Running on empty

Gather round, kiddies. Story. Once upon a time all the old farts could invest in pretty safe stuff called income trusts. Big companies converted to trusts and passed their profits through to the geriatrics who bought units and received income.

The companies were happy because it reduced their taxes. The oxygen-suckers loved it because they got money to live on. F hated it, claiming it cost the feds tax revenue. So, months after vowing never to tax trusts, F and his buddies nuked them. The farts, who paid tax on their trust income, demanded proof of how this hurt Ottawa. F finally released hundreds of pages of explanation to Parliament. But all of them were blacked out.

Today the trusts are largely gone. And now F is worried about a looming retirement crisis. If the man could suck and blow any better, he’d be a dirigible.

Seven in ten of us have no corporate pensions, a fact driven home to me every day when I sit and talk to people about their failing finances. Six in ten have no savings. Only half have an RSP, most with pitiful amounts. More have a TFSA, but most of them contain a few thousand dollars moulding in the orange guy’s shorts. In short, kinda screwed.

The CD Howe Institute says about half the people now under 30 will not have enough money to retire on. But I’d say from my direct experience that half the people now 65 don’t have enough, either. And may Allah help all the poor misguided 40-year-olds who have houses, mortgages, kids and granite-loving spouses.

Fact is, the bulk of people have next to no liquid assets. And a shocking number of Canadians are so risk averse they’ve bloated the banks with 2% GIC money. This is the same money many of them borrow back at 4% for mortgages. And they’re not even all blondes.

Anyway, you know this stuff. I’ve told you repeatedly the greatest risk we face, given our long lives, is running out of money. Not losing it.

So let’s talk CPP for a minute. It started 45 years ago with the idea that working people would pay into a fund to support the old farts. Then births fell, lives got longer, and the public pension plan faltered as a pay-as-you-go system. So premiums were increased (small business hated that) and the CPP started doing what most Canadians won’t – investing pension money in stocks and bonds. So far, it’s worked.

But here’s the thing: CPP pays peanuts. You can’t live on it, unless you have a farm in Radler SK and share meals and a manger with the sheep. It was always intended only as a top-up to supplement private savings – which is why God also invented the RRSP.

The problem now is that house-horny, debt-addicted  Canadians (70% of us have real estate) have eschewed retirement savings in favour of anything that Debbie Travis sat on. There’s absolutely no doubt millions of people – starting in less than five years – will be retiring in waves without enough income. Some will sell their homes, helping to crash property values. Others will just vote for anyone who promises them money, even if it bleeds their kids through taxes.

All this comes to a head in about 15 years, as nine million Boomers pack up the Stones CDs, Viagra brownies and IV drips and shuffle off to suck up more health care than you can imagine.

So, how do you look after people who refuse to look after themselves? That’s been the big political question for a year among governments at various levels. The almost-consensus: Force people to pay even higher CPP premiums to ensure there’s more money for them in retirement. After all, the option is to spend even more money supporting geezers with welfare programs.

Well, F just nixed that, supported by the fossils who run the Alberta government. Ottawa is now proposing that a giant national mutual fund be created that workers currently without pensions can join voluntarily, run by the insurance companies. Which begs the question: When workers can already volunteer to buy mutuals run by insurance companies (and don’t), why is this a new idea?

Sadly, F’s decision smacks more of ideology (he thinks Ayn Rand’s a hottie) than it does of pragmatism. It also seals the future. Take cover.

The guy may wield power now. But there’s a pair of Depends with his name on it

271 comments ↓

#1 GenXer on 12.17.10 at 11:30 pm

A sad example of the wealthy trying to come up with a solution for the middle class without having any clue what the average person goes through financially.

#2 JO on 12.17.10 at 11:32 pm

Retirement issue is very hard one to crack. I actually favour the idea F is proposing but with some critical modifications. First of all, the plan should be mandatory but allow the employer and employee some flexibility in setting contribution rates between them. Those morons calling for higher CPP contributions and benefits think money grows on trees..and when major financial crisis hit, who’s to say greedy politicians won’t raid national pension plans to cover wicked spending as many are doing the world over ? Forcing companies and workers to pay a set amount simply means lower wages, and lower reinvestment long term.

Allowing mandatory, but flexible contributions to a national MPP plan managed seperately from the CPP but by the CPP Investment team would be a good option.

The majority of the population is stupid with their income…having worked in financial services my whole working life I see the lack of financial discipline every day. It is very sad. When the inevitable debt contraction happens, most of these idiots will blame everyone else and vote for scumbags promising handouts at the expense of our kids and the large number of us who do manage relatively well.
Most boomers will never retire. Sadly.
JO

#3 Guy_in_Regina on 12.17.10 at 11:56 pm

Hey Garth,

Love the Allah references.

Um, doesn’t losing money directly integrate with running out of it?

If boomers won’t pitch in for decent childcare spaces (which are fee for service – big fee!) I sure as shite ain’t gonna pony up the full cost of keeping their wrinkled bodies functioning. Taxman take cover! Someday all the tax paying post-boomer folks will be the dominant political force; better acquire a taste for whiskas folks. You can’t always get what you want; but if you try sometimes, you get what you need.

Starting to see more houses for rent at lower rates already.

#4 MikeT on 12.17.10 at 11:58 pm

Thanks for a good laugh, Garth. Keep postings like these coming! My wifey, who’s incidentally not house-horny and agrees to wait out the RE storm (although we got 2 small kids) also laughed heartily and agreed with what you wrote.
The only sad thing is that we and our little ones will be saddled with the debt that will help today’s geezers have a good life… And nothing good for us when we need our Depends… F-ing F and C and H!

#5 Wildroseblogger on 12.17.10 at 11:58 pm

Yes, Alberta is run by corrupt, inept, and faltering fossils- but they got this one right. The last thing I want is to pay more tax into a welfare program for spendthrift Boomers. They had the most lucrative economic opportunities in history, and if they squandered it they deserve to live out their days in forced frugality. Any Boomer with half a brain, an ounce of humility, and a sense of personal responsibility should be a millionare by now. Nor do I want to contribute to the far off retirment of my 20-something peers if they’re too busy buying boats, quads, mcmansions, and vacations in mexico while I’m working 70 hour weeks trying to make something of myself. I sacrafice my ass off for what I have, and I don’t think it’s right that I should have to bail out someone else because they spent their lives having fun. Fun is great, but you have to take care of your responsibilities first, and if you don’t, don’t go stealing from those of us who worked instead of playing, who live thrifty instead of lavishly. If the tax burden gets to great in a few years/decades, I’ll simply liquidate and move somewhere I don’t have to support a bunch of lazy bums and watch while the system implodes because there’s too many with their hands out and not enough with their hands working. There are jurisdictions out there that are favourable to the industrious and not the lazy.

Nice rant, but (a) any pension changes enacted now will not benefit Boomers and (b) you’ll pay anyway for those who do not prepare. This is Canada. Bend over. — Garth

#6 Kurt on 12.17.10 at 11:59 pm

But there’s a pair of Depends with his name on it

– your sure he’s not wearing them already?

#7 Jody on 12.18.10 at 12:02 am

CPP is crap, it needs to be abolished and as for F loving Ayn Rand, that is a great insult to Ayn Rand. F wouldn’t know a libertarian value if it came up and bit him in the ass. Remeber, privitization according to CONservatives is giving your buddy a no bid government contract. Government needs to piss off when it comes to peoples retirements, especially at the federal level, I can’t think of one federal program that actually works and provides me with a valuable service, all of them are nothing more than tax dollar sucking pricks.

#8 phinny on 12.18.10 at 12:07 am

I don’t know about y’all, but the solution is simple for the Alberta fossils.

If the rest of this country wants to fund aging fogies sucking on O2 and cruising Carnival Cruise Lines while offering on-call, in house medical care, we can just leave.

Having lived in many other places in Canada, and having been born poor in that snotty, liberal-leftist sepulchre tower that is Ontario, I say that Alberta is the only place where it doesn’t matter who you know, who your folks are, where you went to school or any of that crap. If you can swing tongs, you’re as good as anyone else. You’re actually admired.

Carpenters and Plumber and Righands are admired.

And the rest of this country wants to steal from our future. From a young, vibrant, hard-working province that sacrifices days and weeks and months away from friends and family to make a living.

Here, you are responsible for your actions. Here, you look after yourself. Don’t chide the ‘Alberta fossils’. The sick, whining, handout-state that is becoming the rest of the country is what is pathetic.

If you didn’t put away enough for retirement, buy some ketchup and dogfood and deal with it. Don’t steal from me, or the children that I will look after someday.

Just separate already. BC will then be closer. — Garth

#9 20 year Bear Market for Housing on 12.18.10 at 12:07 am

Figure 3 (below) shows people become net sellers at 65. The study is from Journal of American Planning Association written by university professors.

http://www.informaworld.com/smpp/section?content=a789053981&fulltext=713240928

Now look at the wall of Boomers about to turn 65 in Canada in 2011. (Note, our demographics are even worse than the US’s)

http://www12.statcan.ca/census-recensement/2006/as-sa/97-551/figures/c13-eng.cfm

(add 5 years to the age above to get 2011)

Worse, potential new owners & renters are about to take a plunge (20 year olds – look at the chart again). Also keep in mind how many homes the average Boomer has to sell – second homes, vacation homes, rental property… I wonder if they’ll need to free up some equity as they near retirement? I won’t even bring up the worst part of our demographics, i might get depressed. It has to do with the average age of peak earning and spending, and that our economy is almost 70% reliant on domestic consumption.

#10 T.O. Bubble Boy on 12.18.10 at 12:10 am

Unrelated to pensions, but someone in Milton wants to sell a $1.6M house in Milton… and they are using the term “ex-urb” to describe the location! (I don’t think that Garth neccessarily had Milton in mind when starting Xurbia Books)

http://www.torontolife.com/daily/informer/gimme-shelter/2010/12/15/house-of-the-week-1-6-million-for-this-1892-classic-in-milton/

#11 R on 12.18.10 at 12:11 am

The insurance companies are sporting wood at the thought of the management fees they can rake in. Not to mention that any bad bets they make (they would never do that) would be backed up by the tax payer.

Looking around the world, this is the final gift of the political class to the banker class – handing over the keys to public pensions. Or, maybe it won’t matter, Ben Bernanke is printing money to infinity and everything will go up forever!

#12 don bool on 12.18.10 at 12:11 am

A Pooled Registered Pension Plan (PRPP) is a nice trick to pad insurance companys coffers with public funds. I always wondered how these Con slime balls would find a way to bail out their insurance industry buddies. A glorified annuity project forced on the tax payer. Manulife must be salaviting over this plan.
You continually hear how the middle class need to smarten up and lessen their dept. In the meantime these manipulators never let on that their very generous pension plans were in trouble and overextended before the recession and are in even more major difficulties now. The ones who need a kick in the butt for over spending and increasing the dept are these same hypocritical politicians,unions and pension plans.

The big question for these politicians and pension plans now is how can they Pilfer even more from ordinary Canadians pocket books to make up for these pension shortfalls without the general public realising they,re being scamed even more then they already are. Stay tuned.

#13 noise on 12.18.10 at 12:15 am

Combine the CPP and OAS with the GIS and that totals about $1800 a month – correct? A minimum wage worker doesn’t make that much, and they have no house, or other equity or savings. If anyone needs a break, it’s the young people.

#14 TaxHaven on 12.18.10 at 12:15 am

Huh?! Another mutual fund??

Growth is next to zero – and will be for years to come. How is simply upping the ante going to help? More paper money chasing higher paper returns is not going to somehow change that, spurring investors to create jobs and boost exports.

This is all gambling. What’s needed is PRODUCTIVITY, not bigger bets.

If Mr. F were actually an Ayn Rand acolyte – and he ISN’T; he’s another socialist – he would slash regulation, rein in the BoC’s printing, cut taxes & services, lay off a boatload of expensive government employees and end the minimum wage…

#15 T.O. Bubble Boy on 12.18.10 at 12:29 am

On F’s pension “solution” — wasn’t this basically the George W Bush proposal to save Social Security in the US?

How about this idea: stop conning people into thinking houses are the best investment! (and stop insuring their high-leverage mortgages via CMHC)

Maybe we should have rules that limit your maximum mortgage to some multiple of your retirement savings? That might stop people from putting every dime they have into a home!

#16 Calgary_rip_Off on 12.18.10 at 12:36 am

This is an excellent video explaining by an MIT math expert why buying is bad vs. renting. Especially in calgary.

http://www.khanacademy.org/video/renting-vs–buying-a-home?playlist=Finance

#17 Basil Fawlty on 12.18.10 at 12:38 am

#7 “I can’t think of one federal program that actually works and provides me with a valuable service, all of them are nothing more than tax dollar sucking pricks.”

You should talk to my Step Dad about the cost of emergency medical surgery in the US. Although, being another corporate true believer, he avoids the subject, due to the shame.

#18 Mean Gene on 12.18.10 at 12:43 am

Maybe it’s time to emigrate but where to??

#19 BC Bring Cash on 12.18.10 at 12:45 am

What a wacko F is.He should be hauled away by men in white coats to the nearest nut house. he makes his decisions based on which lobbyist (former pal) can bend his ear. Him and his chief puppeteer, harper blindly accept what ever these corporate execs. have to offer without even considering another option.Manulife for example is another one of these private pension options, with very expensive management fees plus has had to recently issue more shares just to stay afloat, screwing and diluting existing share holders net worth, operating like a casino with other peoples money. Thats the direction they want to go in. For example CPP management fees are approx. .2% of the total portfolio.Compare that to private for PROFIT con artist Mgmt. fees of 2% or more . Who wins Mr f, the peoples interests you are supposedly looking after or or the interest of once again your pals in private banking who you will be joining upon your retirement from politics?

#20 InvestorsFriend (Shawn Allen) on 12.18.10 at 12:45 am

Garth says:

“The CD Howe Institute says about half the people now under 30 will not have enough money to retire on. But I’d say from my direct experience that half the people now 65 don’t have enough, either. And may Allah help all the poor misguided 40-year-olds who have houses, mortgages, kids and granite-loving spouses.”

Well I would say that 99.9% of people don’t have enough money to live the working or retirement lifestyle that they wopuld like to become accusomted to.

Well tough sh*t. Life ain’t fair. Get used to it. Why should anyone care much about people (other than the disabled) who can’t make and save enough money in this land of opportunity that we live in?

It’s not the Finance Minister’s job to make sure people are not so stupid that they end up eating dog food. People need to fend for themselves.

Christ, stop the whining. And go read some Ayn Rand. Now there was a smart lady. Plus you can get your jollies by fantasing about Dagny Taggert, the hottie heroine of Atlas Shrugged.

#21 nonplused on 12.18.10 at 12:50 am

#2 JO,

You want to make it mandatory that people give money to insurance companies so they can speculate on stocks and bonds? No thank you. The government meddles in people’s affairs too much as it is.

I agree with you about the part where most boomers will not retire, or at least not when they planned, though.

Garth,

You keep talking about how the government is going to raise taxes, but I don’t see how that is going to work. They take too much as percent of the economy now. There really isn’t that much left to tax out here in the real world. And every dollar that is taxed is simply not spent, saved or invested somewhere else in the economy. In fact, the only reason the economy can grow now is because companies can borrow the money the need to invest from the banks and invest the borrowed money. There isn’t enough left in “retained earnings” to fund anything. People have to borrow to buy a house, borrow to buy a car, they put all their expenses on Visa, even groceries and gas, heck, there ain’t enough to live on once you pay all your taxes to live any other way for most people. Fractional reserve bank credit creation is the only thing that crates enough money to make it appear as if we are all still getting along after the government takes their cut. And I don’t call it a “share” because it’s extortion fair and square. Incidentally this is why I think Ben, Barack, Tim, and Hank were/are so terrified of a credit contraction. If credit contracts, there isn’t enough money to go around.

#13, TaxHaven,

Hear, hear!

What we’ve been doing hasn’t worked. There is no reason to assume that just doing more of it will make it start working. What did Einstein supposedly say is the definition of insanity? “Doing the same thing over and over and expecting a different result.”

Tax and spend didn’t work. In fact, it’s never worked other than to get people elected. It’s very good for that. But it’s time to try doing something different. Something like “Let people look after themselves without government interference.”

There is no way to fix CPP. So they should stop accumulating funds (ie. Kill CPP taxes), freeze people where they are at right now in accumulated benefits, and then ration the fund out to those whom it’s been promised to based on how much is there.

What’s that I hear? There isn’t enough money in the fund to pay out currently promised benefits? What is this, some sort of Ponzi scheme? Oh, right….

#22 InvestorsFriend (Shawn Allen) on 12.18.10 at 12:52 am

I think the Fiance Minister’s idea of multi-employer plans for small business pensions is a great idea. Long over-due. And so what if Insurance companies make a profit providing that service? What you a bunch of anti-capitalist socialists?

Good for F. Let’s give credit where credit is due.

And please stop whining about the Income Trusts. They were a bizarre corporate tax evasion scam and needed to be outlawed. Why can’t people save without a tax incentive? Everyone has a hand out. Who will pay the taxes if we fill the land with tax shelters? Besides, the Income Trust murder is ancient history.

God helps those who help themselves.

#23 al on 12.18.10 at 12:54 am

where can i buy viagra brownies from?

#24 Leanne on 12.18.10 at 12:58 am

Hi Garth, fyi (since GregW is temporarily absent, someone had to fill in) – this post brings to mind a Kung Fu episode.
I am in awe of Master Po’s wisdom.

http://www.youtube.com/watch?v=eGblsNXkJog&NR=1

#25 al on 12.18.10 at 1:00 am

where can i buy those v brownies from?

#26 Dave in Victoria on 12.18.10 at 1:08 am

The more I see the less I want public money in government hands. Let people make their own choices, sink or swim. Cover the costs of roads, infrastructure, health, the odd environmental stewardship regulation, and let the rest figure itself out.

Let the rich pay for wars and militarism that benefit the rich, and leave living to the rest.

#27 Jsan on 12.18.10 at 1:12 am

The Great Canadian Bank myth. It’s amazing how you read over and over again in the US press about how Canadian banks are so sound and secure. They go on and on about how Canadian banks are very careful and cautious as to who they lend mortgage money to…blah…blah…blah. Do any of these economists or financial writers have any clue about the CMHC? Do they have any grasp or understanding that yes, Canadian banks are pretty sound from a mortgage point of view but it has nothing to do with them and everything to do with the fact that The Canadian Tax payer takes all of the mortgage risk in this country?

Sure our banks are sound thanks to the government which is precariously holding 600 Billion dollars worth of mortgage risk. Ah yes, it’s VERY good to be a banker in Canada!!!

“Canadian banks are investing in the U.S. from a position of strength. There was no mortgage meltdown or subprime crisis in Canada. Banks don’t package mortgages and sell them to the private market, so they need to be sure their borrowers can pay back the loans.”

http://finance.yahoo.com/news/Bank-of-Montreal-buys-US-bank-apf-1953766670.html?x=0&sec=topStories&pos=6&asset=&ccode=

.

#28 rory on 12.18.10 at 1:14 am

Garth, usually a big fan but I have to concede that this is not a them or us win. The public unions want this badly as it will reduce their pension (negative) liabilities, thus ensuring it falls off any agenda.

In other words this is just another way for their expansive pensions to be solvent and still garner excessive benefits at the taxpayer expense….just hidden via the CPP.

I agree that CPP needs to be upped for those without a DB pension as long as they contribute towards it.

If you are in DB pension then the ‘extra’ CPP cannot apply to you or your pension plan. We cannot keep filling the trough for those that already drink too much – as in public service pensions.

#29 Crash Callaway on 12.18.10 at 1:41 am

Bloggers I have an insider reporting back to me on “F” activity daily.
My source reports having overheard “F” chuckling with glee at solving the pension crisis.
He was also overheard whispering to Harper that he was on the cusp of solving the bed shortage crisis in Canadian hospitals.
With interest peaked Harper asked how he intended to do that.

” Bunk beds” “F” snorted. “Bunk Beds”

#30 Nostradamus Le Mad Vlad on 12.18.10 at 1:58 am


“F hated it, claiming it cost the feds tax revenue. So, months after vowing never to tax trusts, F and his buddies nuked them. The farts, who paid tax on their trust income, demanded proof of how this hurt Ottawa. F finally released hundreds of pages of explanation to Parliament. But all of them were blacked out.”

A possible reason why TFSAs were introduced, one replacing the other. F saw this oncoming retirement mess (not RE) and bought in a new vehicle to cover his ass.

But they’re still liars and will always be known for that, moreso than the Libs.

“. . . will not have enough money to retire on.” — See link from Mish about how the Eurozone is being turned into a dumbed-down Nanny state (easier to control the populace liike that).

“. . . investing pension money in stocks and bonds. So far, it’s worked.” — Sure has; GICs and CSBs are no more than wallpaper. Pays SFA after taxes and other expenses are taken into account.

“So, how do you look after people who refuse to look after themselves? ” — There is such a thing as self-responsibility here. Not for those who are physically unable to take care of themselves, but for the rest of us, it’s everyone for themselves.
*
Bill C-36 Remember Bills C-51 and 52? This was the CPC’s initiative to give Monsanto and big pharma unfettered access to the Cdn. market. Now 75% of natural foods are likely to disappear from sight. More ammunition to get rid of the CPC!

China Westerners don’t really understand how Chindia Rising will affect them yet.

Bond Bubbles are bursting. Does the controlled m$m report this?

The Pain In Spain stays mainly with the taxpayers. Plus — Baaaddd Debts.

Bioweapons Memories of Bhopal.

This may be another GW scam to push for a new carbon tax.

Isn’t it great that Bernanke helped GS out of their debt obligation, so now Bonus Bonanzas for GS. Is this a great planet or whut?

Top Trends for 2011. WW3, martial law and police state?

Property Rights Obama’s govt. is quietly removing a lot of rights from their citizens.

Banking system insolvent then and now. Plus — Nanny State. Wasn’t Canada a cradle-to-grave Nanny state under Trudeau?

Link in. Dick Cheney always gets his way.

#31 Deptfree on 12.18.10 at 1:59 am

@ nostradamus mad vlad
this I’m sure you have seen.
http://www.youtube.com/watch?v=Mqp9jRFF_H0

In the vane of your thinking … there is a way to push back .. in the spirit of the season …. there are blood diamonds! … anyone with a laser can put a polar bear on a diamond ….yes . So all diamonds should be considered blood diamonds . This is collective punishment . So to protect the value of the real bloodless diamonds one should buy none . Happy holidays.

#32 garth turner jr on 12.18.10 at 2:10 am

Western Canada secedes….retirement problem….gone.

only 12.5 million citizens across Western Canada

…WHAT ABOUT THE COUNTRIES WITH POPULATIONS OVER 1 BILLION?…

#33 Roial1 on 12.18.10 at 2:22 am

#7 Jody on 12.18.10 at 12:02 am
I can’t think of one federal program that actually works and provides me with a valuable service.

Yup! especially the programs that can save your ass. like the food inspection service. Oh ya. that was a good cut. Listeriosis anyone???

It’s not the fact of service cuts, but what is being cut to extend the corporate welfare state. (and cut the tax for the super weathy)

It is now down to 1 to 2% of the population getting VERY RICH while the rest of us have to work two jobs just to break even.

#34 smartalox on 12.18.10 at 2:27 am

After reading this story on the utter lack of regulation in the sale of investment produts by insurace agents in this country, I don’t feel so great about F’s plan to have the insurance industry take over pensions on a national scale

http://www.theglobeandmail.com/report-on-business/through-canadas-insurance-loophole/article1842982/

This industry makes CREA look like a bunch of Johnny do-gooders!

#35 Taxpayer like everyone else on 12.18.10 at 2:32 am

Hmmm – so did Norway get it right?……

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

maybe……

http://www.nytimes.com/2009/05/14/business/global/14frugal.html

#36 Vancouver smart renter on 12.18.10 at 2:43 am

Taking vengeance on the previous generation is a cheap shot. We will also be old one day and just as guilty as our parents and grandparents for abusing what we had. Globalization is our heritage, a system where money gets to move unhindered between countries, but we did not make it contingent on employment, human rights and other rules to follow it.

The gloating of government happened under our watch, it is our generation who is so consumerist that “spend it now pay later” became a norm as opposed to a rare exception. No one forces us to withdraw money in HELOC’s for reno’s or German SUV’s – we do that ourselves. We’re guilty for becoming Moldavia and lacking the rocks or in many cases the intellect to educate ourselves enough to understand consequences.

I wonder how many people actually read all the fineprint on mortgages and HELOCs.

We are responsible for the current political landscape, where it is completely dumbed down and lowest common denominator driven. Politics is all about chasing votes and very little about leading and taking a risk but following principle.

More importantly we’re guiltiest of having forgotten how to say “no” and/or complaining.

So while the boomers may have done their bit too, when it comes to the next generation, I have a feeling more blame will be put at our feet.

The pension shemes have been decimated by governments around the world, in fact that very decimation (through the change in tax rules guaranteeing their economic viability) formed the funding pool for the first wave of unaffordable government spending in the late 90’s. The second one was borrowing from the next generation, which we’re seeing the results of now in Europe (who is offsetting it through bailouts) or the US (where there is total political gridlock)…

Most of all we’re guilty as a generation for allowing ourselves to be dumbed down. The old world where folks from emerging economies were less educated are practically over. Manufacturing is gone, services are about to go too. What are our kids going to get to do?

I know as a responsible parent I can ensure my kids grow up in as much a global domain as possible, able to think critically for themselves and have the basic knowledge to understand a situation and work it forward enough to come to the consequences, then decide for themselves.

Ending a rant, before we look at the oldies who provided so well for us given what they had, we should look at what we are leaving behind for our kids and realize that we have to innovate our way out of this mess by creating sustainable wealth generation systems that will employ and re-constitute the middle class. The sooner we do it, the less painful it will be. Wait long enough… Who cares, no body listens…

#37 kitchener1 on 12.18.10 at 2:59 am

Man, the Conservatives are just hanging on by their nails.

They better tread very very carefully on this one, cause the boomers will kick their asses out real fast if they think they are getting shortchanged on this one.

its a silly plan, people already have the opportunity to do the same thing with RRSP’s TFSA, etc.. this is just another pig with new lipstick on it.

All it does is obsolve govt of providing higher CPP premiums by putting the onus on the citizen.

Here is an idea of F, since he beleives in all things “market (equity) related”. Start offer boomers huge loans- 95% leverage, to invest in canadian equity markets, thing about the gains, think about the capital taxes to be made!!!, back it up by a huge govt entity called CEIC (canadian equity insurance company).

All joking aside, the next party that promises to raise CPP -OAS- GIS to $1800 a month is going to win the next election by a landslide never seen before in history.

Its optics folks, going into a potential election year 2011, the Liberals and NDP will be doing all the campaigning they can and what better message to send to the largest voting block then that they care about them.

Boomers will vote in who ever pays them more, have no doubt about that. Maybe Jack will one day be the PM of Canada and there will be a chick in every pot!!!

#38 Junius on 12.18.10 at 3:10 am

What is all this stuff about Ayn Rand? Her stuff is nonsense. Read George Orwell instead if you are looking for someone who got it from that era.

#39 Taking Stock on 12.18.10 at 3:12 am

Come on people! Stop blaming the boomers, the X-ers, Y-ers, or any other demographic. You can’t blame one generation for the economic hurt to the other. Boomers are housing empty nesters, Y-ers are looking at higher house prices than that which faced Boomers, and the world economy is more affected by global incidents that at any other time in history.

The point is we all bought and spent and incurred debt. It wasn’t on purpose to hurt another generation. Shhheesh.

#40 HouseBuster on 12.18.10 at 3:58 am

short housing buy healtcare stocks?

#41 Tre on 12.18.10 at 4:11 am

Running on empty, it pretty much sums up the governing Conservative’s in Ottawa.

#42 Caron on 12.18.10 at 4:56 am

Dear phinny

Before you get too high on the petrol fumes, you need to look at the business environment in Alberta. The same crony capitalism that sank the Asian economies 15 or so years ago is at work in Alberta. High resource revenues have just slowed the inevitable.

The place functions as an authoritarian single party state with a lot of AstroTurf lobbying thrown in. Start with Northlands Bank and work your way forward in time through a very long list of scandals. Norway (socialist cradle to grave welfare state with same pop and fewer resources) copied Alberta’s Heritage Savings and Trust Fund two years later. Norway has over $800 billion saved. Alberta has only $14 billion. This is the mentality that has taken over Ottawa. Enough said.

#43 Sasquatch on 12.18.10 at 5:00 am

Said before and again, If the gen X/Y continues like this, we will have to work until we die. I mean this literally.

Most walk out with student debt before even getting to the start line of the career journey. Then get the vehicle on payments, the house mortgage with less than 20% down, furniture on payments, and only Visa knows on credit cards.

Debt up to our eye balls and not a penny saved in any decent appreciating vehicles. While the Boomers squandered their economic blessings, the following generations are digging the hole deeper thinking that they are on the high ground.

Very few of us realize how deep the hole already is and how much deeper it seems to get by the day.

#44 45north on 12.18.10 at 5:53 am

Radler, Saskatchewan? Google Maps doesn’t find it.

JO: I like your posts

Wildrose: Nor do I want to contribute to the far off retirment of my 20-something peers if they’re too busy buying boats, quads, mcmansions, and vacations in mexico while I’m working 70 hour weeks trying to make something of myself.

talking about vacations in Mexico, I am surprised at the number of Canadians getting married in Mexico.

This is an expense they cannot afford.

#45 45north on 12.18.10 at 6:27 am

here’s an article I think I understand:

http://www.financialsense.com/contributors/brian-pretti/trailers-for-sale-or-rent

Can a domestic economy still very highly systemically leveraged handle higher interest rates?

Pretti says interest rates are going higher.

I think they’re going higher in the US and higher in Canada.

#46 Peter Pan on 12.18.10 at 6:35 am

Garth,

I think you are getting the sense that people who follow your blog are sick of having the spendthrifts ask everyone else for a subsidy and a lifeline.

I guess many of us are coming to the conclusion that you can’t legislate away stupidity.

#47 Bullion.Bunny on 12.18.10 at 7:30 am

Seven in ten of us have no corporate pensions, a fact driven home to me every day when I sit and talk to people about their failing finances. Six in ten have no savings. Only half have an RSP, most with pitiful amounts. More have a TFSA, but most of them contain a few thousand dollars moulding in the orange guy’s shorts. In short, kinda screwed.

Garth you are a crusader, maybe you should wear tights and have a cape? Maybe like that gold guy in Toronto, what’s his name? Oh yeah Oliver Jewellery the cash man! You are acting like a “Big Daddy Government type”! All the current and unsustainable Government entitlement programs are part of the problem. This has created a culture of dependency, “Oh don’t worry dear the Government will take care of us.” I hear that all the time and almost everyday. Great, most of Canada is full of fools looking for a handout. You cannot save people from themselves, it’s not possible. Remember no good deed goes unpunished! When the final crisis comes and the old farts are eating dog food in their granite homes, this will provide the lesson for the next generation. For the present let the spending continue and they are spending……..full force.

#48 Gary in Alberta on 12.18.10 at 7:37 am

#8 Phinny

I definitely like the cut of your Jib.

Alberta could and would be much better off going on its own.

Definitely would give a much better use of the “F” we use around here as perhaps we could then use the “F” for Freedom.

I’m so done with the “Canadian Way”. They can stuff it but we could try to keep or at least invite Garth around here as he too is a Free Man and could add lots to the pot wherever he goes.

#49 Aussie Roy on 12.18.10 at 8:21 am

“IMF economist Prakash Loungani warns that New Zealand, Australia, the Netherlands and Belgium had the “biggest misalignment” with historical price to income ratios and that Canada, Sweden, Norway and Australia had the biggest misalignment in terms of price-to-rent values. He said the last boom has been so much bigger than previous ones and hence the downturn should be more brutal.”

Treasury and Reserve Bank documents obtained under The Freedom of Information Act suggest the household borrowing spree of the past two decades has knocked Australia’s $4 trillion housing market “out of equilibrium”.

Since 1990, capital city dwelling prices have jumped from three times annual household incomes to over six times annual incomes. And household debt has soared from 45 per cent of income to nearly 160 per cent.

Offically of course there is no bubble here in Australia, says our Treasury and Reserve bank.

SSSSh dont want to scare the sheeple.

#50 Kaganovich on 12.18.10 at 9:08 am

Hey Dawgs,

Here is a great interview with Tyler Durden of Zero Hedge:
http://www.chrismartenson.com/blog/straight-talk-tyler-durden-can-us-avoid-free-falling-bankruptcy/49554

And here is a clear discussion of the consequences of wealth inequality:

http://www.washingtonsblog.com/2010/12/extreme-inequality-helped-cause-both.html

Both are worth taking the time to read this morning if possible.

#51 Bastiat79 on 12.18.10 at 9:29 am

So you think forced savings are better than a non-solution. Are you proposing we can infantilize our way out of this mess?

#52 CTO on 12.18.10 at 9:36 am

Garth

Thanks for the insight on Mr F, I already ne he was an excellent “politician”, if ya know what i mean…

Goin to condo for a momment…
At the local grocery store, i thought i’d check the rental catalog of apts, because my wife and i have NOT been able to rent our apt to anyone decent in years.
I figured average rent in the mag to be about $1100/mnth 2 bdrm in N York.

Lets see…
#300,000 condo at 4% int =$12000yr int alone!
Add 4000 maint
1500 tax
1000 ins

$18500/12 =$1540 mnth…no cash flow there!

I know its been beat to death, but we need to keep doing it!

#53 Aussie Roy on 12.18.10 at 9:45 am

I’d like to look at whats behind the global credit bubble. What might be the final solution. There are a number of bloggers here that I guess have thought about this, have a good picture of the mess and its causes. With Garths, OK. I’d like to hear your comments.

Everyone here I presume knows the money supply is controlled by banks not governments. (The cash in your pocket is only a very small part of the money supply. The bulk of the money supply is created by banks through loans via the fractional reserve banking).

My thoughts are, as I tend to do, is to look back through history for some solutions.

Monetary Reform.

Governments to once again be in control of our money, not bankers?.

Is this a viable alternative?.

http://www.youtube.com/watch?v=hrV84FZ_4G4&feature=player_embedded

#54 Utopia on 12.18.10 at 9:57 am

This new plan being put forward is one of the worst ideas out of Ottawa in a long time. Confidence in the whole financial sector incuding insurance companies is already at an all time low.

Should a combination of Banks and insurers pool resources for Canadians and then go belly up for whatever reason we have just set ourselves up for a pension disaster. Remember AIG, Bank of America issues or the host of too big to fail financial companies that have all gone bust over the last few years?

Oh wait, it’s different in Canada.

Mr Flaherty is doing Canadians no favors here at all and we should doubt the motives behind these trial balloon ideas being floated at this time.

So is the goverment now admitting that it screwed up in it’s quest to build the strongest economy and bank sector amongst the G8 by backing nearly three quarters of a trillion dollars in risky and highly levered debt through CMHC,( much of which could end up being defaulted on later when interest rates inevitably rise?) And that is the public purse we are talking about now isn’t it.

This latest move is really the worst idea I have heard in a long time and is completely irresponsible on the governments part as it tries to offload obligations under the guise of a creative program.

The CPP program already works, it is a pooled and professionally managed fund that functions outside of the hands of private interests. There are just so many conflicts on so many levels once you have the private sector involved in taking care of the financial needs of the elderly. Business always puts it’s own interests and bottom line first.

This new idea stinks. Sink it.

#55 Publius Enigma on 12.18.10 at 10:01 am

#20 InvestorsFriend (Shawn Allen) on 12.18.10 at 12:45 am

“And go read some Ayn Rand. Now there was a smart lady. ”

Yes, Alan Greenspan thought so, too. He was a devotee, in fact, attending meetings in her apartment. You are judged by the company you keep, no?

As for Atlas Shrugged, to be blunt, it’s an epically long-winded piece of paranoid, aristocratic garbage which seeks to legitimize unabated self-interest.

Christ, Galt’s climactic “speech” goes on for nearly one-hundred excruciating pages. Remind you of anyone? (**cough** Greenspan **cough**).

Rand’s modus operandi was simply to overwhelm the reader with unrelenting verbal diarrhea. Again, does this remind you of anyone? You give her far too much credit.

You’re not a closet Greenspan fan, are you?

#56 David B on 12.18.10 at 10:04 am

It was just over four short years ago we had muti $Billions in the bank and a few $Billion in reserve and along came MR “F” who spent it all and much,much more under the direction of MR BIG “H” in the name of “REFORM” ….

And soon “F” will be gonzo like “P” to reside in some dark corner office on Bay Street overlooking Toronto Island counting his fortune ….. and looking into a mirror in admiration. They just might meet for lunch and smile knowing they duked 33 million people with only 36% of the voting dump bells who gave them part time power …. just think soon they will have full time power … then life wll be really great eh?

Merry Christmas

#57 Moneta on 12.18.10 at 10:05 am

Nice rant, but (a) any pension changes enacted now will not benefit Boomers and (b) you’ll pay anyway for those who do not prepare. This is Canada. Bend over. — Garth
————
Well pay as you go does not prop up markets. They’ll promote anything that can potentially keep the balls in the air.

#58 hamilton guy on 12.18.10 at 10:08 am

These old people also get supplements if they do not show enough income. But apparently the governments base the supplement payment on income not asset wealth. As a result too many (1 is too many) get to keep the cottage while recieving the gains supplement which further screws the next generation. Enormous capital (relatively speaking) is often sitting in non income bearing assets like houses, cottages and chalets and modest foreign vacation places. Why should people with $800,000 or more in assets be supplemented by the future generations and this includes the payment of OAS.

They have to change some rules on this even if it means Canada brings back an estate tax or repayment tax that makes all benefits or additional/extra benefits received while you are alive repayable to the extent of your estate plus the value of any capital gifts in excess of x$ given in the prior 5 years to your death, (repayable upon your death). And of course it strikes horror into the hearts to think that one might have to repay the future generation the money which you thought you had beaten them out of because you are entitled to have all your wishes fullfilled including of course wintering in the warm climates and spending the good Cdn dollars in a foreign land instead of here (something a lot of us enjoy doing ).

The giveaway programs in this country are phenomenal – CMHC being only one example. excess pay and benefits to governemnt employees at all levels is another (unless you are one of the blessed).

And when the frenzied but very happy home buyers go under water are we going to be expected to pay – if Alberta truly is a non recourse mortgage walk away jurisdiction then does the rest of Canada have to pay for the Alberta “walk aways” when and if that happens or is that why the CMHC premium went to 3.25% (now 2.75%) on a high ratio mortgage – some years ago (about 1980 – 82). The premium had been 7/8 of 1%. Not sure how the Alberta situation works but read recently that they are the only non recourse province in Canada.

but living in Canda is like living in disneyland _ nothing bad ever happens here and there is a nice lollipop right over there – lets go get it. You don’t have to pay for it – you just have to close your eyes and say “I really deserve it ” and it will be yours.

#59 Moneta on 12.18.10 at 10:11 am

The only sad thing is that we and our little ones will be saddled with the debt that will help today’s geezers have a good life… And nothing good for us when we need our Depends… F-ing F and C and H!
———–
Happiness mostly depends on the gap between expectations and reality. They can grab anything they want from us, many with their bidets will still end up miserable.

I already see it when they complain about the below par treatment in health care. They didn’t want to invest in it yet they want the best.

How many put money in Nortel while health care is a measly .5% in the TSX?

#60 Cassandra on 12.18.10 at 10:14 am

Income trusts were a Ponzi scheme anyway. So are pension funds. None of us will be retiring. Money put into pension funds will just be a sitting duck. People need to be liquid in a deflation, not invested in funds the investment bankers can gamble away in the meantime. Most of that money is gone already. We just don’t realize it yet. we will soon enough though. Canada is living in complete denial about being in a massive bubble that has yet to burst. We have such a big wake up call coming, but by then it will be too late for most.

#61 BrianT on 12.18.10 at 10:27 am

#5Wild-Things are changing so rapidly that I wouldn’t be surprised if you will need to leave before 2020 as it is possible the tax hit to get out will be brutal after that point. When things unwind an awful lot of people just like yourself are going to be looking for the exit, all at the same time, and we need your assets to play with.

#62 Kaganovich on 12.18.10 at 10:33 am

#41 Caron

Exactly!! Sickening to compare the Western Canadian results with Norway’s accomplishments.

#63 Moneta on 12.18.10 at 10:42 am

All the current and unsustainable Government entitlement programs are part of the problem. This has created a culture of dependency, “Oh don’t worry dear the Government will take care of us.” I hear that all the time and almost everyday.
———
Even when there was no social net people did not manage their finances. We had poorhouses… that’s when we decided to create old age security/welfare.

I would say that the social net and government meddling has distorted people’s sense of control over their lives.

Successful people tend to underestimate the part that luck played in their lives. The social net has given people the sense that they are better than they are. Therefore, the successful tend to be more scornful of the unlucky ones.

#64 TheBestPlaceOnEarth on 12.18.10 at 10:50 am

A Canadian needs to save $1 million over a working lifetime and invest conservatively at 3% to generate income of 30 grand. The poor renter is in big big trouble with no pension or savings. Fortunately for the homeowner if they have no pension or savings they can rent out a suite, or a room. In prime Vancouver they can rent their house out 6 months per year and go down south for the winter. The owner can take a reverse mortgage. Rents are going sky high folks. 25 years from now a bachelor suite will be over 2 grand per month. The renter IF they saved a million will still beshort when you take food and living expenses into account. If your totally against Real Estate buy silver (much cheaper than gold) and sock it away. Junior uraniums are another area with explosive growth in the next few years (you BUY before you read it inthe paper folks). What does this all mean for VanHatten. Simply its going higher. Offshore investors are carrying suitcases of cash to the promised land. Look for more crises in the coming years in Asia. The billions will want to come to a place where it feels like home. 2011 Vancouver It just doesn’t get any better. Giver yourself a real gift this Christmas. Give the gift of Vancouver, beg borrow or steal but BUY. Your future survival is in the balance. Warm in a house or cold on the street as the parade of Bentley’s and Lamborghinis blows exhaust on you as you sit begging on the street. Don’t embarass yourself, your family stop renting, pull yourself up by the boostraps and get working and buying in the BestPlaceOnEarth
Amen

#65 Seasonally adjusted on 12.18.10 at 10:54 am

The PRPP plan is bullox. And the other solution (pay more to CPP) is not any better.

My solution is simple and effective.

“Just encourage people to save by giving either financial incentives or raising interest rates”

Running of out money solution fixed.

Thank you.

#66 BrianT on 12.18.10 at 10:57 am

#12Don-Funny you should say that-I had typed that probably Manulife had a vice chair seat with F’s name on it waiting but I censored it.

#67 Alex on 12.18.10 at 11:08 am

Problem is fixed easily.
Target inflation at 0%.
Houses will cost the same in 200 years.( as it was in USA
while dollar was same as gold).
Ordinary people will not need financial advsors as money that you earn at 20 will have the same value when you are 65. Cancel pensions all together. People should think about their retirements and save while young. Birthrate will increase as thousands of years
best retirement is to let kids have your money and they will take care of you.
What rulers (bankers +government) are actually doing now is they take (steal) money with one hand during our lifetime(CPI at 1-3%) through devaluation forcing everyone to run looking for “financial advisor”(lol), so once we get old they promise us pensions. Essentially people agree to exchange todays money for a promise to get pension in 40 years and let middleman (advisor) to make a few bucks during this process.
Unsustainable whichever way you slice it.

#68 Got A Watch on 12.18.10 at 11:12 am

The day I heard ‘H’ appointed ‘F’ as “misFinance Minister” I knew Canada was screwed, and that my impression of ‘H’ as an idiot was confirmed. ‘F’ was a disaster as Ontario “misFinance Minister”, so of course, to a genius like ‘H’, he was the obvious choice. Incompetence is always rewarded in Government with a promotion.

More recently, ‘H’ confirmed it yet again, by appointing the always objectionable John Baird as “Government House Leader” – if you have ever seen this guy in action, he disgraces Canada and Parliament every time he opens his mouth to gratuitously insult someone, which he does about every 30 seconds, all day long. One of the most obnoxious guys to ever walk the earth, nobody in their right mind should chooses a man with his massive personality defects to be a “leader” in a Minority Government situation – unless your goal is to have an election every 3 months. His treatment of female politicians from other Parties is absolutely disgraceful, and acts to degrade Canadian democracy with every vacuous insult he utters. I am ashamed I voted Conservative when I see him in action, and I won’t make that critical error again – fool me once…

These morons have blown up the largest deficit in Canadian history, while posing as “CONservatives” – clearly only the first 3 letters of the name apply here.

Now they want voters to believe the abject lie that these same gross incompetents are the “best at managing the economy”, and that only they can clean up the mess they themselves created. As if.

We have clearly seen in the past here in Canada that is CONservatives who blow up the Budget deficit till it breaks, and then some LIEberals have to come in and really deal with the disaster by cutting spending That is exactly the opposite of the way it should happen – but par for the course in Canada.

We have spineless worms masquerading as right wingers, and idiots across the aisle. I’m not endorsing Iggy or Jack here, they would not be much better than ‘H’, probably, but at least they wouldn’t have to lie about everything so much. You know their goal is to increase “social spending” etc, they don’t hide it – so if you vote for them, at least you will get what you paid for. With the CONservatives, no promise can be expected to be honored, and they clearly stand for nothing besides re-election.

Ever watch Parliament on TV? It’s by far the best argument in favor of abolishing the Federal Government altogether. We could save almost every $ wasted by Ottawa (that would be about 99.9%) by simply getting rid of an unnecessary level of Government that does nothing that is any good for this country in any way.

One point that bears repeating though, was that ‘F’s flip-flop on “royalty trusts” was inevitable – when you have half the corporations in Canada wanting to become “trusts” instead, so they could pay less taxes, it could not be kept the way it was. The flip-flop was just bad management and politics, but something had to be done there, or the Federal and Provincial Governments were set to lose a huge amount of tax revenue – and ordinary taxpayers would have had to pick up the slack somehow, we always do. A better solution would have been to allow the ‘oil and gas royalty trusts’ to continue, and banned other kinds – at least they had some value, in that they encouraged fresh oil and gas exploration and drilling, always an expensive and risky business that needed the increased support. IMHO they weren’t that bad of a deal for the nation, as every barrel of oil or cubic meter of gas produced out of their efforts was taxed anyway in other ways.

#69 randman on 12.18.10 at 11:32 am

#7 Jody on 12.18.10 at 12:02 am
I can’t think of one federal program that actually works and provides me with a valuable service.

Yup! especially the programs that can save your ass. like the food inspection service. Oh ya. that was a good cut. Listeriosis anyone???

Roial1=Dummy

Think!!!

Did the fact we already have a food inspection service
stop the outbreak???

Answer=NO ,so what is the point of having it? To tell us AFTER the fact?

Jody’s remarks stand on solid ground!

#70 MythBuster on 12.18.10 at 11:43 am

Garth, your sense of humour is unbelievably entertaining (when I am lucky enough to understand your very rich vernacular). Have you ever considered a ‘moonlighting’ career, e.g. standup political / economic comedy? Your writing is absolutely hilarious, and your insights brilliant. I think the short-sightedness and folly of most politicians is a rich soil for ‘commentary’ in many respects. They are not your friends anyway!

#71 Sand Piper on 12.18.10 at 12:00 pm

“G”man – I gotta admit, turn on my computer – my first site is yours – for years I logged on to the “Housing Bubble Blog”by Ben Jones in the states – it was nice to converse with others who could only shake their heads at what society had become – it actually gave me a piece of mind knowing that I was not the only one who thought the world was going mad with debt…(what was written about housing in 2007 – just when the market was falling apart but the media & government was chirping everything was golden – I seem to sense its deju vu all over again – 2010 Canadian Style).

What we need – is a good kick in the #%!&’s … a few very hard lean years – where we once again teach our kids the basics – one car – simple house – garden to grow your own veggies – simple backyard weekends – … most of those who experienced the great depression have passed on…

My grandfather who lived in 1920’s Germany.. before his passing told me how frightful life was – where an orange for Christmas was a very very big thing – and the countless stories and you realize how people were mentally and physically punished and how this extremist evil party got a foothold in the political scene (mind you – the media today falsely protrays the nazi party just waltzing into power – far from it – they were for many years protrayed as a bunch of holigans and bullies, brown shirt bullies they were known as (sort of like the hells angels of today but with a more sinister plan) – but desperate times called for desperate measures.

We in Canada – need a serious dose of reality – when I see my neighbours kids – (and thats another topic all together on childhood obesity) parents buying them electric powered cars – $200 for a piece of plastic where the kids don’t exert an ounce of energy – while my kids ride on used bikes that I bought at a police auction for $7 – years of use and staying fit a the same time…again people – we need to return to the basics.

The days of excess that is now being exposed to our children so they can become indebted servants in their adulthoods needs to be broken… Life is what we put into it – but things have changed so drastically that it seems like everyone feels they are entitled to some golden lifestyle – “Ceasar Style”- rose peddles laid beneith their feet – fresh fruits at their whim – the finest silks – woman at their beckon – thats what society has become – we all want to be Ceasar –

Let the corporate elite wither and die – we need to take back what life is really all about – experiences that come from simple things in life –

Cheers to all the bloggers – lets hope tomorrow brings some sanity in this insane world.

#72 GBoomer on 12.18.10 at 12:02 pm

#27 Rory

If you are in DB pension then the ‘extra’ CPP cannot apply to you or your pension plan. We cannot keep filling the trough for those that already drink too much – as in public service pensions.

You seem to think the CPP is some sort of government handout funded out of thin air at best, or the backs of millions of non-boomers who still have the misfortune to have been born after 1960 or so at worst. You fail to acknowledge that since the inception of the CPP in the late 1960’s, the bulk of its funding came from the paycheques and employers of those very boomers you seem to have a hate for. Yes, some boomers have public service pensions, but many of them (except for those in middle and upper management who managed to survive rightsizing or downsizing) draw relatively modest pensions. But that isn’t free money either; boomer public service employees paid into pension plans, too. They also paid what used to be UIC but has become EI premiums. I paid EI for nearly 40 years, knowing full well that I would never collect EI, but do I feel all pissy about the generations of EI bums spending six months a year either ski bumming or beach lounging? No. Do I feel disabused because my tax dollars were used to pay for less fortunate people on social assistance, knowing that some (few I am convinced) were routinely gaming the system? No. Do I feel apoplectic because while I rarely have needed to make use of health care, there are those who run to the doctor every time they get so much as a sniffle? No.

Maybe it’s the values I was raised with, but if you want to live in a democratic society with a decent standard of living, you have to accept that there is a price for that society. You pay taxes and you hope the money is spent wisely for the greatest good for the greatest number, but you can’t control or dictate who gets what. Despite criticisms of long wait lists for medical procedures, there is little if any wait for emergency procedures and the quality of care is outstanding. Despite the inevitable criticism of the education system, our kids can mostly function in the world, even if they can’t spel or wrt a sentence. wrth. a. shite. LOL, etc.

See, here’s the deal: Most boomers who have had the audacity to get a decent job, and who have held on to it all their lives, have been rewarded with moderately rising income. That’s the good news for them. The other side is that the taxes they have paid have largely funded government programs, infrastructure development, the education system, the medical system, EI, social assistance and other boondoggles like Olympic Games, Expos, fast ferries and multi-kajillion dollar ribbons of shiny blacktop from Vancouver to Whistler. (Can you tell I live in BC?) And all of this when the economy has been up and down like a whore’s knickers, with expensive families to raise and maintain and university educations to subsidize. And here I emphasize: I am not complaining. You take what life gives you and you deal with it the best way you know how.

There are fiscally stupid boomers for sure, but fiscal stupidity is not a generational handicap. There are stupid 40, 30 and 20-somethings who also look across the street at the neighbour’s new car, boat or RV and say to each other, “Man, we need to get ourselves some of that.” So they take out a HELOC just to keep up. My wife and I never fell victim to that way of thinking. Never owned a boat, a house at the lake, a massive RV and have never driven a brand new car. We bought a modest family home that is mortgage-free and set about providing for our family, paying the bills and putting aside a few dollars for the future.

If that makes us greedy, grasping boomers who are drinking too much at the trough, well, you don’t know jack.

#73 GregW, Oakville on 12.18.10 at 12:04 pm

Hi Garth, fyi I heard this yesterday and found it interesting. I thought others might be interested too.
It can be down loaded. I’ll need to find time to here the
other episodes some time.

CBC radio, Ideas
The Origins of the Modern Public, Parts 1-14 (Listen)

Episode 14 – The Public Sphere Today
http://www.cbc.ca/ideas/episodes/features/2010/04/26/the-origins-of-the-modern-public/#episode14

#74 Gord In Vancouver on 12.18.10 at 12:06 pm

I agree – this is not going to end well. Cash strapped baby boomers are still prevalent even though most North American stock markets have now recouped most of their late 2008/early 2009 crash losses.

#75 David B on 12.18.10 at 12:10 pm

When things start to go South here in Canada will we see headlines like this?

PHOENIX — Attorneys general in Arizona and Nevada filed civil lawsuits Friday against Bank of America Corp., alleging that the lender is misleading and deceiving homeowners who have tried to modify mortgages in two of the nation’s most foreclosure-damaged states.

http://www.huffingtonpost.com/2010/12/17/arizona-sues-bank-of-amer_n_798439.html
————————–

Merry Christmas

#76 Ret on 12.18.10 at 12:14 pm

Here is a wonderful little pension calculator combining, OAS, CPP, and GIS.

One caution. At 65 I receive OAS and CPP directly from the government and my company pension is reduced accordingly.

Input the correct numbers for any reduced company pension payments if that is what will happen to you.

http://www.oneatout.com/pc/oasCale.php

(Garth -delete that last post I made in error without the link. Thanks)

#77 Jocelan on 12.18.10 at 12:33 pm

House-horny? You are SO funny!

#78 dark sad person on 12.18.10 at 12:41 pm

#150 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)….

***********
Thanks for the link-
I don’t dispute your charts of Canadian rentals and vacancies-

The charts i linked are of US housing prices-i do this because the US is about 4 years ahead of us in the Housing unwind and the Deflationary forces that are evident from the horrendous loss of Peoples net worth-

Canada is still in the last stages of an Inflationary blowoff-we have all sorts of price/sales distortions which we see posted daily on this board-
In other words we have yet to develop a solid trend-like the US has-
I was watching when their Housing bubble popped and it was the same sort of undefined pattern at first-some areas were still selling and some were crashing-rents were still holding up-it took almost a year to get everything pointed South and when it did as you can see in my charts-it has been a steady decline since then-

Here’s the reason why-
As People lose jobs-wage rollbacks and they simply cannot afford rent prices or the style of life they were living-so Families move in together or singles all share a house with many to reduce living costs-
This is a growing trend–
As people default in greater and greater numbers-the homes sit on the market with no buyers-this causes prices to fall and vacancy rates climb and with a surplus of vacancies-rent prices fall as renter demand dries up-
(Supply overwhelms demand)
This scenario is easy to see in the US after this length of time-as the charts show-

Don’t ignore what’s happening in the US or in parts of Europe-it is a map of our future-
It will happen here-just give it some time-

#79 Hoof Hearted on 12.18.10 at 12:49 pm

F is simply engaging in a pre-emptive BS strike. This mass of poor retirees has been predicted for years as the boomers retire.

Ironically (aka as to be expected) the pigs at the trough continue to engorge themselves aka MP’s,MLA’s public servants, etc.

I sense a revolt on par with the riots in Europe, your stereotypical nice Canadian will wake up soon after a long post Trudeau era hibernation with their cranium removed from their rectal cavity and ask WTF happened ?, was I lied to and manipulated.?

The system has always had too much fat…..the equilibrium shift will result in many disappointed pigs(sorta “Animal Farm” -ish).

Don’t kid yourself thinking government waste is to blame for a looming retirement crisis. Government could be eliminated entirely and we’d still have a crisis. This is the fault of people who refuse to look after themselves. Do you have a pension? — Garth

#80 dd on 12.18.10 at 12:54 pm

…Ottawa is now proposing that a giant national mutual fund…join voluntarily…

Let hope it is and remains voluntary. I don’t want to give one more penny to the government to “manage.”

Actually the CPPIB has done quite well. The plan was heading for insolvency in 2015, a situation now reversed. Try research next time. It helps prevent embarrassment. — Garth

#81 Junius on 12.18.10 at 12:55 pm

For the Randites out there here is the account of how Alan Greenspan broke with her philosopy:

“Greenspan’s breaking away from Objectivism. In his autobiography, The Age of Turbulence, Greenspan explains why he stopped being an orthodox acolyte of Rand’s Objectivist philosophy:

Like any new convert, I tended to frame the concepts [of Rand’s philosophy] in their starkest, simplest terms. Most everyone sees the simple outline of an idea before complexity and qualification set in…. It was only as contradictions inherent in my new notions began to emerge that the fervor receded.

One such contradiction I found particularly enlightening. According to the objectivist precepts, taxation was immoral because it allowed for government appropriation of private property by force. Yet if taxation was wrong, how could you reliably finance the essential functions of government, including the protection of individuals’ rights through police power? The Randian answer, that those who rationally saw the need for government would contribute voluntarily, was inadequate. People have free will; suppose they refused?…

I still found the broader philosophy of unfettered market competition compelling, as I do to this day, but I reluctantly began to realize that if there were qualifications to my intellectual edifice, I couldn’t argue that others should readily accept it. By the time I joined Richard Nixon’s campaign for the presidency in 1968, I had long since decided to engage in efforts to advance free-market capitalism as an insider, rather than as a critical pamphleteer.

Greenspan here admits what has been suspected for some time: that he came to believe that Objectivism was flawed and so ceased being an orthodox advocate of Rand’s philosophy.”

The full article is here:

http://aynrandcontrahumannature.blogspot.com/2008/11/objectivism-economics-part-7.html

#82 Milhous Plumbers on 12.18.10 at 1:04 pm

I propose Club Z for the masses who reach 65 and haven’t saved. History speaks: Hitler & Stalin made good use of them. You know, labour til you drop in exchange for little food and a hard board in a government run camp well up on the shield. Compulsory & singular entertainment every sabbath – Lawrence Welk reruns. This would seriously teach Canadians to save.

#83 Daisy Mae on 12.18.10 at 1:05 pm

“Ottawa is now proposing that a giant national mutual fund be created that workers currently without pensions can join voluntarily, run by the insurance companies. Which begs the question: When workers can already volunteer to buy mutuals run by insurance companies (and don’t), why is this a new idea?”

When I read that, I was also shaking my head….absolutely unbelievable.

#84 Kevin on 12.18.10 at 1:20 pm

Unemployment rate for Saskatoon, past, present, future http://saskatoonhousingbubble.blogspot.com/2010/12/unemployment-rate-for-saskatoon-past.html

“Recent home buyers are confident the economy in and around Saskatoon will be strong in the near future. But the near future is only a couple of years not the 25-35 years the length of a mortgage. Not only are interest rates going to be different in 5 years ( higher), the job market is really an unknown. Saskatoon has had double digit unemployment rates before (90’s), no reason why they won’t come back in the future (25 – 35 years). Sadly, most new home buyers think that is the unthinkable.

#85 Moneta on 12.18.10 at 1:32 pm

One point that bears repeating though, was that ‘F’s flip-flop on “royalty trusts” was inevitable – when you have half the corporations in Canada wanting to become “trusts” instead, so they could pay less taxes, it could not be kept the way it was
——–
Many of those income trusts were crap anyway. Notice how little were bought back by companies that IPOed them out. If they were so great, the mother companies would have bought them back at fire sale prices.

They waited for the cycle to give them profits and IPOed at the most opportune time.

Many of them with high distributions were just burning furniture to heat the house. F could have waited for the sector to implode by itself but when larger firms were ready to play the game, he lost it.

There is nothing inherently wrong with an income trust corporate structure. Nor did Ottawa ever prove a revenue loss. — Garth

#86 dd on 12.18.10 at 1:35 pm

#79 dd

“Actually the CPPIB has done quite well. The plan was heading for insolvency in 2015, a situation now reversed. Try research next time. It helps prevent embarrassment. — Garth”

Garth, you fail to actually read the response (time again). I don’t care if they have actually done well. I don’t trust government with money. Period. It is a fool that does.

You did it again. — Garth

#87 Bill Grable on 12.18.10 at 1:39 pm

Debt service costs have reached such astronomical levels even though, over the past year and more, yields have been kept historically and artificially low by “quantitative easing (QE)” – in other words, Federal Reserve Chairman Ben Bernanke’s virtual printing press. Now borrowing costs are 28pc higher than a month ago, with the 10-year Treasury yield reaching 3.33pc last week, an already eye-watering debt service burden can only go up.

While the UK isn’t ensnared in monetary union, gilt yields have also spiralled 18pc since the start of November – to 3.55pc. British Government debt is officially £1.05 trillion. We are fast approaching a debt-to-GDP ratio of 100pc, compared to 30pc just a decade ago. If you add off-balance-sheet liabilities to Government estimates, including the bank bail-outs which disgracefully remain “off the books”, the UK already owes more than an entire year’s national income. In the medium-term, this is surely incompatible with a Triple AAA credit rating.

#88 BrianT on 12.18.10 at 1:42 pm

#80Junius-Look-you are not going to find even one human of great wealth (over 100 million) who is not an advocate of huge government power. Rand talked about a theoretical world, not this world. All these human rights abuses that are being enacted with increasing speed are supported by basically 100% of this group (there are a few minor exceptions, usually filmmakers like Michael Moore,etc.)-Rand didn’t even cover this territory.

#89 phinny on 12.18.10 at 1:43 pm

Hello Caron. Move to Norway, then.

Just kidding. I’m sure, however, if we were able to hold onto the 10 billion plus dollars per year we transfer out of the province, our Heritage Fund might be a little more meaty.

Socializing the oil patch, introducing heavy royalties, or whatever the scheme that a non-Albertan might propose, worked so well when Trudeau implemented it, that tens of thousands of Albertans lost their jobs and homes. I still here the old timers…

As for the idea of a “single party totalitarian state”- now, if I remember correctly, I was able to VOTE in the last provincial election. It isn’t that Alberta is undemocratic, it’s that we all think alike. Hence, the only challenge to the Conservatives is the Wild Rose, which are EVEN more conservative!

One advantage to like-mindedness amongst my Alberta brethren is that our Government can plan long term, making long-term decisions like, well, eliminating provincial debt. Completely. I’m sure Norway has no public debt (sarcasm)…

You see, the rest of ya’s think we’re a bunch of gun toting, truck driving red necks, and you’re kind of right. But, capitalist libertarian sensibility trumps airy-fairy pinko dogmatism any day.

…pinko, heh-heh…

Alberta is not in trouble. We’re debt free.

How is your province doing.

#47Gary – of course I’d love to see that bearded dude in a gun metal hummer show up here. That truck alone would justify us building another upgrader. Probably won’t happen, though…

#90 allister on 12.18.10 at 1:43 pm

I work for a large Canadian corp who has had a DC pension plan since 1998.

The DC contributions are only allowed to be invested in mutual funds of one of Canadas largest and oldest insurance companies.

The hot topic at work is that the returns since 1998 are actually negative and the pension values are below the actual cost average put into the funds. What is more astounding, is the biggest winners are the money market mutual funds – DUHH.

There’s a whole bunch of aged boomers who can’t retire because they can’t break even after 12 years.

Thanks for nothin Mr F.

#91 Junius on 12.18.10 at 1:52 pm

#49 Kaganovich,

Both articles are excellent. Thanks for posting!

#92 Junius on 12.18.10 at 2:01 pm

#63 BPOE,

You said,”Rents are going sky high folks. 25 years from now a bachelor suite will be over 2 grand per month.”

You are on crack. What evidence do you have to support this?

Even more more than home prices rent prices are sensitive to wages and affordability as most renters are in the bottom income class. If Vancouver rents increased to this point without a corresponding rise in wages (that NO ONE is predicting) there would be a mass exodus out of the City.

Rents, in fact, will continue to down.

You completely fail to grasp that the past decades of house rises in Vancouver was based almost entirely on access to cheap debt. As this process unwinds and reverses prices will fall. Starting with rent.

Go back to the crack pipe.

#93 Junius on 12.18.10 at 2:03 pm

Garth,

What are the considerations for making a portion of your investment in a TFSA tax deductible? For example, what if 25% of the contribution acted as a deduction similar to and RRSP contribution? Wouldn’t this at least encourage more use of this vehicle?

Impossible (for revenue purposes) unless proceeds of the plan were partially taxable upon withdrawal. — Garth

#94 GregW, Oakville on 12.18.10 at 2:06 pm

Hi #23 Leanne, Still here, reading first, thanks.

#95 Mr. Lee on 12.18.10 at 2:09 pm

Economics is about scarcity. Politics is about promising the sky so that you get elected. Both concepts are opposite to one another, hence what we as country are wittnessing right now and in the future.

Abe Lincoln said, “Governement provides for the people what the people can not individualy provide for themselves.” also, ” you can fool some of the peoples some of the time and all of the people some of the time but not all of the people all of the time.”

As your blog is named….The Greater Fool……Abe is rolling in his grave.

#96 Taxpayer like everyone else on 12.18.10 at 2:15 pm

22 Shawn/67 GAWatch – agreed on the income trusts. Ya had to see this one coming, especially when certain companies were converting. It couldnt last.

71 GBoomer. I’ve been blogging with Rory for quite awhile, and I can’t recall him ever having a “boomer” issue, though he does have a “public service pension” issue. You may have jumped to a conclusion, but I will let Rory blog for himself.

57 Hamilton – Yes, one of the great paradoxes. Here, on a blog which covers saving/investing/wealth creation, we seem to have problems with those that actually use the system to best advantage.

There are still many taxes large estates pay. Sell that cottage or stock portfolio? Cap gains. Wind up that RRSP?
Income in the year of death – big ouch.

#97 GregW, Oakville on 12.18.10 at 2:22 pm

Hi #29 Nostradamus, Your link to Bill C-36 article should be read if you care about retaining access to healthy food and water for your family! But PM H’s and all the Senators may not be able to see that far ahead for even there own families? We can still hope, but I’m not holding my breath and neither should you!

#98 robert in london on 12.18.10 at 2:28 pm

#59 Cassandra

“People need to be liquid in a deflation, not invested in funds the investment bankers can gamble away in the meantime. Most of that money is gone already. We just don’t realize it yet…”

You obviously ‘get’ what so many ‘investors’ do not (to their eventual great detriment). Everyone is still obsessed with making money instead of preserving what they have.

I don’t expect to always be sitting in cash but I’m quite happy to do so until the bad debt is liquidated and the ‘bezzle’ in finance is forced back under the cold dark stone where it belongs.

#99 Mark on 12.18.10 at 2:29 pm

“Cash strapped baby boomers are still prevalent even though most North American stock markets have now recouped most of their late 2008/early 2009 crash losses.”

How so? TSX is still down ~20% from its peaks, as are most other markets. China is still down 50% from its peak. Nikkei-225 index is down 30% from its 2008 numbers, and down 75% from its peak. I think you would be very hard pressed to find any stock investor, absent significant contributions in the past couple of years, that is anywhere close to ‘even’, or anywhere near the sort of stock wealth they had in the 1990s.

Only fools with 100% equity portfolios are still less wealthy than in 2008. A balanced portfolio with a 40% fixed income component lost 15% in 2008-9, regained that by January 2010 and is now ahead 12%. — Garth

#100 realpaul on 12.18.10 at 2:33 pm

F knew full well that when he raped the seniors by bashing the trust income that they would quickly run out of savings. He was willing to screw them because he’s desperate for cash….the cash flow idea came in the way of taxation on the seniors savings when they were forced to sell ( crystallize) their investments and pay increasing amounts of tax on money they’d squirelled away.

The government hated that they couldn’t tax those billions in savings until the seniors could be forced to sell….so F and the the dreaded tax dept cooked up this little plan that would give the Finance Dept greater access to a new source of cash flow ie: seniors savings. Thats why the memo from F as to why he raped the trusts was entirely redacted.

But that plan has blown up in F’s face. He’s hired hundreds of thousands of tax auditors to rape the citizenry…but now they’ve become a net drag on the system as the savings gusher of seniors taxes is quickly running out.

Carney has let one slip,

““Private debts are very quickly becoming public debts,” he explained, referring to the huge deficit financings mounted by governments to sustain economic demand when business and household spending slumped in 2008.”

The expansion of F’s debt machine has exploded any chance of deficit control…he’s between a rock and a hard place. Either keep hiring civil servants to make the EI numbers look better or admit that we could never afford such reckless hiring in the first place.

http://www.thestar.com/business/article/909160–the-hard-part-of-recovery-is-just-starting-says-carney

So, the only answer is to raise taxes…by raising the CPP? Crazy desperation. The reason people are not saving is because they can’t. The taxes are too high…and going up. People can’t afford to have children…..and those who have children can’t afford to raise them. Paychecks are all getting sucked away in direct and indirect taxation.

As we have seen in jurisdictions around the world the top heavy spending by government and heavy handed taxation is what has been the ultimate decider of the failed economies in the news. F wants to keep spending and keeps raising taxes to pay for it. The unions will howl when they start the layoffs….they’ll cry ‘betrayal’. But whats left after the taxpayer is forced to kick back 100% of his income?

The well publicized heavy handed treatment of the citizens in Canada by the police is a warning……by suasion the government is warning people here not to get out of line or else. We see examples of citizen murder in the news headlines constantly. You’re being given graphic examples of what will happen to you if you speak out.

Heres a question for you. How many soldiers were killed in combat in Afghanistan last year? Now….How many citizens have died by the hands of police in the same time frame here in our ‘safe’ nation? That there are more people dead on the streets of Canada by the hands of police than soldiers killed in a war zone at the hands of the Taliban should tell you something. The G20 show was just the start…they were field testing their new equipment.

The fact that seniors and children are starving here is being played down. The fact that parents are lining up to get weekly food at chartity orgs is being blithley ignored. Thousands of people are being impoverished by the ZIRP and the trust rape. The question is “What will be the final straw here in complacent Canada? The HST made people mad…will it be mass starvation and poverty that crystallizes the fact that we’ve all be screwed?

#101 dark sad person on 12.18.10 at 2:37 pm

The companies were happy because it reduced their taxes. The oxygen-suckers loved it because they got money to live on. F hated it, claiming it cost the feds tax revenue. So, months after vowing never to tax trusts, F and his buddies nuked them. The farts, who paid tax on their trust income, demanded proof of how this hurt Ottawa. F finally released hundreds of pages of explanation to Parliament. But all of them were blacked out.

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

All of them were blacked out-

Typical Socialistic Commie Government trick–
What was blacked out was probably what showed to be the Billions that were lost in Foreign investment as they pulled their Money out of a Hugo Chavez Dictatorial type of Government that is Industry adverse-

The biggest Revenue loss would have been to Government Oil and Gas and the Tax Revenues that spawned from this once thriving Industry-
Just a “bit” too embarrassing for a Government that depends on face saving at all costs-so black it out-

It wasn’t only the Investors that got burned-it was the Oil Industries JR. Explorers-
Through the existence of those Trusts the JR’s explorers developed a new type of Industry-where they could find and prove out Oil and Gas fields without ever having to put them into Production-
Once proven out-they could then sell their holdings to the large Producers ie: the Income Trust Companies to develop with the Revenue they were generating from the Trusts–
This new Market had great potential and Foreign Investor Money came flooding into both Trusts and Explorers and created Jobs that never existed before-

F-not only F’d the Shareholders of both Trusts and Explorers-but it also cooked a newly developed Industry and the thousands of People that worked at either end-
Exploration came to a standstill with the demise of the Trusts and has never recovered-
People who work-can and do pay Taxes-that Revenue stream has now dried up-
Another smart move by the blundering idiot F-that we’re stuck with having to call a “Finance Minister”

#102 Debt's Dark Embrace on 12.18.10 at 2:45 pm

We had it so good for so long because we won WW2. North America’s manufacturing capabilities were intact while the rest of the world’s was demolished. The winners make the rules and we prospered. Japan started to catch up in the 70’s and our decline began. Now China and Asia are being industrialized and our further decline continues. The great global re balancing is in progress. We bumbled along and got by until interest rates became too low for too long and lending standards became too low for too long. We created bubbles. Now we have too much debt, both sovereign and personal. Can we pay it back as we continue to decline? Hmmmmmmmm……

#103 GregW, Oakville on 12.18.10 at 2:57 pm

Hi #52 Aussie Roy, thanks for your link to the 8min talk it’s worth hearing and thinking about.

#104 S.B. on 12.18.10 at 3:07 pm

Explains plenty…

“Walter Lippmann, an American intellectual, writer and two-time Pulitzer Prize winner brought forth one of the first works concerning the usage of mass media in America. In Public Opinion (1922), Lippmann compared the masses to a “great beast” and a “bewildered herd” that needed to be guided by a governing class. He described the ruling elite as “a specialized class whose interests reach beyond the locality.” This class is composed of experts, specialists and bureaucrats. According to Lippmann, the experts, who often are referred to as “elites,” are to be a machinery of knowledge that circumvents the primary defect of democracy, the impossible ideal of the “omnicompetent citizen.” The trampling and roaring “bewildered herd” has its function: to be “the interested spectators of action,” i.e. not participants. Participation is the duty of “the responsible man”, which is not the regular citizen.

It might be interesting to note that Lippmann is one of the founding fathers of the Council on Foreign Relations (CFR), the most influential foreign policy think tank in the world. This fact should give you a small hint of the mind state of the elite concerning the usage of media.

“Political and economic power in the United States is concentrated in the hands of a “ruling elite” that controls most of U.S.-based multinational corporations, major communication media, the most influential foundations, major private universities and most public utilities. Founded in 1921, the Council of Foreign Relations is the key link between the large corporations and the federal government. It has been called a “school for statesmen” and “comes close to being an organ of what C. Wright Mills has called the Power Elite – a group of men, similar in interest and outlook shaping events from invulnerable positions behind the scenes. The creation of the United Nations was a Council project, as well as the International Monetary Fund and the World Bank.”
– Steve Jacobson, Mind Control in the United States”

#105 The Original Dave on 12.18.10 at 3:23 pm

I call this and have called this “the staggered recession”, because for Canadians, that’s what it is. Most haven’t felt the full brunt of things as credit has been expanding since the crash of 2008 while most countries have been deflating.

We as Canadians didn’t get all the pain at once, but by not dealing with the issues and letting our market correct, it will be a long, long recession for us.

#106 reality guy on 12.18.10 at 3:33 pm

If hitler told you to line up to the shower room

Would you.

Sheeps are sheeps, the wolves will lead the sheeps into the slaughter house.

People, you only have yourselves to blame, there are needs and wants. Canadian lifestyles “Wants” totally out weights the basic necessity of living.

Instead of living in reality we are drowning in a fabricated fantasy which is created by Media brainwashing.

Don’t expect the government to support you at the end of the day, their job is to take your money and spend it on themselves and their buddies.

Take care.

Living is dying
But Death 0, 1
I wouldn’t like death

ee cummings

#107 InvestorsFriend (Shawn Allen) on 12.18.10 at 3:38 pm

Number 54 Public Enema (cool name)

I agree Atlas Shrugged is WAY too long. I read it on a Kindle. Not sure I could lift the paper version. (Not in a decent print size format) It could have used some serious editing.

That 100-page speech you refer too nearly killed me… excruciating I agree.

A great book but only dedicated readers and fans of free enterprise will manage to read the whole thing.

Is there a movie?

One point of interest, written around 1950 and set in a then future year that was not really clear one thing it foretold was shale oil…

And no, I am no Greenspan Fan, it seems his predecessor, was it Paul Volker was far superior and willing to apply tough medicine when needed.

Greenspan had it right with his irrational exurberance remarks around 1997, but after that he drank the Kool-Aide or something… joined the irrational party.

#108 InvestorsFriend (Shawn Allen) on 12.18.10 at 3:43 pm

Garth, actually some of us have done very well with 100% equity portfolios and with (gasp) individual stocks.

As in life, there are few absolutes in investing.

Statements that assume all equity investors got average results are no more logical than suggesting that all men are (shall we say) created equal.

#109 jess on 12.18.10 at 3:46 pm

Interesting that the same groups of people who want more “private” health care also want canadian system to pay for post operation problems. Is this Medical tourism FreeRiding and seems to be like structured subprime.

The private brokers on commissions seem to be the biggest critics

Is our health care system going to become a “creditor” who has to recoup services rendered from botched operations overseas ? Good luck with that!
The Business (marketing )Model
1) low cost compared home countries.
2 line jumping
3) sightseeing

It’s all good yes?… especially if you pass the post costs on to the HOME country
India’s Pharmaceutical Company Wockhardt’s Dividend Policy hurt its Creditors
google search
Wockhardt – [ Skip intro ]
As a global pharmaceuticals and biotechnology major, WOCKHARDT is riding the crests of contemporary waves of change. Harnessing its energies for growth …
http://www.wockhardtin.com/ – Cached – SimilarWockhardt Hospitals – Best Health Care in India – Heart, Spine …
Wockhardt Hospitals (Harvard International affiliated) is among the best hospitals in India with a tradition of over 40 years of caring and innovation to …
==============
Wockhardt Hospitals – Best Health Care in India – Heart, Spine …
Wockhardt Hospitals (Harvard International affiliated) is among the best hospitals in India with a tradition of over 40 years of caring and innovation to
==========================

India’s Fortis Healthcare Buys Wockhardt Hospitals – BusinessWeek
26 Aug 2009 … Fortis Healthcare, the hospital business backed by the Singh family (former owners of Ranbaxy) spends $187 million to acquire 10 hospitals …
http://www.businessweek.com/globalbiz/…/gb20090826_446713.htm – Cached – Similar

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

http://en.wikipedia.org/wiki/Fortis_(finance)

Fortis N.V./S.A. was a company active in insurance, banking and investment management. In 2007 it was the 20th largest business in the world by revenue[1] but after encountering severe problems in the financial crisis of 2008, most of the company was sold in parts, with only insurance activities remaining….
renamed – Ageas – Company Profile Snapshot
=====================================

#110 Daisy Mae on 12.18.10 at 3:48 pm

“A possible reason why TFSAs were introduced, one replacing the other. F saw this oncoming retirement mess (not RE) and bought in a new vehicle to cover his ass.”

I believe it was Garth who first introduced the TFSA…..not Flaherty.

#111 jess on 12.18.10 at 3:59 pm

100 dark sad person
inflation :
“cookie jar” funds
http://crediteye.wordpress.com/2010/11/12/stories-in-credit-analysis-complete-book/

#112 Midas on 12.18.10 at 4:04 pm

“working people would pay into a fund ” — what fund? If CPP is anything like SS in the US, there is no fund. Every dollar contributed to the ‘fund’ gets eaten up in general revenues.

#113 TheBestPlaceOnEarth on 12.18.10 at 4:12 pm

Junius,
You ever been to Vancouver? Renter or owner? The place is going Up my friend and you, Garth or anyone else is not going to stop it. Mortgage rates and rent prices will not affect the masses with cash flowing into Vancouver. Canadians just don’t understand not everyone in the world has no cash, not everyone has no investments. There are rich people out there folks and the bullseye is on Monaco of Cascadia aka VanHattenCouver

#114 Duke on 12.18.10 at 4:17 pm

Great presentation of the problem: boomers have put their retirement nest egg in real estate along with every other cohort. Don’t agree with your solution: raising cpp contributions. The productive (what’s left) and those that have saved for their retirement are taxed to the limit. We don’t hire, we don’t spend; most of our behavior is predicated on tax avoidance. Sure, the government’s solution won’t work and in the end it will print its way out of the problem. I think the only real solution is pain; the deflationary pain that you envision would be best, but I think politicians are far too corrupt and stupid to allow that to happen.

#115 Cookie Monster on 12.18.10 at 4:20 pm

Sadly, F’s decision smacks more of ideology (he thinks Ayn Rand’s a hottie) than it does of pragmatism. It also seals the future. Take cover.
——————
Yeah right! Ideology in government, Ha! Government’s only ideology is popularity by compromise, even if it means eating a little poison with all your meals.

‘Hi, we’re from the government and we’re here to help.’ Run!

#116 GregW, Oakville on 12.18.10 at 4:22 pm

Hello Garth, #152(yesterday) can choose to look or not ;) 6 links in one post.

Bank of America cuts off WikiLeaks payments
http://www.infowars.com/bank-of-america-cuts-off-wikileaks-payments/
“WikiLeaks has said it will release documents early next year that will point to “unethical practices” at a major U.S. bank, widely thought to be Bank of America…”

U.S. Bank Collapses Reach 157 This Year as Six More Lenders Are Shuttered
http://www.infowars.com/u-s-bank-collapses-reach-157-this-year-as-six-more-lenders-are-shuttered/

2010: Another record breaking winter. So what happened to global warming?
http://www.infowars.com/2010-another-record-breaking-winter-so-what-happened-to-global-warming/

Wikileaks did not commit a crime, House Judiciary chairman says
http://www.infowars.com/wikileaks-did-not-commit-a-crime-house-judiciary-chairman-says/
“The chairman of the House judiciary committee defended Wikileaks on Thursday, arguing that the controversial actions of the anti-secrecy outlet are protected under free speech…”

Ventura’s Groundbreaking Interview on 9/11 and the Threat to Our Liberties
http://www.infowars.com/gov-ventura-probes-pentagon-attack-unreleased-911-video-and-missing-trillions/
“Pentagon was fortuitously struck in the very area where some of this evidence was being held for investigation. Oddly, a great deal of important financial & investigative information was also destroyed in the collapse of WTC7 on the same day…”

Tis the Season: “It’s Beginning To Look a Lot Like Russia…”
http://www.infowars.com/tis-the-season-its-beginning-to-look-a-lot-like-russia%e2%80%a6/
“Was the warning of General Ike;…”

#117 brainsail on 12.18.10 at 4:22 pm

Social Security vs. CPP

Social Security

Maximum monthly benefit $2346
Average monthly benefit $1164
Contribution wage base $106.8K
Employee contribution 6.2%
Matching employer contribution 6.2%
Self-employed contribtion 12.4%

http://ssa-custhelp.ssa.gov/app/answers/detail/a_id/5/~/the-maximum-social-security-retirement-benefit

http://www.ssa.gov/oact/ProgData/retirebenefit1.html

http://www.ssa.gov/oact/cola/cbb.html

CPP

Maximum monthly benefit $960
Average monthly benefit $505
Contribution wage base $47.2K
Employee contribution 4.95%
Matching employer contribution 0%
Self-employed contribtion 9.95%

http://www.servicecanada.gc.ca/eng/isp/pub/factsheets/rates.shtml

http://www.servicecanada.gc.ca/eng/isp/cpp/contribrates.shtml

http://support.intuit.ca/quickbooks/en-ca/kb/company/lists/142.html

Just incase somebody was wondering…

#118 Hoof Hearted on 12.18.10 at 4:28 pm

Don’t kid yourself thinking government waste is to blame for a looming retirement crisis. Government could be eliminated entirely and we’d still have a crisis. This is the fault of people who refuse to look after themselves. Do you have a pension? — Garth

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

Sorry Garth, but they have warned about this for years, it is finally coming to pass.

Re Gov’t…..yeah….if it disappeared overnite their would still be a problem ? Of course…..but Canadians have been lulled into a false sense of security and entitlement.

Anyway, I can foresee a lot of un rest leading to a lot of layoffs in the public sector and the private sector coming more to the forefront. Politicians will have no choice but to turn on their “soldiers”

Pension ? Not into personal disclosure….

How about yours Garth….do you qualify for MP pension?

http://www.canada.com/news/will+qualify+pension+election+delayed+until+July+2010/1989732/story.html
74 MPs will qualify for pension if election delayed until July 2010

OTTAWA — One out of five MPs in the House of Commons can boost their chances of receiving a lucrative pension by preventing a fall election and ensuring the current Parliament survives at least until July 2010, reveals a survey by Canwest News Service.

The survey examined the number of MPs who were first elected in June 2004 and are less than a year away from having the six years of service required to qualify for a government pension that can kick in at age 55.

It found that 74 MPs with several years of experience could find themselves without a pension, if they fail to hold onto their seats, and in the same boat as those elected for the first time in the 2008 election.

But if there is no election before next summer, 36 Conservatives, 16 Bloc Quebecois MPs, 14 Liberals and eight New Democrats can qualify for a pension that would give them at least $25,000 a year based on the minimum MP salary that now stands at $157,731 per year.

MPs who hold special positions in their caucus, on parliamentary committees or in cabinet, would have higher salaries and as a result would be eligible for larger pensions upon retirement.

My MP’s pension is $26K. I donate it. — Garth

#119 brainsail on 12.18.10 at 4:29 pm

Whoops, CPP Matching employer contribution should be 4.95% not 0%!

#120 garth turner jr on 12.18.10 at 4:31 pm

Garth Sr. initially gave a 5% of world depression.

Today we know it has risen beyond a 50% chance.

Where will the “intelligencia” relocate to?

Why the Monaco of Cascadia, aka VanhattanCouver, capital city of the soon to secede Four Western Provinces, where only 12.5 million citizens habitate and a plethora of natural resources are plentiful.

In March, 2009, I put the odds of a depression at 20%. They have since diminished. — Garth

#121 Debtfree on 12.18.10 at 4:52 pm

@112 tbpoe
You ever been to Vancouver? Renter or owner? The place is going Up my friend and you, Garth or anyone else is not going to stop it.

It’s going to keep on raining today and nothing Kristi Gordon or anyone else says is going to stop it.

Hows the sinkhole on se marine drive doing ? Why is it that vancity can’t afford to pay overtime for crews to fix it ? Anything to do will the gordo olympickleds ?

http://www.cbc.ca/canada/british-columbia/story/2010/12/17/bc-vancouver-sinkhole-marine-drive.html

#122 Yank on 12.18.10 at 4:53 pm

“You see, the rest of ya’s think we’re a bunch of gun toting, truck driving red necks, and you’re kind of right. But, capitalist libertarian sensibility trumps airy-fairy pinko dogmatism any day.”

Dear Albertan,

With your public transportation system and your extensive bike paths, your public out-door ice rinks, your community centers and your gov-all-paid for medical system you’re a Snowy Socialist Paradise.

The U.S. Senate just rejected a bill to cover health costs for first-responders on 9-11 who are sick and dying because of lung problems. You have a looooong way to go if you want to be an Ayn Randian libertarian.

#123 Cookie Monster on 12.18.10 at 5:00 pm

Our government’s ideology is totalitarianism.

No one gets to choose anything, you can’t choose what social services you want to pay for or opt out, YOU MUST PAY, I didn’t choose to give $300M to Pratt & Whitney, it was chosen for me and you to pay for. This is total control. Once government can spend unchecked while we all foot the bills without any say or choice is a serious state of affairs.

#124 Hoof Hearted on 12.18.10 at 5:04 pm

Speaking of private sector pensions:

A senior I know lost her husband(in August) who had worked for one of the major airlines and retired at 65.

She has had her (ie his) pension cut in 1/2 , lost all her free airline flights. Apparently, his union didn’t look forward with their negotiations and shafted a lot of retirees.

Another party I know spouse is also deceased.They worked as an Executive in the public sector. The husband had a choice to either take more of a pension while he was alive ..OR take less at the start of retirement but guaranteed their surviving spouse the same pension till she passes on ( which is what he chose).

#125 Got A Watch on 12.18.10 at 5:16 pm

“There is nothing inherently wrong with an income trust corporate structure. Nor did Ottawa ever prove a revenue loss. — Garth” Well no, in a perfect world, maybe. But I judge matters by real world outcomes, and there was a mass shift happening, so it must have been good, for somebody. Re-arranging you corporate structure isn’t cheap, you don’t do it for the hell of it.

I remember that time vividly, you would hear every day announcements about this or that corporation who was going to “convert” to an “income trust” structure, and the claimed reason was usually something to do with “enhancing shareholder value”, aka ‘by paying less taxes’.

It sure didn’t sound like it would do much for enhancing the income of the rest of the taxpayers, who would have to pick up the slack somewhere, somehow. Probably by increasing the GST, and/or income taxes, and/or the alcohol and tobacco taxes, and/or fuel taxes….somebody has to pay. Or Ottawa would have to cut spending, which is ‘inconceivable!’, in the “The Dread Pirate Roberts is gaining on us!” kind of ‘inconceivable’.

They probably looked at the amount of tax money coming in, and it came up short. That’s ‘F’ and ‘H”s idea of a “balanced Budget” isn’t it, they allow spending in all categories to rocket upwards at once, and they are kept ‘on balance’ by not favoring one area over another. Actual “balancing” where ‘income = expenses’, well, come on, that is an unknown concept in Ottawa, anyway, get over it.

This was at the same time they wanted to implement the brainwave GST reduction – perfect timing there, ‘F’ and ‘H’. Who needs revenue, we can just charge it on the deficit credit card and no one will notice, I’m sure, till about 2011. Err, wait a minute, it is 2011 now, OMFG!

They always call Stevie “a University trained economist!” in the media, I can’t tell you how many times I have heard some empty talking head repeat that line, inferring that only ‘H’ is “qualified” to “govern” Canada. Well, judging him by his performance – that would be an ‘F’, for ‘FAIL’, which by some odd coincidence (or not) is also the initial of our MisFinanace Minister. Both get an ‘I’ for ‘Incompetence’. We’d do better with embalmed dead dogs running the show in Ottawa, at least they couldn’t come up with these damaging ‘brainwaves’.

‘H’ is just a product of an educational system that teaches patent nonsense as “economics” and then completely ignores the clear evidence of total failure when those sacred idiocies completely fail in the real world. He has a bright future as a “Dean of Business” or “Economist” or any sector where ‘failure = success and promotion!’. Sadly, as PM and Finance Minister, they have reached the upper limit of being “kicked upstairs”, more gross incompetence won’t get them any more career success now in the public sector, they’ve hit the glass ceiling. Time to move on and destroy some private corporation now instead. It’s just too bad the rest of Canada has to pay the price for having idiots at the helm, ‘H’ and ‘F’ won’t pay it personally, you and I will.

And I voted for them. I’m sorry guys, my bad.

#126 bigrider on 12.18.10 at 5:18 pm

Omers and hoop defined benefit plans.

They should be commuted for all those who have them. Don’t shoot me Garth but I have looked into this thoroughly and believe when all possible scenarios are run, owning the assets in a diversified portfolio with some mix between income and equity better than leaving them with the pensions despite there relatively good performance.

#127 Patz on 12.18.10 at 5:20 pm

#20 Investors blah, blah,
Christ, stop the whining. And go read some Ayn Rand. Now there was a smart lady. Plus you can get your jollies by fantasing about Dagny Taggert, the hottie heroine of Atlas Shrugged.

That’s just pathetic. Dagny Taggert? a name even the shallowest romance novelist would gag over.

#45 Peter Pan
Garth,

I think you are getting the sense that people who follow your blog are sick of having the spendthrifts ask everyone else for a subsidy and a lifeline.

I guess many of us are coming to the conclusion that you can’t legislate away stupidity.

You got the last part right Peter.

#49 Kaganovich
Great links Kag, more than worth the time, they are critical to understanding the what, where and how of now.
Quote from the first, the ZH interview, ques. 6:
As a result, most incremental dollars go not to organic business growth and economic output, but to satisfying what has become the biggest debt burden in the history of the world, whereby the labor and intellectual output of most goes to fund the living standards of a very few.

The 2nd link explores the idea of the widening wealth gap as a causative factor in economic collapse, comparing similar factors in GD1 and now.

There’s a faction of posters in the Randist/let them eat cake/blame the victim camp who just don’t get that they are working from the script provided by the financial elite. The fact is that the middle–class has already been gutted, some just haven’t fallen down yet—but they will.

People have been less spendthrifts than attempting to manage with less (which includes going into debt) and getting suckered into bubbles that results in them taking losses at the bursting. The past 2 even 3 decades has seen a massive transference of wealth from the bottom to the top. So how do you square that with saying the economic losers are asking for unwarranted handouts?

At least a hold–up artist doesn’t turn around and blame his victim for being broke.

#128 prairie gal on 12.18.10 at 5:29 pm

#68 randman wrote:
#7 Jody on 12.18.10 at 12:02 am
I can’t think of one federal program that actually works and provides me with a valuable service.

Yup! especially the programs that can save your ass. like the food inspection service. Oh ya. that was a good cut. Listeriosis anyone???

Roial1=Dummy

Think!!!

Did the fact we already have a food inspection service
stop the outbreak???

Answer=NO ,so what is the point of having it? To tell us AFTER the fact?

Jody’s remarks stand on solid ground!
________

So instead of increasing food inspection, get rid of it altogether? I suppose the ‘market’ will weed out the melamine tainted milk and deadly salami? of course, only after severe illness and death and these companies will concede liability and voluntarily remove product from the shelves, right?

My guess is if your child died from consuming tainted food you’d be the first person screaming at the government to ‘do something’.

#129 Timing is Everything on 12.18.10 at 5:31 pm

#77 dark sad person

‘SK’ (landlord) still has time. If I were him, I’d sell at least half the rentals asap. He needs to act, but no need to panic. If he has mortgages on them and did not lock-in at low rates and plans to ride the VRM wave, he my lose, and quicker than most think. If he owns them outright, well, not as bad.
I’d still sell half the rentals.(maybe all of them)
We will not crash as fast or to the degree as the US, but the storm has been moving ever closer over the last 3 years.
Regina seems to have very low vacancy rates at the moment, so ‘SK’ does not need to panic, but I’d be wary if I was him.

Same goes for folks with a mortgage on their primary home. If you are staying long term, lockin for 5 years at 3.39%. That 5 year mortgage rate will never happen again. And most of the ‘storm’ may be over by then. You may be too late already. And VRM are only going to go up. It was nice while it lasted.

http://www.canadianmortgagetrends.com/canadian_mortgage_trends/2010/12/yields-ascend-to-a-5-month-high.html

#130 Live within your means on 12.18.10 at 5:36 pm

#71 GBoomer on 12.18.10 at 12:02 pm

I can relate to most of what you have written. Too long a story to relate. I worked my ass off even in high school as did most of my girlfriends, most of whom were first gen immigrants. I’m 2nd gen immigrqant. Paid into EI since its inception and rec’d ONE cheque in my life when I moved from one prov. to another. I agree with your philosophy on life as a Cdn. taxpayer. Garth’s blog seems to attract lots of Libertarians. Wonder how they’d feel about social programs if they should one day find themselves on the streets.

#131 realpaul on 12.18.10 at 5:40 pm

People who think China is leading GDP growth should get their faces out of the local newspapers. Take Singapore for ex…19% last Q…moderating to 15% for the foreseeable future.

The Singaporean economy is expected to expand by about 13% to 15% in 2010. In the 3rd quarter of 2010, annual GDP growth rate was high at 10.3%, but still slower than the spectacular 19.6% growth recorded in the previous quarter. However, according to the Ministry of Trade and Industry, the slowdown in GDP growth was “an expected correction from the exceptional growth in the first half of the year”. In addition, GDP growth was expected to return to a slower but more sustainable pace.

RE prices are astronomical with 90% of Singaporeans homeowners. However, Singers is a world class city…something we lack in Canada.

#132 Nostradamus Le Mad Vlad on 12.18.10 at 5:46 pm

#18 Mean Gene — “Maybe it’s time to emigrate but where to??”

To a galaxy far, far away!

#20 InvestorsFriend (Shawn Allen) — “Well tough sh*t. Life ain’t fair. Get used to it.”

S’right, esp. life is not supposed to be fair. If it were, there wouldn’t be any of the nasties happening — everyone would be a Pollyanna, rose-colored glasses view of life.

In general terms, life is a bucket of shit and we’re at the foot of the ladder. But this is a great classroom of a planet for each to have their own experiences in life.

#25 Dave in Victoria — “Let the rich pay for wars and militarism that benefit the rich, and leave living to the rest.”

Well said! Don’t allow a false carbon tax to be imposed on us.

#30 Deptfree — “… there is a way to push back .. in the spirit of the season . . .”

Hi Deptfree, and thanks for the great link. Yes, there is a way to push back, already tried, tested and proven.

Gandhi’s non-violent (passive, neither being for nor against anything) resistance movement. It worked well for India when the Brits. walked out, and left those people to themselves.

From what I have seen, Chindia is rising, the west falling, because we’ve become so immersed in temporary materialism that changes must be made. Happy Holidays to you and yours!

#31 garth turner jr — “Western Canada secedes … WHAT ABOUT THE COUNTRIES WITH POPULATIONS OVER 1 BILLION?…”

My patient, Nostradamus Jr. was correct in his predictions all along (he is doing remarkably well).

Re: the one billion (most from Chindia) — we can absorb a few million, but most of the land should be kept for farming, a non-Monsanto consistent food supply.

#39 HouseBuster — Smart idea, ‘tho REITs are still quite good. Health care is zooming up.

#52 Aussie Roy — “I’d like to look at whats behind the global credit bubble.”

One aspect is the subtraction, or removal of money which makes it harder to spread around what little is left.

Similar to what manufactured food shortages are doing — less to go around, less to eat leading to increased starvation, greater use of food banks, etc.

The worst possible thing the US could have done in 1913 was to create the US Fed, a private organization being in charge of issuing public money. JFK and RFK were taken out as they were going to end the US Fed. Now the IMF and the UN are taking greater interest in running other countries’ finances, instead of letting countries do their own thing.

Interesting that the IMF also has the right to buy gold bullion at US$42.20 / oz.; what is it selling for currently? The elite (the aforementioned) are doing it this all at once, while keeping the majority of profits for themselves. Depopulation is another term.

#69 MythBuster — “Have you ever considered a ‘moonlighting’ career, e.g. standup political / economic comedy?”

Garth was a federal MP once, and in his last stint under Harper, he was almost as funny as Brian, in the Pythons’ “Life of Brian”!

#70 Sand Piper — “. . . garden to grow your own veggies . . .” — The US govt. now prohibits ordinary folk from growing their own food, and with Bill C36 being passed here, roughly the same laws will apply here.

This is purely to force sheeple to eventually live off Monsanto’s filth, and make their profits bigger. Big pharma also benefits, as we will spend more time in hospitals due to the ill-effects ingested.

I would prefer a steady diet of junk food and have a shorter life than make a corporation wealthier at my expense.

#94 Mr. Lee — “Economics is about scarcity.” — That is what the elite have done — simply removed the money from current use to keep it for future use (when most of us are long dead and gone).

#96 GregW, Oakville — Hi Greg. I’ve read it and it goes with my response to #70 Sandpiper — this whole thing is designed to let big pharma and Monsanto run our lives, while we become slaves.

I value my independence too much to let others control my life.

#103 S.B. — “This fact should give you a small hint of the mind state of the elite concerning the usage of media.”

Great post, and a reality check as to what is being done to us sheeples today, which the vast majority don’t even know.

#133 Live within your means on 12.18.10 at 5:46 pm

Taj Mahal’ being built for DND spy agency
Plush CSE campus to include hockey rink, sports courts
By David Pugliese, Ottawa Citizen December 18, 2010

Read more: http://www.ottawacitizen.com/news/Mahal+being+built+agency/3997305/story.html#ixzz18V7XvT5w

I thought the Feds were warning us that we should curb our spending. Guess it doesn’t apply to them.

RE the F35’s did anyone read the 3 articles in the Ottawa Citizen this last week? – lies and more lises by this govt.

#134 Junius on 12.18.10 at 5:50 pm

#112 BestDrugs,

I live in Vancouver. Clearly I know it better than you do.

Instead of the delusional cheerleading why don’t you post something that actually has an argument that makes sense. Maybe try using some statistics.

For example, why are rents only marginal in Vancouver today then they were in 90s? It is because real incomes in Vancouver have not risen much since this time.

The rise in home prices is almost entirely explained in debt. The last 5 years primarily because of the changes in the CMHC rule from the 20/25 to the 0/40 and then down to the 5/35.

House prices in Vancouver peaked in April 2010. Since then the market has been repositioning for a Fall.

We may not see those prices again for more than a decade. Better get used to it.

#135 C on 12.18.10 at 6:01 pm

With no talk about gold today on the blog, and given the recent correction, I’d say it’s a great time to start buying gold stocks again.

#136 Junius on 12.18.10 at 6:01 pm

#119 gt jr.

You said, “Why the Monaco of Cascadia, aka VanhattanCouver, capital city of the soon to secede Four Western Provinces, where only 12.5 million citizens habitate and a plethora of natural resources are plentiful.”

I see Nosty Jr. has returned.

The Monaco comparison really makes me laugh. Have you ever been to to Monaco? I have.

If you take the public transit train 20 minutes to the West you reach the lovely French city of Nice where properties are much cheaper than Monaco or Vancouver. Go East and you hit Italy where it even cheaper than Nice. Both are about the distance Surrey is to downtown Vancouver or Oakville from downtown Toronto.

Monaco is a tax haven and a rare principality. Compare it to other places but not Vancouver. Meanwhile the Manhattan comparison is just a joke. You are beyond clueless.

#137 Hoof Hearted on 12.18.10 at 6:14 pm

Paddy the economist:

NO BS, even though just about every 4 letter word is”employed”, as opposed to actual Irishmen.

http://www.youtube.com/watch?v=koY6kXhQDQo

PS Flaherty ooops “F” is an Irish name, t’aint it ?

#138 Patz on 12.18.10 at 6:20 pm

I met Ayn Rand (figuratively) in the 1960s going as far as to belong (for a short time) to an Ayn Rand discussion group. It wasn’t long before I began to see the very large holes in her thinking.

I remember seeing an interview with AR in which she defended imperialism in Africa by saying the Africans were “too stupid to see the value of the diamonds between their toes.” That’s where we parted company for good.

The worst (among many) of her ideas has to do with the sanctification of private property and property rights. One of the great ironies in her writing is that the crux of Atlas Shrugged is a strike of smart people led by John Galt. So AR, this great anti–collectivist pivots her story on a strike, the essence of collective action. Lest anyone make the mistake that I’m inviting debate on that or any of her flaky spiels, I’m not. Critic Leslie Clark summed it up best by calling her fiction, “romance novels with a patina of pseudo–philosophy.” I’d rather discuss the philosophy of Danielle Steele.

#139 Moneta on 12.18.10 at 6:30 pm

There is nothing inherently wrong with an income trust corporate structure. Nor did Ottawa ever prove a revenue loss. — Garth
——–
I never said there was. But you don’t go and distribute dividends when you don’t have long term profits.

When the high tech bubble burst, a research paper came out and showed that companies with dividends did better than those without. No kidding!

So every company jumped on the bandwagon, afraid to be left out by the next fad. So today we have crappy companies distributing dividends pretending to be blue chips… and everybody drooling over income securities.

In a few years, the same research will be redone and will show that income securities don’t return as much because the arbitrage has occured, the low hanging fruit has been picked.

http://www.youtube.com/watch?v=9cVnxenNEZ8

If a company wants to distribute earnings instead of employ them in expansion, how is that the government’s business? Get a grip. — Garth

#140 Jeff Smith on 12.18.10 at 6:41 pm

JO, sadly, I think you might be right.

.#2 JO on 12.17.10 at 11:32 pm
Retirement issue is very hard one to crack. I actually favour the idea F is proposing but with some critical modifications. First of all, the plan should be mandatory but allow the employer and employee some flexibility in setting contribution rates between them. Those morons calling for higher CPP contributions and benefits think money grows on trees..and when major financial crisis hit, who’s to say greedy politicians won’t raid national pension plans to cover wicked spending as many are doing the world over ? Forcing companies and workers to pay a set amount simply means lower wages, and lower reinvestment long term.

Allowing mandatory, but flexible contributions to a national MPP plan managed seperately from the CPP but by the CPP Investment team would be a good option.

The majority of the population is stupid with their income…having worked in financial services my whole working life I see the lack of financial discipline every day. It is very sad. When the inevitable debt contraction happens, most of these idiots will blame everyone else and vote for scumbags promising handouts at the expense of our kids and the large number of us who do manage relatively well.
Most boomers will never retire. Sadly.
JO
.

#141 AG Sage on 12.18.10 at 6:45 pm

#108 jess on 12.18.10 at 3:46 pm
>Is our health care system going to become a “creditor” >who has to recoup services rendered from botched >operations overseas ? Good luck with that!

Maybe I’m missing what you mean, and this is just an idle thought anyway, but are you expecting an exception for a particular risky behavior that would not apply to other risky behaviors?

If a Canadian goes to Mexico for vacation and comes back with the crabs because he (she?) visited a prostitute there, does the Canadian health service refuse to treat this person under the standard plan? Same if they drove drunk whilst on this vacation, had a crash, and then needed a series of operations to return to a normal life. Would the health service make a judgement about the behavior that led to the need for coverage?

I’m just tossing these examples out there. But it sounds like you are proposing that a specific behavior induced medical problem (follow-on effects from visiting an overseas medical clinic) should be exempted from coverage when other things (perhaps even more obviously self induced) aren’t. Not sure that actually sounds enforceable. Unless you want to institute a blanket “sorry, but you were an idiot, so pay up” policy.

#142 dd on 12.18.10 at 6:48 pm

Garth … His message is “in government we trust.” Beware.

Try it without government. I hear Somalia’s fun. — Garth

#143 Cassandra on 12.18.10 at 6:53 pm

TheBest PlaceOn Earth,

Vancouver has one of the biggest property bubbles on the face of the earth. Prices there are simply delusional. Just wait until the cheap credit isn’t there anymore and see what that does to price support.

Garth,

I think you severely underestimate the odds of a depression. The con-game of papering over the cracks can only go on so long. Then the game is up. We’re a lot closer to that point now than we were in March 2009.

#144 Moneta on 12.18.10 at 6:56 pm

If a company wants to distribute earnings instead of employ them in expansion, how is that the government’s business? Get a grip. — Garth
———

Did I ever pass a judgement on government intervention? I just said that F could not keep his hands to himself just like Chretien did not want bankers to be more important than him.

I don’t agree with his intervention but I still think many investors would have gotten wiped out anyway without his help. It was just another fad and the credit crisis would have done a good number. Many retirees were at 100% income trusts before F stopped the party. Something tells me they were holding more treasuries when the crisist hit.

There were good income trusts that made sense but there were a lot of crappy ones where the IPOers must have partied all their way to CIBC.

#145 Devil's Advocate on 12.18.10 at 7:02 pm

#135 Junius

Seems to me you really don’t like it where you are (Vancouver). Have you ever considered leaving? Were you to do so it might do wonders for your moral. That or you might come to appreciate and regret that which you gave up.

#146 jess on 12.18.10 at 7:16 pm

Unlocking keys that led to throw away keys

Reformers make me nervous!
…universial banking in an integrated global marketplace is the the wave of the future….

And this refinance boom was going to put more money in the pockets of consumers! lol…

” Fannie Mae produces very strong results for investors when interest rates are high and when interest rates are low in recession and during booms. ”

That resilience had to be restated by 9billion.
and those adjustable rate (arms)circumventing usuary laws , home equity becomes the new second key to “unlocking” all that wealth.

=============================
complexity + complexity =
The OFHEO report is the product of more than two years of in-depth review involving nearly 8 million pages of documents.

It seems to me that manipulated earnings when the jar is empty become managed earnings when the jar is full.

I am sure this list will grow
http://en.wikipedia.org/wiki/Accounting_scandals

#147 Devil's Advocate on 12.18.10 at 7:32 pm

#133 Junius on 12.18.10 at 5:50 pm

#112 BestDrugs,

I live in Vancouver. Clearly I know it better than you do.
Instead of the delusional cheerleading why don’t you post something that actually has an argument that makes sense. Maybe try using some statistics.

For example, why are rents only marginal in Vancouver today then they were in 90s? It is because real incomes in Vancouver have not risen much since this time.
The rise in home prices is almost entirely explained in debt. The last 5 years primarily because of the changes in the CMHC rule from the 20/25 to the 0/40 and then down to the 5/35.

House prices in Vancouver peaked in April 2010. Since then the market has been repositioning for a Fall.
We may not see those prices again for more than a decade. Better get used to it.

I see too many holes in your argument Junius.

1.) Are you talking about Vancouver proper where house prices average something in the order of $1mil? If so then how can you possibly believe that those average homes are financed 20/25, 0/40 or 5/35? No Junius I don’t think the CMHC rules had anything much to do with the rise in those particular property values. but yes they did fuel the general market. Hey why rent when the monthly cost of owning is as cheap… or cheaper? But those $1mil shacks? They were not bought with such cheap money they were bought with smart money. I don’t care what anyone says of those ready, able and willing to lay down a cool $1mil CDN for a property few, very few, are fools, and fewer still are high ratio financed.

2.) My information says house prices peaked in April 2008 not 2010.

3.) We most certainly, I would be almost willing to guarantee, will not see those peak prices, be they 2008 or 2010, return for years. Whether it is 2, 5 or 10 I do not know. In any event what does it matter? By your own comment “we may not see those prices again for more than a decade” you, clearly, agree they will return, it’s just a matter of time.

Housing is/should be a long term investment, not a speculative venture in trade. That is why you pay no capital gain on it – because it was never bought with intent to sell and show a profit. It is your home not a source of income.

Am I missing something?

#148 TheBestPlaceOnEarth on 12.18.10 at 7:38 pm

Low vacancy rates and high rent levels
Vancouver has low vacancy rates and high rent levels. The city usually has the lowest vacancy rate in the region — less than 1% for the last four years. In 2009, the vacancy rate was at 1.2%. A balanced market would have a vacancy rate no lower than 2% and preferably around 3%. Rent levels continue to increase above the rate of inflation.

#149 jess on 12.18.10 at 7:41 pm

140 AG Sage

look at the whole picture and then you won’t be missing something

#150 Junius on 12.18.10 at 7:45 pm

#144 DA,

Actually my moral is good. My frustration is that I may in fact have to leave in the next few years.

In my job I weekly operate not just with Toronto and Montreal but New York, LA, San Francisco and Europe. I frequently travel and see the state of the world.

I love living in Vancouver and we have a wonderful life here. However the business world here is incredibly small.

Vancouver’s biggest problem – in my opinion – is that it thinks that world class lifestyle translates easily into a world class economy. Over inflated Real Estate and Ego Inflated projects have masked the fact that our real economy is thin and we lack depth and diversity. In fact, the high cost of Real Estate is costing us valuable people and intellectual capital that will not come here and build a sustainable economy.

My angst toward the Bull Crap crowd is that they are preventing Vancouver from reaching for its real potential by selling snake oil instead of something tangible and long term.

Did you know that Kelowna has at least one world class new media firms? This firm advises top US new media firms including some in Silicon Valley and New York? However no one celebrates this. They just want to see the prices of condos.

My problem, dear DA is not where I live. It is the attitude of the Snake Oil Salesman that is so pervasive.

#151 K on 12.18.10 at 7:57 pm

You will love this!

http://www.youtube.com/watch?v=koY6kXhQDQo

Posted several times already. — Garth

#152 dd on 12.18.10 at 7:57 pm

…Garth … His message is “in government we trust.” Beware….

Try it without government. I hear Somalia’s fun. — Garth

Too funny. How is that bunker working for you? You trusting soul you …. you are full of it.

One more ad hominem remark and you’re done here. If you can’t make an argument without belittling the other side, you are not worth reading. — Garth

#153 Devore on 12.18.10 at 8:05 pm

#59 Cassandra

Income trusts were a Ponzi scheme anyway.

How were income trusts a ponzi scheme? There was nothing wrong with the income trust concept. It’s just a vehicle for passing on income streams to investors in the most direct and tax efficient way possible. Individual investors were still paying taxes, and had far fewer methods for reducing or avoiding taxation.

I am sure there were trusts whose business model was “financial innovation”, and fair enough that’s a paper ponzi that requires ever greater numbers to sustain itself, but so are many public companies, such as banks with swaths of their portfolio based on easy money and endless asset appreciation. And that there were as many investor scams in the trust area as there are in the public equities arena. Investor beware.

None of this however, speaks negatively to the income trust structure itself. They were nuked for no good reason, at least no good reason that we have been deemed worthy of being told about.

#154 Devore on 12.18.10 at 8:12 pm

#127 prairie gal

My guess is if your child died from consuming tainted food you’d be the first person screaming at the government to ‘do something’.

That’s disingenuous. In the current regime there is no alternative to government standards and inspections. You cannot take them away and not replace them with something. That’s a pretty poor way to justify the existence of something, but apparently is good enough for most people (the “if government didn’t do it, no one would (because they now have a monopoly on it mandated by law)” line of reasoning).

#155 doctore on 12.18.10 at 8:17 pm

Well it looks like with all the welfare issues going to come to ahead it looks like higher taxes one way or another. Look at europe, many countries there now are going to pay even higher taxes and get less services. Yet in the USA, they actually are going to have lower taxes going forward! When they are in such poor shape to begin with. If the US didn’t have the reserve currency of the world, and supposed safe haven status for money to go in times of trouble, they would be in the same dire situation as europe. In Canada meanwhile, we are just going to bend over and take what our gov tells us is coming.

#156 eddy on 12.18.10 at 8:25 pm

Connect the dots- NYC real estate inflation (or USD devaluation) is guaranteed

http://www.telegraph.co.uk/finance/newsbysector/constructionandproperty/8210845/Nouriel-Roubini-buys-5.5m-home-in-New-York.html

#157 Devore on 12.18.10 at 8:29 pm

#133 Junius

BPOE is using the “rich asians paying cash” argument. As if that explained the bubble in lower mainland, and everywhere else in Canada.

As you point out, rents in Vancouver have gone nowhere in the last 10 years, and I think actually gone down in real terms.

The increase in prices IS due to increased demand (simple economics), but not from “organic” demand. The additional demand was created by lowering lending standards (20/25, 5/35, 0/40, cash back, qualification etc) and falling interest rates, and not by, for example, a growing population, rising incomes, or falling housing construction.

From this point on, the demand incentives have nowhere to go but up. Higher interest rates. Higher qualification standards. Higher downpayments. Shorter amortizations. Each of these steps will incrementally remove demand as buyers are eliminated (just as they were previously added), while at the same time it is more and more likely (as the market runs out of new buyers and steam) that supply will be increasing.

Lets face it, a 25/25 mortgage (25% down 25 year amortization) presents real barriers to entry that demonstrate the buyer is responsible, forward looking, able to live below their means, and has steady income. Combined with high lending standards (such as would be created if we remove CMHC guarantees), buying a house would be a very serious decision, and not just another “life milestone” (ie, entitlement) you want to get past as quickly as possible.

It is entirely likely that in such a scenario renting would become more expensive than owning (as it was through most history), but only serious investors who have their own money to invest would be able to take advantage. And in this case, tightening the belt and saving up the downpayment would be a real “rite of passage” for responsible young families again, and not something to get hot and bothered over.

#158 Roial1 on 12.18.10 at 8:43 pm

67 Got A Watch on 12.18.10 at 11:12 am

One point that bears repeating though, was that ‘F’s flip-flop on “royalty trusts” was inevitable – when you have half the corporations in Canada wanting to become “trusts” instead, so they could pay less taxes, it could not be kept the way it was. The flip-flop was just bad management and politics, but something had to be done there, or the Federal and Provincial Governments were set to lose a huge amount of tax revenue – and ordinary taxpayers would have had to pick up the slack somehow, we always do.

Hey! JUST ONE DAMN MINUIT!
The “ordinary” taxpayers where paying. Thats what was so unfair to Canada and the taxpaying public. It was not counted that we had to declare it as INCOME and pay at what ever rate we are in.
It was a total lie by Harper and F to appease their buddies who wanted to reduce the competition for investment.
And now we are paying MORE to cover what is now off shore income and not taxable. Its owned in Dubi and Abudabi, and as you should know, they pay NO TAX in Canada so YOU must cover the short fall.

Yup! a winning stratagy if I ever heard one.

Talk about sucker punched.

#159 Nostradamus Le Mad Vlad on 12.18.10 at 9:03 pm


Santa When it asks for your name, just put in your first name. Watch it all and you’ll find out why. Make sure you have the sound on — something to put a smile on your face!

#109 Daisy Mae — Noted, and yes it was Garth who thunked up the TFSA. My bad.
*
Elite Fascinating reading. What if the elite were on the verge of collapse?

3:16 clip ‘Net neutrality — the Dems are trying to pull a fast one again.

More ‘net “The Julian Assange hysteria has simply been a setup to allow the US to attempt to control the internet. Fortunately for the flow of free information, such an attempt will ultimately not be effective, as savvy net users will figure out ingenious workarounds, rendering such censorship efforts futile.” wrh.com.

Bill C-36 “The bill also gives inspectors the right to not only seize products, but the vehicles used to transport them. They can also examine any documents they want to.

“In addition, the legislation gives the government the right to disclose personal and business information to foreign governments without the consent of the parties involved.”

1974 — BG BG stands for Before Garth. Odds of forthcoming ice age? Pretty good. GW? Fuggedaboud id!

2:55 clip ECZ — EuroComa Zone. “Burden of debt is being pushed onto the lower and middle classes. Public anger at wages of European Parliament set to increase to $170,000 euros.”

0:23 clip What The Royal Canadian Air Farce does for fun!

NAU / SPP Obama and Soros love this — free amnesty for ALL illegals.

#160 a prairie dawg on 12.18.10 at 9:04 pm

F is a dirigible?

“Oh the humanity!”

#161 Caron on 12.18.10 at 9:23 pm

Well Phinny:

First off, as Will Rogers famously remarked: “where everybody thinks alike, nobody thinks very much at all.” You need a wider circle of friends if you think all Albertans think alike.

Second, for those of us who actually know the history of Alberta beyond a mere 25 years ago, Alberta was receiving Federal Transfer payments up until 1963. Most of that $10 billion you cite goes in the form of corporate and individual income tax and a big chunk is returned in support payments.

Third: I said Alberta FUNCTIONS like an authoritian single party state. That means for those of us who actually live and do business here, we have to suck up to the Conservatives or go nowhere fast. It also means that property rights, and the right to appeal Conservative decisions affecting property to the Courts have been completely removed. Read Bill 50, etc.

As to being able to vote: not quite accurate. One person does not have one vote. If you are a rural Albertan your vote is worth anywhere from 25% or even more than an urban vote. The Conservatives simply ignored a court ruling ordering them to fix this. With gerrymandering and an electoral process controlled by the Conservative party, you may have been able to cast a vote, but in the last farce, 60% of the eligible voters could see it was useless.

Alberta, in case you had not noticed, is running an operating deficit and is certainly not debt free. When the costs of the various public private partnerships come home to roost, those extra costs will be a formidable drain on the economy, and watch your taxes go up and your services go down. These debts are not a lot different than those Britain has with 17 times the population base.

http://www.monbiot.com/archives/2010/11/22/the-uks-odious-debts/

http://albertadiaryfootnotes.files.wordpress.com/2010/12/emergencyemails.pdf

The National Energy Program was actually a joint agreement between Premier Lougheed and the Federal Government. It fell apart for the same reasons that will kill your short term oil patch business / job: high interest rates and falling energy demand.

I don’t much care for the Republican elements in the Wildrose Party, but it is not fair to describe them as all that way, even though Ms. Smith will not divulge her funding sources.

The Norwegians have the brains to plan for the future, as did Premier Lougheed. His successors blew it and my province is running out of floor boards to tear up and throw into the fire place to keep things going.

But hey, maybe all those central Asian gas and oil reserves will just stay in the ground because the world wants to pay more for Alberta’s oil, but I would not bet the farm on it.

#162 Dan in Victoria on 12.18.10 at 9:29 pm

Phinny @ 88
You see, the rest of you’s think we’re a bunch of gun totin truck driving red necks, and you’re kind of right but, capitialist libertarian sensibility trumps airy – fairy pinko dogmatism any day.
How is your province doing?

Well I guess the East coast was doing all right till the fishing was pretty much exhausted
I guess the fur traders did all right till they pretty much exhausted the critters.
I guess we did all right with the fishing here till we pretty much exhausted that too.
Got all the easy timber pretty much sawed into boards too.
As far as your government thinking long term….

What are you guys going to fall back on when the gas and oil is gone?
Just wondering.

I suppose

#163 Devore on 12.18.10 at 9:33 pm

#134 C

With no talk about gold today on the blog, and given the recent correction, I’d say it’s a great time to start buying gold stocks again.

There is no talk of gold on the blog, because Garth has stopped stoking the flames of gold bugs. Instead, he’s switched his sights to another group, apparently. That’s also known as “sector rotation”.

#164 TheBestPlaceOnEarth on 12.18.10 at 9:35 pm

Junius,
Your being logical. Vancouver has nothing to do with logic and all to do with big time demand. There is no industry here, there are no jobs except low paying ones in the service sectors. Canadian professionals making 6 figures struggle buying a house on the West Side. Depth, diversity, valuable people the market has no interest in. Investors are paying 2 million for a small 33*110 lot and bringing in the bulldozer. Reminds me of the old Bob Dylan song “Something is happening here and you don’t quite understand do you Mr. Jones”
+++++
Vancouver’s biggest problem – in my opinion – is that it thinks that world class lifestyle translates easily into a world class economy. Over inflated Real Estate and Ego Inflated projects have masked the fact that our real economy is thin and we lack depth and diversity. In fact, the high cost of Real Estate is costing us valuable people and intellectual capital that will not come here and build a sustainable economy.

#165 VICTORIA TEA PARTY on 12.18.10 at 9:38 pm

#2 JO

I agree that it’s hard to herd a wheel-chair bound generation of aging Boomer cats especially those who’ve not saved and who’ll one day call for a government bailout.

For them it’s too late. May they sail away on the next available, regularly scheduled, ice floe, neck pillows extra.

That is but a pipedream, of course. Instead what we’ll all be treated to is a cacaphony of whine and whinge over the next several years. These Boomers, believing themelves to having the same heft as the American Empire’s blighted Wall Street banks, will be calling for their own “special” bailouts.

Happily, the finance minister of the day will be forced to say, “No dice, you time-expired boomers. We’re flat-assed broke! Have a smiley-face day yerself, Pilgrim!”

So, we must now turn our attention away from the yowling, toothless, masses to the more important up and comers, the young folks. For the younger generations, then, I rather like Mr. Flaherty’s idea of a national pension/saving scheme.

It has merit especially for low-wage for young Canadian workers who don’t have enough to start up an RRSP and who are otherwise fiscally overwhelmed. For them to contribute for 30 or 40 years into such a fund would be wise indeed.

But this move does not go near far enough to absolve Mr. Flaherty of his dreadful 2006 mistake of sticking a fork in the income trust industry. That was a bad move.

I still think the decision was cultural, as much as being a business one. I believe the Upper Canadian business establishment was envious of a powerful, energy-driven Western Canadian business elite based in Calgary, where most of those former energy trusts were headquartered (those Ontario snobs probably still don’t like cowboys!).

So Mr. Flaherty got the whisper in the ear and canned the project. The Eastern elites are now happy to see Canadian investors wallowing in squalid low yield issues trading on the TSX. They got their way, again! The unintended consquences, of such a policy, are making themselves obvious today. Garth writes about them all the time!

On another matter, I was listening on CKNW’s morning business show, to guest Bob Hoye, the highly respected West Coast market oracle. He forecasts:

-a major down stock market in January, as this world-class credit contraction continues unabated;

-demise on the Euro currency;

-he went after the economists and central bankers who believe that a country can borrow its way back to prosperity;

-oh yes, watch for higher mortage rates in the next period of time.

Referring back to Mr. Flahery’s saving scheme, Mr. Hoye says its well past time for Canadians to be paying down debt and saving their money. Mr. Hoye has spoken! Listen! He is scarily accurate. Mr. Flaherty is listening to him, too. How can he not?

Heed Hoye at your peril. — Garth

#166 Jody on 12.18.10 at 9:51 pm

17 Basil Fawlty……

considering I pay more than $2000 a month in federal income taxes – we have the most expensive health insurance program in the world, health care isn’t free, where the f*** do you think your taxes go?

#167 dark sad person on 12.18.10 at 9:53 pm

#127 prairie gal on 12.18.10 at 5:29 pm

So instead of increasing food inspection, get rid of it altogether? I suppose the ‘market’ will weed out the melamine tainted milk and deadly salami? of course, only after severe illness and death and these companies will concede liability and voluntarily remove product from the shelves, right?

My guess is if your child died from consuming tainted food you’d be the first person screaming at the government to ‘do something’.

******************
Why all or nothing?
Why is it Government needs to be involved in any way-other then to enforce law-which should be satisfactory to Consumers-

Send that service out to the Private sector for unfettered Competition and you’ll see much “improved” and much less costly Food inspection fees-

Throw the costly bungling Government employed People out the door along with their fat cat pensions and let them Compete within the Free Market for the job–

#168 charles on 12.18.10 at 9:57 pm

Relevant post comming this week on Mad Max’s blog…
Nicole Foss “I did an interview with Max Keiser on the Canadian bubble recently. I think it’s going up on his site on Tuesday.”

#169 dd on 12.18.10 at 10:29 pm

.#152 dd

“One more ad hominem remark and you’re done here. If you can’t make an argument without belittling the other side, you are not worth reading. — Garth”

It takes two – match point.

You are anonymous. — Garth

#170 dark sad person on 12.18.10 at 10:41 pm

#165 VICTORIA TEA PARTY on 12.18.10 at 9:38 pm

It has merit especially for low-wage for young Canadian workers who don’t have enough to start up an RRSP and who are otherwise fiscally overwhelmed. For them to contribute for 30 or 40 years into such a fund would be wise indeed.

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

I think that is a horrible idea-

What if this happened as you turned 70 or 80?

http://2.bp.blogspot.com/_nSTO-vZpSgc/SXR7NBCHaKI/AAAAAAAAFY4/lA3LpVHJGq4/s1600-h/%24SSEC-weekly.png

http://2.bp.blogspot.com/_nSTO-vZpSgc/SXR9Jeqe4II/AAAAAAAAFZI/zyAdCDwvh4w/s1600-h/%24TSX-weekly.png

http://4.bp.blogspot.com/_nSTO-vZpSgc/SXbruNT3DXI/AAAAAAAAFaM/KmVr7LYUrpE/s1600-h/%24SPX-weekly.png

Funds lost big into that sell off-
They always do-
They’re all long-no cash and un-hedged-
Pensioners would be slaughtered in a Market sell off that could last for who knows how long-

We all skip the root of the problem and try and perfect
the inevitable flaws that develop as a result of Monetary system that has no base and is nothing more then a floating abstraction-controlled at the whim of irresponsible Governments and Central Banks-

If we want to fix something-let’s fix the Monetary system and the rest will fix itself-
No need for Pensions then-
It’s very simple-lock down the Money/Credit supply with hard backing and all these Investment/Government chasing Money schemes will dissolve-

Here’s a rough example-

If your “Money” would buy you more or less the same goods and services 20 or 40 years out-as it did today-why not just simply save enough to last you through your retirement years-
If it costs X amount today to live-then save that same amount for everyday that you plan to be retired-
Doesn’t mean you can’t invest or be entrepreneurial-but you would know-very close to what you needed to save-
Simple-

Is that how it works on your planet? — Garth

#171 HouseBuster on 12.18.10 at 10:44 pm

http://www.nytimes.com/2010/12/18/world/europe/18spain.html?_r=2
“At its peak, the construction sector accounted for 12 percent of Spain’s gross domestic product, double the level in Britain or France. ”

And how much is it in Canada?

#172 old timer dc on 12.18.10 at 10:54 pm

Sorry Garth but I don’t see how you can let F and cohorts off the hook for victimizing the boomers. Yes many have squandered opportunities and many have not tried to save. There are on the other hand, many who trusted their financial advisors and came up short in the aftermath of 2008. They didn’t ask gov’t to keep ridiculously low interest rates while the economy was so spiked, there weren’t enough workers to go around. They didn’t ask to bail out the auto industry workers who @ $75 per hour including benefits created their own problems. Housing would not be near as unaffordable if the interest and amortization rates would have been maintained at realistic levels. Maybe just maybe, if the gov’t hadn’t messed around and tried to seduce all of our greedy, house hungry greater fools, us old geezers could be looking at decent rates of return like we should be (considering most of us went through the 80’s with mortgage rates in the twenties).Instead, we’ll continue to prop up the property hungry idiots (who in all likelihood will be in deep doodoo once reality hits) through higher taxes or reduced benefits. Just because some feel we have a better banking system than most other countries, it doesn’t take the gov’t off the hook for bad calls. Carney and Flaharty both missed the call and got caught up in the hype.

#173 Guy_in_Regina on 12.18.10 at 11:10 pm

Of course all the rabid anarchists on this site have no idea what actually goes on inside government, that the vast majority of public servants are hard working people, and that all three levels of government provide many public goods and positive externalities that greatly benefit society. Are there slackers in the ranks? Hell ya. But you’ll find them in any organization – especially the big ones. The ‘nasty, brutish and short’ crowd have developed their (very strong) anti-government opinions largely through their own prejudices and ignorance (heavy-all on the ignorance) rather than objective information.

The culture of accountability in government is actually so intense as to be stifling in many instances. I have no experience with the feds; but provincially you’re much, much more likely to be (chronically) understaffed than overstaffed. I’ve also never been in a union; but pretty much all managers in government that I’ve worked with are outstanding people.

Dark sad, dd, Cookie, Mad Vlad, Hoof and the rest of the ding-dong crew should endeavour to actually know something about a topic before you go spouting off about it. And seriously, the rate that some of you post at makes me wonder if you’re not living off the state! Why don’t you go out and do something productive!!!

Government is in the business of providing public goods and encouraging positive externalities. Google it. It’s a good thing.

Merry Christmas

#174 Guy_in_Regina on 12.18.10 at 11:12 pm

I would just add that government must always strive to improve and aim for nothing short of excellence – which the government of SK has firmly committed to doing under the SK Party – we’re on our way to lean, mean administration.

#175 dark sad person on 12.18.10 at 11:15 pm

Is that how it works on your planet? — Garth

*********************
What do you have against “Money” retaining its buying power and the fact that with a hard backed Money-Governments can’t Inflate it to worthlessness-by trying to control the Free Market?

Don’t seem to working to well today-does it?

#176 Kaganovich on 12.18.10 at 11:29 pm

Patz

Glad you found them as useful as I did.

Got a Watch

You are most likely familiar with this already, but Harper’s ways can be better understood if you know about his Straussian philosophical heritage, an attitude and approach fostered in him by Flanagan (I think).
Perhaps Garth has some anecdotes to add on this subject? Garth, why does a patrician like you mingle with us unwashed plebs everyday?

Caron

Thank-you for the devastatingly effective response to Phinny. Being involved in the oil extraction sphere myself, I know all too well how hubristic/forgetful some individuals get when they become ‘self-made’! Lougheed, what a mouthpiece of ‘airy – fairy pinko dogmatism’, eh?

#177 Guy_in_Regina on 12.18.10 at 11:34 pm

Food for thought:
http://www.pco-bcp.gc.ca/index.asp?lang=eng&Page=clerk-greffier&Sub=archives&Doc=20090318-eng.htm

“in the globalization system … one of the most important and enduring competitive advantages that a country can have today is a lean, effective, honest civil service”.

Thomas Friedman

#178 JB on 12.18.10 at 11:36 pm

Historical prime rates in Canada.

http://www.fin.gov.bc.ca/PT/bcm/ref/cibcHistoricalPrime.pdf

Can someone please advise me whether I should lock into a fixed 10-year mortgage rate @ 4.86% CIBC?

Cost is $8,000 to cut lose from my mortgage.

Thanks.

#179 Publius Enigma on 12.19.10 at 12:05 am

Incidentally, since the current blog post references Jackson Browne’s iconic song in the title, and deals with the man known as “F”, I’d like to remind everyone of perhaps the most famous line from that tune:

“In ’69 I was twenty-one and I called the road my own.
I don’t know when that road turned onto the road I’m on.”

I’m sure it’s unrelated.

#180 B&B on 12.19.10 at 12:11 am

Just interested in knowing the source(s) of the various statistics provided regarding pensions, savings etc. StatsCan or something similar, or personal experience? I agree with what you have to say. I’d like to know the sources so when I’m spreading the message I’ll have backup. Thanks.

#181 dark sad person on 12.19.10 at 12:12 am

173 Guy_in_Regina on 12.18.10 at 11:10 pm

Dark sad, dd, Cookie, Mad Vlad, Hoof and the rest of the ding-dong crew should endeavour to actually know something about a topic before you go spouting off about it. And seriously, the rate that some of you post at makes me wonder if you’re not living off the state! Why don’t you go out and do something productive!!!

Government is in the business of providing public goods and encouraging positive externalities. Google it. It’s a good thing.

***************
First-thanks for putting me in such an esteemed group-

Government shouldn’t be in “any” Business-Mr Socialist

Google it-

Typical Crony Government apologist propaganda-

We need to toss you and your public sucking Government Taxpayer wasting protectionist buddies asses out the door and make you compete in the real World-

Me-I enjoy the hell out of living on the Dole-

#182 BC Bring Cash on 12.19.10 at 12:30 am

#64 BestPlaceOnEarth
It has a religious over tone to it. You must be one of Gordon Campbells true believers. Super Natural British Columbia sounds more realistic to most of us and most likely a better tourism sales pitch. I do however believe that B.C. is one of the best places for con men to work over fellow citizens.Take Kelowna for example most people here work for ungrateful employers for sub-standard wages, poor benefits if any,work extra hours without pay and add to that a very high cost of living. For example rents and house prices. Add to that a often treacherous trip to civilization (vancouver). This place sucks. The major employers are, the hospital, city of kelowna and the school board. WOW. The rest of us poor saps for the most part work in service industry jobs just like Phoenix AZ. See the connection. We all know that Phoenix is hooped. By the way here in Kelowna there are hundreds of condo units that have never been occupied, sitting there rotting away with a few people in the buildings trying to maintain the whole building of so many vacant units and they keep building more.
By the way I see a lot more for sale signs with reduced price attached. Your flogging a dead horse. B.C. is going down. Expect of course the elite. They always benefit from everybody’s misery.

#183 prairie gal on 12.19.10 at 1:27 am

dark sad person: so who pays these oh-so efficient private sector regulators? The industry? How much does it cost to have such high-quality inspection? What is the motive for inspectors to order improvements to process, particularly if they are costly and impact profit? Look up the definition of “accountability” and “captivity”. Self-regulation doesn’t work, neither does outsourcing regulatory oversight to a private body with no accountability to the public.

What you are proposing results in Enron-like activity… a lack of accountability will be exploited every time.

#184 throwstone on 12.19.10 at 1:49 am

Guy in Regina,

Have you worked in the private sector in the last 15 years?…

You sound like a typical self-righteous government employee!

#185 TaxHaven on 12.19.10 at 1:50 am

#173 Guy in Regina, what’s a “public good” to me may not be one to you, and vice-versa. Any definition of something as a “public good” is speculative at best and ridiculously pompous hubris otherwise.

I’d rather do without government’s expensive and involuntary “services”, thank you!

Once I heard someone stateside say “I’d like to shrink government small enough to fit in a bathtub – and then I’d pull the plug!”

Sometimes – horror of horrors! – I wish I were an American…

Just think how much more productive and vibrant an economy Canada would have, and how much more capital would be available for productive use…

#186 Patz on 12.19.10 at 1:51 am

#167 DSP
Your faith in the private sector is about as valid as someone’s belief that government should do it all. The private sector has shown itself over and over to put profit above people’s welfare; to cut corners to save money and to obfuscate to cover their butt. When public safety is on the line I’d go with government every day—excepting North Korea of course.

#187 Nostradamus Le Mad Vlad on 12.19.10 at 1:56 am


#146 jess — “…universial banking in an integrated global marketplace is the the wave of the future….”

See the headings of the three links following. These jackasses are getting really antsy.

NWO by 2012? Hmmm. Maybe / maybe not. We might all be frozen stiffs by then!

Obama “He is being pushed as savior (by Soros and the elite) in an attempt to con the American people into accepting global slavery.” It is working out very nicely for them.

China is going to collapse the world.

Further to the Dark Side Of The Moon. Lunar eclipse happens during the winter solstice.

Vaccinations Remember whooping cough?

Soros vs. Murdoch Who wins? One a lefty, the other right. Both nutbars.

Cdns. ‘R’ Bonkers plus Spanish Fandango.

The Real WMD Incl. a 2:11 clip.

Four Scenarios why interest rates are going higher.

NAU / CFR Never seen this site before. Plus — Merger Still pushing hard.

Wanna buy a soccer team? It ain’t cheap!
*
#173 Guy_in_Regina — “Dark sad, dd, Cookie, Mad Vlad, Hoof and the rest of the ding-dong crew should endeavour to actually know something about a topic . . .”

Umm, I’ve worked in both union and non-union printing shops; the better half used to work for the Ministry of the AG in Toronto, but we’re retired now.

Does that satisfy your self-serving, bloated, know-it-all ego? That’s the part which takes up the empty space between your ears.

BTW, globalization sucks. It’s done diddly-squat for us, except increase taxes. However, you’re the one that knows everything about nothing, so I’ll let you figure it out.

#188 throwstone on 12.19.10 at 1:57 am

Being Canadian is really just a disposition.

#189 Burnt Norton on 12.19.10 at 2:06 am

Gotta chuckle at the back-and-forth on Vancouver from the likes of TBPOE, junius and DA.

Lived in Van my whole life, traveled a lot & ain’t movin’ anywhere else. Would consider Oz (& maybe Norway) but it’s too far from the rest of our family.

Buying a house in a decent area of Van has not been on for taxpaying mortals sans inheritance for around 10 years or so now. But the thing is: so what. In fact, I think that it’s a blessing in disguise.

People need to start realizing that renting can be much more liberating than owning / owing / maintaining / being stuck somewhere. It’s taken me many months reading this blog to realize this and the orthogonal shift in perspective really is profound. Fortunately, my wife agrees and my kid’s not old enough to know the difference.

#190 Jody on 12.19.10 at 2:35 am

#173 Guy in Regina

“the vast majority of public servants are hard working people.”

Hahahahahahahaah! Oh gawd! I am one and no, the vast majority of pubic servants are not hard working, they don’t give a shi** and are more than happy to retire ASAP. They certainly aren’t servants, ever tried to get served in an emergency room or at the passport office? Nobody cares, and why should they, they have no incentive to care, no boot kicking them in the ass to serve the customers.

But you’re ignoring the true cause of the problem – upper level civil sevants, politicians, bankers, multi-national CEO’s, when corporations and government are one in the same that is the dictionary definition of facisim and thats what we have now. Just wait, soon we’ll have to flash our papers when we walk down the street, for our safety of course. Or for the children like the one broad on here who told me I’d freak out if it was my kid that got sick, well, I’m sure she’ll go apeshit when she finds out my daughter has never had a vaccination, there crap, do nothing.

Yea, everything I love and hold dear have been people and things I’ve entered into relationships voluntarily with, nobody forced me into them, hence I love them. That’s what the problem is with government, it’s not voluntary, it’s some ahole sitting somewhere thinking they know better than I do about how I should live my life. They use the guns of government to force the productive to pay for their adventures in totalitarianism. Problem is, now the parasites outnumber the producers and the totalitarianism is getting out of hand. Expect the Balkanization of North America. Europe is dozens of countries, why the hell do we think we can carry on with only two countries and three languages in an area twice the size of Europe? Sorry, but the time has come for a change.

We’ve never had a truly free market, why are people so scared to try it once, hmmm? The idea of cradle to grave soicialist garbage is exactly that, garbage. We’re condeming future generations to economic ruin.

#191 nonplused on 12.19.10 at 2:57 am

Garth, others,

Here is one fact you are just going to have to get through your thick caveman heads, and pass the memo on to F. Taxes cannot be raised until wages are growing faster than the cost of living. There is nothing out there to tax at this point, without just consuming capital, which means even less production tomorrow.

Taxes are at a high point. Any raise of taxes mean a reduction in GDP. Until wages grow faster than inflation, there is nothing left to tax. All tax increases from here just mean mortgages go unpaid, consumption drops, and bankruptcy is the order of the day. Tax raises at this point are counterproductive, on all levels.

The government must cut spending!

#192 Junius on 12.19.10 at 3:00 am

#147 DA,

Are you missing something? Yes.

Vancouver housing prices are already dipping. The past 6 months has been pretty flat. Whether they fall slowly or quickly doesn’t matter. Fall they will and for many year.

Will it take 10 year or 30 years for them to recover. I don’t know. I think it would be arrogant to think anyone could project that far out. However it will be a different world by then.

#193 Junius on 12.19.10 at 3:03 am

#164 BPOE,

You said, “Vancouver has nothing to do with logic and all to do with big time demand.”

This is the core of your delusion. It is also the core of my angst. You believe in it because you need it to be true. I don’t believe in it because I know it is false.

Wake up.

#194 Vancouver_Bear on 12.19.10 at 3:11 am

#64 TheBestPlaceOnEarth on 12.18.10 at 10:50 am

Is it you begging for a buyer or your hungry wife forces you? So you even started begging ppl to buy on anti RE blog? You seem to be desperate….
Go to yattermatter guy’s blog, you speak the same RE dialect of Gibberish at least.

#195 Mark on 12.19.10 at 3:47 am

#174, great theory, except there’s practically no jobs in Regina outside of government. And the Sask Party isn’t doing anything meaningful to change that.

#196 Thetruth on 12.19.10 at 5:02 am

Don’t agree with many views that Garth pitches…often get censored…but

Kudos to him donating his MP pension to charity even though it may be a small percentage of his total earnings…

#197 McLovin on 12.19.10 at 5:50 am

DA you are a joke. If more of your “clients” treated real estate as you suggest as a long term “must live in, need roof over our heads old Jeb” investment you would be out of a job,

Face it, 50%+ of all real estate sales in BC short term speculation. If you think I am wrong, prove it.

PS – Polish up your resume. Not only is Kelowna ground zero and no bid, your guys are out of a job. Have fun at McDonalds Realtard!

#198 Moneta on 12.19.10 at 8:52 am

How were income trusts a ponzi scheme? There was nothing wrong with the income trust concept. It’s just a vehicle for passing on income streams to investors in the most direct and tax efficient way possible
—–
While it is acceptable for Americans to maximize tax avoidance, here in Canada we do have general anti-avoidance rules where the sole purpose of changing a legal structure cannot be for tax avoidance only.

So even if one is against government intervention in the income trust structure, it was totally foreseeable that government would somehow stick its nose into it.

#199 Darryl on 12.19.10 at 9:30 am

24
Leanne
“Hi Garth, fyi (since GregW is temporarily absent, someone had to fill in) – ”

Did the aliens get him? Or is he in a NWO prison?

#200 jess on 12.19.10 at 10:02 am

Friday, December 17, 2010
Extreme Inequality Helped Cause Both the Great Depression and the Current Economic Crisis
http://www.washingtonsblog.com/

#201 Leanne on 12.19.10 at 10:14 am

#196 Thetruth: “Kudos to him donating his MP pension to charity even though it may be a small percentage of his total earnings…”

What percentage are you giving?

#202 Bottoms_Up on 12.19.10 at 10:39 am

#190 Jody on 12.19.10 at 2:35 am
———————————————–
Not vaccinating your child is like gambling at the casino — yet you’re gambling with their future health.

The fact of the matter is, vaccination has eradicated some very serious diseases and saved countless lives (ever heard of small pox?).

How would you feel when your child comes down with polio, and won’t be able to walk without crutches (tiny Tim anyone)?

Irresponsible parenting. Period.

#203 Herb on 12.19.10 at 10:43 am

Jody @ #190,

We’ve never had a free market? Go a bit beyond 20th Century fascism. Try the 19th Century. There were no internal restrictions on “trade”, and all the external ones were put in place solely to favour domestic production and commerce.

Worked out well, didn’t it.

#204 Bottoms_Up on 12.19.10 at 10:44 am

#178 JB on 12.18.10 at 11:36 pm
———————————————
That depends on how much you have left on your mortgage, but given the high penalty, I would think you’d save money in the long run by going with <5% for 10 years.

#205 Kaganovich on 12.19.10 at 10:44 am

generation disparity in the UK:

http://www.globalresearch.ca/index.php?context=va&aid=22451

“With the tripling of tuition fees, educational costs are now being transferred from state to individual almost in their entirety. Having inherited a system which recognised higher education as a public good, and hence paid for publicly, what has been passed on is a system in which many students will repay nearly £40,000, and many poorer students will be dissuaded from going entirely. This ‘Cabinet of millionaires’ are now forcing others to pay for what they themselves received for free.”

B. Chapman’s semi-paranoid, but nonetheless valuable assessment of the present state of the global economy:
“Most of you have observed rioting in London, Athens and Rome this past week, as Europeans become more militant in retaliating against austerity, higher taxes and growing unemployment. The bitterness, resignation and militancy is reminiscent of the late 1960’s demonstrations in Paris. Now we have seen this not only in Paris over the last three years, but now over Europe as well. The entire Continent is in contagion.”

And his guess about the results of quantitative easing:
Irrespective, temporary fiscal stimulus has been just that, temporary. We ask, why would the result be any different this time? All the exercise, a very expensive exercise of $2.5 trillion annually, is doing is buying time. The result will be more inflation and unemployment and the beginning of demonstrations and violence as we have seen all over Europe for the past few years. Incidentally, both are worsening and next year will reach a level not seen since 1968 in Paris. Riots are on the way in America, just be patient, they will come in good time. This is the result of austerity from the bottom up and the rich getting richer. Washington and NYC had best re-read French history starting in 1788.”
http://www.globalresearch.ca/index.php?context=va&aid=22454

It seems to me that the fact that we are witnessing an increase of rioting continental europe and that we probably won’t see much of it in Oslo or Stockholm lends itself to an argument for a socialist rather than a fascist style government/economic nexus. That is, if riots are something to be avoided. If anything Chapman has written has an ounce of credibility (which I think it does), then he is describing (and predicting) social blowback from fascist policies.

#206 Junius on 12.19.10 at 11:01 am

#157 Devore,

Completely agree.

#207 Bottoms_Up on 12.19.10 at 11:15 am

#143 Cassandra on 12.18.10 at 6:53 pm
————————————————
It certainly looks like we’re headed into a depression:

“Canadian industries operated at 78.1% of their production capacity in the third quarter, up from 76.9% in the second quarter.

This was the fifth consecutive increase since the record low rate of 67.8% in the second quarter of 2009.”

http://www.statcan.gc.ca/daily-quotidien/101213/dq101213b-eng.htm

#208 dd on 12.19.10 at 11:24 am

Jim Rogers – “the US will default on its debt in the next 5 years.”

http://insider.thomsonreuters.com/link.html?cn=share&ctype=group_channel&chid=3&cid=165521&shareToken=MzpkYWQ1NGRlMi1hN2RlLTRmZGItYWU5MC02Mjk1ODQ5MmMyM2M%3D&start=0&end=3725

Bizarre. — Garth

#209 Got A Watch on 12.19.10 at 12:00 pm

Kaganovich – “You are most likely familiar with this already, but Harper’s ways can be better understood if you know about his Straussian philosophical heritage, an attitude and approach fostered in him by Flanagan”

Ahhh yes, the esteemed assassinator, Prof Flanagan, Canada’s own Joe Lieberman clone. A man who is against Wikileaks because it makes America look bad (not very hard to do these days) and that embarrasses him by association, as a committed American bootlicker, a position that makes him a traitor to his own country. If he is “teaching” ‘H’, that just proves my point, that ‘H’ is dumber than a box of rocks. But I knew that already. I’ve always thought ‘H’ was just a wannabe American who would sell Canada for 5 cents if he thought it would please his American masters. No surprise there, really, as the “Straussian philosophy” is just complete bullshit, which is why so many neo-cons follow it avidly – being that sort of right winger requires extreme reality detachment as a matter of course. But I really don’t care to “understand” ‘H’, I just want to see him out of public office ASAP, before he does any more damage to this country. He is quite welcome to go to the US for some corporate job, and if I’m lucky I will never have to hear any more of his vacuous speeches, and we’ll both be happy.

Yes, I hate ‘H’, and I’m proud to say that.

‘Guy in Regina’ – I have stated in many comments that a proper role of Government is to regulate commercial and financial activities to protect consumers. Something we don’t do very well in Canada, despite your claims, I’m still waiting for some real ‘Consumer Protection Legislation’ like what they have in many other countries.

Proper regulation would require, maybe, 10% of the Federal and Provincial Government employee pools. The other 90% could be easily dispensed with, and the rest of Canada would not care.

You overlook the simple basic fact that by it’s very nature, a “government” operates on extracting “taxes” from the (private economy), which makes it a net minus to growth and prosperity. Every $ that a Government spends comes from somewhere outside of Government, or they just print it, and that devalues the currency – either way, those outside of Government pay the bloated cost for it. And most of the bloat comes in pay and benefits and pension plans, for employees who work in the many Departments and Ministries, that if they vanished overnight, would not be missed at all.

Government is just a net drain on the economy, an ever growing vampire, that needs to suck more blood every year, to survive. I am not arguing for complete elimination, just a 90% down-sizing. If you find that unacceptable, as a Government worker, I cordially invite you to get a job, if you can, in the private sector, also known as real life. A place where money apparently does not fall from the sky, and nobody gets a raise or benefit increase if there is no value added.

Or the economy goes the way of the Soviet Union – “we pretend to work, and they pretend to pay us” – until it all collapses. Having a large, bloated, public service is just another “stimulus” plan, for those who are lucky enough to work there – taxpayers overpay taxes, to support parasites. Which subtracts from real economic activity outside of Government crony circles.

Did you by any chance see the Quebec contractor talking recently about all the bribes he had to pay in Ottawa to get the juicy Government work jobs? Please don’t try and tell me our tax $ are well spent, and carefully managed, we both know that is just a flat out lie.

If we don’t cut the size and scope of ‘Big Government’ in this country, we will just follow Europe and the US in their downward spirals. That is the bottom line. We will end up exactly like Greece and Ireland and UK and US etc. Spending like drunks at last call, until they hit the debt wall, and shatter.

#210 throwstone on 12.19.10 at 12:15 pm

Yo Garth! What gives with this BS?

A typical example of off-the-rails demographic projections is Boom Bust and Echo, the 1996 best seller by David Foot. “Real estate is no longer a growth industry,” wrote Mr. Foot. Baby boomers, he said, would leave cities, and there was no hope of a housing price revival. The supply of housing will exceed demand. “Boomers who think they will be able to sell their houses in say, 2010, and live in luxury thereafter… will be in for a surprise.” His totally wrong conclusion, written in 1996: “Only in the second decade of the 21st century… will prices recover again.”

So much for demographics as a useful tool. The future will be what we make of it when it happens, and not what we think it might be. With 100 million people, Canada’s future would likely be unpredictably terrific.

Terence Corcoran, Editor

Read more: http://www.nationalpost.com/case+million+Canadians/3938655/story.html#ixzz18Ze302cZ

Foot was right. So am I. — Garth

#211 Ben on 12.19.10 at 12:21 pm

#208 dd

I’d love to see the U.S. default and the Chinese take it up the a$$

It would be yours first. — Garth

#212 Bob on 12.19.10 at 12:26 pm

New article from a US Economics writer on the Canadian RE bubble and our banks moral hazard:

http://www.businessinsider.com/canada-real-estate-bubble-banks-2010-12

#213 cellar dweller on 12.19.10 at 12:44 pm

….Ottawa is now proposing that a giant national mutual fund be created that workers currently without pensions can join voluntarily, run by the insurance companies…

Wonderful, if we had any misconceptions of how deep the political elite had their noses up the buttocks of the Insurance/banking industry….all doubts have been removed.

A “voluntary” contribution scheme? Like the one that has currently been underfunded by the uneducated, lazy, greedy masses?
One wonders how many “experts” sat in how many meetings to come up with that gem of an idea.
No surprise why its a minority govt. Come to think of it. Minority Govts seem to be the new trend WORLD WIDE. Could it be that the few voters left out there have finally clued into the fact that most politicians are self absorbed, over educated, greedy swine that will say anything to everyone to stay in power.
“None of the above” should be an option on all voter cards and if “nota” wins then all politicians that lose to ” nota” get 2 options . Quit or work for free for a 2 year term.(or no pension for 2 years)

#214 BrianT on 12.19.10 at 12:45 pm

#185Tax-Firstly, if you were an American citizen you wouldn’t be able to keep your American citizenship and live in a tax haven (like Canadian citizens do). Secondly, to describe the USA as a land of “small government” is utterly ridiculous. Obama forcing Americans to pay a tax to corrupt sick care companies is just the latest in a never ending line of big government/big corporate scams. Not to mention literally trillions of taxpayer dollars disappearing into thin air.

#215 Devil's Advocate on 12.19.10 at 1:00 pm

#197 McLovin on 12.19.10 at 5:50 am

DA you are a joke. If more of your “clients” treated real estate as you suggest as a long term “must live in, need roof over our heads old Jeb” investment you would be out of a job

Face it, 50%+ of all real estate sales in BC short term speculation. If you think I am wrong, prove it.

PS – Polish up your resume. Not only is Kelowna ground zero and no bid, your guys are out of a job. Have fun at McDonalds Realtard!

McLovin I’ve been in this business now for about two decades. My business comes largely from repeat clients and the referral of their friends and family to me. It is a receipe which ensures the longevity of my business.

I don’t disagree that a very large percentage of real estate transactions during the building of the bubble were speculative. That is precisely what causes such bubbles. But I did not participate in that business.
Polish up my resume? I don’t think so… although a gig at Home Depot would be a hoot for a time.

I am confident organized real estate isn’t going anywhere any time soon. There are most certainly changes coming down the pike though, but not the changes you think McLovin. Think about contingency instead of commission. It is happening as we speak in the USofA and not more than a couple years away here. Makes sense… that way if someone wants to list their home at a ridiculously high price we charge them an up front fee to cover those costs we know we will never recoup as it will never sell. That way we can reduce the costs we charge those who list their homes for realistic price and it sells. Really it’s going to happen. Think we didn’t see the Competition Bureau thing coming our way? Get real. It happened in the US first and we knew it was just a matter of time before our own Competition Bureau tried the same. Oh and how did that work out? Nothin’. Ya know why? We were prepared and had a defensible model which works and promotes competition like none other.

The internet has done NOTHING to undermine organized real estate. The internet has enhanced the way we do business. It has most definitely caused the newspaper industry some concern as fewer and fewer look to the classifieds and real estate sections which were significant revenue generators. But the business of real estate itself? Ain’t goin nowhere McLovin, nowhere. And my job… well my employers (clients) seem happy enough that they keep coming back. How’s yours working out for you?

#216 Guy_in_Regina on 12.19.10 at 1:09 pm

Keep on hatin’ fellas.

Gov’t ain’t goin’ anywhere.

#217 randman on 12.19.10 at 1:18 pm

So instead of increasing food inspection, get rid of it altogether? I suppose the ‘market’ will weed out the melamine tainted milk and deadly salami? of course, only after severe illness and death and these companies will concede liability and voluntarily remove product from the shelves, right?

My guess is if your child died from consuming tainted food you’d be the first person screaming at the government to ‘do something’.

Prairie gal……

Clearly you missed the point

Please join Roial1 and proceed to the back of the class

Thanks for coming out!

#218 cellar dweller on 12.19.10 at 1:34 pm

80,000 govt Pink Slips to be issued in England in the coming 3 months?
….and on a much smaller scale, 225 pink slips issued in City of vancouver on dec 24th?
“Merry Christmas everyone ! Merry Christmas to all!” so sayeth Tiny Tim
Gotta balance that budget folks … sorry. :)

#219 Jody on 12.19.10 at 1:42 pm

#202 Bottoms Up

and I suppose responsible parenting would be to teach ones child to trust the government and go along with everything it says, hmmm? One thing I let the kids do is play outside, in the mud, in the dirt, let them climb trees, throw rocks at each other, learn the limits of the human body, help them get exposed and then immune to all sorts of garbage. It wasn’t vaccinations that cured our ills, it was sanitation, period, end of story.

#216 guy in regina – oh to be a fly on the wall when the Saskatchewan government goes bust and you get your pink slip.

#220 Hoof Hearted on 12.19.10 at 1:55 pm

Garth

Any comments on the mega city concept?
It appears Metro Vancouver (21 member local gov’ts) has a ” Regional Growth Strategy ” till 2040 that has passed 1st and second reading. They have re-defined local gov’t by allowing our transit authority(Translink) to be designated as a local gov’t .

http://www.metrovancouver.org/planning/development/strategy/RGSDocs/RGSNov12_1stand2ndreading.pdf

Critics, such as myself see this as nothing more than an ATM machine for local gov’ts, as they are effectively creating hi density areas in a (you scratch my back and I’ll scratch yours ) mentality. Beleive it or not, hi density construction is still booming in Metro Vancouver. In my view the local gov’ts have nothing to lose…they get inst cash via DCC’s, then property taxes in perpetuity regardless of the economy, and if the RE market collapses, they simply adjust the mill rates .

This mega city concept seems to be their latest desperate grasp to maintain the cash flow.

#221 prairie gal on 12.19.10 at 2:01 pm

Jody, as a public servant yourself, how can you possibly say that the private sector does not have its fair share of layabouts and incompetent management?

I encounter the odd self-loathing public servant who believes, without evidence, that if only the private sector took over the job would magically be done faster, better and cheaper. Of course, these dreamers have never actually worked in the private sector. They embarrass the public sector with their naivety and fawning over every consultant and industry rep they encounter.

I’ve worked both in government and in the private sector – both have their fair share of dedicated, hard working employees and the opposite. Gross generalizations like yours are a product of ignorance.

#222 cellar dweller on 12.19.10 at 2:07 pm

#64 BiggestBlogBlowhard
…Warm in a house or cold on the street as the parade of Bentley’s and Lamborghinis blows exhaust on you as you sit begging on the street. Don’t embarass yourself, your family stop renting, pull yourself up by the boostraps and get working and buying in the BestPlaceOnEarth…..
####################################
I’m just curious, do you really think that all renters have no job, no savings…?
Go back to your “boiler room” and keep pumping gold,silver and real estate. The correction is coming, unfortunately not soon enough to cause your ludacris drivel to keep spewing forth.

#223 prairie gal on 12.19.10 at 2:10 pm

#217 randman – your response indicates that you have no substantive rebuttal to my hypothetical and are resorting to ad hominem attacks to disguise that fact.

I win this round.

#224 cellar dweller on 12.19.10 at 2:34 pm

#164 BestBS’erOnEarth
….Junius,
Your being logical. Vancouver has nothing to do with logic and all to do with big time demand. There is no industry here, there are no jobs except low paying ones in the service sectors. Canadian professionals making 6 figures struggle buying a house on the West Side…….
####################################
While I totally disagree with your simplistic evaluation of the Vancouver economy. Assuming your right.

How do you believe this type of economy is sustainable ?

#225 realpaul on 12.19.10 at 2:36 pm

F’s idea of a ‘private pension plan’ is ludicrous……as ridiculous as the CPP is now even if contributions were to quadruple.

The industry insists that you have 75% of your pre retirement income available as retirement income…don’t forget the greedy tax man and all his minions.

So lets take the average CDN income of $80,000 and focus on 75%…..$60K right? That would mean that the average woman who lives 30 years in retirement needs $1,800,000 .00 million dollars to retire.

The CPP pays $9600 p/a……thats a big differance from the government fantasy to the kibbles aisle.

Likewise the person making $100,000.00 needs $2,200,000 million to retire with 75%.. Bwahahahahahahahahahaha not when the average swinging dick has a negative net worth in this country all presaged on the continuum of RE going up forever and rates staying ZIRPED. ( You don’t want to look at the real bond market that lives outside governments buying its own paper).

http://www.torontosun.com/money/2010/12/17/16599181.html

Lets face it…the Tories will all be retired with comfortable indexed pensions by the time you sneak down the dog food aisle to shop. The civil servants will be blasting into the teen hookers in their luxury SUV’s while the rest of Canada starves….because its only a fantasy to retire as an average CDN. Unless you’re a dope dealer, porn seller or civil servant with a fat succulent pension and able to ride out on the backs of the poor…….the future don’t look so bright.

A retirement nest egg of $800,000 invested to yield 6% with a small return of capital would provide a lifetime retirement income of $60,000. I’m sure glad you’re not a financial advisor. — Garth

#226 dark sad person on 12.19.10 at 2:49 pm

#183 prairie gal on 12.19.10 at 1:27 am

dark sad person: so who pays these oh-so efficient private sector regulators? The industry? How much does it cost to have such high-quality inspection? What is the motive for inspectors to order improvements to process, particularly if they are costly and impact profit? Look up the definition of “accountability” and “captivity”. Self-regulation doesn’t work, neither does outsourcing regulatory oversight to a private body with no accountability to the public.

What you are proposing results in Enron-like activity… a lack of accountability will be exploited every time.

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

so who pays these oh-so efficient private sector regulators?

The same people that pay now-of course-
******************************
How much does it cost to have such high-quality inspection? What is the motive for inspectors to order improvements to process, particularly if they are costly and impact profit?

The “incentive” to do a better job and do it for less and the fact that your “competitors” are looking over your shoulder and waiting for you to not do a good job and to charge too high of prices and if you do-they’ll snatch your job from you-

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

Look up the definition of “accountability” and “captivity”.

I don’t need to look it up-i just explained it above-

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

Self-regulation doesn’t work, neither does outsourcing regulatory oversight to a private body with no accountability to the public.

Who said anything about “self regulation?

The regulations are set by “Government” and like i said–that is the “only” role Government needs to play in any market-anywhere-

You die hard Socialist’s are so afraid of the free Market-it laughable-you need to understand that it is much more efficient and cost effective then anything those grey faced old men that you call Government can organize-

Get the Government “out” of the Markets-
Let the Free Market work and it will bring you low prices and quality service-

I don’t expect you Socialists to get it-you’re all delusional when it comes to the role of Governments in the Market place-
People like you are what causes Depressions-as you side with Governments that try to fight the Market and prop up the Union Masters-

Take a good look at the unrest in Socialist Europe as the Unionist/Socialist’s fight the Market-
Look close-it’s because of unbending-inflexible People like you-we can see our future unfolding in front of us-

#227 cellar dweller on 12.19.10 at 2:50 pm

#208 dd
I watched about 20 minutes, Jim Rogers contradicted himself numerous times( sometimes in the very next sentence). “Irelands banks shouldnt be propped up by the Euro. The Euro is dead”,… I own Euro’s”… ” Iceland went bankrupt, its a great place to invest”

and on and on and on

#228 Dan in Victoria on 12.19.10 at 2:51 pm

While we sit here discussing the pros and cons of government, arguing who is right who is wrong, smugly thinking our argument is “correct”………

This story below is played out daily across our cities.

Sorry, but I think we should all be a little more aware of our fellow citizens.
Oh yeah, I’m down to the food bank to buy some turkeys / food again this year.

And you?

http://www.timescolonist.com/Police+help+year+loner+pension+cheques+uncashed/3999658/story.html

#229 Thetruth on 12.19.10 at 3:05 pm

#210 throwstone

+1

Blog readers here are falling into the same trap that adherents to the ‘Boom, Bust, and Echo’ theme did in the late 90’s…

They are oblivious to true population growth concentrated in the cities (demand) and land zoning restrictions in cities such as the ALR (supply)

#230 Off-Gridder on 12.19.10 at 3:27 pm

Garth I am so dismayed. Last time I talked to a bank for a private investment they told me to go ask private lenders at 14% interest BUT they said they’d mortgage me a house no prob for double the original sought after loan cost no less. And that’s fine. I mean our family income is $84,000 and we had been at our job six months and with the company 4 years. Every year income changes depending on circumstances. We had a health problem put us both out of work for a year and it was hard enough making truck payments. And if we had a mortgage?

I have warned all my loved ones and strangers who listen about the risk involved with purchasing a house. Sent them to your blog. Quotes facts and statistics. The older generation is more willing to listen and agree. My young friend, however, don’t believe in bad times. another friend plans to buy this week. One of them works and on is unemployed going to school. The one that works just got over a shoulder surgery due to the hard job and has only been with the latest company 4 months. Every year he has been laid off for the winter. This winter it appears there will be work through the winter due to demand from China I believe. So the bank approves them for $275,000 and encourages a 35 year AM by offering 3.25% and discouraging the 25 yr AM by offering 3.85%

6 months ago they were both unemployed. They managed to get an 8% downpayment and yes have a couple of small assets. But what happens if they lose their jobs again? Sure for the first five years they can prob afford $1000 payments a month at 3.25% but then what? With kids down the road… I have told people until I am blue in the face about the risks. They don’t care. Everyone believes it’ll be fine, the banks know what they’re doing, why bother to learn about what a mortgage costs, the bank wouldn’t approve me if I couldn’t afford it, I’ll just play the system and claim bankruptcy if I can’t make payments.

So in the end. Since my initial house hunt began in 2007 when I was told to buy now or never see these 5.5% interest rates again. When the only way to buy a house was with a pre-approval and a realtor insider. I have learned that humanity is greedy. They do what they can get away with even at the financial expense of others. It is all about profits and investments in one asset class. We are risk takers who believe no harm will ever come.

You can take a horse to water…but you can’t make it brush it’s teeth. In the meantime I’ll be enjoying my $300 a month it costs me to service my rental and save like a bugger!

#231 Patz on 12.19.10 at 3:50 pm

Lookin’ for an expression
Of th’ comin’ depression
It sucks
It blows
It jes how it goes
D’ elites is up
We all is down
You belivin’ da man
You be th’ clown
The slave owning class
They got they ass
Handed back to ’em in ’65
Amendment 13 was the jive
Now they’s back
Wit a new set a chains
They made a debt
‘N they ’round yer neck
They drag you down
They swing you high
Make no difference
Yo still gonna die
Less you wake up
Like your bros before
An kick they ass
In a new class war.

Anyone caught rapping on this blog will be run over with a Hummer. — Garth

#232 Duke on 12.19.10 at 3:52 pm

Garth, I wonder if you could elaborate on your comment re the Jim Rogers quote and video: Jim Rogers – “the US will default on its debt in the next 5 years.”
Bizarre. — Garth

#233 dd on 12.19.10 at 3:55 pm

.#227 cellar dweller on 12.19.10 at 2:50 pm

…Jim Rogers contradicted himself numerous times…

No he didn’t. He was talking about technical trading – when everyone is bearish he will take other side of the trade, eventhough long term he things it will blow-up. There is a differnce.

#234 dd on 12.19.10 at 4:18 pm

#210 throwstone

..With 100 million people, Canada’s future would likely be unpredictably terrific…

Last I saw the population of Canada increased 1% (300K) YOY. And the government of canada isn’t seriously upping the mirgation numbers. It doesn’t look good for a generation or two.

#235 Guy_in_Regina on 12.19.10 at 4:40 pm

Dark sad is all theory. Unfettered markets concentrate capital at the top – this is what you get:

http://www.youtube.com/watch?v=H5OtB298fHY

The top 1% of income earners in the States bring in more than the bottom 50%, and the uber rich want huge tax cuts and to reduce the deficit by cutting health, education and other social programs that the bottom and middle depend on. This is the stuff of revolution. The struggling US middle class needs more government services, not less. Someone on here recently made a post about the huge number of personal bankruptcies in the States were because of health care costs. Rural folks in Saskatchewan used to have no access to hospitals, electricity, or telephones until the big bad government stepped up and provided those services.

Of course markets must be the drivers of the economy – but there is an important role for government. Even the most die-hard conservatives will tell you so. Those who go beyond that are the anarchist fringe; and they come here to spout.

We had very limited government from the ancient sumerians till the early 20th century, when things seemed to get a whole lot better.

Garth man, I’d love to hear your thoughts on this issue.

#236 Patz on 12.19.10 at 4:52 pm

#230 Expand your means
Why are posters so negative? 2010 was awesome for Canadians, the stock market is boomin and our real estate prices are healthy! I loved 2010! Happy new year 2011!

And it was a beautiful sunny day in Banda Aceh, Phuket and Sri Lanka on December 26, 2004. Ya never know what’s around the corner. Wait a minute, we do know—sort of.

#237 Herb on 12.19.10 at 5:43 pm

Let the Free Market work and it will bring you low prices and quality service-

Such as Bre-X, Enron, the auto sector, ABCPs and CDS’s. All of those, of course, would be the fault of unions in the minds of some of our more “conservative” commenters.

#238 Devil's Advocate on 12.19.10 at 5:51 pm

#237 Patz on 12.19.10 at 4:52 pm

#230 Expand your means

Why are posters so negative? 2010 was awesome for Canadians, the stock market is boomin and our real estate prices are healthy! I loved 2010! Happy new year 2011!

And it was a beautiful sunny day in Banda Aceh, Phuket and Sri Lanka on December 26, 2004. Ya never know what’s around the corner. Wait a minute, we do know—sort of.

Yes, exactly, so why waste your life worrying about things that may never come to be and those you can not change anyway?

#239 Devore on 12.19.10 at 5:52 pm

Foot was right. So am I. — Garth

It’s the other face of the housing equation. Beyond the next 10-15 years, where is demand for housing going to come from, given the demographics? I don’t think enough focus is given to that. Everyone seems to be assuming a worst case scenario of some dips, then flat for 10 years, then another steady rise, just like previous housing busts. Ride it out baby!

But again, as we discussed here a couple days ago, people are just taking today, and flat-line projecting it into the future, this time without accounting for demographics.

#240 realpaul on 12.19.10 at 6:24 pm

Hey Garth…heres a pretty good site for ‘Joe Average ‘ investors- Canada related.

http://www.boomerandecho.com/2010/12/perfect-asset-allocation-doesnt-exist/

#241 dd on 12.19.10 at 6:36 pm

#230 expand your means

…the stock market is boomin…

The market isn’t up because the economy is fundamentally sound. That is why there is worry.

Checked corporate profits lately? — Garth

#242 dark sad person on 12.19.10 at 6:41 pm

#236 Guy_in_Regina on 12.19.10 at 4:40 pm

Dark sad is all theory. Unfettered markets concentrate capital at the top – this is what you get:

The top 1% of income earners in the States bring in more than the bottom 50%, and the uber rich want huge tax cuts and to reduce the deficit by cutting health, education and other social programs that the bottom and middle depend on. This is the stuff of revolution. The struggling US middle class needs more government services, not less.

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

What a joke-

We don’t have a free Market “that” is why what you posted above is happening-
You just don’t see it-
I doubt you know what “Free Market” means-
We haven’t had a free Market since our Monetary System became totally Fiat-
The Governments “free reign” over our Money supply and the imbalances that have been papered over for years and has now hit the wall-

Print-Spend-Tax-Corruption-Bribery-Kickbacks-Golf Courses-Wars-Bailouts-Boondoggles with no accounting

Here’s the Market-

Watch Bernanke and H-F-C changing their calls every 2nd Month-
The Market has them down and it’s putting the boots to em-embarrassing them-humiliating them-
The Market is a great humbler and stern teacher-but teach it does-

Equilibrium is what the Market is trying to teach us-
This you need to look across the Ocean for-
It’s called “Chindia”
People are considered top scale if they make $1/hr
They have all the Industry-thanks to our Governments with the Sweet Corporate deals and the intentional Inflation that was ramped up to mask that great transfer of Wealth out of our Countries-
This could have been prevented simply by letting the Market set rates-
It would have sent rates into double digits when the dotcom bubble blew-instead they lowered rates and blew a housing bubble that made people “feel” as if they were becoming wealthier and so they got fat and watched our Industry move overseas allowing China to do the Manufacturing and allowing them to export cheap good back here and all the NA fools assumed they were getting wealthier as they could afford to buy more-with the help of their House ATM’s

Your wonderful Government “missed” seeing the blowup-in fact they never did admit that it blewup-
Yet–they all know how to fix it-

Now it’s payback time-
“Global Wage Arbitrage” is foremost on the mind of the Market-
Wages prices and bloated Governments are all heading South-

Governments are bailing out Banks-not People nor should they-
You need to understand-the Market is looking out for you-it is your friend-
It knows “exactly” what we need to do and so-
We “will” do it–

I’m not sure what you mean by saying I’m all theory-
If you would like to see some Technical data to prove what i said above-i can provide it–but why don’t you simply look out you friggen door and down the street-

#243 VICTORIA TEA PARTY on 12.19.10 at 6:41 pm

#170 dark sad person

I see your argument about risk facing pensioners, either current and future. That’s been the damn problem with markets in the past few years. Accurate market forecasts are scarce as hens’ teeth. Hence the angst.

Right now (and for the past two years at least) the world stock markets are being twisted and turned by too much recently-printed money cranked out by too many central banks and their acolytes, to allow Ma and Pa investor any kind of clear picture for them to create a “sensible long-term investment stategy” as so many mutual fund sharks have been babbling for lo’ these many decades. Therefore the markets are casinos.

Nothing is normal anymore. That is, the investment strategies of industrial-world investors created during the Cold War have no currency today, because geopolitical forces have shifted from knowing the enemy (Communism) to not knowing from one milli-second to the next who’s a friend, who’s a foe and where the hell are they anyhow? “They were over here a minute ago!”

But there is one constant; the need for people to look after kith and kin and to be secure in their own attitudes and lives. Investing is still an important part of that process.

My suggestions, as opposed to advice:

-use fundamental and, to a lesser extent, technical analysis, the latter being a wobbly science that tries to quantify investor psychology (that seems like Mission Impossible to me!).

So, go with the fundamentals meaning the study of government/consumer debt levels; currency fluctuations; where the wars are being fought and why; international trade patterns (Baltic Dry Index) and why; changing weather patterns (for crop productivity); your gut instinct.

There’s more of course, but that’s a start. Just remember you can always make a buck somewhere in the markets.

-Where not to be…

Right now the giant bond market is in the process of some kind of collapse, thanks to soverign debt. In otherwords there are more bonds for sale out there that there are customers willing to buy them, because the risk is too great in too many countries (this is why mortgage rates HERE will be zooming upward shortly).

-Where to be for a while…

Stock markets until the US tax relief/increased welfare legislation warm and fuzzy starts to cool…then watch it!

-Gold and silver coins…

I view them as a small but necessary part of any portfolio. In a pinch, Garth will likely trade squirrel cassarole recipes for a nice $5 Maple Leaf silver coin, maybe a couple of recipes!

-And as I’ve been kvetching on this blog for months now, get rid of your debt. The best way to travel through this economic hurricane is with ballast (flexible debt options)that can be adjusted to your good “ship’s” needs, rather than be burdened with tons of potentially fatal pig iron (huge mortages and their ilk).

You actually believe stock and bond markets can both collapse simultaneously? This blog is toxic. — Garth

#244 Live within your means on 12.19.10 at 6:44 pm

Just listening to a Twisted Radio (Bob Rivers) CD. One of our favourites. It is so funny, so true, but some, with little children are so heartwarming, IMHO. Check out http://en.wikipedia.org/wiki/I_Am_Santa_Claus. Might be able to still buy it but not sure.

#245 prairie gal on 12.19.10 at 7:08 pm

dark sad person: is iteven possible for you to try debating me without resorting to name calling. Labeling me as a socialist without addressing the actual argument is lame, dude.

You are all theory. You remind me of an economics graduate who has never had a real job before. All piein-the-sky market rhetoric that conveniently ignores the fact that privatization of regulatory oversight leads to opportunism and corruption. You should read ‘The Corporation’ by Joel Bakan. Or watch ‘The Smartest Men in the Room’ – these are real life case studies of actual events. NOT hypothetical, pollyanna free-market bullshit.

Bottom line is this: without regulatory oversight WITH TEETH accountable to THE PUBLIC (not the regulated) there will be corruption. The private market is driven by short-term profits and will, if given the opportunity, produce utter garbage. A private regulatory entity whose very existence depends on the survival of the entities it is mandated to regulate becomes toothless VERY FAST. Just look at the Alberta government – it is completely beholden to the oilsands industry because that is its only source of income. Now imagine if the Alberta government was a private company.

Enron relied on Arthur Andersen, an accounting firm who was supposed to adhere to GAAP (generally accepted accounting principles) in its audits. It did not. Why? Because Enron was their golden goose.

#246 Ben on 12.19.10 at 7:24 pm

#230 expand your means

…the stock market is boomin…

The market isn’t up because the economy is fundamentally sound. That is why there is worry.

Checked corporate profits lately? — Garth

——————————————————

Check the stock market index’s lately

Daily. Doing fine. — Garth

#247 dd on 12.19.10 at 7:25 pm

#230 expand your means

Checked corporate profits lately? — Garth

Yes … just like in 2007 before the 2008 market melt down. What could go wrong?

Heck, it is not like $1.47 in debt vs income for each Canuk family would slow any recovery down. Furthermore Mark to Market accounting is not a reality for the US banking system. The mess is still there but have been partially transfered to governments balance sheets. The “to big to fails will have to actually fail” for a true recovery – government and business.

#248 InvestorsFriend (Shawn Allen) on 12.19.10 at 7:32 pm

Garth said at number 243.

“You actually believe stock and bond markets can both collapse simultaneously? This blog is toxic. — Garth”

Umm yes, Garth and the Fall of 2008 / Winter 2009 just called and wants to know why you have forgotten its crash which sent both stocks and bonds down a lot.

How quickly they forget…

Actually a balanced portfolio of equities and bonds fell by 15% in 2008-9 whereas an all-equity one collapsed by 50%. By the end of 2009 the mixed portfolio was back to even and today is nicely ahead. There is almost always a very healthy negative correlation between these asset classes, and I will continue to use that to advantage. — Garth

#249 Hoof Hearted on 12.19.10 at 7:35 pm

Dark sad, dd, Cookie, Mad Vlad, Hoof and the rest of the ding-dong crew should endeavour to actually know something about a topic before you go spouting off about it. And seriously, the rate that some of you post at makes me wonder if you’re not living off the state! Why don’t you go out and do something productive!!!

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

Hey canine seducer

What PSAC et al public sector union do “ewe” belong to.

I’ve been on both sides of the equation and its quite a joke in the “surreal ” public sector.

Nowadays, I puke when I hear about the perks and benefits beyond the pay scale(salary or hourly rate)
Those of us in the real world have learned a lot of survival skills so when the civil service collapses under its own largesse….please don’t come crying, just huddle and watch SOYLENT GREEN .

Basically I think you are a troll , given you can’t be serious about what you profess. unless of course you are a professor…that’s a whole other discussion.

#250 dark sad person on 12.19.10 at 7:41 pm

#243 VICTORIA TEA PARTY on 12.19.10 at 6:41 pm

*************
I agree with a lot of your post-
You say-

***************
use fundamental and, to a lesser extent, technical analysis, the latter being a wobbly science that tries to quantify investor psychology (that seems like Mission Impossible to me!).

So, go with the fundamentals meaning the study of government/consumer debt levels; currency fluctuations; where the wars are being fought and why; international trade patterns (Baltic Dry Index) and why; changing weather patterns (for crop productivity); your gut instinct
********
Yes you need fundamentals and technicals but your missing the most important one-

An good understanding of Mass Psychology-it is the greatest driver of all things Market related-which means all things in our know Universe-
Without it you’ll lose-
***************
I do not see the Bond Market crashing-quite yet in NA-
I have no doubt it will sooner or later revolt-but there’s so many more Bond Markets around the World to collapse yet-that i think we’ll be spared for quite awhile yet and i sure as hell don’t see it collapsing on fears of Inflation-
If the Stock Markets tank around the World again-
I would expect the UTB and USD to get much stronger as Money heads to “perceived” safety-also Gold-but it could sell down first as Investors flee the “perceived” risk in Gold-
assbackwards as always-
Gold will do well imo-but it needs to show Investors that it’s capable of decoupling from the Stock Market and capable of competing as a Currency-
It will-just like it did last time the Market crashed-08
Gold Stocks just “stopped” going down with other Stocks-
Gold made a uturn and outperformed all-
That divergence is what to watch for “if” Markets tank-

#251 jess on 12.19.10 at 7:48 pm

support the troops indeed! …go after wikileaks and ban people from reading this stuff but on the other hand they deny and catagorize as PD rather than ptsd. to save cash.

Pentagon Uses ‘Personality Disorder’ to Deny Veterans Health Care
By CHRIS COUGHLIN
….”By discharging 22,656 service members on the basis of PD, the DoD has saved the military approximately $4.5 billion in medical care and $8 billion in disability compensation that these service members would have received had they been discharged on the basis of Post-traumatic Stress Disorder (‘PTSD’) or another service-connected disability.”
http://www.courthousenews.com/2010/12/17/32685.htm

=
AEHI stock through bogus and frequent press releases – more than 87 this year along. The defendants “made multiple misrepresentations, including claims that its executives had such confidence in AEHI that they had not sold a single share of company stock,” the SEC said in a statements. “Records obtained by the SEC show that Gillispie and Ransom have instead secretly unloaded extensive stock holdings and funneled the money back to Gillispie.” AEHI reported to the SEC and to investor that Gillispie was paid $133,000 a year, but the SEC says that “Gillispie has actually reaped approximately six times that amount in 2010.”Ransom and Gillispie each sold more than 1 million shares of their AEHI stock, and hid it from the SEC and from investors, the SEC says. “Proceeds of those sales went to Gillispie, who spent the money on lavish personal expenses such as his Maserati sports car.” The SEC also sued Bosco Financial and Energy Executive Consulting as relief defendants. It seeks disgorgement, penalties, and an order telling both of them never to do such a thing again.

http://www.alternateenergyholdings.com/company-information.aspx
SEC Brings Fraud Charges Against Self-Described Idaho Nuclear Power Company

#252 Live within your means on 12.19.10 at 7:53 pm

.#228 Dan in Victoria on 12.19.10 at 2:51 pm

Yes, its so sad. He is but one soul who needed help. No doubt there are countless others all across this country. I’m by no means religious, but I have compassion for those less fortunate than I and try to support them with donations. Watched a program last night – apparently Vcr. food banks are way down this year with donations.

#253 Taxpayer like everyone else on 12.19.10 at 8:00 pm

220 Hoof hearted

Thanks for the link. I’ve pasted the following from it:

“A commitment to a compact region reflects the
recognition that sprawling urban development
consumes the natural landscape, necessitates costly and
inefficient urban infrastructure and adds to the global
problems of greenhouse gases, peak oil and climate
change.”

How might you propose they address these issues?

#254 Basil Fawlty on 12.19.10 at 8:11 pm

I enjoyed Jim Rodgers interview on Reuters, thanks for the link.
One point he made about commodities was interesting in that he felt if the world economy expands, commodities will do well. Alternatively, if the world economy does poorly, money printing will increase, which will drive up the price of commodities.

#255 Love this Blog on 12.19.10 at 8:23 pm

“You see, the rest of you’s think we’re a bunch of gun totin truck driving red necks”

Not with a vocabulary like that I don’t!! Kiddin’ ya bud. I’m a red-neck Sask boy myself, and we’d get along fine!

“My neck didn’t get this red sittin’ in a cubicle, pal”

#256 Love this Blog on 12.19.10 at 8:32 pm

#228 Dan in Vic,
Good Link man. I always read your well-thought out posts.Always. But that link was very nice too.
Everyone likes to hack on the cops, but man…………the things they see, and have to do?? My old man was one.

RealPaul has a real knife to drive into the “civil servants” Don’t know why. He should read that link.

“Civil Servants”………..those evil civil servants…….are your neighbours, friends, relatives……………….everyone hates a cop…..until you need one.

#257 Love this Blog on 12.19.10 at 8:38 pm

#118,
Since I’m on a roll, I thought I better give credit where it is due. How many of you/us would donate a pension?

I believe Garth is very well off………fair enough. Fact is……………..he didn’t go into public service for $…..he went in to serve his country…….and now, he is still serving his country, amongst some ridicule by MSM, and donating his pension. A man of principle. If we had more like him in power, we would have a better country.

#258 realpaul on 12.19.10 at 8:48 pm

Right as always Garth:

“A retirement nest egg of $800,000 invested to yield 6% with a small return of capital would provide a lifetime retirement income of $60,000. I’m sure glad you’re not a financial advisor. — Garth”

And right into the guts of the issue as always. Our subject has got to be a cash millionaire to make this equation work. Given that the 60K is intrest income it is taxed at the highest marginal rate…thats going to send half ( roughly 50% or 30K to the parasites in Ottawa) in taxation and leaving 30 to 32 thousand in net income…..or 25-2600 a month.

The ‘small return on capital’ of course is speculative positioning on an absolutely correct CAPM and the advisors choice of Beta protecting me from any market risk. In fact, as we have seen in the DJIA over time could be zero.

Bad advice from an industry of advisors who urged investors to sell into the 2008-09 crash could leave another segment of the investor universe wiped out and unable to replace the necessary capital in time to gain back losses and achieve the 6% returns. Lets face it…the Beta of the 6% return is far higher than the systemic risk of a long bond where 6% in unattainable.

I say ‘cash millionaire’ because you have to either own your roof clear title or you have to rent. If you have to pay rent ( having sold the home to get the $800K to invest for income) then 2500 p/m gets cut in half again to keep a roof over your head. Now you have $1200 a month to pay all your bills and pay for food. So the $800K is cash without the RE component added on. Given that this amount is thousands of times more than the statistical average that any Canadian can claim as net worth…the figure is somewhat unrealistic to most Canadians. The majority of Canadian ‘real estate millionaires’ will have to sell the barn to free up living expenses. Last time I checked ( two weeks ago) the cost of a room in an assited living complex ( average quality) was $5000 a month. The nest egg dries up pretty fast at those rates…….pretty shocking.

Agflation alone is increasing 30++% p/a and inflation on consumer items is all of that and more. Taxes are continuing to rise and property taxes are set to blast off into the stratosphere. There is no coming down from the sugar high the civic workers have been on with the big money that has come from the RE boom as it has taught them to expect ever higher wages and benefits…..these all effect escalation in taxation going forward. My $2500 p/m income won’t go far unless the government tries to implement wage and price controls again….its barely adequate today.

This is why I can’t get my head around a 6% return as being adequate. We have seen the purchasing power of the dollar shrink ( as well as the size of the packages our consumer items come in) to where we can see that a mid 1970’s dollar will only buy .19 cents in todays market. If I am retirement planning for myself and having to take all this into account for a time frame twenty years from know I think my estimate of 2 million for retirement will fall far short of what is actually required to stay out of the Kibbles aisle.

Nope $800K will not do for us. By the time I retire in ten years inflation and all the reasons I’ve pointed out ( I strongly believe that Ottawa will gut the RRSP’s to pay off the growing numbers of parasites while increasing taxation across the board) will probably demand that I have at least $3 million just to go sideways…….and live in my home without a reverse mortgage…..and eating Kibbles. The CPP…I don’t even consider as money …it will probably be axed according to a ‘needs assesment’ within a decade. Retirement will likely follow the EU model and be moved up to 75 and none of the boomers will get it for more than 2 or 3 years.

The 6% return I quoted is not, of course, interest income. And I said, return of capital, not return on capital. Are you drinking right now? — Garth

#259 Hoof Hearted on 12.19.10 at 8:55 pm

Anyone caught rapping on this blog will be run over with a Hummer. — Garth

=======

Howzabout limericks…

There was a guy from Regina……..

OR

There was a gal from Nantucket…….

#260 Nostradamus Le Mad Vlad on 12.19.10 at 9:05 pm


Sound up! A new and inspired take on The Twelve Days Of Christmas, complete with Irish accent! About five minutes.
*
#228 Dan in Victoria — “Sorry, but I think we should all be a little more aware of our fellow citizens.”

Well pointed out, Dan. Too many of us read about the various types of help more and more people need, but how many of us are willing to forego some of our own pleasures to be able to help others out?

It’s not that difficult to put our own wants to one side for somebody else who has needs. Besides, the sales in January are usually better than the Boxing Week blow-outs.
*
GW? Winter storm over Hawaii. Plus — UK. Liverpool’s soccer game yesterday was postponed because there was a foot and a half of snow. Difficult to play in that!

Homeless So it’s come to this — homeless people committing crimes so they can go to jail, have a relatively decent place to sleep and be fed at taxpayer’s expense.

Here is the next war, courtesy of Obama, the elite, Pentagon and WH as the spokesoffspring. Politics don’t matter, of course — the US is beyond broke and any excuse in any country is necessary.

Moody’s “What Moody’s is saying is that unless the government of Ireland agrees to force the Irish people to cover the bankers’ frauds, the bankers won’t play nice with the Irish government any more. Good reason for the people of Ireland to emulate the people of Iceland (it is just one letter’s difference) and replace the government.” wrh.com.

Perfect Excuse for unwanted and unexpected war.

Goldman’s Eggs QE2 has failed miserably. But keep flogging the dead horse to see what happens next.

Chaos — You may understand. “So now we are hearing that it’s not happening on 2012 but going to occur starting Dec 21, 2010.” (The Winter Solstice and Lunar Eclipse on the same night.)

Newfoundland — Frozen ocean waves (GW)?

Shadow Lending and the fiscal BS.

Central Banking 101 — Basics for Grade One math.

12:08 clip The deliberate dumbing down of the US (and Canada).

11:28 clip US a banana republic (so are we).

#261 RickOShea on 12.19.10 at 9:13 pm

I am sure the reason F and the provinces even considered pension reform was because someone woke up and realized that when all these old farts quit working – they are going to stop spending en mass because they have done such a pee poor job of planning for retirement.

The consumer driven economy is going to feel the pinch – an understatement. F et al. are worried about the Walmarts of the world much more than Jane and Joe Shmoe’s grim fate as cat food connoisseurs.

But in the end, F did what I expected, he let his ideology trump reason – it’s what ideologues do.

#262 Bullion.Bunny on 12.19.10 at 9:22 pm

173 Guy_in_Regina on 12.18.10 at 11:10 pm

You forgot me “bullion.bunny”

You actually believe stock and bond markets can both collapse simultaneously? This blog is toxic. — Garth

anything can happen at this point…..by the way, did you call the sept 2008 crash or the march 2009 rebound? Exactly.

Actually I think I did. — Garth

#263 kathy on 12.19.10 at 9:27 pm

see this; Carney can’t do much about housing but is hinting to Flaherty to tighten rules.

http://www.theglobeandmail.com/report-on-business/commentary/barrie-mckenna/why-mark-carneys-speaking-to-more-than-you-and-your-neighbour/article1843910/

#264 TheBestPlaceOnEarth on 12.19.10 at 9:47 pm

Kelown real estate is fueled by Alberta Oil period. Stop the tar sands and Kelowna will sink like a stone. Offshore real estate in this instance means Alberta and throw in some NHL money for the big homes. Same goes for Revelstoke where a little house can run you 700k and a handful of logs processed in the mills the last few years. What sort of jobs do they have in Revelstoke that fill the demand for 700k plus homes?
()()()
The major employers are, the hospital, city of kelowna and the school board. WOW. The rest of us poor saps for the most part work in service industry jobs just like Phoenix

#265 Leanne on 12.19.10 at 9:49 pm

#23 al on 12.18.10 at 12:54 am
where can i buy viagra brownies from?

#25 al on 12.18.10 at 1:00 am
where can i buy those v brownies from?

And yet another desperate cry in the night went answered…

#266 Bullion.Bunny on 12.19.10 at 9:53 pm

Actually I think I did. — Garth

oK…..that’s interesting. So why did you not sell in Sept 2008 and buy back in March 2009. I think you held on through the crisis, did you not?

Explained that. Try to keep up. — Garth

#267 Stevo on 12.19.10 at 10:03 pm

So, the realtors don’t like the big banks saying that debt is too high. Guess who is now looking for their business?

http://www.financialpost.com/news/Credit+unions+household+debt+deal/4001218/story.html

#268 dark sad person on 12.19.10 at 10:19 pm

261 kathy on 12.19.10 at 9:27 pm

Mr. Carney, a former Bay Street and Wall Street banker, knows the banks aren’t going to tighten lending standards on their own, no matter what he says.

********************
That reporter misses the big picture about Banks tightening-
Why should the tighten?

They can see that 280 Billion Dollar backstop sitting there just waiting for the Defaults to roll in so they can hand the Default over to Taxpayers and be made whole for the bad Debt-
What BS-
If Carney cared about anything-other then his Banker Brethren-he would have let the Banker bastards croak in 08-
He would have let them face the losses and I can guarantee you-loose Credit would have vanished in a heartbeat-
It was Carney-who blew the bubble-
Of course the fools H&F were at the Podium throughout it all-cheerleading the demise of Canadians and their future-

Where is the risk-that would have dampened Credit availability from Banks?

There is none-that self correcting Mechanism was short circuited by Carney himself-with the blessing of our incompetent-clueless Politicians-H and F and every other idiot Politician that sits in Government-
NONE of them has the foggiest idea what to do-

#269 TaxHaven on 12.19.10 at 10:29 pm

@#214 Brian T…

a)I DON’T live in a tax haven; I live in a low-tax country, and b)did I really describe the U.S. as “a land of small government”? If so, sorry. It’s not true.

#270 Guy_in_Regina on 12.19.10 at 10:29 pm

Sorry Hoofhearted; I mostly just threw you in there because Garth took a pop at you. Your moniker sounds rural, and I’m good with that.

Bullion.bunny – ok you’re in. Your Ding-Dong Crew membership card will arrive in 2 weeks.

Dark sad. No we don’t have a free market; and we never will! You’re like a die hard communist – “if only vee could implement pure communism, zen you vould see comrade, zen you vould see!”.

Take public education. Many kids wouldn’t go to school if it participation was decided by market forces (say, 80% of kids living below the poverty line). These kids would have very little chance at bettering themselves and would be born into the bonds of abject poverty forever because their parents too poor, stupid, or lazy to pay for their schooling. This would hurt all of society because we would have a huge segment of illiterate, uneducated and, in all likelyhood, highly unproductive citizens. Fast forward a few prolific breeding generations and we’d come to resemble Afghanistan or some other God-forsaken place. Beyond that, the principles of natural justice dictate that we take some reasonable measures to ensure citizens have a reasonable chance to succeed through their own merit – not be born into a station as in feudal times. You focus far too much on economics (the dismal science) and not enough on political philosophy, sociology, history, anthropology, international studies, etc. etc.

But I know that knowledge doesn’t fit well with your narrow, entrenched world view.

And I DO get economics – I have an undergrad minor in econ. and I took multiple econ and finance classes at the masters level. I just think it provides useful models as opposed to a panacea.

#271 Guy_in_Regina on 12.19.10 at 10:39 pm

Final post tonight!

I should have just said “principles of justice” not “… natural justice” above.

You guys think governments are going to reduce spending?! With ‘n’ million wheezing geezers making their way to the social safety trough, then the hospital, before croaking 30 years later???!!! Ha ha ha, ha ha ha, ha ha ha!

Any politician who puts the gun to the head of that sacred cow will themselves be flailed on the alter of the boomer ballot!

And I am thoroughly horrified by the detrimental public policy being pursued by Harper and his minions. I strongly oppose huge bailouts and deficits. I balance my checkbook and I absolutely expect governments to balance theirs!! However, I am even more opposed to the notion of doing away with government as the solution! That is a suckers’ game!