Five lies

Two years ago it was named the poster child of the housing crisis. Others have called it a dusty suburban wasteland. Endless rows of houses, most less than five years old, all big. If it weren’t for the relentless sun and wisps of desert dirt between homes, this could be Burbsville, Canada.

Maricopa has about 45,000 people living just outside of urban Phoenix. For Sale signs dot every block in every neighbourhood. Tumbling prices and hot, sunny days are two reasons a lot of Canadians are parking their cash here, snapping up homes like they were hi-def TV sets at Best Buy on Boxing Day. Half off, baby.

So, who cares about this loser town of subprime mortgage holders? Just about everybody, now, after the woman who will probably run for US president bought a house. Actually, it was Sarah Palin’s 20-year-old daughter who signed the papers. However speculation is the almost 4,000-square-foot McMansion will end up being a family compound.

But here’s the interesting part.

The house sold four years ago, just as the wheels were coming off the housing bubble, for $330,000 – cheap by Canadian standards for a big, new home with a three-car garage. It went into foreclosure at the beginning of 2010, and was bought by investors for $137,200 – a 60% reduction in value. They threw some paint around, and sold it to the Palin clan for $172,000.

Now wouldn’t it be interesting if the 2012 Republican presidential candidate lived in a foreclosed home that her family vultched?

In contrast, here’s Barack Obama’s house in Chicago:

He bought this in 2005, just when the Palin home in Maricopa was being built. The asking price was $1.95 million, and his third offer of $1.65 million was accepted. Actually the whole thing was controversial, since a political fundraiser of the then-senator bought the vacant lot next door (closing on the same day), then sold Obama a strip of land a few feet wide for $104,500.

All this may seem inconsequential, but it forms a social and financial backdrop to the two most important years in a few generations, which begin next week. The man-of-the-people transformational president in the mansion vs the plain-talkin’ pissed-off mama bear in the foreclosure. In many ways, the presidential election to come will be symbolized by real estate. And at this point, the granite guy is toast.

All of this is highly relevant for the Canadian housing market, jobs, and the whole constipated economy. There is no way we escape a real estate melt without an American recovery – and that’s unlikely for at least three years. As I wrote here a day or two ago, Canadians have fallen into a zombie-like repetition of the five big mistakes Americans made years ago.

We’ve pushed average home prices past the ability of average families to afford them. We’ve embraced lending standards so low people without money can buy houses. We’ve amassed historic levels of household debt. We’ve borrowed billions at sub-prime rates destined to rise. And now we’re sucking equity out of our houses to make ends meet.

These five realities make a lie of those who claim this country is populated with cautious, prudent, carrot-up-the butt, little boy scouts or buttoned-down bankers who only grant mortgages to virgins and Conservatives (quite often synonymous). In fact, why should similar actions have different outcomes?

Interestingly enough, I spoke to a career real estate agent on Boxing Day who said in his BC community home sales are down 40%, “with prices ready to follow.

“Trust me. I’ve been in this business long enough to smell the fear.”

Anyone who cannot understand that taxes and interest rates have only one direction in which to travel, pushing real estate in the other, must work for CTV. In fact, that network’s news operation turned out a piece days ago claiming 2011 “is going to be a good, balanced market,” with, at most, a one-half point increase in mortgage rates.

What most fail to understand is that while the cost of living, including home loans, will rise, this is not the fundamental reason we face an inevitable housing implosion. Oh, that was the giant threat a year ago (and the Bank of Canada did pull the trigger three times in 2010), but it’s now been replaced by debt. Families simply cannot sustain the higher debt service costs which upgrading a home involves. Higher house prices have brought with them the greatest mortgage burden in history, as the traditional down payment of 20% has shrunk by more than half for all new originations.

In other words, people who would never in their booziest, raunchy, cowboy moments buy a stock or a mutual fund with 95% financing, think they’re utterly safe in grabbing new house at its highest-ever price, with just 5% of the dough. How does this end?

Ask Sarah.

153 comments ↓

#1 $froma$ia on 12.26.10 at 11:13 pm

“…people who would never in their booziest, raunchy, cowboy moments buy a stock or a mutual fund with 95% financing, think they’re utterly safe in grabbing new house at its highest-ever price, with just 5% of the dough. How does this end?”

And tell me why I would want to compete with putting my hard earned savings as a downpayment against an idiot with playing with 5% down and nothing to lose.

“F” Your an A$$hole!

#2 mid-Ontario on 12.26.10 at 11:44 pm

Even if F and Carney stand on their heads to keep interest rates the lowest ever in 2011, the provinces and municipalities will pick up the slack with a multi proned attacked spear-headed by Premier Dad here in Ontario to drive water, sewer and Hydro costs up so fast they will soon match current mortgage payments for many.
F will tell the premiers that transfers payments are down, premier Dad will tell municipalites to that their transfers are down so up goes water, sewer, solid waste, and local rates to the moon!
Just when you are ready to sell your 52 inch flat screen to keep the lights on, F will up the prime rate to put the final nail in your life.
I tell everyone. No-one listens.
I feel bad for them already.

#3 Basil Fawlty on 12.26.10 at 11:46 pm

“In other words, people who would never in their booziest, raunchy, cowboy moments buy a stock or a mutual fund with 95% financing, think they’re utterly safe in grabbing new house at its highest-ever price, with just 5% of the dough. How does this end?”
We know that a lot of people have limited financial smarts.
However, one would think that the banks that lent them the 95% mortgages, would have some financial smarts.
But then, the banks have been passing off the mortgages to CMHC, so they are insured by the government.
Well then, one would expect that the government has some financial smarts and would counsel Canadians on carrying to much debt, while we have the lowest interest rates in history.
Yet, it was the government who reduced interest rates to the lowest level in history.
Fortunately, Mark Carney is now warning Canadians about carrying too much debt. What stellar financial advice, something along the lines of “close the barn door after the cows escape”.

#4 Geoffrey L on 12.26.10 at 11:48 pm

I wish everyone a good financial plan in the New Year.

#5 Hovering on 12.26.10 at 11:52 pm

preacher’s block

(ask the sheep)

#6 Mr. Lee on 12.26.10 at 11:58 pm

Merry Christmas and Happy New Year Mr. Turner.

You ask, “how will thid end.”, I do not know the answer accept to say that I know how it is ending in the US, GB, and now Europe as a whole. We know how it ended in Japan and her lost decade.

As F prepares his budget, one is sure to get some form of austerity, some form of indication that the era of open spending has come to an end. Heck, even here in Alberta the talk about a sales tax is getting lounder.

So as for the ending, well, a lot of peoples will realize the hard way that they are over extended, and the upper middle class life style they HAD was faciliated by access to cheap borrowed money predicated on a static asset that will regress to the mean.

Happy Ending

#7 Behavioral Finance on 12.27.10 at 12:04 am

Next step for construction….

http://www.mnn.com/your-home/green-building-remodeling/blogs/beijings-incredible-inedible-egg-house

#8 BC Bring Cash on 12.27.10 at 12:04 am

Never seen seen a highway sign like the musher was observing. How appropriate, falling of a cliff anyone.

#9 Behavioral Finance on 12.27.10 at 12:08 am

This is hysterical…

1. “Spain is not Greece.”
Elena Salgado, Spanish Finance minister, Feb. 2010

2. “Portugal is not Greece.”
The Economist, 22nd April 2010.

3. “Ireland is not in ‘Greek Territory.’”
Irish Finance Minister Brian Lenihan.

4. “Greece is not Ireland.”
George Papaconstantinou, Greek Finance minister, 8th November, 2010.

5. “Spain is neither Ireland nor Portugal.”
Elena Salgado, Spanish Finance minister, 16 November 2010.

6. “Neither Spain nor Portugal is Ireland.”
Angel Gurria, Secretary-general OECD, 18th November, 2010.

#10 dark sad person on 12.27.10 at 12:09 am

Here’s why there wont be Hyper-inflation in the USD any time soon-

First of all-there has to be something of Hyper-inflate against-
We have to stop focusing on the US alone-
Does anyone actually believe they’re the only Country printing and monetizing?
Currencies float-they compete with each other-

Take TARP for example-
The US printed 750 Billion and stuffed it into Banks and what did Canada do at the exact same time?
We printed 75 Billion with the same destination–
Divide 750 Billion by 300 Million debt slaves and then divide 75 Billion by 30 Million debt slaves–
There it is-

The US will lead the way in printing and everyone else is “forced” to match it-why?
Because-whoever holds the weakest Currency will tip the balance of World trade in their favor-
Importers always flock to the weakest Currency-if for a rough example-
The USD fell 50% in Currency trade weighted value-everything they produced would be 50% cheaper to buy in any other Currency-
So-will Germany sit and watch the EUR skyrocket and their Industry sit idle while other Foreign buyers leave German exports and do business in the US or will they simply devalue in sync to save their Export Trade Industry (which is basically all they have)
What would stop The Euros from printing and Buying USD’s as fast as the US can print them?
Nothing-
Every Country wants the weakest Currency and that is impossible-

Another example that wholesale printing does not always cause a Currency to devalue-

The CHF-

http://barchart.com/chart.php?sym=^CHFEUR&style=technical&p=WO&d=X&x=42&y=6&sd=&ed=&size=M&log=0&t=CANDLE&v=0&g=1&evnt=1&late=1&o1=&o2=&o3=&sh=100&indicators=&addindicator=&submitted=1&fpage=&txtDate=#jump

Swiss Banks loaned Hundreds of Billions into the Euro Zone/PIIGS Mortgage Market-they lent out in CHF which means-those who hold those loans get paid in EUR-but they must pay it back in CHF-
When the loans were made-the EUR was high and times were large-
Now that reality is starting to appear through the cracks-
The Swiss Banks know that Defaults will hit their Banks hard and with the climbing Swissy-they will come even harder as the exchange rate has soared 20-25% since the loans were made-
Since that time the EUR has continually devalued against the CHF-in spite of the Swiss Government printing so many CHF and buying EUR to the point-that Swiss Banks now hold more Euro Dollars in their Banks than the ECB holds-

There-is great example of how hard it would be to Hyper-inflate-
Why is this happening?

Because-like the USD which sits beside the largest Gold Reserves in the World-the little Swissy sits beside almost as much Gold-
Both the USD/CHF are seen as Safehaven Currencies and it is largely because-their “Gold Reserves” are visible to all-

Does it matter what the Swiss want?
Does it matter what the US wants?

No-they are both at the mercy of the Market-

Traders see Gold and they see “Gold Backing” against Currency Default in both Countries-so they run to safety in both-
(The US does have much more than Switzerland to offer for backing)
(70% of Swiss GDP is derived from their Banking Industry and that is looking shaky-yet the CHF soars)

So-does it even matter if both Countries are lying and they actually have no Gold Reserves?

Nope-World Sentiment believes they do have the Gold and “that” is all that matters in the floating abstraction World of Fiat-

Can this all change?
Yep-but until it does-it wont-

http://barchart.com/chart.php?sym=^CHFUSD&style=technical&p=WO&d=M&x=37&y=11&sd=&ed=&size=M&log=0&t=CANDLE&v=0&g=1&evnt=1&late=1&o1=&o2=&o3=&sh=100&indicators=&addindicator=&submitted=1&fpage=&txtDate=#jump

#11 throwstone on 12.27.10 at 12:12 am

Let’s see how Sarah does against Hillary when Obama decides against running for a second term.

Btw…Garth how do you think the government will be able to service its debts while the economy “sputters along”?

As always. The power to tax. — Garth

#12 Roy Cobden on 12.27.10 at 12:21 am

“How does this end?”

Badly.

Far too many people (& I know some personally) who are just barely servicing their debt load at current low rates WILL be crushed. It’s only a matter of when and how badly.

#13 throwstone on 12.27.10 at 12:38 am

How do you tax those who are bankrupt?

#14 Michael on 12.27.10 at 12:43 am

My financial plan for 2011 stands and I am in the right mindset to make it happen. A bit of pain now rather than being roasted alive later IMO.

I wish most people would add up their outstanding debt and debt cost, I knew roughly where I was, but I didn’t realize how much it really was each month.

This ends now, bring in the gruel.

#15 dark sad person on 12.27.10 at 12:44 am

i hate it when that happens–

re-post-

http://www.barchart.com/cache/eb0596922cc92a00daa7d87324542845.png

http://barchart.com/cache/c4bd6abc51c7783a73281606e13f0d12.png

#16 throwstone on 12.27.10 at 12:57 am

Garth,

I just don’t think government has any more room to tax.

You have adequately demonstrated that we are in debt more than ever, mortgaged to the chin, and IMO taxed to the max.

I think the only way out will be cutting services and some mild austerity measures.

Perhaps a maximum of 25 years of employment for government employee’s, no double dipping(working pensioners), wage freezes at all levels, and an increase in corporate taxes.

Just some thoughts….

#17 dd on 12.27.10 at 1:07 am

#11 throwstone

…Btw…Garth how do you think the government will be able to service its debts while the economy “sputters along”?…

Alot of external US debt is borrowed short and when rates rise most revenue will be shallowed by interest payments. The US will have to default or inflate their way out of this. There is NO other way. People that tell you different have not done their homework.

#18 dd on 12.27.10 at 1:14 am

#9 Behavioral Finance

…“Spain is not Greece.”… “Neither Spain nor Portugal is Ireland…

And people that say the US will never default on their debt are the same people that say “housing is different here.” If they can default the US can also. Anyone that tells you different be very wary of their advice.

#19 Nostradamus Le Mad Vlad on 12.27.10 at 1:20 am


“. . . the two most important years in a few generations, . . .” — Indeed, 2011 is when commercial RE hiccups a lot, mtgs. on both sides of the border are reset and a ton of shit dumps on us very quickly. How quaint!

“. . . the presidential election to come will be symbolized by real estate.”

Instead of The Usual Suspects (D-R), look for a new, alternative centre-based party, which will capture the imagination of voters.

The only difference being that the elite set them up to look smart, crisp and clean, no bad news bears following them, they (may) get elected and then take control of slaves here. That is when the days of The Spanish Inquisition begin repeating themselves again.
*
#191 Bullion.Bunny on 12.26.10 at 9:43 pm

Thanks for the highly informative, educational and instructional video. Think I’ll go and build a new igloo in Lap Land for future use!

#10 dark sad person — “Currencies float-they compete with each other-Take TARP for example-”

DSP, I don’t disagree with you but I do put forth an alternate view, in that HI is purely a politically motivated choice of and by govts., to bail themselves out of the nonsense they’ve driven themselves into.

Not in all circumstances, I admit, but Germany’s economy in the 20’s was the catalyst that propelled Hitler and the Third Reich forward.

Whether it does / does not happen remains to be seen; the western world is now so totally screwed up that most ordinary folk have given up figuring out what will be the next to happen. Good post.
*
Ain’t Saskatchewan booming?

Military Budget Instead of increasing its military — TROTW is perfectly capable of taking care of itself — possibly the WH should look to helping their citizens out, because it seems TARP is a failure and Citigroup’s chairman gives reasons why Citigroup should be broken up.

Uranium a good investment? Plus — Despondent.

Feed the kids or pay utility bills? Plus — Comments are good.

Canada’s is as well.

Speaking of constant change: “Rate of decay speeding up” (that’s us).

Snow in Subway Yessirreee, that’s that darned GW booga booga again!

#20 Keith in Calgary on 12.27.10 at 1:26 am

If the bank won’t buy your paper without the government guaranteeing it via CMHC…….you’re the Canadian version of a subprime borrower.

Like it or not……the truth hurts, eh ?

#21 FerrisWheel on 12.27.10 at 1:36 am

I hear alot about interest rates going up. Not gonna happen. There is no way Carney and friends will increase interest rates. My guess is he lowers them in 2011. this time it will be too little too late. Real Estate and the economy will be heading down slowly over the next few years.

#22 DJH on 12.27.10 at 1:42 am

Obama’s a skillful and brilliant dude who will save the US (and us) from disaster and comfortably win a second term in 2012. And most of us will thus survive whatever moderate downturn the Canadian housing market may experience. There’s far too much doom and gloom in the air.

#23 walter safety on 12.27.10 at 1:50 am

Good analysis. Now anything I can do to get you to see the bubble in financial assets .?

#24 ottawaLive on 12.27.10 at 1:54 am

**Even he’s not sure**
Real estate lawyer Mark Weisleder :
All of the above points to a very positive 2011 Canadian Real Estate market. Still, just to protect myself, I will write another column saying that the market should decline next year. That way, I can’t go wrong. Enjoy 2011.

#25 nonplused on 12.27.10 at 1:57 am

I think I know how this ends: very slowly, then all at once. But the “all at once” part will be some way off yet. 2011 will be a year of bargaining, not resolution. It takes roughly 5 years to get through the 5 stages, but we are at least a few years in.

I don’t think the musher has anything to worry about unless the lead dog is blind. Typically only broke governments put blind men at “lead dog” at the central bank, so the dog team can be counted on to have a much brighter future than we do collectively.

Garth, I really liked this post, especially the 5 lies. Couldn’t disagree with a word of it. And I am with you on rising interest rates, modestly and slowly but at this point that is a disaster all by itself. But I can’t see eye to eye with you on taxes going up. Oh sure, they can try to raise tax rates. At this point everything is already taxed, and not modestly. So when you consider what a burden taxes are already, and how each dollar is taxed multiply times as it finds its’ way through the “trickle down”, I can’t see how tax rate increases will result in actual tax receipts going up. I think any tax rate increase from here is counterproductive and only throws more instability into the system as spending gets diverted from wherever its’ going now (debt servicing) to where it’s going later (taxes).

For example, they could eliminate the capital gains (inflation tax) exemption, but then I think you just see no more capital gains. What’s the point of selling even something totally overvalued if all the profit just goes to the government, no matter how much of that gain was due to inflation? There will be a market reaction to the tax.

Or let’s say they decide to tax gains on primary residences (another inflation tax). Well, what’s the point of selling even to downsize if the government is going to take much of the money? You might not actually be able to afford to downsize.

The current tax system already stifles growth and exerts a strong hand against economic activity. I am not saying the government won’t try and make it worse, they might, but the effects may not be what they are hoping. They might try to raise revenue and kill the economy in the process. That old killing the goose that lays golden eggs thing.

They say the last official act of any government is to plunder the nation. And while that might actually happen, I am hoping our government isn’t that close to dissolution. If we are to survive a few more years, spending cuts come next. So tax changes may be in the offing, but those will be reallocations for political purposes. If they try to change the overall take more than marginally, the economy goes Soviet. Government employees and elite insiders will do well until the collapse, the middle class goes black market, and everyone else starves.

You just cannot get blood from a stone. You can get flesh from a cow, but take too much and you have no cows.

#26 Larry on 12.27.10 at 1:59 am

We had a great boxing day today, all led, lcd, ipod, ipad, wii, kinect, and wtf sold out by people without money. Wake up Mark the horse left 2 years ago.

#27 TheBestPlaceOnEarth on 12.27.10 at 2:11 am

Vancouver investors pay a flat tax of 10%. Their salaries are well in excess of 250k. They sell their apartment in China for a few million and buy up a cheap house in Richmond for 800k. Let’s see your cards Canada, do you have the balls to raise interest rates? That’s what i thought. As this first decade ends owners in Vancouver raise their glasses high in celebration of the incredible fortunes made with home ownership. Renters nervously await higher rents as owner kick tenants out to install granite and stainless steel. Renters walk stunned as their family and friends have made fortunes while they missed out on the biggest boom in history. Renters have the BC Liquor store as their only comfort this New Year. Get Rich Get Buying and join the respectable class THE OWNERS

#28 Milhous Plumbers on 12.27.10 at 2:11 am

Phoenix – bad choice relies on imported water. Chicago has the lake.

#29 dark sad person on 12.27.10 at 2:31 am

As always. The power to tax. — Garth

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

Yes and that tactic leads directly down the road to a liquidity trap and the jaws spring shut when the “ability” to tax ends-

#30 stanley on 12.27.10 at 2:49 am

It’s not the power to tax. It’s the power to borrow (print) money.

#31 Edmonton Guy in Alberta... on 12.27.10 at 2:54 am

Today the Banks have given masses loans with nearly nothing down and will see interest rate surging over the next five years as inflation soars.

People will have to sell their places as they can’t afford their payments (monthly payments could almost double)and the houses will become devalued so much the federal government with go into massive debt covering all the loans guaranteed by the banks on these properties bleeding hundreds of thousands of dollars! Yikes!

Can we say raise taxes, privatize health care and sell of Government assets & property… again…

#32 realpaul on 12.27.10 at 3:19 am

“The power to tax” indeed amigo. But as I’m always saying …..”Tax what?” We’ve already got working families MAKING APPOINTMENTS for the food bank so they can stay at work as long as possible. Whats going to come of this?

1) Cast off parents and more ‘granny bashing’ which is already becoming common as heck in the burbs.

2) Lots of teen pregnancy stats and rising juvenile crime from a generation of heavy boozers as parents who drink away their lost dreams leave the key on latch.

3) Tax cheats and avoidance beaucoup…say hello to the black market economy in just about everything as people desperate for cash can’t seeing sending any to the parasites in Ottawa who piss it away on civil service pensions.

4) Credit is going to smack into the wall like a suicidal drunk going the wrong way on the off ramp and retail will crash pushing mainstreet into a tailspin. The retialers and car dealers will be desperatley competing for trade with the CRA and we all know that the government hates competition.

Heres another heads up for those who think they get to run away to the USA tax havens of Arizona and Florida to reduce their tax when they get out of the rat race and can maybe scrape by if they retire in a low tax/low cost area instead of staying in Canada to get hooped.

Revenue Canada will follow you into the grave to get their pound of flesh. Think its easy to retire in the US? Think again snowbug.

Read it and weep. You have to ask the CRA for permission to escape and you can only do so if they let you….and if you have any holdings ot attachments to Canada..inc religious affiliations, kids, drivers license, accounts..house, RRSP’s etc etc etc….they will disallow your tax status in the US and screw you to the wall.

http://www.financialpost.com/personal-finance/When+snowbirds+come+home/4019649/story.html

There was a famous case a few years ago when thousands of local airline pilots fell for a line that had come down through their association. They all opened a PO BOX in San Jose Costa Rica and said they were residing there instead of here. They thought they’d beat the taxman at his own game. They all got fined, audited, screwed , blued and tattooed. Obviously a pilots license doesn’t make you a tax expert.

And remember kids…theres always a good reason for real estate to be cheap in some markets. Do you really think you’re smarter than the 300 million citizens of the USA? Real estate is cheap in Spuzzum too….Gee I wonder why?

#33 In Phoenix on 12.27.10 at 4:23 am

Ride in from the airport, Indo-American cabbie – teaches economics extension course at ASU – says people have no idea the macro-economic sh!tstorm that’s about to hit.
First day – first hour! – we meet a neighbour walking her dog. She sold her house this year just to get out from a mortgage that was $300K under water. Not $300K. Three hundy less than the value of the home. She’s renting it back from the new owner.
She told us about the hordes of Canadians allegedly buying up real estate down here. We are now to Phoenix what the mythical “Asian investor” is to Vancouver RE and the apocryphal “German investor” is to hopeful sellers of Prairie farms.
We’re in an inner-city enclave they’ve romantically dubbed the Historical District. In the block and a half to the new rapid transit line, there’s a house with no door and all its windows shattered. Across the street is a house the neigbhour figures had a million bucks dumped into it on a reno before it went to foreclosure.
Today was our first day here.

#34 Aussie Roy on 12.27.10 at 5:05 am

Five lies

1. House prices only ever go up.
2. No matter what the price there is a shortage, so prices will be supported.
3. Rental yields and price to income ratios dont matter.
4. Its different this time, here.
5. Weathly people frrom Uranus are stupid and will continue to support prices.
6. Central banks have complete control over mortgage rates.
7. Commercial banks dont create credit money out of thin air.
8. House prices double every (insert years).
9. Debt doesnt matter.
10. House prices are not driven by credit and emotion.
11. It is as safe as houses.

Sorry I couldnt stop at just 5, the pumpers use so many – lol.

Aussie Update.

THE nation’s confidence about employment and the cost of living has sunk to its lowest point since the end of 2008.

Australians are the most pessimistic they have been about the outlook for their jobs and cost of living since the beginning of the global financial crisis and world recession.

http://www.news.com.au/money/one-in-four-see-living-standards-worsening/story-e6frfmci-1225976582037#ixzz19IcLKIwH

”Safe as houses” is a well-worn expression, but the MLC Investments strategist Brian Parker says the notion that Australian real estate prices can move in only one direction could go out the window. ”Residential property looks absolutely obscenely overpriced and seems to offer very, very poor investment prospects,” he says.

A Morgan Stanley economist, Gerard Minack, has echoed a recent International Monetary Fund report in a note to clients, warning of a housing bubble in Australia.

http://www.smh.com.au/business/slugging-it-out-over-our-future-direction-20101226-197w7.html

A couple of months old but still a great read.

Housing bubbles are normally pretty obvious at the time: there’s one right now in Vancouver, for instance. You can see them in the rise of dozens of huge new glass-clad condo buildings; you can see them in massive price increases; you can see them when mortgage payments are significantly larger than the amount of money you could get renting out the place; and you can see them whenever people start making more money from selling their homes than they do from actually working.

http://blogs.reuters.com/felix-salmon/2010/08/17/why-the-housing-bulls-never-made-much-sense/

#35 betamax on 12.27.10 at 5:56 am

#167 Sam on 12.26.10: “I have no idea how Taleb can call any of these things black swans”

You should read Taleb, not what his readers post about his theories. Taleb also makes the distinction that readily foreseeable crises are not true ‘black swan’ events. He also acknowledges that some people use the term depending on their perspective: Thanksgiving is a black swan event for the turkey, but not for the turkey farmer.

#36 SafetyBear on 12.27.10 at 7:21 am

dark sad person I agree with you regarding currency wars. There is one country. however that is not playing and seems to prefer the rest of the world to leave them in a bubble: Australia.

#37 VMT on 12.27.10 at 8:19 am

The truth about life is that “sooner or later people get not what they want, but what they deserve”.

It’s going to be a harsh lesson paid in full by many “home owners”.

What will come next though? A Great Depression II?

#38 Ben on 12.27.10 at 8:29 am

In other words, people who would never in their booziest, raunchy, cowboy moments buy a stock or a mutual fund with 95% financing, think they’re utterly safe in grabbing new house at its highest-ever price, with just 5% of the dough. How does this end?

—————————————————–

In the old world if you couldn’t come up with 25% down YOU were considered sub prime and YOU had to pay the extra fees every month to be CMHC insured.
In the new world, there’s isn’t a newbie out there that puts down 25%. LOL

#39 somecatchphrase on 12.27.10 at 8:48 am

Sarah Palin as POTUS? Shudder, shudder, shudder.

Be very afraid. She would make Curious George look like a genius.

#40 Ben on 12.27.10 at 9:11 am

In other words, people who would never in their booziest, raunchy, cowboy moments buy a stock or a mutual fund with 95% financing, think they’re utterly safe in grabbing new house at its highest-ever price, with just 5% of the dough. How does this end?

—————————————————–

In the old world if you couldn’t come up with 20% down YOU were considered sub prime and YOU had to pay the extra fees every month to be CMHC insured.
In the new world, there’s isn’t a newbie out there that puts down 20%. LOL

#41 Moneta on 12.27.10 at 9:21 am

Here’s why there wont be Hyper-inflation in the USD any time soon-
———-
That’s the modern day trick to win an argument. Make the other party look as if they are exagerating.

You don’t have to believe in hyperinflation to make a case for tough times or rising prices. Just bring the mortgage rates back to 5-8% and households are going to choke. Inflation of 5-10% will do the trick.

And by the way, the BoC (working with the fed it seems) has a team working on how to spot inject inflation into the economy.

Another trick is across the board M&A and bankruptcies to reduce supply. We can already get a whiff of this with the big getting bigger. This phenomenon has been going on for 20-30 years but we are about to witness the hockey stick movement. Just wait for the next slowdown when companies won’t be able to refi… for the 1st time in 3 decades! Less competition, higher prices.

The spot inject inflation sectors are probably going to be the staples as discretionaty spending gets squeezed out.

GDP in nominal terms is up despite asset deflation over the last couple of years. They are going to do whatever it takes to keep that number going up. When countries write down, it’s when they are the only one in a pickle. When everyone is printing, it’s a different game.

And remember that if the long bond yields goes back up to 5-6%, a lot of pension problems quickly get resolved as liabilities shrink with a rising yield.

#42 Tony on 12.27.10 at 9:24 am

I don’t see higher rates, i see an implosion in commodity prices and sharply falling rates in America by May 2011 at the latest. Canada’s rates should drift lower with the lower American rates.

#43 Aussie Roy on 12.27.10 at 9:41 am

Vancouver now Canada’s gang capital, public safety minister says ‘Gangcouver’

FAMILY INCOME IN VANCOUVER

Family Type Median Family Income

2000 2005

Non-immigrant
$78,203 $80,127
Immigrant
$60,316 $59,761
Difference
$17,887 $20,366
Source: Statistics Canada. 2008

http://www.canadaimmigrants.com/Vancouverliving.asp

CONSUMPTION TAXES

In Vancouver, the Harmonized Sales Tax (HST) is 12%.

2009 FEDERAL INCOME TAX

Income Tax Rate

On the first $40,726 of taxable income, +
15%

On the next $40,726 of taxable income (on the portion of taxable income between $40,726 and $81,452), +
22%

On the next $44,812 of taxable income (on the portion of taxable income between $81,452 and $126,264), +
26%

Taxable income over $126,264.
29%

Source: Canada Revenue Agency. 2009.

2009 PROVINCIAL INCOME TAX

Income
Tax

Basic Personal Amount
0%

On the first $35,716 of taxable income, +
5.06%

On the next $35,717, +
7.7%

On the next $10,581, +
10.05%

On the next $17,574, +
12.29%

On the amount over $99,588
14.7%

Source: British Columbia Government. 2009

B.C. POLICE REPORTED CRIME STATISTICS 2009

Crime
Total

Homicide
118

Serious Assault
9,154

Robbery
4,952

Total Violent Crime
74,208

Total Violent Crime Rate
(per 100,000)
1,666

Source: Statistics Canada. 2010

NICE……….

#44 Ben on 12.27.10 at 9:43 am

I can find charts on housing prices, mortgage rates but I can’t find a chart on the ratio of CMHC insured mortgages. I bet that chart has an even steeper rise then a housing price chart.

#45 Bullion.Bunny on 12.27.10 at 9:57 am

As always. The power to tax. — Garth

Yes, the poor taxpayer has a bottomless pocket. I remember twenty years ago when you stood up in parliament and asked “When can the Canadian tax payer expect a break?” I still remember the look on Brian Mulroney’s face as he turned his head looking at you in the back benches. Good old hand in the cookie jar Brian looked like he was going to take you out to the wood shed for a beating.
What, you think anything has changed from twenty years ago? Canadian tax payers are raped day and night. The civil service grows every year, have you seen the sunshine list of late?

http://www.stoneycreeknews.com/news/article/206458

Government is now truly unaffordable, what they are going to raise the tax rate from 75% to 90%. Why would anyone want to work at all? The tax revolt will come when the bond vigilantes say NO. Just have a look at Europe!

#46 Moneta on 12.27.10 at 10:00 am

The truth about life is that “sooner or later people get not what they want, but what they deserve”.
————
That line drives me batty because so many people do not get what they deserve.

Why do millions get to live in concentration camps while millions get to live in McMansions?

People get what they get.

#47 Moneta on 12.27.10 at 10:11 am

throwstone on 12.27.10 at 12:57 am
Garth,

I just don’t think government has any more room to tax
———
There’s plenty of room. Think of the million of households who could go from 2 to 1 car. You’ve just liberated 6K per year.

Think of all the discretionary stuff which does not currently seem discretionary due to social mores…

One woman on a tight budget told me she was so sick of all the money she constantly had to fork out for school stuff and other activities. And she blamed the stepford wives for these excesses. When these perfectionist moms run out of refi money, discretionary spending will finally dry up.

We are spending so much money on imports which end up in the dump. What a waste. Why not give it to our government instead? LOL

#48 T.O. Bubble Boy on 12.27.10 at 10:12 am

@ #9 Behavioral Finance:

Don’t forget Canada…

December 3rd:
“…Or, as finance minister Jim Flaherty told the House of Commons last week, “the evidence is not there that Canada has a housing bubble. In fact, the evidence with respect to affordability of mortgages in Canada is solid and we have a stable market. ”

“It’s a long, long stretch to compare our housing market with that of Ireland.”

http://www.calgarysun.com/homesandcondos/news/2010/12/03/16420271.html

#49 TS on 12.27.10 at 10:18 am

In other words, people who would never in their booziest, raunchy, cowboy moments buy a stock or a mutual fund with 95% financing, think they’re utterly safe in grabbing new house at its highest-ever price, with just 5% of the dough. How does this end?

If mortgages worked like margin calls and banks could call in their mortgage loans if the price of real estate dropped we’d still have people making stupid decisions. Greed always trumps logic.

#50 T.O. Bubble Boy on 12.27.10 at 10:20 am

Maybe Palin just wanted a house in John McCain’s backyard? (in Arizona)

Or — maybe she wanted a place to see Mexico from her house so that she could guard both borders?

#51 S.B. on 12.27.10 at 10:26 am

It’s sad the unions will continue to weaken our cities – I am not particularly anti-union, but the unions will continue to hold us hostage for COLA inceases and job security that is simply not available in the private sector.

I’d say that large cities will see 5-10% yearly tax/fee/utilities increases over the next 5 year simply due to the unions’ folly.

The new despot mayor of Toronto I fear is simply a blue collar incarnation of the pro-union David Miller.

#52 Bullion.Bunny on 12.27.10 at 10:36 am

Oh look………more good news

A Ton Of Bailed-Out Banks Are On The Brink Of Collapse

http://www.businessinsider.com/bailed-out-banks-failing-tarp-december-27-2010-12

Japan’s New Budget Has Country Issuing Debt Worth More Than Tax Receipts For Second Year In A Row

http://www.businessinsider.com/japans-new-budget-should-scare-anyone-worried-about-their-debt-problem-2010-12

Not to worry……….just tax the peasants some more.

#53 S.B. on 12.27.10 at 10:57 am

FYI Garth, still flying? An article ;)

Silent compliance as we line up for the camp trains err I mean planes. I’ll bet half of the observers would cheer her fight for freedom, while the other half would decry her actions as aiding the ‘terrorists’ (the omnipresent bogeyman who controls our lives now, thanks to the media’s brainwashing).

http://www.kvue.com/news/local/Woman-arrested-at-ABIA-after-refusing-enhanced-pat-down-112354199.html

Austin Woman Thrown to Floor, Arrested for Refusing Pat Down at Airport

Jim Bergamo
KVUE News
December 23, 2020

Early Wednesday morning, a computer glitch shut down a security checkpoint for a couple of hours at Austin-Bergstrom International Airport. The line snaked out the door as many travelers waited for more than an hour and some missed their flights. One of the first people in line after that shutdown never made it through. She was arrested and banned from the airport.

Claire Hirschkind, 56, who says she is a rape victim and who has a pacemaker-type device implanted in her chest, says her constitutional rights were violated. She says she never broke any laws. But the Transportation Security Administration disagrees

#54 dark sad person on 12.27.10 at 11:01 am

#19 Nostradamus Le Mad Vlad on 12.27.10 at 1:20 am

The more likely scenario is that the US dollar will continue its long-term trend downward in fits and starts along with every other fiat currency. As the US dollar gets weaker, export business in America gets strong at the expense of other countries export businesses. In a desire to help their own countries businesses, those countries will devalue their currency, making by default the value of the dollar rise against their local currency.

All fiat currencies will more than likely continue to fall in relation to the gold as we have seen over the past decade. My gut though tells me we will continue to see what we have seen the past 8 months, both gold and the US dollar rising against other foreign currencies. If the value of the dollar drops 20% in relation to gold, but other currencies fall 30% in relation to gold, then the true price of the US dollar will rise, because the US dollar is priced against those other currencies which are falling faster, although it won’t rise against them nearly as fast as gold. For hyperinflation to exist, the whole worlds fiat currency would have to collapse collectively together. This talk of the US dollar collapsing against all other currencies though is absurd. Go lower? Yes. Collapse? Please.

************************
LMV-

Thanks for the link-

I totally agree-all Currencies will continue to weaken against Gold as they eventually all go to zero-
Which is exactly what’s been happening and will continue happening-

http://3.bp.blogspot.com/_nSTO-vZpSgc/Su–RcGANII/AAAAAAAAHNw/vx4x_Z-UU_M/s1600-h/Gold+In.png

Competitive Devaluation-not Hyper-inflation of the USD-but all together as the author describes-
This does not rule out a Currency Crises that could crop up in a Major at some point-
Watch the Yen-imo-

#55 Kevin on 12.27.10 at 11:07 am

The Canadian Housing Bubble has caused a Pension Crisis

If it was not for people investing and speculating in housing over the last decade due to extremely low interest rates and lax lending standards which has been Government created, Canadians would more money left over each month to save and invest for their retirement. Instead we have the government trying to solve a retirement problem that has been created indirectly by them blowing up the housing bubble. It is of no wonder why real estate is about 50% of Canadians net wealth, while in the 90’s real estate wealth was just over 35%, while total debt has tripled in ten years.

#56 Mikey the Realtor on 12.27.10 at 11:08 am

“In other words, people who would never in their booziest, raunchy, cowboy moments buy a stock or a mutual fund with 95% financing”

Can’t live in a mutual fund, just as you say ‘you cant eat gold’

2011 is going to be an awesome time to buy, many on here will be listening to the doom and let the opportunity pass them by while paying their landlords mortgages, when the spring hits record breaking sales will erupt and once again 2012 will be the year of the crash according to this blog.

#57 pessimist on 12.27.10 at 11:08 am

#13 throwstone on 12.27.10 at 12:38 am

How do you tax those who are bankrupt?
————————–
You don’t. You put the screws to those who are not.

And there will be no “soaking the rich”. First, the rich are mobile and can move their money within minutes of perceiving a threat. Second, if you took all of the income of the “rich”, it will not be nearly enough for the government.

Thus, it is always the employed middle class that gets hosed. Every time.

#58 Observer on 12.27.10 at 11:09 am

Could this all be a scheme by the banking system in North America to keep currency from going to places like China? After all, what better way to keep spending money at home, than to have nearly everyone owing on a bloated domestic mortgage to buy into a bloated market?

#59 FerrisWheel on 12.27.10 at 11:29 am

I’m getting tired of waiting for this housing boom to implode. I’ve lived in an apartment for 21 years now and have saved enough to buy a house (25% down) but the home here in the east have not budged. With 4 of us in a 3 bedroom, it’s hell. I really need this thing to start to come down. What’s taking so long?

So rent a house. Sheesh. — Garth

#60 Junius on 12.27.10 at 11:43 am

#156 DA (previous post),

You asked, “Are you telling us that, if the government set about implementing policies which presented to you opportunity to reap great rewards for your efforts, you would not exploit the opportunity?”

I can easily answer the question having faced the dilemma – No, I would not if I knowingly knew it would hurt other people.

Your collective responsibility argument is the same one always used by those who destroy the environment or peoples in the pursuit of greed. While we share a collective responsibility I reserve my anger for those at the top of the food chain at the banks, in our political offices and in the highest end of the Real Estate cartel where they know better and choose to continue the ponzi scheme.

I have said many times before that I do not hold the greater fools or the every day realtor or mortgage broker responsible. It is our leadership that has failed us.

#61 Junius on 12.27.10 at 11:49 am

#26 BestPlaceOnEarth,

Let me paraphrase your blog post: “Greed! “Fear”. “It is different here.” “More greed”. “More Fear. “More it is different here.” “Buy Now or be priced out forever.”

Meet the poster child for the bubble economy.

How about something new for 2011? Maybe a logical argument for a change.

#62 S.B. on 12.27.10 at 11:51 am

Best place on earth?

http://www.piquenewsmagazine.com/pique/index.php?cat=C_Frontpage&content=Rmow+budget+1751

Whistler council dealt with the first stages of the budget Tuesday night, approving the anticipated four per cent property tax increase, as well as a transit fare increase of 50 cents per ride.

The report presented to council dealt primarily with cutting the Resort Municipality of Whistler’s $2.8 million 2011 budget shortfall. A motion to accept the report’s recommendations passed 6-1, with Councillor Ralph Forsyth opposed

#63 Nostradamus jr. on 12.27.10 at 12:21 pm

#41 Aussie Roy

“”Vancouver now Canada’s gang capital, public safety minister says ‘Gangcouver’””

…and watch National CBC weather forecasts….It is always raining in Gancouver too….yet it is actually always clear and sunny.

Translation….We only want rich Asians relocating to the safest city in the world.

Nostradamus jr.

#64 Aussie Roy on 12.27.10 at 12:22 pm

Kevin on 12.27.10 at 11:07 am

Kevin what you wrote hits the nail on the head, my friend. My hope is that blame will eventually be laid at the feet of those that got us here, some how I doubt it. The sheeple are too easily distracted and herded into the required direction.

Junius on 12.27.10 at 11:43 am

I have said many times before that I do not hold the greater fools or the every day realtor or mortgage broker responsible. It is our leadership that has failed us.

Ditto.

#65 Mark on 12.27.10 at 12:26 pm

#53 Kevin, so if real estate is to revert to being only 35% of Canadians’ wealth, we can expect at least -30%, and, practically speaking, a mean-reverting process will suffer some overshoot. So 50% off doesn’t seem at all unreasonable.

#66 Bullion.Bunny on 12.27.10 at 12:28 pm

Andy Xie: Either America Or China Will Crash In 2011

Finally, someone talking some sense.

http://www.businessinsider.com/andy-xie-either-america-or-china-will-crash-in-2011-2010-12

Yes, no defaults here.

The NEXT 10 City Pensions That Will Run Out Of Money

http://www.businessinsider.com/first-city-pensions-insolvent-2010-12

and last but not least, Cue-Ball has some stock tips. Better to short these bitches.

Jim Cramer Picks His Top DOW Stocks For 2011

http://www.businessinsider.com/jim-cramers-top-dow-picks-for-2011-2010-12

#67 dark sad person on 12.27.10 at 12:29 pm

#40 Moneta on 12.27.10 at 9:21 am

Here’s why there wont be Hyper-inflation in the USD any time soon-
———-
That’s the modern day trick to win an argument. Make the other party look as if they are exagerating.

You don’t have to believe in hyperinflation to make a case for tough times or rising prices. Just bring the mortgage rates back to 5-8% and households are going to choke. Inflation of 5-10% will do the trick.

And by the way, the BoC (working with the fed it seems) has a team working on how to spot inject inflation into the economy.

Just wait for the next slowdown when companies won’t be able to refi… for the 1st time in 3 decades! Less competition, higher prices.

*************
Spot inject Inflation?

Bernanke would love to be able to do that-in fact that’s exactly what he’s been trying to do-except the Market has been making him look like the Keynesian fool that he is-

Mortgage rates are immaterial at this point-
It’s the Deflating price of homes that is the catalyst-
Look at the US-
House prices started crashing when rates were at historical lows-
Sure-higher rates will bring it on faster-but-that’s not the reason we will experience Deflation-

Inflation and Deflation are Monetary events-not “price” events-
GDP includes Government spending/printing-don’t look at those numbers and expect to come up with anything measurable-

Less competition = higher prices?

Less consumer purchasing power = lower prices-
Lower prices can still be too high if you cannot afford them-

Beware the double top-

http://www.barchart.com/chart.php?sym=CIF11&style=technical&p=MN&d=M&x=63&y=5&sd=&ed=&size=M&log=0&t=HLWCDL&v=1&g=1&evnt=1&late=1&o1=&o2=&o3=&sh=100&indicators=&addindicator=&submitted=1&fpage=&txtDate=#jump

So-show us the old day model to make your argument-

#68 S.B. on 12.27.10 at 12:34 pm

Best place on earth Part II? 27%? Hydro will be for the rich, I predict a return to candles – they are economically bombing us back to the stone age.
————————

Rising hydro rates could have an impact
on Whistler Blackcomb’s bottom line,
a company offi cial said last week.
Doug Forseth, vice-president of
operations for Whistler Blackcomb, said
that plans by BC Hydro to increase rates
by 27 per cent over three years are going
to increase the company’s costs, bringing
a possible increase in ticket prices

#69 Junius on 12.27.10 at 12:39 pm

#33 Aussie Roy,

You forgot my favourite Aussie original – “The House is never worth less than the day you purchased it.”

#70 throwstone on 12.27.10 at 12:42 pm

#45 Moneta

So you would sell your second car and give a portion of the proceeds to the government for tax? Then use the rest to buy a bus pass to get to work…..

The only reason we have to fund raise for schools is because the funding is being absorbed by teacher salaries (see #43 Bullion.Bunny LINK)….

#71 Bullion.Bunny on 12.27.10 at 12:55 pm

#196 Cow Man on 12.26.10 at 10:35 pm

I fully agree with realpaul #184 Garth. I lived on our family farm in Halton for 60 years. I watched the Region of Halton, the City of Burlington and the Province of Ontario regulate me out of business shrinking 153 acres of farmland into only 92 workable acres through designation. No compensation and then Greenbelting us. Pure extortion, from my point of view.

Yes, welcome to government in action. Bring on the defaults, lets have a bail out everyday until the system collapses. The rot and maggot infested civil service is so bad it smells! Enough is enough.

#72 Mark on 12.27.10 at 1:11 pm

#64, “Better to short these bitches.”

You do know that shorting stocks, is essentially going ‘long’ on dollars, right, and going long on dollars (ie: keeping confidence in the government’s paper “money”) is what re-inforces the government’s power?

Hate Cramer or not, I’d rather be holding shares of Dow Jones Industrial Average constituents, than dollars (CAD, USD, AUD, etc.).

#73 Bullion.Bunny on 12.27.10 at 1:28 pm

Europe……more bailouts….

http://www.zerohedge.com/article/ecb-peripheral-bond-purchases-sleepy-christmas-week-double-e11-billion

Keep going, lets get this over with.

#74 WannabeBear on 12.27.10 at 1:29 pm

#54 Mikey the Realtor:

I suspect you’re right. Come spring the seller’s strike (BC) will have had its effect and people will come rushing back to the market in droves and prices will tack higher. The only thing that will take this market down is a sudden and ruthless increase in interest rates–no change in sentiment (a former part of Garth’s argument which, I notice, has been conspicuously absent lately) or panic at rising unemployment rates. After all, during the worst economic crash since–we were told–the 1920s, housing prices here only went down 20-25%.
So far the Vancouver market has been a lot like Phoenix–not the godforsaken town in Arizona–but the mythical creature that rises from its own ashes. So if you’re waiting to vultch here, I suggest you look into Buddhism: it will help you deal with the odd mix of desire and bitterness that you will have to deal with for the next several years.

#75 Aussie Roy on 12.27.10 at 1:48 pm

Nostradamus jr. on 12.27.10 at 12:21 pm

I hope you wrote that tongue in cheek, if not give me an address where I can send over a new tin foil hat.

IMO Some Van guys comments here do go along way towards explaining the size of the house bubble you have there. I have noticed from blogging in other countries, where prices are the most bubbled the people usually are aswell.

BTW I’m not having a go at Vancover per se, just presenting some balance with the stats.

#76 Timing is Everything on 12.27.10 at 1:50 pm

As always. The power to tax. — Garth

Up to a point…Then it’s the whole ‘blood from a stone’ thingy. Then the nasties start, little by little…
“Hun, where did you leave the garden pitch fork and the spade…the really big one? Jim and the boys are having a meeting.”

Just because they ‘have the power’ to tax more is absolutely no reason to do it. Why don’t they shrink the ‘incredibly’ growing Fed Gov first, as a sign of good faith?

A little blood-letting may be fun to watch…
Ha! Hunker-down with a supply of sno-cones….
Should be an interesting show.

#77 S.B. on 12.27.10 at 1:51 pm

Oh boy those Bullion nuts are at it again. SLV is a silver ETF.

Cafferty Faucher LLP Files Class Action Lawsuit against JPMorgan and HSBC Alleging Manipulation of Silver Bar Financial Products
Ticker Symbol: U:SIVR U:SLV

CHICAGO — (Business Wire) —

Cafferty Faucher LLP (www.caffertyfaucher.com) filed a lawsuit on behalf of a class that includes purchasers and sellers of the iShares Silver Trust (NYSE-Arca �SLV�) and the ETF Securities Ltd. Silver Trust (NYSE-Arca �SIVR�) during the period March 1, 2008 through the present.

The lawsuit alleges that JPMorgan, the custodian of silver backing SLV securities and the sub-custodian of silver backing SIVR securities, and HSBC, the custodian of silver backing the SIVR securities,�manipulated and suppressed the price of silver bar financial products, including SLV and SIVR, in violation of Section 9 of the Securities Exchange Act.

If you purchased or sold the iShares Silver Trust ETF (NYSE-Arca �SLV�) or the ETF Securities Silver Trust (NYSE-Arca �SIVR�) securities during the period March 1, 2008 through the present, you may move the Court�to serve as lead plaintiff within 60 days. The lawsuit, Case No. 1:10-cv-07768, was�filed in the Northern District of Illinois on December 7, 2010 and is currently assigned to the Honorable Charles R. Norgle, Sr.

The case is also brought on behalf of�investors who purchased or sold CME Group Inc�s �COMEX� silver futures�or options contracts which are traded electronically�through the Chicago-based �GLOBEX� platform and�through COMEX. On behalf of these investors, the lawsuit alleges violations of the anti-manipulation provisions of the Commodity Exchange Act.

In addition to the claims under the anti-manipulation provisions of the Securities Exchange Act and the Commodity Exchange Act, the lawsuit also alleges�that defendants violated federal antitrust law.

#78 Basil Fawlty on 12.27.10 at 1:51 pm

From James Kunstler today;
“Which brings me to the subject of our own financial crisis, soon to mutate into a political crisis. There really is no “solution” to our problem of debt except to become a less affluent society. You can get there via the path of compressive deflationary depression (no money), or hyperinflation (plenty of worthless money), but the destination is the same. In the meantime we’re stuck with the extremely uneven distribution of hardship and luxury. Whole classes of formerly working people face the prospect of genuine ruin while an ultra-pampered class of celebrity clowns and professional swindlers fob off with whatever’s left on the national buffet table. The real politics of all this are so far from being sorted out that sheer contemplation of what lies ahead leaves the mind harrowed and feeble.”
Like Garth, Kunstler has a way with words. Just google his name for the whole essay and enjoy his description of the Tea Party set.

#79 dd on 12.27.10 at 2:02 pm

#61 Nostradamus jr.

…Translation….We only want rich Asians relocating to the safest city in the world…

Same old dribble.

#80 Bullion.Bunny on 12.27.10 at 2:07 pm

Only Air Farce can tell the truth about the Federal and Provincial debt. Remember this was 1996, please note what happened during the “Mulroney” years.

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

#81 Bullion.Bunny on 12.27.10 at 2:11 pm

Here is another great one…….the GST is gone. Remember that one.

http://www.youtube.com/watch?v=tqcg–MA2v0&feature=related

#82 jess on 12.27.10 at 2:17 pm

The Securities and Exchange Commission is now investigating how securities firms hawked some of the complex bonds in a poorly understood, $55 billion offshore market for debt issued by banks, insurers and real estate trusts – a market that’s only now becoming clear.

Read more: http://www.thenewstribune.com/2010/12/27/1479355/fed-could-have-rescued-banks.html#ixzz19Ks7WvAB

==========================
Investopedia explains Trust Preferred Securities – TruPS
TruPS have been created by companies for their favorable accounting treatments and flexibility. Specifically, these securities are taxed like debt obligations by the IRS while maintaining the appearance of equities in a company’s accounting statements as according to GAAP procedures

What Does Trust Preferred Securities – TruPS Mean?
A security similar to debentures and preferreds that is generally longer term, has early redemption features, makes quarterly fixed interest payments, and matures at face value.

……………………

#83 VMT on 12.27.10 at 2:54 pm

@#26-TheBestPlaceOnEarth:

Their salaries are well in excess of 250k. They sell their apartment in China for a few million and buy up a cheap house in Richmond for 800k.

To whom do “they” sell their apartments in China for a few million? Could you please clarify this? Thanks.

#84 Moneta on 12.27.10 at 3:08 pm

So you would sell your second car and give a portion of the proceeds to the government for tax?
——
I never said I would. I said there’s still a lot of juice to squeeze out of the household lemon. Look around and make a list of every useless excess in our lives. Dead weight. The list is long.

People complain about higher gas prices but they still fill up those cars…

Cost of necessities and staples until a couple of years ago were still being priced at 1990-2000 cost levels, yet the 20$ oil has been burnt.

Governement is going to do everything to keep CPI low to keep COLA low. Taxes and user fees don’t get calculated in CPI.

#85 Moneta on 12.27.10 at 3:15 pm

Governement is going to do everything to keep CPI low to keep COLA low. Taxes and user fees don’t get calculated in CPI.
———-
Government does not even have to change the tax grid. All it has to do is create inflation where 30K income becomes 60K in a few years. And without adjusting the rates, it gets more money out of the lower income brackets.

#86 Moneta on 12.27.10 at 3:24 pm

The only reason we have to fund raise for schools is because the funding is being absorbed by teacher salaries (see #43 Bullion.Bunny LINK)….
————
If I understand correctly, teachers pay a huge sum for their pension.

Furthermore, I believe we are currently in deflation right now but that our central banks are setting us up for good inflation within the near future. I also think they will find ingenious ways to keep CPI low despite a rising cost of living. That means defined benefit pensions will not be as rich as most think they are.

When I went to school, I did not have jungle gyms outside and the X number of parties, activities and field trips. It’s non-stop.

I went to a private high school mostly attended by the well to do and only a couple of girls went down south during March break. Last year, more than half of my daughter’s class went down south and this is a public, middle class school.

Our kids are spoiled rotten. Stop blaming the teachers.

#87 dark sad person on 12.27.10 at 3:30 pm

#24 nonplused on 12.27.10 at 1:57 am

I can’t see how tax rate increases will result in actual tax receipts going up. I think any tax rate increase from here is counterproductive and only throws more instability into the system as spending gets diverted from wherever its’ going now (debt servicing) to where it’s going later (taxes).

For example, they could eliminate the capital gains (inflation tax) exemption, but then I think you just see no more capital gains. What’s the point of selling even something totally overvalued if all the profit just goes to the government, no matter how much of that gain was due to inflation? There will be a market reaction to the tax.

Or let’s say they decide to tax gains on primary residences (another inflation tax). Well, what’s the point of selling even to downsize if the government is going to take much of the money? You might not actually be able to afford to downsize.

The current tax system already stifles growth and exerts a strong hand against economic activity. I am not saying the government won’t try and make it worse, they might, but the effects may not be what they are hoping. They might try to raise revenue and kill the economy in the process. That old killing the goose that lays golden eggs thing.

*********************
Good post-

For every action-there is a reaction-

Typical clueless Government trick-that defeats their purpose (if they even have a purpose)

You’re right about Taxes diverting Money away from the Economy and choking off growth-not to mention that this little trick creates an enormous underground (non taxable) Economy –
It causes People to hoard instead of spending and like you said-why sell and create Capital Gain if you don’t have to-

Governments need to cut Taxes everywhere-they need to get their dumb asses out of trying to be the Market-
The real Market doesn’t like controlling Governments-
The real Market will open up underground and function perfectly-
The real Market will take the Governments heads off before this is done-

http://www.acting-man.com/blog/media/2010/12/Ceridian-Index-Annual-and-6-Mth-Change1.gif

#88 Ben on 12.27.10 at 3:52 pm

#26-TheBestPlaceOnEarth

What a crock of stool. I work with Chinese, they live 10 to a bedroom and eat rice. My Chinese employer prefers to hire them cause they work for minimum wage and obey the mighty employer.

#89 Junius on 12.27.10 at 4:11 pm

#77 dd,

You said, “Translation….We only want rich Asians relocating to the safest city in the world…

Same old dribble.”

The part that is always absent from this is how to create a sustainable economy from all of this. They are describing a ponzi scheme where new rich money comes to take out the old. Classic ponzi scheme. However they seem to really believe that this can continue in a vacuum in a city decoupled from the world economy.

It is just stupid.

#90 Junius on 12.27.10 at 4:18 pm

Good article on the smart money getting out of China. see it here:

http://www.businessinsider.com/smart-money-getting-out-of-china-2010-12?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+clusterstock+%28ClusterStock%29&utm_content=Google+Re

#91 Debtfree on 12.27.10 at 4:24 pm

@64 bullion bunny

cramers 2011 top picks … thanks for the laugh … skank of america . jpm too funny . Cramer should stick to picking his nose.

btw did you know that China also imports oil and potash? You should check out how much as opposed gold . Too bad you can’t get your bullion into your tfsa .or can you ?

#92 jess on 12.27.10 at 4:50 pm

wealth gaps

The Cost of Success
Life in Beijing’s Cellars
As speculators and increasing demand drive up Beijing’s real estate prices, those who cannot afford the rent are going underground — literally. Hundreds of cellars and air-raid shelters are being rented out as living spaces in the Chinese capital. By Andreas Lorenz in Beijing more…
http://www.spiegel.de/international/

#93 Bigrider on 12.27.10 at 5:05 pm

Garth why would you hang up on Brian Persaud? Why would you not appear on his show? All of us would have loved to see you at him.

#94 Bobby on 12.27.10 at 5:09 pm

I must disagree with Mikey the Realtor and Wannabear. No, buyers are not going to rush back to the market. The message in the media now is that Canadians are up to their eyeballs in debt and real estate will not continue to rise.
Given many have limited financial knowledge, they tend to follow the herd and the herd ain’t buying.
Lots of homes for sale in Victoria, with not many selling. Sadly, for commission based realtors like yourselves, if no ones buying, you don’t get paid. So what other message do you think you would support.
There are three things for certain; death, taxes and realtors saying the market is going to improve going forward. Happy holidays!

#95 BrianT on 12.27.10 at 5:10 pm

#84Moneta-I gotta laugh-you were sent to a posh private high school for the “well to do” and your conclusion is “our” kids are spoiled rotten. Most Canadian children aren’t gettting the cushy ride you received, so you can relax.

#96 BrianT on 12.27.10 at 5:14 pm

#83Moneta-You seem to believe the entire Cdn economy is the government and financial sector-magically the guv “inflates” and your employer automatically pays you 60K instead of 30K.

#97 S.B. on 12.27.10 at 5:15 pm

On this Thursday at Boston Housing Court, there were nearly 30 cases, involving people from many walks of life, from a single working mother to a 75-year-old retiree to a city police officer.

Some manage to postpone eviction, while others are not so lucky.

Joan Williamson, a 44-year-old housekeeper at a Sheraton hotel, appeared in court for the third time to fight eviction from her Dorchester home, which she lost in March because she could no longer stretch her $32,000-a-year salary to make the $3,200-a-month mortgage payments.

http://www.boston.com/business/articles/2010/12/27/at_housing_court_final_pleas_to_head_off_evictions/

#98 Bullion.Bunny on 12.27.10 at 5:17 pm

#70 Mark on 12.27.10 at 1:11 pm

You do know that shorting stocks, is essentially going ‘long’ on dollars, right, and going long on dollars (ie: keeping confidence in the government’s paper “money”) is what re-inforces the government’s power?

Yes I understand this very well. The Market is long the “Hot Stories” and short the dollar. But that’s a story for another day.

You did not notice the sarcasm in my writings. Jim Cramer has a terrible track record of picking stocks, you can find numerous examples on the web. In 2006/2007 he recommended all the home builder stocks; only later to state he sold all his real-estate in 2005. NICE! Yeah Baby Yeah! Let them eat cake!

This man is a complete and total wall street tool! I’m amazed he is still on the air! This is the point I was trying to make.

#99 Bullion.Bunny on 12.27.10 at 5:25 pm

#89 Debtfree on 12.27.10 at 4:24 pm

Check out these ETF’s

PHYS (Sprott Physical Gold ETF)
GTU.UN (Sprott Physical Gold Fund)
GLD (Use for trading only)
SLV (Silver, if you are into that….I use it for trading only)

RRSP’s held at scotiabank can purchase can hold Gold Certificates)

As always Buyer Beware.

#100 Dorothy on 12.27.10 at 5:46 pm

I agree with Moneta (#84) that we are currently in a deflationary environment, and consequently interest rates will not be rising any time soon. House prices here in BC (with the exception of Vancouver) have dropped substantially in the last 18 months.
But at the same time food and fuel prices have increased, while wages for the most part have remained stagnant. So consequently people’s disposable incomes have shrunk, putting downward pressure on all items that are discretionary purchases. It’s true that lower interest rates have limited this downward pressure, thereby artificially keeping some prices higher than they would otherwise be, but that is only a temporary effect and eventually we’ll begin to see much more deflation on luxury items such as vehicles and televisions etc. It is to try to at least slow down, if not prevent, this deflationary spiral that central banks are madly printing money, a strategy that has so far met with some success. But how they are going to prevent a return to high inflation once the deflationary spiral is over is a mystery to me. I’m not sure that they will be as successful at that, and a return to double digit inflation at some point is probably inevitable (but not the hyperinflation some on this blog fear). However the turnaround could be several years down the road, so if I’m right, this period of deflating assets and low interest rates could be a perfect time to buy a house providing it is your primary residence (not intended for investment purposes) and providing you can afford it (as in have at least a 20% downpayment). You also have to exercise a little common sense and buy in a good resale area (location, location, location) and negotiate a good price, but those two caveats would apply no matter WHEN you choose to buy a house. So, provided you do it right, I see nothing wrong with realizing your dream of owning your own home. Because renting can be a real pain sometimes.

Did you miss the memo from Mark Carney? Rates will be rising. — Garth

#101 robert in london on 12.27.10 at 6:02 pm

#96 Bullion Bunny

And Jon Stewart effectively ripped him a new one in front of millions over his really sleezy pre “Cramerica” dealings. Buy stocks when you see Jimmy passing the fourth floor (window).

#102 Wendy on 12.27.10 at 6:03 pm

I’ve been following every day since I was pointed in your direction. We’re contemplating refi’ing our house at a lower interest rate and since we are renting it out right now (circumstances prevented us from moving into it), putting the difference from the rental income aside to help shrink the value of the mortgage. It’s an older house on a developing street and we don’t forcast the value going down since it was about 1/3 the price of the new houses on the street. We’re not sure if we should try the variable rate mortgage but figure that with it we could afford the rate to go up 3-4% on the variable rate without it affecting us a whole lot. We just like the idea of paying it off sooner than later.

Why pay off deductible debt? Invest instead. — Garth

#103 realpaul on 12.27.10 at 6:21 pm

China has become economically responsible? And Canada is acting like a third worl banana plantation? Gee, what a revelation.

China has swung the intrest rate and policy axe “To control rising prices that are making it hard for people to buy homes and food”.

Canada…still mired in bulls**t, and shorting the $CDN so as to slow down the economy so as to keep the ‘loon’ under the USD…….now thats real ‘loonacy’.

By the time Canada comes out of the bubble we’ll be so far in debt that there will be no possibility of recovery. Who’s going to lead the recovery…..government spending on raises for the sloppy fat civic servants? China on the other is taking steps to ensure that all future economic activity is not sucked into the blackhole of todays ZIRP fiasco. Canada……just plain ignorant.

(Hey Bullion Bunny..take a look at two aggressively managed funds by the same principals

1) SPR 003

2) NCE 703

the annual returns are 70 and 80%…better than the GLD !!)

Canada……..duh…….none of the above smart moves by government like in China. Desperate Canadians are starving because of ZIRP , massive mortgage debt and now credit debt at 150% trying to support a lifestyle that has slipped away and only credit debt can induce the dream when you’re drunk enough to stop thinking about whats actually going on.

Read this and compare,

http://globaleconomicanalysis.blogspot.com/2010/12/china-hikes-rates-ponders-capital.html

#104 realpaul on 12.27.10 at 6:35 pm

Imagine reading a quote like this in a CDN newspaper….the kneejerking politically correct and union apologists would be barking mad…calling you a nazi….a rascist…..a really bad person….anything to make sure that this type of opinion was hurriedly squashed. We can’t have the average citizen knowing the truth about the union movement can we?

“Be sure and read Ahearn’s whole column. And next time someone tells you unions are just about fair wages for an honest day’s labor, remember that’s not always the case. All too often they’re about power and greed. This is also true for public sector unions — see the cover story in today’s Examiner.

Read more at the Washington Examiner: http://washingtonexaminer.com/blogs/beltway-confidential/2010/12/power-unions-average-stagehand-lincoln-center-nyc-makes-290k-year#ixzz19LxYCXBg

#105 realpaul on 12.27.10 at 6:39 pm

If the truth hurts than you’re going to really sore after you read this.

For decades, public sector unions have peddled the fantasy that government employees were paid less than their counterparts in the private sector. In fact, the pay disparity is the other way around. Government workers, especially at the federal level, make salaries that are scandalously higher than those paid to private sector workers. And let’s not forget private sector workers not only have to be sufficiently productive to earn their paychecks, they also must pay the taxes that support the more generous jobs in the public sector.

Data compiled by the Commerce Department’s Bureau of Economic Analysis reveals the extent of the pay gap between federal and private workers. As of 2008, the average federal salary was $119,982, compared with $59,909 for the average private sector employee. In other words, the average federal bureaucrat makes twice as much as the average working taxpayer. Add the value of benefits like health care and pensions, and the gap grows even bigger. The average federal employee’s benefits add $40,785 to his annual total compensation, whereas the average working taxpayer’s benefits increase his total compensation by only $9,881. In other words, federal workers are paid on average salaries that are twice as generous as those in the private sector, and they receive benefits that are four times greater.

The situation is the same when state and local government compensation data is compared with that of the private sector. As the Cato Institute’s Chris Edwards notes in the current issue of the Cato Journal, “The public sector pay advantage is most pronounced in benefits. Bureau of Economic Analysis data show that average compensation in the private sector was $59,909 in 2008, including $50,028 in wages and $9,881 in benefits. Average compensation in the public sector was $67,812, including $52,051 in wages and $15,761 in benefits.” Those figures likely underestimate the true gap on the benefits side because the typical government employee gets a guaranteed defined benefit pension under very generous terms, while the private sector norm is a 401(K) defined contribution plan that is subject to the ups and downs of the economy.

With the federal deficit and national debt heading into the stratosphere, taxpayers can no longer afford to support such lucrative government compensation. Public sector pay and benefits at all levels should be reduced to make it comparable to the wages and benefits earned by the average working taxpayer. The first politician to propose a five-year plan for this purpose is likely to be cheered mightily by taxpayers.!

Those are US numbers and do not apply. I know. You don’t. — Garth

#106 Utopia on 12.27.10 at 6:42 pm

Tough talk from Jim Flaherty.

I did not read any papers over the holidays. Hardly touched the internet either. And so I am only now catching up on news from over the last few days. Some of you will already have seen comments by Jim Flaherty in a pre-Christmas interview he did with the Canadian Press an January 23rd.

In that interview Mr Flaherty comments that he is prepared to toughen up regulations and policies regarding the heavy mortgage borrowing of Canadians. He is also notes he is taking a closer look at the home equity loan market, aka HELOC’s.

These comments are almost certainly coming as a result of recent related statements from some of the heads of Canada’s big banks that government needs to step in from a policy perspective and take action that will keep the playing field level for all. Shortening of amortization periods, increasing down payments or other related actions could help reduce the risk of further hazards to the banking sector that have developed as a result of too much easy credit.

Was it BMO that recently commented that more prudent lending was now preferred by the big banks but that competition amongst them based on current Federal regulations was impacting the outcome of their practices. That none could take the initiative unilaterally towards a more prudent lending model without the risk of losing business to the others. I am paraphrasing of course as I don’t have the article handy right now but we discussed this in past issues of this blog.

The rumblings from Ottawa should be greeted as good news though. The debt binging has gone too far already. Canadians apparently need to be protected from themselves and some systemic risk is developing for the banking sector as borrowing against homes has reached a fever pitch. These home equity debts are not guaranteed by CMHC of course so the Banks are on the hook should the economy go South and double dip as interest rates rise. Some parental action from Ottawa is now all but guaranteed. Change is coming.

It is still a concern of mine that these suggested initiatives have come so late though. The Real Estate market has already crested and is now heading into it’s down cycle. Debt is already at record highs and we are at historically high home ownership rates. There is very little buying power or borrowing potential left to be discouraged. The reckless behaviour brought on by historically low rates has nearly exhausted itself by it’s own accord.

Of what little borrowing and risk sentiment remains, eliminating it now can only weigh on future sellers as the coming spring market approaches and many thousands of homes that were held back in the fall are finally put on the market for sale. Tightening of lending practices at this late stage is sure to send a chill down the spine of both sellers and Realtors across the country.

Our credit orgy is certainly over. Mr Flaherty’s comments assure us of that. With his words we have arrived at an end to an unprecedented period in our history. And now the time has finally come to clamp down on all those fools who thought the party would never end. If only for the sake of the Banks and the snapshots in our national solvency photo album that the IMF is so eager to pore over lately.

Here is an excerpt from the CP article for those who have not already seen it.

“Flaherty also revealed that he is considering intervening for the third time in three years to discourage Canadians from taking on too much debt. Canadian households’ growing debt burden — which has risen to a record high 148 per cent of disposable income — was singled out as a key risk to the economic recovery by the International Monetary Fund on Wednesday. Flaherty and Bank of Canada governor Mark Carney have also repeatedly warned of the risk to some households once interest rates begin to rise.

Flaherty said he is concerned about Canadians buying “too much house” and becoming saddled with high mortgages, but after moving twice to tighten requirements, he said he has set his sights on a new problem — home-equity loans. “We’re seeing increased home-equity loans, and that’s another area I’ve been looking at recently — carefully,” he said.

“The banks have been encouraging the use of home-equity loans. I expect the banks to show prudence in their lending practices, quite frankly, without me telling them to do it. But if they insist … we’ve done it before, we’ll do it again.”

According to Bank of Canada tracking, personal lines of credit from chartered banks have continued to expand throughout the recession, increasing to about $219 billion in October from $139 billion three years earlier — a 57 per cent increase.

Flaherty cautioned that he does not believe there is a crisis in borrowing at the moment because low interest rates are keeping monthly payments at affordable levels. But he said he must take steps to ensure no crisis develops once interest rates rise.

Currently, Canadians can borrow up to 90 per cent of the equity they have on their homes, using the home as collateral. The most obvious hammer Ottawa can adopt is to increase the threshold to 15 per cent or even 20 per cent, said Bank of Montreal economist Douglas Porter.

But Porter said another action Flaherty could take is simply tell the banks to tighten their lending practices. “If an edict came down from on high, I believe the banks would respond,” he said. Flaherty said he shouldn’t have to tell banks to mitigate risks:. “At the end of the day, the government will do what it needs to do. But I do think there needs to be recognition not only of prudential regulation, but prudential lending practices.”

Here is the whole article :

http://ca.finance.yahoo.com/news/Harper-government-looking-capress-2768999913.html?x=0

PS: I love today’s photos. Huskies it turns out substitute for Lemmings just fine.

#107 Utopia on 12.27.10 at 6:50 pm

My apologies, the interview with Mr Flaherty by the Canadian Press was done on Thursday December 23rd, 2010,….not in January as I wrote above.

#108 Bullion.Bunny on 12.27.10 at 6:52 pm

This really sums up the European situation.

http://www.youtube.com/watch?v=FisN3s9GaF0

#109 Moneta on 12.27.10 at 6:57 pm

Most Canadian children aren’t gettting the cushy ride you received, so you can relax
—–
I know. That’s why I’m convinced we’re going to go through a rough time when I see half the kids in a public school class going down south­ during March break or when I have school kids ringing my doorbell to get money to go to Europe.

#110 Steven Rowlandson on 12.27.10 at 7:08 pm

Hello Garth.

In regards to posting #16 it was suggested that mild austerity measures could be implimented.

“I think the only way out will be cutting services and some mild austerity measures.”

With all due respect to you and the poster that won’t work.
The only kind of austerity that can work is the cruel brutal variety. Government is going to have to get serious about spending cuts even if it hurts, if one is going to avoid extreme inflation. Its too late for puberty economics and toe nail clipping style fiscal management. They should have made serious spending cuts 30 years ago and killed the debt and the habit of excessive spending. They pandered to special interests and screwed the pooch big time.
Now there is no nice way out.

Steven

#111 Moneta on 12.27.10 at 7:15 pm

83Moneta-You seem to believe the entire Cdn economy is the government and financial sector-magically the guv “inflates” and your employer automatically pays you 60K instead of 30K.
——
I believe we currently have excess supply because we had room to cut rates one last time and companies refied.

I think there’s going to be a shakeout in the next slowdown. Rates can not go any lower and we are going to see M&A and bankruptcies like we have not seen in a long time. That will be the end of 30 glorious years of falling rates.

Short term, companies will cut prices to move inventory and stay cash flow positive but once these are liquidated, M&A and bankruptcies will soar. Supply will dwindle as companies won’t offer products if people can’t pay.

People buying less means higher cost per units. Investment to increase productivity means higher dd&a. Higher interest rates mean higher interest expense. Pension expense will also rise to fund underfunded plans. Nearly all expense lines on the income statement will be increasing.

In my scenario wages will go up. Not in one day but over 5-10 years.

With inflation, workers will be better protected than the retired and wealth will get redistributed from the 55+ to the youngdr generation.

That’s my forecast.

#112 Nostradamus Le Mad Vlad on 12.27.10 at 7:21 pm


#40 Moneta — “And by the way, the BoC (working with the fed it seems) has a team working on how to spot inject inflation into the economy.”

Now the connection between the BoC (Carney) and the US Fed (Paulson) which equals GS becomes clearer, and it is good to see that someone else has picked up on this as well.

Of note, The Third Reich was supposed to last 1,000 years; it lasted twelve (1933 – 1945); this could mean that by the time the Mayans, Aztecs and Incas have all completed their cycles by 2018, the Yellow / Red races will be ready to replace the Causasian race at their appointed time.

#52 dark sad person — “Watch the Yen-imo-”

With the change in cycles (races) becoming more intense as the days fly by, China has two currencies Yuan and Remnibi). If the west tries to subvert one, China could replace it with the other, so it does make for interesting times.

As for the Yen, Japan seems to be in a state of flux; when the left won the last election, they cozied up to China and let the US drift.

Now the poles have shifted, so what has the west done to placate Japan, or threaten it?

#61 Nostradamus jr. — Dad! Nice to see you back! Seems your prophecies are coming true, but the Okanagan (from Hope through the Rockies, and the border through Prince George) is now accessible only to vacationers.

Stay on yer meds for the time being!

#64 Bullion.Bunny — “Andy Xie: Either America Or China Will Crash In 2011”

Ahh, but wot if both sink at roughly the same time? Soros, Obama’s bankroller has already stated he admires China’s govt. Not sure of the west, but no doubt the elite are profiting immensely from this.

However, the wheel always turns.

#89 Debtfree — “Too bad you can’t get your bullion into your tfsa .or can you ?”

Gold / silver / uranium / valladium and others in paper shares / stocks only, as far as I know.

#113 Debtfree on 12.27.10 at 7:24 pm

@97 BB agreed you can put paper gold in your tfsa but I thought you and I were talking real gold coins and bars .
Still thanks for the cramer crap . Btw he was a gs partner just like “C” and just as full of it.

#114 Moneta on 12.27.10 at 7:27 pm

#84Moneta-I gotta laugh-you were sent to a posh private high school for the “well to do” and your conclusion is “our” kids are spoiled rotten
——–
I was very fortunate to have parents who sacrificed a lot to send me to a very good school.

Circa 1982, my gift was a cheap, albeit nice, fountain pen (it was mandatory in our school) when my father, an engineer, was working without pay for a few months.

#115 Utopia on 12.27.10 at 7:31 pm

As a prologue to my comments above regarding Mr Flaherty’s suggestion that change is on the air…….

Depending on his timing the mere threat of changes to policies surrounding bank lending practices that might freeze out potential buyers could actually goose the markets in the coming months.

You know, a spring fling and plenty of sales just in time for a much anticipated election call following the coming budget. More likely yet, an election will be precipitated as a result of a budget that the Opposition simply cannot swallow.

And frankly if I was a Conservative politician I would make every effort at this juncture to bring forward a budget that would resonate happily with the majority of Canadians while simultaneously driving the other parties into an apoplectic fit.

That is how you end up with a majority government.

#116 Bullion.Bunny on 12.27.10 at 7:57 pm

#111 Debtfree on 12.27.10 at 7:24 pm

PHYS

http://www.sprottphysicalgoldtrust.com/

As close as you will come to bullion in your TFSA.

As always Buyer Beware.

#117 $froma$ia on 12.27.10 at 8:02 pm

uTOPIA-

“Flaherty said he is concerned about Canadians buying “too much house” and becoming saddled with high mortgages, but after moving twice to tighten requirements….”

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

C’mon man!!! They guy was securing votes by allowing zero down and 40 year ammortization and nnow he’s trying to turn the fault back on Canadian!!!

Give me a break, it’s like giving candy to a infant and then when he’s/she’s become a sugar addict you cut the little bugger off and tell him he is addicted and it’s the infants fault.

This is all about turning the blame around.

#118 realpaul on 12.27.10 at 8:06 pm

Garth I googled ‘Canadian Public sector wages’ and got thousands of choices where information complied by private sector sources proves that there is no differance between the outrageous salaries and pensions in the US and those of the greed soaked parasites of the CDN civil service. Heres one example…there are thousands more….but we don’t need the whole list to prove that the civic service is over compensated and pensioned….it would take up pages of your blog.

From the highest to the lowest ( firemen, teachers, police) the average civil service wage and pensions are triple ( managers , administrators and quango worker) what the private sector worker receives in competing economies such as the US…how much of this can the taxpayer afford? If we can’t look at a side by side comparision to the economy we most often compare ourselves to for the sake of social and economic polling then whose numbers can we use when the Canadian government refuses to make any public data available?

Even our pathetic media can’t get public data without fighting costly and litigious Freedom of Information challenges. And only when we receive the information fully redacted do we find that the government has no intention of bringing the truth into the public forum.

http://www2.canada.com/vancouversun/features/public-sector-salary-database/index.html

But…its your tea party…..say what you will.

I see no proof there that public sector salaries are triple those of the private sector. In any case, if you think the cost of government is our biggest economic concern, you are lost in the forest. — Garth

#119 Fred on 12.27.10 at 8:18 pm

Sorry Garth,

There is no way in heck you are going to convince me Obama is in political trouble vs Palin. No way.

Epic fail trying to sell that snake oil!

There were elections last month. Did anyone tell you? — Garth

#120 Herb on 12.27.10 at 8:20 pm

Re #103 –

there must well over 100,000 public servants who wish that it were so.

One of these days Unreal Paul is going to cement his heartfelt grudge by comparing “comparables” such as work to be done, job classifications, skills required, responsibilities, and remuneration levels in the public and private sector.

I certainly would be curious to know what a “private” teacher, doctor, firefighter, policeman or soldier makes a year, but I’m not going to hold my breath.

#121 Moneta on 12.27.10 at 8:34 pm

In any case, if you think the cost of government is our biggest economic concern, you are lost in the forest. — Garth
—–
A could not agree more.

People are looking in the rearview mirror. The retirees of the last 30 years are the ones who got the free lunch.

Government pensions are going to get decimated. If it’s not by inflation it will be with cuts.

#122 S.B. on 12.27.10 at 8:38 pm

“As the middle class in America continues to be slowly wiped out, the number of working poor continues to increase. Today, nearly one out of every three families in the United States is considered to be “low income”. Millions of American families are finding that they can barely make it from month to month even with both parents working as hard as they possibly can. Blue collar American workers from coast to coast are having their wages decreased at a time when it seems like the cost of virtually every monthly bill is going up. Unfortunately, there is every indication that things are only going to get worse and that average American families are going to be financially squeezed even more in the months and years to come.

The Working Poor Families Project has just released their policy brief for the winter of 2010-11. What they have discovered is that the number of working poor in the United States is higher than they have ever seen it before and it continues to increase at a staggering pace. The following are some of the key findings for 2009 that were pulled right out of their report….

* There were more than 10 million low-income working families in the United States, an increase of nearly a quarter million from the previous year.

* Forty-five million people, including 22 million children, lived in low-income working families, an increase of 1.7 million people from 2008.

* Forty-three percent of working families with at least one minority parent were low income, nearly twice the proportion of white working families (22 percent).

* Income inequality continued to grow with the richest 20 percent of working families taking home 47 percent of all income and earning 10 times that of low-income working families.

* More than half of the U.S. labor force (55 percent) has “suffered a spell of unemployment, a cut in pay, a reduction in hours or have become involuntary part-time workers” since the recession began in December 2007.

http://theeconomiccollapseblog.com/archives/the-working-poor

#123 Nostradamus Le Mad Vlad on 12.27.10 at 8:39 pm


DSP — Inflation It starts somewhere.

Fascism “Its aim is to subjugate the entire planet and its resources to U.S. corporate interests.”

Sidebar — Putin’s purge of the Money Changers: “WHEN PUTIN WAS ELECTED PRESIDENT of Russia in 2000, Russia was bankrupt. The nation owed $16.6 billion to the Rothschild-run International Monetary Fund while its foreign debt to the Rothschild-controlled Paris & London Club Of Creditors was over 36 billion dollars.

“But Putin took advantage of the current boom in world oil prices by redirecting a portion of the profits of Russia’s largest oil producer Gazprom so as to pay off the country’s debt. The continual surge in oil prices greatly accelerated Russia’s capacity to restore financial sovereignty.”

Laurel & Hardy at the DHS The Toilet is involved with this again. From FOX, so it must be true.

Fake Farmer’s Markets “Watch out for “fake farmers’ markets” that are sprouting up in grocery store parking lots all across the country.”

11:41 clip Euro riots justified.

The Fatcats Have Spoken No economic recovery.

NOTW Another UK-owned m$m collapses behind a PPV firewall.

1984 — “Unfortunately for law abiding Americans, this means that low IQ security officials will not only bother and sometimes molest you at airports, they will also be in your local mall or hotel.” Don’t count the CPC out of pulling the same stunts here.

Charts ” It’s going to be several more years before household balance sheets are repaired and ready to assume more debt. Hello, Tokyo.”

Conservative dubya changed the bankruptcy laws before he finished. Now some want them changed again.

The Ripple Effect A&P goes under, which leads to layoffs in other parts.

10:54 clip This planet is an insane asylum, as we’re all certified looneybins!

Martians “In 2010 the northern hemisphere suffered its coldest winter in decades because of global warming. Really.”

War The US is setting itself up nicely, but life has a nasty habit of getting in the way.

#124 Moneta on 12.27.10 at 8:52 pm

Evolution of government spending:

http://dsp-psd.pwgsc.gc.ca/collection_2009/fin/F21-8-2003-5E.pdf

see page 5

For some reason, people seem to think that government spending if over the top when in historical terms, it isn’t.

#125 Moneta on 12.27.10 at 9:03 pm

Here is another report:

Just How Much Bigger is
Government in Canada?

http://http-server.carleton.ca/~winers/papers/Comparative_Size_Proofs_CPP_June_%2007.pdf

I like the chart on on page 13, where hospitals and universities are included. In the US, a lot of the social net comes through the back door.

#126 Bullion.Bunny on 12.27.10 at 9:10 pm

#119 Fred on 12.27.10 at 8:18 pm

There is no way in heck you are going to convince me Obama is in political trouble vs Palin. No way

Wake up dude, lift up the rock you are living under. Obama has the lowest approval ratings of any sitting prez……………

http://www.economist.com/blogs/dailychart/2010/10/obamas_approval_ratings

#127 Sam on 12.27.10 at 9:20 pm

#79 dd on 12.27.10 at 2:02 pm

#61 Nostradamus jr.

…Translation….We only want rich Asians relocating to the safest city in the world…

Same old dribble.
______________________
respectfully disagree; This is DIFFERENT dribble.

dribbling out the back side these days, not as usual from his nose & lips

#128 cellar dweller on 12.27.10 at 9:40 pm

@ #27 BestplaceonEarth
PLEASE tell me who your “pharmacist” is ! I need a fix man ! I’m hurtin bad !
I need an escape and YOU have obviously found the right drug to escape reality.
When the 500 ft tsunami washes over Richmond like an angry God cleansing its backyard and roars toward Vancouver your gonna WISH you rented in …. SFU’s Village.
moo hoo haa haa haaaaaaaaa

#129 cellar dweller on 12.27.10 at 9:43 pm

Sorry Garth, Got a little “carried away”.
I’ll stop slammin the Rum&eggnogs and go back to my room.

#130 Basil Fawlty on 12.27.10 at 10:03 pm

realpaul

“greed soaked parasites of the CDN civil service.”

Before one develops a hatred to your degree, they should at least get their facts correct. Canadian Federal Government salaries are not at the levels you put forward. In addition, how dare you refer to people such as RCMP Officers who daily put there lives on the line for our safety, or Coast Guard Employees who go out in the most dangerous of conditions to save us, as “greed soaked parasites”. What kind of a person would insult some of Canada’s finest people in such a manner? You need help.

#131 Cookie Monster on 12.27.10 at 10:06 pm

I certainly would be curious to know what a “private” teacher, doctor, firefighter, policeman or soldier makes a year, but I’m not going to hold my breath.
———-
That’s right, we don’t know so long as it’s a public service monopoly we will not have any idea what people are actually worth who work in the public sector or what their true cost/benefit is and what society is actually willing to pay for the services provided.

We’re just forced to pay no matter what. It’s open-loop economics, there’s no feedback, no market control or input. It’s just a one way street straight to the poorhouse.

#132 Sam on 12.27.10 at 10:14 pm

#128 cellar dweller on 12.27.10 at 9:40 pm

@ #27 BestplaceonEarth
PLEASE tell me who your “pharmacist” is ! I need a fix man ! I’m hurtin bad !
________________________
Mosey on over to where Picton used to hang out. I’m sure someone can “set you up”

#133 dark sad person on 12.27.10 at 10:19 pm

#86 Moneta on 12.27.10 at 3:24 pm

Furthermore, I believe we are currently in deflation right now but that our central banks are setting us up for good inflation within the near future. I also think they will find ingenious ways to keep CPI low despite a rising cost of living. That means defined benefit pensions will not be as rich as most think they are.

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

If Governments and Banks “could” induce long term Inflation-they would-
At this point i think in Canada we’re in sort of a purgatory between Inflationary blowoff that’s been nitro injected with Stimulus-but being dampened by the gathering Deflationary forces-

I agree with you about Governments trying to keep the CPI low-“if” there was to be Inflation-I say there wont be-other then choppy style stimulus guns that goose the stock market-like Japan did-but in the end it always failed and has never recovered-despite Trillions in QE

http://2.bp.blogspot.com/_nSTO-vZpSgc/ShLjDIaR7FI/AAAAAAAAGHI/jTLtM7ms0CI/s1600-h/Two+Lost+Decades.png

During a Deflationary trend they try to hold prices up and are fudging the numbers to hide the declines-

The last thing they want (they = Carney) is for Sentiment to shift fast into believing prices will be cheaper in the future-because that is max Deflationary-

http://3.bp.blogspot.com/_nSTO-vZpSgc/S5CaXRbHySI/AAAAAAAAH_U/2-qiit04syc/s1600-h/CS-CPI-2010-02-A.png

Above-you can see on the US-CS-CPI that during the years of extreme Inflation 2002-07 Government hid the rising prices by counting only rent and not House prices and shifting the basket of goods (BLUE) –
Since they tipped into Deflation 2007 09–the house prices have for the last while stabilized-both- are now tracking quite close-but as prices were both rising and crashing-Government reported CPI did not track it–

Government reporting = (BLUE)

House prices and a stable non changing basket of goods (RED)

Easy to see the spread differential by their method of painting the tape-

#134 Dan in Victoria on 12.27.10 at 10:32 pm

Realpaul @118
“The average civil service wage is triple”
“Canadian government refuses to make any public data available”
Heavy Duty Mechanic $25.52- $27.73 per hour.
Carpenter $24.62- $26.67 per hour.
Plumber $25.89- $29.31 per hour.

Ummm….. thats not triple the private sector, probably on the low side of the private sector “depending”

http://jest-orae.psc-cfp.gc.ca/JEST-ORAE/advsrch.do?cnsrch&lang=en&di=40#res

And I will on occasion take a swipe at the gov’t employees , but I understand this. Without the stability of the gov’t workers here and in other parts of Canada, buying houses and having reno’s done, guys like me wouldn’t have done as well as we have.

#135 Devil's Advocate on 12.27.10 at 10:39 pm

5 Reasons to Buy a Home in 2011

Michele Lerner, author of Homebuying: Tough Times, First Time, Any Time, offers reasons why real estate is likely to improve in 2011. Here are five reasons she thinks consumers should consider a home purchase next year:

▪ Mortgage rates will stay low. Even with rates climbing — maybe to as high as 6 percent by 2012 — they are still well below where they have been historically.
▪ Tax cuts could help. Extending the tax cuts could encourage a more rapid recovery for the economy.
▪ Americans want to be home owners. A recent Fannie Mae survey showed that Americans still believe a home is a safe and desirable investment.
▪ Builders are about to begin building. Home builders have been sitting on the sidelines. This year, they think pent-up demand will create an appetite for new homes.
▪ Homes are shrinking. Homes are getting smaller, which has made them more affordable.

Source: Investopedia, Michele Lerner (12/24/2010)

This is not the USA. — Garth

#136 S.B. on 12.27.10 at 10:44 pm

USA – it’s fun to watch an empire in its death throes?

http://www.nytimes.com/2010/12/26/opinion/26kristof.html?_r=2

By NICHOLAS D. KRISTOF
Published: December 25, 2010
Damon Winter/The New York Times
Nicholas D. Kristof

On the Ground
Nicholas Kristof addresses reader feedback and posts short takes from his travels.

Go to Columnist Page »It’s the military/security world, and it’s time to bust that taboo. A few facts:

• The United States spends nearly as much on military power as every other country in the world combined, according to the Stockholm International Peace Research Institute. It says that we spend more than six times as much as the country with the next highest budget, China.

• The United States maintains troops at more than 560 bases and other sites abroad, many of them a legacy of a world war that ended 65 years ago. Do we fear that if we pull our bases from Germany, Russia might invade?

• The intelligence community is so vast that more people have “top secret” clearance than live in Washington, D.C.

• The U.S. will spend more on the war in Afghanistan this year, adjusting for inflation, than we spent on the Revolutionary War, the War of 1812, the Mexican-American War, the Civil War and the Spanish-American War combined.

This is the one area where elections scarcely matter. President Obama, a Democrat who symbolized new directions, requested about 6 percent more for the military this year than at the peak of the Bush administration.

“Republicans think banging the war drums wins them votes, and Democrats think if they don’t chime in, they’ll lose votes,” said Andrew Bacevich, an ex-military officer who now is a historian at Boston University. He is author of a thoughtful recent book, “Washington Rules: America’s Path to Permanent War.”

#137 S.B. on 12.27.10 at 10:47 pm

Ex-Shell president sees $5 gas in 2012

NEW YORK (CNNMoney.com) — The former president of Shell Oil, John Hofmeister, says Americans could be paying $5 for a gallon of gasoline by 2012.

In an interview with Platt’s Energy Week television, Hofmeister predicted gasoline prices will spike as the global demand for oil increases.

http://money.cnn.com/2010/12/27/markets/oil_commodities/index.htm

#138 Thetruth on 12.27.10 at 11:00 pm

If the housing market does turn south in a hurry,… the key players are already stating that they are not to blame… “pr” insurance?….

Banks say its the governments fault…they should tighten mortgage rules blah, blah, blah

F says it is the banks responsibility…forgetting about cmhc blah, blah, blah

Who will “own” the media if south does happen?? F or the banksters?

#139 Thetruth on 12.27.10 at 11:06 pm

On another note … saw the new Wall street movie..the similarities are striking ;)

Gordon Gecko 1980’s = Garth Turner in Parliament

Gecko 2000’s released from prison a changed man and educating people by authoring books = Turner’s books and blog about educating people.

Gecko later turning 100 mill into 1.1 bill now = Turner in the future???

#140 dark sad person on 12.27.10 at 11:18 pm

#123 Nostradamus Le Mad Vlad on 12.27.10 at 8:39 pm


DSP — Inflation It starts somewhere.

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

Yes it does start somewhere and it will come again as it always does-but not until purchasing power returns to the people-

In your link-the author confuses rising prices and government borrowing as inflation and then goes on to talk about wage spirals-falling GDP in-spite of printing (which counts as GDP growth)

He does make the connection of government borrowing (peasant tax) and the gift to the banks and that they are speculating in the markets and gunning prices-along with what all banks are doing with taxpayer dollars and also recognizes slumping economic growth-high unemployment and spiraling wages-
That is a catalyst for deflation-
I see little chance of monetary/credit inflation from the UK-

These (all) big banks through their monster hedge funds are trading in commodities and driving prices up-which is even more deflationary-
How can people spend and create the positive velocity needed to spur inflation-when their shrinking (personal) money supply must go into necessities-
with the greedy crook bankers sitting on it and selling it to them-after gunning up prices with the taxpayers own money-

When money is directed into one area-the velocity range is narrowed and velocity collapses as the flow of outside spending decreases-

btw-i said above i suspected the Yen might blow up first
my 2nd choice is the GBP-

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

UK unemployment has risen back over the 2.5 million mark, fanning fears that Britain is suffering a “jobless recovery”.

The number of people out of work in Britain rose by 35,000 in the three months to October, pushing the unemployment total up to 2,502,000. This raised the UK’s unemployment rate to 7.9%, from 7.8% in the previous quarter, the highest rate in six months.

22 Dec 2010:

Twice as many jobless as at the start of last recession, with cuts meaning thousands more face redundancy in the new year

http://www.guardian.co.uk/business/unemployment-and-employment-statistics

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

http://research.stlouisfed.org/fred2/series/GBRRGDPC

http://research.stlouisfed.org/fred2/series/GBRRGDPH

http://research.stlouisfed.org/fred2/series/GBRRGDPE

**********
imports from the UK

http://research.stlouisfed.org/fred2/series/IMPUK

http://research.stlouisfed.org/fred2/series/UKTOT

#141 Bottoms_Up on 12.27.10 at 11:27 pm

#83 VMT on 12.27.10 at 2:54 pm
———————————————
Well, if the Chinese are coming from Hong Kong, looks like they’re getting on average $2000/sqft for selling their place:

http://www.bukisa.com/articles/298685_most-expensive-real-estate-markets

#142 Aussie Roy on 12.27.10 at 11:49 pm

Devil’s Advocate on 12.27.10 at 10:39 pm

The most sense you have written ever well done.

The moral of the story buy into a market that has been battered and bruised and buy rental yield. Not just for ever increasing asset appreciation.

BTW what is the rental yield in the USA and what is it in Canada.

#143 InvestorsFriend (Shawn Allen) on 12.27.10 at 11:52 pm

So, Sarah Palin and family buy a 4000 square foot house / compound at the bottom of the market for $172,000.

This purchase will end well for the Palin family.

Some people recognise opportunity when it knocks. Most don’t.

Did we read the same blog? It’s a political move. — Garth

#144 Utopia on 12.27.10 at 11:53 pm

#117 $froma$ia

C’mon man!!! They guy was securing votes by allowing zero down and 40 year ammortization and now he’s trying to turn the fault back on Canadian!!!
—————————————————

No problem $froma$ia. The remark that has offended you was not written by me though. It is content from the Canadian Press article as I noted in my post.

#145 Utopia on 12.28.10 at 12:42 am

#135 Devil’s Advocate

Mr Devil, just a dumb question from me. How do you get bolding and italics into your posts on this blog? I have tried it a few times but the site always turns everything back to the same old regular font.

…Tips for computer Neanderthals?

#146 betamax on 12.28.10 at 1:12 am

#121 Moneta: “Government pensions are going to get decimated. If it’s not by inflation it will be with cuts.”

Absolutely. It’s already happening. A friend’s govt. pension was recently reduced in that it’s no longer automatically indexed for inflation. He’s worried about how little he’ll eventually get.

I have a well funded private pension, but I’m not counting on it for a dime. Whatever I get is gravy.

Moneta — great posts today (as usual).

#147 Herb on 12.28.10 at 1:26 am

Cookie Monster @ 131,

It’s open-loop economics, there’s no feedback, no market control or input. It’s just a one way street straight to the poorhouse.

Not quite in the age of the internet. Stats Can publishes a lot of material. You can also go to your province and municipal websites and determine the costs of the public services/servants you object to, and how these costs and services should be reduced. You can then spread the word and start a political movement to make it so.

How about starting your own commercial police force, fire service, army or whatever, and offering your services at greatly reduced costs? Just remember that people expect to be paid for their work, and that you have to bill your costs, not to mention your modest profit.

Government is a bit more complicated than the “It costs too much” mantra.

#148 nonplused on 12.28.10 at 1:50 am

#87 DSP,

Thanks! It’s nice to know I am not the only one out there!

#149 throwstone on 12.28.10 at 11:59 am

HERB-

clearly you are stauchly a pro-government, pro-government union guy and have been for a long time, perhaps since you were given full time status in your government job…

see if you were not in that government job and working in the private sector and paying for those people you could at least see that we have a problem…

Same applies to MONETA, clearly a teacher!…Its your indexed pension that causes children to knock on your door for donations to go to europe. Unless only private school students should be allowed to experience travel and history. See the dual standard thinking at play…

You Government lifers have no idea what it really takes to make things work.

Government Needs private sector…. more than Private Sector Needs Government.

No Private Enterprise, NO COMMERCE-NO TAX DOLLARS. PERIOD.

#150 Steven Rowlandson on 12.28.10 at 12:06 pm

Hello Garth.

RE:
Realpaul @118
“The average civil service wage is triple”
“Canadian government refuses to make any public data available”
Heavy Duty Mechanic $25.52- $27.73 per hour.
Carpenter $24.62- $26.67 per hour.
Plumber $25.89- $29.31 per hour.

—————————————
In the real world things are different.
I spent 26 years of my life working at stair building starting out as an apprentice earning 4 dollars an hour which seemed too much to my employer back in 1982 when I was 22 years old. Over the years to 2009 my business income as a master stair builder was 15 dollars an hour. Adjusted for real inflation I was probably making less than what I earned as an apprentice. Now after getting hurt on the job almost
2 years ago those that might hire me would pay me minimum wage. If there is a credibility problem in Canada it is definitely not within me. We have a cost of living including real estate costs that demand pay rates equal to or greater than government pay rates and a private sector that wants something for nothing.
No raises, no danger pay and no COLA. Eventually workers and tradesmen are earning nothing even if they have a job.
Yes government pay rates are big compared to the private sector. Then again unions are very much part
the public service situation. It is not always a union shop in private sector shops. So yes due to unions public sector workers are quite well off compared to non union workers.

I am a canadian citizen and I was alive in canada all these years but I have never been paid enough to live here except for one week in august 1987. Survival and living are not exactly the same thing.
One weeks pay was $550 production bonus plus 67 hours at $8 per hour. I put alot of effort into making those earnings. I doubt I could of kept up such an effort for a whole year. But if I could then maybe I could havequalified to buy a home at the lower end of the market. That would be basing contracting a long term debt based on short term economic proformance and that would have made me the greater fool. I generally made $400 to $600 per week back then. Better than minimum wage but no where good enough to live in canada.

I don’t blame me for being priced out of canada.
The collective decisions to keep non union wages down and jack up real estate prices is not my doing.

If you people want economic growth first of all stop importing people to compete with canadian workers.
All governments must not raise taxes, they must allocate money for interest on the debts first and 30% of the balance for principle payments on the debt and ration the balance over 12 months each year. Government must not only govern the nation it must govern itself. The existance of government debt is proof of failure.
If statutory expenditures stand in the way repeal those laws and abolish or roll back expenditures immediately so that there is no borrowing and no money printing.
There are no sacred cows when it comes to austerity and real resposible government.

We need to get all fertile women out of the labor force and married off to make room for men in jobs a man could do and are traditional jobs for men. Also we must legislate that at least a zero be knocked of the price of real estate and make crown land available to citizens who wish to escape high real estate costs. A silver dollar per acre would be a reasonable rate with a ten acre limit per citizen and buyers should have full and real ownership of the land including exemption from property taxation and seizure. All the laws passed in the last 50 to 60 years should be reveiwed and if communistic or immoral be repealed. Any law or treaty that is likely to drag Canada into a war that is not on canadian soil or territorial waters should be repealed. Anything that is likely to drag canada into a new world order or world goverment, court or financial/ monetary system should be abolished and prevented.
We need a made in canada society, government , economy and money that is made by the mint and not the banks.

It’s a matter of getting back to basics and a made in canada policy or we will be sucked into the new world order and the global hell that goes with it.

Steven

Remote confinement camps for old people would be good too, no? — Garth

#151 throwstone on 12.28.10 at 12:17 pm

#130 BASIL FAWLTY…

When in university I rented a room in a rental house owned by two police officers.

Its was required that I give post dated checks for the duration of my stay. When a family crises required I abandon school and my rental room prematurely; I set about finding a replacement tennant for the landlord’s. Three months down the road, with the new tennant in place, those police officer cashed my post dated cheques as well.

So don’t give me the higher moral code Bull$#^

#152 Fred on 12.28.10 at 1:57 pm

Garth,

I won’t try pretend I know more about Finance and Investing than you do. You should not pretend you know much about American politics. I happen to follow it quite closely and can tell you that your read on the current political situation there is dead wrong.

First of all the Palin thing won’t happen. She is dumb but not stupid enough to think she can win an election against Obama or even his dog. She is just keeping that thought out there because it can only help to benefit her financially. Besides, her party knows that she would only hurt them by running so they will make sure it doesn’t happen.

Lastly, the midterms were not a mandate on Obama or even Democrats. The party in power has historically always done poorly during midterms. Also, I don’t need to remind you they are experiencing the worst recession since the great depression and housing is probably experiencing the worst devaluation in history. Although most people understand that most of of that was on Dems or Obama’s fault it doesn’t matter. The party in power always gets blamed. So it was a double wammy for the midterms.

2012 is a whole other ball game. Obama’s base (liberals) are notorious for not voting during midterms hence the so called enthusiasm gap which was largely blamed for the midterm results. 2012 will have no such problem. Polls already show Dems with a large lead among likely voters. Simply due to the historical adjustment for enthusiasm gap of mid terms vs presidential elections.

Actually, I have some political experience. And you? — Garth

#153 canali on 12.28.10 at 3:41 pm

RE: “I spoke to a career real estate agent on Boxing Day who said in his BC community home sales are down 40%, “with prices ready to follow.”…yeah well it ain’t here in vancouver or the local burbs of burnaby, new west or richmond, that’s for sure (wish it were, believe me)….many RE experts still can’t figure out Vancouver, with it’s bull’s arguments of being the ‘best meth on earth’ ‘can’t happen here’ limited land supplies, asian immigrants always coming over to invest and live (etc).