Jerky

Days ago I roasted Re/Max`s ambitious little weenie for fibbing to us again. House prices to soar, the pumpers said. The factual basis: er, well, realtor fairy dust.

Today we can throw Central 1 Credit Union into this mix, the latest self-dealing forecaster to tell us Canadian real estate – at its highest price point in history amid a crashing world – is about to swell like a blowfish with a Victoria’s Secret catalogue.

“An undersupply in the new home market will place upward pressure on resale home prices,” said Helmut Pastrick, chief economist (remember that name for future ridicule). This will mean, he said, a price hike of 4.1% nationally, which should mean 44.7% in Vancouver.

Of course, it’s dumb. Unsupported by anything. But in case it does come to pass, I am reinforcing the perimeter wall and installing new trip wire-activated tasers at the bunker. It will not be fun when the fools we call our neighbours and brothers-in-law understand what’s happening to them.

Why?

Real simple. Most Canadians have the bulk of their net worth in a single asset, which is over-valued and will most certainly correct. In this regard, we are mirroring what Americans did in the years leading up to 2006. Consider these two voices, and two facts, for a preview of what may be at hand (and why I have a four year supply of squirrel jerky).

First, our bud Mark Carney, head of the Bank of Canada. He may ride in a shiny black car with a chauffeur, eat with his pinky extended and have trouble keeping his briefcase, but the dude has more info on our financial health than anyone else alive.

This week he’s pulling no punches. After hinting for months we’re marching towards a debt cliff, he’s going full frontal. In his semi-annual report card, Carney says our spending is out of control and vastly outpacing income growth – which is largely non-existent. The fact we have (on average) $1.46 in debt for each dollar we earn makes households vulnerable if the economy wobbles any more. And, thanks to the flubbing of Europe and USA, it likely will.

“Households bear ultimate responsibility for ensuring that they will be able to service that debt in the future,” he ominously intones. It’s like God telling you to stop smoking. With similar results.

Now cue Stephen Jarislowsky.

He may be a crusty 84, but he’s also a billionaire, contrarian and delightful pain-in-the-rump. Also mostly right. He just said this:

“In Canada the hardship still lies ahead. Our houses are still 20 to 30% above normal levels, salaries are shrinking and a lot of Canadians are heavily indebted. There’s a lurking disaster, to the extent that you have reduction of purchasing power and we are just not saving hardly anything as a nation. That’s pretty bearish.

“I think things are going to get a hell of a lot worse. We still have a trade deficit today despite the fact that commodity prices are incredibly high.

“I hope I’m wrong but I think Canada is on the edge of a lot of trouble.”

He probably isn’t wrong. Most Canadian families are financial disasters waiting to happen. I wouldn’t say that with conviction if my days weren’t spent talking to people about to implode – and they are the ones smart enough to seek help. Pity the rest. Their HGTV-addled brains (plus the influence of dipstickers like Re/Max and Pastrick) have lulled them into thinking bricks are safe while financial assets are for cowboys. Sadly, it’s the reverse.

Even sadder and more poignant, we all have a giant, groaning example of what happens to people who think this way.

So here are those two facts:

  • Middle-class Americans (according to a Wells Fargo survey) think they’ll need $300,000 to retire on, but have saved less than 7% of that. People aged 50 to 59 have an average of $29,000 put away for retirement. The vast majority admitted they need serious help, but are doing nothing about it. They are screwed. Imagine what this will do to the US economy – and to us.
  • Real estate is responsible for most of this tragedy. US homes have fallen for 51 months, and prices are now down by 25%. During the Great Depression they fell for 60 months, and lost 25.9% of their value. Whoops.

If you think this can’t happen here, get a job with Re/Max. I hear it comes with a fab drug plan.

180 comments ↓

#1 Hoof Hearted on 12.09.10 at 10:22 pm

Hey I’m #1

Is that it? — Garth

#2 Oasis on 12.09.10 at 10:32 pm

Timely piece by the BCA. So much for the deflation case, … what the Fed wants to create is inflation, and it’s going to get it in spades.

http://www.bcaresearch.com/public/story.asp?pre=PRE-20101209.GIF

Is The Fed’s QE Working?

U.S. money aggregates, as well as corporate sector borrowing, are starting to show meaningful signs of life.

Money growth and corporate sector borrowing are among our main indicators to determine whether Fed policies are being effective, i.e. if bank deleveraging, which has blocked the ’credit channel’ of monetary policy is easing. Various measures of currency and money growth have clearly bottomed (albeit at a very low level) and are turning up on a short term rate of change basis. The money multiplier (broad money divided by the monetary base) is also edging higher. All of this suggests that banks and corporations are beginning to lend and borrow again, a key missing ingredient so far in the recovery. The implication is that the economic recovery should remain on track. Of course, we still expect real GDP growth to fall short of previous recoveries and the employment and consumer spending revival to be gradual. Nevertheless, modest gains in the equity market are likely, should the rise in money growth, and thus confidence in the recovery, continue.”

#3 andrewS on 12.09.10 at 10:35 pm

– Extremely high level of starts in Ontario, due to a ridiculous number of condo starts

– Rental vacancy rate is the lowest in a decade as first time buyers stay out of the market.

Something fishy is going on here.

#4 Farm Renter on 12.09.10 at 10:39 pm

Well … my mom just sold her condo … It was hard to get her to accept a lower offer than her asking price but I used lots of quotes from Garth and the blog dogs and agreed that it was wise to sell now. What floored me is the buyer actually had a 5%/35 year mortgage – what a greater fool!

#5 Franco on 12.09.10 at 10:44 pm

US housing prices still going down and a double dip is not in the works.

Confirms what you wrote in your blog.

See link for video from CNBC

http://www.jugglingdynamite.com/blog/_archives/2010/12/9/4699691.html

I agree with everything you have written about. Time will prove you correct. I expect a second commodities crash when China tightens to much and speculators jump ship. It is a dangerous world we invest in today.

#6 mark on 12.09.10 at 10:55 pm

How much trouble are you in when your state’s housing finance figures fall back to 1998 levels?

http://tasmanianrealestatetrouble.blogspot.com/2010/12/time.html

#7 Jsan on 12.09.10 at 10:55 pm

I find it amusing how the BOC Governor has been warning for months that personal debt in Canada is out of control yet interest rates are still at what would be called emergency levels. Are we in an emergency? No! Rates in Australia are around 3.5 points higher so why is Canada still at “emergency” levels?

You get the feeling that Carney understands how this whole mess is going to unwind and this is nothing more than him covering his butt for when the Canadian house of cards inevitably collapses. There will be allot of “well, don’t say we didn’t warn you”!

#8 Timing is Everything on 12.09.10 at 11:10 pm

#7 Jsan said – “Rates in Australia are around 3.5 points higher so why is Canada still at “emergency” levels?”
“There will be allot of “well, don’t say we didn’t warn you”!”

Agreed. Rates are goin’ up quicker and higher than most folks think. Are you ready?

#9 joe larue on 12.09.10 at 11:13 pm

Had lunch with someone who has a paid-off house in Bloor West Village Toronto…she said when she bought her house 8 years ago they thought the price was pretty high but they just bit the bullet and paid it off as quickly as possible….now, 8 years later she can’t believe people are paying 800K for “piece of crap fixer uppers” in her neighbourhood.

When I asked her who was buying those houses, she said it was all young couples. What a sad, scary thought.

#10 Joseph [Original] on 12.09.10 at 11:16 pm

Who to believe … who to believe …

How Canada avoided housing ‘bubble and crash’

The Canadian housing market has managed a rare feat, TD Bank says, avoiding both a “bubble and a crash” over the last three years as the sector gyrated wildly.

In a report from its economics department Thursday, the bank said that the Canadian housing market has pulled off a soft landing and likely hit bottom in July. And having pulled off that rarest of feats, the bank now expects “modest price softness for the next year.”

http://www.theglobeandmail.com/report-on-business/economy/economy-lab/daily-mix/how-canada-avoided-housing-bubble-and-crash/article1831359/

#11 Ben on 12.09.10 at 11:19 pm

#7 Jsan on 12.09.10 at 10:55 pm

Interest rates are at emergency levels because the fed wants to kepp this party going. Watch for QE 3 and QE 4… Oh ya, they want to penalize savers with zero interest so you will go out and shop and spend and get in debt and spend more more more!

#12 Timing is Everything on 12.09.10 at 11:24 pm

Garth said – (and why I have a four year supply of squirrel jerky).

Well, I have 5 years supply, but I’m not as crazy as you.

#13 Caveman on 12.09.10 at 11:28 pm

All of the recent statements from the real estate industry remind me of one guy…

http://www.welovetheiraqiinformationminister.com/

#14 Rick in Seattle on 12.09.10 at 11:31 pm

True story… Moved from Ottawa in 1999 where we owned a townhouse since 1991. We Bought that place for 112K and sold for 95K (loss of 15%). Moved to NJ, USA and rented for a year. Bought SFH (4bed, 2 bath) Dec/00 in Hillsborough, NJ for 307K (I was shitting my pants). We then decided to move to Seattle, Wa in may/06. It took 10 months and 100K drop in price to finally sell our house in NJ for 481K (gain 57% but worse 10 months of my life). We have been renting ever since.

What truly sticks with me is how many people in the Seattle area thought it could not happen to them. It was different here… Let me tell you they ain’t sayin’ that shit no more. Seattle is down 25% from the peak in Mar/07 and nothing is selling.

Cheers

#15 BDG-YYC on 12.09.10 at 11:52 pm

“Most Canadians have the bulk of their net worth in a single asset,”

It is likely fairly safe to speculate that about a third of those actually have all of their NEGATIVE net worth tied up in one asset that is leveraged one way or another at 20:1.

The “C” & “F” “warning” is nothing more than an after the fact ass covering exercise … all the damage they new they were doing is now done … nobody left to “save” … sort of like a negligent parent hollering out the kitchern window … “don’t go near the pool without asking momy” … loud enough for all the neghbours to hear … as the little blue bodies bob ass to the heavens.

Tic … tic … tic…

#16 Habsfan on 12.10.10 at 12:10 am

Lab Rat

#17 anon10 on 12.10.10 at 12:13 am

“Economics has taught us that to have sustainable growth, we need monetary stability and prudent economic policies that favour entrepreneurship and trade. But for many years now, western countries have tried on the contrary to produce wealth with more debt and more money created out of thin air. This is a recipe that has never worked and which may only prolong the crisis we are in.

We need to change direction, and the sooner the better”

A bad recipe for economic recovery

#18 T.O. Bubble Boy on 12.10.10 at 12:14 am

The Vancouver Olympic Village may not have anyone who wants to live there (at least not at the ridiculous $1000/sqft prices), but they will have shopping and daycare across the street:

http://www.marketwire.com/press-release/Vancouver-Based-Executive-Group-Argo-Ventures-Inc-Announce-New-Multi-Tower-Mixed-Use-1366858.htm

#19 NorthOf49 on 12.10.10 at 12:14 am

Talking to my neighbour here in Ancaster the other day, she said she wants to move, find something nicer. She paid $470,000 for her current home with a 0/40 mortgage 4 years ago. So she told her agent that if he could get her a $100K more than what she paid, she would buy another house from him. He said: “Be reasonable, I could probably get you $50,000 more, not $100K”. The kicker…the house 3 doors down from her sold this summer for $435,000, originally listed at $514K, similar home & lot but no pool.

Fun times……

#20 Timing is Everything on 12.10.10 at 12:15 am

#4 Farm Renter said – “What floored me is the buyer actually had a 5%/35 year mortgage – what a greater fool!”

“Life’s tough, and it’s even tougher if you’re stupid.”– John Wayne

#21 Cookie Monster on 12.10.10 at 12:24 am

To all the greater fools and capitalist antagonizers,

The positive results of capitalism that surround us all are evidenced in everything we own and use daily through the products brought into existence by successful business entrepreneurs. Modern life’s items including all the benefits bestowed on us by the public sector including the highly touted roads that we depend on so much. The modern conveniences of modern life are brought to us in one way or another by a base of people called capitalists, the money raisers and wealth creators, the builders of enterprise and industry, the successful business operators who bring people and resources together in the process of delivering products and services for society to consume.

We all know most business start-ups fail and in doing so many starry eyed entrepreneurs lose their life’s savings and years of their time trying to commercialize some idea or invention into a business success. Just watch Dragons Den and see a sample of turds that get flushed everyday and the odd few that have a small chance to succeed. Many more obscure businesses languish on the margins of viability indefinitely without failing. These enterprises are a lot of work. So considering this, one must appreciate the rarity of those highly successful and mighty business operations that do succeed, the one that amass great wealth are truly exceptional to the rule and tremendously beneficial to society and greatly responsible for raising our standard of living. Think Microsoft, Potash, Exxon, RIM etc.

So I’m a defender of capitalism because I’m a capitalist, I’m a small business owner and I’m an entrepreneur and I’m often disgusted watching government constantly squander wealth day after day in the public sector and other incoherent statist pursuits.

Lately many people are blaming capitalism for the corruption and distress in our economy and I constantly argue that people’s anger is misplaced. The villain on our failing economy is not capitalism, its not entrepreneurship, its not rich business people, it’s our government, it’s our banks, and it’s our bloated public sector. These institutions are responsible for our crumbling economy, these institutions are not capitalist they are socialist parasites feeding on the host of an underlying real economy that is capitalism. We have a mixed capitalist/socialist economy with a growing portion of free loaders living off the real economy, hoards of looters feeding on the private sector successes, too many legalized thieves supporting their standard of living on the back of a slowly shrinking impoverished private sector working class poor who are struggling to support an ever expanding expanse of non-productive public sector upper-class socialites. The working private sector businesses and their employees are supporting an ever growing elitist public sector narcissistic government and an ever growing unsound fraudulent banking system. These are the reasons why so many people have so much debt, these are the reasons why the poor are getting poorer, and this is why it takes two full time incomes to support an average household, soon to be three. Government spending and inflation are robbing us and our future generations blind.

Governments are complicit in contributing to our economic demise. Bailouts for banks and large financial institutions and numerous manufacturing corporations are used to keep the conduits and creators of wealth alive, keeping workers on life support so as not to lose any slaves, government must not allow their cronies to fail and disturb their system of theft that took so long to construct. Government will continue to guarantee bank deposits and loan books; they will continue to buy billions in bad mortgages and bad debts brought about by their own orchestrated credit expansions puffed up in the news as a strong economy and rising GDP during the boom phase, such popular fun and political exuberance until the bust lays waste but that’s always postponed until the next guy gets elected.

Everyday in the news it’s one waste fest after another, it’s this scandal here and that intervention there, botchery by bureaucrats. These jokers have turned politics into a reality TV soap opera for the ignorant masses to debate about how they best want to be oppressed. Proof of our taxpayer funded public education/daycare system’s curriculum of ignorance.

Our modern banks create money out of thin air in a fractional reserve banking system condoned and fostered by government for the benefit of government, a system of misallocation of funds and fraudulent activity. Historic jurisprudence clearly holds that only term deposits are legal tender for lending at a 100% reserve ratio with some agreed to rate of interest to be paid to the depositor for use of his funds, anything else is misallocation of funds and fraud. Long standing principles developed over centuries for sound banking have been discarded for the benefit of modern banks and governments around the world with the demise of society’s wealth through inflation and rescue packages to crooks. See the bank of Amsterdam as an example of the most successful and honest bank in world history when gold was money. Gold still is money and always will be. These are facts of reality and fundamental pillars of economics where erosion will lead to economic demise and social chaos.

And of course the public sector, what a tremendous waste of money and good people’s talents who unfortunately do not contribute nearly as much to society as they receive. If public sector workers had to put a cash registers in their public sector offices they would soon realize that no one is actually willing to pay them the high prices needed to support the delivery of their crappy services. They are so frightened to death of this idea you’ll notice how indigent a public sector worker gets at the mere suggestion of converting them to the private sector, they know full well they could never honestly earn their standard of living by continuing doing what they are doing. They know full well how demanding a free market would be and the impossible task would be for them to separate people from their money without the force of government extortion feeding their bloated budgets and lavish compensation.

All the fine people in government, banking and the public sector need to realize that they are in fact the source of much of the looming economic catastrophe we are facing. They are the beneficiaries of immorality, they are the beneficiaries of looting and government largess, they are the beneficiaries of wealth that is stripped from the real economy, the true tangible and underlying economy that actually exists built on savings, brains, brawn and risk called capitalism.

Our public sector lottery winners should feel ashamed of themselves and a tremendous sense of guilt and responsibility for the downfall of our economy and the suffering of the poor and working class serfs beneath them, but like a stampede of cows they unknowingly trample on their heads while protesting any cuts and demanding the party must go on.

Socialism destroys capital. This is why capital and jobs flee unfriendly jurisdictions. This is what helped keep the USA competitive domestically, it was competition amongst the states; it’s flee or die; survival of the fittest, efficiency does matter. As it gets worse with time more businesses in the socialist republic of Canada will leave. There will be less arguing from jerks like me and fewer votes in the ballot box as more votes are made by people voting with their feet and leaving while saying farewell to the blood sucking leeches. Eventually the only people left in the country will be a bunch of useless twerps and lying politicians. The wealth will be gone and the cannibals will be left to dine upon one another like they did in Soviet Russia.

Socialism’s great until you run out of other people’s money.

#22 Bigboy on 12.10.10 at 12:43 am

Canadian RE prices will continue to rise. Just because readers don’t agree doesn’t really matter.

I enjoy being the owner of a multi million dollar home in BC while shopping for more multi unit RE in Vegas. Good luck renters, you’ll need it when I increase your cost of living.

Won’t end well? It definitely won’t if you don’t own RE.

#23 A little Levitationaty on 12.10.10 at 12:43 am

I look forward to the day that the sneering smirks of the 30-something couple who live in the house across the street from my beautiful little rental walkup are wiped from their faces. Pretty much the look they give anyone coming out of our building. http://www.youtube.com/watch?v=ymLTO-GxZoQ&feature=related

#24 TheBestPlaceOnEarth on 12.10.10 at 12:50 am

Don’t have a pension? Don’t have savings? Don’t have an RRSP? Do you have a House? Then your alright Jack. What you want to do is have the biggest house you can afford preferably with a basement suit and an upper floor that can be converted into a separate suite. You see they ain’t makin any land out her in the Garden of Eden aka God’s Country aka Land of the Plenty VanGodBlessedVancouver. Buy the house, pay it off over 25 years and when the kids have moved out you have an incredible revenue stream of rent. Folks rents are going sky high in heavenly Vancouver. 25 years from now and that 2 bedroom suite down stairs and the upstairs suite and I dare say your looking at a cool 6 grand per month plus right offs, plus you own a house now worth in the mega millions. So rack up that card, shop til you drop if you are an owner. If your a renter I will say a prayer. God doesn’t shine a light on renters.

#25 Kevin on 12.10.10 at 12:53 am

Saskatoon inventory, rental market, housing starts and housing under construction update
http://saskatoonhousingbubble.blogspot.com/2010/12/saskatoon-inventory-rental-market.html

“Demand in 2011 will need to be stronger than 2010 to offset a possible surge of listings to record highs in the spring. Builders are still going quite strong and there are almost 500 more units under construction now compared to this time last year. Much of 2010 sales were front loaded with the scare of interest rate increases and renters jumping into the market.

I am forecasting the spring of 2011 to have the second highest levels of inventory of recent years.”

#26 45north on 12.10.10 at 12:53 am

Joe laRue: talking about Bloor West Village TO she can’t believe people are paying 800K for “piece of crap fixer uppers” in her neighbourhood.

me neither. So how much to fix up? Two new bathrooms, new wiring, new plumbing, new roof, skylights, new gyprock? I’m thinking $200,000. Total bill $1 million. Anybody have a better number?

US homes have fallen for 51 months, and prices are now down by 25%. During the Great Depression they fell for 60 months, and lost 25.9% of their value. Whoops.

I was telling everybody at work that the US housing market is really hurting right now. A guy said with great emphasis “this isn’t the US”. He sounded a little defensive but I don’t think that he has much at stake, I sort of assume his house is paid off. The young kids just listen.

#27 Peter Pan on 12.10.10 at 1:01 am

Helmut Pastrick has no credibility… His predictions are quite simply derived… He simply draws a straight line out three years of what has happened in the past two months…

Take a look at this before and after from October 2008…

http://www.realestatetalks.com/viewtopic.php?f=8&t=36452&start=0&st=0&sk=t&sd=a

In two months, he totally capitulated on his previous predictions.

How did he come up with 44.7% returns for next year for Vancouver Real Estate?

He probably calculated that last month, real estate prices in Vancouver went up MOM by 3.725%, so he multiplied it by 12 = Voila, 44.7% yearly return.

#28 canali on 12.10.10 at 1:04 am

so many people talk of a pending china real estate bust…but to me that will only drive more of them over to our ”safer, more prudent” north american RE shores, thus driving up our stupid prices even more.

#29 Coho on 12.10.10 at 1:04 am

Like a drug dealer telling his customer he’s taking too many drugs, Mr. Carney’s actions seem not to match his words. His words say “We have taken on too much debt and there’ll be heck to pay” and his actions say, “Borrow, borrow, borrow — money is cheap. Be a good consumer.”

The wolves in chicken suits are occupying the hen house and seem to be getting bolder by the day! They’ve about stopped the pretence of administering to the affairs of the hen house for the benefit of us chickens. We’ve been plucked and thrown into a boiling pot of water. Stick a fork in us…we’re just about done.

And let us have some compassion for our brethren to the south. America has been manipulated to take over the role of the world’s biggest imperialist bully, which was once overtly held by ” Jolly Old England”, the very imperialist tyrant which it liberated itself from over 200 years ago. She has taken on the role and the cost of meddling in the affairs of other countries and is neck high in foreign entanglements and wars. All courtesy of the American taxpayer. Americans get stuck with the tab and are becoming hated around the world to boot. Courtesy of the ruling class by way of government that once upon a time was for the people.

As if that isn’t bad enough, the “Federal Reserve” which is not federal or a reserve, has looted that nation’s wealth and with blessings from government, has saddled it with debt it can never repay. These are the things that the founding fathers had warned about and they’ve all come to pass. Jefferson warned that a central bank is more dangerous to America than a hostile standing army. How sad for America and how sad for liberty everywhere. One has to wonder who and how few the true American Patriots are in positions of power.

#30 Patz on 12.10.10 at 1:04 am

Lies, damned lies and statistics. Listening to a radio discussion of housing starts today in Vancouver I heard that housing starts were up across Canada and BC construction was booming. Strange, I thought. Googled it.

According to CHMC housing starts were up across the country in November. That was because they were up in Ontario by 80% but were down in the rest of the country. BC was down by 21% seasonally adjusted. But the unadjusted numbers had BC up marginally. So when it suits the pumpers they use the raw numbers but will switch to seasonally adjusted if that helps their pitch. How easy it is to fool people with this sleight of hand manipulation of the numbers and that is the intent.

The simple truth is that housing starts are seriously down in most of the country. But multi–unit starts are up so much in Ontario that it seems in aggregate as if housing starts are up across Canada. All that extra condo construction in Ontario is something they’ll wear in the near future.

They will lie until they can lie no more. That will be when we play Ruth to the US’s Naomi. You know, “whither thou goest, I will go.”

November housing starts:
http://tiny.cc/zi2hx

#31 hobbygirl on 12.10.10 at 1:07 am

People get the government they deserve.

We can point the finger all we want but in the end we are all seduced by short term promises as opposed to a responsible long term and disciplinary plan.

You know you can’t deny this, when government tries to be responsible we toss them out of office (Garth you know all about it). Time to stop blaming and look inward, we are the sellouts. Save Wikileaks!

#32 realpaul on 12.10.10 at 1:13 am

I’m in NYC and up to my yang in US opinion and news (I am inside watching more TV because I froze my ying off the other day) and what a differance in opinon on the ‘real estate ‘ story from the media down here. In fact the pessimism here is ubiquitous. 25 to 49’s are staying away from buying in general fearing further price cuts. The specter of ‘shadow inventory’ being released as soon as any perception of change is aspied by the banksters is no secret in the news. Everyone knows that there are millions of homes being held in abeyance by the banks so as not to flood the market and further depress prices. The question is the number…anything between 8 and 12 million homes owned by the banks and millions more forecast to get foreclosed on in the next five years. Renting has gained popularity…and the open media supports the notion.

Unlike in Canada where the lollipop media has been pre licked by the real estate pimps and the ‘buy buy buy’ crowd is holding court in the front pages. Carney telling Canadians that they are responsible for their own demise is laughable. The BOC openly pimped the RE market to goose up phony recession numbers….no one actually thinks that the governments numbers are even close to truthful.

#33 dark sad person on 12.10.10 at 1:25 am

Credit expanding?

lol

Easy to say if you just take the MSM propaganda at face value–
Iwould have thought that by now most here would be sceptical of what they listen to-
Apparently not-
Why would anyone just take some blowhards word for it-without searching further for the real facts-instead of believing all the MSM BS one reads in hopes of being right for a change-
Need to dig deeper and define “what Credit” is expanding-

*********************
Z.1 Flow of Funds

Today’s Flow of Funds release by the Fed. These numbers are through 3rd Quarter 2010.

* Total Domestic Nonfinancial Household Credit: -$232 billion. Down 10 consecutive quarters.
* Home Mortgages: -$255.8 billion. Down 10 consecutive quarters.
* Household Consumer Credit: -$37.0 billion. Down 9 consecutive quarters.
* Domestic Financial Sectors: -$584.9 billion. Down 7 consecutive quarters.

What was up?

* Total Business Credit: +$185.2 billion. Up 1 consecutive quarter.

* State and Local Government: +$124.1 billion. Up 1 consecutive quarter.

* Federal Government: +1395.9 billion. Up countless quarters

Definitions:

* Domestic debt comprises credit market funds borrowed by U.S. entities from both domestic and foreign sources, while foreign debt represents amounts borrowed by foreign financial and nonfinancial entities in U.S. markets only.

* Financial sectors consist of government-sponsored enterprises, agency- and GSE-backed mortgage pools, and private financial institutions.

* Credit market debt consists of debt securities, mortgages, bank loans, commercial paper, consumer credit, U.S. government loans, and other loans and advances; it excludes trade debt, loans for the purpose of carrying securities, and funds raised from equity sources.

http://globaleconomicanalysis.blogspot.com/2010/12/is-credit-contraction-over.html

#34 vomitingdog on 12.10.10 at 1:31 am

You may have to slow down your posts. Prices won’t be going anywhere until interest rates climb decisively.

#35 realpaul on 12.10.10 at 1:44 am

Shock and awe hits the treasury markets. Apparently governments can’t print all the money they need…and when they have to go cap in hand to the private sector….well intrest rates are quite another story. Point being…as indebted governments are forced to stop printing bonds and buying them back because national debts are unsupportable they will have to go to the bond market where rates are signifigantly higher than are being phonied up by the real estate pimps today.

http://www.ft.com/cms/s/0/e550f996-0304-11e0-bb1e-00144feabdc0.html#axzz17gROHHPy

#36 Nostradamus Le Mad Vlad on 12.10.10 at 1:53 am


Forget the RE pumpers — they are doing what they are paid to do.

Most here have enuff common sense to stay away from home ownership (unless it’s already paid for), and are able to sign the home over to someone else for the notary’s or lawyer’s fees, selling at a realistic price.

“Stephen Jarislowsky: I hope I’m wrong but I think Canada is on the edge of a lot of trouble.”

See 2:54 clip just before the last link. All the politicos / know-it-alls give is facts, figures and nothing else.

Jarislowsky points it out quite clearly; he doesn’t have to think anything, just take a look at the smaller towns which have pretty much been decimated.
*
#171 GregW, Oakville on 12.09.10 at 9:41 pm — “If she runs there is money coming form somewhere.”

Hi Greg. Soros bankrolled Obama to the WH, but since their mid-terms has hinted he may go for someone else. As Hillary has ruled herself out, consider a change of heart if he bankrolls her.

But you are correct in that it is expensive to run, and is a good job that Garth chose to step away. His success as educating others can be shown by hackers disrupting his site a couple of times.
*
Monopoly Money and No Euro for Iceland (or bank bailouts). At least the populace has got balls to stand up for themselves.

Curious that gold, silver and copper are all racing ahead when JPM bought 80% of the London copper market a week or two ago and it has a nice chunk of change in silver.

Price fixing with someone, or waiting until prices reach all-time highs then flood the market with it?

Bets on when the Euro dies. Maybe that’s when JPM will dump the market with their copper and silver. Also — British banks gained from IMF bailout of Ireland.

Links in. Remember the Exxon Valdez? Seems it’s coming our way (west).

Yes We Can! Change for change’s sake is not necessarily good.

Winter Woes in space. Was that HAARP that just exploded?

Every picture tells a story — The Economy, new and improved from lying politicians. Plus — 2:54 clip Fearmongering. Excellent clip.

The Bovine Excrometer in full orgasm! WikiDicks “That may have been the plan all along!” wrh.com (to shut down the ‘net).

#37 The Original Dave on 12.10.10 at 2:00 am

What you seem to ignore is that risk tolerance is different for everyone. Unique to everyone’s particular situation. One person’s diversification may not be adequate for his neighbour, regardless of how much they are working with. Your million dollar threshold assumes “all other things being equal” and they never are. You are a professional advisor for goodness sake – you’re supposed to treat everyone’s situation as unique.

Let me clarify for the cowboys: Anyone buying individual stocks with a portfolio of less than a million is a fool. — Garth
—————————————————

G Man, is it possible that individual security investing is something you haven’t explored or haven’t spent the time to delve into? That’s not a bad thing. Hey, I have family members that tell me with conviction to stay completely away from investing in the stock market. In their eyes, they’re right. In your eyes you believe that people investing in individual companies with less than mill “will learn soon enough”.

Some of us have ridden the waves already and have found ways to make money in individual securities. I’ve certainly found methods that work for me. I take profits when I feel like. I won’t get burned as I’m now investing with the house’s money…and a lot of the house’s money is tucked away too.

What works for me is investing in sectors that have the biggest upside. Most people, including investment analysts, were oblivious to these bull markets during their infancy – so it takes a lot of work and research but is very possible without “learning a hard lesson”.

I invested early into many different securities in the uranium space, the gold junior space, the potash space, and the rare earth space. I can’t think of any other sectors that outperformed these. I can name dozens of companies, many that I hold, that have returned triple digit percent for me. I’m not saying there hasn’t been any duds, but the good far outweighs the bad. Again, I’ve taken profits.

Maybe this is something that is difficult to do. It has taken me quite some time to learn things and avoid being greedy when everyone else is and being fearful when everyone else is.

Your methods are much easier. They’re especially good for those who don’t want to pay attention or mange their portfolio, but lets not assume that anyone using other methods are sure to lose.

#38 totalchaos on 12.10.10 at 2:08 am

I thought this story was interesting:

http://www.cbc.ca/canada/british-columbia/story/2010/12/06/bc-creditdispute.html

“A Vancouver lawyer representing a mentally ill woman saddled with credit card debt is taking a stand against Capital One — saying it may not have been legal for the company to issue her a card in the first place.

“The [B.C.] legislation says it’s an ‘unconscionable’ practice to give someone a credit card if you know there is no prospect of her repaying it,” said George Gregory, pro bono lawyer for 62-year-old Nancy Chamberlain”

Could not the same be said of many of the mortgages handed out over the last few years? I wonder if CMHC would still need to back an “unconscionable” mortgage? There could be a lot of finger pointing when our not-American-style-sub-prime-mortgages hit the fan.

#39 Jeff Smith on 12.10.10 at 2:15 am

Geez, Mr. Wong is notifying us to the fact that rentals are in short supply. :-( that’s :-( x 1000
We gotta build more condos. Or rather, we ought ta go buy a condo, cause renting just aint a good idea when there are not any available anyway.

:-(

http://www.moneyville.ca/article/904248–far-fewer-apartments-for-rent-in-gta?bn=1

#40 Crash Callaway on 12.10.10 at 2:23 am

The bad news: Local TV Calgary news saying rentals are apt rentals are filling up fast which equates rent increases.
Better buy a house quick!

The good news: A squirrel will never try and sell you a house.

#41 kitchener1 on 12.10.10 at 2:27 am

people in Canada have to realize a few things:

Canada is not a stand alone island– we need the US a lot more then they need us, until there economy recovers we will stagnate

Its not different here!! Think about this for a second, the US has literally thousands of people crossing their unsecure border on a daily basis, thats on top of the legal immigration they have of apprx 1.5 million a year. If immigration could not save the US RE market, it will not save ours.

Income growth– when interest rates rise even up to a piddly 3-4% (BoC rate) we will be finished, people will need to take second jobs just to support current debt load– does not bode well for our economy.

#42 Tim on 12.10.10 at 2:30 am

Then why in the $^&#* hasn’t he raised interest rates? Why haven’t the legislated maximum 25 yr mortgages. He’s doing one thing and saying the opposite. Tough gig he’s got…

#43 Nick on 12.10.10 at 2:53 am

I’ve come to the conclusion that no amount of proof and example will convince young and hormonal buyers to rent instead. Maybe 5% of them will ‘get it’. For the rest, the idea that real estate only goes up is as pure and simple as the air they breathe.

#44 go figure on 12.10.10 at 3:17 am

I’ve read your blog and the contributed commentaries for a few weeks now. I appreciate the variety, and occasional disparity, of views, comments, perspectives, approaches, suggestions, yada yada yada, presented by those who have written. You may call me smart, silly, late for dinner, whatever you wish, and even though flames may be forthcoming, I respectfully request, Garth, to know what you advocate that Mr.I-Am-Canadian should do – generally speaking – going forward to best position oneself in light of what appears to be much doom-and-gloom on the housing/economic/investment horizon (expecting that each person must consider his/her specific situation and circumstances). Is your advice more than “merely” living within one’s means? I haven’t read your latest book (yet), so if the answer is therein, perhaps share your paragraphed summary. Please, and thank you.

#45 Bilbo Bloggins on 12.10.10 at 3:55 am

Hey old farts, u gonna need a hell lot more than 300Gs
to retire.
Unless you plan to retire at 70 and die at 80.

#46 Whistler Dude on 12.10.10 at 4:43 am

#18 TO bubble boy Might be onto a trend. The Whistler development of it’s Olympic village, has been removed from sale (the River Bend; market housing Dev.) until market conditions return. Whistler, a town of ten thousand, has thirteen million dollars on loan for this.
BTW; winter bookings are down. The rental market has the largest volume on record- rents are falling. And timeshare and fractional markets, at the bottom of the market, are showing cracks….
The toys are the first things to go…

#47 HouseBuster on 12.10.10 at 5:38 am

2003 prices are coming… I’m starting to see some price declines in Oakville.

#48 betamax on 12.10.10 at 6:26 am

Carney to Canadians: “Hey you alcoholics, stop drinking that beer I leave out everywhere in kegs with signs on the side that say ‘Drink me’. Show some restraint, for gosh sakes — it ain’t my fault if you wake up with no money, no pants, and a bad case of the clap.”

#49 Habs76-79 on 12.10.10 at 7:11 am

Overpriced housing lust by fed by the real estate and financiers spin machine especially today’s 20 something couples tied to fixing up a shack or buying a faux fancy but shabbily built condo with those oh so important granite counter tops (ooh whoopy do) and gimmicky stainless steel appliances is today the new getting pregnant at age 16-17 was. In either case people doing so will be just as screwed. as dropping a baby at age 16-17 was.

#50 nibs on 12.10.10 at 7:12 am

#3- andrewS
“- Extremely high level of starts in Ontario, due to a ridiculous number of condo starts

– Rental vacancy rate is the lowest in a decade as first time buyers stay out of the market.

Something fishy is going on here.”

I agree. It’s nothing but rampant overbuilding and speculative demand that seems to be keeping the condo market going.

http://financialinsights.wordpress.com/2010/12/09/note-to-toronto-condo-investors-get-out-while-the-gettings-good/#comments

#51 Ottawahouse on 12.10.10 at 7:20 am

What about what is happening in Australia are they that far away that it does not matter?

Anyway I look at my Porsche index,
Every Porsche I have been looking to buy in the last 6 months has sold within a few weeks.

When I read this doom blog I keep waiting for the rush of toys to flood the market. Has not happened yet.
$50,000 Porsche sold yesterday 3 weeks on the market, it the dam winter, go figure.

#52 bigrider on 12.10.10 at 8:51 am

” Bricks are safer then financial assets”

This cuts to the issue. The belief among this predominantly immigrant nation and there children that owning a pile of bricks with all the attached liabilities is safer than a diversified portfolio of financial assets.

Meanwhile BCE raised there dividend this morning. Go figure

#53 David B on 12.10.10 at 8:53 am

And the give-a-way vote burying continues fueled by reports “Canada is Different” couched with words from the A Huffington … like ” move to Canada if you want a good life”

So perhaps Mr. Turner has got it all wrong ….. In the Kingdom of Steve the streets are payed with gold ….even the houses eh?

Canada = Dubai North~!

#54 bigrider on 12.10.10 at 8:55 am

Conversation last Saturday turned to RE verse stock market. Of course ,all believed RE better way to go. Buy rental property and rent out was the predominant belief.

“Of course stocks are high risk. I mean look at Nortel” was the quote of an obvious genius in the mix of conversation who has spent more time doing her nails then educating herself.

#55 Sean on 12.10.10 at 9:07 am

#21 Cookie Monster on 12.10.10 at 12:24 am
To all the greater fools and capitalist antagonizers…

Amen, friend… you have taken the time to write an excellent commentary on the state of affairs in Canada. I myself am an expat of four years, and as I watch events unfold / unravel in Canada, I question what the future will look like should my children choose to return one day. Each passing day convinces me more that it will not resemble the Canada I knew as a child.

#56 Pr on 12.10.10 at 9:22 am

Well it may be not as swift as the usa, but when it all start to crack , the usa will look at us and find us very bizard to get in the same mess as they did.” you had 5-6 years in advance to prepared your self”. Sadly it look like canadian are more naif than the usa. We are different here! Time will tell. The gouvernement have the control, please,more warning to your dear canadian, regarding the 150% in debt of your average citizen. The only thing those ultra low interest rate are doing now, is more and more dangerous debt!

#57 Moneta on 12.10.10 at 9:29 am

Is The Fed’s QE Working?

———-
Of course it is. Were it not for bailouts and QE, the economy would have not rebounded the way it has.

A better question would be whether QE is fixing the problem. The answer is probably no but then again, can the problem be fixed or is it not too complex?

If most people have trouble making their marriage work, understanding the needs of one single person, how can we expect them to fix the world?

#58 fancy_pants on 12.10.10 at 9:30 am

The longer C prolongs the give away rates the longer canadians as a whole will pile up debt.

At this point on the teeter-totter, it is way past the time to stop ignoring the dangerous debt-to-income ratio that canadians have accumulated.

Time to deal with the white elephant in the room (debt levels) that has grown much larger than the bulls in the china shop (high dollar, trade imbalance and poor job growth).

Sure C sees it and wags a finger at it but for heavens sake address it! get those damn % rates up already! Take one on the chin for the country.

#59 Got A Watch on 12.10.10 at 9:41 am

‘Ottawahouse’ – your name says it all, no? You live in Ottawa, last bastion of delusion left, where everyone works for the Government in some way or another. No accident that people there are drunk on kool-aid, they all feel ‘the taxpayers will provide’.

Well, sorry, the taxpayers are fed up. Personally, I’d fire about 80% of the swivel servants in Ottawa now, and permanently lay off the rest tomorrow. And the rest of the country probably would not even notice. That’s how relevant Ottawa and it’s faux economy is to the rest of Canada – zero. Government is just a drain on the rest of the economy, the vampiric parasites who live off the productive tax-paying work of others. While enjoying vastly better job security, benefits and pensions than those who foot the bill.

That is why I have such a hate on for Stevie ‘The Economist’ Harper – because he is just an Ottawaization of a real “Conservative”, a faux fiscal right winger who made a career out of calling for less Government, lower taxes, less bureaucracy etc. Until he actually got into power, when he revealed his only real pressing concern was to secure his place in the history books of the future, by gaining a ‘majority Government’ at the cost of any and all compromise.

Since we gained the dubious distinction of having a “conservative” Government, they have spent like drunks at last call at the Federal level. Largest expansions of Federal bureaucracy ever, more swivel servants, bigger Dept. Budgets, cutting the GST which robbed the Government of needed revenue and set the stage for his crowning achievement – largest deficit in Canadian history. Thank God we had ‘conservatives’ in charge, just think of where we’d be with somebody else!

I voted for Stevie, once, more fool me, but never again. It does not matter how much idiocy exists across the aisle either, you can hardly argue with any credibility that any other Party or leader, had they been in power, would have done much worse. Iggy and Layton may be tools as well, but they are not PM and are not writing the Budget. When your ‘conservatives’ find they can readily get support from the NDP on most issues, are they really ‘conservative’ in any actual sense of the word, or just the ‘con’ part?

Harper now is still stuck in the same place he was a few years ago, but the country is much worse off. He still has little hope of winning his coveted ‘majority’, and hist shelf-life in politics is winding down anyway – you only get a few years as ‘leader’ of any Party before it becomes time to move on, or the voters will move you on, out of fatigue. He had his chance to make his mark in his first term as PM, and failed to achieve anything of note that I can discern. If you want to make changes, the first 6 months of a new mandate is the time to do it, after that it gets increasingly too late.

As the economy turns down, again, voters always turn to blaming incumbents in the end. And why not, the incumbents were in power and made the (mostly bad) decisions that have led us to where we are today. In the same way, Dalton McDumbo, another complete idiot, is certain to face massive defeat next November in Ontario, and deservedly so.

Which brings me to a final point: those who are already writing off Ontario are premature. Certainly we have our problems and more, but I can also say we have a stronger base economy than anywhere else in Canada other than maybe Sask or Alberta, IMHO. Once we get rid of the McDumbo Lieberals, we will have austerity here again, as we did in the ’90s under Mike Harris. It won’t be a new experience, and it will take a while to have effect, but our Budget problems will be dealt with over time. I’m not saying it will be easy, or good times, but we’ll get over it. We’ve had real estate busts before, not much new there, except to the younger residents. The lights won’t be going out either, with plenty of nuclear generating capacity (28+ reactors), and I’d bet Ontario also has a lot of natural gas we have not even looked for yet – they keep finding it in vast amounts all around Ontario, we very likely have it too. So while things look bleak in the short term, I have full confidence that a few years down the road Ontario will be recovering. As among the first to enter recession, we will be among the first to exit it too. All it would really take is a pick-up in the American economy, which will happen later this decade.

Besides, if you live anywhere in Canada, even if you hate Ontario, you should be cheering for Ontario to recover, because if the largest Province does not do well, the rest of the country will have to pick up the slack by paying higher taxes. Personally, I have no real problem with any Province or Territory, Canada is such a small side show in the global economy, that in an ‘Age of Turbulence’ like this ‘Great Recession’ we really can’t afford to be bickering navel gazers, we have to work together. I’m still proud to be Canadian, this nation has a bright future, regardless of present issues.

#60 Denis on 12.10.10 at 9:50 am

$1.46 in debt per $1 in income doesn’t scare me – that’s like a family making $100 K having a $146 K mortgage.

What scares me is that the proportion of people (particularly young families) with more like $4+ in debt for every $1 of income seems to be rapidly increasing.

The $1.46 is an average. Those households without mortgages, for example, dramatically scale the number higher. — Garth

#61 Moneta on 12.10.10 at 9:57 am

The working private sector businesses and their employees are supporting an ever growing elitist public sector narcissistic government and an ever growing unsound fraudulent banking system. These are the reasons why so many people have so much debt, these are the reasons why the poor are getting poorer, and this is why it takes two full time incomes to support an average household, soon to be three. Government spending and inflation are robbing us and our future generations blind.

————
You do have many valid points but you are so set in your ideology that you fail to see that we are a mature economy clinging to the belief that we can keep on growing the way we did over the last century.

The reason why the debt ballooned is because the easy growth ended decades ago, and the only way to keep the party going was by burning the furniture to heat the house.

All of us Canadians are told to take responsiblility of our financial future. We are being told to expect 6-10% returns on our portfolios when the economy is growing at less than 6% nominally. How can Canadians as a whole make more than 6% when the economy itself is growing at less than this amount? The strategy does not add up. Most Canadians are being set up to fail.

As economies mature, wealth is accumulated and usually redistributed because that’s what being civilized means. Most people dop not want to live in gated communities or see sick people on the sidewalks. If we don’t redistribute, that’s what we will have.

Furthermore, were it not for the FRB system we have, we would not have the distribution of labor, specialization and the luxuries we currently enjoy. It is amazing the number of luxuries we enjoy today which came thanks to our pooling of money and governement intervention.

Now, is the government overgrown and fat? Yes. But we still need it. So instead of trying to get rid of it, why don’t we try to clean it up?

Why does everything ALWAYS have to be black or white when most of life situations call for different shades of grey?

#62 Moneta on 12.10.10 at 10:08 am

Sure C sees it and wags a finger at it but for heavens sake address it! get those damn % rates up already! Take one on the chin for the country
———–
C can’t do anything. The US needs to raise the rates and will only when it’s good for them… probably when all the bad mortgages have been plucked off the banks’ books using QE.

If C raises the rates, short term, our dollar will soar and exports will tank even more. And households will drown under the weight of rising interest payments. So on top of killing exporters, they’d strangle the consumer. Not going to happen until they are forced to.

#63 Oasis on 12.10.10 at 10:10 am

Why would anyone just take some blowhards word for it-without searching further for the real facts-instead of believing all the MSM BS one reads in hopes of being right for a change-
____________________________________

yes. the Bank Credit Analyst is really a bunch of blowhards. lol. they’ve only been doing this for 70+ years. surely you know better than them. lol.

#64 pjwlk on 12.10.10 at 10:15 am

The Meaning of Russia, China, Iran Dumping US Dollar

http://macedoniaonline.eu/content/view/16952/54/

#65 Oasis on 12.10.10 at 10:17 am

HAHHAHA.. now i see your bias. MISH. ahahhaha

http://globaleconomicanalysis.blogspot.com/2010/12/is-credit-contraction-over.html

AHHAHAHAHAHAH

poor mish. he’s even got a section there on the right from Prechter. another idiot who’s been constantly wrong for nearly 25 years.

what an idiot that Prechter has been wrong on the stock market for 1/4 century. bearish on Gold since $300/oz .. has that guy got anything right ?? nope. no wonder you have this deflationary bias… you’ve been following guys who have been wrong almost as long as you’ve been alive.

at least by now you could have learned to read a chart. maybe it would help if you looked at them upside down.

#66 Moneta on 12.10.10 at 10:17 am

$1.46 in debt per $1 in income doesn’t scare me – that’s like a family making $100 K having a $146 K mortgage
——–
The average seems OK but it does gives you a good indication of what is happening out there.

The US peaked at $1.40.

All you need is the rop 10% leveraged households defaulting. That’s what happened in the US. If you look on the Fed’s website, you will see that delinquent mortgage leans were at 10.7% in 3Q2010.

90% are OK, yet we still have a real estate market in complete disarray.

#67 Moneta on 12.10.10 at 10:19 am

Well, sorry, the taxpayers are fed up. Personally, I’d fire about 80% of the swivel servants in Ottawa now, and permanently lay off the rest tomorrow. And the rest of the country probably would not even notice. That’s how relevant Ottawa and it’s faux economy is to the rest of Canada – zero. Government is just a drain on the rest of the economy, the vampiric parasites who live off the productive tax-paying work of others. While enjoying vastly better job security, benefits and pensions than those who foot the bill.
——-
It will be interesting to see if we get tax cuts à la US style.

#68 sue on 12.10.10 at 10:19 am

#47 Betamax,
Your comments just made my day.

#69 Devil's Advocate on 12.10.10 at 10:25 am

From Seth Godin Today

“You will be misunderstood”

“If you want to drive yourself crazy, read the live twitter comments of an audience after you give a talk, even if it’s just to ten people.

You didn’t say what they said you said.

You didn’t mean what they said you meant.

Or read the comments on just about any blog post or video online. People who saw what you just saw or read what you just read completely misunderstood it. (Or else you did.)

We think direct written and verbal communication is clear and accurate and efficient. It is none of those. If the data rate of an HDMI cable is 340MHz, I’m guessing that the data rate of a speech is far, far lower. Yes, there’s a huge amount of information communicated via your affect, your style and your confidence, but no, I don’t think humans are so good at getting all the details.

Plan on being misunderstood. Repeat yourself. When in doubt, repeat yourself.”

http://www.sethgodin.com

#70 Denis on 12.10.10 at 10:28 am

Garth – exactly. It would be awesome (read: scary) to know what that number scales up to for (say) families with young children that bought a house in the last few years, particularly in urban areas. Sure doesn’t seem hard to get approved for 4x + these days… based on two full incomes right before mat leave kicks in. With little to no money down, of course.

#71 AxeHead on 12.10.10 at 10:35 am

Garth,

Why do you let the perverted propoganda from TheWorstPlaceonEarth continue…he/she adds no value.

#72 CTO on 12.10.10 at 10:36 am

Unfortunatly, if the Canadian housing market doesn’t start correcting in a big way this spring, I’ll have to be entering the legion of fools who moved up to a bigger house.

It will likely finish us finacially, but the media is too stronge for those that do not read this blog.

A bouble can last longer than one can stay solvent, like a cancer it has finally taken over my family. It will likely distroy 50% of the Canadian middle class before this ends in maybe 5 years.

I just wish the end came sooner so that my opinions would have enough credibility to matter. I’m not even allowed to be on this blog anymore!

#73 Serge on 12.10.10 at 10:46 am

I just want to point out that the CEO of TD Bank thinks he can make more money if the Federal Gouvernment would lower the maximum length of loans to 25 years.

Think about that. TD = More money, if no one in canada could make 35 year loans.

“Speaking in an interview, Mr. Clark said TD has already acted to slow lending but it’s now up to the federal government to take steps such as reducing maximum amortization periods on home loans to 25 years from 35 years or lowering loan-to-value ratios.”

http://www.financialpost.com/news/Bankers+sound+alarm+loans/3954536/story.html

#74 Ret on 12.10.10 at 10:51 am

#58 Well put, I agree 100%.

Our “Conservatives” are to far to the left of Obama politically. The other parties might as well just call themselves socialists.

Don’t give up hope. Rob Ford, TO’s new mayor has a following that could become a movement across the land. We can only hope for change. It may be too late already.

“End the gravy train,” strikes a chord with many people.

#75 GregW, Oakville on 12.10.10 at 10:58 am

Hi Garth, fyi article I’ll start with what sound like a positive development, it came to me today.
Money was needed to get it done.

Just don’t forget about all the other stuff getting into your drinking water from other sources!

You-all should really thank about helping to protect your family drinking water supply today in your own small way.

Lafarge landfill fix approved by Ontario government
http://www.waterkeeper.ca/2010/12/08/lafarge-landfill-fix-approved-by-ontario-government/#more-19934

“We are pleased with the arrangement: “Our primary goal has always been the protection of Bath Creek and Lake Ontario,” says Waterkeeper & President Mark Mattson. “We are genuinely pleased that Lafarge worked so well with our hydrogeologist to develop a management programme that will improve and protect the environment. We hope that the work may begin as soon as possible.”

Years after we were first alerted to environmental issues in Bath, and about two hundred thousand dollars of legal and scientific efforts later, we think that Bath Creek and Lake Ontario are far better protected than they were until now.”

#76 BrianT on 12.10.10 at 11:01 am

#21Cookie-Yes, but Capitalism gets slammed because the vast majority of big players use government coercion to increase their pile. You are small business-at this point big business and big government are almost the same thing-definitely the largest financial firms are far more efficient at DESTROYING capital than any government.

#77 Cookie Monster on 12.10.10 at 11:08 am

Moneta,
You need to read
“Economics in one lesson”
http://www.hacer.org/pdf/Hazlitt00.pdf

and

“What has government done with our money”
http://mises.org/books/whathasgovernmentdone.pdf

Then we can talk.

#78 The American on 12.10.10 at 11:09 am

At #14: Rick in Seattle, THANK YOU for your post. I live in Seattle as well and posted a few days ago, stating we had a 25% decline, yet oven in our decline our GDP is 2.4 times that of Vancouver. Seattle and Vancouver are similar in size, only Seattle has a real economy where large-corporate business is regularly conducted and contains a real sense of entrepreneurship. For those of you who want to defend why Vancouver is “different,” please spare my ears because I’ve heard it all. Perhaps the most ridiculous and laughable argument for Vancouver is the Chinese immigration argument. I can trump that… Seattle had and still has the ultra-weatlhy East Indian, Chinese and Russian immigration argument, but we see how well that held up, right? I wouldn’t trade Seattle for Vancouver on a bet, nor would any other Seattleite (and most Vancouverites for that matter) I know. Vancouver is terrific in many ways, but it severely lacks when it comes to economy, logistics infrastructure, parks (excluding Stanley park, of course), shopping (excluding Robson), freeway infrastructure, nightlife, and I could go on and on and on. My point is, the city is nice, but isn’t a truly world-class city, and most people would agree with that. It is beautiful (not any more than Seattle, mind you), and it has a great setting, but that does not make a city world-class. Toronto, on the other hand, may not have a stunning setting, but it is a true world-class city.

Rick, you are are absolutely correct that Seattlletes once said, “it can NEVER happen here because our economy is so robust, our city is so beautiful, and we have people dying to move here.” Even then, I knew the people making those comments were full of sh*t and completely delusional and unaware of the laws of economics. Well, our market has indeed fallen up to 25% in some ares (depending where you live in the city). I don’t view this as anything that wasn’t warranted, though. Our prices are now stable and our average price per home is in line with the old rule of “three to four.” This means one’s loan value should not exceed three to four times that of one’s gross income.

The bottom line is values in the U.S. were way out of whack with earnings. When I hear what is happening in Canada from friends that live in Toronto and Vancouver, my heart goes out to them, because I know what is about to happen. No, really, TRUST ME I KNOW. I understand salaries are “close” to that of American’s for similar work. However, the tax rate in Canada is exceedingly higher than in the U.S., Canadians do not have the luxury of mortgage-interest expense write off on a yearly basis, savings rates in Canada are now sitting at NEGATIVE 2% (Americans are at a positive 6%, believe it or not), consumer/household debt is on par with Americans, and home prices are now substantially higher in Canada than the U.S. This means only one thing – it isn’t sustainable, and values will correct downward. Home values in Canada will not come in on a “soft landing” as Canadians are continually being told. It will probably fall much like it did in the U.S., and then the REAL unemployment comes along with the REAL turmoil in the economy. If you think things are bad right now, you honestly haven’t seen anything yet.

#79 Bill ( Peterborough) on 12.10.10 at 11:16 am

# 21 cookie Monster

Excellent clarification to your previus blogs. Will have to agree with your comments.

The only thing which I would say is the human factor behind the corporations/ governments/ labour these days. We have as a society regressed , for the most part to a cesspool . Having lost alot of morals principles, values along the way.

For every action there is a reaction, ours seems to have been spiralling downwards since almost the beginning of our existance. I feel that we have not yet reached our bottom.

#80 GregW, Oakville on 12.10.10 at 11:24 am

Hi #35 Nostradamus,

thanks for the link “Remember the Exxon Valdez”
International corporations think it’ll means more profits to ship jobs over seas were labor cost less and work safety standard seem to be lower?

We all use a lot of energy, there is a lot of us, but what are the true costs?
Have you seen the movie ‘The Corporation’ yet?

#81 BrianT on 12.10.10 at 11:24 am

#56Mon-NO-the amount of taxpayer capital expended would have produced a far greater economic boost had it been allocated differently.

#82 BrianT on 12.10.10 at 11:30 am

#78Billpart of that is the growth of the financial/sales part of the economy. Imagine if Goldman had a dominant position in the Cdn condo building industry. Condos would last maybe a couple years before they would totally disintegrate and their would be lawsuits galore flying around-their would be federal guv commissions and basically we would shrug our shoulders and say that is just the way it is. My point is that the majority of the people in this country (at this time) are still honest, which is why the grifters can thrive so well.

#83 Bill ( Peterborough) on 12.10.10 at 11:32 am

# 28 Coho

POWERFUL!!

Alot of people I know feel the same way. Most have large properties outside of the ” Cities” choosing not to have contact with the mindless sheeple’s of the world.( not to say that the mindless sheeple are not in the country as well)

We all keep in contact , gathering once in a while. If any one needs a hand one or all of us are there. Not many of us : but we hold values / principles/ morals / friendship above money/ materialistic wealth.

#84 dark sad person on 12.10.10 at 11:35 am

Moneta-

There is no such thing as too small of a supply of money-
There is however such a thing as prices that are too high to accommodate a fixed supply of money-
If the money supply was anchored-prices would have no choice but come into line with that supply-

#85 Cookie Monster on 12.10.10 at 11:36 am

Bill, thank you.
The authority on morality as far as I’m concerned is Ayn Rand. The statement “capitalism is the only moral political system” is from her.
I only picked-up some of her books last year while reading through tons of other economics literature over the past few years. I noticed her name appeared often among the Austrian economics’s circles and writings.
Check out this site for starters, I think you’ll like it.
http://www.importanceofphilosophy.com/Chart.html

#86 BrianT on 12.10.10 at 11:42 am

#58Got-I can’t see how you have misread Harper like that-the guy has made it quite clear that he aspires to be an important member of the global elite. These guys-Mulroney,Harper,Tony Blair-they all share the identical goals and go about reaching them the same way.

#87 Cookie Monster on 12.10.10 at 11:47 am

Sean, thanks.
I hope Canada smartens up too, maybe Rob Ford and Don Cherry can help us get the ball rolling!
I would like to see the Bank of Canada re-adopt the gold standard right away. This would be a huge step in the right direction to the creation of a sound money standard unit of measure. $1000 CAD/oz would be good.

#88 VMT on 12.10.10 at 11:48 am

“Now and here it’s different” – really?

“Let’s see what happened a few hundred years ago, when a powerful country decided to live on credit, rather than production. Let’s go to imperial Spain, because the impact of South American gold on the Spanish economy was the 16th century equivalent of Chinese savings on the Anglo-American world in the 21st century.

In 1540, Juan Acosta returned from his second trip to the New World with a galley laden down with gold. The voyage, notwithstanding a scare involving English pirates off the Cuban coast, had been relatively uneventful. Eight years earlier, Acosta had accompanied Pizarro on that fateful day in Peru when the Spaniards garrotted Atahualpa, the Inca King. That week, the conquistadores had plundered more gold – as a ransom for the God King – than the entire continent of Europe produced in a year.

Acosta promised himself that this would be his last trip, and set about building himself the most extravagant villa in Cadiz. No expense was spared. Dutch tradesmen and expert woodcutters were transported from Amsterdam. Arab roofers and master tilers came in from Morocco. All carpets and curtains were bought at exorbitant mark-ups from Genoese merchants whose original sources in the Levant were impeccable. By 1546, the Acosta Villa was the talk of Andalusian society, as was Acosta himself, an amiable adventurer of humble origins.

Sixteenth-century Spain was awash with these rags-to-riches stories, and gold robbed from Latin America paid for everything. A monumental mass of gold and silver crossed the Atlantic between 1540 and 1580. In 1564 alone,154 ships, each carrying over 200 tons, docked in Seville. In the 50 years after the death of Atahualpa, the total amount of gold and silver in Europe increased fivefold. Almost every single ounce passed through Imperial Spain.

One would have thought that, given their windfall, the Spaniards would have been the richest people in Europe by the end of the century. But amazingly, Spain blew it. The impact of the flow of gold was felt elsewhere.

The Dutch, in particular, benefited enormously from Spanish gold.

There was hardly any lasting positive effect on the Spanish economy.

How did Spain manage to waste one of the biggest financial windfalls in human history? And are there any lessons for Ireland in the history of the Spanish gold rush?

Spain went on an almighty bender.

The Spaniards proved themselves to be better at spending money than saving the stuff, and acted like renaissance lotto winners, blowing their new money on anything they could get their hands on. They bought spices from the Orient, clothes from Italy, guns and firearms from anywhere.

Gold flowed out of the country. With their new credit, nothing was too expensive. Even today, a stroll through any regional Spanish town reveals churches, great houses, palaces and ornate fountains built by Italian architects and paid for with Latin American gold. By 1590, of all the goods shipped from Spain to its new colonies, 80 per cent had been imported from elsewhere in Europe.

(This was in direct contrast to the British Empire, for example, which shipped British-made goods from Britain to its colonies.)

Pretty soon, Spain forgot how to make things. Production of everything from food to clothes faltered.

As one observer at the time put it, ‘‘Agriculture laid down the plough, clothed herself in silk and softened her work-calloused hands. Trade put on a noble air . . .went out to parade up and down the streets.”

Apart from general idleness, another far more insidious enemy emerged to face the Spaniards. The Spanish rapidly went into debt with other nations, paying over good Spanish money for what, at the time, were called ‘‘puerilities’’ – bangles, cheap glassware, playing cards and the like. Prices in Spain began to rise.

However, the rise in prices was not due to any economic shift in the economy, but to the non-productive abundance of gold. This is the same story in Ireland. Our prices over the years rose because of too much credit.

As inflation took hold in Spain, those Spanish manufacturers who had still managed to trade found themselves becoming increasingly uncompetitive. Having been the richest nation in Europe, Spain experienced successive financial crises as it tried to pay for its gold-inspired extravagance.”

http://www.davidmcwilliams.ie/2010/01/03/imperial-spains-lesson-for-us/comment-page-2

#89 The Original Dave on 12.10.10 at 11:48 am

*******LADIES AND GENTLEMEN, I HAVE IMPORTANT NEWS*******

my wife (we’re recently married) was addicted to all those house building shows: Mike Holmes show, that real estate lady that knows all and tries to sell people houses, love it or list it…….all of them! Hours of those shows every night. She even recorded them with the PVR.

*****NEW DEVELOPMENT*****

ever since Garth’s speaking engagement in Toronto when he ridiculed all those shows and everyone laughed, the shows have stopped at our home (rental). We haven’t spoken about it, not even a word. I’m usually on my computer while she watches t.v. I don’t hear a peep about real estate coming from the t.v now. It’s incredible! My plan worked!

#90 Bill ( Peterborough) on 12.10.10 at 11:52 am

Bernanke, Carney and most of all the other people put in charge of currencies in various countries of the world are just “Managerial Puppets Of The Facist Elite.”

Instead of being accountable to their countries they choose to be bought and payed for by the Internation Banking Cabals/ Financiers.

This should be constituded as a Treasonous Act. Unfortunatley laws are written and passed to protect their corruptable action, therefore sheltering them from any justifiable prosecution.

So why even give a flying @@#$% as to your self serving actions when there is accountabilty/ punishment.

I would let any of them paint a wheel barrow.

#91 dark sad person on 12.10.10 at 11:59 am

#62 Oasis on 12.10.10 at 10:10 am

yes. the Bank Credit Analyst is really a bunch of blowhards. lol. they’ve only been doing this for 70+ years. surely you know better than them. lol.

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

Yep-70 years and how is that been working out so far?

There’s tons of data in that post–
Here’s your big chance to strut your stuff to the board and show us how smart you really are and simply rip it apart?

We all await your analysis-

How’s the Hyper-inflation going today??
See Gold down-USD up–lol

#92 fancy_pants on 12.10.10 at 12:05 pm

#61 Moneta

If C raises the rates, short term, our dollar will soar and exports will tank even more.

Right, I mentioned that. Sometimes tough love is the best solution.

And households will drown under the weight of rising interest payments

another valid point. you lift the carpet, I’ll get the broom and maybe Garth will sprinkle the fairy dust and it will all go away.

#93 pbrasseur on 12.10.10 at 12:12 pm

Garth,

I have a lot of respect for Mr Jalislowsky, like you he has been bearish for a long time on Canadian real estate and on Canada.

…is about to swell like a blowfish with a Victoria’s Secret catalogue.

And I wish I could write like that…

#94 househunter on 12.10.10 at 12:15 pm

#77 The American on 12.10.10 at 11:09 am-Dude. I’m from Vancouver. I can tell you right now, on the West Side, the market is hotter than hell. (Anecdotal) in a popular area called Kerrisdale, there was an old house that was listed. No open house. 14 People representing builders showed up. People are buying like CRAZY right now and its December (supposed to be the slowest time for sales).

Maybe you are right. Maybe Vancouverites are biting off more than they can chew but it will take a significant shift in interest rates to headbutt these buyers into reality. I can’t see the rates making a big move. Too much turmoil in the world for the Bank Of Canada to raise aggressively. I think these zombies will keep on buying till the rates come home. There are hints that rates i rise mid march 2011 but I have doubts it will be aggressive in any way. Still an unstable economic climate everywhere but India, China, Brazil (emerging). Is there anyone that will say a correction is coming to Vancouver in the next 12 months? I’d say no. Rates are tooooo low for that to happen.

#95 GregW, Oakville on 12.10.10 at 12:16 pm

Hi #35 Nostradamus, your 2nd last link is worrisome.
If I recall Reagan sent the military into ‘Grenada’ just before the USSR finished building a long airstrip and underground sub base there. And we almost went nuclear with the Cuba missile thing, we’ve been told… Even if the USA could see this as a defensive more toward the USA aggressive behaviors…
I can’t see this Iran-Venezuela missile thing ending well? Some persons will believe (falsely) they have the right to have other human beings killed for there own agenda.

#96 Bill ( Peterborough) on 12.10.10 at 12:16 pm

Re # 80 If you choose to put this on blog please correct 2,nd last paragraph by putting “no” after ” when there is”…. accountability/ punishment. Thanks.

#97 RE Bear on 12.10.10 at 12:17 pm

TheBiggestSchizoOnEarth

LMFAO! So broke grandma is supposed to sleep on the couch while she generates enough rental income to eat and pay her property tax bill for fear of becoming homeless by having a family live in the basement and upstairs?

Oh yeah, MEGA MILLIONS. LMFAO.

I wish we could put a name/face to this schizoid and then ridicule him perpetually once SHTF.

#98 youknowwho on 12.10.10 at 12:20 pm

http://www.financialpost.com/news/Bankers+sound+alarm+loans/3954536/story.html

I guess the banks are now worried about amortizations.

#99 RE Bear on 12.10.10 at 12:24 pm

Anyways, housing starts are way down everywhere. Developers are realizing the gig might be up and are hedging their bets.

Carney came out in full force and quite sternly said that the ultimate responsibility of not going into debt remains that of the consumer. AKA Don’t bitch and moan once I raise interest rates and you’re broke / homeless.

I don’t know what else Carney can do other than to crank up interest rates. The problem is he can’t diverge too much from US Fed policy otherwise he risks appreciating the dollar further versus the USD, and lowering our exports, and further inflating the deficit.

But there in lies the conundrum, he’s damned if he doesn’t raise interest rates (housing bubble inflates further and worsening the eventual fallout), and damned if he does (kills the economy).

There has to be a point where he says enough is enough and has to rapidly raise interest rates. I’m guessing sooner rather than later.

BTW, Shawn Allen, the idiot that you are, you’ll probably agree: Jarislowsky doesn’t know much about economics, right? Since your little page presents your amazing NW, your networth is what, $800,000? His is 250,000% of yours LOL… Yeah but he’s a fool and you’re ALWAYS RIGHT!!!!!!!

#100 hobbygirl on 12.10.10 at 12:26 pm

#21 Cookie Monster ‘Socialism’s great until you run out of other people’s money.’

This is not socialism, it is capitalism at it’s worst. As the old saying goes, ‘privatize the profits and socialize the problems’.

Never having to take responsibility like a spoiled child is a capitalists’ dream come true.

#101 Mouldy Basement Renter on 12.10.10 at 12:28 pm

#23 BestplaceonEarth
Arent you the same smug twerp that was bragging that all renters will be forced to live on the street ? which is it ? vancouver, a city of Uber rich and Homeless or indebted “middle class” renting out rooms to anyone to help pay the mortgage?
Change your name to Marie Antoinette and eat some more cake.

#102 Moneta on 12.10.10 at 12:29 pm

Cookie Monster on 12.10.10 at 11:08 am
——–
Like I said. You are stuck in your ideologies.

I’m not fond of big government but I don’t see a world without it. The US has been fighting big government like crazy and what has it gotten them? Bigger government with policies coming through the back door. When people don’t want something that is coming no matter what, leaders just hide the truth.

When you stand in front of a moving train, you get crushed. I see the Canadian mood changing towards government. You are a reflection of it. But the more Canadians are going to fight it, the more government is going to take away our freedoms. We can already see it.

The reality is that we are in a pickle. Hard decisions need to be taken but Canadians still believe they deserve to be on top of the food chain. These decisions involve sharing the pain between generations and boomers will not want to hear it. It’s not government’s fault. It is a refelction of our times. It’s what has happened to all prosperous nations who have sat on their laurels for too long.

#103 Kevin in Winnipeg on 12.10.10 at 12:37 pm

I think the worst part about this upcoming downturn in real estate and quite possibly the economy is the agonizing long wait for people who did sell and now have to wait years to get back into a home.

I don’t see any winners in the end and find it very sad. Time is going to be the real loss here, not money.

#104 Incubus on 12.10.10 at 12:43 pm

Very soon in Canada

http://www.youtube.com/watch?v=bNmcf4Y3lGM

#105 Junius on 12.10.10 at 12:46 pm

#21 Cookie Monster,

This is a very old argument. You created a straw man approach and simply lump everything into the “gov’t is socialism and socialism is bad approach.”

You also can’t credit capitalism with being the engine of innovation you think it is. It is MUCH better than socialism but it pales in comparison to open networks. For an good read on this check out Steven Johnson’s book, “Where Great Ideas Come From.” The public sector has a far greater role than you acknowledge.

You fail to see how elites have gamed the system by co-opting terms like free markets. Look at the US Chamber of Commerce’s recent role in the US elections. Who were they acting for? Look at the army of lobbyists who swarm our govt’s on behalf of narrow interests who have no interest in competition but simply want control.

As I said I am an ardent capitalist but in the classic sense of one who believes that it is competition and innovation. My concern these days is that the real enemies of this type of capitalism shroud themselves in the arguments of free markets when it is convenient but most of the time have no real interest in competition.

Here is an example. The other day you mentioned the CRTC as an example of gov’t over reach or something like that. The reality is that the CRTC has grown increasinly weak over the past decade as a result of a Convervative government who don’t believe in it and who are owned by the cable companies.

The “fee for carriage” issue last year is now over as the cable companies have taken over. Shaw now owns roughly 1/3 of the systemt as does Bell. Meanwhile Rogers is rolling up most of the rest leaving us with 3 major players.

One this is complete you will see the regulatory system beefed up to protect their interests. Essentially crony capitalism. Watch for Netflix, Apple Amazon and Google to become regulated. So much for your “free” markets.

Going forward we need a new paradigm if Capitalism is to move forward with more transparency and more open networks. We also need to help entrepreneurs build new and innovative businesses. However if you look hard enough you will find that more often than not the real enemy of Capitalism lives as much or more in those on the political right as those on the left.

The left is tired and discredited. However the old right is in control.

#106 Junius on 12.10.10 at 12:48 pm

#77 The American,

Thanks again for posting. You perspective is appreciated.

As a Vancouverite I may not agree entirely with your opinions on the relative lifestyles of the cities. However I cannot argue with the economic conclusions.

#107 Zaza on 12.10.10 at 12:51 pm

That’s a forth price reduction for this house on my street
$799K>>$769K>>$739K>>$699K>>$669K
http://www.realtor.ca/propertyDetails.aspx?propertyId=10052839&PidKey=-1660867329

#108 Bill ( Peterborough) on 12.10.10 at 12:52 pm

Re 2nd last paragraph of my last blog should have read :

So why even give a flying @@#$% as to your self serving actions when there is NO accountabilty/ punishment.

I wouldn’t let any of them paint a wheel barrow

#109 Paolo on 12.10.10 at 12:56 pm

Canada?

“Someone’s going to get a lot of hurt…”

The signs are already around us. Low rental vacancies, trouble brewing in the world, in Europe, debt levels out of control.

These are understatements that Stephen Jarislowsky says above:

“In Canada the hardship still lies ahead…There’s a lurking disaster…I think things are going to get a hell of a lot worse…I hope I’m wrong but I think Canada is on the edge of a lot of trouble.”

I bet many are already suffering silently.

This is how it played out in the USA, in Ireland, in…

Like watching a train wreck unfold.

#110 Young Old Fart on 12.10.10 at 1:05 pm

#44 Bilbo Bloggins on 12.10.10 at 3:55 am

Hey old farts, u gonna need a hell lot more than 300Gs
to retire.
Unless you plan to retire at 70 and die at 80.

I believe there are a few like me on this blog that read it and fully understand as we have been doing things the right way for a number of years. I am in that age bracket that remembers the early 80’s and was smart enough to learn from it. The ignorant comment above, I believe, comes from the frustration of realizing ones own…what’s a term you may understand…shitty predicament. I have retired 22 years shy of 70 as you suggested. I own debt free not one but 3 houses, 2 of which are in tropical locales, with well over 10 times the paltry 300G’s you mentioned. I am also happy to mention that I will continue to prosper due to “greater fools” that are too busy chasing their lusts for “stuff”. Purchasing outside their means…

Someone mentioned the “toys”. Well you should have seen the tears of the fool as he handed over the keys to his R8 that he had paid 160k just 4 months and 2000kms ago. I believe he is still reeling from the bath he took. Give me the finger when I roar down Burrard and I will know you are a blog reader.

Cheers!

Expat and happy

#111 kitchener1 on 12.10.10 at 1:15 pm

#72 Serge– re TD CEO calling for 25 year ammorts. Its simple economics. Consumers need money to spend for the economy to grow.

We are a service based economy now in Canada. When people go all in on a mortgage with 5/35 and get approved for 4x income, it means simply that the family unit is now done for discretionary spending!

No more dinners/movies/resturants/new electronics, there car is going to have to last them 10 years because they will not be able to afford to replace it. By and large, its bad for the economy.

Thats what i dont understand about these RE bulls, it would make for a much healthier economy if prices were at 3.5 income.

#77 The American

thanks for your post– Canadians have drank to much kool aid. We all know were this is going and how its going to end.

#112 DARLENE on 12.10.10 at 1:22 pm

“I think all of us are looking at [what to do],” said Ed Clark, chief executive of Toronto-Dominion Bank, adding the current situation “is not a good thing.”

Speaking in an interview, Mr. Clark said TD has already acted to slow lending but it’s now up to the federal government to take steps such as reducing maximum amortization periods on home loans to 25 years from 35 years or lowering loan-to-value ratios.

“These are exactly the things that government should be doing and there’s been a lot of discussion,” he said.

Bank of Montreal CEO Bill Downe said his organization is also doing what it can to rein in customer borrowing, but fixing the problem without hurting the economy is “the challenge for Canada.”

“I think [tighter mortgage rules] is consistent with maintaining healthy consumer debt levels,” he said, suggesting the changes could be included in the next federal budget.

Read more: http://www.financialpost.com/news/Bankers+sound+alarm+loans/3954536/story.html#ixzz17jCXIait

Well no shit, it’s not a good thing and that this is the kind of thing that the government should be doing. Can’t fix the problem without hurting the economy. Well duh. Think that these changes will be included in the next federal budget? Are you friggin delusional? It would be political suicide for them to do that. I need to go for a walk. Man, the stupidity is frustrating.

#113 Alpha_Bear on 12.10.10 at 1:25 pm

Devil’s Advocate,

What’s up with the Kelowna real estate stats?

#114 D from London, ON on 12.10.10 at 1:39 pm

# 21 Cookie Monster

I love to read the rehashed rants of the so-called “small businessman”. I am fascinated with the delusions of grandeur that allow you and your sort to connect yourselves with successful large enterprises. Face facts what small business people are is basically a horde of day-labourers who work for their masters on-call, while assuming a greater share of the business risk .

Do you really think that there is anything in common between the typical “entrepreneur” and the capitalist class? Time to put down the rant about gov’t/”socialists”/and “the bloated public sector” and face reality – you have nothing in common with capitalists (who possess real capital) – they certainly do not feel they have anything in common with you and small business people. LIke slave owners, they only feed and water you so that you’ll live another day to hoe the fields for them. When one small business fails, there is invariably another waiting to take it’s place.

Also, when I read long, long rants like yours I wonder: Is there is an inverse relationship between small business failures and the time it takes to craft these rants?” Maybe more time on your business and less surfing the ‘net might work to your advantage. Just sayin’…

Successful business people are realists who work with the world they find themselves in. Failures always look to blame others.

#115 kitchener1 on 12.10.10 at 1:45 pm

From:
Read more: http://www.financialpost.com/news/Bankers+sound+alarm+loans/3954536/story.html#ixzz17jHLTuBh

A spokesman for Canadian Bankers Association declined to comment on whether it is lobbying the government for tougher regulations.

Interesting news story, could it possible foreshadow a move in the next “tough love” Conservative budget?

Notice how lobby spokeperson did not deny or even clarify…………. Either way its a good thing and I would love nothing else for CMHC to bring it down to 25 years.

The bank lobby is the most powerful lobby in Canada, what it wants, it gets. Other factor is that I am sure that the current trajectory of CMHC debt is not sustainable and with each month its ability to withstand a housing price decling grows smaller and smaller. IE.. before the 0/40 down im sure they could have withstood a 20% and still be solvent, now, it might be down to a 10% decline.

Folks, Carney along with F and the big boys at banks have all been telling Canadians to be prudent. It has fallen on deaf ears.

Follow the news, read it with a critical eye.

Policy news is usually foreshadowed in their words.

Lets hope they go all in and do a min 10/25 year rate for CMHC mortgages. Weither your a homeowner or not, we are all taxpayers and it would be the best thing to do for all Canadians.

#116 The Other Dave on 12.10.10 at 1:58 pm

Who says there is a rental shortage? There are over 200 units for rent in Parkdale’s Liberty Village area. Many of these are probably accidental landlords.

#117 GregW, Oakville on 12.10.10 at 1:59 pm

Hi Garth, fyi 5-1/2min video fox bisness

Ron Paul Claims Chairmanship of Monetary Policy Subcommittee, Prepared to Subpoena Fed
http://www.infowars.com/ron-paul-claims-chairmanship-of-monetary-policy-subcommittee-prepared-to-subpoena-fed/

“Paul replied “The chairman of the financial services subcommittee, Spencer Bachus, has told me today verbally that I will be the chairman of that subcommittee.”

#118 Nostradamus Le Mad Vlad on 12.10.10 at 2:45 pm


#78 Bill (Peterborough) — Hi Bill. Seems Obama will be a one-term socialist prez, so what are your thoughts on who will replace him?

The party doesn’t matter, as the Dems and Repubs are both sides of the same coin.

With all the nonsense happening thruout the world presently, I am having a hard time choosing between Mr. Ed, the Talking Horse or a Valium pill, ‘tho it doesn’t really matter — ever since Reagan left in 1988, all presidents have been put there by the elite.

Who presents a viable alternative?

Good posts today.
*
Disappointment. Arthur “Two Sheds” Jackson was a hero of mine once, but he isn’t real. 2:50 clip.

#119 Victoria on 12.10.10 at 2:55 pm

THE AMERICAN

Funny, may husband just said the other day that he would like to move his company to Seattle. I would go – no problem.

#120 TS on 12.10.10 at 3:08 pm

To:#23 TheBestPlaceOnEarth on 12.10.10 at 12:50 am
If your a renter I will say a prayer. God doesn’t shine a light on renters.

Your right. God does care if you lie, manipulate or get greedy. You will find out soon enough.

#121 Chaos on 12.10.10 at 3:10 pm

I would prefer it if the Prime Minister of Canada would
leave the Beatles and the Stones out of his master plan to remake Canada in his image.

It’s too late to save the middle class but it may not be too late to save our cherished memories.

#122 Gregor Samsa on 12.10.10 at 3:31 pm

What people don’t seem to realize is that “fiscal conservatives” do not exist anymore. These new conservatives are something else entirely… they are fox news watching, war-mongering, hate filled, fear filled, small men who make policy by and for BANKS and CORPORATIONS, not the people.

These people’s idea of “fiscal conservatism” is tax cuts for corporations and millionaires while saddling the common man with paying off the debt generated by this corporate socialism. Then they fool the common man into voting for them through lies and manipulation.

Look at the U.S. By all accounts a much more “conservative” country than Canada, and yet they have an ever higher level of government waste than Canada does. People need to closely examine how this came to pass, and when you do, you will find that it is actually conservative policies that fostered it, just as it is currently fostering it in Canada.

Conservatism is the PROBLEM, not the solution. Anyone who thinks the Rob Fords of the world hold the answers are in for a rude awakening one day.

#123 Oasis on 12.10.10 at 3:31 pm

How’s the Hyper-inflation going today??
See Gold down-USD up–lol
___________________________________

ah yes.. the usual myopc drivel … one day’s action. when gold has been going up for 10 straight years, and the USD has been going down for even longer.

lol

gold is going much much higher, and the USD is going much much lower. any time you care to put your credentials against that, i’d welcome it.

but you won’t.

#124 Mr Lee on 12.10.10 at 3:41 pm

The fact is the in Palm Desert CA, a town hoese that went for $350K is now selling for $70K. Again I say what makes Canada differnt. The largest economy in the world with the largest riches that is in an econmic slump. The EU with, arguably the reserve economy and currecny in the world that has members states that need bail outs. GB, austerity.

AGAIN, AGAIN, and AGAIN…..what makes us so differnt that some how by the grace of Allah, we are to escape a housing deflation.

#125 Dan in Victoria on 12.10.10 at 3:46 pm

Cookie Monster and others,
Been reading this back and forth about business and government for the last couple of days.
Interesting.
I would recomend listening to Professor Richard Wolff and his talk “Capitilism hits the fan”
You only have to listen to the first half hour, he lays it out very simply.
Doesn’t pull any punches.
If any thing it will make you think, I enjoyed it.
http://www.youtube.com/watch?v=0HTkEBIoxBA&feature=related

#126 Bill ( Peterborough) on 12.10.10 at 4:02 pm

Re # 117 Nostradamus Le Mad Vlad

With all the nonsense happening thruout the world presently, I am having a hard time choosing between Mr. Ed, the Talking Horse or a Valium pill, ‘tho it doesn’t really matter — ever since Reagan left in 1988, all presidents have been put there by the elite.

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

Nosty you heard it here first;

Whispers behind closed doors are saying that if willing, Sarah Palin is going to be groomed to be the next president of the U.S.A. Shouldn’t take too much grooming, since they will be working with a blank.

God help us all.

After here being the President ; we might as well have:

http://www.youtube.com/watch?v=YWyCCJ6B2WE

#127 dark sad person on 12.10.10 at 4:09 pm

#21 Cookie Monster on 12.10.10 at 12:24 am

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

One of the best posts I’ve read here-

Lock down the money supply with hard backing and all that true Capitalism stands for-will revolve and evolve around and from that locked money supply system-

#128 HouseBuster on 12.10.10 at 4:11 pm

#109 Young Old Fart – Dude, you’re too old to be driving an R8…you should be taking the city bus instead

#129 VICTORIA TEA PARTY on 12.10.10 at 4:16 pm

#23 TheBestPlaceOnEarth

Vancouver, the city of my birth in May1945, seemed a pleasant place back then. The best.

From our West Point Grey house on the hill I would look across to English Bay, the West End (no highrises), downtown (Hotel Vancouver the only skyscraper) and the North Shore mountains (largely virgin wilderness–no cliff-dwelling yuppies). The Best Place indeed.

EXCEPT…

A closer look yielded some different views. Those included the heavy toxic industries in False Creek, a waterfront plagued with labour strife, an impoverished east end, along with the downtown east side then called Skid Row.

I remember Dad taking me to his Main and Hastings-situated office, on some Saturdays, because he worked that day too. On the busy streets I often saw young war-scarred veterans, from WW2, some on crutches because of missing limbs, begging for money to buy shoe polish so they could get high. But that was then.

IN ITS CURRENT CONTEXT…

From 1945 to today, therefore, and seeing the changes extant, you couldn’t pay me enough to live in Vancouver. Pot-holed streets, insane drivers, high prices, oppressive architecture, aging yuppie imperialism on West Broadway, Fourth Avenue and Point Grey (still!). And the rain. My God the rain. We get a third of that stuff here in the BC capital.

MY SYMPATHIES

I have tremendous sympathy for those living on the ragged financial edge, in what former Vancouver Sun columnist Alan Fotheringham used to call the “village at the edge of the rain forest” or somesuch.

My humble advice to those who have trouble making ends meet there, and please don’t take offense because none is intended, is to move to Canada’s interior, get financially and otherwise established and then move back to the coast, to anywhere but Vancouver.

LANDLORD HUBRIS

For you, #23, your thoughts of landlord superiority is the mind-set that drives the private sector rental market there. I know we’ve rented from such people (they could at least be polite!). And we have also owned real esate. The latter is much superior, but one also needed a huge grubstake back then. Today, forking out taxes and other imposts is the price homeowners pay there to live in the city that resides in The Best Place On Earth.

SO…

Values have gone wonky. A good dose of heavy duty real estate depression-style salt would be “a good thing,” sorting as it would, the wheat from the chaff. There’s way too much chaff blowing about.

#130 Bill ( Peterborough) on 12.10.10 at 4:19 pm

Re # 113 D from London

“Face facts what small business people are is basically a horde of day-labourers who work for their masters on-call, while assuming a greater share of the business risk .”

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

Could you please clarify this , especially about ” work for their masters on call

AND

“Do you really think that there is anything in common between the typical “entrepreneur” and the capitalist class? Time to put down the rant about gov’t/”socialists”/and “the bloated public sector” and face reality – you have nothing in common with capitalists (who possess real capital) – ”

*******************************
Please if you could define “Capitalist Class” as well as “you have nothing in common with capitalists ( who posses real capital).

Would like to hear your version of what is ” Real Capital”

Thanks .

#131 Bill ( Peterborough) on 12.10.10 at 4:34 pm

Re # Brian T

My point is that the majority of the people in this country (at this time) are still honest, which is why the grifters can thrive so well.

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

Agree Brian T but when are we going to wake up and put a stop to this.

#132 Bill ( Peterborough) on 12.10.10 at 4:38 pm

# 84 Cookie Monster

Thanks for the link.

#133 Alberta Boy on 12.10.10 at 4:43 pm

#88 Dave,
Congrats man! It’s great to hear another success story.

#134 Steven Rowlandson on 12.10.10 at 4:44 pm

Garth your buddy Stephen is correct. The real hardships and economic punishment for canada is ahead of us. Make no mistake the sins of this country are greater than most think and so will the punishment be greater than expected. One of the greatest faults canadians have is their faith in the government and its allies in society. And also the belief that canada is special and that canadians can beat the odds and not suffer for their excesses. At some point all sins get punished especially if there is no repentance and a spirit of arrogance is displayed instead.
So what will kill canada the fastest? The greatest depression in history or the soon to arrive ice age?
Perhaps it will be a one ,two punch and canada will be down and out of business for good. An object lesson for what is left of the united states if you like.

Steven

#135 BrianT on 12.10.10 at 4:48 pm

#121Gregor-All this “conservative/liberal” B/S is past its due date. Obama gets elected to great fanfare and what is the first thing he does-re-appoint the same grifters that ran Bush (I forgot-his other big priority was to ramp up Afghanistan and keep Iraq going). Then he turns to funnelling huge taxpayer capital to Big Pharma and the Sickness Industry. Conservative? Liberal? How about GRIFTER.

#136 Ottawa town is not only a government town on 12.10.10 at 4:51 pm

To Got A Watch

You should never make assumptions about Ottawa less than 30 % of the people who live in Ottawa work for the Government, The majority yes, but rembember Ottawa still has lots of High tech.
The majority of the Government is low paying clerical jobs not porsche types.
Rule one in law is never never make assumptions

#137 Bill Grable on 12.10.10 at 4:54 pm

If you want to “lively up” your pre Christmas “Punch” up – just bring up Real Estate in Vancouver – and then say “Garth Turner”.

** It was fun, Mr. Turner – but I didn’t get to eat much mince pie.
It was RE, all night. LOL.

Wow.

Blog Dawgs, there are a LOT of very scared, angry and befuddled fools, here in LaLa land.

Spent twenty minutes trying to convince a very nice young couple to at least think over their soon to be made purchase.

West Side – near a busy corridor – and the place was built in 1946. It has 30 ft frontage and a falling down, literally, garage at the lane.

They were so pumped because they thought $1.11 mill was a STEAL.

She is pregnant – and was making mid 80’s at a soon to be gone Government job (* I know because she was open about it and even sanguine) – and he is a newly articled Lawyer; all possible with ‘ Boomer’ Mom’s help. “We are putting down over 100K”, she trumpeted.

“Oh, we have a wee bit of student loan overhang, but it’s fine”. ** How much overhang? ” “About 80K, total for both of us, I’m still paying off my MA in Geography”, says the little lady, almost proudly.

Savings? HELLO?

BUT, they have a nice BMW out front. I parked my old 1996 paid for Accord next to it.

I felt sick.

Mortgage?

Variable.

I asked them if they had a cushion for repairs or when, gasp, the rates go up.

The Lawyer husband thought I was from Mars.

“Rates will NEVER go up because the Government won’t let them rise”, said this QueensUBC educated, soon to be determining the lives of others, boob.

“Doctor Turner to the STUPID CLOWN Ward – STAT”.

OMG.

#138 GregW, Oakville on 12.10.10 at 5:03 pm

Hi #124 Dan in Victoria, thanks for the link-talk, I got throught 1/5th of it so far.

#139 TheBestPlaceOnEarth on 12.10.10 at 5:13 pm

Bear are you high?

RE Bear on 12.10.10 at 12:24 pmAnyways, housing starts are way down everywhere
()()()()
You have no clue about Vancouver and how the market works. Now go back to your TinkerToys
()()()
#93 househunter on 12.10.10 at 12:15 pm#77 The American on 12.10.10 at 11:09 am-Dude. I’m from Vancouver. I can tell you right now, on the West Side, the market is hotter than hell. (Anecdotal) in a popular area called Kerrisdale, there was an old house that was listed. No open house. 14 People representing builders showed up. People are buying like CRAZY right now and its December (supposed to be the slowest time for sales).

#140 Dan in Victoria on 12.10.10 at 5:35 pm

Bill, Nosty @ 125
It’s rigged, don’t know if the audio is still up but…..

Ihttp://washingtonexaminer.com/blogs/beltway-confidential/2010/11/bennet-angry-over-senate-process-caught-hot-mic-stuff-riggedt’s rigged…..

#141 Paolo on 12.10.10 at 5:39 pm

# 77 The American

I hear you loud and clear. My sister is ‘underwater’ with her mortgage in Atlanta, GA

Your words are worth repeating:

“Home values in Canada will not come in on a “soft landing” as Canadians are continually being told. It will probably fall much like it did in the U.S., and then the REAL unemployment comes along with the REAL turmoil in the economy. If you think things are bad right now, you honestly haven’t seen anything yet.”

#142 Hell in a Hand Basket on 12.10.10 at 5:41 pm

@ Cookie Monster #21

I’m in agreement that capitalism had its place when scarcity was the rule and economies could grow. Without capitalism and the invention of money we could not have had the specialization we have today. Where I diverge is that we’ve grown to a point where economies have no more room to expand and with our powers of production there is no reason why the basics of life need be scarce. And I am uncertain as to the contribution the Sham-Wow or the Slap-chop doth make.

Capitalist only bring us products and innovations that turn a profit, private sector can never take on projects (like public infrastructure) or innovations (like the internet) that do not bring a clear profit although they confer a clear benefit on people.

I do not doubt for a moment that new entrepreneurs invest much time and effort into their ventures. Our beef is not with them. Our beef is with the older, entrenched organizations that seek to stack the deck in their favour. At some time we must all come to realize that the larger a business gets the more likely it is to resort to tactics to gain advantage that do are not part of the regular tool box of a businessman, meaning a good quality product for a good price. Big businesses exist to crush new innovators; this is a natural reaction of the incumbent to protect their markets.

I seek a third option because we’ve outgrown capitalism. We don’t need an overgrown government, but we also don’t need transnational corporations.

The government and the transnational corporate agenda are indistinguishable. These two classes of organizations suffer from so much incestuous transgressions that they have become inbred behemoths, grasping at every last dollar through tax or through profit. Government and business co-operation over the years have made them one in the same.

Socialism is not the problem, it is the band-aid keeping this whole mess from spilling it’s stinking, corroded guts all over our nation’s soil.

The free loaders you speak of are people who are victims of technological unemployment which keeps moving the goalpost on them with what society requires you to possess before you can be gainfully employed. In the 1970’s you could finish High School with the expectation that you could get a middle class job sufficient enough to support a family where only one person was required to work. Today the requirement is a university degree to get an entry level position in a company and both parents must work to maintain a comparable standard of living to the 70’s.
Capitalism, in it’s striving to cut costs, have created this class of dispossessed “free loaders” you so derisively speak of.

Government spending and inflation are enabled in Canada by the private banks, again reinforcing the public-private co-operation in all things, including the looting and impoverishment of the poor and middle class.

Governments are demonstrating the adages of corporatism. Privatize the profit but socialize the risk. This is the worst kind of socialism ever perpetrated, but not by socialists, but by self-professed capitalists. Governments do not allow their cronies to fall because governments are run from people who have crossed over from the private sector. Capitalists are at the wheel of our government not good men and women of conscience.

These bureaucrats that accuse of debauchery, more likely than not were former employee of these transnational corporations or future hopefuls to be employed after their tenures are complete. I agree this is all theatre, but the problem is much bigger than the “socialist” policies of the government.

This fractional reserve banking is supported by the private sector. Most money that is created is by the private sector and not the BoC. The fact that our government pays interest on these loans is not to the government’s benefit it is to the benefit of the privately held banks. Our government uses the banks like a credit card, backed by their ability to tax us, but this is of course encouraged by the private banks for their increasing profits. Garth is right to say to invest in bank preferred’s, the government is the banks biggest cash cow.

I agree that the public sector is tremendously wasteful because the government is spending other people’s money, they have no concept of what things are actually worth, but what the government is good at is delivering services that cannot deliver a profit but confer benefit to the nation as a whole.

The idea that corporations want a fee market is ludicrous on its face. Transnationals do not want a free market, they want markets with regulations because it prevents new entrants into their markets. Porter’s five forces. Regulations stifle competition allowing the incumbents to do pretty much as they please.

What you need to realize that it is both the public sector and the large players in the private sector that are to blame. Ask yourself who has influence in our society? People (both natural and artificial) with money. Corporations have a lot of money in which to pay lobbyists to get legislation passed on their behalf and if that doesn’t work, they just leave the private sector for a few years to work in government to get what they need and then return to the private sector. You demonize the government, but they are in fact the same people as the private sector.

Capitalism destroys itself. It grows without regard for the environment in which it finds itself and upon consuming everything it can it migrates to better pastures. Capitalism chases profits and low costs of labour such as India and China, places with minimal environmental standards and questionable human rights. How is that for an absolute moral system?

The paradox of capitalism will eventually cut itself off at the knees.

#143 eddy on 12.10.10 at 5:47 pm

It may be time for Canada to sever ties with England. I know it sounds extreme, but I think it’s a satanic imperialist empire. No one has offered an explanation of why Canada escaped the USA real estate meltdown.
Here is one: They are saving Canada to use as a backdoor to re-enter USA after they destroy it. Some people will be welcomed into Canada as refugees

#144 Calgary_Rip_Off on 12.10.10 at 5:57 pm

#77 The American:

I grew up in Bellevue. Seattle sucks. The rain. The wishy washy reserved people. The music. The coffee. It all SUCKS!!!! Too bad that Seattle in NOT like Northern Exposure or Twin Peaks. Bunch of transplants in Seattle now, all the natives have mostly left. I remember when I was stuck at that awful University of Washington for four years. Bunch of precocious useless professors. And the real estate is overpriced crap there. All those increases were due to the idiot nerds in Redmond. So now all the whole area is in a funk. Thankfully I escaped the wishy washiness that is Seattle. Whole city needs coffee to get aggressive rather than have testosterone. What a bunch of eunuchs.

Garth your blog is all speculation. I havent seen any evidence of serious changes in real estate in Calgary. Its the same old crap, idiots trying to figure out how to screw the other guy. Houses here are still a total overpriced joke(I sent my Dad who works for a housing agency in Massachusetts some mls listings in Calgary and his emails were very angry about tight fence lines and vinyl)-its truly amazing what sellers and market value is in Calgary. What the hell is this, New York City or Brooklyn? Come to think of it, the Calgary skyline looks like “All F&ck#d up in the Family”. However, other than the total ripoff on real estate, Calgary for the most part is good. Reminds me a bit of Houston Texas. And for the most part the speed patrols arent in the rectum while driving around the city like the radar guns like to be in Vancouver Island, another place that like Seattle, sucks.
unspun.com/list/34509-top-reasons-why-seattle-sucks

vancouverislandsucks.com

#145 Abitibidoug on 12.10.10 at 6:13 pm

Just today I read an article in the Ottawa Citizen by some economist with TD Canada Trust who said there is no real estate bubble, no major correction coming, and all is well. On the same page was a warning by, you guessed, Mark Carney of how Canadians are heavily indebted and of troubles that may be ahead. I don’t know about you, but like Garth I’m inclined to believe Mr. Carney’s sobering analysis of what’s going on and could happen.

#146 Reasonfirst on 12.10.10 at 6:13 pm

#143 Calgary_Rip_Off

Does testosterone make you say “sucks” more?

#147 EzTo on 12.10.10 at 6:18 pm

The US bubble burst was started by the jump of mortgage rate when those adjustable mortgage renews. As long as interest rate stays low, there is no bubble burst in Canada.

A domino doesn’t fall until the first one falls.

#148 Moneta on 12.10.10 at 6:24 pm

The facts are:

1. Energy preservation. Man is inherently lazy but wants to increase his comfort.

2. Survival instinct. Man needs to trade to increase his standard of living.

3. Social animal. Man needs to feel accepted. Man will cooperate with others to share resources in order to increase his standard of living.

4. Natural limits. Resources are distributed unequally. Some men don’t like this, some others accept their poor lot in life. Some work harder, others take it by force.

5. Normal distribution of desires and personalities. It takes man a whole lifetime to learn conflict resolution skills and even then why would man share if he does not have to… and he’s a sociopath?

6. Change works at the margin. 1 to 5% of people are sociopaths. When free trade is running perfectly, sociopaths will taker over because nothing is there to stop them.

8. The pendulum always swings too far. Even if nothing was there to hinder the perfect progression of capitalism, we’d end up with fascism because that is its end result­.

There is no perfect system. Change is a constant.

#149 BrianT on 12.10.10 at 6:30 pm

Good recent video where Peter Schiff attempts to school some bubblehead http://www.youtube.com/watch?v=MJEoRgdxSzE

#150 Chris in Langley on 12.10.10 at 6:52 pm

The Original Dave,

Congratulations!!!!!
Having one spouse house hungry and the other…like yourself, seeing the facts, has got to be very tough. Good news indeed.

Thanks a ton Garth!!

#151 Bill ( Peterborough) on 12.10.10 at 7:07 pm

# 141 Hell In A Hand Basket

Another great post. Many different perspectives here. Sort of like many roads lead to Mecca.

There are many poisonoous roots which all come from the same tree. Eventually people will realize that most of the Chaos/ anarchy/ famines /wars… are all being orchestrated by a handful of people, for the sole purpose of further acquiring more wealth /power, eventually crushing the freedoms we take for granted right out from under us.

Frog in boiling pot syndrome.

#152 jess on 12.10.10 at 7:17 pm

The criticisms of Green stem from the £1.2bn dividend paid by Arcadia to his Monaco-resident wife. Critics say that was in reality his income and should have been taxed as his income. But on dividends she doesn’t have to pay any taxes in the UK but pays taxes in Monaco which has zero taxes. Hence the zero personal taxation.

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

An investigation by the Guardian last year uncovered some of the ingenious and perfectly legal tax strategies employed by these companies. Some of the schemes – devised by highly-paid accountants and lawyers – had obscure names such as “Dutch sandwich”, “double Luxembourg” and “thin capitalisation”.

Two high street banks have been accused of tax avoidance. Lloyds TSB, bailed out by the government, was accused by one former employee of inflating its profits by almost £1bn through the use of aggressive tax avoidance schemes and exotic offshore deals. The bank was also accused of disguising loans to American banks as investments to avoid potentially large tax payments – a scheme called “double-dipping” by tax experts.

Lloyds denied the claims today, adding that it “maintains an open and transparent dialogue with HM Revenue and Customs and has made adequate provisions for all tax liabilities.”

Whistleblowers alleged that Barclays set up a series of elaborate schemes to avoid paying hundreds of millions in tax. The schemes were said to be so complex that HM Revenue and Customs struggled to unravel them. Internal memos suggested that these schemes involved an intricate circuit of offshore Cayman Islands and Luxembourg companies. Barclays went to court to obtain a gagging order banning the Guardian from publishing the documents. The bank vigorously denied the allegations today..
==========

#153 Dan in Victoria on 12.10.10 at 7:35 pm

Bill Grable @ 136
Bill, like i’ve always said. That young couple doesn’t know the diffrence between knowledge and intelligence.

#154 Devil's Advocate on 12.10.10 at 7:42 pm

#112 Alpha_Bear on 12.10.10 at 1:25 pm
Devil’s Advocate,
What’s up with the Kelowna real estate stats?

Is it a real problem or a simple nuisance? If a real problem, email me at [email protected] and I’d be happy to provide you the information you need. DA

#155 Nostradamus Le Mad Vlad on 12.10.10 at 8:25 pm


#125 Bill ( Peterborough) and #139 Dan in Victoria —
Gawd help us, ‘tho I do understand why She (God) would give us a pass!

Dan, thanks for the link. Turns out that conspiracy wackonutballs are fast becoming the m$m! Damn we’re GOOOODD!
*
Ron Paul “This could get interesting.” Webmaster’s Commentary: “Let’s hope Ron Paul has his Kevlar undies close to hand!” wrh.com. Seen positive and negative things about him.

WikiLeaks A big con-job from the US govt.

Iceland No Euro and no IMF. They are doing just fine without those dumbbells!

BoA “A trial is set for June 13. Now the class actions are coming.” Negative karma, or payback is a bitch!

GW Snowballs in Cancun? Plus this.

2:02 clip A swearing Irishman on TV? NOT politically correct language.

Punchline “More confirmation of what I have been saying; the dark secret of Wall Street are the fraudulent mortgage-backed securities sold around the world for the last 9 years. Now that banks and mortgage companies are being forced to buy them back, the government has taken away your high paying jobs so the banks can take your homes to re-capitalize their balance sheets. Yes, it is that simple!” wrh.com.

JPM & Silver “Both J.P. Morgan and COMEX are massively shorted on silver. They have ample motive to try to manipulate the price of silver downward in order to not be driven into insolvency covering the longs. ” wrh.com.

‘Net Censorship “Especially when there are blogs that were blowing whistles a decade earlier (WRH started as a sub-page on my business web site on March 11, 1994). This author is correct; TIME Magazine was promoting Julian Assange and WikiLeaks before they had actually done anything at all!” wrh.com.

Big Dick Cheney Nice to have friends in high places!

Treasury “Which makes perfect sense if the goal of the government’s policy is to allow the banks to confiscate millions of Americans’ homes, in order to recapitalize after having to buy back all those fraudulent mortgage-backed securities.” wrh.com.

#156 Guy_in_Regina on 12.10.10 at 8:34 pm

Those who hate government should move to Somalia, where there isn’t one – must be nice there.

#157 Cookie Monster on 12.10.10 at 8:57 pm

#99 hobbygirl, keep sewing buttons dear, leave the thinking to us.

#101 Moneta, you can surrender your rights to government if you want to but I will choose to fight for mine. Please see the 2nd amendment in the US bill of rights. It’s there for a reason. See you in the bread lines.

#104 Junius, your examples all illustrate government involvement in markets, exactly what I’m against.

Laissez faire means “hands off’ in french. Laissez faire capitalism is a redundant term like free market capitalism is a redundant term. The concept capitalism implies free markets in and of itself derived from the concept of property rights component in the concept of capitalism.

#158 Cookie Monster on 12.10.10 at 9:27 pm

#21 Cookie Monster on 12.10.10 at 12:24 am

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

One of the best posts I’ve read here-

Lock down the money supply with hard backing and all that true Capitalism stands for-will revolve and evolve around and from that locked money supply system-
____________________-
DSP, thank God somebody gets it!
Exactly, lock down the money supply, back it with gold.
Sound money is step 1.

Keynes economics adopted by governments in the 30’s or 40’s was done so because his economics are ‘socialist economics’, and this is the ecnomics that has been taught in economics courses at universities for 60 years now, moron idiot Bernanke is their current leader for destruction. Any economist who wanted to get a job and succeed in government or banking had to be an immoral socialist Keynesian economist. The Austrian school of economics was shunned and kicked tot he curb because it didn’t suit the government’s agenda for control over nations money supplies.

A gold standard would crush all the false milquetoast’s ideologies.

I think it’s happening and going to happen whether they like it or not. Thank God for reality. It always wins in the end.

Join the real world. There will never again be a gold standard. — Garth

#159 Timing is Everything on 12.10.10 at 9:35 pm

#109 Young Old Fart

It’s just a car.

#160 eddy on 12.10.10 at 9:54 pm

video about investing in gold and silver:
http://www.youtube.com/watch?v=419aPXb7Uhg&feature=player_embedded#!

7/7 subway bomb video:

http://video.google.com/videoplay?docid=8756795263359807776#

#161 tkid on 12.10.10 at 9:59 pm

Another article on Carney’s recent words:

http://www.theglobeandmail.com/report-on-business/commentary/derek-decloet/mr-carneys-warnings-and-the-perils-of-pride/article1833774/

I’d like to track down the book mentioned.

#162 Guy_in_Regina on 12.10.10 at 10:03 pm

Hey Cookie Monster,

But who will protect your property rights? Someone with a bigger gun will come along.

Better read Hobbes’ “Leviathan”.

Join the real world indeed.

#163 Guy_in_Regina on 12.10.10 at 10:08 pm

Cookie Monster,

You do realize that publicly funded schools, police, hospitals constitute “socialism”, don’t you?

So when you have a heart attack from high blood pressure, please asssure me you won’t go to a hospital and thereby contribute to the “immorality” of government.

All this ‘red’ talk is almost entirely residual bigotry from 1950s America (i.e. McCarthyism) – and you think you’re so cleaver.

#164 McLovin on 12.10.10 at 10:09 pm

Devils Advocate: “Is it a real problem or a simple nuisance? If a real problem, email me at [email protected] and I’d be happy to provide you the information you need. DA”

Its serious enough for the board to be launching a full investigation into how the numbers were reached. Further, it has been picked up by many people in Kelowna and that board has received “dozens” of inquiries. They will not be able to bury it.

I have been telling you that things seem much much worse than the “official” stats have been saying. We now know the official stats are a lie and prices are at least 5% lower than posted. I continue to stuck to my belief that Kelowna is ground zero for the crash and prices are down 20% for houses and 30% for condo’s from the peak.

It will be hilarious to see what BS excuse the Realtards come up with to justify the restating of a year’s worth of stats.

Garth you really should look into this and perhaps do a bit on it.

Kelowna is in a power dive!

#165 Cookie Monster on 12.10.10 at 10:17 pm

#141 Hell in a hand basket
I’m in agreement that capitalism had its place when scarcity was the rule and economies could grow.
Capitalism will always have its place.
——————————
Capitalism is fundamentally about individual rights, property rights and morality. Socialism is an invasion of rights.

Where I diverge is that we’ve grown to a point where economies have no more room to expand
——————————
Yes the earth and natural resources are finite and yes many moron economists seem to overlook this fact, but my contention is the real world business men know this. Our economy can not continue to expand in its current for, oil is running out, coal too, global warming, over fished oceans, destruction of forests, rising sea levels etc… all not good. But, a free market will find solutions to problems. A good economy is a rising standard of living. GDP measurements are meaningless. As the oil runs out we will have electric cars. As the coal runs out we will go nuclear, solar, wind, grid storage. The free market works, it may not be perfect but its better having thousands of people competing for solutions than governments legislating crony capitalism. Economics is not finite; we can all have an electric car. Think change. Think out of the box. It’s not fantasy.

entrenched organizations that seek to stack the deck in their favour.
——————————-
Without government aid large incumbent corporations will always have trouble competing against more nimble intelligent harder working hungry entrepreneurial start ups. Let the free market work and watch giants crumble. It’s competition at its finest. Look at Nortel, JDS Uniphase, GE, Microsoft. In a free market even these giants will crumble. Look at GM and Chrysler they should have been wiped out and their assets sold off to someone more responsible. This was government intervention in markets. This is the problem. First government, unions and managerial capitalism destroyed them, and then government keeps the mess going. It was wrong and wasteful. We will all suffer.

Government and business co-operation over the years have made them one in the same.
And
Governments are demonstrating the adages of corporatism. Privatize the profit but socialize the risk.
——————————
Exactly, this must end.

The idea that corporations want a fee market is ludicrous on its face. Transnationals do not want a free market, they want markets with regulations because it prevents new entrants into their markets. Porter’s five forces. Regulations stifle competition allowing the incumbents to do pretty much as they please.
——————————-
Exactly, this must end. Business lobbies are evil. Society must not tolerate lobbying. Government must separate itself from business and economy. Economics is the domain of business. Government is the domain of law and order.

Capitalism destroys itself.
——————————-
Wrong, corruption and favoritism destroys itself, hopefully, thankfully and eventually. Even Nazi Germany finally collapsed. Sometimes it’s gruesome and expensive so we must recognize this and nip it in the bud early.

The paradox of capitalism will eventually cut itself off at the knees.
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Capitalism is not a paradox, cronyism is yes, but not capitalism. Individual rights and property rights are not a paradox.

#166 Leanne on 12.10.10 at 10:24 pm

And you thought Harper could rock…

http://sendables.jibjab.com/view/p0dqUC8PhzvPcNNJ

P.S. If I get banned for this, it was worth it.

Holy crap! — Garth

#167 hobbygirl on 12.10.10 at 10:32 pm

Bill Grable #136
You can’t equate an Ivy League education with common sense. Lots of idiots out there with prestigious degrees. My father had more assets with a grade 7 education.

#168 Cookie Monster on 12.10.10 at 10:40 pm

Hell in a hand basket,
You put your finger on so many problems but do not seem to identify the source of these problems is in fact government. Governments are complicit enablers of corruption. Recognize this and we’ll be on the same page.

Solution is less government and separation of government from economics. I know it sounds impossible yes, but recognition of this fact and implementation of this principle will in fact be the solution to so many problems. Anything else is pure avoidance and will result in failure.

Chemotherapy is no solution for heart attack.

#169 hobbygirl on 12.10.10 at 10:48 pm

COOKIE MONSTER

Don’t call me a dear and I don’t sew buttons you sexist creep.

As for allowing others to think for me, well you can see the state of the world when you are left to your ‘skills’.

#170 Timing is Everything on 12.10.10 at 11:05 pm

#143 Calgary_Rip_Off

It’s probably just you.

#171 Timing is Everything on 12.10.10 at 11:25 pm

#156 Cookie Monster

Nothing’s free.

#172 Sam on 12.10.10 at 11:25 pm

I have to say Garth, you have a great way of expressing yourself with your insights. I personally could not believe that Global News video from ReMax. But really Garth does anyone care about Sammy or the debt load? All society is focused on is keeping people working, so they can keep making those payments. That is all the banks, Carney and rest of them want. No one cares how much debt you have in your house, credit card, home equity, 3rd reverse mortgage, etc. As long as you can make those payments, you can continue to do lever up. Now, maybe Garth to really learn about how a “market breaks” Dubai – can’t pay, Greece, can’t pay, Canadians – CAN pay, when that breaks down and those Ft Mac pot smoking truck drivers are all out of jobs, Vancouver no longer looks like a suburb of HK and gets back to looking like part of Canada, start ringing the alarm bells. In the meantime, keep up your entertaining posts and keeping the only monopoly market on it’s feet. At least advocate that home buyers can see what the guy before him paid. If you know that a stock was 20$ three days ago, you might not pay 50$ for it today (unless you are from Asia, right!)

I imagine a cartoon of Chinese day trader sitting infront of computer and his keyboard has just one big button “Buy”

#173 Cookie Monster on 12.10.10 at 11:42 pm

#168, The salutation ‘Dear’ is not sexist darling. My note to you was simply condescending.

#170, when I say free markets I mean free in terms of liberty not monetarily. And your wrong anyway, air is free.

This is why we need individual rights and liberty, so that the few intelligent people among us (very few some days) are not destroyed by the horrible consequence brought on by pervasive stupidity and ignorance that surrounds us.

#174 dark sad person on 12.10.10 at 11:58 pm

#151 jess on 12.10.10 at 7:17 pm

The criticisms of Green stem from the £1.2bn dividend paid by Arcadia to his Monaco-resident wife. Critics say that was in reality his income and should have been taxed as his income. But on dividends she doesn’t have to pay any taxes in the UK but pays taxes in Monaco which has zero taxes. Hence the zero personal taxation.

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

An investigation by the Guardian last year uncovered some of the ingenious and perfectly legal tax strategies employed by these companies. Some of the schemes – devised by highly-paid accountants and lawyers – had obscure names such as “Dutch sandwich”, “double Luxembourg” and “thin capitalisation”.

Two high street banks have been accused of tax avoidance. Lloyds TSB, bailed out by the government, was accused by one former employee of inflating its profits by almost £1bn through the use of aggressive tax avoidance schemes and exotic offshore deals. The bank was also accused of disguising loans to American banks as investments to avoid potentially large tax payments – a scheme called “double-dipping” by tax experts.

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

Unreal the blatant corruption that’s coming to light on a daily basis and the music just keeps on playing-
Lloyds denied it and so that will end it-
They only need to keep it tied up in Court for a hundred years and simply continue on with business-fully funded and backed by the Taxpayers they were cheating-
You couldn’t read a more surreal fiction novel then what we’re seeing everyday-

Whistleblowers are very much a part of the cycle of Deflation-they are the People on the inside who are in the know and they have a conscience and the knowledge of what’s wrong overbalances Company loyalty and the truth comes out and it has a contagion effect-
But who’s listening who’s reading-who knows of this?
No one outside of a few Bloggers as always-
The Whistleblower are being thrown in jail-the Crooks are rewarded with bonuses-
The People are deaf-the fleecing continues-

You post a lot of good stuff here–appreciate it-

#175 Guy_in_Regina on 12.11.10 at 12:30 am

Hey Cookie Monster,

You clearly ARE a sexist – you intoned as much in order to shut down debate with hobby girl. “sewing buttons” eh? Shame on you.

No rebuttal for me? That’s not suprising coming from an intellectually (and, clearly, morally) bankrupt troll. You’re more of a bolshevik than you realize.

Ahh, I’ll give you the benefit of the doubt; maybe you’re brushing up on your political philosophy.

#176 Cookie Monster on 12.11.10 at 12:40 am

Guy in Regina,
I’ve never advocated anarchy. I’ve been quite adamant that the proper role of government is law, law enforcement and maintenance of a civil society, nothing more. So yes, I would like to exclude government from healthcare and education, two of their largest areas of spending.

Yes, a free market healthcare system is what we need so that people are more responsible for their own well being and if necessary must pay for any healthcare they need either out of pocket or through health insurance. Those who use a system must pay for their use. Pretty simple. And yes, it may mean losing your house if you want to live and if you don’t have a house to lose then you might not be worth saving. Sorry. Life is tough. It’s not fair to punish the living to save the dying. Death is inevitable. Maybe charity can ease the process.

If my ideology is familiar to you then maybe that’s because sound ideological advocacy is timeless.

Hey, if you figure out how to make socialism work, give North Korea a call, I think they’d like to hear from you.

#177 Timing is Everything on 12.11.10 at 2:21 am

#173 Timing is Everything

#171 Cookie Monster said “And your wrong anyway, air is free.”

So far…..Patience. Water used to be ‘free’ too.

———————————————————–

Let me be cyrstal clear ‘Cookie’…Land used to be ‘free’ too.

#178 Cooliecat on 12.11.10 at 3:57 am

Garth you look good as a rocker!

#179 LB on 12.11.10 at 4:35 am

#147 Moneta

You’re missing empathy as the factor and motivator unique to man,which, when identified,valued and supported, individally and collectively, addresses and influences all your other points, facilitating both the necessary and constant change that you refer to, and ultimately, to more effective outcomes for everyone.

A more evolved kind of socialism.

#180 objectivist on 12.11.10 at 6:02 am

A bitter Calgarian saying Vancouver Island sucks!? I worked outside all day today in my T-shirt.

Calgary Rip0ff, you came into the game with no credibility. Now you’re in a deficit. Quit while you’re behind, man.