Strange times

First, more lies. Then the Tragedy of F.

Yesterday I referenced the mischievous and devious way the real estate industry reports stats. This, I said, is sad enough. That the little buggers of the media just report it, without critical balance or even fact-checking, is inexcusable. When we lose the free press, we lose freedom. No wonder this is a Wikileaks world.

Even worse, however, is the now-common practice of running advertorial drivel as news – making it virtually impossible for dewy-eyed and impressionable hormonal young buyers to discern self-serving opinion from fact. This has turned our once-great newspapers from champions of their readers’ interests into bootlicking support for anyone with an ad budget. It’s also spawned the practice of accepting articles from people unburdened by ethics.

Which brings me to Mark Weisleder.

Once a lawyer, he’s now a real estate shill, teaching aspiring moist young realtors how to manage clients, while generating referrals and sales leads. He gives seminars for industry groups, and recently wrote a book about how to buy a house. Plus, he writes for the Toronto Star, which has also lost its way.

This week the paper carried a Weisleder piece, “Our housing market to sidestep US-style bubble.” It’s typical of the material a desperate industry is using, and makes us all think we’re living in Phoenix, circa 2005.

Says he: Fret not about Mark Carney’s debt warning. It’s all crap. We’ll never repeat the US housing meltdown experience because those lazy Americans were given “no incentive” to  pay off mortgages since US bankers were lax with loans (“if you had a pulse, you got approved”), mortgage interest is tax-deductible, and in many states you can walk away from a home loan debt.

In contrast, Weisleder writes (making many people happy he no longer practices law):

  • “Canadian banks have made sure over the last few years that even if you qualified for a 1-year mortgage rate of 2.5 per cent, you had to have the ability to pay the 5-year rate, which was closer to 5.5 per cent, in order to qualify for the mortgage. Thus, even if interest rates rise, as the Governor has warned, most Canadians will still be able to absorb the increased payments.
  • “Banks have been much stricter in requiring evidence of real down payments before lending any money. There are no free down payment programs in effect in Canada.
  • “In Canada, because you cannot deduct interest from your home mortgage on your tax return, you are encouraged to pay down the principal on your mortgage.
  • “Most Canadian mortgages, except in Alberta, are recourse mortgages, so if you don’t pay, you can be sued by the lender for any shortfall.”

What do we make of this? Are these valid reasons why our real estate market will continue to rise when housing has taken a hit in 47 countries, most spectacularly our nearest (and most similar) neighbour? Has Mark Weisleder passed his Best-before date?

Hmm. Well on the issue of mortgage qualification, the rules changed in April, not years ago. And as for new buyers having to qualify for a 5-year fixed rate – ensuring those with lousy incomes don’t make it – check out the rates in the squirrely little box on the top of this page. Yup. All the money you want, you house-horny kids, just a few hairs north of 3%. So when you renew in five years at 8%, you know who to blame – [email protected]

Strict bankers and no free-down payment-programs in Canada? Hold me. My walls hurt.

Actually, as this blog has given ample evidence of, 0%-down financing is commonplace, through mortgage brokers financed by the big banks. So are cash-back mortgages, showering any new borrower with up to 7% of the amount borrowed – ideal for a down payment you don’t have. Liar loans are also available from among the Big Five, where self-employed people “don’t need to prove their income.” That’s a relief.

And in Canada we encourage banks to be anything but conservative by having the federal government backstop potential losses on high-risk loans with public money. This is probably why nine out of ten new mortgages are high-ratio. Hell, those tightwad Yanks have nothing on us when it comes to selling houses to people without money.

On tax-deductible mortgages, little Mark has a point. But he conveniently forgets we allow people to keep all the money they make flipping their principal residences 100% free of tax, as well as being able to borrow tax-free from sheltered  retirement plans. Ottawa can sucker people into real estate speculation just as efficiently as Washington.

As for the ability of Americans to walk away from mortgages while we have our snowy asses sued off, you’d think an erstwhile lawyer would know this stuff. Some US states are recourse and some are not (like provinces here). How much difference did it make to the housing crisis in those various areas? Nada. Not a whit. Another Canadian myth. Besides, American homeowners who walk still face big tax bills, while Canadians can wriggle from a mortgage debt through bankruptcy – and keep their homes to boot.

In short, Weisleder, others of his disingenuous ilk, the CREA harlots and media sell-outs floundering in a bed of their own making, deserve each other. We deserve better. Truth be told, though, it’s probably too late.

Holy crap, Look at the time.

Sorry, F. We’ll do you tomorrow.


#1 HouseBuster on 12.16.10 at 11:31 pm

2003 house prices are coming. Prepare for it while you still can.

#2 Kevin on 12.16.10 at 11:37 pm

this has been happening for too long in this Country.
Here a just a few articles about Saskatoon and Regina in 2007, that don’t say, but do imply ” buy now or be priced out ”

if the real estate association was really in it for the best interest of its clients, there would be some statements such as” its possible what happened around the world in regards to the housing and credit bubbles could hit Saskatoon”. But you won’t see that printed in the Star Phoenix. As I have said before, there is no long term benefit to a local economy which has high house costs compared to previous history. There ends up being a huge debt that needs to be paid back.

Saskatoon real estate: Buy now or being priced out forever( The bubble years)

#3 a prairie dawg on 12.16.10 at 11:38 pm

Maybe we won’t have a US style bubble, now that the subprime REIT is born. We’re saved.

#4 camcool on 12.16.10 at 11:39 pm

#1??? I’m Lovin’ it!!!

#5 TheBestPlaceOnEarth on 12.16.10 at 11:44 pm

All offshore investors will be able to weather the storm of POTENTIAL higher rates. Some Canadians will have to struggle but not all. The Canadians who will be in trouble are the ones who have many credit cards maxed out. Carney would be fired instantly if he even hinted at a future of 5 year mortgages at 8% or higher – gone, finished , kaput. On the other hand Visa, Mastercard are not puppets of the Government. Those teaser rates of 6 or 9% credit cards. 3 to 6 months warning and they can be at 23.9% and there is no recourse. This has already happened in the US and will eventually happen in Canada.

#6 Joe Q. on 12.16.10 at 11:46 pm

I agree with your assessment of Weisleder’s piece, Garth, and made very similar comments on the Star’s website. The article was very Lereah-esque. Something of a new low for the Star.

#7 Jsan on 12.16.10 at 11:56 pm

Hmm, I wonder if this might have something to do with the fact that many Australians, like Canadians, are up to their eyeballs in mortgage debt? And all this after we have been told over and over that Australia is booming thanks to China. I wonder if Australia’s housing Boom fueled “Wealth Effect” has finally run it’s course? A harbinger of things to come for Canada?

“Gloomy Christmas for Australian retailers”

“Christmas isn’t coming early for Australian consumer stocks and may not even come at all this year.”


#8 Chances on 12.17.10 at 12:06 am

Canadians can wriggle from a mortgage debt through bankruptcy – and keep their homes to boot.

How can you keep your home if you go bankrupt? Doesn’t it go to power of sale?

They are separate legal proceedings, one against a person and one involving a property. Many have bankrupted and yet come to an agreement with the mortgagor. — Garth

#9 Soylent Green is People on 12.17.10 at 12:07 am

Isn’t it kind of weird Lisa Raitt doesn’t have her husband David in her Christmas card picture the tax payer pays for her to mail out?!/photo.php?fbid=173070212726345&set=a.101148906585143.2545.100000701030243&pid=412468&id=100000701030243

#10 GenXer on 12.17.10 at 12:12 am

Discussions on the impact of tax deductibility of mortgages in the US are interesting. Seems to me that the impact of near-zero % interest loans completely negates the benefit of writing off the cost of borrowing against your income. This is further compounded by the fact that jobs are disappearing and incomes are falling, placing people into lower tax brackets anyway.

If you follow that line of logic, the lack of capital gains on house flipping is currently a much bigger incentive in Canada than any tax write off on interest costs would be.

#11 Dodged-A-Bullit-in Alberta on 12.17.10 at 12:27 am

Greetings: Great pic, I didn’t realize Queen Elizabeth had shed a few years and was still trying to clear the mortage on Windsor Castle!!!

#12 squidly77 on 12.17.10 at 12:30 am

Why will Alberta crash the worst ?
Because you can simply throw the keys on the table and walk away, yup it’s that easy, the bank won’t even bother you.
No recourse borrowing equals no risk gambling.

#13 InvestorsFriend (Shawn Allen) on 12.17.10 at 12:37 am

I think the ability to walk away in many States is a key issue that intensified the decline there.

In Canada you can’t walk with the (currently unimportant) exception that in Alberta if (and only if)you are not CMHC insured meaning (you had at least 25% down payment) you can walk away. But you are not going walk to unless the house value falls (well)below the mortgage and given you paid 25% down, that is not too likely, though it could happen…

If one could find an Alberta house with a non CMHC mortgage that for some reason you could buy by simply taking over the mortgage (say it has already fallen in value to the mortgage level for some strange reason). Then you would have the freedom to walk in future if house prices crashed.

Might be a stragety to check out if a year from now Alberta house prices have crashed… Though finding a large (like equal to the crashed house value) non-CMHC mortgage already existing on a house is going to be tough.

#14 Dan in Victoria on 12.17.10 at 12:39 am

Bradley Manning.

#15 T.O. Bubble Boy on 12.17.10 at 12:41 am

Here’s another problem with this type of “reporting”: there is an underlying hypothesis that if Canada is not EXACTLY like the US, then it means our housing market can’t crash… so, if our banks are different, our mortgages are different, our cities are different, and our people are different, the outcome could never be a “US-style crash”.

But – what about Ireland? What about the UK? What about Spain? Did “not being the US” save them?

Again – the problem here is: the writers are out trying to prove that Canada is not identical to the US (which is obviously true)… and then they draw a conclusion that we can’t have any crash whatsoever because we’re not identical to the US.

So, the logic being pushed by these “analysts” is:

A) US had a crash

B) Canada is slightly different than the US in terms of certain housing-related factors

C) Therefore, Canada can’t crash at all, because we’re not the same as the US

So, if Vancouver houses drop 50% over 5 years vs. 50% in 1-2 years in Florida or Arizona, that’s somehow better? (it’s “different from the U.S.”, isn’t it?)

#16 Roial1 on 12.17.10 at 12:42 am

She would look better in a Timmie’s uniform.
That one is so ——— American.

(Harbinger of things to come????????)

#17 obert on 12.17.10 at 12:48 am

“Truth be told, though, it’s probably too late.”

Sir, with the greatest respect, you tried to save this country for the last 2 years of this blog – but failed… but for sure prevented many from becoming the greater fools!!

Mark C. is warning now – and what an irony, it’s too late.

Hope the pain will be short… but, again, you say it will last for years.

#18 Patz on 12.17.10 at 12:48 am

Shilling for da man! Had a good laugh today, with a touch of bitters, while listening to the Bill Good show do a financial market update with his regular cheerleader/commentator, Michael Levy. Bill raised the question of personal debt and, properly cued, Michael jumped in with his golly, gee–whiz style and said, “Yeah, there is a pile of it out there. I mean just listen to some of those ads offering cash back when you buy a car.”

Then the two of them fell all over each other saying they or course weren’t referring to anyone who advertises on CKNW—nope and by the way did you catch those flying pigs?! There’s an annoying and continuous rotation for Maple Ridge Chrysler which offers $10,000 cash back with each new car purchase. Yikes!

Meanwhile here in the land of plenty aka BPOE, aka BC the food banks are desperately short of food due to dropping contributions and rocketing demand. There’s some real world supply and demand for you economist wannabees.

#19 dark sad person on 12.17.10 at 12:49 am

And in Canada we encourage banks to be anything but conservative by having the federal government backstop potential losses on high-risk loans with public money. This is probably why nine out of ten new mortgages are high-ratio. Hell, those tightwad Yanks have nothing on us when it comes to selling houses to people without money


Not only do the Banks have no fear of risk-precisely because of Taxpayer backing-those with no Money really had nothing to lose either because of Tazpayer backing-they had no skin in the game and everything to gain by buying a house-they could easily see the rapid price rises-so why not?
Most didn’t Capitalize on the price gains-but really-what’s their loss going to be-they come with nothing-they leave with nothing-they ATM’d a 10 year shop til you drop lifestyle-they drove new cars-they lived and ate in Shopping Malls-they had a taste of the rich and famous lifestyle -exactly like the programs they watched on TV-except they got fat-

easy come easy go-

#20 Mean Gene on 12.17.10 at 12:50 am

For some strange reason I am thinking Cheech and Chong… something to do with the Burger Queen??

#21 The Original Dave on 12.17.10 at 12:53 am

FYI, Greg W, thank you for the FYI articles posted.

#22 nonplused on 12.17.10 at 1:08 am

Garth, you forgot the part about how we didn’t side step the bubble, the west is “in” a bubble. Maybe most of Canada actually.

We Canadians love our Canadian Supremacy Myths. Let’s recount a few of them:

Myth: Canadians are more responsible and conservative borrowers.
Fact: Canadian household debt is now higher than in the US.

Myth: The Canadian economy is stronger.
Fact: The Canadian economy is a solely owned division of the US economy.

Myth: Canada has a trade surplus with the rest of the world.
Fact: Canada had a trade surplus with the US, but doesn’t anymore. Now we have a trade deficit.

Myth: Canada has better mortgage rules.
Fact: I think Garth covered this one nicely.

Myth: Canadian governments are in better shape financially.
Fact: The federal government might be, but Ontario and BC are in much worse shape than California. And now BC doesn’t even have a functioning government to deal with the issue!

Myth: The Canadian banks didn’t need to be bailed out.
Fact: Then why did CMHC buy $50 billion in mortgages from them?

Myth: Higher interest rates won’t be a problem in Canada.
Fact: The Federal government is still $500 billion + in the hole. Ontario over $200 bil. The list goes on. Higher rates will mean higher mandatory expenses for most Canadian governments, even at the municipal level. This is to say nothing of the bombastically indebted households.

Myth: Our resources will mean we have a strong economy.
Fact: The US is pretty resource rich too. They still produce more oil than we do (a lot more), and now they are producing so much gas we are having to shut in production. They have trees, iron ore, coal, lots of stuff. They have better and more abundant agriculture too. Fact is most of Canada is uninhabitable. They definitely got the nicer lot. Fact is 90% of the Canadian population lives within 2 hours of the US border. Why? Because anything north of that sucks. It’s a slow transition into an arctic wasteland. And I haven’t even given myself a lead-in question as to where the innovation happens.

Fact is, we have fooled ourselves into making a much bigger hole for ourselves than even the Americans did. Ultra-low rates brought on by the financial crises saved the Canadian housing market, but there is no more of that left. Thus there is only one way for the economy to go. We will follow the US into the dark.

#23 Nostradamus Le Mad Vlad on 12.17.10 at 1:08 am

“Strange times. First, more lies. Then the Tragedy of F.”

Your writing style leads me to believe that you are the rebirth of SillyBillyBard Shayxpeare. Is that not in keeping with where we are headed, Back To The Future in the 1500’s or thereabouts? Peasantville here we come!

BTW, did Mom lend you one of her pix or did you take a snapshot on your European jaunts?!

“When we lose the free press, we lose freedom. No wonder this is a Wikileaks world.” — See last link; NikkisTweets are the invention of Bre-X on acid!

“Hold me. My walls hurt.” — I’ll let that slide by!

Don’t ferget — when Parliament reconvenes, F will present a budget designed to be defeated and an election will be called in the spring, about the same time as a blogger from the last post said 4Closure City will have arrived here.

C-H-F’s timing is impeccable as always. The outcome may be slightly different.
Not The Nine O’Clock News There are no more conspiracies, because nothing is real anymore.

Bankruptcies Now hitting supermarkets near you.

3:33 clip US and Canada are insolvent. Easy to see why the CPC may call an election in spring. Could backfire on them, ‘tho.

3:35 clip Recap: Recall the Russian prof. who said the US would break into six pieces by the end of 2010? “And he was correct. The USA as we have known it is already gone.” Divide and conquer — Harper’s motto.

2:18 clip Ohio lighthouse encased in ice, caused by waves and GW.

FF Time “The “unthinkable” in this case may be a false-flag attack using a nuclear weapon, since nobody will get hot and bothered for war by crashing a plane into a building.”

South Korea “The actions of the South Korean government do not at all appear to be the actions of a country wishing to soothe tensions in the region.” So who is behind all this hair-brained BS if not SKorea? Three guesses, and the first two don’t count.

Junk Silver Gold bars filled with tungsten were all the rage a few weeks ago.

Desperation on the cusp of madness Read the headline, then you will understand.

TSA Scanners How they tear apart one’s DNA.

Lawyers Assange’s lawyer has Rothschilds link. Frame-up or media spin?

#24 bridgepigeon on 12.17.10 at 1:13 am

#1 You can almost feel it…

#25 MJ on 12.17.10 at 1:17 am

Here is what my real estate agent said in her montly newsletter – here in Calgary.

“Although sales remain sluggish in the Calgary resale market prices are steady and demand is already building for 2011. House prices rose 3% in November compared to October 2010, they are up 1% so far this year but down 2% from the same time last year. Sales volume is the biggest difference with the number of sales down sharply from a year ago however up slightly from the previous month. This is largely due to an unsustainable amount of sales that took place from March 2009 to June 2010 as buyers took advantage of lower prices and attractive financing rates, essentially reducing the buyer base in the fall marketplace. Expect demand to pick up early next year as the market reloads its buyer base. Mortgage rates are just as low as they were a year ago and prices remain on par which means the same fundamentals still exist in the market moving forward.”

Believe it or not!

#26 EJ on 12.17.10 at 1:17 am

I recall reading back in 2005, near the peak of the US housing bubble. All, and I mean ALL of the things being said by our MSM, government, and housing pumpers were said there first. Except they were comparing themselves to Japan (and the cliche rebuttal: “The USA is NOT Japan”). Immigration will keep sales and prices high, our lending standards are solid (yes, before everything fell apart many truly believed they had great lending standards), everyone wants to live here. It’s like listening to someone read the same script over and over in different countries, hoping somewhere it will stick.

For a good laugh, or to send chills down your spine, check out some of the old links on, circa 2005 to see what was being said in the media shortly before the bubble burst. The ones that allow public comments are great for witnessing the parallels.

#27 EJ on 12.17.10 at 1:18 am

Oops, forgot to close the quote on the last link:

#28 Junius on 12.17.10 at 1:20 am


I have to admit that I enjoy your posts the most when you call out the scum. Perhaps it is because you are one of the very few doing it. I don’t know. I just hope you keep doing it.


#29 20% er on 12.17.10 at 1:35 am

Sexy pic.

CMHC says housing market stabilizing:

Leslieville (Toronto) house prices are fairly level:

Funny. Because Bernanke (after being consistently wrong) is still 100% confident in his abilities. At least Carney is warning Canadians about their debt levels.

Wanna see how a housing crisis translates into a mass panic? The Republicans released a good Q&A on the housing crisis in the US:

Hope we don’t go through the same mess here.

#30 20% er on 12.17.10 at 1:37 am

My point about Bernanke is that he denied that the housing bubble existed for a loooong time.

#31 Patz on 12.17.10 at 1:40 am

I guess from the comments that most readers of this blog, (that is if it’s reasonable to believe that readers who don’t comment closely mirror the beliefs and attitudes of those that do) agree that real estate in Canada is in trouble.

After that there is a great divergence it seems. Most seem to think there will be a “correction,” maybe even a strong one, a few down years and then we’ll get back to normal. (Keeping in mind that normal was never ‘normal.’) A few seem to be aware of much deeper fundamental problems pointing us into uncharted territory—and not in a good way.

Stoneleigh, aka Nicole Foss, the smartest one in the room has a well thought out view on this. Recommend you read this one. If she’s right, you need to know:

#32 domain on 12.17.10 at 1:43 am

#1 HouseBuster on 12.16.10 at 11:31 pm

“2003 house prices are coming. Prepare for it while you still can.”

I am. It’s called a six-figure down-payment/cash purchase of someone else’s house. Possible by de-leveraging since 2006 (thanks to observing the US) and living well within one’s means.

I expect the prices to over-shoot below the long-term trend, and become undervalued at some point; probably not for 5 – 10 years out though. I’m beginning to wonder how quickly our bubble will deflate since it looks like it has gone far beyond the historical mean. I suspect it will be rapid, and violent.

#33 Dirt Dog on 12.17.10 at 1:45 am

Seasonally Adjusted, shills for CREA or on the Bank Payroll people like this are always going to be there. Look at Greenspan 360 on gold standard. The market will be the true barometer for all to see. Sadly there are no heros today standing up for what is right. Everyone is trying to grab as much as they can. I wonder how big the ‘hole has to be’ when the bulldozer pushes all our crap on our coffin? I am sorry to say that I have been in Real Estate for close to 30 years, I am appalled at what is taking place today. Very, Very Sad. Sorry It’s NOT different here.

#34 Jody on 12.17.10 at 1:51 am

I wanna know when are we gonna riot like the Greeks, I wanna set something on fire.

#35 sk on 12.17.10 at 1:55 am

You can spin what Weisleder wrote however you want, but the four excerpts that you pasted into the blog are accurate.

I proved otherwise. — Garth

#36 Expat Canuck on 12.17.10 at 2:32 am


I do not agree with Mark Weisleder piece nor do I agree with you highlighting his email address as a “blame” launch pad for Canada’s real estate woes.

Let’s stop the mud slinging and get back to objective analysis please.

#37 prollywrong on 12.17.10 at 2:32 am

#5: “All offshore investors will be able to weather the storm of POTENTIAL higher rates. Some Canadians will have to struggle but not all.”

I thought investors were into making money, not weathering storms.

#38 Chaos on 12.17.10 at 2:36 am

F was very busy on Thursday admonishing home buyers to be more like their parents generation and not spend so much money on housing and to watch their debt levels!

I’m sure anybody would like to pay only $15,000 for a brand new home on a 1/4 acre, make 8 bucks an hour and be able to afford to keep his wife at home to look after the little hooligans.

By all means Frackass…bring back the good old days!

#39 rob chris in Spain on 12.17.10 at 2:40 am

and this one as well, yes Canada is just as bad as the states

#40 Robert on 12.17.10 at 2:40 am

#41 Tim on 12.17.10 at 2:41 am

Way to go at ferreting out the weasels Garth! Keep shining the flashlight on these slippery %$#%@%#s…

#42 realpaul on 12.17.10 at 2:45 am

Bwahahahahahahahaahaaa !!! F tells provinces to beat down their deficits :) This after off loading a majority of the federal debt onto the provinces…..what a hoot!

This little troll thinks he can just bellow out any nonsemse that busts out of hiss little head and think that no ones ‘really’ listening. The MSM certainly isn’t. How can the TO Star print this drivel without quaestioning the content?

You’d think the newspapers would want to side with the people who they want to buy the paper instead of alienating us by this constant barrage of bull-puckey.

Q…….when no one buys the paper anymore…will the advertisers still advertise?

Note to MSM…….You’re on the wrong side. Start writing copy that people want to read…that people can get behind…become civic leaders…express some ethics….stop trying to redirect the public mood into the express direction of a few advertisers. You need readership…without it you’re dead. BTW…the reader is us.

#43 Happy Renter on 12.17.10 at 2:50 am

I have often heard it said that Alberta is a non-recourse province for mortgage debt. Technically, the “Law of Property Act (Alberta)” bears this up, but in practice, most high-ratio mortgages are insured, even in Alberta, by CMHC. “National Housing Act – Section 10(2) – Subrogation” grants CMHC the right to seek full recourse on an insured mortgage if the bank applies to CMHC for compensation after a default. This supersedes the provincial legislation.

For the sake of exhaustive analysis, in Saskatchewan, I understand that the initial mortgage taken on the house is non-recourse, but if you switch lenders or refinance, it changes to full recourse.

Also, even in full recourse provinces, some lenders’ loan contracts may be specifically a “non-recourse” contract, but these are typically 50-60% LTV (it’s a low-risk loan and the mortgage is likely uninsured).

Back to CMHC: if the recourse is being pursued by CMHC, they have a forgiveness program that may reduce the outstanding debt in certain circumstances (thus, avoiding bankruptcy).

I am not sure whether alternative mortgage insurers (e.g. Genworth) can pursue full recourse in such a case.

#44 brent on 12.17.10 at 2:53 am

Really interesting article on USA house prices and demographics here:

Hopefully our Universities will conduct similar studies in a couple more years once the current bubble has popped a little.

#45 dave in calgary on 12.17.10 at 2:59 am

#12 – In the early 80s, in Alberta, so I am told, it was called “jingle mail”. Banks in Alberta getting envelopes with keys in them. Why pay off a mortgage that’s more than what you can sell your house for?

#46 dave in calgary on 12.17.10 at 3:00 am

and Garth, ps, the Queen in a Burger King uniform would have been more ironic. Just saying.

#47 Free Trial on 12.17.10 at 3:13 am

The mortgage that “renews at 8%” seems to be a moving target around here. Apparently it’s now going to happen 5 years from now…

#48 Peter Pan on 12.17.10 at 4:11 am

Garth, I don’t think you should be bothering with small potatoes like Mark Wheatabix.

I think you should be saving the heavy ammo for TD’s CEO Ed Clark who has an interesting take on his bank’s responsiblities and corporate governance…

Mr. Clark’s perspective is “Don’t expect us to cut off mortgages to people who can’t afford it… You suckers (aka CMHC) are backing these future deadbeats… Short-term profits are being privatized and future losses will be socialized. We’re coining too much profit right now to care about future consequences.”

Clark and his multi-million dollar compensation package richly deserve further investigation and criticism.

#49 Aussie Roy on 12.17.10 at 4:53 am

It must be human nature to look for the differences between markets and then to hold these differences up as to why it is different here (wherever here is). A much better picture would be to look at what things are the same between other crashed markets and your own. Is this too simple or is it that the RE industry has a problem with this truth.

I’ve been visiting blogs and writting about this whole mess for more than 3 years now. The common thread in all of these markets (I’ve blogged in US UK AUS and now Canada) can be boiled down to just a couple of signals. Well above long term average price gains while rental yields fall, a common belief that houses just cant go down and the most telling massive increases in personal debt levels thanks to easy credit and or low interest rates. I just dont understand why it is so difficult for others not to see this. Sure some are still suffering from delusional but look around the world its not hard to see, if you consider things from another point of view, not the delusional one the logical one.

Its a slow news day here today so here is a song for the delusional housing bulls. From about 1 minute in is appropriate.

#50 Rob now in Nova Scotia on 12.17.10 at 6:56 am

All this talk of how we are different than in the US got me googling about bankruptcy and a mortgage. There are some really great articles here:

1. A House is NOT an Investment…

2. A mortgage is NOT discharged when you declare bankruptcy…

3. You may be able to keep your mortgage but it depends on how much equity you have…

In fact, I would dare to say that the site above is like this one but sans the interesting pics that makes Garth’s site so fun in the mornings.

#51 Kaganovich on 12.17.10 at 7:20 am

Here Garth:

This article may be relevant to a blog like this:

#52 Cow Man on 12.17.10 at 7:50 am

Amigos: Bought and paid for Press. Is there anything worse than the free paper in north Halton? Every issue has a double page centre spread paid advertising from the Region of Halton. It is even printed in the Regions branding colour. Anything the Region of Halton proposes gets positive reviews and coverage from that little rag. The Region CEO and Chair have large propaganda editorials. The centre of the coming housing crisis promoted by the local press. As they sang in Cabaret: ” Money make the world go around”.

#53 allister on 12.17.10 at 7:59 am

Garth – I know your article is about the RE touts, but your the photo caught my.

When I was a teenager in the late 60’s and living at home, I worked at A&W. It was ALL teenagers working there. I have noticed these jobs seem to be populated with boomers now.

I’ve always wondered why. Is it out of boredom, or out of neccessity. Would like to here from some of those people about it.

#54 Charles on 12.17.10 at 8:07 am

Hi Garth,
Why are you so surprised that reporters are biased it is out of self interest, they own houses why would they want to report something that will devalue their own assetts.



#55 Aussie Roy on 12.17.10 at 8:45 am

prollywrong on 12.17.10 at 2:32 am

I thought investors were into making money, not weathering storms.

This is what many dont understand (or refuse to). When prices stop rising and rental return doesnt cover interest payments, what kind of investor (not to be confused with speculator) would want to buy an investment which makes a loss. Many will argue they bought years ago and rent covers their interest payments, but they never consider the new investor who is needed to keep demand afloat.

Take away the delusion of ever increasing prices and you soon see the truth. An overpriced over speculated market filled with no economic sense and lots of emotion.

“Its not economics its a religious belief”.

Just like all other bubbled house markets, past and present.

#56 David B on 12.17.10 at 8:58 am

Yes …. please do not forget Mr. F before he jumps to Bay Street with Mr. “P” who is still counting his Christmas bonus.

Strange think how the media when coupled to government is more concerned about a leaking condom than the truth and just who is put in jail for printing the truth. Check your safety stickers Garth …. ya never know?

Tax Bill passed and stocks should rise. AND CNN is in North Korea????

Merry Christmas ….

#57 Caveman on 12.17.10 at 9:01 am

The Real Estate guys have one thing right. They know that a change in sentiment will be the tipping point. They are doing everything they can to keep people believing RE is a good investment. It is just more air in the bubble.

#58 Joe Realtor on 12.17.10 at 9:13 am

When I read that article in the Star yesterday I thought… oooh, he’s going to get raked over the coals at Greater Fool.

We don’t have “no money down”? I guess he isn’t aware that if you haven’t got the money, the banks are more than willing to LEND you the money for a downpayment. Line of Credit, whatever, but they are doing it.

I run into a large number of people who are wanting to buy new construction and don’t have 5,000 for the initial deposit with an offer. Actually, a lot of them don’t even have a spare 2,000…. so maybe they shouldn’t be trying to buy a 300k house, or so you’d think.

But these are the same people that often have combined salaries of +100k and have absolutely nothing to show for it.

#59 TS on 12.17.10 at 9:16 am

#35 sk on 12.17.10 at 1:55 am
You can spin what Weisleder wrote however you want, but the four excerpts that you pasted into the blog are accurate.

You’ve GOT to be kidding! You post indicates one of three possible causes….you can’t read and understand English…. or you have no ability to assess logic…. or you are a real estate agent. Which is it?

#60 Bilo on 12.17.10 at 9:18 am

Newspapers are just as bad as the banks, RE, and govt.

In Australia for example many news articles about housing is provided by the RE industry (ie property monitors, housing stats etc)….. Coincidence some of these companies are OWNED by the newspaper? Coincidence that the real estate section in newspapers is very profitable due to the ads, listings etc?

#61 Moneta on 12.17.10 at 9:23 am

You can’t get blood from a stone.

If they can’t pay, they’ll walk away and file for bankruptcy. There are not debtor prisons in Canada. And when millions do it, the stigma goes away and the courts can’t keep up anyway.

Why do you think it got so out of hand in the US? The system was built for an average of 4-5 million home sales per year. From 5 million in 2001, sales reached 7 million in 2004. That’s a 50% increase 3 years. One can just imagine the quality of the people and the systems put in place in such a quick ramp up.

And on the down side, the system was set up for a 1-3.3% delinquency rate on residential mortgages. It is now hovering around 10%.

In Canada, the system is built for something like a .5% delinquency rate. Imagine if it goes to 2%. Now imagine if it goes to 5% or 7%. The courts will be overflowing for sure. Debtors will do the same as in the US.

You can look at this beast from any angle and you will see the enormity of the bubble. Why is it so hard for so many people to be pragmatic?

#62 Bilo on 12.17.10 at 9:31 am

Example: Australian Property Monitors (APM) owned by Fairfax media

#63 X on 12.17.10 at 9:34 am

re #35 :

“In Canada, because you cannot deduct interest from your home mortgage on your tax return, you are encouraged to pay down the principal on your mortgage.”

I would love to see stats on how many Canadians are making interest only payments.

“Most Canadian mortgages, except in Alberta, are recourse mortgages, so if you don’t pay, you can be sued by the lender for any shortfall.”

With most Canadians being house rich, cash poor, if the bank takes the house, its not much of a threat for the bank to sue the homeowner in arrears.

#64 robert in london on 12.17.10 at 9:37 am

#22 nonplused

Agree 100%.

Apparently we didn’t think our shit stank in 1931 either because we had (thus far) managed to avoid the bank failures and dire consequences being endured south of the border. Read Barry Broadfoot’s Ten Lost Years if you want to know what happened next.

#65 Moneta on 12.17.10 at 9:38 am

Sir, with the greatest respect, you tried to save this country for the last 2 years of this blog – but failed… but for sure prevented many from becoming the greater fools!!
Since people were taking 30 year mortgages, our host still has 28 years to prove his point. As long as people have jumbo mortgage loans to refi every 5 years, they are at risk. And with variable, even more.

#66 Moneta on 12.17.10 at 9:43 am

Not only do the Banks have no fear of risk-precisely because of Taxpayer backing-those with no Money really had nothing to lose either because of Tazpayer backing-they had no skin in the game and everything to gain by buying a house-they could easily see the rapid price rises-so why not?
Yes and no. Banks will always be considered a national treasure but… CMHC can take up to something like 2 years to pay up in case of a default.

Let’s just say that banks have time to write-off all their equity before they get their money back. So government will most probably prop them up but equity holders could still potentially lose a lot of money.

#67 Sand Piper on 12.17.10 at 9:45 am

Awesome like always “G” man…

but a minor noted correction, working in a Trustee’s office in Bankruptcy..if one files..not necessarily they will be able to keep there house.

If there is any equity (appraisal – mtg) they either have to “buy back” that amount or the Trustee will need to take possession to satisfy the creditors. (filing bk – there monthly payments may be excessive to possibly handle -thus the creditors will balk at – or filing proposal, mthly payments over 5 years to buyback) – either way – there really isn’t a free ride when you actually have some equity in the property.

Those who have little to no equity (which is sad anyways) are the one’s who can keep the house – but those who are gaining on the Mortgage monster – there the one’s who have some serious issues to deal with!

Cheers to all the bloggers – this site is AWESOME!!

#68 breezer1 on 12.17.10 at 9:58 am

there is no main stream news. there is main stream propaganda. by the way ZH was attacked and has a new address.
there is no better view into the workings of the news machine than the words of the master.
great work Garth, Have a happy Christmas and a Prosperous new year.

#69 Moneta on 12.17.10 at 10:02 am

2. A mortgage is NOT discharged when you declare bankruptcy…

3. You may be able to keep your mortgage but it depends on how much equity you have
Let’s be practical here…

If you have a lot of equity, the bank will gladly take your house, sell it and keep the gain.

If you have negative equity and can make the payments, the banks will want you to keep on making them. But we saw what happened in the US when a critical mass objects. The courts can’t keep up.

If you have negative equity but can’t make the payments, you won’t make them. Because there will be so many in that situation, and houses won’t be moving, the banks will let you stay in your house because it is better to keep the house occupied than empty. Also, as long as they pretend they don’t have to write off and can just wait for a bailout.

It does not matter if you can walk away or not. The US has shown us this. You can’t get blood from a stone.

#70 BrianT on 12.17.10 at 10:03 am

#51Kag-Interesting article but the writer uses the same tactic he is criticising-he defames libertarians by labelling them as shills for large corporations. He repeats the myth that big government is a problem for large corporations-nothing could be further from the truth. Example: during the ongoing gigantic financial bailouts (which is about as large an example of “big government” you are ever going to see) which large corporation or high profile wealthy individual has spoken out as this? None. In fact, there is about 100% agreement among this group that no amount is too large to suck from the overall economies forcibly. Another example: it appears that about 100% of all large corporations and extremely wealthy high profile individuals are in agreement with the dramatically increased anti human rights actions of all types instituted over the last few years. No cries of big government as a problem from this group-just silence or often encouragement when a chance is seen to jump on the gravy train or keep out competition.

#71 Expat in NC on 12.17.10 at 10:04 am

The Queen sure has young looking hands ;-)

#72 CTO on 12.17.10 at 10:10 am

#168 karl hungus

You right Karl!!!

Immigrants will rent! They’re also smart enough NOT to spend 60% of their take home income renting some $400,000 box in the sky. MOST OF THEM MAKE $30,000 A YEAR! READ THE STUDY!!!
Your answer to this maybe something like:
“they will have no choice?”
Karl…trust me, you do not want someone spending 60% of their income renting your beloved condo! Nasty things happen!

#73 dd on 12.17.10 at 10:37 am

Downgrade of Ireland from A to BBB+. Wow the rating agencies are sure on top of their game. Next Spain, Port, …. UK … USA.

#74 robert james on 12.17.10 at 10:40 am

If and when the financial poop hits the fan,, who will be the scapegoats,, realtors,, bankers,, mortgage brokers perhaps ??? The blame game will hopefully be fun and not get too nasty..

#75 Nibs on 12.17.10 at 10:45 am

Mr. Weisleder’s article is a joke and a poor reflection on the industry in general.

Mr. Weisleder has obviously honed his skills of data manipulation and sleight of hand while practicing law. The man has skills!

Once again we see our media swallowing this type of industry-sponsored drivel. It absolutely sickens me. It astonishes me that a practicing real estate lawyer can be so ignorant of the facts. The question in my mind is whether he is willfully ignorant or whether he happens upon it honestly. I’m not sure which one troubles me more.

#76 Nibs on 12.17.10 at 10:46 am

“The Queen sure has young looking hands ;-)”

She moisturizes

#77 Joe Larue on 12.17.10 at 10:54 am

Love this from the link posted earlier…..

Dateline: March 2005
“Some investment buyers are willing to rent out their properties at a monthly loss, anticipating future sales price rises. Dru Finley and her husband, Hsiao-Li Pan, who live in Brewster, N.Y., bought a one-bedroom condominium in Battery Park City in Lower Manhattan last summer for $499,000. They rent it out for $2,225 a month, about $1,000 less than their mortgage and maintenance costs. The couple hope to make up the shortfall when they sell the condo in a few years. “It seems that real estate always goes up,” in the long term, Ms. Finley said.”

Do you think they were smart enough to take all of their “profits” and invest in Vancouver?

release the hounds….

#78 Paolo on 12.17.10 at 10:55 am

This is how it starts.

#1 HouseBuster

It’s like that movie “Hot Tub Time Machine” – and we are going back to 2003 at best.

#79 pablo on 12.17.10 at 11:02 am

Some US states are recourse and some are not (like provinces here). while Canadians can wriggle from a mortgage debt through bankruptcy – and keep their homes to boot.

Garth; most of the U.S. states have a “homestead act” which prevents a mortgage or lien secured creditor from seizing and selling the principal residence. Unless there’s been significant change to the bankruptcy act in Cda a mortgage holder on proving their claim is considered a secured creditor in the bankruptcy and can on default of the contractual obligation achieve possession and sale of the subject property. So there’s no wiggle room for the debtor through bankruptcy.

#80 jen on 12.17.10 at 11:16 am

I recently know someone who was purchasing a house and offered the bank 30% down payment. The bank teller tried to convince them to put down only 10%.

I was wondering how pervasive this specific issue is and would be interested if others have noticed this phenomenon as well. Is this an active strategy by all the banks to talk consumers out of down payments?

I guess the theory is the banks are actively shifting further risks onto an already risky CMHC by convincing people not to make larger downpayments.

#81 VMT on 12.17.10 at 11:20 am

Meanwhile, in Halifax a real estate specialist reports:

“As has been the case with he rest of HRM, average price continues to increase but sales continue to drop.”

#82 Kevin in Winnipeg on 12.17.10 at 11:21 am

I was very surprised to learn Florida and even Nevada are recourse States. For me, this paints a different picture of the housing situation in the US.

Buyers were purchasing real estate on speculation, not to buy and then walk away if it didn’t pay off.

#83 brunt on 12.17.10 at 11:25 am

I simply cannot believe how many people swear that what happened in the US cannot happen in Canada due to differences in banks, financial attitudes, and so on.

The crash in the US had very little to do with the banks. The problem began, and ended, with people paying too much for houses. If Americans were able to afford the otherwise fraudulently obtained mortgages, there would not have been a problem.

That’s all there is to it. Too little house for too little money.

So rather than comparing the banking systems of the two countries, we should examine whether or not Canadians have overpaid as much as their American cousins. And of course, as Garth has been pointing out for ages, the answer by every conceivable metric is a resounding “yes”.

We are indeed different. We’re crashing later. We’re crashing in Canadian dollars. We’re crashing with Tim Horton’s on the corner. We’re crashing with 5 freaking months of winter.

There does seem to be something in common though in all of the ways we are different.

#84 Junius on 12.17.10 at 11:29 am

#69 BrianT,

Sad but true. We are moving closer everyday to an oligarchical corporate society. People are much better off reading George Orwell these days than Ayn Rand.

#85 Junius on 12.17.10 at 11:31 am

#73 robert james,

The blame should be on the banksters, the major corporations and the politicians that they own. However it won’t be. Individuals will be blamed for being irresponsible.

#86 househunter on 12.17.10 at 11:39 am

Garth, can you comment on what your opinion is of James Chanos and his predition that in 2011 China will go through some difficulties because of a large real estate bubble? I think this was a significant development in the making for a while that will possibly impact resource based Canada. Particularly the Chinese Nationals in Vancouver who have holdings in China.

#87 Bottoms_Up on 12.17.10 at 11:44 am

It’s true Canadian banksters offer those various vehicles; however, I believe that they have not been abused to the same extent as in the USA.

Take my situation for example: highly educated, great job prospects, yet (twice; in 2007 and 2008) couldn’t get a chincey ($200,000) mortgage from the big 5 (to live in Ottawa). I didn’t push for an exotic mortgage, however.

Even when I got a job, paying close to the average family income of Canada, AND with a credit rating nearing 800, I had a difficult time getting $280,000 (they wanted co-signers etc.).

There is NO DOUBT in my mind that if I had been in the USA, that I would have been offered well over $200,000 the first time I went in to see the bank.

I am absolutely confident that lending in Canada HAS BEEN different than in the USA. Just how much different in the abuse is the proper question to ask!

If we had a measure of the lending abuse per capita, I think we could gain a better understanding of where Canada might be headed.

#88 Bottoms_Up on 12.17.10 at 11:51 am

#61 Moneta on 12.17.10 at 9:23 am
From the following website, you can see a chart depicting total yearly residential sales activity in Canada:

It appears we fluctuate from 350,000 – 500,000 sales per year. No where did we ever “ramp-up” to 700,000 sales.

This could be an indication that our banks (or borrowers) didn’t abuse the lending system (as bad).

#89 SK on 12.17.10 at 11:52 am

I proved otherwise. — Garth

Proved otherwise? You posted a link to CanEquity, a relatively small-time lender and hardly ‘commonplace’. Nor did you mention the qualification requirements for the cashback mortgages.

Either way – I still struggle to see why I should be selling my real estate portfolio. I don’t plan on selling within the next 5 – 10 years (can you forecast what prices will be in 2030?), I generate a significant positive cash flow, and if property values do fall and people are ‘afraid’ to buy that means more tenants in an already extremely competitive market (for tenants). Seems good to me!

I guess being in Regina and resource-rich Saskatchewan (GDP expected to grow 5.3% in 2011) doesn’t hurt either.

Anyways, you are an excellent writer and certainly have a flare for the dramatic (to a fault, in my opinoin) so you seem like a smart dude. I can only imagine you see some of the posts from the ‘blog dogs’ and are just left shaking your head at the sheer lunacy of some of these ‘world is going to end tomorrow’ types.


#90 Bottoms_Up on 12.17.10 at 11:53 am

sorry, charts were difficult to read, looks like those are quarterly numbers.

#91 TS on 12.17.10 at 12:01 pm

#66 Moneta on 12.17.10 at 9:43 am
Let’s just say that banks have time to write-off all their equity before they get their money back. So government will most probably prop them up but equity holders could still potentially lose a lot of money.
You are correct. We will all pay.
Depositors will also see Banks charge more and taxes will go up for all.
And the beat goes on.

#92 Jan Etter on 12.17.10 at 12:19 pm

#63 X on 12.17.10 at 9:34 am
“With most Canadians being house rich, cash poor, if the bank takes the house, its not much of a threat for the bank to sue the homeowner in arrears.”

For some, but those who are dependent on a paycheque are at risk that the bank, after obtaining judgment on the suit, garnishes their wages to enforce the judgment so it’s not the same thing as a “judgment-proof” corporation with no assets.

#93 PTDBD on 12.17.10 at 12:30 pm

$858 Bbbbillion – USA tax cut package passed
$1+ Ttttrillion – USA Budget Bill to be passed soon

Just like Garth’s copulating elephant, this huge beast of American Debt in the room just disappears as far as the MSM is concerned. They are worried about Europe ;-)
No need to worry about that. They will print as much as needed but not be as blatant as The Bernanke. So will Asia.

Jeeze Carney! Are you really preaching restraint? Instead give us the money to compete with this paperprestidigitizer.

F, where is our tax cut?? Where is our extension for the unemployed? It seems like restraint if only for second class countries. F that!

We need stimulus cheques in the mail as was passed to Americans. People underwater on their mortgages should be able to stay in their homes for years – payment free as in America. Food stamps for those in need. Free cell phones and plans for those unemployed. Money for kids to stay in school.

Help Canadians stay afloat on this blizzard of debt by dropping money on them. It’s the new reality – the stuff is limitless! Other countries are using multiplying paper to soak up our resources.

Contact Obama or GS, they’ll show you how it’s done.

#94 Macrath on 12.17.10 at 12:39 pm

Just wondering ? If JP Morgan and GS are making tons of cash and doling out 9.3 billion in bonuses. Why is it that the astute genius investment managers of our pension plans are not doing the same, and doling out bonuses to the the retirees ? Are the banksters gains fraudulent and the pension plans lilly white. Or are the pension managers just stupid and incompetent ?

#95 T.O. Bubble Boy on 12.17.10 at 12:47 pm

How disturbing is it that the price tag for 2 years of extending the Bush Tax Cuts (just a 3% change in tax rates: 39% vs. 36%) in the U.S. is $300B more than Canada’s entire Federal Debt?

Cost of the new U.S. Bill: $858B
Canada’s Federal Debt: $550B

But – somehow our economy will stay strong even when the U.S. is struggling?

#96 BAD on 12.17.10 at 12:50 pm

Of course we are different. Even in US someone with an income of $3,662 (after tax) per month would have difficulty obtaining $987,595 debt for $1,148,860 worth of real estate. And the quoted income is a recent development meaning that the debt has been accumulated on possibly smaller earnings yet.

In Calgary, an entrepreneurial lady we’ll call Harriet is 39. After trying several other business ventures, Harriet settled on real estate, amassing $1,148,860 in assets. But with those assets come whopping liabilities of $987,595 for four mortgages and two lines of credit.


Collectively, her four investment properties generate monthly income of $5,975 and bear interest expense on mortgages and lines of credit of $5,323. They are barely cash flow-positive on rent over debt-service costs without allowing for maintenance and depreciation.

Mr. Egan is supportive of her recent decision to go to work in the chemical industry. A startup firm is paying her $3,662 per month after tax, plus sales commissions.

Money Landlord held hostage by real-estate investments

Did someone mention something somewhere about Canadian banks being more prudent or strict than the US banks?

Strange times we live in, strange indeed.

#97 AG Sage on 12.17.10 at 12:57 pm

>#12 squidly77 on 12.17.10 at 12:30 am
>Why will Alberta crash the worst ?
>No recourse borrowing equals no risk gambling.

Flip it around, though and look at it again. Why are the *banks* gambling in that case? It takes two parties to write a mortgage. If they have no recourse they have no business writing a crappy mortgage, right? CEO compensation was the cause of this in the states. Bonuses are tied to business activity. A sadly neglected topic, actually. Bankers are incentivized for short term stupidity.

Quick example: California (ground zero of banker stupidity) Non-recourse
Texas (a bit of bubble, but very small) Recourse.

If you assume the banks are acting logically, then this makes no sense. Answer: the banks are not logical. Or, their incentives have nothing to do with long term risk as an rational outside party would view it. Which is my belief. And no one is talking about fixing that. Except Gordon Brown, who was on The Daily Show on monday, if anyone is interested.

>1-year mortgage rate of 2.5 per cent, you had to have
> the ability to pay the 5-year rate, which was closer to
> 5.5 per cent,

5.5%? You kids today. I remember when mortgage interest rates were 18%.

#98 realpaul on 12.17.10 at 12:58 pm

Pity the poor ‘real estate investor’ who listened to the realwhore bs and drank way too much kool aid. Unfortunatley this woman is only the tip of the ice berg. There is a well known RE pimp out of Vancouver who sold ‘seminars’ popular with bartenders and hairdressers that suckered them all ( by the thousands) to become ‘cash flow experts’ in real estate in the far flung communities like Edmonton etc. They have all been left holding the bag with multiple properties sliding underwater with negative ‘cash flow’.

Theres a generation burned for sure. Too bad these kids never learn……..maybe they have stupid parents as this womans story will attest.

#99 dark sad person on 12.17.10 at 1:06 pm

#66 Moneta on 12.17.10 at 9:43 am

Yes and no. Banks will always be considered a national treasure but… CMHC can take up to something like 2 years to pay up in case of a default.

Let’s just say that banks have time to write-off all their equity before they get their money back. So government will most probably prop them up but equity holders could still potentially lose a lot of money.


Sure-they can take 2 years to payout the Banks-but the only reason they put that clause in-was to make it look like they’re being tough and acting responsibly-which is pure BS-

As for the Bond and Shareholders-yes the potential to lose is there-but the probability is not-
In a free non-corrupt system-they would be the first to lose then the Bank itself but we don’t have a free working Market-we have a Taxpayer funded corrupt Market-that favors the rich Bond and Shareholders who hold the Shares and who were paid to hold the risk and are now relieved of any risk-by the working poor-
This is how its being played out all around the World-

Shareholders should have lost-
Insolvent Banks should have been Bankrupted-
Insolvent homeowners should have been foreclosed on-
H-F-C should have been fired and should be facing charges of looting the Treasury-
Governments (not these asshats) should have seized the Banks and Nationalized them (temporarily) and printed “only” enough Money to keep “depositors” whole-
This should have happened in 08-
We would be looking ahead now and pulling our way out-like Iceland is-
Their GDP has already started to improve-the Krona is gaining-
Those smart courageous People told the Bankers/IMF and the Puppet Politicians to get stuffed and now-they aren’t saddled with a lifetime of Banker debt obligations like we will be-

#100 AG Sage on 12.17.10 at 1:08 pm

>#49 Aussie Roy on 12.17.10 at 4:53 am

Do you have a link to your blog?

(Obligatory: I am intrigued by your ideas and would like to subscribe to your newsletter.)

#101 GregW, Oakville on 12.17.10 at 1:20 pm

Hi Garth, fyi article
Still don’t think it’ll happen here or to your family???
So when PM H make/signs this new corporate trade deal, will we Canadians need USA premition to get any work here?

DHS Implementing No Work List: Citizens Must Get Government Approval to Work in Private Sector Jobs
“In other words, construction workers in New York will need permission from the TSA and DHS in order to practice their profession and earn a living. It was much the same in the former Soviet Union and authoritarian states such as China where the government determines all aspects of an individual’s life and where even the mildly rebellious are severely punished…”

#102 Rich Renter on 12.17.10 at 1:28 pm

#73.If and when the financial poop hits the fan,, who will be the scapegoats,, realtors,, bankers,, mortgage brokers perhaps ???
I’m going to blame that Turner guy.

#103 Coldlazarus on 12.17.10 at 1:32 pm

Stenography, and the enthusiastic reproduction of a press release: this is all we can expect from the Main Stream Media. Thoughtful, independent and critical journalism does not work well within the framework of the corporate media convergence model.
Donate to those web sites which encourage discussion and the exchange of ideas…

#104 GregW, Oakville on 12.17.10 at 1:44 pm

Hi Garth, fyi ctv news article link War?

So who are the mad people pushing to start war/killing other human beings? Dr. Strange love comes to mind.

Will someone please tell the people standing in the room flooded with gasoline to stop trying to light there matches, or better yet take away there match and send them to there rooms(jail) for a time out.
The south and the press need to critically think about this insanity sooner than later.

N. Korea warns S. Korea to stop live-fire drills
The Associated Press
Date: Fri. Dec. 17 2010 10:20 AM ET

SEOUL, South Korea — North Korea warned South Korea on Friday not to stage artillery drills on a front-line island the North bombed last month, saying it would hit back even harder than in the previous attack that killed four South Koreans.

The North warned the South against similar drills before the Nov. 23 shelling that destroyed homes and renewed fears of war on the divided peninsula.

South Korea has said it plans one-day, live-fire drills sometime between Saturday and Tuesday on Yeonpyeong, a tiny island that is home to fishing communities and military bases and sits just 11 kilometres from North Korean shores. Seoul says the drills’ timing will depend on weather and other factors and, despite the North’s threats, the exercises will go ahead as planned.

The North, which claims nearby waters and has said it considers such drills an infringement of its territory, responded to similar firing exercises by raining artillery shells on Yeonpyeong,

#105 Utopia on 12.17.10 at 1:46 pm

There is way too much skin showing in today’s photo. I am quite offended and I am thinking of taking my business elsewhere.

#106 GregW, Oakville on 12.17.10 at 1:46 pm

Hi #72 dd, I wonder when Canada could be seen on the list?

#107 Bullion.Bunny on 12.17.10 at 1:54 pm

And Now For Something Completely Different….

Grant’s Interest Rate Observer April 24,1992..

Grant’s Interest Rate Observer is an independent, value-oriented and contrary-minded journal of the financial markets. We publish 24 times a year. Our mission is to identify investment opportunities in a range of markets at both extremes of valuation, high and low alike. A typical 12-page issue is likely to contain a long idea, a short idea, a macroeconomic comment and a monetary or credit analysis (and, of course, one of our famous cartoons). Without bragging, we like to think that we are the financial-information medium that least resembles CNBC.

Real estate is an admittedly slow and illiquid asset, but it isn’t in every postwar cycle that tall buildings collapse on the heads of the billionaires who own them. Recently, David Shulman of Salomon Brothers predicted that the slump in commercial real estate may last, in some regions, until the end of the decade and that it will be 12 years before the national vacancy rate returns to 5% from about 20% today. (Note: remember this was written in 1992). To equity investors who have become accustomed to measuring bear markets in terms of days, weeks or months, such a thing is almost beyond imagining.
Precedent is on Shulman’s side however, and the documentary evidence is available at the New York Public Library. One instructive story is that of the Equitable Building , 120 Broadway, a still magnificent Wall Street skyscraper built in 1914-1915. We’ve been reading up on the Equitable’s past to try to reach a clearer understanding of the future. What we want to know is weather the real-estate related credit cycle is over or ending, or, as Shulman and others suggest, still unfolding. The answers to that question is easy: It is still unfolding. H. Dale Hemmerdinger a reader and New York property owner contends that years of misery lie ahead as long-term leases are replaced by new, lower cost leases. “Costs are front-end loaded,” Hemmerdinger says. “Even if the market turns tomorrow (which it won’t), it will take me a long time to get rid of my free rent, of my $30 to $50 work letters, and I’ve got to get my rents up. In the meantime, my costs are still going up…..What Olympia & York is looking for is a short-term solution. I don’t know how that works” (Note: we all know what happened to Olympia & York during this period…that’s right TOAST).
The period selected for this investigation was the last glacial deflationary bear market in New York City real estate, that of the 1930s. We skipped the 1970s bear market because it was an inflationary downturn, one that featured rising commodity prices and expanding bank credit. In the Depression era, occupancy rates and interest rates fell, and chastened lenders hung back from committing new funds. It has been a little like that in the 1990s, too. What most interesting about the Equitable story, however, is what happened in the long succession of disinflationary years between the alleged return of prosperity in 1933 and the U.S. entry into World War II in 1941. The company stumped through the Depression only to seek bankruptcy protection at a time of relative prosperity. For those who like to use the stock market as a leading indicator of business activity, the failure occurred some nine years after the Dow Jones Industrial Average made its all-time low.
We are relating this story because it helps to convey a sense of the rhythm of a deflationary liquidation. It is slow motion, like a family reunion. If past is prologue, lessons from the l930s may also apply to the 1990s (with certain modifications, of course, allowing for the mature welfare state, the full paper monetary standard and the possibility that the federal government may yet engineer a new inflation). For instance, construction activity will not make the hoped-for contribution to the next business expansion; real estate losses will continue to weigh on banks and life Insurance companies, and the patience of newspaper readers will be sorely tested. Like the man who came to dinner, Paul Reichmann might move onto the pages of The Wall Street Journal indefinitely. He and his lenders and their lawyers may carp and cavil and negotiate into the next millennium (but — to strike a bullish note — not into the one after that).
The best reason to study the Equitable Building is that the Equitable Office Building Corp. was once an investor-owned company, and its financial history is available in Moody’s Bank & Finance. The original Equitable Building burned to the ground in 1912 on the same Broadway site, and Coleman DuPont came up from Delaware to organize a corporation to put up a bigger and better successor building. No visitor to 120 Broadway is likely to quibble with management’s appraisal (c. 1915) that the building, originally housing 1.2 million square feet is “among the great business structures of this hemisphere.” It was so great, in fact — 40 stories rising straight up from the building line without a single setback — that the shadows it cast on lower Manhattan galvanized a political movement to restrict the construction of anything so overpowering in the future. The Equitable Life Assurance Society of the United States gave DuPont a long- term, $20.5 million mortgage, one of the largest ever written up until that time. The interest rate was 4½%.
It is impossible to appreciate the Equitable story without a proper respect for the building’s gleaming place in the Wall Street skyline. “Emphatically, and unequivocally,” said the original sales brochure, perhaps reflecting market conditions as well as management’s sense of decency, “we will not make to one tenant, regardless of his size or his importance or his desirability, any concession which is denied to others” The capitalization of the Equitable Office Building Corp. was conservative, and the tenants were grade A. The fact that 4½% eventually became an unmanageable rate of interest is a useful lesson in the relativity of nominal yields and the changeableness of rents. What seems low may later appear high, even oppressive and, of course, vice versa.
The moral of the Equitable story it that a decline and fall takes time. In the roiled credit markets of 1930 and 1931, the Equitable Office Building Corp. 5s of 1952 were still quoted in the low 90s and mid 80s. In the nightmare year of 1931 — marked not only by a global liquidity crisis but also by a rash of real-estate foreclosures by New York savings banks and life insurance companies, the company showed a profit and comfortably covered its fixed charges; rental income was almost $6 million, or $5 rentable square foot After expenses, depreciation and taxes, net earnings totaled $2.4 million.. Cash on hand totaled $1.5 million. Altogether, it must have seemed to the Equitable’s creditors as if the Depression were happening to somebody else.
In 1932, rental income dropped by less than 5%, earnings per share by a little more than 10%. The common dividend was cut to $2.50 a share from the old $3 rate, but at least then was a dividend, So far, so good.
If the phrase “world coining to an end” has ever pertained to the resilient American economy, it was descriptive in 1933. Rental incomes plummeted, and 25% of the mortgage Investments of the major U.S. life insurance companies wound up in default. In that harrowing year, the Equitable Office Building Corp was able to earn $1.4 million, or $1.54 a share, a testament to the quality at the tenancy and the long terms of the leases.
Inevitably, of course, leases came up for renewal. Some tenants did renew (others moved out and still others went bankrupt) and the new leases were signed at low, Depression-era rates. In 1933, rentals fell to an average of $4.16 a square foot. In 1934, they averaged $3.66 a square foot. Operating expenses and real-estate taxes happened to drop in 1934, but the capital expenditure program went on. Hoping to save on energy costs, the price of oil had vaulted by 71% in the first year of’ the Roosevelt recovery — management converted the building’s oil-fired steam generating plant to anthracite coal power.
Earnings in 1934 just topped the $1 million mark, or $1.25 a share, representing less than half of the 1931 rate. In the summer of 1934, the common dividend was omitted. It was reinstated at a lower rate in 1936; a false harbinger of recovery, it turned out.
The worst of the Depression was over, but rental income continued to fall as high-cost, 1920s leases were annually converted into low-cost, 1930s leases, (For 1920s and l930s, of course, read 1980s and l990s, respectively.) By 1936, the building’s rental income amounted to just $2.68 a square foot, down by 46% from the levels prevailing in 1930, The Equitable Building’s vacancy rate in the mid 1930s hovered around 15%. For perspective, the 1992 vacancy rate stands at 15.8%. Counting space available for sublease, it would amount to 20.5% (We leave to the real-estate scholars to determine the underlying cause of the decline of rents in lower Manhattan in the 1930s. Was it the still-weak national economy or overbuilding in the boom? Our bet is on the first hypothesis. In the l920s no self respecting New York bank made seal-estate loans.)
Periodically, but without great success, management petitioned the city for tax relief. The corporation paid $807,533 in real-estate taxes in 1935. It paid $788,800 in 1937 but $846,800 in 1939. War broke out in Europe in September 1939, and America became a haven for frightened money. It might have seemed to the average Wall Street investment strategist that a rally in rental Income was imminent. But the building realized only $2.41 a square foot, on average, in 1939, and reported a net loss of $14,685, or two cents a share, its first annual deficit of the decade. It just barely covered fixed charges.
The company fell short in 1940, and again in 1941; management gave up the ghost eight months before Pearl Harbor. “The [bankruptcy] petition said that, although the company would not be able to meet its current obligations as they fall due, it has an income and assets sufficient to make possible an equitable reorganization,” Moody’s reported.
The same slow, dream-like pace of activity continued during the reorganization. proceedings — another cautionary precedent for today’s lenders.
Committees were formed, plans submitted and meetings held. Paul J. Isaac, the reader who inspired this piece, tells it story about one such proceeding. He says that the anecdote from his father. An arbitrageur named .named Lou Green, of the firm of Stryker & Brown, was questioned by an SEC examiner, Isaac relates. Asked what class of security holder he represented, Green did not reply “the debenture holders,” “the senior mortgage holder” or “the preferred.” What he said was, “the short interest in the common.” Wartime prosperity not withstanding. the vacancy rate in the early 1942 was almost 14%. On July 10, 1942, Federal Judge J.C. Knox approved the purchase of a $16 million war and bombardment insurance policy for $16,000 a year. Rents and margins were down: The net loss grew.
As for the Equitable reorganization proceeding, it was conducted without undue haste. Competing plans of reorganization were submitted, and at least once the U.S. Circuit Court of Appeals reversed Judge Knox. By the rime the final plan was confirmed, in October 1948, fees and allowances to the trustees and attorneys had piled up to $792,521. In November 1947, the building got a new, 25-year mortgage from the John Hancock Mutual Life Insurance Co. In place of the overbearing 4.5% interest rate was a reasonable 3.7% interest rate (which would later increase to 3¾%). The downward adjustment was just in time for the start of the long postwar rise in interest rates and also, of course, in rental rates. Still, the rent roll in December 1948 had returned only to an average of $3.47 a square foot, lower than the average for 1934.
Scrolling ahead a half century, to 1992, the Equitable Building is owned and managed by Silverstein Properties. A fund managed by J.P. Morgan Investment Management holds a participating mortgage on the property (entitling the creditors to a share of the cash flow). The lobby is still splendid, and the rentable area of the building is now put as 1.9 million square feet, an increase of 58% since the 1930s. According to a broker, the reasons for this miraculous growth rate, first, to the expandable definition of a square foot under New York law and, second, to the general tendency of potato chip bags to hold fewer chips every year. He implied that space inflation was in the air. As noted, the vacancy rate, not counting available sublease space, is l5%. One big tenant nowadays is the office of the New York State Attorney General; another is the law firm of Lester Schwab, Katz & Dwyer. The defunct Crossland Savings Bank occupies ground-floor space. Brokers say that deals can be struck at an effective rent of less than $22 a square foot over a 10-year lease for a 10,000-square-foot space. The number includes a work letter to finance construction and a certain amount of free rent. Neither Morgan nor Silverstein would comment on the economics of the building, but the numbers can only be bleak and — in view of the weakness of rents and the long-term nature of big-city leases — getting bleaker.
At a meeting of the New York Real Estate Board the other day, Larry A. Silverstein, head of Silverstein Properties, explained the real-estate profit- and-loss dilemma, and the April 15 Real Estate Weekly gave this account:
Silverstein said the problem is that commercial rents are to low — the deals are not economically viable for the owners. He said operating expenses amount to $7 and $8 per square foot, real estate taxes are running from $7 to $11 pet square foot, tenant work letters are at $5 per square foot and $1 is going for leasing expenses. This adds up to$21 per square foot before debt service, he said.
Postwar building debt service averages $25 per square foot so Silverstein said owners need to see $46 per square foot just to break even. “In a $30 market,” he said. “it’s hard to see a profit and impossible not to incur a loss.” In fact he added, “’There is no profit and the question is the magnitude of the loss.”
In other words, losses loom indefinitely. If $21 per square foot is the average operating coat of a building before interest expense, it’s a cinch that the owner of the Equitable Building is showing no profit after paying its lenders. “Quality projects in the end will become profitable, “a vice president of Olympia or York Properties (Oregon) assured the Portland Business Journal recently. “It’s just a matter of time.” Based on the history of the Equitable Building, we would amend that claim. In a deflation, even quality projects will become unprofitable. It’s inevitable,
A similar path of a series of insolvencies by both equity and mortgage holders occurred with Chicago’s Showmart Building from 1929 until the early 1950s. An index of U.S. farmland prices set a secular high of 50 in 1920 and plunged to 20 in the mid-1930s.

Get ready… it comes bitches.

#108 GregW, Oakville on 12.17.10 at 2:03 pm

Hi #70 Expat in NC, She still looks good for her age, I’d bet she almost never eats that fast food stuff.

It’s amazing how you can add someone’s face to a picture and think they might have actually been there.

#109 GregW, Oakville on 12.17.10 at 2:07 pm

Hi Garth, fyi A case of do as I say not as I do, maybe?

Flaherty urges provinces to slay budget deficits

#110 GregW, Oakville on 12.17.10 at 2:12 pm

Hi Garth, fyi Will your blog still be safe/here in the near future??? What kind of world do you want your family to wake up in? What are you going to do today?

UN mulls internet regulation options

#111 GregW, Oakville on 12.17.10 at 2:27 pm

Hi Garth, fyi Worth think hard about, I think!
(I’m sorry to say I do not feel safe from this PM’s Governemnt at this time! If ‘they’ are not safe, ‘you’ are not safe. Have you heard that anyone was held to account yet? anyone?)

Caught In The Act – Ombudsman Report on the G20 Summit

the largest mass arrest in Canadian history and a violation of the Canadian Charter of Rights and Freedoms.

“For the citizens of Toronto the days up to and including the weekend of the G8 and G20 will live in infamy as a time period where martial law set in the city of Toronto leading to the most massive compromise of civil liberties in Canadian history and we can never let that happen again” – Andre Martin.

#112 Bullion.Bunny on 12.17.10 at 2:28 pm


Ok everyone back to sleep……the sheep are about to be sheared…..GOLD AND SILVER=>BAD SELL IT ALL AND BUY HOMES & OFFICE SPACE

#113 GregW, Oakville on 12.17.10 at 2:33 pm

Hi Garth, fyi atricle

The Politics of Truth: WikiLeaks, The Power Elite, and Deep Politics

“I’m telling you that our leaders lie to us, they lie to us systematically, they lie to us with a purpose that may not be your purpose. Some of their lies, if you’re a young man, may motivate you to go off some day and die, be killed, or to kill people. And the only way you can defend yourself against other people programming you–because we are programmable, marine corps boot camp taught me that–they can teach you and get you fired up and they say charge and you will charge up the hill without asking why, and perhaps may not come down the hill feet first. The French have a saying that I mangle in translation “Them that don’t do politics will be done.” If you don’t defend yourself by filling your mind with a true understanding of what’s happening in the world then others will fill it up for you, and then at some point in time use the information and the conditioning that they planted in your mind and breast to use you.” – CIA Whistleblower John Stockwell, a Former Chief of CIA Angolan Task Force, from a lecture he gave in December 1989 called “Secret Wars of the CIA.”

#114 Bullion.Bunny on 12.17.10 at 2:36 pm

This message is for “Another Albert”

WTF is this,openbsd-has-fbi-backdoor-claims-contractor.aspx

please comment…..

#115 jess on 12.17.10 at 2:39 pm

difference :

Amercians had to tap into their home equity to pay for HEALTHCARE .
in 2007, 62 percent of all personal bankruptcies were caused by health problems
78% of those filing for bankruptcy had health insurance
The forecast for this year is that there will be 1.4 million to 1.5 million total bankruptcy filings. Our data say 62 percent of those will be medical. That works out to around 900,000 cases, and each one affects about 2.7 people. That makes roughly 2.4 million people who will suffer from new medical bankruptcy filings in 2009 alone.

Most medical debtors were well educated, owned their home had medical insurance and WERE middle class

#116 Debtfree on 12.17.10 at 2:55 pm

Great blog today …..thanks yet again Garth.
I find it hard to believe that there are still sheeple left it north america that will put down good money to buy whats left of the so called news…..papers. I haven’t done that for decades. Thanks again for shining a light on the rats . They have no shame . They are no better than the Madoff gang .Sadly those that are ripped off by their lying spin will never see the inside of a courtroom as the victims that they are .The murdocks , conrad blacks and ilk have destroyed the very name of journalism . We are indeed left with only the likes of wikileaks lucky for us and that is why the likes of tom flanagan calls for him to be murdered (Julian Asange). I believe as do many others I have read on line that Julian Asange should be nominated for a noble prize for journalism or peace or both. Sooner or later some may call for the same fate for you Garth as you uncover the lies and spin and I don’t mean a prize.

#117 Leanne on 12.17.10 at 3:10 pm

#70 Expat in NC on 12.17.10 at 10:04 am
The Queen sure has young looking hands

It’s photoshopped. Those are Sarah Palin’s hands.

#118 vreaa on 12.17.10 at 3:10 pm

Stealth Speculators & Shadow Inventory –
“I am an owner who is again thinking of selling. A 10-30% hit I could handle. Any greater than that and I will regret not cashing out.”

The main engine that will accelerate a crash, the factor that will turn a shallow pullback into a dizzying plunge, is ‘shadow’ inventory.
There are many Vancouver owners who are ‘stealth’ speculators, meaning that they have bought or are holding properties, including primary residences, purely because prices have been rising.
Some of these owners are getting wind of the possibility of price pullbacks, they are considering the possible effects of such pullbacks, and they are weighing their strategies.

Discussion and illustrative anecdote from ‘vancouverowner’:

#119 Devil's Advocate on 12.17.10 at 3:16 pm

Nothing is so strong as the will to survive. Until all hope is lost and no man remains standing the human race will continue keeping on, adapting to the challenges along the way. Life is a one way highway on which there is neither U-turn route nor any shoulders upon which to stop. It keeps moving, some in the passing lane some in the passed lane but none backward. We all are headed to the same final destination. The faster you go the quicker you get there. Go your own speed and judge not they who choose to go faster but, why not slow down and enjoy the ride?

I learned not long ago why old men drive slowly; because they can. They are in no hurry to get anywhere. They appreciate the journey not the destination.

I learned how to drive the highway too late in life. If you watch the traffic in a posted 110 kph zone everyone is racing to stay ahead but generally not so quick as to be caught for speeding. This results in clumps of traffic traveling along at 110 K +/-. These clumps of traffic seem to be fairly evenly dispersed. If you drive at 100 K you will spend 90% of your time in between the clumps rather than in the clumps of traffic.
Try it…

And if you are in a hurry, figure this out; how much time will you save by going 120 kph rather than 100 kph to reach your destination? Is it worth it (speeding ticket – crash?).

Yes we are all on a highway… some will get to their destination a lot quicker than the others… one way or another.

#120 dd on 12.17.10 at 3:28 pm

Real Money

#121 jess on 12.17.10 at 3:29 pm

when irish eyes are lyin’

John Rusnak is a former currency trader at Allfirst bank, then part of AIB Group, in Baltimore, MD, United States. On January 17, 2003 he was sentenced to 7½ years in prison for hiding US$691 million in losses at the bank, after bad bets snowballed in one of the largest ever cases of bank fraud. He was transferred from prison to a halfway house in June 2008, to home confinement in September 2008, and ultimately released from home confinement on January 5, 2009, serving just under 6 years.

Rusnak could have faced up to 30 years in prison. The original 7½ year sentence was part of a plea bargain with US prosecutors. He was released early having earned good-behavior credits and completing a drug treatment program. Upon his release, he started paying US$1,000 a month for the five years of his probation.

Rusnak will remain on the hook for the full $691 million he lost, but prosecutors said the amount he pays back will depend on how much money he is able to make after leaving prison.

Following the scandal AIB sold Allfirst to M&T Bank of Buffalo, New York, in July 2003. AIB retained 23% of M&T stock. Over 1,100 Allfirst employees lost their jobs in the sale.[citation needed]

First Maryland Bankcorp was the holding company for the First National Bank of Maryland, acquired by Allied Irish Banks (AIB) in 1997.

In 1999 First Maryland Bankcorp merged with Dauphin Deposit Corporation to form Allfirst Financial.

AIB sold Allfirst to M&T Bank of Buffalo, New York in July, 2003.
Excess FX charging issues
In 2004 it was revealed that the bank had been overcharging on foreign exchange transactions for up to ten years. The overcharging affected 3 million purchase transactions of foreign drafts. Initially the projected amount of overcharging was €14m. However the bank has set aside €50m to cover the cost of refunds.

The Irish Financial Services Regulatory Authority published a report into an investigation of AIB Group concerning overcharging its own customers for FX transactions and deal allocation and other associated issues[16]. This revealed excess charges of €34.2 million, including interest. AIB failed to comply with the law for a period of almost 8 years and that certain staff and management were fully aware of this at the time.

Eight years later for this whistleblower….
The Financial Regulator knew that Allied Irish Banks were overcharging consumers in FX fees but failed to act for a number of years. [17][18] They gave a parliamentary inquiry the “false impression” that they were unaware of it.[19][20] The whistleblower who gave the FR the information was requested to come to a meeting with them but was only invited to withdraw the allegations of wrongdoing and at the same time found himself removed from his position at Allied Irish Banks without any reason given. After his case was highlighted in the media, the FR officially apologised on how the authorities treated him, eight years after alerting them of overcharging.[21]

AIB announced on 27 September 2006 that the final outlay in respect of restitution and interest arising from overcharging amounted to €65 million and that this included a donation of €20.6 million on behalf of its customers to an unspecified charity that it was unable to identify. No employee or officer of the banks is to be disciplined [22]. (wiki)

#122 Debtfree on 12.17.10 at 3:30 pm

QE explained

#123 Kaganovich on 12.17.10 at 3:34 pm

Brian T

Good point. I think Monbiot would probably distinguish between libertarian and astroturf libertarian, but the problem is that he is simply hypothesizing, writing:

Reading comment threads on the Guardian’s sites and elsewhere on the web, two patterns jump out at me. The first is that discussions of issues in which there’s little money at stake tend to be a lot more civilised than debates about issues where companies stand to lose or gain billions: such as climate change, public health and corporate tax avoidance. These are often characterised by amazing levels of abuse and disruption.

Articles about the environment are hit harder by such tactics than any others. I love debate, and I often wade into the threads beneath my columns. But it’s a depressing experience, as instead of contesting the issues I raise, many of those who disagree bombard me with infantile abuse, or just keep repeating a fiction, however often you discredit it. This ensures that an intelligent discussion is almost impossible – which appears to be the point.

The second pattern is the strong association between this tactic and a certain set of views: pro-corporate, anti-tax, anti-regulation. Both traditional conservatives and traditional progressives tend to be more willing to discuss an issue than these rightwing libertarians, many of whom seek to shut down debate.

So what’s going on? I’m not suggesting that most of the people trying to derail these discussions are paid to do so, though I would be surprised if none were. I’m suggesting that some of the efforts to prevent intelligence from blooming seem to be organised, and that neither website hosts nor other commenters know how to respond.

Does this remind us of some of the personalities on this blog?

#124 dd on 12.17.10 at 3:38 pm

As Garth say … China is not in the game when it comes to gold purchases. Please read and form your own opinion.

#125 Aussie Roy on 12.17.10 at 3:47 pm

AG Sage on 12.17.10 at 1:08 pm

I’m just a retired currency and commodity trader (risk manager) who enjoys blogging in his old age. LOL

I am however flattered, thankyou.

Also since 2008 an ex investment property owner.

#126 grantmi on 12.17.10 at 3:52 pm

Hell.. you should have heard Michael Levy on the Bill Good show yesterday here in Bubbleouver!!

1. Things are great!
2. Buy now!
3. Prices are not going to decline.
4. repeat!
4.5 – Oh.. and buy gold!

Garth! Why are YOU not getting called by the MSM radio stations as a counter view. Why are you only regulated to the Podcasts on web sites.

You know Bill Good…. You should be a regular on his show.. other then Michael Campbell and Michael Levy, Ozzie Jerkoff… and Rob W(r)ennie!!!!!

#127 Aussie Roy on 12.17.10 at 3:56 pm


Are you ever going to enlighten us with any logic. Your mindless baby babble is only highlighting your delusion.

#128 BrianT on 12.17.10 at 4:03 pm

#96Greg-Yes I would expect that Canadians would need to get US guv permission before being allowed to work in Canada-not only that, but IMO the vast majority of Canadians are OK with that setup.

#129 Chris no longer in England on 12.17.10 at 4:06 pm

China – the next Hongcouver?

#130 Chris no longer in England on 12.17.10 at 4:16 pm

Leanne #113:

#70 Expat in NC on 12.17.10 at 10:04 am
The Queen sure has young looking hands

It’s photoshopped. Those are Sarah Palin’s hands.

They can’t be – they are not bludgeoning a fish!

#131 Moneta on 12.17.10 at 4:50 pm

Bottoms_Up on 12.17.10 at 11:51 am
#61 Moneta on 12.17.10 at 9:23 am

In 2000, resales were about 350K
In 2007, 525K
Now = around 450K

So in 7 years, sales increased 50%. I guess we could say that our system had more time to ramp up! I guess soem could argue that we had an extra 4 years, vs. the US, to improve the quality of our real estate exeprts and systems. LOL!

The reality is that Canadian business is more centralized than in the US. We don’t have to change cities like Americans do when we change jobs. So it is totally normal to have a smaller number of sales than in the US.

Let’s look at housing starts:

US went from less than 1.5M in 1998, went to 1.7M for a couple of years and peaked at 2.3M in 2006.

In Canada, we went from around 150K in 1998 to 225K from 2003 to 2007!

Households formation is around 175K. In US, 1.7M.

This means we have been building way more houses than in US.

So maybe a good chunk of the excess is in new homes because people in Canada just don’t move as much as in US.

#132 GregW, Oakville on 12.17.10 at 4:54 pm

Hi Garth, fyi 2min movie trailer some might enjoy seeing.
Inside Job Trailer

#133 Bill Grable on 12.17.10 at 5:11 pm

Noted with a hint of disgust in my voice –
> From

The 2010 Olympic Games managed to cover all its costs, breaking even on $1.88-billion worth of expenditures, according to final budget figures released Friday.

While the Vancouver organizing committee overspent on its initial $1.63-billion budget, corporate and public funds ensured that the final balance sheet had no red ink.

>> NOTE No mention of sticking Vancouverites with the Athletes Village! These clowns had tried to float a give away to Civil Servants – and other crazy stuff.

Taxes just went up 4.5%. DOH!! No Red ink!

I wonder why there are not more people like Mr. Turner around, when we need LEADERS?

Where are the Leaders?

Oh, and in Vancouver, according to latest stats – you are more likely to get robbed here, than in NYC.

That stat for Real Estate agent that posts here as Thegreatestplaceonearth. * Yeh – if you have an AK-47 and AP rounds.

#134 GregW, Oakville on 12.17.10 at 5:28 pm

Hi #129 BrianT, I’m not ok with it, as you might be able to tell. I assume others aren’t ether. How about you?

#135 Cassandra on 12.17.10 at 5:52 pm

Max Keiser is doing a spot on the Canadian real estate bubble this Tuesday I believe. It’s been suggested that he should speak to you.

#136 Mouldy Basement Renter on 12.17.10 at 6:05 pm

#18 Patz
Your comments on CKNW are bang on !
I grit my teeth everytime either Bill Good, Michael Levy, Ozzie Jurock or Philip Till spew anything out of their mouths. The first two are “pumpers” for the ads they pimp and ozzie Jurock would sell his mother a grave plot in the terminal oncology ward.
Mr Till is the most self absorbed, horribly over rated AM DJ I have ever had the misfortune to be stuck listening to when checking for traffic news. His jokes would make Helen Keller wince if she were still alive.

#137 Vancouver_Bear on 12.17.10 at 6:06 pm

#5 TheBestPlaceOnEarth on 12.16.10 at 11:44 pm

Read again what you posted…’s makes no sense….it’s good that you know how to spell words….try putting them into sentences now.

#138 Moneta on 12.17.10 at 6:37 pm

Bullion.Bunny on 12.17.10 at 1:54 pm
My god. I thought I was reading Proust, then I noticed it was all English.

#139 dark sad person on 12.17.10 at 6:47 pm

#84 SK on 12.17.10 at 11:52 am

Either way – I still struggle to see why I should be selling my real estate portfolio. I don’t plan on selling within the next 5 – 10 years (can you forecast what prices will be in 2030?),
In one sentence you say-who could know what prices will be in 2030 and at the same time say in 5-10 years you plan on selling and “obviously” you believe that prices will have recovered by then-
Can you see from here-what they will be in 5-10 years?

The last time this happened 1929-it took until 1954-
25 years for the DOW to get back to 1929 levels-
In Japan-house prices fell for 18 years straight–
Who knows for sure-but i have a feeling we follow these examples-

I generate a significant positive cash flow, and if property values do fall and people are ‘afraid’ to buy that means more tenants in an already extremely competitive market (for tenants). Seems good to me!

That isn’t the trend that’s developing-vacancy rates are escalating and house prices and rent prices are falling and will continue to fall as purchasing power diminishes–

To my way of thinking-rental vacancies will continue going up-prices will go down–way down–tenants will become scarce-
Doesn’t sound like good business to me-especially if your Mortgaged-

#140 Off-Gridder on 12.17.10 at 6:56 pm

“Besides, American homeowners who walk still face big tax bills, while Canadians can wriggle from a mortgage debt through bankruptcy – and keep their homes to boot.”

I don’t understand. If Canadians come out on top after claiming bankruptcy then what are the consequences for borrowing more than they can afford and not doing a worst case scenario risk analysis? If they get to keep their house and not get sued because they live in Alberta did they not just score a free house? So that would be like a reward? Please explain…. ><

#141 BrianT on 12.17.10 at 7:05 pm

#135Greg-It isn’t a positive thing for our society-I might be wrong about most Canadians supporting measures such as these (hopefully).

#142 dark sad person on 12.17.10 at 7:07 pm

Here’s something for all you China bulls to ponder-

#143 Timing is Everything on 12.17.10 at 7:17 pm

#89 SK

Mostly agree. Everyone’s situation is different.
We are in our retirement ‘situation’ and have been
since 2001, when we purchased it. We will be selling (and/or sub-dividing) sometime in the next 20 years, give or take.

The bottom line is, RE prices have peaked, interest rates are going up (quicker and higher than most folks realize), future job situation is tenuous at best (across Canada), taxes/user/utility rates/fees going up…blah, blah.

A lot of folks are ‘a day late and a dollar short’ to ride this one out. They will get run down, slooowwwly over these next 5 to 10 years of funk. But such is life.
If you were not ready (planned) two or three years ago, good luck, you’re gonna need it.

However, It’s never too late to make a better decision.
It will get worse before it gets better, economically speaking. You can not miss the signs, can you? Make a better decision. Use credit wisely, it can be a very powerful weapon, but so many end up shooting themselves in the foot with it.

Strange times indeed.
Crisis? What crisis?
Rules? What rules?

“Finance Minister Jim Flaherty proposed on Thursday that a privately-run pooled savings vehicle be introduced to help cover Canadians who do not have access to a company-sponsored pension plan.”

Sno-cone please.

#144 Bullion.Bunny on 12.17.10 at 7:32 pm

#139 Moneta on 12.17.10 at 6:37 pm

What….cat got your tongue?

#145 Reasonfirst on 12.17.10 at 7:40 pm

#134 Bill Grable on 12.17.10 at 5:11 pm

“The 2010 Olympic Games managed to cover all its costs, breaking even on $1.88-billion worth of expenditures, according to final budget figures released Friday.

While the Vancouver organizing committee overspent on its initial $1.63-billion budget, corporate and public funds ensured that the final balance sheet had no red ink.”:

I love the way they can claim something broke even that required public funds….NOT.


#146 Bill Grable on 12.17.10 at 7:45 pm

Quote of the week:

From Pulitzer-winning journalist Chris Hedges:

American workers, as they are repeatedly told, will have to become competitive with prison labor in China,” he said. “That’s where we’re headed, and all the pillars of the liberal establishment are complicit in this.”

>>Our Largest trading partner is in throes of something – and Mr. Hedges says that it will not be pretty.

That brings me to why I posted this link. I confess to being bearish on RE, especially in view of the fact that I saw what happened to Vancouver in the early 80’s.

That was a picnic, if the TOM spreads widen, the yield curve goes parabolic and the rot continues to eat at Washington.

Effectively, John “the Crier” Bohner and his fun group of insiders really have the reins now.

#147 Kate on 12.17.10 at 8:08 pm

Just talked to the friends of mine yesterday. They have an apartment in Latvia which used to cost 100K fuelled by the potential acceptance to EU. Now the price is 30K, it is almost impossible to sell and doesn’t make financial sense to rent. I’ve heard of 50% drop but this sounded even scarier…

#148 Nostradamus Le Mad Vlad on 12.17.10 at 8:21 pm

#52 Cow Man — “Bought and paid for Press.”

Correct. They are used to serve and push their master’s propaganda, not publish the news. Global Garbage News at six is just an awful piece of trash, so it’s a good time to take a nap!

#93 PTDBD — “Jeeze Carney! Are you really preaching restraint? F, where is our tax cut?? F that!”

Don’t forget Slimeball Harper! He said “You won’t even recognize Canada by the time I’m finished with it.” That’s why the NAU / SPP is still a hidden, or secret agenda, and that’s why there will be an election soon, so these two can be brought in — IF THEY WIN A MAJORITY (which they won’t).

#105 GregW, Oakville — G’day Greg. Seems as if we’re a lot closer to war than most even comprehend. The elite are pushing all their buttons to confuse us. Good post and links.
Toilet humor at its finest. Sound up, but ladies, please avoid!

Just suppose, for argument’s sake only, the US defaults on its debt / deficit obligations in Feb. or March; this will have a detrimental effect on the markets across the world.

As one poster has said, RE will more than likely start tumbling in March, esp. if interest rates start moving higher and a couple of FF’s are thrown in.

The CPC may call an election at the same time, to keep our attention away from other world events, so I guess the following is a starting point:

Bond rout Everything else is pretty much minced meat. Obama and Soros are leading the US down the socialist road — privatize the profits while making serfs responsible for debts.

#149 Timing is Everything on 12.17.10 at 8:39 pm

#140 dark sad person

I’m not in the landlord business, but take it for what it’s worth (to you)….

#150 TheBestPlaceOnEarth on 12.17.10 at 8:53 pm

2010 Vancouver Broke even in the most difficult financial environment since the Great Depression.
Folks 2010 was great but 2011 is going to be spectacular.

#151 The Original Dave on 12.17.10 at 9:07 pm

ladies and gentlemen, 6 FYI articles from GregW today…FYI.

I’m beginning to think GregW is a bot. How does someone start their post the same way everyday for a few months? Sorry if I’m being rude, but wtf. 6 months ago it was Bill (forgot the rest of his name) that each one of his posts were longer than an Ayn Rand novel

Greg W, to break up the monotony, can you for once post something like “hey Garth, here’s a link”. You sound like a friggin machine. Every post starts the same. You have a handful of articles that you want Garth to read, I understand, and it’s a nice gesture. I don’t mean to be an A hole, but can you please try some variation? You’re bright enough to read and type, so I don’t think you have a learning disability that would prevent you from posting things that are reader friendly. This is a blog and it’s purpose is to influence people by providing information / opinions; why not do it in a way that is interesting for people to read – or at least attempt to make it interesting.

#152 John on 12.17.10 at 9:11 pm

Her Majesty is not amused

#153 tkid on 12.17.10 at 9:48 pm

Off Gridder, it means when they declare bankruptcy they can’t walk away from the mortgage obligation. The bank can foreclose, sell the property, and they are still on the hook for the difference of the remainder of the mortgage minus the selling price.

TD recently changed its mortgages so that you could get 125% of the value of the house (but they swear they aren’t actually offering this up to new homeowners but they are saving this as a safety margin) & you could not walk away from the debt through bankruptcy. Why would they do this? So the homeowners, when underwater, would not necessarily need to write a cheque if, when the mortgage came up for renewal, the mortgage was worth more than the current value of the home. It also eliminates the advantage of declaring bankruptcy or attempting to walk away from the property and the mortgage as the damned debt will follow you anyway.

#154 Nostradamus Le Mad Vlad on 12.17.10 at 10:03 pm

HAARP? Plus the LHC Hadron Collider. JPM bought 80% of London’s copper market a couple of weeks ago, and copper thefts are skyrocketing. Someone will make a nice profit off these things.

And Justice For All GS and some banks may be getting their comeuppance.

US$202 Trillion Debt Chart of the day. Plus — Gold Stocks vs. Fiat Currency.

Further Chart Imagine how life would have prospered WITHOUT C-H-F.

Dictatorship The US is fast becoming a clone of Nazi Germany.

EU Bailout “European heads of government vowed on Friday that the eurozone’s bail-out fund would always have enough financial wherewithal to rescue any faltering country,

“It should say: EU leaders commit to in debt future generation to save the corrupted banks.”

Reason for four more years of war (no wonder the US is broke).

Yesterday A&P filed for Chapter 11; today, it is L&L.

Inflation “For the first time since 2008, inflation is hitting consumers in the stomach…”

Hmmm. Recognize these names? Although this is the US, the CPC have to be annhiliated soon.

Govt. Shutdown Partially goes with the hypothetical hypothesis in #149, about the US govt. defaulting on their debt / deficit obligations in Feb. or March, and the CPC calling an election at the same time (everything is connected).

5:03 clip Gold bullion, 9-11 and other naughties.

Fraud “Fraud, you know, is a business practice. And protecting fraud is the primary function of The Fed.”

Palestinian State gaining recognition.

Banxsters in charge in Germany.

2011 won’t be a great year for most of the west.

‘Net Control WikiLeaks is being used by the UN for tightening ‘net regulations.

SicklySqueeks “Speaking to Haaretz, Duff added that “it sticks out like a sore thumb that WikiLeaks is obviously concocted by an intelligence agency. It’s a ham-handed action by Israel to do its public relations.”

BTW, new research shows that GW causes kidney stones!

#155 viewer on 12.17.10 at 10:33 pm

“Yesterday I referenced the mischievous and devious way the real estate industry reports stats. This, I said, is sad enough. That the little buggers of the media just report it, without critical balance or even fact-checking, is inexcusable. ”

come on garth.

“Yesterday I referenced the mischievous and devious way STATISTICS CANADA/US FEDERAL RESERVE/US CENSUS BUREAU reports stats. This, I said, is sad enough. That the little buggers of the media just report it, without critical balance or even fact-checking, is inexcusable. ”

they all use seasonal adjustment – and by the way, why don’t they seasonally adjust price levels? Price levels generally have minimal seasonality depending on the market. For proof, there are a number of academic papers out there that show this – basic pricing, seasonality would generally allow arbitrage opportunities

#156 realpaul on 12.17.10 at 10:48 pm

For people who are fuzzy on the whole ‘China’ issue…heres a fairly layman/readable primer.

#157 Milhous Plumbers on 12.17.10 at 10:51 pm

This pics been circling a while.. should have been Chuck. He was the Royal with a Mc’s beef on the obesity issue.

#158 Aussie Roy on 12.18.10 at 1:16 am


Jobless people from across Canada flocked to Vancouver for it’s warm climate and in hopes of finding work. The popular saying was that “Vancouver is the only place in Canada where you can starve to death before you freeze to death.”

By December of 1930 long bread lines were common in the city, and hobo jungles and shanty towns started to spring up. By the summer of 1931 there were 42,000 jobless in B.C. In September of that year 237 relief camps were created outside the city, where men were forced to do road work. The men called them “slave camps”.

Hunger March of 1932

On March 3rd of 1932 4,000 unemployed workers, squatters, and hobos marched through the city to protest the policy of cutting single men off relief if they refused to go to work camps. City council declined to meet with them and police on foot and horseback charged the group with clubs. The marchers used their flag and banner poles as lances, fighting back and defending themselves, sending 2 police officers to the hospital.

On the morning of March 20th, 1933, the Royal Theatre at 142 East Hastings was torn apart by a bomb. The Lobby and ticket office were destroyed and the explosion smashed the windows of other buildings on the block. One man was slightly injured and the mananger of the theatre, W.P. Nichols, was jolted from bed as he slept in his suite directly above the theatre.

Nichols informed police that the Workers Unity League had met in the theatre the night before to celebrate the anniversary of the Paris Commune. Stink bombs had been used to scare away customers several months prior. The theatre had also been involved in a labour dispute a year before and a projectionists car had been bombed then. Despite this the police decided that the explosion was not a result of labour unrest but simply a matter of a personal grudge.

Sometime after noon on the 20th street car operators found a coconut with a fuse and a skull-and-crossbones painted on it’s side, which they turned over to police.

A mass eviction of families on relief was carried out the same day.

#159 Another Albertan on 12.18.10 at 1:29 am


There’s plenty already written about this on the ‘net. Technically, it’s really essentially a non-issue from a code standpoint. (We have fixed some minor bugs as a result.) Mathematically, who really knows if and when the NSA compromises raw algorithms? That’s years of PhD-level cryptanalysis required.

Also, please differentiate between outright holes versus information leakage due to coding errors versus algorithm vulnerabilities.

Your computer is at greater risk by running unverifiable binary firmware blobs from large multinational corporations.

I’m not sure the proper response to this (and to bring it back to matters pertaining to real estate statistics…) is anything other that Ronald Reagan’s “Trust, but verify.”

Everyone else’s mileage may vary.

#160 Phil on 12.18.10 at 4:53 am

Ah, Garth with regard’s the following:-
Sorry, F. We’ll do you tomorrow.

Oh please Garth , give us the whole story on “F” incuding his competencies and or his deficiencies ?

Garth is the man truly a total bolux or will this become apparent to us all later ?

#161 GregW, Oakville on 12.18.10 at 1:25 pm

Hey #152 The Original Dave, In an effort to keep my post short and give links to info, if someone chooses to look, I use the fyi often. Not that there is anything wrong with long posts.

As for what you call ‘monotony’ it’s tough to please everyone, some here have said they don’t like long post and skip them. Some of my long post take time and don’t get posted in the end. But that’s ok, it’s not my blog after all. The links often communicate the ideas much better than I ever could.

I check the definition of ‘bot’, and I can assure you I am very human, fallibly and imperfect, at least some of the times ;) If I was perfect I wouldn’t need or choose to read this blog after all.