10 at 8:02 pm

#102 dark sad person on 12.06.10 at 1:25 pm

I think so-cuz-
Gold says so-
Listen to it scream–


that’s a beautiful chart showing gold rising against stocks. which it’s been doing since 2000. same as gold going up against pretty much everything … a sign of … inflation, not deflation.

#145 BrianT on 12.06.10 at 8:12 pm

The MSM reads like THE ONION these days-this article about the partnership between Walmart and Big Sis can’t even be satirized because it already reads like satire

#146 The InvestorsFriend (Shawn Allen) on 12.06.10 at 8:13 pm

Dark Sad says at Number 36

“I have no idea how this relates to Investor Shawns pipe dream that there is a dollar of savings/cash for every dollar of debt”

Actually I made the simple observation that since One man’s Debt is another Man’s Savings, then Savings in this world exceed debt.

Somehow you turn this into a statement that there is more cash than debt. A claim I never made.

Obviously the health of the financial system depends on loans being repaid. There is an allowance for some loans to go bad but certainly the vast majority (say 90% plus, more ideally 99%) of all debt must be repaid eventually or we are in trouble.

If too much debt is not repaid then the savings that were lent start to evaporate.

That does not change the fact that the world as a whole is not a debtor world (who would it be in debt to? -Martians?). The world as a whole obviously has a hugely positive net worth.

Those who are in debt like to justify it by thinking “everyone” is in debt. Not true. You may find that that boring neighbour of yours not only owns his house free and clear but he has a few hundred grand in the bank that (ala Jimmy Stewart) has been loaned by the bank to you.

Say it again. There are more savings than debt. If you have a negative net worth or even negative financial assets, you are in the minority. Most of us have positive financial assets especially by age 50 or so. Net debt is for the young.

#147 Vancouver_Bear on 12.06.10 at 8:23 pm

#16 TheBestPlaceOnEarth on 12.05.10 at 11:59 pm

What could we do without your useless insight.
All I can say Notrsi, that you can hide behind thousand nicks you will still be the one and the only Nostradumba$!!!
Report to us something useful, rather then providing comments on fantasies of some realturd not supported by any real facts or evidence. This story and e-mail about an outhouse near main & hastings sold for 2 mil is a pure fantasy and wishful thinking. There…

#148 Behavioral Finance on 12.06.10 at 8:32 pm

That is correct. Like you said the current generation of first time buyers never experienced a correction. Since it has not happened in their life time they think it will never take place. It is now or never to buy, just ask Santa.

#149 Behavioral Finance on 12.06.10 at 8:35 pm

Lets not forget that in Hong Kong in late 1990s people paid cash for real estate and the market there managed to correct.

And lets not forget the Japanese buying US real estate in early 1990s. Move forward couple years later and they were selling the same real estate at a discount.

#150 Ret on 12.06.10 at 8:37 pm


I will not be totally dependent on CPP and OAS at 65 and on that basis I’ll be taking my CPP at 60.

If I drop dead at 64.9999 years of age, my wife will get the funds that I have saved and invested from the 5 years to cover the CPP reduction in the years after 65 years of age. We are talking 60 months x $??? per month. Serious money folks.

If I don’t make it to 65, she gets zippo and they use my CPP contributions to fund the CPP of someone else. It is all so Canadian.

I realize that if I have the “misfortune” of living to I think it is 78 years of age or longer, I’ll be a loser on my gamble.

Check out this (US) table for 100000 males at birth. I haven’t got a 50 % chance of making 76 yo. and only 36.75% chance of making 80. Check out the drop off from 60-80yo.

#151 Behavioral Finance on 12.06.10 at 8:40 pm

Steven Rowlandson,

I do own precious metals funds, but to say there is no bubble building in silver or any other metal is just irresponsible. Just ask George Soros.

#152 dark sad person on 12.06.10 at 8:42 pm

#134 GregW, Oakville on 12.06.10 at 5:48 pm

Hi #129, Thanks for the links. Iceland is starting to looking better all the time for quit a few reasons like the ones that you mentioned.

Did you here ‘F’ moved the budget balancing issue back again. But don’t answer the question of taxing the top 1%-10%, and corporations anything, or even some.

I forgot ‘question period’ is not ‘answer period’.
‘F’ gets quit red in the face sometimes in ‘non-answer period’, for his families sack, I hope his blood pressure is ok.


I think the red face is likely from a few too many Guinness or Baileys-

The guy is clueless-totally-
If you look above him closely you can see Carney operating the strings-

Also-anyone having posts “disappear”?
Or is G disappearing them?

One did contain the forbidden word a few times-

#153 Nostradamus Le Mad Vlad on 12.06.10 at 8:43 pm

Raspberry Chocolate Cupcakes Ummm, caught me a little off-guard there — sorry ’bout that.

Bill (Peterborough) — thanks for phoning this a.m. Great chinwag about all the fluff that’s about to hit the fan, and I found it very interesting that the bankers here are terrified about what’s happening.

The better half mentioned that Bernanke was trembling, shaking like a leaf on 60 Minutes, so he (and other high banxters) know something is happening, but can’t put their fingers on it, which leaves them on the same level playing field as the rest of us. If the govt. wants us, they will have to come and get us!

You are correct in the assertion that now is the time for much greater self-sufficiency and reliance. Don’t bother with any levels of govt., get off the grid (as one poster rightfully says), and be as free as possible.

For myself, I’m not that mobile anymore, but that’s fine. I understand the sentence — Give me liberty or give me death — very well, and I can say (from personal experiences throughout my life), that leaving one’s clay temple, sack of clothes or temporary body is a magnificent adventure, which everyone goes through at death.

So to you and yours — Merry Christmas and a very Happy New Year! We can call or e-mail one another whenever necessary.
Lotsa great comments today, but DSP is pretty much right on the ball.

#154 jess on 12.06.10 at 8:46 pm

senator bernie is mad as hell

#155 Antonio on 12.06.10 at 8:50 pm

Something tells me that average price will be a favourable measure for the real estate industry in 2011.

#156 S.B. on 12.06.10 at 9:00 pm

Coffee inflation 0 I dunno, seems reasonable so far: A 326g tin of Nabob at Shoppers Drug Mart or Sobeys is about $6.50 regular, was on sale for $5.50. Is this considered high?

#157 crazed and a little confused on 12.06.10 at 9:18 pm

123 # Sue/ 125 # house buster

Yes there are more important things than money but there is a thing called financial responsibily. I am the opposite of Sue’s Boy friend . My stocks/ dividends / GIC pay almost all my rent 90 % plus .
therefore I will have money for home purchase later on…it may not be here but somewhere

Sue is thinking long term stability…ie tuition for kids or RRSP when they retire. Financial stability is also a sign of maturity when you have 40 K debt for 8 years at record low interest rates…what are you going to do when % rates goes up 2-3 % in the next 2 year…entirely possible.

I applaud Sue for being so fiscally smart. If she were pretty as she is smart…she must be freakin hot.

i ‘m not saying sell house or not/ or break up either but honestly at the rate he is going 40k will be 50 k then 60. when u owe $$$ to someone …they have control over you.

it’s basic math renting is 1/3 to 1/2 of buying here in lower mainland. you can either work for money or have it work for you

I applaud you Sue for going against the grain …”all woman are nesters and wanr a house …no matter what the cost”

#158 TakingResponsibility on 12.06.10 at 9:22 pm

Wow! 24 offers, ALL Chinese, all serious!

How on earth does one know the offers were “Chinese”?
Hmmm, when does ‘Chinese money’ become ‘White money’??

Further, those who generalize a lot tend to lump all Asian peoples together, or all white peoples together, etc.! Could be a few offers came from a Viet-Ukraine-Eng-dian. Geesh.

Perhaps rather than racializing money, it might be time as Hayek has argued in his “Denationalisation of Money” to de-nationalize / de-racialize money. By doing so, he argued, much of the instability governments cause with fiscal and monetary policy would be prevented. For example, interest rates would cease to be an instrument of policy, instead being determined by the demand for and supply of loans.

In any case, should governments in a capitalist economy be able to restrict the movement of persons, money, or capital? Hayek argues not.

A good read for all those who say they are Hayekians but hold to antiquated notions of ‘nation-state’.

#159 Devore on 12.06.10 at 9:35 pm

Tomorrow is Bank of Canada next scheduled rate announcement, last of this year. Expected to be no change. Keep your eyes peeled.

#160 Nostradamus Le Mad Vlad on 12.06.10 at 9:56 pm

Disclaimer: I am not in any way related to the two following dickheads:

#148 Vancouver_Bear on 12.06.10 at 8:23 pm and #16 TheBestPlaceOnEarth on 12.05.10 at 11:59 pm

At least I can twiddle my fingers. NLMV out, and don’t bother the rest of us with your childish comments again.
Choices The banks have been chosen over the people; now look for anarchy.

Pat-downs. This doesn’t happen in a democracy, so North America isn’t a democracy anymore.

17:13 clip At least there is one honest person in the US Fed.

JPM “To describe what happened to Andrew Maguire and his wife as “a bizarre hit and run accident” after he had informed the CFTC of what was going to happen with JP Morgan and silver, is stretching the long arm of coincidence into a dislocation. This was a hit which failed to “neutralize” its target.”

Protests Remember the Canada War Measures Act? Just as Obama (via Soros) has increased harassment of US citizens, Harper can do the same here.

Precious Metals For those who have spare cash, get some.

Nuke stuff “Were I a betting person, I would not bet that a deal Iran feels it can reasonably live with on this issue will be struck.

“Then, watch the US and I*%^#)l use Iran’s not coming to (from their perspective) a deal as the excuse for yet another military misadventure.”

North Korea “This is exacerbated by the realities that:

“1. The US is absolutely incapable of paying back the billions it owes China.

“2. China and Russia have done away with using the US dollar in their transactions completely, and

“3. China refused to revalue their currency at the last G-20 meeting, while Tim Geithner of the Fed has put through a “quantitative easing”, injecting billions of dollars into the economy, and debasing the US currency’s value even further.”

First Brazil, now Argentina. Is the tide turning?

Welfare Fraud “If you want to know why the states are in financial trouble, read this!”

Coming Out Of The Closet Yep, now it is being admitted. The farce over GW was a failure, as CC will always take place.

Syria bares its fangs.

7:09 clip “Nigel Farage Hits Out Of The Park On Fox News! ”

Greater Debts This is what the Canada War Measures Act can (and probably will) be used for here.

Bank Run Tomorrow Possibly this is what Bill (Peterborough) was alluding to.

#161 An Cat Dubh on 12.06.10 at 9:59 pm

Russia buys Canadian dollars, but not Vancouver real estate.

#162 buylow on 12.06.10 at 10:02 pm

if you have your 37 best working years in already, shouldn,t you start taking the CPP now? Isn’t it based on the best 37 working years?

#163 Taxpayer like everyone else on 12.06.10 at 10:03 pm

36 Dark Sad – Thanks for your well-reasoned response.
I’m disappointed Shawn has blogged yet. Sorry I am a
little behind due to the “work thing”.

In your closing remarks, you talk of debt which is not re-
paid – “no means of final settlement to extinguish it”. I just need to clarify. Are you saying that you consider this
debt to remain, but the “savings” related to the inital
issue of the debt to be gone?

Also I recall Shawn did not mention cash but rather
the “balance sheet”.

#164 Taxpayer like everyone else on 12.06.10 at 10:06 pm

Speak of the devil! Thank you Shawn @147.

#165 Utopia on 12.06.10 at 10:40 pm

Not sure if anyone else has posted this up already (because I have not read todays comments yet) but Mish Shedlock has written a pretty good round up of the macro changes taking place between countries, currencies, Chinese, Canadian, Australian property bubbles and a whole host of other fascinating material.

It is a bit long but worth your time I think. Try not to lose any sleep over it though. Not everyone sees an epic crash coming but Mish does detail how we might be heading for the biggie if we cannot get this all under control.


#166 jess on 12.06.10 at 10:55 pm
protestors superglued themselves to the store windows
in the uk.

#167 sue on 12.06.10 at 11:09 pm

#158 Crazed and a little confused.

Wow, thanks for the vote of confidence. I like to think I’m pretty so heck ya I’m hot. :) It’s nice to know that there are men out there that would appreciate my financial smarts. I am a pharmacist by trade but am fascinated with economics…should have picked that instead.
Cheers. :)

You just unleashed the pack. — Garth

#168 Utopia on 12.06.10 at 11:10 pm

Sorry all. I am an idiot with computers….

Let me try that link again that I mentioned above. Hopefully it will work for everyone this time. If not, you can find it at “Mish’s Global Economic Trend Analysis” site. Cheers.

#169 sue on 12.06.10 at 11:10 pm

Oh and Garth,
That comment from you made me feel proud and a little verklempt. :)

#170 4thgenchinese on 12.06.10 at 11:18 pm

Kinda weird to read that so many people have the mis-conception that Chinese are rich. Chinese value their FACE and will not stop at any cost to keep their FACE which is mostly reflected in their ability to buy nice cars and houses even if they cannot or should not afford it!

My wife’s friend is from Shanghai and she rents a 1 bedroom apartment for $900 for her whole family but will walk around in designer clothes, LV handbag, an Iphone4 that she only uses to dial phone calls, and drive a 2011 Lexus RX350 SUV. Her occupation is a waitress.

My friends brother just came from China and said a $2000 used 98 Corolla was too expensive so he bought a 90 Cavalier for $600.

My ex-girlfriend who lives in Hong Kong says her sister bought a 600 sq/ft apartment for $7,000,000.00 HK and put down $2,000,000.00 as a down payment.

My wifes friend is a realtor who deals with a lot of chinese clients and says there is no action that she can see.

So I laugh when I read the BS that the Chinese are rich. We are mostly working class just like everyone else. We are overleveraged just like everyone else. We are on a credit orgy just like everyone else. The grass is not greener on this side. Actually the grass is brown with the heatwaves and droughts we get.

So WTF if 24 Chinese pumped a 1.5mil shack to 1.95mil. It doesn’t mean the other billon or so are rich. The only thing I think Chinese are bigger than any other culture is their gambling. Believe me when I say they will bet the HOUSE which is small potatoes. They will even bet their spouses and children if they think they have good odds.

Gotta go now, I have to puke!

#171 Timing is Everything on 12.06.10 at 11:34 pm

Garth, What’s with the Chinese fool distinction?
A fool’s a fool. Full stop.

#172 4thgenchinese on 12.06.10 at 11:35 pm

I forgot to mention that ONE casino called “Wynn” located in Macau, China brought in more gambling revenue than all the casinos on the Las Vegas strip put together—that’s a shit load of casinos. If Chinese gambling has any reflection in real estate there is going to be a huge explosion in the near future in China. Once China goes bust Hongcouver will be a mess. 10.0X plus the average income for a SFH house will drop back down to more normal average like 1.3 in Montreal.

#173 dark sad person on 12.06.10 at 11:39 pm

#145 Oasis on 12.06.10 at 8:02 pm

#102 dark sad person on 12.06.10 at 1:25 pm

I think so-cuz-
Gold says so-
Listen to it scream–


that’s a beautiful chart showing gold rising against stocks. which it’s been doing since 2000. same as gold going up against pretty much everything … a sign of … inflation, not deflation.


Why do you have this so assbackwards?

Are you gonna tell us that the 30’s were a decade of Inflation?

Did we have Deflation from 1980-2001?
I think you must know-that those were years of Inflation-I’m assuming you do-

Look at this-


Gold didn’t do anything during those years of Inflation-
It went “down”

Only 2-things make Gold shine-

1# – Hyper-Inflation-(Currency Collapse)

2# Credit Default risk-(Deflation)

We had our Hyper-inflation-(Credit Money supply)

You didn’t see it and you still don’t-

And likely never will–

#147 The InvestorsFriend (Shawn Allen) on 12.06.10 at 8:13


I’ve shown you the numbers-you can’t dispute or just disregard the data-

I asked you to show us some numbers backing your claim-

You can’t come up with them-

You come back “Theorizing” like there’s some Nirvana that we can all escape to-

You act as if Tens of Trillions in Debt is really nothing-
Because the fact that your neighbor has 200K socked away-everything is just fine-

Is it owed to the Martians you ask?
No–it’s owed to the “Banks” or did you not realize that either?

Say whatever you want–cuz–
I’m done living in your fantasy–

#174 dark sad person on 12.06.10 at 11:51 pm

#164 Taxpayer like everyone else on 12.06.10 at 10:03 pm

36 Dark Sad – Thanks for your well-reasoned response.
I’m disappointed Shawn has blogged yet. Sorry I am a
little behind due to the “work thing”.

In your closing remarks, you talk of debt which is not re-
paid – “no means of final settlement to extinguish it”. I just need to clarify. Are you saying that you consider this
debt to remain, but the “savings” related to the inital
issue of the debt to be gone?

Also I recall Shawn did not mention cash but rather
the “balance sheet”.


What is it with you two?

Didn’t you see where i showed you-there is “very little” savings?

You completely ignore all the evidence “admission” by Bernanke etc.
That there is FRB-
What more can be said?

does this look like people have been “saving?

Here’s your latest spike in savings-
“Defaults ” counts as savings-

#175 dark sad person on 12.07.10 at 12:06 am

Bill (Peterborough) — thanks for phoning this a.m. Great chinwag about all the fluff that’s about to hit the fan, and I found it very interesting that the bankers here are terrified about what’s happening.


Hey Bill-
If your out there-
Merry x mas-

#176 Kuwaiti on 12.07.10 at 12:16 am

@122 MikeT

Mashkoor (Thank you in arabic) ;) Back in Kuwait, housing for citizens is heavily regulated to prevent such disasters, but commercial properties follow free market principles. Hopefully Canadians get out of this without too much pain, you sure are nice friendly people!

#177 Utopia on 12.07.10 at 12:23 am

#112 dark sad person on 12.06.10 at 2:50 pm
#105 Utopia on 12.06.10 at 2:00 pm

It never hurt anyone to have a nice big food inventory. Even squirrels are smart enough to do that.


Yes-everyone should have a surplus of food/necessities stocked up-

Agree 100% Dark. It is just prudent and makes good common sense during any period of significant uncertainty to not ignore the basics of life.

Like a good solid store of food just in case all hell breaks out. And I imagine not one person in a thousand can even conceive of the crisis that would erupt across this continent if global shipping were shut down for even a short period of time. Like a few weeks. Like what could happen during an act of war or aggression on the seas…like what happened in Europe for a time during WWII when the wolfpacks were sinking every civilian supply ship in sight.

Store shelves would be stripped bare within days and nobody in their right mind would sell you any of the food they held in reserve.

Food and energy are the most basic of all forms of insurance.

#118 POCO… Thanks for the clarification.

#157 S.B. …..Coffee is already up. By more than 35% already by my best estimates in my local grocer. Talked to a clerk in that local grocery store, he related that the store manager was warning staff to expect some serious food price increases imminently. They are all stocking up.

@Love this Blog from a few days back….Did you really say that someone is building a MILLION dollar home in your prairie town. Holy Mack, it must be a palace. I think I agree with you that those folk are headed for some real heartache if anything goes wrong for them.

@ThebigLebowski……where are you buddy? I kind of miss you. Have not seen a post from you in a while.

#178 Mr Black on 12.07.10 at 12:40 am

“The average family in Toronto makes $96,000 and in Vancouver $83,000. The average Toronto SFH costs $600,000, or 6.2 times income. In Vancouver the ratio is 10.8. The American housing market collapsed in the Spring of 2006 when houses topped out at 4.6 times. The Canadian national average is now 5.2.”

Doesn’t this just prove that these numbers have zero meaning in Vancouver’s housing market??

Wake up, it’s all foreign buyers and illegal money.

Do you think a foreigner that buys a second home in Vancouver really cares if that house he paid 1.9 million for drops to 1.3???? He has a home where his wife and kids live, it’s a safe city, the kids can go to school here, learn english, get a great education and eventually all qualify for Canadian citizenship.

It’s a different frame of mind. You think investment but for them its a cost to immigrate here and for their kids to have a brighter future.

How many of you are saving up money so your kids can go to university in another province or in the states?

Same thing for them, but its not just tuition for them, it includes a house, spending cash and car leases.

#179 Adam on 12.07.10 at 12:56 am

Hi Garth, perhaps you could help me to understand- I watched the 60 mins. interview with Bernanke and was confused by something he said about QE2. He plainly said that the Fed was buying treasuries with Government money not public. He also said that contrary to what I hear from all other sides that this action does not increase the money supply or add to the deficit. What am I missing here ?

#180 Timing is Everything on 12.07.10 at 1:16 am

#133 Rich Renter said – “Carney leaving rates as is but will no doubt try and lecture the delinquents about money management LOL.
Interesting scenario we have here with the bond market dictating fixed rates, the way things are going vr mortages will be higher than fixed.”


#181 Taxpayer like everyone else on 12.07.10 at 1:54 am

175 Dark Sad – so you are saying people are saving by defaulting? But if defaulting destroys savings then isnt it a wash? I also notice savings rate has always been
positive. And I’ve never ignored fractional reserve

#182 Foggy on 12.07.10 at 12:58 pm

At 128 Junius:

Like I said before, Chinese money is stupid money.
Quote “It was listed at 1.58 million. On the market for two days her realtor received 24 offers, all Chinese, and all serious.” What is it about this statement (ie reality) that you don’t understand? It’s funny how you get your politically correct shorts in a big knot when real estate and Chinese ‘investors’ are mentioned in a negative light. The facts speak for themselves.