Lost

Jake and Marnie moved about a month ago now, just before the weather turned. “You have no freaking idea,” he says, “how cold this province is.” Yeah, but I do. To step onto the tarmac at Fredericton airport in January is to wish yourself elsewhere. Anywhere. Wondering why the hell people chose to live in a place where it snows every day and the wind’s a weapon.

One answer – a cheap house. In fact, when you’re running out of money, and time, it’s the only reason that matters.

I first met them when they were trying to sell their custom-built dream home on ten acres outside of Halifax. As the months rolled by their situation worsened – she with MS setting in, him booted out the door of his engineering firm at 62 when people stopped building stuff. Almost all their net worth was in that property, and still a mortgage. No pensions. Minimal savings. But an $85,000 RV in the driveway, with a sixty grand LOC idling behind it.

Why did you buy that bruiser, I asked. “Marnie can’t move much now. But she can sit in there and watch the world stream by. It’s the only time she still smiles. We can never give it up.”

It took seven months to sell, and a massive reduction in price. Seems few people want rural acreages with big rambling houses and a distant glimpse of sea. With an offer in hand, Jake called me. I sensed tears. “We have to take it,” he said. “But this will not be easy.” It never is, when money makes you move, take less, be remote, fail.

I thought about this Boomer couple in the afterwash of Mark Carney this week. If you drove by Jake and Marnie’s place outside Halifax, you’d swear it was the McMansion of a successful upper middle class family. After all, big house. Big RV. Sweeping lawns. SUV. But beneath the veneer of stuff was a mortgage, a line of credit, illness and an endless ocean of worry.

The final blow was discovering the one thing they most prized was illiquid.

As Carney said Tuesday, trying to be a prophet but cast as the boy who cried wolf, assets vary in value. Debts do not. Those who borrow to acquire things always face a day of reckoning. ”People in Ireland, people in Iceland, people in the United States that took out big mortgages on assets that were worth a lot more for a long period of time, found out that the asset’s not worth very much but the debt’s worth exactly what it was when taken.”

A BeeMo report this week sought to dampen concerns we have become a nation addicted to the crack cocaine of cheap money by saying asset values have risen along with indebtedness. Which is quite right. The average price of a house in BC is up 9% in the last year, to $523,924. The Toronto stock market is 52% higher than two winters ago. And the cost of money is barely above is lowest point in history.

But rather than making us rich, it makes us vulnerable. In the context of owing more money than ever before, a drop in real estate prices or a rise in lending rates would be apoplectic. Of course, as Carney knows and is warning (and as this miserable blog has been moaning) both will happen. The result will not be a tsunami of foreclosures or an immediate collapse in housing values to match that of Phoenix or Cape Coral, but more of a slow grind lower until the reality dawns: my house is worth less but my mortgage is not. Or worse: my home is unsalable.

They’ve gotten that message even in upscale cities like Boston. Last month it took, on average, 130 days to sell a house. That was up from 114 days in November of last year.

Or in Chilliwack, where real estate cartel boss Kyle Hislop surveyed the latest sales numbers, and muttered:  “Sometimes you have to call a spade a spade. November was a pretty crappy month for real estate if you were a home seller.”

How most Canadians could not have gotten the message speaks volumes about our financial literacy, our media, our leaders and ourselves. The more asset values rise, the greater the correction. The more we borrow to acquire, the higher the odds of failure. After all, interest rates and taxes will only rise, and at the end of the day nothing but liquidity matters.

So, how’s the rig?

Jake went quiet on the other end of the line. I instantly regretted the question, sensing the words to come.

“Sold,” he said. “I explained it all to Marnie. But she cried, and cried.

“I am so lost.”

205 comments ↓

#1 jasonturbo on 12.14.10 at 11:25 pm

Hope i’m number 1

#2 Boombust on 12.14.10 at 11:35 pm

Why a “slow grind”?

#3 Ayn Rand on 12.14.10 at 11:41 pm

I was talking to a colleague today about his Christmas plans and such. He was telling me about his brother in law coming for the holiday dinner and with the BIL being 65 yrs old, I started to ask questions – if the BIL was retired (not – still working), etc to learn about what some seniors are really facing these days.

How about Garth you develop a quick survey (could be week-long to complete?) for the blog readers to get a sense of where us folks are at finanically – questions such as:

1 – age and total gross family income
2 – equity values (house (shudder!), RRSPs, RESPs, non-registered assets, cash, TFSA, other property, etc
3 – company pension plan value (if any)
4 – age planning to retire and assumed retirement income

I am curious if this group is financially wiser than Globe and Mail or Money Sense readers (insights are available thru their forums or letters to the editor). Not statistically reliable, but anecdotal, but good insights none the less.

When is the new book due…..any hints on contents??

#4 Debt's Dark Embrace on 12.14.10 at 11:42 pm

The “hints” with respect to higher interest rates and reduced amortizations will fuel another buying frenzy. Gotta keep that bubble inflated.

#5 Mike in Etown on 12.14.10 at 11:44 pm

Hi Garth,

Have you ever considered a blog post on the merits of various other types of life insurance beyond a UL policy? I.e., how CI, DI and LTC policies – when part of an overall plan – can help with protecting one’s portfolio.

maybe the cash flow wasn’t there in this case but perhaps something could help others prevent a similar outcome.

P.S. Love the pics. Even when they aren’t workplace appropriate.

#6 Fractional Reserve on 12.14.10 at 11:45 pm

The illusion of wealth is clearly brought out in a book entitled The Millionaire Next Door. The authors describe what Garth has been talking about. They even have a term for it, UAW (Under Accumulator of Wealth). A very interesting study done by two highly educated authors. While it is over a decade old and based on the USA, nothing has changed and it could just as well be describing Joe and Jane Canadian. The authors describe supposedly affluent US neighbourhoods that in reality are massive debt pits. The inhabitants, despite having good jobs, have very little wealth.
http://en.wikipedia.org/wiki/The_Millionaire_Next_Door

#7 Debtisforever on 12.14.10 at 11:46 pm

Carney sure is sticking his neck out by telling us all about evil debt. Also by mentioning the fact that assets DO go down in value (WTF???) I guess he doesn’t live in Vancouver where “real estate always goes up”.
hahahahahaha. Suckers!

#8 bystander on 12.14.10 at 11:49 pm

U N S U S T A I N A B L E …

#9 Nonplused on 12.14.10 at 11:52 pm

An engineer with nothing saved? That doesn’t sound right. Then again these days anything can happen.

#10 T.O. Bubble Boy on 12.14.10 at 11:52 pm

moral of the story:

House = Shelter
Money = Assets

House != Money, until you sell it
(just like Gold)

When this is all said an done, I just hope that people remember all of the “there is no bubble” talk from F and the “we’re in a balanced market” crap from realtor associations… and try to question whether or not they should have been listening to “news” that is actually a press release from RE/Max or the Vancouver Sun.

#11 InvestorsFriend (Shawn Allen) on 12.14.10 at 11:56 pm

So it seems we can’t, after all, all get rich by simply selling our houses to each other at ever higher prices…

And it will no longer be normal for our house to make more in a year than we do…

Say it isn’t so…

All good Ponzi schemes must come to an end…

#12 Coho on 12.14.10 at 11:56 pm

Victoria Tea Party from last posting,

So, when I mention Mr. Carney, I do so with the assumption that he is NOT some federal government lackey doing its bidding.

While he is his own boss to that extent, he is also influenced by the same forces that shove the rest of us about, mostly US monetary/fiscal/foreign policies. That’s the way it is when you’re a colony of the American Empire.

Each of us are lackeys, even central bankers. Government is only half way up the food chain and GS and the like are maybe another rung or two up the ladder, but far from the top.

America is imploding. It has never had an empire, really, or maybe a fragile paper one vulnerable to be taken down at any time…like now. But, the British Empire is alive and well, only appearing to have taken a back seat in world affairs and watches while America destroys her wealth and reputation as a beacon of liberty. By their actions, it would seem there are powerful people in America whose first allegiance is to other countries, including Britain. The rot started from within a long time ago and is really starting to show on the surface. Kind of like how termites work…

America has been undermined since the get go by forces opposed to freedom and liberty and the notion that all people are created equal, which is what the country was founded upon. There are flag waving wolves in sheep clothing gushing about how great America is while they systematically dismantle Her.

Her manufacturing base has been gutted. Jobs have been exported overseas. And the many jobs left are being snapped up by illegal immigrants being exploited for their willingness to work at far below a living wage. She is being bankrupt by wars and imperialistic ventures. Her people are being stripped of their freedoms. And the list goes on. A return to Her roots is essential to salvage her own peoples’ freedoms and for the continuation of any “privileges” people in other countries (including us) enjoy at the moment.

Canada, like many other countries is a child of the task master England, the tyrant America broke free from (sort of) a couple centuries ago. As someone wrote on this blog a while back, what makes people think that the sun has set on the British Empire? Fancy electronics, McDonalds and Oprah hasn’t changed the fact that the age old seats of power are vying for world domination. If wolves continue to weaken America, which will spell the end of the real America, it’ll be a dark day for people everywhere.

#13 TD69 on 12.15.10 at 12:04 am

listened to helmut patrick tonight on the local vcr news, chef economist with central credit 1 -about what carney had to say this week. Good old Helmut said that yes we are in more debt than ever BUT we also are worth more than ever “in monetary and non monetary values”
non monetary values? wifey and i both said what and the look on old helmut’s face made even him appear to be choking it down. at least he gave himself an F grade last year when BC Business asked him about his 08/09 performance on predictions in real estate. so he has some shame. but this one is treason. feel sorry for the folks above, the average person just wants to get by but had to keep up with the jones over the last 10 years of corrupt money oozing out at us all. great columns Garth-a patriot is always scorned at first.
keep going

#14 JO on 12.15.10 at 12:06 am

The Ponzi economy is in its terminal stages. BeeMo wrote a report designed to sooth fried nerves…think about it, a huge lender whose business is mostly lending telling the debt slaves it’s not that bad…the irony of it would be comical if it weren’t so pathetic…using inflated asset prices to say our level of debt is OK is about as useful as saying I won’t get wet if I bring my umbrella…the inflated asset prices are themselves a function of the excessive debt. Using asset prices to justify huge debts is a joke..that it passes for analysis is beyond comprehension. Morons..self serving morons.

Mr Carney/Mr F are smart enough to know that GDP has been inflated by the massive flood of debt..hypocrits now come and repeatedly pretend they are concerned about debt levels…I should sell some drugs outside my local high school then come back a few minutes later and tell the kids who bought the dope they have to be careful and don’t take them…it is utter deception..the financial crack cocaine dealers are pretending to care about their sheep…WHEN the rate of growth in debt merely comes down, lest when it goes negative,GDP will suddenly stop its “growth” soon after, unemployment will explode, and the flood of taxpayer and saver subsidized debt will begin contracting – asset prices come down and the whole jig is up.

Careful what you wish for Mr. C and Mr. F…stop pretending you care Ottawa…the horses have left the barn and are in fact about 10 miles down from the barn.
JO

#15 Coldlazarus on 12.15.10 at 12:06 am

Ouch! That’s a sad portent of what is to come for many Boomers – perhaps too late for many even if they took the advice from Garth and his not-so-miserable-blog.
This was supposed to be the wealthiest generation in all of history.
Having experienced the pain of double digit interest rates on a business and a house in the 80’s I must admit I never would have imagined how the financial heroin (Don Coxe’s words) of ultra low cost money would threaten far greater and enduring harm.

#16 Trino Tuta on 12.15.10 at 12:07 am

Garth: This is it. Butts, boobs, meth lab…whatever…but this? I am deeply offended by the picture you selected for this blog entry. Santa smashed by an airplane is not funny at all. I am embarrassed by it and I won’t recommend this blog to my friends, who deeply believe in Christmas…and Santa…. :-p

#17 Fade To Black on 12.15.10 at 12:14 am

Even when you hit the concrete “real estate wall” at a 150 kph … you don’t feel the pain for a while … at least not until the shock of your new damaged economic status becomes apparent from the shrill screams of your many fractured bones and wallet.

Many Canadians are now waking up far too late to the fact that the have been had. They were systematically conned by the same gang of enablers and ponzi schemers, who wanted a collapse and engineered the herd for shearing.

It all seems just too orchestrated, while the mass class of Canadian idiots drank the real estate and debt cool aid, and partied on thinking everyone is entitled to be a millionaire.

Well in Zimbabwe they are all billionaires and still dirt poor.

You deserve to get what you prepare for, or in this case what you did not.

Why is it that the political Gods of Finance and Politics and Real Estate could say exactly the opposite from their learned tongues less than a month later shout out the new contradiction, were all broke.

A corrupt people deserve a corrupt Government. We have both

#18 Spectro on 12.15.10 at 12:14 am

Fredericton is cold?! Try Saskatoon.

#19 TaxHaven on 12.15.10 at 12:16 am

We ironically might be getting near the time to be searching for rural acreages. Minus the RV, the boat, the big SUV and the mortgage, of course. (Marc Faber!: buy farmland.)

But you can enjoy quality of life, on the cheap. Gardening, keeping chickens. A good place to raise kids. Fresh air. Land. Low taxes. No water bill. A way to ameliorate the coming decades of Lower Living Standards. And, in the admittedly somewhat unlikely event that TSHTF, you can make a go of it…

Just avoid taking out that mortgage.

#20 TryingToGetOutAlive on 12.15.10 at 12:20 am

sad story. but i know they will be better off making this move. who wouldn’t be lost after being handed two bombs like that and really – what choice did they have.

lately i’ve been reading comments from certain dawgs about how boomers can just continue working instead of retiring at a decent age collecting pension and living off of income from investments.
well, let’s face it. at that age, you are less employable, demand more salary, more prone to disease, less energy and enthusiasm, unable to compete with the fresh grads. it’s a tough sell any way you slice it.
thanks to GT and the dawgs for educating us so we can try to avoid this outcome.

#21 Hovering on 12.15.10 at 12:22 am

love the santa pic

my kids did too

(some people need to chill)

#22 Spiltbongwater on 12.15.10 at 12:22 am

Sometimes you call a spade a spade, sometimes you call a spade a shovel.

#23 Brico on 12.15.10 at 12:27 am

Garth,

Did you get along with Maxime Bernier? He seems to be allowed to speak his mind. Talking trash about the Governor’s policies.

http://opinion.financialpost.com/2010/12/14/maxime-bernier-carney-vows-to-keep-pouring-oil-on-the-fire/

That’s what you get for hanging around biker chicks. — Garth

#24 Siddelly on 12.15.10 at 12:27 am

Garth, if you think we are in trouble here in Lotusland then you should watch the Charlie Rose interview with James Chanos from Kynikos associates where he is predicting the Chinese RE bubble to burst within the next year . The average wage is 7000 dollars and they are selling 150,000 dollar condos that don’t even come equipped with walls and doors! Whole towns are sitting empty waiting for buyers just so that the 9% GDP growth can be sustained without fail year after year.

When China falls along with all the expat investors living in Vancouver who are due to lose their shirts, how will this affect west coast prices?

#25 Crash Callaway on 12.15.10 at 12:29 am

Canada will be a slow grind and the heat slowly turned up before most even realize their cooked.

#26 InvestorsFriend (Shawn Allen) on 12.15.10 at 12:32 am

Ayn Rand, number 3 you want to know if the bloggers on this Site are smarter than the folks who read Money Sense?

You are kidding right?

Haven’t you read the posts here?

Most who post here appear to blame the government of Canada and the U.S. and capitalism and basically the world for the fact that most of them appear to have accumulated little. (Well, except for much debt and a lot of resentment)

Most who come here are sure “everyone” is up their eyeballs in debt.

I come here for Garth’s insights and then the entertainment value of the rabble here.

(And occassionally to bait the crowd for added entertainment value)

No, I don’t think this crowd will stand up too well next to the Money Sense or even Globe and Mail crowds. After all you have to at least have a few bucks to subscribe to those…

By the way I liked your book, Atlas Shrugged.

Glad to see you are still writing and have not let the fact that you are dead slow you down. Just like Elvis and Michael Jackson, you are showing that death should not be used as any excuse to stop working and making money.

#27 realpaul on 12.15.10 at 12:37 am

Garth I wonder what will happen when the millions of civil servants and the other union led sheep have to face the prospect of going underwater on the huge mortgages the sanctity of the ‘safe wage’ of government work has led them to buy? After all….didn’t the government encourage them to buy?

I wonder will there be a righteous call for a ‘bail out’ of the civil service so that societies infrastructure doesn’t fracture?Won’t they be the first to have their hands out…again holding the people at gunpoint to get the pay raises first before ‘austerity hits? Don’t the unions have a history of cleaning out the coffers and then crying poverty?

We saw the trial balloon of ‘civil servant only’ accomodation sail up and burst in the fire of acrimony when the City of Vancouver tried to stuff the Olympic Village with ‘important people’at massive subsidies.

Won’t the civil service be the stumbling block to Conservative political peace when they demand higher than private wage increases bbecause of the losing real estate investments and the chokehold of food and cost inflation comes whipping down…..?

Governments in EU zone areas have been smart to smack down the civic service first to derail the flaming rage of the masses. But will that fly here?

I’ll speculate that the governments and the unions have already made a deal knowing that without organized support any rebellion will be short lived. As we found out the police in Toronto etc just finished stocking up on billions of crowd control equipment and material. Don’t expect the flaccid immigrant students to protest in the streets, they’re subsidized by the bank of Mommy and Daddy.

Canadians will take their medicine…certain ‘special interests’ will be swabbed with some kind of government pixie dust and the general population will suck heinie.

The banks and mortgage ghouls have stated that the average citizen can afford to take on ‘a few hundred dollars’ a month more in debt. But that money won’t go to the banks…it will be sucked up in new taxes and redirected into the pockets of the civic servants unions so that unions stay complacent and ensuring that average people get screwed.

#28 Boombust on 12.15.10 at 12:38 am

“…how great America is while they systematically dismantle Her.”

With a capital “H” no less. Spare me.

#29 Contrarian Canuck on 12.15.10 at 12:40 am

Hi Garth

With regards to the coming amortization rule changes…

How do you see this playing out in the next budget? What are the chances we’ll see 30/10 mortgages?

#30 AxeHead on 12.15.10 at 12:46 am

CBC National discussed housing tonight. The 2 biggest differentiators (they say) between Canada and US housing is 1) Canada has more equity, on average 50% and 2) US had more inventory (Vancouver cited as example with low inventory).

The kicker…most debt is household mortguage debt, what the National ‘experts’ claim is good debt vs credit card debt…watch for it…good because you are building equity and … you guessed it … the value of your home is going up.

I think they showed they’re hand there. It’s ALL OK, just as long as the price of houses go up. God forbid that it ever goes down.

One glance south shows just how easy that can happen.

#31 dave in calgary on 12.15.10 at 12:54 am

# 8 – Working at an engineering firm doesn’t make you an engineer… being and engineer does. I’m an engineer and I’ve never worked at a place where more than 40% of the staff were engineers (typically is 25% or less). That being said, there are, in Calgary anyway, plenty of highly paid engineers (80k – 140k) who basically use their high salaries as leverage for taking on more debt. Apparently the pinky ring doesn’t prevent one from drinking the real estate kool-aid

#32 Timing is Everything on 12.15.10 at 12:54 am

#17 Spectro – said “Fredericton is cold?! Try Saskatoon.”

Ya, but it’s a dry-cold…. ;)

#33 Peter on 12.15.10 at 1:05 am

I live in Vancouver and yes am a realtor for 7 years. I have seen many people spend less time buying a home than buying a pair of jeans. The average person has no money and lives in this fake bubble of needing to be a “player”, everyone needs to show they got it and if you can’t buy a house a 100k car a vacation every 4 months then your a loser. I’m not agreeing or disagreeing with Garth but I see big trouble ahead. I have not taken 5 listings on account they all owe more than it’s worth and can’t write a cheque to complete the sale. Also based on looking at listed properties sale histories many listed properties are currently listed for less then they paid. No doom and gloom just the truth. Wether they rent them, lose them, sell them or live in them the people who used to run around bragging about living the dream are now very quiet.

#34 hobbygirl on 12.15.10 at 1:08 am

Another finger to point blame at are the homebuilders that make large homes. I built last year in a smaller city – paid in cash and I kept it as modest and practical as possible. You have no idea (or maybe you do) of how hard it is to find home plans that are under 1200 sq with attached garage (needed in northern Ontario). When I built at 1250 sf, RE and contractors tell me that ‘nobody builds that size anymore’ and I need to consider resale value. Why? I ask, I’m not interested in selling. There are so many tiny lots that builders have maxed out on square footage it’s become ridiculous. It’s not attractive opening your front door and taking your next step onto the city sidewalk.

Extras, oh yes, I went for high energy efficiencies. Lots of homes out there with eye candy granite yet no hot water on demand system or R40 insulation. I love my laminate and can change it on a whim if the style changes.

I don’t think it’s an evil thing to own a home but for God’s sake keep it manageable. I see these large homes and think of all the brutal housework that goes with it. It would be nice if people can look at homes as a place of shelter to turn to for comfort and not a financial tool to worry and fret about.

For what it’s worth, HGTV ain’t such a bad channel, they have a program on small living spaces. That to me requires a lot more creativity then how to decorate with the latest paint colour. I’ve seen some beautiful places that are small and cozy. Ask the guy on HGTV who converted a 120 sf shed into his home, the steep roof that enclosed a loft for his bed that he tows with his truck. The guy was happier than a pig in poop living this way and no way felt deprived. Nothing gets more creative than trying to figure out how to get the most out of every square inch of limited space and look spectacular at the same time.

#35 Patz on 12.15.10 at 1:16 am

A very sad story today. We’re supposed to struggle and sacrifice in our early years so that we can relax and enjoy our final decade or two. At least that’s the mythology of prosperous countries in the late 20th and early 21st century. But there’s a tsunami of tears on the horizon as all but a few are going to walk that same path as Jake and Marnie. Can you say “unfunded pension liability?”

Sometimes I truly don’t know who to feel more sympathy for: the older folks who’re going to fall down hard from the comfort of their youth and middle age or the younger ones who are seeing it all turn to ashes before they’ve even had a chance to savor much of ‘the good life.’

Maybe there’ll be a silver lining…, Nah!

#36 Junius on 12.15.10 at 1:20 am

Proving once again that the MSM are complete idiots across the country the Montreal Gazette fell for the BeeMOOO (is it because of the name?) line hook, line and stinker:

http://www.montrealgazette.com/business/indebted+also+wealthy/3973110/story.htm

#37 hobbygirl on 12.15.10 at 1:21 am

I’d say to Jake to keep the RV and live in a home smaller than the wheels. I’ve seen a retired couple do it right once. They had a 750 sf bilevel (bedrooms in a raised bsmt) that paled in comparison to the size of the RV parked in their driveway. They go south in winter for 3 months and the tiny place doesn’t fuss while they are away.

#38 Brynn on 12.15.10 at 1:22 am

wow!
i really wonder where Garth finds all these losers who cant sell their houses? ARe they located next to pedophiles, maybe mold shacks? Every house I see go up for sale sells, usually over asking around here ( vancouver west side)
Meanwhile, Canada’s index of leading economic indicators rose for the second straight month in November, led by increases in housing and stock prices.

I know you guys are super paranoid and will misconstrue all this somehow so lets see how this plays out huh?

The only time Garth has been right about the housing market was for the 3 months in 2008 when the world banking system crashed..other then that real estate has been an excellent investment….

#39 Tim on 12.15.10 at 1:26 am

Blame it on the Conservatives- 40 year amortizations, now 35- still too high. The market wouldn’t be anywhere near this level if there was a mandatory 25% down payment. Carney says lots, but does very little…

#40 Mean Gene on 12.15.10 at 1:31 am

Sometimes life sucks big time, this was a sad story :(

#41 Timing is Everything on 12.15.10 at 1:33 am

Well, this sucks…there’s always Ft. Mac.

http://ca.finance.yahoo.com/news/Electrolux-close-Montreal-capress-1427525194.html?x=0

#42 Behavioral Finance on 12.15.10 at 1:33 am

Siddelly,

Obviously Chanos has an agenda. He is a big short seller, so I am assuming he is short selling real estate in China somehow. I think he is overlooking one important aspect. What income level are the people who are buying the $150K condos? Additionally Chinese I huge savers so many of these people maybe be paying with cash. Who knows? I am sure those stats are pretty hard to get in a country like China.

#43 McLovin on 12.15.10 at 1:44 am

For those who think the rich Chinese will bail out Vancouver:

http://www.businessinsider.com/pictures-chinese-ghost-cities-2010-12

Maybe they should buy their own condo’s first!

#44 McLovin on 12.15.10 at 1:46 am

Hey Devil’s Advocate,

I thought things were much better than they appeared or “not that bad” in Kelowna?

Okanagan Mainline
Listings: 5,370
Sales: 319
MOI: 16.8

South Okanagan
Listings: 1,758
Sales: 93
MOI: 18.9

If this is not that bad, I would hate to see what awful looks like!

#45 LS on 12.15.10 at 1:59 am

No, I don’t think this crowd will stand up too well next to the Money Sense or even Globe and Mail crowds.

Yeah I sat next to one of those Money Sense reading geniuses at one of Garth’s seminars. Sold his house in 2007, dumped all the proceeds into equities and promptly lost 40%.

Sad sad story this post. MS is a brutal disease..
But you don’t need an RV to watch the country go by. Hope they can smile out of a more sensible vehicle in another part of this country soon.

#46 realityguy on 12.15.10 at 2:03 am

I live through the crash in the 80’s.

It was awful, remember lining up for a job which was two blocks long just to get an application.

All my building and construction buddies were out of a job and trying to make ends meet.

Since such a big part of the BC economy is based upon real estate, image what would happen if there was a dead stop to construction.

– construction workers, builders, electrician , plumbers, framers etc
– Planner architects
– Real estate agents and companies
– Lawyers
– Forestry, Materials for houses
– Bankers, mortgage brokers

and how many canadian can survive without a paycheck for more than 4 months.

For me, I don’t really feel sorry for people like Jake and Marnie, when real estate was at it peak they could of sold and make a profit.

Remember is no longer called buying a house, its and INVESTMENT, and never fall in love with your investments. Exspecially when its on the Vancouver (pump and dump) exchange.

Learn a lesson from Sheryl Crow,

I don’t have diddly squat
It’s not having what you want
It’s wanting what you’ve got

Learn to live within your means canadians.

#47 EJ on 12.15.10 at 2:04 am

#22 Brico on 12.15.10 at 12:27 am

Finally a Canadian politician who gets it (besides Garth). There doesn’t seem to be too many around who speak out against the Keynesians. If you’re not part of the Old Boys Club, you’re blackballed pretty quickly and not given any press. On the other hand, shill out for these guys in public once and you’ll get constant coverage as long as you continue to play ball (eg. Helmut Pastrick, Tsur Somerville, or any major bank “economist”)

An inflation target of 0% is one of the best, and really only, thing the BoC could do for The People. People, stop tolerating the 2% annual theft of your hard work!

#48 nonplused on 12.15.10 at 2:10 am

Carnival Mark is being very disingenuous. He caused the situation with absurdly low interest rates. And now he wants the uneducated to take the blame for following him down the path of more debt. No way. The adulterated masses never had the ability to decide whether the rate was right or whether it’s not. They follow the leader’s lead. And Mark lead them where they are. Responsibility lies with Mark Carnival Carney. No one else.

It would be like, as me, as an amateur soccer coach, lost a game, and then for my rap-up said: “you played my strategy, used the skills I taught you, and lost. But it’s all your fault because you should have known better to listen to me! It’s your fault you listened to me! You will be held accountable, me, not so much.

You followed my absurd coaching and totally incompetent advise! Now you will pay, because I can’t run this scheme any longer, I’ve lost the support of the parents since we always loose and aren’t getting any better, but it’s still your fault! You listened to me and made life decisions based on my ridiculous policies! Your fault. By the way I’m rich now.

If the guillotine every come to Canada, Mark goes first. He better get back to New York while the TSA will sti8ll let him in. Enjoy the pat down Mark!

#49 Sasquatch on 12.15.10 at 2:14 am

#18 TaxHaven

Yeah that is funny. If you buy rural be prepared to have no job or think the making $3.00 an hour above min wage is good. Then you have to pay for gas to get to work. Hope you get a place with a well or be prepared to bay a few thousand per foot to reach the water table.

Farming the land for income is a joke. Cattle don’t pay, crops don’t pay either and start up costs millions. If your really interested my old man is selling his for $60,000. Half hour away from Arborg Manitoba, the well is already there, 1/8 section of land, great for hunting, and comes with a POS house trailer.

Oh, and Tax Haven, if you put any property on the land the taxes go up!

#50 Wendy on 12.15.10 at 2:14 am

My dad pointed me in the direction of your blog and I have to say I’m quite entertained and also feel a little more informed having read through your past postings. We’re a mid-30 and mid 40 couple with 2 small children. We own a house right now that we unfortunetly have to rent out but at least we didn’t max our selves out to buy it and I think we’re pretty happy renting where we are now. I do wish we had more set aside for retirement but are just working to get ourselves debtless (and we’re getting there). Your blog really helps point us in the right direction.

#51 Dirt Dog on 12.15.10 at 2:14 am

Garth Hi

Your example tonight will be “classic”. It hurt and it sucked to lose. However these people will be “Thankful” when the die are cast.

Thank you for this blog and all you do to maintain it.

Best Wishes to you, your family, the dogs, and your tank.

DD

#52 Canadian Real Estate Blog Carnival | Landlord Rescue on 12.15.10 at 2:34 am

[…] Turner weaves a tale of real estate woe in his post Lost It makes me sad when the inevitable results of financial mismanagement come to their inevitable […]

#53 Phil Indablanque on 12.15.10 at 2:55 am

Speaking of Lost …

#54 J on 12.15.10 at 2:55 am

OK let’s play,

1 – age and total gross family income

38, $96 000

2 – equity values (house, NOPE (shudder!), RRSPs, RESPs, non-registered assets, cash, TFSA, other property, etc

$96 000 – split 4 ways equally – cash, physical gold/silver/platinum/palladium, ETF’s/dividend paying stocks, bonds

$32 000 RRSP – very little contribution room due to future government pension.

$10 000 TFSA

It would be nice to consolidate all this stuff.

3 – company pension plan value (if any)

$130 000 (my contributions only), I can’t touch it or invest it how I see fit. I am forced to contribute to a government union pension plan I want no part of, I can’t opt out.

4 – age planning to retire and assumed retirement income

65, $40,000 a year.

I have no debt, no house, plan to buy a cheap shack in the developing world and retire on a beach. If I was to buy a house in Canada I would look at a $125,000 mortgage, no more and I would put $100,000 down = $225,000 total purchase price. That ain’t happening in the city I live in anytime soon. I’m willing to go into debt to buy a home but not into slavery, although I’m sure that’s what I’ll be when all those retards who got 30 year 5% loans default and the tax payer is left to pick up the tab for those whining bitches.

I look at myself and 5 of my closet friends, I’m the only one without debt, not that debt is always bad but I was raised to avoid it at all costs.

#55 Jojo on 12.15.10 at 2:56 am

Hi Garth,
Where is Deflation? TSX from March/09 till today jumped up 80%. From 7,400 to 13,500 points?
Where is the crash and Deflation?
Inflate or die. Well will die one day, for sure.
Crash is comming after 6 months,1 year or 3 years?
Mark my words after 4 years TOTAL WORLD WAR or DEPRESSION.Or maybe even both.
We’ll see.

#56 Taxpayer like everyone else on 12.15.10 at 3:00 am

Caught this on HDNet tonight: Dan Rather reports trailer

http://www.youtube.com/watch?v=OiQ9eHXc-CU

Covers some cases where the mortage modification
program has been seriously abused by banks. Also a few
minutes with Gary Shilling.

#57 Bill Grable on 12.15.10 at 3:03 am

This post will be a story told a million times.

It just won’t be as well written.

My heart sank when I read this post.

Lyrically written epitaph of a generation?

#58 dark sad person on 12.15.10 at 3:29 am

#13 JO on 12.15.10 at 12:06 am

it is utter deception..the financial crack cocaine dealers are pretending to care about their sheep…WHEN the rate of growth in debt merely comes down, lest when it goes negative,GDP will suddenly stop its “growth” soon after, unemployment will explode, and the flood of taxpayer and saver subsidized debt will begin contracting – asset prices come down and the whole jig is up.

****************
Someone can see the scam for what it is-

Others are praising C’s new found Financial insights-
The gullible swallow it all and think he has our best interest in mind when he starts his get tough talk-
What BS-

Rates in Canada and the US should have gone up in 2001 and stayed there and at the very latest in 2008-
Instead they did the opposite because they needed to gun the Economy and create another bubble after the dot-com bubble blew-
These fools actually think they can control the Economies by jacking rates around-when in fact all they can do is blow bubbles and when there’s no more bubbles to blow they are powerless to stop the unwind-

Sure they can and have goosed the Economy with Stimulus and they create mini bouts of speculative frenzy-that looks like they’re winning but as we can see in the US as soon as the Stimulus runs its course-back down it goes and so far they keep hitting the pumps when it runs out-which is why QE 1-QE light-QE 2 and all the other Cash incentives they’ve come up with have failed to sustain growth-

Carney knew damn well what he was doing when he slammed rates down to zero and what the end result would be-
We knew-so he knew-
Thus the 280 Billion Bankers slush fund in place-

I doubt rates go very high-with the new Money goose replacing the old spent and burned out one-we have the Inflationist’s and Quants back in the Stock and Future’s Market-
Bonds are selling down as risk/speculation is coming back into Vogue-for now-but it will shift again at some point-as the Green shoot hopefuls get their ass burnt once again and shit scared Investors head back into the “perceived” safety of Government paper-

Carney knows high rates are Deflationary because People start saving again and borrowing and spending bites the dust-

When China/Greater Europe crashes-all that you’ll see is smoke coming from the holes the World Economies fell through-

#59 dark sad person on 12.15.10 at 3:44 am

22 Brico on 12.15.10 at 12:27 am

Garth,

Did you get along with Maxime Bernier? He seems to be allowed to speak his mind. Talking trash about the Governor’s policies.

******************
I’ve read some of Berniers’s stuff and have been mostly impressed with his understanding of Economics-
Not sure where he sits as far as having any stroke with the upper Hierarchy-but they should be listening to what he says-

I’m sure the little “incident” with Miss High Pockets didn’t boost his career much-
He sorta Spitzered himself-

#60 The Original Dave on 12.15.10 at 3:47 am

I’m going to point this out once to those that cling onto assumed action of interest rates to determine where house prices are going….

Here it goes. There’s been thousands of speculative bubbles in the past. I’ll take one for example – the tech. boom of the 90’s. It wasn’t interest rates that crashed the market, it was buying exhaustion. Why is this so difficult to understand? People outbid eachother and completely loaded up on tech. stocks. Everyone owned them. There was no one left to buy! There’s a point where things peak/ humans are holding enough of the asset and there’s not enough buying at higher prices to keep the prices going up.

The real estate market can and will likely go through a severe correction because of buying exhaustion. We all see that prices are unaffordable compared to incomes. We all see that home ownership amongst Canadians is at 70%. We all see that the real unemployment number in this country is 16%. By means of deduction, you should be able to conclude that there aren’t many people with stable employment that don’t have a house or two. That’s exhaustion. The bidding up of prices with a vengeance occurs when there’s a high volume of buyers pushing prices upward. An asset that is thinly traded (low buying volume), and is at it’s highest price point ever, with a very high percentage ownership rate, doesn’t have a bullish future.

The point is: please don’t assume that there has to be action with interest rates for house prices to be affected. I understand what happened in 1989. It doesn’t mean every real estate correction is caused by higher rates. You have to figure that the cost to purchase a home has increased, the cost of living has increased dramatically, and taxes have increased. Consumers are stretched out, and the recent publishing about Canadian debt levels is the proof.

A big drop in real estate is a certain for Canada. Don’t worry about interest rates.

#61 canali on 12.15.10 at 3:48 am

watch cbc’s ‘the national’ tomorrow…will have a panel of experts discussing with controversial viewpoints mark carney’s contention we’re over indebted….ian hannamansing was interviewing people on this story as a ‘part one’ tonight and the same old theme arose: real estate will over the long run (despite the dips) only go up….and one ubc prof says we’re also different here as unlike in the states here in vancouver there is not alot of excess land due to our geography and location, so hence the demand is to be consistent going forward.

#62 prollywrong on 12.15.10 at 3:51 am

How do I access older blog posts that have been bumped off the links on the right? Is there a site archive I’m missing? I need more Garth!

#63 The Original Dave on 12.15.10 at 3:53 am

Canadians consume more energy per capital than any other nation. More than Americans. It’s amazing how self-righteous we can be.
—————————————————-

awesome. Have you considered the weather in this country? It should require more energy per capita for heating that’s for sure. Google what happened in Sarnia yesterday.

Also, have you had a look at our land mass with respect to population? Travel distances in a country with such a huge land mass and a small population must be scary in a lot of rural areas especially. Destinations like an outlet mall aren’t a hop, skip, and a jump away if there isn’t a sufficient amount of people in a given area to substantiate a mall in that area.

I’m guessing running telephone lines in Canada is amongst the highest per capita in the world too.

#64 returned expat on 12.15.10 at 3:54 am

1 – 38, wife and I, 1.3 million
2 – non-registered investments, cash, rental property(10% return), we rent downtown hogtown
3 – No company pension
4 – still a long way to go before thinking about retirement hopefully

At age 30 I was finally able to say I was worth zero, I had my student loan finally paid off. I left canada around that time and worked in a tax haven (wife and I both CAs). It was fun but very happy to be back in Canada at the start of this year. Both unemployed though, anyone need a good couple of CAs?
I am having a difficult time holding the wife off from wanting to buy a house with all that cash sitting around, but it just doesn’t make sense with house prices where they are at. I will continue to hold the fort no matter what, I know we are in for a major correction (although I have been saying it for years now).

#65 canali on 12.15.10 at 4:05 am

and of course TD’s analysis says we avoided the housing bubble/crash….
http://www.theglobeandmail.com/report-on-business/economy/economy-lab/daily-mix/how-canada-avoided-housing-bubble-and-crash/article1831359/

#66 Live within your means on 12.15.10 at 6:46 am

Now for a good chuckle.

The Nativity story – digital style

http://www.youtube.com/watch?v=GkHNNPM7pJA&feature=player_embedded

#67 O on 12.15.10 at 7:07 am

Garth – “So, how’s the rig?…Jake went quiet on the other end of the line. I instantly regretted the question, sensing the words to come…“Sold,” he said. “I explained it all to Marnie. But she cried, and cried.”

I feel quite sad reading that as she has MS and it’s a “way out to the world”… Couldn’t they get a small one? Couldn’t they not forsee that debt kills?

#68 TS on 12.15.10 at 8:39 am

I find it incredible that so many bloggers here blame the government for the problems that average Canadians brought on themselves by making poor financial decisions. At the end of the day individuals are responsible for the decisions they have made. No one forces you to buy things you really can’t afford… no one forces you to take on mountains of debt… no one forces you to live as an uninformed bumpkin… just because 0/40 existed and 5/35 mortgages now exist is no excuse to be stupid and actually get one.

Simple truth is that people will always try and blame someone else for the dumb decisions they make in their lives.

#69 Moneta on 12.15.10 at 9:00 am

The Original Dave on 12.15.10 at 3:53 am
Canadians consume more energy per capital than any other nation. More than Americans. It’s amazing how self-righteous we can be.
—————————————————-

awesome. Have you considered the weather in this country? It should require more energy per capita for heating that’s for sure. Google what happened in Sarnia yesterday.

—————–

That’s the point. We are faced with constraints that reduce our productivity and force us to work harder than Americans to keep up with them. We should be preserving, not wasting.

We might need more energy but there is a lot of excess out there.

#70 Leanne on 12.15.10 at 9:05 am

#65 Live within your means on 12.15.10 at 6:46 am

Thanks for the link to Christmas 2.0. Love it!

Garth, thanks for sharing Jake & Marnie’s story and showing us why you do what you do—you’re a good man.

#71 Moneta on 12.15.10 at 9:09 am

We might need more energy but there is a lot of excess out there
——–
We should be selling our energy to higher paying Americans, reinvesting the profits into sustainable future growth, added value products and services.

Overgrown road networks, heated pools, big houses and large cars for every member of the family are a drain on our national wealth. Especially considering that many provinces are charging under market prices for electricity. The list of wasteful endeavours goes on and on.

We are burning our furniture to heat our house.

#72 T.O. Bubble Boy on 12.15.10 at 9:11 am

@ #63 returned expat:

Your gross annual income is $1.3M?

No offense, but what the f*ck are you doing hanging out on a blog??? I’m pretty sure things will work out ok for you, regardless of whether you buy a house or have a pension.

#73 fancy_pants on 12.15.10 at 9:13 am

a slow grind… perhaps

Although all it takes is another 9/11 type event to flip the sentiment switch, then the sky is falling

…just ask Santa

#74 T.O. Bubble Boy on 12.15.10 at 9:23 am

RE: everyone who is calling Carney a hyprocrite for dropping rates to 0.25% and then telling people that they took on too much debt…

If you recall, very early on in this near-zero interest rate era, Carney made several statements saying that interest rate policy impacts the ENTIRE economy (not just housing), and that policy changes (i.e. through F and CMHC) were the appropriate way to control household debt and highly leveraged lending.

In other words: when your in a recession, you can’t raise rates solely to settle down the housing market.

AND: don’t forget — the friggin’ “Economic Action Plan”, whose central tax credit was for renovating your home! Anyone who thinks it is a coincidence that Harper/Flaherty rolled out that tax credit without any changes to CMHC policy is missing the big picture. Given where the Economy was at in fall 2008, Harper/F doubled down on the one bubble they knew they could keep inflating – housing. And, right after the tax credit ended (end of 2009) was when the new CMHC rules were introduced (spring of 2010). That way, they got the maximum bubble for their buck!

#75 dd on 12.15.10 at 9:23 am

#63 returned expat
…wife …wanting to buy a house…

Wow, even CA’s have emotions.

#76 T.O. Bubble Boy on 12.15.10 at 9:24 am

(your = you’re)

#77 dd on 12.15.10 at 9:25 am

#38 Tim
…Blame it on the Conservatives…
No, lets blame it on the NDP. They held the balance of power way back in time. So it has to be them.

#78 Kaganovich on 12.15.10 at 9:32 am

Achtung!

How the FIRE industry is helped by the Republicans in deciding who is to blame for the housing meltdown:

http://www.nakedcapitalism.com/2010/12/republican-members-of-fcic-to-promote-crisis-urban-legends-shift-blame-from-banks.html

#79 dd on 12.15.10 at 9:47 am

….China gold imports rose to 209 tonnes in the first ten months – up dramatically from just 45 tonnes the year before….

What do they know what we don’t?

Sure. 1.3 billion people, 95% living in abject poverty and totalitarianism. No lessons there. — Garth

#80 Stop complaining on 12.15.10 at 9:50 am

To realpaul
What mental institution let you out for Christmas???

The Civil Service cannot keep its executives because they earn more in private sector sometimes double!

Wage increases are at less than 1%. This blog is full of dumb ass people like you who have nothing better to bad mouth civil service.

Remember that next time your kids go to school, or you go to the hospital, or you need the police. Better still give the Ottawa police a call I am sure bad mouths like you will be properly striped searched and what ever other pleasures the big cell block sergents like to do.

To nonplused
You should be praying to the Bank of Canada rather than condeming Mark, without Mark at the helm you would have seen a depression far worst that the 30’s.

Thank your lucky stars you have Mark. And he is grossly underpaid, or would you rather have a chewing tobbacco guy in long underwear making 10 million running the bank, duh! opps we are Canadian I meant a hockey player, now who is overpaid duh!

Get a life, go back to your little rock, critizing something that you do not even understand.

To all
Ask your self why is Canada coming out of the greatest financial crisis of the world pretty well on top?

Duh and yet all you dumb bloggers still complain.

Blame the BOC, blame the Government, blame the civil service, Why not look in the mirror!!!!

Tell me who held the gun at your head and said my my I will use my credit card today to buy that big screen TV. Duh.

Ask yourself this did Mark come into your dream world and say you have a LOC what are you waiting for spend spend spend. Why Save?????

Duh duh duh
You have no one to blame but yourselves, look in the mirror.

To all those who lost their jobs and single mothers who are truly in hardship I apologise for my Rant, this rant is for the fat pigs who have jobs two incomes and a LOC so big it would make a banker blush!
They have no savings and love to blame everyone but themselves.

#81 AM on 12.15.10 at 10:06 am

37 Brynn on 12.15.10 at 1:22 am

“The only time Garth has been right about the housing market was for the 3 months in 2008 when the world banking system crashed..other then that real estate has been an excellent investment….”

Let me connect the dots for you…

2008 – housing market starts to crash. Canadian government sees nightmare approaching and crashes interest rates.

2009 – the RE industry sees a new market of individuals who, with a mediocre income, can afford the monthly payment on a million dollar Vancouver crack shack…pump…pump…pump

2010 – RE industry continues to pump even though sales are dropping yet prices remain sticky (at least in Vancouver, which is apparently on another planet). Feds keep warning us about taking on too much debt. Why? BEACAUSE WE ARE. Do you think this would be a hot topic if this wasn’t going to be an issue in the coming months and years?

2011 – you figure it out

#82 MikeT on 12.15.10 at 10:10 am

@ #15 Trino Tuta:

What’s to be offended about? do you believe in Santa? It’s time you know that Santa Claus is an invention of the beverage giant Coca Cola (and by the way, in my opinion, the “geniusest” marketing move in the history of humankind – Santa advertises Coca Cola only!). There is nothing saint about him. Nowhere in the Bible is written about the little old guy flying in the sky in a sled pulled by reindeers.
So, unless you’re a kiddo who believes in Santa, what are you offended by?

#83 c ames on 12.15.10 at 10:32 am

yea they can talk about high debt levels . its the bond market signaling the move…

#84 rower on 12.15.10 at 10:35 am

It was supposed to be different here. Thousands of rich city folk were coming to build McMansions on every available waterfront lot. When the waterfront was full, they were supposed to buy up every available piece of interior acreage.
Forget the fact that most locals were making @$12/hr and couldn’t compete with the new money. Who needs a home for shelter anyway?
Local developer rubbed hands in anticipation of big business and big paycheque. It came. For a few years. He bought the rundown historic hotel on the main street with visions of making it into a showplace of condos/hotel rooms/upscale commercial space. It sat boarded up for a couple of years just waiting for savvy investors to buy into the deal of a lifetime.
Developer went to the local papers a couple of weeks ago begging for investors. He didn’t have the money to hang onto the place nevermind turning it into a showplace. The future of an historic hotel is in doubt.
Today, I saw that the developer’s house is up for sale. Sad situation.
The city folk are still coming, but they are now trickling in. They are buying up resale homes for the most part and are being very picky about which homes they buy. No oil heat, please, and I want a house in town.
Why did things change? Two reasons: the economy and the industrial wind turbines the province wants to fill the place with. Most folks don’t want a million dollar McMansion in the shadow of a huge turbine.
But real estate always goes up, right?

When we bought this house four years ago, there was a slight downturn in the market. We negotiated a deal that reflected that downturn. When our agent took the paperwork back to the office, agents lined up asking “how much?” When she told them, their chins hit the floor. One even said, “They stole it!”
Stole it? The selling price wasn’t as high as it was supposed to be so we stole it. Okaaaay.

#85 doctore on 12.15.10 at 10:43 am

speaking of taxes, when things decline for canada’s fortunes, look for F to apply the 2% back on the GST in the near future.

#86 Utopia on 12.15.10 at 10:46 am

I did not post yesterday. The knee jerk reaction to Mark Carney’s coments and speech were just too predictable. Some of you blog dawgs out there seem a little confused to me too.

Mr Carney after all simply stated the obvious. He reiterated exactly what have been the underlying themes on this site for the past two years.

That is, he warns that interest rates have no place to go but up and that complacency over borrowing too much with the expectation that rates will remain low is not prudent.

Mark qualifies as an Alpha blog Dawg on the basis of both his speech and BNN interview he gave and has come out strongly on side with many closely held beliefs here. So you are all vindicated. The Governor of the Bank of Canada has confirmed your concerns.

Some of you have not been reading his remarks over the past year either. He has been very consistent in his message to Canadians, to the Banks and to the Government. I do not have an issue with his comments at all and nor should you. Try to understand what the mandate of the Bank of Canada is and how responsibilities differ there from the legislative branch of Governmert and policy decisions made at the bureaucratic level versus business decisions undertaken by Banks based on their own cycles.

We cannot lump everyone together and then hold them all blameworthy when at the end of the day it is still the responsibility of the individual to manage his own finances and life. In any event, the low interest rate policy was not the making of one man.

This was a strategic policy decision based on meetings between the Central Banks of all the top countries to prevent a deflationary outcome and boost global growth. It had never been tried before to this extent and while it was not perfect there were few other good options at the time. So stop crying everyone.

Did Mark Carney put a gun to anyones head and force them into speculative real estate buying? Those decisions were undertaken by individuals and families after estimating the risks and calculating the odds.

Meanwhile, I think that it is time people paid closer attention to the very candid warnings out of the Bank of Canada and paid less heed to political spin out of Ottawa. This guy has been on your side all along but you just don’t seem to get it.

He is an Alpha dog for sure.

#87 Junius on 12.15.10 at 10:59 am

#32 Peter,

An honest realtor. Good to have you. You must not have got the memo from our Pal Mick about Van Re.

I see the same thing in our group of friends. Broadly speaking they are early 30s to mid 40s. Most are home owners and have a few kids. They are all “professional” with pretty decent jobs. Classic middle to upper middle class.

The stories are coming out now of just how strapped in tightly many are too their homes. Several really went big in the past few years during the run up and are just now getting worried. You see the stress in the relationships as well.

What is increasingly bizarre are the desperate measures I see people taking to try and quick fix their financial position. The stories of people crossing the border with back packs of pot and professional woman offering to be surrogate mothers is just the tip of the iceberg. Everything from the latest MLM ideas to “can’t miss” stock tips as well.

Most people here want to focus on the degree of the crash – 20,30, 50% etc. It is worth speculating about but few seem to realize that even a flat market or down 5-10% in Vancouver would bring hardship to many.

The 30-50 crowd is generally so over leveraged in Re on the premise that is the investment of a lifetime they will not know what to do when their dream doesn’t come true. It is really not a whole lot different than the couple in Fredericton.

#88 Bullion.Bunny on 12.15.10 at 11:05 am

Another one bites the dust……

http://www.bloomberg.com/news/2010-12-15/electrolux-to-close-quebec-cooking-product-factory-lay-off-1-300-workers.html

Last one out, please turn off the lights..

#89 fancy_pants on 12.15.10 at 11:06 am

good grief… more hot air.

… “assets are again growing faster than debt in absolute terms,” says Porter.

http://www.cbc.ca/money/story/2010/12/14/f-debt-analysis.html

Fantastic. more words of wisdom… and Solomon thought he was smart, eh? Heaven forbid this is called at face value – try a BUBBLE.

Bank Economist: “Everything is fine b/c the bubble is inflating again. Here try these rose coloured glasses on… mine are paid for.”

Sheeple #4763765: “Wow, OK. So it is blue skies and roses ahead. thanks. And I thought my glasses were good. I got mine free with my last RE purchase. Odd they made me put them on before I signed the dotted line.”
“Hey, did I mention, I also got a free T-shirt? In a sexy green (like money) that says “You can’t afford me!”. I got the last XXXXXL size. Wifey looks great in it.”

#90 Junius on 12.15.10 at 11:08 am

#41 Behavioural Finance,

Three things.

First of all, Chanos doesn’t have an “agenda”. He has a “Position”. His Position is that he has shorted China and stands to make money if he is correct. Note that he first reached the conclusion China was in a bubble AND THEN shorted it. While this does not make him 100% objective it also does not mean he has an “agenda” which I take to mean an alternative motive apart from being correct and telling people why.

Secondly, China releases an enormous amount of economic data to the public. Chanos’ firm looks at this data and other available data when formulating their opinion. While this doesn’t mean they are correct it does mean they can and have done their homework. This isn’t just a coin toss.

Finally, the idea that Chinese workers from the rural areas could come to the cities and afford these condos they are building is ridiculous. Good savers or not the average income in China is $3,500 per year. This is the average so most of these people make less. After living costs how much do you think they could save?

Meanwhile, most of these workers ironically are working in construction. What do they do when the work dries up? That’s right, many go back to the village.

#91 eddy on 12.15.10 at 11:11 am

This is a good educational film called “Money as Debt II”

http://www.youtube.com/watch?v=_doYllBk5No

This film is the best I’ve seen about chem-trails. (It looks like it’s a NATO
or CFR initiative to kill us):

http://www.youtube.com/user/Antibilderberg88#g/c/B55561CA0A1C8EFA

#92 Junius on 12.15.10 at 11:16 am

#85 Utopia,

I am mostly with you on Carney. I wish he had been this forthright earlier in this process. Certainly some of his 2008 and 2009 speeches now read like he was either confused or conflicted or both. However he finally was rather direct and utterly unequivocal for a change.

The moment he got me was when he was on BNN and he was asked to respond to the comment from the BEEMOOO economist as Garth mentioned in this post. The fact that he brought in Iceland, Ireland and the US housing situation so directly I thought was a clear break from the past waffling.

#93 Alex on 12.15.10 at 11:19 am

#37 Bryn:

Take off the freaking blinders, man. You might think the rarified west side of Vancouver is all there is, but look out side your own little “bubble.” And you don’t need to go far either. The Fraser Valley, Squamish, Vancouver Island, the Okanagan – price reductions are rampant, inventory is up, unsold listings are being taken off the market in the vain hope that better prices can be had in the spring. How very typical of those living in the urban heart of this bubble to NOT look outside their own tiny geographic zone.

#94 Alex on 12.15.10 at 11:22 am

This just in (from the Dec 15th Vancouver Sun): Vancouver homeowner property taxes to rise 4.2 per cent. Ah, another reason why it’s so darned wonderful to own a home in the urban heart of The Best Place On Earth.

#95 The American on 12.15.10 at 11:25 am

Confession time: Mark Carney MUST have known this information for some time considering the fact Canadians are now more indebted with their households than Americans. I say this because I work for a lil’ ol’ bank here in the U.S. that starts with a J (yeah, you’ve probably heard of it). This information has been known for quite a while, at least on this side of the border. I was privy to it beginning last April. For Mark Carney to be approaching the Canadian public NOW is complete b.s. He made this an official statement only in the past couple days because of political posturing and reasons forthcoming with respect to not only Canadian elections but also American elections. This guy should be held accountable for all that is going on there and all that will be going on there. He basically lied with a straight face to his fellow Canadians.

Now that a senior official has “come clean” with the situation (well, sort of clean, but that’s a whole other story. let me know if you want to know more), this means that it is most definitely too late to correct it. He makes it clear for the record that he warned everyone, yet only after the fact of all the debt rising and all consumers pretty much being tapped out with credit. TD coming out with the 125% mortgage/deed of trust product is merely testament that the loans aren’t pouring in at the rate they once were.

I’ve worked in international banks and within international banking in those banks for that matter for quite some time. In my experience, most all operate the same, regardless of country of operation. Mark Carney’s been lying to Canadians concerning the “prudent and conservative” Canadian banking system. Of course the people will listen and believe because they WANT to believe. This propels a bubble and the viscous cycle continues. In banking, it is now widely believe Canada is perhaps the largest housing bubble of any of the G20. The son of a b*tch didn’t mention that though, did he? Of course not, because he’d rather the public continue believing all is well and perhaps a soft landing was in store – anything to the contrary would cause a panic.

Anyone giving him credit for being “forthright” now with information should also understand that he wasn’t being forthright at all. Had be been forthright, he would have been approaching the Canadian public several, several months ago and addressing this matter at that time.

#96 Junius on 12.15.10 at 11:27 am

#88 fancie_pants,

The speed at which the Porter response to Carney has hit the MSM is really something to give admire if only for total commitment to a diabolical strategy.

They didn’t even give Carney’s message a day to sink in before unleashing the counter position.

Not a word in the article that mentions that the many think the assets are over valued whether they are in the stock or real estate markets.

Meanwhile the MSM behaves as usual and prints without thought or responsibility.

#97 Paolo on 12.15.10 at 11:29 am

# 32 – Peter

“No doom and gloom just the truth. Whether they rent them, lose them, sell them, or live in them, the people who used to run around bragging about living the dream are now very quiet.”

Well said.
Someone needs to step back, take a good look, and let people know what’s going on.
Dirty job.
Someone has to do it.

This is how it begins – – same people begin suffering in silence.

#98 Patrice on 12.15.10 at 11:40 am

http://guava.ca/indicators.html

2010 is right in the middle of the pack.
inventory is low, listing are low, activity is low. Thats pretty much it.

nothing alarming.

Price may very well get back in line with affordability over a period of 10-20-30 years.

I can’t help but thinking that If you didn’t listen to Garth and bought 1-2-3-4 years ago, you would be much better off than today.

sorry Garth, lost faith in you.

#99 In the Maritimes on 12.15.10 at 11:42 am

From the play “La Sagouine”

“Durin the Depression, times got to be so bad, a person couldn’go any lower. But when you’re low enough, like this, that’s when they decide to do som’n so you won’t croak. Fer instance, durin’ the depression, they invented the breadline. Fr’m then on, we was all set. Depression saved us fr’m starvation. The worst time fer poor folks is when not’n happens: no war, no floods, no ecumenic crash…not’n to remind people that some folks got not’n to eat.”

Good people here in the Maritimes. If times are going to get tough then I’d pick the Maritimes over the big cities west of here.

In New Brunswick and much of the Maritimes you can easily get double the house for one quarter of the price compared to the communities bordering Victoria or Vancouver partly because of the winter weather – a cloudy +7c over a sunny -7c. Summers are fantastic here so no need to go anywhere.

With the $500,000 to $1,000,000 saved you can actually afford to retire early and can spend most of your winters south where it is really warmer.

Think about how traveling $500,000 to $1,000,000 would allow you to do.

I wouldn’t have thought there was enough of a price difference between Halifax and Fredericton housing to justify a move. Why couldn’t they have just downsized there – maybe I missed something in Garth’s post.

Net worth can be a useful measurement but leave out the house, cars, boats and RV’s if your using it for retirement planning. Call the new measurement “practical net worth” or something similar.

#100 cxcroney on 12.15.10 at 11:45 am

Stephen Harper is a true visionary and economist. When the sh*t hits the fan there will be a lot of dissatisfied “customers” out there needing accomodation.

#101 cxcroney on 12.15.10 at 11:48 am

More prisons.

#102 KWalts on 12.15.10 at 11:53 am

OK I’ll play too and totally skew the average!

1 – age and total gross family income

33, under $40 000 (since my spouse and I have both been unemployed/underemployed since the crash in fall 2008)

2 – equity values , RRSPs, RESPs, non-registered assets, cash, TFSA, other property, etc

A few thousand in cash savings, $7,000 RESP for school aged child. I will be using some of my small LOC to begin a TFSA this year. No RRSP’s. Just purchased a 10 yr old car as our primary vehicle.

3 – company pension plan value (if any)

No pension, and I don’t expect that CPP will exist when I get there. It certainly doesn’t support my 92 yr old grandfather now.

4 – age planning to retire and assumed retirement income

65 – 70 retirement? Plus, I hope I can afford the shirt on my back and the roof over my head.

I have been an avid follower of GT even before he was unceremoniously booted from the Hill. I use all of this greater fool ammunition to provide reasons why we aren’t interested in buying RE when the family pressures.
We’ve rented next to the Forest Hill area for the past 3 years. Rent is cheap, utilities & parking included, school is amazing and neighbourhood is relatively safe.
I’ve gotten over my house lust, I just need to get over my baby lust and I could forsee being able to make it to a fiscally sound retirement.

#103 GregW, Oakville on 12.15.10 at 11:56 am

Hi Garth, fyi still want the shot? video link total ~55min
The interview is in Spanish with clear subtitles in English

A Spanish Nun reveals the truth about H1N1
This is well worth looking at. Please watch this video! Thanks to Spirit Daily for this one:

Sr. Teresa Forcades is a nun at the monastery of Sant-Benet, in Monserra-Barcelona. She is a doctor physician specializing in internal medicine, PHD in public health at Barcelona’s university, specializing in the USA at the State University of New York. She gives verifiable scientific data and the disturbing irregularities related to this subject. This is relevant to all countries, all people.
http://salesianity.blogspot.com/2009/11/spanish-nun-reveals-truth-about-h1n1.html

#104 Jack on 12.15.10 at 12:04 pm

Sigh…

http://vreaa.wordpress.com/2010/12/14/local-realtors-bullish-predictions-sorry-but-you%E2%80%99re-wasting-your-time-with-these-charts-they-mean-nothing-there-are-only-three-factors-supply-of-buyers-buyer%E2%80%99s-access-to-fun/

You can look up the realtor if you can get the vomit out of your mouth…

#105 Howie on 12.15.10 at 12:10 pm

Unlike your source in Chilliwack, according to this article sales were up 4.8% in November.

http://www.vancouversun.com/business/Home+sales+rise+cent+November/3980867/story.html

#106 Got A Watch on 12.15.10 at 12:12 pm

Garth – a sad tale there. Some bad planning, some bad luck – life can fall apart very quickly. Sorry to hear of Jack and Marnie’s problems, they sound like nice people. Sure, they may have made some bad decisions, but who here has not? Really, some of you, with your oh so sanctimonious superiority complexes, need to take a long look in the mirror. Are you really as perfect as you claim – I think not. Jack and Marnie may not be financial geniuses, but they did what all their peers and the media and the Banks and the Government todl them to do, more or less – it’s not all their fault, it is society’s as well. If you are perfect in every way, then feel free to dump all over them, otherwise, just shut up, you’re making me nauseous. Not everyone is a master investor and long range planner, we’re just humans, a bipedal mammal, after all.

Utopia – anyone who worked for ‘The Squidmen’ should have no place at all in public service. Period. The last thing we need is criminal gang members from a financial terrorist organization working for the Government in any capacity. C should never have been appointed to his present job, but that speaks more to the fundamental stupidity of H, really.

That being said, C, has not been that bad at his job, I would not have expected much different from anyone else, really. Blowing a real estate bubble with too low interest rates is just par for the course, straight out of ‘Zimbabwe Ben’ Bernanake’s and ‘Easy Al’ Greenscam’s playbook. He is probably one of the more honest Central Banksters out there, but of course that is not saying much these days.

It all stems from the same magical thinking that says “any Bankster or nation must never be allowed to fail”, “taxpayers should always bail them out”. The same thinking that is rampant in Europe, where many Banks and nations have defaulted, some of them many times, throughout history – but today, that simply can’t be allowed to happen. Probably a product of ‘political correctness’ and popular psychology too – nothing bad can be allowed to happen anymore, it might cause hurt feelings. Instead, CONfidence must be maintained at all costs – until the whole mess just collapses from too much intervention, and reality finally enters the picture, too late. Moral hazard just multiplied by 1,000 really.

nonplused – I forgot to add, if you are concerned about the balance in your TFSA being “insured” by the Government or whomever. A ‘self-directed TFSA account’ is just another investing account, and as such is not protected by Canada Depositor Insurance Program which “insures” most Bank accounts up to $100,000 per account (you can have more than 1 account type ie checking and saving, and one for each spouse and family member in most cases, at more than one Bank/Credit Union). Split your money up among many accounts if you have to, to get under the $100K limit. Do what you have to do. If you have enough ca$h in the Bank(s) that you can’t fit under those limits, well, everybody has problems, yours are pretty minor. Buy Government Bonds with the overage, if you are worried about it.

All “trading accounts” at Brokerages of any type are insured under Canada Investor Protection Fund up to 1 Million $ per account. That would be your “self-directed TFSA”. A ‘regular’ TFSA at a Bank should be under CDIC, if it isn’t a “self-directed trading account”, much the same as how RRSP’s are treated, in their various forms, AFAIK. But I am not an expert there, best to consult the “TFSA handbook” for example.

CIPF is a private Fund, but in the event of a real crisis, I don’t see how the Federal Government would avoid backing it fully up to the $1 M per account limit. Or see a massive loss of confidence in Canadian markets, and ensure almost everyone’s retirement funds would be lost. The same situation applies to Bank accounts, IMHO, the CDIP would be applied to all ‘deposits’ in Bank accounts etc, likely up to a higher limit, probably $250K per account, in the event of a Bank failure – they have done this in almost every other country when Banks were failing, it is standard procedure, and has to be done to prevent Bank runs and making an already bad situation worse. That is conjecture of course, but the Canadian Feds did intervene somewhat in the ABCP fiasco, for example, on the same set of principles.

Life is risky, then you die. Risk exists in all things, inherently. Get over it already, or be prepared to be broke in your old age.

#107 Junius on 12.15.10 at 12:26 pm

#104 Jack,

You are wasting your time with poor Agent Will. He is determined to be the last man standing in this debate. Not worth the time to argue with. Just let the future take care of him.

#108 Mouldy Basement Renter on 12.15.10 at 12:28 pm

Totally Off Subject
Did ANYONE see the irony in the Unelected Canadian Senate “voting” to abolish the Penny?
” Because it costs too much to produce and contributes nothing……”
Sounds like the Senate. $65 million a year(est) to keep a bunch of govt appointed hacks around to rubber stamp what the federal Govt wants
Who gets to vote to abolish them.

#109 Jan Etter on 12.15.10 at 12:35 pm

#81 Mike T – the “:-p” at the end of #15 means it was a joke/sarcasm.

#67 TS on 12.15.10 at 8:39 am “I find it incredible that so many bloggers here blame the government for the problems that average Canadians brought on themselves by making poor financial decisions. At the end of the day individuals are responsible for the decisions they have made…”

Yes and no – there’s a difference for blaming F and/or C for their own bad choices (what you’re talking about) and blaming F and/or C for bad policy that affects the economy as a whole, that in turn affects all of us. It is critical that governments have good policy because the vast majority of people do not have the intellectual capability, interest, will, time and/or emotional detatchment to make rational economic decisions for themselves. If bad policy lets people indulge their base instincts then we end up with the global economic crisis that developed and engulfed the world over the past decade. Regardless of whether you blame F, C or neither, those with the power to make those policy decisions should be accountable.

#110 realpaul on 12.15.10 at 12:52 pm

The truth is coming out slowly. The debt/income ratio ‘now EXCEEDS 150%’. Some ( like me) have been commenting about this since it was 80…nobody wanted to listen…hahahahahahaha.

http://www.theglobeandmail.com/report-on-business/economy/economy-lab/daily-mix/canada-growing-more-at-risk-to-shocks/article1838376/

Nice going Carney. If not for the bought and sold media in Canada the truth would have been apparent a long time ago. So you’ve put off the inevitable….and that has done what? Oh yeah…made the situation worse than it had to be.

#111 costa_calgary on 12.15.10 at 1:05 pm

#98 Patrice on 12.15.10 at 11:40 am

right on the spot! i bought 22 months ago and am, at this point, comfortoble even with highly unlikely 20% price reduction. whicle high prices might be unrealistic they do seem to be here to stay.

#112 45north on 12.15.10 at 1:12 pm

MikeT: It’s time you know that Santa Claus is an invention of the beverage giant Coca Cola

there was a Santa Claus before there was Coca Cola:
http://en.wikipedia.org/wiki/Santa_Claus

#113 jess on 12.15.10 at 1:14 pm

Eagle you said in China

“1 million peoples moving to the cities every week?
Okay so do they only come out at night?

http://remittanceprices.worldbank.org/
Migration and Remttances News Roundup: Dec10, 2010
Submitted by Ani Silwal on Fri, 12/10/2010 – 15:51
Greece to Tap Overseas Wealth by Selling Diaspora Bonds (Dec. 9, 2010)
UK:Government confirms plans to curb international student numbers
Indians No. 2 in emigrating, top in sending money home
Indonesia: Migrant worker remittances reached US$5 billion (Dec. 9, 2010)
Outflow of Nepali migrant workers up by 34 percent (Dec. 6, 2010)

14 December 2010
China police probe Xinjiang ‘slave labour’ factory
By Michael Bristow
BBC News, Beijing
=

One man has been sentenced to death and 28 others jailed for their roles in a slave labour scandal at brick factories in northern China. The foreman of a kiln where more than 30 people were held captive was jailed for life, and an employee received the death penalty for killing a worker. Others were jailed on charges of illegal detention and forced labour. Since the scandal broke in June, more than 570 people forced into slavery in Shanxi and Henan have been freed.

…now head over to africa’s ivory coast and check out the farms that use child labour to pick the chocolate beans. But hey, commodity trading is making a killin’ whilst these children/farmers live in destitution.

“We could identify some children who, we believe, had been traded in some way and did not have the freedom to leave the farms on which they were working,” an IITA report says. The organization found that children harvest the cocoa beans from farms in the jungle using machetes. They spray crops with pesticides and insecticides, without masks, rubber boots or proper equipment.

Save the Children Canada reports that 15,000 children between the ages of 9 and 12 have been sold into forced labour on cocoa farms on the Ivory Coast, West Africa, in the last few years. Most reports on the child labour practices on cocoa farms in West Africa indicate that children are often trafficked from Mali, Burkina Faso, Togo and Benin, then brought into the Ivory Coast and other countries in West Africa.

The global chocolate market is worth $75 billion annually. And yet a family’s annual income (for example $829 in Côte d’Ivoire) place these cocoa-producing countries, and the children living within them, among the poorest countries in the world to live.
(save the children)

Sometime back in July
When British hedge fund manager Anthony Ward bought about $1-billion (U.S.) worth of cocoa beans last week, there was talk he was trying to corner the cocoa market and fears that chocolate lovers everywhere would face huge price hikes for their favourite treats.

#114 BrianT on 12.15.10 at 1:32 pm

#72TO-They are both unemployed in TO with a combined net worth of 1.3 million dollars. They won’t be missing any meals, but just the fact that his wife wants to sink it all into a house at this point in their situation shows you how irrational this whole house thing can become for many women (even extremely intelligent women). An analogy would be the way very intelligent guys can make very bad decisions based on sexual desire-very intelligent women can make very stupid decisions based on house lust.

#115 Moneta on 12.15.10 at 1:34 pm

It is critical that governments have good policy because the vast majority of people do not have the intellectual capability, interest, will, time and/or emotional detatchment to make rational economic decisions for themselves. If bad policy lets people indulge their base instincts then we end up with the global economic crisis that developed and engulfed the world over the past decade. Regardless of whether you blame F, C or neither, those with the power to make those policy decisions should be accountable.
—–
I agree.

Our leaders have a fiduciary duty to Canadians and should act according to the prudent man rule.

In French, it is even more concrete: agir en Bon Père de Famille.

They have acted like the parent telling the kids to stop throwing stones because they might get hurt but do nothing to stop them. Even worse, they actually gave them a bucket of stones.

#116 AG Sage on 12.15.10 at 1:37 pm

>#80 Stop complaining on 12.15.10 at 9:50 am
>To nonplused
>You should be praying to the Bank of Canada rather than >condeming Mark, without Mark at the helm you would >have seen a depression far worst that the 30′s.

Wait . . . that outcome is off the table?

#117 eaglebay on 12.15.10 at 1:38 pm

#82 Mike T.

Are you serious? We all believe in Santa.
Santa Claus is real. Ask around.
Coca Cola is for bourbon. Silly.

#118 TheBestPlaceonEarth on 12.15.10 at 1:41 pm

If you think you can time the market bottom be my guest. Vancouver doesn’t give a hoot for Carney and his policies and predictions. This is called progress folks and Vancouver will steamroll over whatever Carney and Co. can throw. Carney reminds me of Shiller , DEAD WRONG on Vancouver, doesn’t live here and doesn’t GET IT. Don’t be fooled or scared and miss out on the biggest boom of all time. We’re going higher folks
*****
watch cbc’s ‘the national’ tomorrow…will have a panel of experts discussing with controversial viewpoints mark carney’s contention we’re over indebted….ian hannamansing was interviewing people on this story as a ‘part one’ tonight and the same old theme arose: real estate will over the long run (despite the dips) only go up….and one ubc prof says we’re also different here as unlike in the states here in vancouver there is not alot of excess land due to our geography and location, so hence the demand is to be consistent going forward

#119 Debtfree on 12.15.10 at 1:42 pm

@82 mike T saint nick was a round in europe long before coke was even thought of . There is also as much evidence for the existence of santa as there is for the invisible man in the sky from ” the big book of jewish fairy tales ” now called the bible.

#120 AG Sage on 12.15.10 at 1:48 pm

>#34 hobbygirl on 12.15.10 at 1:08 am

There is a “small house movement” going on, in the States at least.

I see you’ve built already (congrats on surviving) but you still might find Ross Chapin‘s small house architecture interesting. But even those are not 1200, so I can imagine you had difficulty. She has others, labelled “cottages” that are that size.

#121 BDG-YYC - A Letter to "Stop Complaining" on 12.15.10 at 1:56 pm

#79 Stop complaining on 12.15.10 at 9:50 am

Dear Mrs. Carney;

First let me congratulate you on your forthright and measured response to Realpaul’s post of #26 realpaul on 12.15.10 at 12:37 am. Also please allow me to thank you for helping me to more properly understand the venomous nature of his post. I have to admit that my reading skills are somewhat lacking as I had completely missed most of the inconsiderate, disrespectful, and yes; insanely insubordinate and ignorant atacks that were so obviously right there between the lines. Thanks for taking the time to illuminate the hateful and incideous nature of those among us who would criticise our leaders and disrespect those who toil and sacrifice on our behalf.

I hope you’ll consider sending a copy of your post to some of the major media outlets. While I’m sure you’ve been successful in adjusting the attitudes of the thousands of ungrateful whiners and complainers who frequent this site I believe it would be a great morale booster for the community of civil servants across our country to have someone of your stature open the eyes of Canadians to the responsibility they have to the civil service. Canadians – especially the stupid upity ones who don’t “get it” really need to be made to understand exactly who works for who in this country and appreciate that they really don’t know what is best for them. Maybe some form of re-education program could be developed for these misfits?

Anyway thanks again for taking the time to share your views with us. You should be very proud of how you’ve taken the liberty to express the views of civil servants everywhere.

As a final note, I really think you should just ignore all the stupid wining posts you will probably see poping up here throughout the day from the likes of Realpaul and others blithering thier radical views and using words like “shame” and phrases like “who the hell do you think you are”. Let’s face it these ingrates need to be rounded up and educated once and for all as to exactly who works for who in this Country.

Ever so Respectfully,
Your Majesty’s Faithful Servant

#122 dark sad person on 12.15.10 at 1:59 pm

#80 Stop complaining on 12.15.10 at 9:50 am

*******************
About Carney?
You are delusional-
You actually think Carney has “prevented” anything?
All that he’s done is kick the can down the road and deepened the pockets of his kin Bankers-

I agree that the people who over leveraged themselves are to blame as well-

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

#95 The American on 12.15.10 at 11:25 am

***************
Absolutely correct-
Great post-

I’ll use your words to confront the confused People here-you know the-
“Carney is working in “our” and Canada’s best interest”
Unbelievable-

This is why they (Bankers) get away with robbery because even the People here who “think” they know what’s happening and that Carney is on top of the problem cannot see the big picture-

GSF-FGS

Goldman Sachs Forever–Forever Goldman Sachs

#123 Azza4 on 12.15.10 at 2:03 pm

This is one sad story. I’m often see that ad on TV for debt resolution website. You know, that one with lady shoping ” I wanna two pairs of shoes, not just one, wanna little more, wanna have some fun…” It seems that people got careless with their money and money that they dont even have. My approach to life always was this: “bank and invest the income, spend the interest / dividents”. It worked pretty good for me.

#124 AG Sage on 12.15.10 at 2:07 pm

#68 TS on 12.15.10 at 8:39 am

If the decision makers incentivize people to do one thing and then expect them to do another so as to avoid disaster, who is the one to blame again?

People will follow incentives and disincentives. They actually are pretty good about that on the whole. The current incentives are all toward buying, both social and (short term) financial. So that’s what they are doing. Acting like this is surprising given the environment guarantees this will all happen again.

You can’t pass out free hard drugs and say, well, all those addicts that we all now must suffer with as a society, that’s not our fault for handing out the dope in the first place. If you don’t think money and the *appearance* of wealth is the most addictive, sexiest drug on the planet, you must be living in a Buddhist Monastery.

I’d like to see the policy making changed so we can kill this idiot cycles, but that involves placing the blame where it can enforce reforms that make a difference. Central banks as wed to suppressing bubbles as they are to setting inflation or employment targets would be a good start.

#125 MikeT on 12.15.10 at 2:12 pm

allright, allright, I am getting my arse kicked and partially rightly so.
First, Santa Claus is based on the name of Saint Nicholas, but there is nothing saint about him – it’s a fiction that even the Bible doesn’t write about (whatever people say about this book, billions believe in what it says).
Second, snopes.com says Coca Cola didn’t invent it – I’ll accept that. It’s an urban legend, another victim of which is me :( But it looked like a quite true story, as it seems that only Coke has the right to use this jolly (fictional) man in many of its ads.
So, ashes on my head, mea culpa.
P.S. True or fictional, Santa will bring a Nintendo DS to my little daughter, cause she’s been nice this year. And we ask our children not to lie…

#126 Jake on 12.15.10 at 2:20 pm

#81 AM, Thanks for clearing things up for #37 Brynn.

#127 Jake on 12.15.10 at 2:33 pm

#98 Patrice,
LOL. Lock yourself up for a few days so that a realtor doesn’t find you in your delusional state and take advantage of you.

#128 Junius on 12.15.10 at 2:47 pm

#118, Biggestpimpontheblog,

You really believe this crap don’t you? Wow.

Indeed. We are the second largest country in the world but we are running out of land. The City of Vancouver had added more than 100,000 people to the population of the City over the past few decades without adding a stitch of land (hint: look up). LOL!

NY, SF, Seattle all have the same problems but worse but they fell and keep falling. Yet this is what is going to keep housing prices going up.

Yet the pimps and pumpers are out in full force now that Carney has said it is all about debt.

Keep believin pal. I wouldn’t want to ruin your holidays.

#129 Business Unusual - the BUN on 12.15.10 at 3:03 pm

#43 McLovin re: China Ghost Towns

Those cities look nice!

perhaps while all the rich Chinese are overbidding for houses in Vancouver we should move to these cities! At least the cost of a living will be rock bottom.

#130 Business Unusual - the BUN on 12.15.10 at 3:09 pm

SCAREY SURVEY

Do you think we are going deeper into recession (read – depression) in 2011 or no?

#131 GregW, Oakville on 12.15.10 at 3:25 pm

Hi Garth, fyi 3 part video link ~14min total

Jeffrey Smith on Dr. Oz Discussing GMO’s
http://gmofreeworld.blogspot.com/2010/12/jeffrey-smith-on-dr-oz-discussing-gmos.html

#132 bystander on 12.15.10 at 3:30 pm

There is no such thing as sustainable growth.
Watch these lectures of Prof Al Bartlett (this knowledge must be included in high school):
http://www.albartlett.org/presentations/arithmetic_population_energy_video1.html

#133 GregW, Oakville on 12.15.10 at 3:34 pm

Hi Garth, fyi link 1hr49min video

The World According to Monsanto
http://wideeyecinema.com/?p=105
On March 11 a new documentary was aired on French television (ARTE – French-German cultural tv channel) by French journalist and film maker Marie-Monique Robin, The World According to Monsanto – A documentary that you won’t see on American television. The gigantic biotech corporation Monsanto is threatening to destroy the agricultural biodiversity which has served mankind for thousands of years.

#134 T.O. Bubble Boy on 12.15.10 at 3:36 pm

Learn to read people!!!

November sales were NOT up from October, or up from Novemeber 2009… they were simply “up” on a seasonally-adjusted basis compared to Ocotber (i.e. November 2010 vs. November 2009 was -9%, and October 2010 vs. October 2009 was worse).

http://creanews.ca/

#135 dark sad person on 12.15.10 at 3:43 pm

#113 jess on 12.15.10 at 1:14 pm

Eagle you said in China

“1 million peoples moving to the cities every week?
Okay so do they only come out at night?

************************
Jess-
You’re bang on about China-
I can’t believe the People who are so hot for this Economically Commanded -Overheated-Hyper-inflated-Over Producing-Inventory Clogged-Polluted Wreck that’s about ready to rip the Inflationists heads off-

http://www.youtube.com/watch?v=19NGtR3xjYY

#136 Melissa on 12.15.10 at 3:47 pm

You have got to see this – pictures of China’s empty cities. Sort of supports what Jim Chanos has been saying about China.

http://www.unconventionaleconomist.com/2010/12/chinas-empty-cities.html

#137 Hell in a Hand Basket on 12.15.10 at 4:11 pm

I read about these hard luck couples on Garth’s blog quite a bit, no savings, no pension, all the equity tied up in a ginormous house. Garth’s advice is pretty much “your screwed” and that is the end of it. And I agree, if you want to live a normal retirement in a normal home you are pretty much going to have to work until you die. The formula is during hte working years the money coming in must be more than you money going out so you can put aside some of it for the later years. So for people with no or minimal savings, they have no choice be to keep working and try to keep the debt ball rolling.

There is the other part of the equation. Reduce expenses, radically. This is not to say live on dog food, but get rid of your house, get a 12 by 12 (twelve3.ca), cut your tv, internet, phone, start a victory garden, sell as much furniture, books, cds, dvds, electronics as you can. Having stuff costs money, maintaining stuff costs money. The less stuff you have the less time, space, effort and money you need to maintain it.

And this is something we should all be doing. It’s called hte 100 things challenge. You go through your stuff and get rid of as much as you can trying to whittle your possessions down to 100 things. It is liberating and you’ll be surpirsed that once you get rid of the clutter how big and spacious your current 500 square foot apartment can be. Or you don’t actually need to upgrade that 1400 ft townhouse to a 2800 sq ft detached for your family of 4. It also wonderful concentrates your attention on what really matters, your stuff, or your friends and family.

#138 Bill Grable on 12.15.10 at 4:13 pm

Something NASTY this way comes. The TOM spreads on US paper are terrifying – the PIIGS are done, if you check BIS charts. Spain is THIS close to Falling down a rathole and taking a LOT of European/US/Brit money down the hole with it.

Junius and some of the other bright lights here have been posting some pretty clear and concise reasons why we have a problem – so I will just step back and do more reading.

That said – man, am I glad I have been reading Mr. Turner’s books – and so is our Family.

#139 BAD on 12.15.10 at 4:17 pm


Yes, the so called “middle class” is lost and the city of Toronto shows that clearly:

Toronto is becoming a city of stark economic extremes as its middle class is hollowed out and replaced by a bipolar city of the rich and poor – one whose lines are drawn neighbourhood by neighbourhood.

Shrinking middle class makes Toronto a city of socioeconomic extremes

And that’s an indication what’s happening in Canada as a whole. A part of the “middle class” population tries to hold on to the “middle class” life by borrowing their brains out, and lately they have been helped by the extremely low interest rates, but where that leads everyone knows (or should know).

So we are different in Canada. Our “middle class” is being eradicated even during RE (and economic) boom years. Interesting, eh?
If our RE declines then whatever remains of the middle class will not suffer but it will be wiped out completely. The makeup of our Canadian society will change but it will not be the end of the world, it will be just different world.

“Le Roi est mort, vive le Roi!”, eh?

#140 Timing is Everything on 12.15.10 at 4:18 pm

#101 cxcroney said – “More prisons.”

http://www.youtube.com/watch?v=l6MFN8yiVc0

#141 jess on 12.15.10 at 4:22 pm

What is a diaspora bond?

“A diaspora bond is a debt instrument issued by a country – or potentially, a sub-sovereign entity or a private corporation – to raise financing from it s over seas diaspora….” (2 of 22)
….”The Indian authorities, in contrast, have used
this instrument for balance of payments support, to raise financing during times when they had difficulty in accessing international capital markets. Diaspora bonds are often sold at a premium to the diaspora members, thus fetching a “patriotic” discount in
borrowing costs. Besides patriotism or the desire to do good in the investor’s country of origin, such a discount can also be explained by the fact that diaspora investors may be more willing and able to take on sovereign risks of default in hard currency as well as
devaluation as they may have local currency liabilities and they may be able to influence the borrower’s decision to service such debt. In terms of process, India was able to bypass U.S. SEC registration in the past. But that appears unlikely for the foreseeable
future since U.S. investors are unlikely to be allowed to choose the law and the forum governing bond contracts. Finally, having a sizeable diaspora, especially first-generation migrants, is understandably an important factor affecting the issuance of diaspora bonds. Countries with strong and transparent legal systems for contract enforcement are likely to
find it easier to issue such bonds. Absence of civil strife is a plus. While not a prerequisite, presence of national banks and other institutions in destination countries
facilitates the marketing of bonds to the diaspora….”

page 20 conclusion:
This paper discusses the rationale, methodology, and potential for issuing diaspora bonds as instruments for raising external development finance, mostly drawing
on the experiences of Israel and India. The Government of Israel has nurtured this asset class by offering a flexible menu of investment options to keep the Jewish diaspora engaged since 1951. The Indian authorities, in contrast, have used this instrument opportunistically to raise financing during times when they had difficulty in accessing international capital markets (for example, in the aftermath of their nuclear testing in
1998). While thus far, only state-owned entities have issued diaspora bonds, there is no reason why private sector companies can not tap this source of funding. In terms of process, the issuers of diaspora bonds were able to bypass U.S. SEC registration in the past; but that may not happen in the near future as U.S. investors are unlikely to be allowed to choose the law and the forum governing bond contracts.

http://siteresources.worldbank.org/INTPROSPECTS/Resources/334934-1100792545130/Diasporabonds.pdf
Paper presented at the Migration and Development Conference at the World Bank,
Washington D.C. May 23, 2007.

#142 GregW, Oakville on 12.15.10 at 4:45 pm

Hi Garth, fyi Will your blog, this site be shut down soon?

Globalists Can Win Cyber War, But Not Information War
http://www.infowars.com/globalists-can-win-cyber-war-but-not-information-war/

“The government, through the DHS, has already shut down over 80 websites for copyright infringement without due process, in addition to floating the idea to tax information websites. Corporations like Google, Verizon, and others are making deals to tip the Internet in favor of major players. Finally, in the courts, ambulance-chasing copyright infringement lawyers are bullying blogs to pay settlements despite Fair Use rights — while their ultimate goal is to set a golden precedent with which to attack all news aggregating websites.

Don’t you see what’s happening here as the media continues to hype this cyber war? Because of the fierce resistance to all proposed changes to the Internet,…”

#143 Mouldy Basement Renter on 12.15.10 at 4:48 pm

#118 TheBiggestHeadontheBlog
aahhhhh yessssss, It’s different here.
Tell ya what , max out your line of credit, borrow against your house to buy 2 more, snap up a cheap condo in Whistler, lease a Beemer……
You get the idea, put someone else’s money where your mouth is…. Interest rates dont matter. It’s different here.
hahahahahahahahahahahahahahaahaha

#144 GregW, Oakville on 12.15.10 at 4:58 pm

Hi Garth, fyi 7-1/2min video msnbc

Stockman: A Leveraged Buy-out of the American Economy
http://www.infowars.com/stockman-a-leveraged-buy-out-of-the-american-economy/
And he continues: “The Fed is destroying prosperity by funding demand that we can’t support with earnings and productions, causing massive current accounts deficits and the flow of funds overseas and the build up in China, OPEC and Korea of massive dollar reserves which is a totally unsustainable, unsupportable system, and we are coming near the edge of where that can continue to remain stable.”…

#145 bigrider on 12.15.10 at 5:10 pm

Nice to see so many people bullish on Vancouver RE in the media and on this blog like “bestplaceonearth”.

Time and time again it has been shown that the best type of investor to be is a contrarion.

It is crystal clear that the masses are charging into housing in Vancouver like a stampede of wildabeasts

#146 GregW, Oakville on 12.15.10 at 5:11 pm

Hi Garth, fyi Have any silver filling still?

FDA Panel Reviews Health Safety of Mercury Amalgam Filling
http://www.infowars.com/fda-panel-reviews-health-safety-of-mercury-amalgam-filling/
“The mercury in amalgam fillings, called elemental mercury, releases small amounts of mercury vapor – a substance that at high levels can be toxic to the brain and kidneys. Vapor levels are highest right after fillings have been placed in a tooth, and later if they’re being removed or replaced. People trying to stop the use of mercury in dentistry say mercury vapor levels are boosted by chewing, eating, brushing teeth and drinking hot liquids….”

#147 CTO on 12.15.10 at 5:19 pm

#139 Bill Grable

Same here Bill!, but the RE spin continues until capitulation… More news on how the real estate market is improving!
“HOME SALES RISE AGAIN”
http://money.ca.msn.com/investing/news/breaking-news/article.aspx?cp-documentid=26757137

Amazing! All during a “World” market downturn, immediatly after a sturn warning by our banking chief to put on the brakes!
Mark!…they’re not listening!

#148 triplenet on 12.15.10 at 5:25 pm

#115 – Our leaders have a fiduciary duty to Canadians and should act according to the prudent man rule.

hmmmm….
Would that also infer that we as individuals should ensure we do not act or demonstrate the Greater Fool.
– which means that the “reasonable man” test infers we all act with personal responsibility, and if we don’t there are mechanisms available by which we shall be corrected.

…..the government made me do it?
I think not.

#149 GregW, Oakville on 12.15.10 at 5:27 pm

Hi Garth, fyi

Martial Law: UK Police Chief Mulls Banning Protests
http://www.infowars.com/martial-law-uk-police-chief-mulls-banning-protests/
“UK police chief Sir Paul Stephenson is considering whether to ask the British government to ban protest marches altogether in response to last week’s student riots, a move that would place Britain under a de facto state of martial law….”

#150 Chinstrap on 12.15.10 at 5:35 pm

Okay for you voyeurs:

Married no kids yet
1) Gross family income is $100k but going up big since my wife is finishing physician residency
2) Mid-late thirties
3) Toronto Condo $450k Value paid off through condo flips and stocks
4) Investment property $700k value (half owned) generating $4500k gross a month. w $255k mortgage
5) Stocks and RRSP $350 net. Note, I’ve been really aggressive and leveraged up up to $400k of credit lines (at times.. now lower) since the crash so I have achieved fantastic returns..

Might be forgetting stuff but net worth just made it to over a million this year and I don’t feel rich..

#151 Mikey the Realtor on 12.15.10 at 5:40 pm

Junius,

Nice to see you taking a break from your online law course, we all need a break sometimes. Peter seems like a nice enough fellow and I believe what he says, but I can sense your desperation for a housing collapse, once again I’m here to tell you that it wont happen so you might as well drywall your moms basement as you will be staying a while longer.

#152 TheBestPlaceOnEarth on 12.15.10 at 5:47 pm

Don’t be fooled by Carney’s bluff. If you have access to credit it’s a good time to load up. Carney will NEVER EVER make significant increases in his tenure at the job. He’d be fired long long before you ever see traditional 5 year mortgage rates at 8.5%. No government in power is going to allow interest rates to rise ever again. Think about all the poor Canadians mortgaged to the hilt. Rising interest rates sure of a low amount say 2% max. Anything higher and the governemnt in power is gone. Of course this will have no effect on Vancouver because it IS different out here

#153 GregW, Oakville on 12.15.10 at 6:05 pm

Hi Garth, fyi article, the last two paragraphs are worth thinking hard about.

U.S. security expert warns of risk of food terrorism in Canada
http://news.sympatico.ca/oped/coffee-talk/us_security_expert_warns_of_risk_of_food_terrorism_in_canada/1c729a21

“And here’s where we get into the fundamental problem I have with Asa Hutchinson’s proposal for food security: we can install all the guards and inspectors we want at food processing plants, but it may not fix the larger problem that our food system has become too anonymous, too industrial, and too reliant on processing.

In other words, Hutchinson seems to have hit on a really important issue, but missed the most important point. The greatest threat to food safety might be the very processes that Hutchinson’s trying to protect. And in our never-ending quest for cheaper, more convenient food, the real enemy might be us.”

#154 Calgary_rip Off on 12.15.10 at 6:10 pm

It’s interesting the perspective here.

Here’s an eye opener:

200 years ago you would be lucky if:
1) You lived to 65.
2)You had good food and clean water.

Present day:

With interest rates to rise(whenever that will be) those that bought houses not close to their breaking point will simply refinance with a lower principal each time. Nothing to worry about. This panic about interest rates is only if you bought and are house poor.

$80K is not a High salary in Calgary. That’s not much money. If you are renting making that much expect a SLOW save up to buy a place. And good luck with having a life if you have family expenses with that amount of cash. Expect to forego winter tires and eat macaroni and cheese with the family.

House sellers in Calgary are desperate:
Here’s why:

1)The land value not the house dictates the highly interesting rip off market value.
2)Builders in Calgary will send u desperate emails telling of what they have to offer and why you should come see their show homes(just wait they’ll become more desperate).

I dont expect much to change in Calgary. Fortunately I make enough cash so I can buy a place if I feel like it. But what is the rush? There isnt exactly much inventory that is a bargain on big sized lots.

YAWNNNNNNNNNNNNN……………….

#155 Duane Storey on 12.15.10 at 6:10 pm

I rent out in Chilliwack in one of the nicest areas in town, the new Garrison Crossing (built on what used to be CFB Chilliwack). The last six months have seen a ton of sales in the area, so much so that the little for-sale sign holder the realtors use (which allows each realtor’s signs to be hung from the one above it in a long chain of for sale signs) was so full that 3 or 4 of them were literally lying on the ground.

#156 BrianT on 12.15.10 at 6:11 pm

#150Greg-Adolf would be very proud-the UK is probably about 10 yrs ahead of the USA in this area, maybe 20 ahead of Canada.

#157 Azza4 on 12.15.10 at 6:11 pm

//
#135 T.O. Bubble Boy on 12.15.10 at 3:36 pm
Learn to read people!!!

November sales were NOT up from October, or up from Novemeber 2009… they were simply “up” on a seasonally-adjusted basis compared to Ocotber (i.e. November 2010 vs. November 2009 was -9%, and October 2010 vs. October 2009 was worse).

http://creanews.ca/

//

Man, what a spin by MSM! Lets compare moon to the sun as we are in trouble if we simply tell the truth. Disgusting!!!

#158 GregW, Oakville on 12.15.10 at 6:14 pm

Hi Garth, fyi

McDonald’s sued over Happy Meals
http://news.sympatico.cbc.ca/world/mcdonalds_sued_over_happy_meals/dee320f5
CBC News
“A consumer protection group filed a class-action suit against McDonald’s Wednesday morning, claiming the toys included in Happy Meals bait and induce children to develop a preference for nutritionally poor foods…”

#159 returned expat on 12.15.10 at 6:17 pm

Sorry gents and ladies savings are 1.3 million not income. Aren’t working right now so income is about 70,000 from investment income.

#160 Junius on 12.15.10 at 6:22 pm

#146 bigrider,

You said, “Time and time again it has been shown that the best type of investor to be is a contrarion.”

In respect to Real Estate wouldn’t that mean to bet against it? With 70% home ownership rate a contrarian stays out of Real Estate.

Or are you advocating a double head fake?

#161 dark sad person on 12.15.10 at 6:26 pm

#149 triplenet on 12.15.10 at 5:25 pm

#115 – Our leaders have a fiduciary duty to Canadians and should act according to the prudent man rule.

hmmmm….
Would that also infer that we as individuals should ensure we do not act or demonstrate the Greater Fool.
– which means that the “reasonable man” test infers we all act with personal responsibility, and if we don’t there are mechanisms available by which we shall be corrected.

…..the government made me do it?
I think not.

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

I agree with #115

Here’s what you miss-
Governments have a “responsibility” to “protect” our “Money Supply”

Human behavior revolves around a locked and limited Money/Credit Supply-

Governments-when they abandoned hard backed Money ie: Gold Standard-they took total control of our Monetary system and handed it to Private Bankers-

They have over Inflated it-they have created every type of anti-saving method possible-ie: theft by Inflation-record low interest rates and have purposely led the masses into a Deflationary Debt trap-

It is well known amongst Economists (the “few” who have a clue what they speak of) the Mass Psychological effect of a “cheap abundant money/credit supply”
There is a herd and they live amongst us and we have no control over their behavior-“other then” to limit the supply of money-
With a fixed Money supply-people become aware-they “save” they act “responsibly”

A limited money supply would have and will soon-jerk Prices back into line and they never would have reached these heights-without the bubble blowing of CB’s-

Money can only chase high prices when Money is cheap and easy-

#162 RE Bear on 12.15.10 at 6:32 pm

Don’t be fooled by Carney’s bluff. If you have access to credit it’s a good time to load up. Carney will NEVER EVER make significant increases in his tenure at the job. He’d be fired long long before you ever see traditional 5 year mortgage rates at 8.5%. No government in power is going to allow interest rates to rise ever again. Think about all the poor Canadians mortgaged to the hilt. Rising interest rates sure of a low amount say 2% max. Anything higher and the governemnt in power is gone. Of course this will have no effect on Vancouver because it IS different out here

——————————————————-

So students, this concludes speech by our guest lecturer on Schizophrenia and how people plagued with Schizophrenia behave.

Clap your hands everyone for TheBestPlaceOnEarth, and make way for the asylum guards to put the strait jacket on him for his departure to his mental ward. But do not worry, he will return next week where he will prove that 2 + 2 does NOT equal 4, but the letter ‘U’!

#163 RE Bear on 12.15.10 at 6:33 pm

But in all seriousness I don’t think TBPOE exists, I think it’s Garths amusing alter-ego, :-)

#164 GregW, Oakville on 12.15.10 at 6:38 pm

Hi Garth, An xmas card link for you and all the bloggers here. Some interaction required. I hope you all have a nice xmas and newyears. There is some sound with it.

http://ak.imgag.com/imgag/product/preview/flash/bws8Shell_fps24.swf?ihost=http://ak.imgag.com/imgag&brandldrPath=/product/full/el/&cardNum=/product/full/ap/3166187/graphic1

#165 Rich Renter on 12.15.10 at 6:53 pm

#155 Calgary Rip Off,
Your a bit of a drama queen when it comes to describing how things are here in Calgary. 80K is a decent salary even in Calgary. House prices are dictated by supply and demand. The fuel has been low interest rates but even that is barely keeping the RE flame alive. 3 houses in North Haven have dropped over 50K in the past 6 monts alone and sales for Nov 2010 are down a huge 25% compared to Nov 2009

#166 UrbanCowboy on 12.15.10 at 6:54 pm

“The only time Garth has been right about the housing market was for the 3 months in 2008 when the world banking system crashed..other then that real estate has been an excellent investment….”

Let me connect the dots for you…

2008 – housing market starts to crash. Canadian government sees nightmare approaching and crashes interest rates.

2009 – the RE industry sees a new market of individuals who, with a mediocre income, can afford the monthly payment on a million dollar Vancouver crack shack…pump…pump…pump

2010 – RE industry continues to pump even though sales are dropping yet prices remain sticky (at least in Vancouver, which is apparently on another planet). Feds keep warning us about taking on too much debt. Why? BEACAUSE WE ARE. Do you think this would be a hot topic if this wasn’t going to be an issue in the coming months and years?

2011 – you figure it out
———————————————————-
Good post putting it in laymens terms. Yep housing should have collapsed 2 years ago, instead it inflated it with double the greater fools = double the jeopardy to come, the stats all speak for themselves. I can hear the wooden legs of the artificial prop starting to crack.

#167 BrianT on 12.15.10 at 6:59 pm

#155Cal-I will match your eye opener-200 yrs from now those same things will apply (I know-it can’t be-the MSM hasn’t ordained it so yet).

#168 BrianT on 12.15.10 at 7:03 pm

#153TheBest-the funny thing is that your foolish belief that rates can never return to historical levels because “they won’t allow it” is actually quite widespread.

#169 Moneta on 12.15.10 at 7:07 pm

triplenet on 12.15.10 at 5:25 pm
———-
Of course, if one believes in despotism, it won’t stick:

“International equity expert Professor Paul Finn has underlined, “the most fundamental fiduciary relationship in our society is manifestly that which exists between the community (the people) and the state, its agencies and officials. ” Many suggest the basic problem of stopping Human Rights violations and political negligence stems from the lack of understanding by media and politicians on the laws of fiduciary control. In equity fiduciary control suggests obligations that not only include duties of good faith and loyalty, but also include duties of skill and competence in managing the people’s interests. After all, Government is a trust structure created by people to manage certain services within society with the politicians depended on by the people to do that task. Therefore the relationship between government and it’s politicians and the governed is clearly a fiduciary one.”

“It has been said that fiduciaries must conduct themselves “at a level higher than that trodden by the crowd””

#170 Done Like Dinner on 12.15.10 at 7:07 pm

I read this blog a few times a week out of interest, but nothing else. I have absolutely no business being here.

Want to know my net worth? You’ll be frightened. It’s in the negative, by around $3,000 (credit card). No assets, no rrsp’s, no savings. Lost whatever I did have in the past 3 years since losing my previous job.

I have a contract position now that pays me about $18,500 a year gross (no deductions, because they don’t want to pay me as an employee, even though I am). A few thousand more a year (gross) in online income and a tiny little royalty income from TV/Radio placements as a songwriter. I also have huge amounts of advertising and promotion expenses to keep my online businesses from sinking. A multi million dollar movie investor deal I put together went sideways at the very last minute. A half million dollar record deal went sideways as well. Story of my life.

Am I screwed? Of course I am. But I’ve always been from day 1, so I’m used to it, and it wasn’t for a lack of trying. Back luck, or cursed? I’ll let you decide. I make about the same as a senior on CPP and OAS. Oh, and I forgot the best part. I’m 46.

If you think couples like the one on this thread have troubles, you might want to look around you. The world is filled with people like me, or worse. You know what though? I still see the glass as half full, not half empty. If I don’t manage to accomplish anymore than I have so far (which is zero), c’est la vie. I gave it my best shot. Just bad choices I guess.

#171 BrianT on 12.15.10 at 7:07 pm

#151Chin-pretty impressive that you can type so well while admiring your reflection in the mirror.

#172 CanukInAugusta on 12.15.10 at 7:10 pm

1 – age and total gross family income
49.997/47/8/6 $150k
2 – equity values (house (shudder!), RRSPs, RESPs, non-registered assets, cash, TFSA, other property, etc
557k in 401k, 350k house (no mortgage), 100k misc assets
3 – company pension plan value (if any)
None
4 – age planning to retire and assumed retirement income
I suspect I will never be able to retire. I think inflation will kill any hope of that.

#173 Love this Blog on 12.15.10 at 7:34 pm

#27 Real Paul,

Man, you really have a hard on for the civil servants, don’tcha?

#174 Terry on 12.15.10 at 7:37 pm

So much for unbiased news …

FOXLEAKS: Fox boss ordered staff to cast doubt on climate science

http://mediamatters.org/print/blog/201012150004

#175 Jan Etter on 12.15.10 at 7:38 pm

#149 triplenet “…Would that also infer that we as individuals should ensure we do not act or demonstrate the Greater Fool.
– which means that the “reasonable man” test infers we all act with personal responsibility, and if we don’t there are mechanisms available by which we shall be corrected.

…..the government made me do it?
I think not.”

Abdication of personal responsibility (which I do not endorse) is not the same thing as recognizing that government needs to put in good policy to create the boundaries within which people can exercise their personal choice and be accountable. If policies like 40 yr ams and loosening of lending standards were not adopted then it is likely that real estate would not have inflated to the extent it has, and we can still hold people responsible and not bail them out if they act recklessly and get into trouble. However, if bad policies lead to a crippling of the overall economy through the sheer number of people able to act recklessly and get into trouble, then the bad policies have led to a “too big to fail” problem that forces government to bail out the reckless, as the U.S. has tried with the federal government mortgage relief programs and bailouts.

#176 Nostradamus Le Mad Vlad on 12.15.10 at 7:48 pm


The comments about yesterday’s pic (The Man With Three Buttocks) drew some curious responses. Never have I seen so many posts to one of Garth’s pix in a post.

Re: the Bunny Buns pic, this would be a good description of some reactions: Yadda yadda yadda — it was simply C-H-F blowing hot air about something they knew nothing about (typical lying politicos).

So, onward . . . When Money Dies The Weimar Republic.

Who is behind WillyLeeks? Y’all ready know that, because the link was posted a few days ago. But here’s another POV. Plus — Cyber War is the result of too much WikiWashing.

Dark Side Of The Moon Nice shots from space.

Combined with the 80% of copper that JPM picked up in London recently, what is the outcome of this (plus derivatives and CDS) going to be?

#177 john m on 12.15.10 at 7:53 pm

No matter how long it takes this country’s fkd!

#178 S.B. on 12.15.10 at 7:57 pm

The Best Place on Earth?!!??

Vancouver taxpayers will see their property taxes increase in 2011 after city councillors approved a 2.2 per cent increase at a meeting Tuesday night, exceeding the two per cent cap they hoped to keep on the hike.

Read more: http://www.cbc.ca/canada/british-columbia/story/2010/12/14/bc-vancouver-property-taxes.html#ixzz18E8IiYum

#179 john m on 12.15.10 at 8:00 pm

don’t hear much about how” things are different here lately” hmmmmmmmmm ……….. millions ..perhaps billions of our tax dollars were spent telling us just that…fkn losers

#180 Kaganovich on 12.15.10 at 8:04 pm

Stoneleigh made her reply to Gonzalo Lira’s hyperinflation prediction public:

http://theautomaticearth.blogspot.com/2010/12/december-15-2010-debunking-gonzalo-lira.html

#181 jess on 12.15.10 at 8:15 pm

give the chinese credit cards

=============
the McFadden Act of 1927
fragmentation-
placed constraints on banks with national charters
since they were not permitted to cross state lines

Expansionism
Interstat Branching Act 1994

credit cards of the 70’s did not offer revolving credit and were classified as nonrevolving

total consumer credit made by banks
(in millions of dollars)
jan 1968-
banks total 51,193.00
revolving 1401.00
non-revolving 49,792.00

Feb. 2009
total – 882,024.40
revolving – 382,006.53
non – 500,017.87

source Federal Reserve

consumer credit made by finance companies
(millions of dollars )

Jan 68 –
non revolving 24,328.00
dec 1894
revolving 80.00
non revolving 89,803.00

Feb 2009
total 546,880.43
revolving 55,810.86
non revolving 491,069.56

source Federal Reserve.
===================

#182 CTO on 12.15.10 at 8:25 pm

#153 TheBestPlaceOnEarth

“Don’t be fooled by Carney’s bluff. If you have access to credit it’s a good time to load up.”

Ok, by now we all know this guys a troll. Come on man, the jigs up… It’s getting old. We know, ok.

#183 CTO on 12.15.10 at 8:28 pm

#151 Chinstrap

Good for you!!!!!

#184 tran, Calgary on 12.15.10 at 8:41 pm

http://www.calgaryherald.com/business/Calgary+sales+decline+November/3980945/story.html?cid=megadrop_story

Calgary MLS sales decline by 25% in November

House prices down 0.6%

#185 vomitingdog on 12.15.10 at 8:44 pm

That’s an incredibly sad story.

#186 AG Sage on 12.15.10 at 8:45 pm

Wait, wait, I finally got it. Mikey and BestPlace are Garth’s amusing sock puppets, right?

Do I win a prize?

#187 Nostradamus Le Mad Vlad on 12.15.10 at 8:47 pm


Booga Booga Time! “The desperation by the US Government to start a new war is palpable!” wrh.com.

Illusions of an economic recovery, but it’s not happening.

Economic spending — threat to SS (CPP), household debts not decreasing.

Boeing “This report just surfaced today. Two whistleblowers from Boeing have stepped forward. This does not look good for Boeing OR the U.S. Government, who may be involved.”

No COLA “This equals a tax of 19.4% on the poor! And the republicans want to cut it even more!” Yet food costs are skyrocketing.

Cover Yer Ass! Pic of US$9 bln. cheque.

Moody’s — “Very LITTLE mention of this story from yesterday in the financial press, but this is how sovereign bond routs begin… This is a HUGE DEAL and bears watching…”

Watch out for sunny and warm winters. NOT!!

Matt Drudge His site is not the greatest.

Homeless Man Great story, not on the m$m.

9:09 clip James Turk says yes to HI. We’ll see.

Yer On Yer Own! As if we didn’t already know that.

Childrens’ needs have changed (Christmas needs vs. wants).

China “You’re China, you were refused IMF gold, so you are going to quietly sell your treasuries, or swap your treasuries more likely for a spot financial transaction. What they are doing is buying spot, which is a currency transaction because you can’t get the metal. The physical market has now completely diverged from the paper market.” Plus — The Endgame? Gold, again.

Ditching the US$ “Gulf states have held secret talks with Russia, China, Japan and France to replace the US dollar with a basket of currencies in the trade of oil, the UK’s Independent newspaper says.” This was the cause of the Iraq invasion — Sadaam had already planned to use the Euro.

#188 45north on 12.15.10 at 9:14 pm

you know “BestPlaceOnEarth” you do remind me of Mohammed Saeed al-Sahhaf

http://en.wikipedia.org/wiki/Baghdad_Bob

except that no one is paying you for your efforts

here are Mark Carney’s words again:

“Low rates today do not necessarily mean low rates tomorrow. Risk reversals when they happen can be fierce: the greater the complacency, the more brutal the reckoning.”

http://www.ottawacitizen.com/business/Debts+high+Canadians+warned/3973187/story.html#ixzz18EPrdQu1

His words are more than strong, they are as tough as they get.

#189 S.B. on 12.15.10 at 9:14 pm

GregW, Oakville , you do not have to post EVERY article from Inforwars…we can visit site oursevles.

That site contains a lot of truth but they never tell us the full story…and nothing will change, either.

#190 Milhous Plumbers on 12.15.10 at 9:20 pm

If you must RV buy used. A nice 3-4 year old job has already lost worst depreciation. No LoC on these things unless you’ve money to burn. Go for diesel – better torque & mileage.

#191 S.B. on 12.15.10 at 9:33 pm

Some amazing Greece riot footage.
When Slaves go Wild II.

Coming to our cities soon? Hope and Change? :(

http://video.godlikeproductions.com/video/Action_video_of_Greece_riots_as_fire_bombs_stones_fly

#192 been there. on 12.15.10 at 10:00 pm

#181 Chinstrap,
Get ready to get served and say goodby to half your stuff.

#193 dd on 12.15.10 at 10:32 pm

….China gold imports rose to 209 tonnes in the first ten months – up dramatically from just 45 tonnes the year before….What do they know what we don’t?

“Sure. 1.3 billion people, 95% living in abject poverty and totalitarianism. No lessons there. — Garth”

No lessons? Very very short sighted.

#194 The Original Dave on 12.15.10 at 10:44 pm

There’s a lot of FYI’s for Garth lately. Jeezus!!!

#195 Lynne on 12.15.10 at 11:36 pm

to # 19 Tax Haven

Yes, but where? Not in the earth quake zone or the
running out of water zone or the serious gang problem zone, or the too much snow zone. or the two high tax zone, or the two far for amenities zone, or the firebrush zones, or the high unemployment zones. like tell me where where can I aspire to?

#196 TheBestPlaceOnEarth on 12.15.10 at 11:41 pm

2.2% is nothing with our tax rate soooo low. When your average offshore investor pays maximum 10% tax their wallets bursting with cash to throw the City a few dimes.
So Carney when you going to raise those
rates? That’s what I thought talks cheap. Make your move or stop spewing garbage. Your policies created this Canadian disaster.
*****
The Best Place on Earth?!!??
Vancouver taxpayers will see their property taxes increase in 2011 after city councillors approved a 2.2 per cent increase at a meeting Tuesday night, exceeding the two per cent cap they hoped to keep on the hike.

Read more: http://www.cbc.ca/canada/british-columbia/story/2010/12/14/bc-vancouver-property-taxes.html#ixzz18E8IiYum

#197 Anotherlowlyrenter on 12.15.10 at 11:43 pm

Ed Clark’s comments in the Globe are a must read. Same stuff you already know, but such candor. Of course the banks will keep lending — they have no choice when they are backstopped by the government.

http://www.theglobeandmail.com/report-on-business/economy/banks-wont-lead-way-on-fixing-debt-problem-tds-clark/article1839794/

#198 Old timer on 12.16.10 at 12:17 am

My son manages one of those slightly seedy cheque cashing establishments (terrible job but there really isn’t too much out there in the way of jobs here in Vancouver for recent university graduates) and regales me regularly with tales of teachers, truck drivers, engineers and various other well paid individuals coming in for a “pay-day” loan. You have to show your pay stub to get one on these loans and most of the applicants make decent money but all are living beyond their means. He also mentioned that a recent search for a part-time employee received about 800 applications, including many individuals with MBAs or other degrees.

#199 krista on 12.16.10 at 3:39 am

Garth,you have no idea of whats going on with real estate and the stock market.You are a dangerous man that spreads paranoia to the masses.You may be the fallen angel.

#200 Mouldy Basement Renter on 12.16.10 at 12:33 pm

#200 Krista
###Garth,you have no idea of whats going on with real estate and the stock market.You are a dangerous man that spreads paranoia to the masses.You may be the fallen angel###
++++++++++++++++++++++++++++++++++
And YOUR credentials are ???????????

#201 GregW, Oakville on 12.16.10 at 12:35 pm

Hi #190 S.B., Did you get the fun xmas card link at post #165, it’s for you too!

#202 Steven Rowlandson on 12.16.10 at 12:41 pm

A quote from the above essay:

“But rather than making us rich, it makes us vulnerable. In the context of owing more money than ever before, a drop in real estate prices or a rise in lending rates would be apoplectic. Of course, as Carney knows and is warning (and as this miserable blog has been moaning) both will happen. The result will not be a tsunami of foreclosures or an immediate collapse in housing values to match that of Phoenix or Cape Coral, but more of a slow grind lower until the reality dawns: my house is worth less but my mortgage is not. Or worse: my home is unsalable.”

A house that is unsalable isn’t worth much is it?
I would say that unless we see serious deflation in real estate prices there is unlikely to be any serious pick up in sales. In other words the price of real estate is so high that as a product it is grossly overpriced to the point where it is worth alot to avoid buying it and also to avoid renting it. Its not financially safe to try to buy it. Then again most people have to find out the hard way.

Steven

#203 GregW, Oakville on 12.16.10 at 12:51 pm

Hi #200 krista, You speak very strong words. I’ll need to think about them, since I’m not sure I totally agree, but I’ve been wrong before. Post #165 is for you too. Thanks for posting. ;)

#204 GregW, Oakville on 12.16.10 at 12:53 pm

Hi #177 Nostradamus, thanks for the nice space pics.

#205 the hangover 2 on 12.16.10 at 6:20 pm

#80 stop complaining, Your right I got caught in calgary in 1982, bought house for 82,000 and could not get 65,000 two years later. Watched prices go up for four years and had to get in. Learned a lesson, have house and investments now and defined pension in a year, so worked out, but alot of the problem is greed.