Sha la la

You might think it’s $200 oil or the profligacy of the middle class. Radical Islam or Sarah Palin. China rising or America failing. Swelling rates or stumbling markets. But that’d be shallow. It’s the geezers we gotta worry about.

And if I were 30 again, I’d be terrified. There is nothing more certain in Canada than nine million Boomers staggering into the final two decades of life, most of them delusional even before the dementia hits. It’s this thought which convinces me the first thing young couples should want is liquid assets. The last thing is a house.

I said some months ago, provoking a shocked response on this tormented blog, that anyone who hits thirty without a hundred grand is a loser. On second thought, that’s too little.

Here are the facts. About 32% of the entire population is made up of wrinkly old hippies who admire Keith Richards’ value system. This is the largest generation alive (if barely), and the most significant post-war cohort on the planet. The median age in Canada is now more than 40. In Britain, 39. In the US it’s 36. In China, 35. And in Libya, 24.

One of the only major countries older than us is Japan, at 45. And that nation’s demographics are one reason it’s been in a deflationary funk for more than a decade. You don’t need an economics degree to tell you that old people suck more than they blow.

More facts: Most boomers (six in ten) don’t have a work pension of any kind. Half have no retirement savings. The average amount saved by those who do is adequate for less than five years of living. In 1962, that was fine. Guys croaked at 67. Today life expectancy is rocketing higher and everyone expects to see eighty.

More facts: Boomers love house porn. It’s believed home ownership here is about 80%. That means the biggest generation has the bulk of its net worth in a single asset, with most being pensionless and short of cash. And about to stop working and start sucking.

Are we worried yet?

One of the comments posted here yesterday summed it up nicely:

I was talking to two people at work who fit perfectly into the deadbeat boomer demographic. Both have white-collar careers, one has made six figures for 30+ years, but neither have any savings. Virtually none. Both have teenagers, some in college, and they spend every penny they make. They’re both banking on their houses, even though both have second mortgages and would be lucky if they had $200k in equity at today’s inflated prices (they used to have more but got divorced and kept the house).

They’re the ones who should be selling right now. But they’ll hang on to the house, hoping it’ll be worth a fortune when they retire 10-15 years from now. Because they don’t have enough time left to start saving enough now, even if they radically changed their lifestyle, which they won’t. I don’t know what’s going to happen to them, but it won’t be a golden retirement.

Well, I know. So do you.

People whose only steady retirement income is a paltry thousand a month from the feds and who’ve burned through their pitiful savings in half a decade will be forced to cannibalize their real estate. That means selling, downsizing and living off the difference. Or, selling in Mississauga, Oakville, St. Albert or Surrey, and moving to Hicksville where a bung costs less than a new BMW. Or, selling, renting and sticking the proceeds into income-producing assets. Or… what?

Fact is, if you have only one large asset and need cash to buy KD, Stones CDs and Viagra, how many options do you have?

So logic dictates the coming five or ten years will produce a gathering tidal wave of houses hitting the market from this anxious group alone. And since real estate’s all about supply and demand, it makes sense that prices will be impacted. Especially when this takes place in a period of rising interest rates; when scads of 5/35 buyers from 2009-11 are bummed out with renewals; and cash-starved governments (run by Boomers) are raising taxes and cutting services.

If you buy into any of this (and you should), consider the implications. Supply could swamp demand in the coming years. That would make houses illiquid, like they are now in the US, where folks can’t move to find jobs since they cannot sell. Prices, naturally, will drop. This is a potential disaster for young families who throw all their cash towards a mortgage – which could end up being larger than the value of the home. But it’s even worse for the Boomers, forced to liquidate into a falling market, taking pennies on the dollar. If only they had acted in 2011, when everybody was house horny…

So I’ll say it again. Most at risk today are (a) young buyers who have no equity, endless debt and no capacity to withstand a downturn, (b) anyone with the bulk of their net worth in a house and no diversification into financial assets and (c) an army of screwed Boomers who actually think real estate is a retirement plan.

It’s not. And they should grow the hell up.

259 comments ↓

#1 shanks on 03.07.11 at 10:56 pm

1st!!!

#2 JO on 03.07.11 at 11:04 pm

The debt based Ponzi scheme will come to an end just as it has everywhere else. What you have had in the last 8-10 years globally is a massive effort to use various strategies such as negative real rates (holding interest rates below the rate of inflation),taxpayer gaurantees and subsidies to help inflate the most wicked debt bubble which has made housing unaffordable for the “middle class”.
As the bubble has grown,you effectively have used this massive transfer of wealth from savers (prudent/pensioners) through to most recent homebuyers who speculated on higher home prices using subsidized debt and now have a situation where housing is so artificially inflated it amounts to a massive hidden, but extremely regressive tax against the same “middle” class who is subsidizing the charade.

Most recent homeDEBT RENTERS are in reality paying inflated economic rent to the senior bank/RE executives and the government sector through excessively high home prices. And it hurts to know most of these people have been subsidized by those smart enough to avoid the scheme and those who do not have the resources to participate but suffer terribly thanks to inflation.

It won’t be pretty as this thing unwinds..and remember..when gov’ts start coming out with subsidy and bailout schemes to try and keep the bubble inflated (they will fail), lower home prices are very beneficial to the middle class…it is after all our biggest monthly expense..don’t let any scumbag politician tell you otherwise.
JO

#3 Shaq on 03.07.11 at 11:05 pm

I am 1st kick azz

#4 Spazmogen on 03.07.11 at 11:08 pm

Ça commence…

#5 InvestorsFriend (Shawn Allen) on 03.07.11 at 11:11 pm

The upside of tons of Geezers should be that the job market gets tighter. (less unemployment and higher pay)

We all know the Japanese stock market and house prices have not done well.

But how is the average younger Japanese worker doing?

Does a 35 year old Japanese engineer now find less competition and therefore higher pay?

Toyota and Sony and tons of Japanese companies are still making tons of products, so someone over there is eorking.

And has he bought a house that is not inflated and financed it forever at 2% or something?

Who lives and works in Japan and can give us some insight please?

Who knows, if all else fails, maybe we can all make big money changing diapers for rich Geezers. (ewh!)

#6 InvestorsFriend (Shawn Allen) on 03.07.11 at 11:14 pm

I mean Geisha Girls ,must be sooo busy keeping Japanese coots in spirits elevated, no?

#7 Secondisbest on 03.07.11 at 11:15 pm

hello peeps!

#8 Toronto on 03.07.11 at 11:18 pm

10th

#9 Debtisforever on 03.07.11 at 11:19 pm

But but….the Chinese will save us! They all want to buy our houses for inflated prices! (well, at least in Richmond and Vancouver-west, but mysteriously not anywhere else in the country. Or even anywhere else in North America where prices might actually be reasonable. What’s wrong with this picture?)

#10 student_loan on 03.07.11 at 11:21 pm

$100K at 30? I’m 29 and was getting educated to the Masters level until I was 26. I’m not even out of debt yet; nevermind 100 grand. I’ve got a good job and am only set to rise. But I’ll likely still be in debt at 30. Educational retirements and student debt have only increased. You’re out of touch on this one Garth – too much time spent on S&M in the bunker.

#11 bsallergy on 03.07.11 at 11:23 pm

Ah beware the deluded boomer.

I have a government job and will have a small but decent pension if I work until 65 with 24 years of service.

I have a colleague 61, he plans on retiring at 65 with 11 years service. His pension will be about $17 – 18 k. He just bought a new Ford F350 pickup, just borrowed $30 k to “invest” in RRSPs, continues to fund his adult children, subsidize his aged mother and still has a $205 k mortgage. Keep tell him he’s not retiring because he needs the health benefits and he can’t afford his current lifestyle on a $75 k income. He and all the other boomers are like Wile E Coyote looking back at the cliff while holding their housing anchors. Jimmy and Stevie will continue blow icing sugar up their backsides and the boomers will continue to be true believers in real estate.

All is for the best in the best of all possible worlds.

#12 student_loan on 03.07.11 at 11:23 pm

Oops; that’s “educational requirements”… freudian slip.

#13 Throwstone on 03.07.11 at 11:26 pm

Garth,

The Gen-Xers of Canada have been living off the table scraps of the boomers since their birth.

Time to change places. What was too good for too long…will soon be… just too bad.

#14 cialis on 03.07.11 at 11:31 pm

Another factor to consider is that as boomers reach retirement age, their parents die.
More real goods, and real estate onto the market at lowball prices.

#15 LH on 03.07.11 at 11:31 pm

Old age pensions are income tested (which includes RRSP withdrawls), not home-equity tested. There’s nothing wrong with owning the roof above your head, in the context of a diversified portfolio of financial and real assets. That, and living within your means are what retirement is all about. However, as Garth mentions, too few Canadians get the program.

Heck, I could retire tomorrow as the rentier I am, but 26 is perhaps a bit too early.

#16 Jeff Smith on 03.07.11 at 11:44 pm

>I said some months ago, provoking a shocked
>response on this tormented blog, that anyone who
>hits thirty without a hundred grand is a loser. On
>second thought, that’s too little. – Garth

And you are a freakin Geezer!!! There got you back! Hmph!

I guess we now know who doesn’t have the cash. — Garth

#17 Soylent Green is People on 03.07.11 at 11:48 pm

I am running into scared old people on FaceBook who insist everything will be fine:

Ron Miller – the truth of it is that ones house is usually ones wealth! Those that buy will win over the long hall!

what are you talking about. Most of my retired friends are not selling their houses as they intend to stay there. Some like me moved to a small town from Vancouver for quality of life.

………………….

OTTAWA – Today, an alliance of more than 30 accountability organizations called on the Public Accounts Committee to pass a resolution recommending, and the government to follow through on, the cancellation of the reported $500,000-plus secret severance pay package offered by Harper’s Government to former disgraced Integrity Commissioner Christiane Ouimet.

Severance is given to people who are fired (at an average rate in Canada of one to two weeks’pay for each year served)– severance pay offs are not usually offered to people who retire or resign like Ms. Ouimet did, especially when clear evidence exists of failing to do their job properly

(Ms. Ouimet was found by the Auditor General in a November report to have not done her job properly in many ways).

http://rabble.ca/news/2011/03/citizens-groups-integrity-commissioners-severance-pay-package-must-be-cancelled

.
.
http://www.unseatHarper.ca

#18 zloy on 03.07.11 at 11:50 pm

100K/30yrs? and it’s too little? ha-ha, you must be smoking some good stuff in your bunker :)

#19 Carlyle on 03.07.11 at 11:51 pm

Carlyle from milton here.

My parents are classic examples of what Garth is talking about.

Father is 68 mother is 63. Both still working full time with no plans to retire … Ever. No savings. No pension. Maybe 100k equity in their home (and that only because of the last explosion of prices between 08 and 11), with a 275 – 300 k mortgage. Only other assets include a trailer up on georgian bay worth maybe 10k.

I’ve told my mom they need to sell and either buy way up north a 100k condo, or rent for the rest of their life.

They won’t hear it though. How will we get to work? We can’t commute … If prices go down everyones home will go down in value too. Our house can’t lose it’s value, we are by a GO STATION! With gas the price it is that is sure to in crease the value of our home …

Oh man it goes on and on. I don’t know what to tell them anymore. Warned them months ago when i sold but they aren’t listening.

#20 kc on 03.07.11 at 11:56 pm

I am sure that the poor shmuck in the photo would love a free pass throu the time machine…. Priceless picture Garth… ( i even googled that to make sure)

#21 Patz on 03.08.11 at 12:05 am

Sha na na, it gave me a nostalgia buzz for my old buddy Scott Simon, Sha na na’s keyboard player. He was my neighbor and friend for several years when I lived in LA.

They say porn is addictive and it must be! Glow–Ball lead their evening news tonight with 9 minutes of drooling real estate coverage, in news, where the typical item is 90 seconds, that’s an eternity.

The lead story is that Richmond has joined the SFH millionaires club and realtor Patsy Hui says with smug pride that, yes indeed, the buyers are all from mainland China. I have no problem with lots of Chinese in Canada, heck I even went for dim sum yesterday, but how can people coming from the mainland and buying up all the available property be thought of as a good thing. OTOH I don’t trust the source so, who really knows.

The giveaway that this isn’t journalism (as if you needed one) is the constant cheerleading. Because if RE really only ever went up, wouldn’t a journalist question the effects this would–and does–have on the majority of families. Oh you wacky optimist you!

All together now. This won’t end well!

#22 MP on 03.08.11 at 12:05 am

@ #10 student_loan:

Masters level at 26? What were you doing for 3-4 years in your early twenties? We all make choices. 100k by 30 (give or take a couple years) can be done even while obtaining a graduate degree and still having some good times.

#23 T.O. Bubble Boy on 03.08.11 at 12:06 am

Can’t we pack up all the Boomers and send them off to find cheap retirement condos in Florida/Arizona/Vegas?

I think there might be a few left for sale in those areas.

#24 LJ on 03.08.11 at 12:08 am

With the education requirements necessary today, and the current work environment, there is no way that the “average” 30 year old could have saved $100,000 unless their education was sponsored by mom and dad taking out second mortgages (along with a host of other factors).

A lot of them are also unemployed because grandpa stole their job: “a rising youth jobless rate … jumped to 14.4 per cent in January from 13.8 per cent the previous month.”

http://www.theglobeandmail.com/report-on-business/economy/weekly-employment-hours-lag-recovery/article1931676/

#25 Mr. Lee on 03.08.11 at 12:09 am

Five to Ten Years is a generous time line Mr. Turner. I agree with #2 JO.

After the dot com bust the heard got suckered into believing that their dwelling was the last bastion of security. The retirement nest egg that would never collapse like the rest of the market. Many of them acted and paid an overvalued amount on their homes just like the did with Nortel and Bre X.

As we enter the era of triple digit oil and double digit oil, the five to ten year time frame you give could very easily be reduce to one to five years.

I just spoke to a new home sale manager and she is shitting herself because of interest rate increases and March 18. She has been in the business for 25 years and has told me it may be time to get our of the bizz on a high note. Come Jan 2012, a house will be relegated back to what it supposed to be……a home and not an investment stream.

#26 Min in Mission on 03.08.11 at 12:28 am

I am still working, not anywhere near enough “stashed away” plus still renting the house from the bank. Though that is nearly done.

Was at my parent’s place on the weekend. Yeah, they are both still alive. Dad at 91 and Mom at 85. Dad has been retired for more years than he worked. Both from the “old school”. Don’t borrow to get stuff. Save. Never did try to “keep up with the Jones”. Awesome people.

They still look after themselves. Live off of their income, don’t touch the principal. All the simple ideas.

Somewhere along the line, the majority of the people seem to have “lost it”

#27 [email protected] on 03.08.11 at 12:31 am

This monkey is about to soon regret his friendly neighbor…

http://www.jokertattoo.net/joker_tattoo_blog/images/articles/regret/tattoo-regret.jpg

When will the crash happen I am predicting spring 2012.

#28 Elmer on 03.08.11 at 12:33 am

I’m glad you brought up this topic, Garth. I frequently walk around my neighborhood where I rent (Bayview Village) and I see nothing but old geezers around here. I think at least 80% of the homes here are owned by retirees. It’s baffling, why would someone who is retired choose to live in an area where the average house costs 800k when they could buy a nicer house for a quarter of that in a smaller town, or better yet, Florida? All I want is a detached house of my own within reasonable commuting distance of my office, it doesn’t have to be big (1200 sq/ft is fine), it doesn’t need granite or hardwood or a finished basement, as long as it has a garage where I can work on my hobby of restoring an old car. Is that an unreasonable wish for a guy in his late 20s? Unfortunately I don’t have 800k (and even if I did I wouldn’t pay it) so I’m forced to rent an apartment where I have to smell other peoples’ garlicky cooking wafting into my living room every night and listen to someone slamming the garbage chute outside my door every ten minutes. Did these old dinosaurs also rent an apartment when they were my age? No, because back then it was possible to buy an average house on an average salary because houses cost 2 to 3 times average income. Any educated individual could expect to buy his own house immediately upon graduation back then. These people bought their houses for 35k 35 years ago and now they’re worth 800k. Why should they get an enormous unearned return on their houses for doing nothing but living in them and maybe some maintenance? Well I refuse to let them get it at my expense so I’ll continue to rent until house prices correct. I’m really confused by why someone who is retired would choose to live in Toronto? Why? You get the same pension regardless of where in the country you live, so why do you choose to stay in Toronto when you don’t need to work? Do you not know there are cities with less traffic, less crime, and everything from food to car insurance is cheaper? I HAVE to live in Toronto because I am unable to find a job in my field in any other city in Canada (except maybe Vancouver but it’s even worse). My mistake for choosing this career path, I didn’t know it would be like this, and now I’ve invested too much time and effort into it to switch careers. If I could get a job in a smaller town, I’d move without hesitation. The second I turn 55, I’m outta here (at my current rate of saving I should have 1.5 million bucks at 53 years of age assuming a 6% return). I think it’s time for the city to encourage these old farts to leave, perhaps by greatly increasing property taxes for those aged 65 or over. It certainly wouldn’t be unfair (consider that over 90% of healthcare costs are because of the 65+ crowd) and it would greatly benefit the city’s economy by making it much more affordable for young people who actually contribute something to the economy. As all these old geriatrics who retired without sufficient money to sustain their lifestyles run out of money and continue to cling to their houses, they will look to us working young people to pay for them. Since they make up the largest voting bloc, I can easily see the government conceding to their wishes and greatly increasing pensions, and of course increasing taxes on those of us with jobs. The future of Canada does not look bright for those in my age group.

#29 mefirst on 03.08.11 at 12:35 am

shit….i am not first!

#30 Abitibidoug on 03.08.11 at 12:35 am

Anyone turning age 30 should have a net worth of at least 100 grand? In that case Chad (from the March 4 posting of It’s Different Here) with 200 grand at age 28 is the only one who has gotten it right. Good work, Chad!

#31 Tim on 03.08.11 at 12:36 am

Fear not, with our control freak leader who said:
“”In terms of the unemployed, of which we have over a million-and-a-half, don’t feel particularly bad for many of these people. They don’t feel bad about it themselves, as long as they’re receiving generous social assistance”

Spending our tax dollars on crass attack ads instead of doing something constructive. Let’s hope that twit NDP leader actually sides with the Liberals to prevent this right wing nutbar from getting another term
http://unseatharper.ca/why-unseat.php

#32 WesternGrit on 03.08.11 at 12:38 am

Hey Shawn (Investor’s Friend): I think most Japanese production ended up in Taiwan, China, Malaysia, Singapore, Indonesia, and even India. They have a boomer crisis/retiree crisis.

For us a big part of the solution is more real immigration (not temp workers), who tend to have large young families. Can’t force Canadians to have more kids. We need to tip the tide back to a more youthful country – and we’re already behind the proverbial 8-ball because people don’t know the basics of economics – and don’t like immigration.

Of course, there has to be a real re-visiting how corps and gov’ts do things – but that will take a Wisconsin-like revolution. Don’t hold your breath.

#33 Tim on 03.08.11 at 12:39 am

Vancouver City Council Hearings on Massive Casino Development tonight

http://www.vancouverobserver.com/Casino/2011/03/07/battle-long-brewing-comes-head-tonight-city-hall

Just what this soul-less town needs, another mega casino. Christ, if it wasn’t for the ocean and mountains…

#34 Wowzas on 03.08.11 at 12:42 am

I remember hearing similar comments about real estate and money. “If you don’t have a house by age 35, you’ll never pay it off”… If you don’t make your first million by age 30, you’ll never be rich”… Funny how the focus has now shifted to how much you should have in savings, Garth.

Only two thoughts here: When the USA capsizes under its massive debts, and Canada’s housing markets go belly-up, will both countries be considered by the rest of the world to be too big to fail?

And will it help that you have $100,000 in savings if North America becomes the next Soviet Union?

#35 SafetyBear on 03.08.11 at 12:43 am

Hell I don’t even have more than $70K in all sources and I’m 40. I guess the world will just have to meet all us losers halfway.

#36 NLN on 03.08.11 at 12:54 am

Back in 2005 I had read many articles on where you should be financially in life at different years. The consensus was that by the time you were 30 you should have $150K. Of course those estimates were in US dollars… I hit the target at the time.

I remember friends of mine buying new cars in University with their loan money whereas I bought a used commuter car (back seat functioned just fine :) ). Well years later their cars are pretty bagged but I’m doing well. It’s always embarrassing to drive a beater but what’s more embarrassing: driving a beater in University or driving a beater then you’re 30 years old.

#37 Shane on 03.08.11 at 12:55 am

I’m in my early 30’s now… I saved $100,000 by the age of 28, wasn’t too difficult to tell you the truth, and I never had to move to Fort Mac either.

Got my engineering degree at 22 but continuously worked part time since I was 15… Parents were factory workers so didn’t grow up poor but certainly didn’t grow up with a silver spoon in my mouth or a dad who could open doors for me… Just knew I didn’t want to do any manual labour when I grew up… I did co-op placements at $18/hr right thru university, earned a few scholarships and worked weekends to graduate debt free. Couldn’t justify doing a masters/MBA using a risk/reward or rate of return calculation. Still can’t.

Never did a gap year while in school, to “discover myself” but I can afford to travel now. Never took a vacation in my life that wasn’t heavily discounted or didn’t involve a backpack and hostels… Still haven’t. I drive a 9 year old car that is immaculate and is a domestic so its much cheaper to service (which I do myself). I always rented thru my 20’s with roommates and invested the difference… Rent/Buy analysis never made sense if you didn’t expect to stay in one place for 7 years and what kind of person in their 20’s stays in one place for 7 years? People in their 20s shouldn’t buy, ever! (Unless they live in Windsor I suppose) Still went out on Fri/Sat but stayed away from the drugs and “marriage minded” girls. I will admit, moving to Alberta helped as well…

Any newly minted engineer who doesn’t have something keeping him/her home should move to Alberta. Yes, the money really is better here for engineers. You’re just wasting your time otherwise.

With some planning, doing a little reading on finance (like here), and most importantly discipline, having $100k by the age of 30 should be cake… Oh, and when you get married, make sure your partner is of similar mind. If so, it becomes even easier to save up and its more fun with a partner to invest with.

Oh, and most importantly, use birth control! Children aren’t just money pits, they also derail careers and kill academic drive. Very important if you want $100k by the age of 30… Remember, there is no such thing as accidents, only negligence.

#38 Dave in Victoria on 03.08.11 at 12:55 am

#10 student_loan on 03.07.11 at 11:21 pm

Agreed. The colour of his depends are shining through.

#39 Peter Schiff Fan on 03.08.11 at 12:58 am

With the education requirements necessary today, and the current work environment, there is no way that the “average” 30 year old could have saved $100,000 unless their education was sponsored by mom and dad taking out second mortgages (along with a host of other factors).

A lot of them are also unemployed because grandpa stole their job: “a rising youth jobless rate … jumped to 14.4 per cent in January from 13.8 per cent the previous month.”

I call BS and excuses on this one. I’m 31 married with a baby on the way and have 260K in financial assets. Paid my “own” way through university in engineering, always had my own car (money pit) and came out of school debt free. I worked my ass off for all of it and partied pretty hard. My luck was having frugal parents to teach me the value of a dollar.

Unfortunately I have not invested properly and should have more in the bank. I feel I’m still behind the pack! Last week I liquefied my mutuals and headed into ETF’s & stocks with my waterhouse accounts to take back some control. I worry of simply protecting my “measly” wealth now from stock market volatility and inflation and may invest in some PM’s for long term.

Fortunately my wife is on board with not buying a house… for now. But man o man friends and family think we’re idiots…my gut tells me we’re playing it right.

Thanks for the Blog Garth…part of my daily routine! :)

#40 bby88 on 03.08.11 at 1:02 am

Richmond Realtor under investigation for alleged scam

This was on CBC this evening
Wonder how many more scams will be revealed.

http://www.cbc.ca/news/canada/british-columbia/story/2011/03/07/bc-richmond-real-estate-scam.html

#41 Alpha Bravo on 03.08.11 at 1:04 am

Concerning monthly home price declines, fearing analysts, falling housing starts,”soft landings” and positive RE media spins. Please compare the following two news articles.

U.S. in January of 2006:

http://www.cbsnews.com/stories/2006/01/25/business/main1237389.shtml?tag=mncol;lst;9

Canada in March of 2011

http://ca.news.yahoo.com/value-building-permits-issued-canada-falls-unexpectedly-january-20110307-060940-487.html

#42 nonplused on 03.08.11 at 1:12 am

Smashing post Garth, agree with all of it except, as always, the rising taxes part. There is nothing left out here to tax! Maybe a few billion could be skimmed off the rich before they head for Argentina, but that’s about it.

After a certain point rising taxes lead to reductions in economic activity, which yields lower tax receipts overall. Every dollar taken as tax is a dollar that someone else won’t earn somewhere in the economic system as it reduces spending power. So eventually you end up with lower employment.

There is probably a sweet spot that optimises both economic activity and tax rates, but we are already well above it, or they would have raised taxes instead of running deficits.

But I suppose one should never preclude any preposterous idea from making sense to the financially illiterate boomers. Maybe they will raise taxes to 100% (still not enough) and then put the whole country on food stamps. “From each according to his ability, to each according to his need.” And need will be determined by a bureaucrat, of course. Maybe ability too, with the food stamps cut off if you don’t show up for work. I think we know how that economic system resolves itself.

On the other hand, with unionized government employees now earning substantially more than the average worker or their direct counterparts in the real economy, maybe it is time to raise marginal rates. That would be one way to claw back those preposterous pensions.

#43 Mister Obvious on 03.08.11 at 1:13 am

#13 (Throwstone)

“The Gen-Xers of Canada have been living off the table scraps of the boomers since their birth. Time to change places. What was too good for too long…will soon be… just too bad.”

This statement suggests Gen-Xers are equipped with the necessary drive and ambition to create their own generational pool of wealth. There has been little evidence of that so far. Time is running out for them as well. Sponges are useless in the desert.

#44 Don on 03.08.11 at 1:17 am

I’m with you THROWSTONE

Time to move aside rogue boomers. Time for you to see how good change is attempted. The other generations are waiting. Gen Y: Get your heads into the game and watch the news for F#$% sake.

Proud member of the table scrap generation.

#45 NLN on 03.08.11 at 1:24 am

With the education requirements necessary today, and the current work environment, there is no way that the “average” 30 year old could have saved $100,000 unless their education was sponsored by mom and dad taking out second mortgages (along with a host of other factors).

Saved ~ $170K by 30. No insurance settlements, no money from parents, scholarship was only $1800 in first year. The only break I ever caught was some side jobs that netted some easy cash, but that accounts for maybe 15%. I lived cheap but I still did everything… vacations in Mexico, Hawaii, Korea, California, Vegas about 6 times. An average person should be able to hit $100K by 30 if they try. Hell, I spent 6 years in University (switched faculties) and got screwed by 2 different financial advisers so even my case wasn’t optimal.

Shout out to Mackenzie Financial for being crooks: 7 year lock in period with a 25% early withdraw penalty…. fine but did you have to perform under the index every *&%^ing year.

#46 Elmer on 03.08.11 at 1:26 am

The boomers really screwed up this country by investing in real estate instead of in telecoms, factories, mines, etc. That’s why Canada has such run down infrastructure, why Canadians today pay the most in the developed world for internet and cell phone plans, that’s why we have some of the lowest salaries in the developed world for engineers and software developers. Thank you so much, boomers. What a useless generation.

#47 Jon B on 03.08.11 at 1:29 am

I see the cashless boomer train wreck along with the fear no debt generations X and Y being the two main reasons for a severe decline in the population of the group of people we currently recognize as the middle class. Get ready for US style socio-economic demographics sans middle class. Perhaps I could rephrase this prediction as that of impending social class polarization.

#48 Nostradamus Le Mad Vlad on 03.08.11 at 1:33 am


“Radical Islam or Sarah Palin.” — Now there’s a partnership that could work (in another solar system).

“Well, I know. So do you.” — That’s why all kinds of taxes (including the GST) will be heading north shortly.

I know you have done a couple of columns on TFSAs, but while they are still here in their present form, do a few more for the uninitiated — get what money they have working for them, don’t expect govts. to bail us out.
*
#21 Patz — “. . . Glow–Ball . . .”

Magnifique Moniker! Similar to Valium Viagra! The sun shines right outta their ass!

#25 Mr. Lee — Jo writes excellent posts, and I agree.

“. . . got suckered into believing that their dwelling was the last bastion of security.”

The same trap that many have fallen into. A home is shelter, no more, no less. Four walls, a roof, a yard but it is not security or an investment.

One can be happy renting in a one bdrm. condo, without the stress of not knowing whether one will have a job next month with mtge. payments to make.

But that’s what sheeple were designed for — to listen and follow their leaders, no matter if those leaders are right or wrong.
*
3:49 clip The gentleman is from Newfoundland. GO NEWFIE! New addition to solar heating panels, and this is his website. Almost free energy. 4:41 clip This might help — solar death ray has the power of five thousand suns.

US$6K Gold, Surge One and Surge Two.

China Theoretically, Dad (Nostradamus Jr. and my patient) may be right, plus China Two China is buying out plenty of NAmerica, so is the EU next?

Free Trade is not the same as Fair Trade, and Trimming the Rothschild fat.

US – NATO Well, whaddya know? They’re back to their old trix again, plus 1:18 clip. Drooling (TPTB and war hawks).

The Monsanto Zone along with a GM Volcano!

H1N1 Vaccine Link confirmed with narcolepsy.

Spring Fever Election BS, and ‘Quakes, Volcanoes and assorted gibberish.

#49 nonplused on 03.08.11 at 1:39 am

I read a good quote today, that I unfortunately will have to paraphrase but the point will be correct:

“Everyone wishes to live off of the state. But they forget that the state also wishes to live off of them.”
– A dead economist

It all goes back to the free lunch thing:

“There is no such thing as a free lunch.”
– A really wise dude, probably also dead

Tough choices are coming. Really tough choices. But when some of our best minds are stuck in the mindset that all we have to do is raise taxes and everyone get the right preferred shares in their TSFA, you know we aren’t going to be facing up to those choices until it’s too late in the game to stage a come-back. Say “Goodbye, old world order! We will, sincerely, miss you.”

PS I have a new insight (not entirely mine) that finds the common ground between the protests in Libya and Wisconsin. In Libya the protestors are now trying to violently throw off the shackles of government insiders stealing all the wealth and opportunity. In Wisconsin the insiders (unions) are trying to put down a non-violent protest by the voters. When you think government union, think “those loyal to Quadaffi”.

I am not opposed to all unions. But the Firefighter’s Union? 90% of the country (geographically) is protected by volunteers. Give me a break. The police? They are always a day late and a dollar short unless they are handing law abiding citizens a fine. And now with their Tazers and warrantless searches they are becoming a real nuisance.

#50 Cato on 03.08.11 at 1:40 am

Mid 30’s and not under any illusion the welfare state will be solvent upon retirement. Pension plans based on intergenerational transfers are no different then ponzi schemes,at some point they always fail. Most boomers in my social circle seem blissfully ignorant, I assume thats fairly representative. I suppose gen-x will be better off, they might wake up after seeing gov. fail their parents and do something to save themselves. Too bad gen-x & y are leveraged to the hilt, their solution to the boomer crisis will probably involve “cosy” green housing (think shipping container) and all the cat food you can eat.

#51 Mackie on 03.08.11 at 1:47 am

30 year olds with $100,000. Get real Garth. Most 30-year-olds today are paying off student loans, honeymoons, their first new car, their weddings… Many are barely making much more than minimum wage and probably half have kids in diapers. If they have $100,000 they are probably still living at home with mom and dad counting their pennies… And they probably will be for the rest of their lives.

#52 Peter Pan on 03.08.11 at 1:48 am

“logic dictates the coming five or ten years will produce a gathering tidal wave of houses hitting the market from this anxious group alone.”
——————————————
This may happen, but I think it will be matched with another tidal wave of immigration. If the federal government has proven anything, it’s a willingness to prop up the housing market at any cost… I don’t think the disappearance of the “Harper Government” will change this mindset…

What’s to prevent the government of 2020 from increasing yearly immigration from 250K to 900K?

#53 Eric on 03.08.11 at 1:57 am

I wonder if Chad has found a chick yet.

#54 Don on 03.08.11 at 1:58 am

“Every month more evidence piles up, suggesting that online comment threads and forums are being hijacked by people who aren’t what they seem.”

http://www.guardian.co.uk/environment/georgemonbiot/2011/feb/23/need-to-protect-internet-from-astroturfing

Possible alias: DA, BestPlaceonEarth, etc. Same dribble, same links, same baseless facts.

Who employed? Who has a vested interest in a bubble not blowing at the moment?

#55 Into the Sunset on 03.08.11 at 2:02 am

My wife and I are pre-boomers by a year.

I read the comments about the ” Boomers” and there is certainly a basis for the criticism regarding non-prepardness for their retirements.

The adjectives used against this generation would not be condoned if you were referring to gays as fags etc., or coloured individuals as N***ers.

The 70% of the 9 million boomers failed in another area …………..they did not take more action in their earlier years regarding birth control; resulting in a generation rift of basic manners and the most prolific whiners who have not earned their spurs experiencing tough times but feel they can hammer on this boomer generation with impudence.
They must also grow up!

Garth Turner uses the insulting descriptive language for his own reasons.
He may have the right to do so, being a boomer himself and self inflicts as an Old Geezer.

It doesn’t raise his respect level from a great number of people that read this blog and this is inconsequential to him.
It follow’s tit-for-tat as readers as myself fully understand the value of shock language sticks much better than if the facts are wrapped in dry presentation mode.
We just look past his communication style at the value of what he states and let the chaffe fall where it may.

#56 Timing is Everything on 03.08.11 at 2:02 am

Ouch!…That’s gonna leave a mark…

http://www.timescolonist.com/homeowner+stuck+with+archeology+bill/4399422/story.html

#57 March of the Pigs on 03.08.11 at 2:39 am

couldn’t find much about securitized mortgages in Canada besides this link saying they’ve gone up 15% since 06, this was for 09. Give Inside Job a watch doesn’t really uncover much that isn’t already know but puts all the information together in a very compelling documentary.

http://www.canadianmortgagetrends.com/canadian_mortgage_trends/2009/07/mortgage-securitization-up-15-since-2006.html

#58 Peak Oil? on 03.08.11 at 2:41 am

http://www.nextenergynews.com/news1/next-energy-news2.13s.html

#59 Pat on 03.08.11 at 2:50 am

“Most boomers (six in ten) don’t have a work pension of any kind. Half have no retirement savings.”

What’s the overlap between these two sets?

e.g. – nearly half have pensions the other half have savings?

#60 early mid life crisis on 03.08.11 at 2:54 am

100k by 30?! Sounds great but few in that age group have the focus and discipline to do it. Hats off to those that do. Being a regular reader now, i’m not sure whether to congratulate or hit myself for where i’m at at this stage of the game. Pushing 40, sold high, just figuring out what to do with my life, realizing that the traditional educational route will cost 60k easy. At least i can pay cash for it, and hopefully have enough left for a house when the bottom hits. Kudos to the masters @ 26; all i did when i was young was party. Oh well, an education is still an education even if it’s of the other variety.

#61 Jane on 03.08.11 at 2:55 am

Okay, I’ll bite…how do you suggest, after getting a post secondary education, does one save and make that much? Would be a pretty boring decade. No trips, no travel, low budget entertainment; what would the twenty somethings do? Work save and invest? How boring.

It is not just the boomers. My own parent, left without a pension, insists on keeping a rental property even though by their own admission is making less than 1% returns currently. And even with the knowledge that rates are going up, boomers will need to sell, etc, property is king and both the home and rental property will be kept until they ” need the money”. For sharing the views on this blog with my family, I am truly the black sheep. I sold my place and am living with cash and no debt. Black is better than red.

#62 Pat on 03.08.11 at 3:01 am

“Or, selling, renting and sticking the proceeds into income-producing assets. Or… what?”

Or working a few extra years. Simple. And natural given the current life expectancy.

#63 ted on 03.08.11 at 3:05 am

i agree with number 10 about the 30 comment. People like him are not losers but victims. In fact some losers just because of nepotism may have the 100k. Look at 30 I had nothing. But I guarantee that the poster in comment 10 will quickly make up for it in his 30’s. In four years i saved over 200k. I am sure once that guy gets past his student loans he can do the same

#64 The Original Dave on 03.08.11 at 3:05 am

#46 The Original Dave: “I assume those businesses are doing well. Lately, I’ve noticed a lot less real estate ads in the paper. Tons of car dealerships and vacation ads, but the real estate ads are much less than before.”
———-
Actually Dave, I beleive the opposite to be true. I work in automotive and can tell you that the ads increase as the business drops off. January/February especially. I think a lot of people are also finding travel difficult to afford these day, hence the ton of travel ads and vacation deals.

————————————————-

wait a minute, you’re saying that companies increase advertising when things are tough? I always thought that the marketing dollars were the first to go.

#65 The Original Dave on 03.08.11 at 3:06 am

G Man, I read on BNN today that Scotia Capital (if I remember correctly) said interest rates would be increasing in Q3. Where the efff did they get that info.? I hope they’re full of sh*t.

#66 debtified on 03.08.11 at 3:28 am

I would like to present myself as exhibit A for Garth’s [email protected] claim. Please do not misconstrue this as bragging. I just want to show that it is possible.

My family immigrated to this country when I was 19; with negative net worth (had to borrow from my sister to pay for my flight ticket). I am just a regular Joe who’s always been somebody’s employee and have had to pay for my own schooling.

Just shortly after becoming a Canadian citizen I bought a townhouse in Mississauga to house my parents and some siblings. Our family friend who is a real estate agent arranged for me to get a LOC for downpayment (I had no money). I got in debt and learned my lessons then. I sold the house and paid off all debt as soon as I can. That was the last house I owned.

I worked my ass off. I did get a great paying job that was offered to me while working as a co-op. I worked too much that I didn’t have time to attend my classes, at night, at York U (so, yes, I am a drop out). By the time I was 30, I was debt-free and had over $150K of liquid assets.

Then I went on a spending spree – I never had so much money in my disposal that I didn’t know what to do with it. Before I knew it I had no money left and I owed over $60K in LOC and CCs. I learned my lessons the second time.

Three years after reversing the debt spiral I have zero debt with over $100K of liquid assets (plus a 5.4 hectares of beachfront lot in a small island in the country where I was born – purchased during the spending spree). No, I didn’t win the lottery. I worked my ass off and, most importantly, followed the opportunities as they presented themselves. I was free to move anywhere I liked (or needed) and was not held back by anything including a house I couldn’t afford and couldn’t sell (and all the crap that were in it).

This is why I could relate to Chad’s story – [email protected] It is possible. I didn’t have his problems, though. I have a great life. I avoided more girls than I pursued. I’ve been to 26 countries (backpacking mostly and worked in some). I almost died twice – once on my 10th skydive and another when I ran out of air while scuba diving.

I don’t own a house because I feel that it is a burden specially in today’s market. It also encourages a person to collect all sorts of crap; including expensive furnitures, appliances and electronics. All these crap costs a lot, costs that are often left unchecked – especially when they are purchased in credit because the interests add up to the costs overtime. Now people want ever bigger houses so they can fit yet more crap in it – again, likely on borrowed money. Once, all my clothes fit in a couple of luggages (I have more shoes now but comes Spring I will get rid of as much crap as I can). My one TV is also my computer monitor.

My car is 12 years old. Most of my long-time friends have had at least three cars in the same time period and they all wonder how I can afford to travel so much. What they fail to realize is that they spent more on their cars than all of my travels.

Folks, [email protected] is possible. I hate to sound like I am bragging to make this point. The silent killer is debt because of how easy it is to accumulate and how hard it is to service. I wouldn’t be surprised if someone has paid up over $100K worth of interests on debt in a ten-year period (around the same amount of time one could be earning an income, save and invest before one hits 30).

#67 Whistler Dude on 03.08.11 at 3:36 am

http://www.latimes.com/business/la-fi-timeshares-20110307,0,6873139.story?source=patrick.net#content

They say the USA is at least 2 years ahead of this great Dominion (in financial matters- they’re 2 years behind us in social matters). The timeshare ponzi is crumbling down south, and is dead in the water up north. It’s obviously over. Timeshares rely on new development’s, and there’s little need for new one’s when there’s 2 years of built up unsold inventory.
As for G.T.’s sermon on the boomers- I’d bet that the majority of RE inWhistler is owned by boomers (75% are Vancouver owners- basically speculators at their point in life- and their knees ache). Taxes are going up- tough on the house rich, cash poor crowd. There’s even a political movement starting here- they’re called “The Citizens Coalition” rumoured to be local real estate agents trying to remove the cap on hotel rooms (the campaign is to have a mail in vote to push for lower taxes, for the afore mentioned baby boomers/house rich cash poor group .
Oh yeah, it was also decide to pull the Olympic village market housing from the market, to wait for favorate market conditions= FAIL.

#68 March of the Pigs on 03.08.11 at 3:51 am

http://www.cnbc.com/id/41946553

little article about MERS in the states do we have something like this set up in Canada?

#69 New Era on 03.08.11 at 4:36 am

Looks like Greece is in big trouble.

Wonder how the EU will get itself out of this.

Caused by low interest for a prolong duration of time.

OH yeah just like Canada is doing

#70 Calgary Hat on 03.08.11 at 5:14 am

Bring on March 18th and the interest rate increases.

Let’s ring the Bell of the School of Hard Knocks and let the learning begin.

By the end of it all, years later, we will be a little poorer in money but a lot richer in knowledge and wisdom.

A fine trade if you ask me.

#71 Brian1 on 03.08.11 at 5:40 am

To regret nothing is to be inhuman. I am not afraid of what is coming. Those who bought houses will carry the majority of the burden into the future, as well as those who get caught in the stock market. There is only one country which has gone before us and will show us the way and that country is_ _ _ _ _ Japan.
In Japan their stock market and real estate have never recovered yet they are doing fine, thank you. The ones who are trapped here did it to themselves because they allowed fear of disgrace through poverty to get the best of them. You might need $300,000 in the end but not right away. The trapped ones will never have real health because of the stress that will come from their burden. Those who have chased the material things in life were once strong but when they realise that if they had to start over again will feel panic and there will be many among us who will feed on that.

#72 george on 03.08.11 at 6:22 am

Some idiot boomer the other day told me I need to work to pay for their pensions. So I get locked out of the housing market, houses they had for like ten bucks, and that’s my incentive? Thanks.

I’d like to get some revenge on boomers but I just can’t see this downsizing happening. Most old people just stay in their house until they drop dead in my experience. Apartments suck. Sharing walls, getting arseholes above you who intentionally make a racket on the floor, stupid ripoff strata fees that you just know aren’t being spent properly and someone is skimming it.

In Australia I think a couple gets about $400-$500 a fortnight. Looks comfy enough to me. Plus they can ride around on all the public transport as far as they want to go for $1 a day.

Sure wish they’d grow up. Can’t see that happening either. You really need to be able to use the internet and know where to go to be properly englightened these days.

#73 betamax on 03.08.11 at 6:45 am

#2 JO: “What you have had in the last 8-10 years globally is a massive effort to use various strategies such as negative real rates (holding interest rates below the rate of inflation),taxpayer gaurantees and subsidies to help inflate the most wicked debt bubble”.

Excellent point. Despite every podunk town’s “It’s different here” rationalization, house prices went up because of a global credit bubble that has been supported by governments eager to stay in power and boost short-term revenues while running up long-term debt. They know that one day the bill will come due, but not during their administration.

No conspiracy theories needed; the only thing working in concert here is blind human greed.

#74 Rick in Japan on 03.08.11 at 6:47 am

#5 InvestorsFriend (Shawn Allen)

As someone who is originally from Ontario and lived in Japan since 1995, I thought I’d make a quick comment to answer your question.

Young people that I know are actually doing fairly well. I keep hearing about the lost decades and how the world will be doomed as it turns into Japan.

Houses are super cheap and so is everything else compared to Canada. So, while people are making less, many are doing well. There are people with problems and issues, but it seems to have far less crime than most industrialized countries that I have been to. Also, the tenants are much better to me than Canadians have been or are (I own rental properties in Ontario as well as Japan-lots of problems in Ontario vs few here).

I have presented a paper on limits to growth and how Japan might be considered a leader in the future. . . except for government debt which is at scary levels.

#75 Brave Sir Robin on 03.08.11 at 6:57 am

Hey, aren’t all these geezers driving the stock market too?

#76 gmcccc on 03.08.11 at 7:04 am

Garth you’re the man, The housing porn is very strong i have tried to follow your advice, and have done well, sold my house 2.5 years ago , invested the funds, and rented, but I just bought a house last week because the spouse still doesn’t believe what is coming, so I have the money but managed to buy a modest house in the Sound area for $245,000 , I did the 35 yr 5% down, wasn’t sure about the RRSP type mortgage you talked about, the reason I did this was we just got booted out of the house we have been renting for the last two years, and had to find something within the 60 days, unfortunately there was no places to rent and like I said got tired of trying to justify my action, I was tired of hearing that “I do not want to wait until I am 90 for a house “, so I got a nice place and hope for some peace at home. We will see soon enough, but I do have 250000 invested and hope to leave it alone for the next five years, we will tally, the gains of the investment verses the lose of the house, it ‘s all to the good. My point is, even living with someone that is following what is going on, and reading all kinds of articles and data to back it up, I could not even get my spouse to see what is happening, let alone get her to read some good material on what has just happened to the USA, you know it’s different here. I have been following the markets and I am very scared of a society that rips off their own and allows the the privileged to rape and destroy good people, such as the Wall street boys did, and I see that in our own government, which is not called the Canadian government, it is CALLED THE HARPER GOVERNMENT,
same same.
I guess we will see what he met when he said “you will not recognize this country after I am done with it”. We are a great country that use to take care of our own, now it seems we are headed the American way, we are set up to destroy it, but my question is, is it planned this way, you know we have way too many riches for such a small population to have and control and maybe the elitist just want to steal away from us or is the Harper government just plain stupid.

#77 betamax on 03.08.11 at 7:24 am

#5 InvestorsFriend (Shawn Allen): “The upside of tons of Geezers should be that the job market gets tighter. (less unemployment and higher pay)”

Somewhat, but a massive demographic of deadbeat geezers won’t be engaging in conspicuous consumption. Every retiring boomer is one less spendthrift customer, which doesn’t bode well for a consumer-driven economy.

Gen X, Y and Z’ers expecting to cash in on the boomer exodus from the job market may discover that the market is contracting at the very moment they expected it to blow wide open. Life just isn’t fair.

#78 betamax on 03.08.11 at 7:36 am

To clarify: some job markets will definitely increase with retiring boomers: health care, adult diapers, massage therapists. (Real ones, not the rub-and-tug variety. OK, maybe them too.) But practically everything else is going to take a sh*t-kicking.

#79 Mr. B on 03.08.11 at 7:42 am

100K at 30 shouldn’t be unattainable today. Technically I had 100k + at 30 but that was in 1989. In 1982 I bought a house in Brampton for 52K and sold in 1989 for 160k and had my mortgage down to under 20k so for that brief time between houses I had well over 100K at age 30. Speaking of the time I was lucky enough to assume a montage at 11% while interest rates climbed to 19%. The whole thing was luck but how many buy a house at 22. This graph did not continue in the same direction through the 90’s.
Today probably unlikely for a 30 year old to have 100K from real estate because you would of already had the 100K in your early 20’s to keep the mortgage affordable. If you started investing in your early 20’s in stocks, bonds, and all the liquid stuff this blog is about, then why not 100K at 30. Wish I did it that way.

#80 jimmy on 03.08.11 at 7:42 am

Hi, you may be right about concerning buying a home, but when your rent you pay $ so if your mortgage = renting cost would it be better in the long term to buy ? Also what will happen when oil goes to $ 150-$200 Garth. Thanks JIm.

#81 Brian1 on 03.08.11 at 8:27 am

For anyone interested in learning investing start with You Tube. Infinite videos. Wealth Track videos look like a good start. Intelligent Investor videos are available. Marty Whitman is there who says that Grahamm and Dodd ran their course when full disclosure came on the scene. Harry Dent, in his free Oct newsletter, says the stock market is rigged, that it has been hijacked by the big rollers who manipulate it much as was done in the late 1920’s, but with computers. Warren Buffett confirms this in his forward to the sixth edition of Graham and Dodd’s Security Analysis. So I have no choice but to follow Garth’s strategy to the best of my ability. It is the wisest way to go. Check out You Tube and you will see.

#82 Shane on 03.08.11 at 8:33 am

garth, Are you going to comment on scotia not seeing any interest rate hikes till Oct?

Shane

What’s to comment? It’s an opinion. But whether rates jump in the summer or the autumn, it hardly matters. We’re going to the same destination. — Garth

#83 jane54 on 03.08.11 at 8:49 am

For all these boomers that say they don’t need a pension as they will work forever – at what job?

I seem to be hearing every week now about another 50 plus friend who has been laid off. Makes sense as a 25 year old will do the same job for half the money so why hang onto the boomer.

Things happen in life, not all of them good.

#84 David B on 03.08.11 at 8:54 am

Think you mentioned it before Garth about those toys that get sold prior to lights being turned off in the Mc Mansion

1531 used Beamers for sale in Ontario … not included are the ones people try to sell themselves (of course there are many other fancy toys)

http://www.autotrader.ca/a/pv/new-used/BMW/all/BMW/?srt=3&lloc=Ontario&cty=Toronto&prv=Ontario&ctr=Canada&vpt=43.4168299973413%2c-79.8107645429352%2c43.8803573695361%2c-78.959906034976%2c&dftC=True&rprv=True&c2t=Car&yRng=2006%2c2010&st=1

#85 Montrealer on 03.08.11 at 8:56 am

I would love to know how many % of people have $100k saved at 30 (excluding their potential house value)!
I’m far from $100k invested, but I’m ahead of most with mortgages. and I rent a house, convinced the girlfriend that we’d be renting for a long time and she finally understood it was the wise move.
She still tells me sometimes “it will be fun when we will be house hunting” but I try to change the subject.

#86 Mike Rotch on 03.08.11 at 9:00 am

Liberal apologist explains how we are different from our brethren to the South:

http://www.torontosun.com/comment/columnists/warren_kinsella/2011/03/07/17529881.html

“Our lending institutions tend to be larger and more cautious in their approach…” Kinsella is way past his best-before date. — Garth

#87 eddy on 03.08.11 at 9:09 am

we are ruled by banks who issue the ‘endless debt’ with taxpayer guarantees. our government works for the banks.

here’s a good article about the history of baking

‘How Venice Rigged
The First, and Worst, Global Financial Collapse’

http://www.schillerinstitute.org/fid_91-96/954_Gallagher_Venice_rig.html#top

#88 Smoking Man on 03.08.11 at 9:24 am

Happy geezer here

#WINNING

#89 Elmer on 03.08.11 at 9:46 am

#37 Shane

What do you want, a medal? People on this blog have become such braggarts.

#90 Scare Crow on 03.08.11 at 9:47 am

Okay – I am itching to add my 2 cents to today’s blog – one of your readers was writing about 2 co-workers who just opened up about their financial situation – royally screwed – I call total BS on that, I have never – Never – come across anyone who claims they are in a financial mess – (they may as far as to show through body language that things aren’t as rosey and they are in a heap of trouble) but I am laughing my ass off that people will write “I was standing in line for a coffee and overheard 2 guys talking about how they need to buy now or be priced out forever”, or my favourite…”a co-worker told me that he’s behind on his car payments, maxed out his credit cards and his wife is threatening to leave him”…. (this brings me back to my days as a skinny awkward teenager who read penthouse magazines articles about guys who totally scored with 2 hot chicks and then won the lottery afterwards”.

People tend to exaggerate winnings (stock market, casino) have you heard anyone ever boast about losing 2 grand at casino – exactly –

And 1 final note – in my old neighbourhood in Etobicoke – growing up in the mid 70’s even back then, most families were in there 40’s .. and when I head back here and there – most of them – much older – grayer – still living there. That’s why reverse mortgages will play an even bigger role – why is it that your 65 and time to sell – most people who are comfortable where they live – probably want to stay there – whats with this mass exodus – that’s an assumption (probably has some merit).

And if it’s so dire – maybe the government is gonna tax the rest of us to support those who are facing the possibility of living on the street – why is it assumed we retire – eat caviar, go on yearly cruises, and play golf – maybe most will take the semi-retirement approach – you supplement your income through CPP by adding a few hours each week – (and that doesn’t mean only McDonalds) –

This vision Garth predicts – which I won’t say is off base – but there are a hundred different variables that can alter any outcome – so relax – buy your home that was intended for shelter – I do hope for a moderation in prices and live life as its meant to be……

#91 Renting in Rosedale on 03.08.11 at 9:49 am

#28 Elmer on 03.08.11 at 12:33 am

“…I think it’s time for the city to encourage these old farts to leave, perhaps by greatly increasing property taxes for those aged 65 or over. It certainly wouldn’t be unfair…”

Elmer, you are a dork. Nothing personal

#92 Renting in Rosedale on 03.08.11 at 9:53 am

#46 Elmer on 03.08.11 at 1:26 am

“…Thank you so much, boomers. What a useless generation.”

Elmer, please refer to my previous post, above.

#93 Renting in Rosedale on 03.08.11 at 9:56 am

#55 Into the Sunset on 03.08.11 at 2:02 am

“..The boomers failed in another area ………….. birth control; resulting in a generation rift of basic manners and the most prolific whiners who have not earned their spurs experiencing tough times but feel they can hammer on this boomer generation with impudence.”

Good post!!

#94 Happyplace on 03.08.11 at 10:04 am

Brushing aside the arrogance of the comment from the poster in today’s column, I think he or she was a little off. People of boomer age don’t have teenagers, they have grandchildren. The “deadbeat” the poster was referring to would be of a younger demographic.

#95 S.B. on 03.08.11 at 10:18 am

I hope Boomers remember they must plow 5-10k yearly into their debt palaces, just for combating depreciation.

Will today’s buyers pay top dollar for post-WW2 technology and building standards like lead/copper pipes, dodgy fuse panels, asbestos in the attic. And with today’s heating/cooling costs will 40 year old windows really cut it?

What about 3-decades old eaves troughs? How about that 70s or 80s style kitchen? Anyone want fake wood planneling and shag carpet in the basement? Leaky basements? Cracked interlocking paths and driveways?
Who’d pay top dollar for that?

And what about ridding the place of that musty
old-person smell?? :P :P

And storing a Harley in the living room is a no-no!!

#96 Joe Q. on 03.08.11 at 10:18 am

Garth,

There was a survey released by TD Bank last fall, based on phone interviews with baby-boomers. A huge proportion (over 80%) intend to move to smaller homes, half of them for financial reasons. Worth a read if you haven’t seen or commented on it already.

http://smr.donovangroup.ca/TDBank/BoomerBuyers.html

#97 Utopia on 03.08.11 at 10:19 am

Sha Na Na Na,
Sha Na Na Na
Hey Hey Hey….goodbye.

Very subtle Garth. Oh my God, I am getting way too old.

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

I was thinking more, ‘Sha la la la la la… live for today…’ — Garth la la

#98 observer on 03.08.11 at 10:27 am

The demographic cohort born betwen 1947 and 1966 is generally accepted as the baby-boom generation. The leading edge of which is rapidly approaching age 65. And Garth is absolutely correct that the rate of home ownership amongst boomers runs at approximately 80%.

A recent TD Bank survey indicated that 86% of boomers plan to downsize when they make their next move. The vast majority do not plan to rent, however. Boomers have indicated that they would like a smaller place with less maintenance and stairs to climb, such as a condo apartment or a tidy one-floor bungalow.

What does this portend for the real estate market? At first blush one might envision a flood of larger homes coming on the market in the near future, and this may very well be true. The other side of the equation is, however, is that retiring boomers will be creating a great deal of demand for smaller homes.

So while boomers may look like geezers, they will be behaving like first-time buyers. All real estate markets are driven by the bottom up. If you lose the first-timer (which some argue may be happening now), then nobody else can move either.

Logic dictates that current younger owners of condos and bungalows will have a steady supply of buyers soon entering the market for their homes, allowing the youngsters in turn to move on up the property ladder, creating demand for the next price range of homes etc. etc.

It is not the end, it is only the beginning.

Uninformed intentions have a way of morphing into disparate results. Wait until Boomers see what a 2-bedroom urban condo costs (a) to buy and (b) maintain. — Garth

#99 Moneta on 03.08.11 at 10:35 am

You’re out of touch on this one Garth – too much time spent on S&M in the bunker.
————-
I don’t think he’s saying that it’s easily doable. I think he’s saying that you are screwed if you are not there.

But, for me it’s not se clear. The word poorhouse exists for a reason.

http://www.bing.com/images/search?q=poorhouse+great+depression&view=detail&id=02DB317D862C447CACBE9DD0A25EEF0BE2259B6C&first=1&FORM=IDFRIR

There is no way young couples with children will be able to pay for boomer entitlements as things are today.

Historically, healthy workers have always had the advantage over the poor who can not work.

IMO, there will be a shakeout.

#100 cory on 03.08.11 at 10:41 am

#51 Mackie

I agree, I knew one (35 year old) living at home counting his pennies, thought that all women were after his money. He is 40 now and nothing has changed.

#101 Moneta on 03.08.11 at 10:42 am

Another factor to consider is that as boomers reach retirement age, their parents die.
More real goods, and real estate onto the market at lowball prices.
——-
As the great generation dwindles, boomers will probably use the money to pay off their mortgages. I know a few waiting to do just that.

Not sure liquidity will boost the markets. I think growth in market prices will depend on plain old roll up your sleeves earnings growth, not boomer participation.

#102 Moneta on 03.08.11 at 10:44 am

This statement suggests Gen-Xers are equipped with the necessary drive and ambition to create their own generational pool of wealth. There has been little evidence of that so far. Time is running out for them as well. Sponges are useless in the desert.
——–
Well, let’s look at it another way… We can’t do much worse than past generations. LOL!

#103 Moneta on 03.08.11 at 10:52 am

think it’s time for the city to encourage these old farts to leave, perhaps by greatly increasing property taxes for those aged 65 or ove
———
The problem is that they are dead set on creating centralized mega health centres. In the heart of the metro areas of course… and boomers want to be close to their health care.

#104 Keithin Calgary on 03.08.11 at 10:54 am

The guy on my father’s street has finally taken his house off the market after having it listed for many months @ $349K…….

He paid $337K in Sept 2008 and bought it from the previous owner who was initially asking $409K…..

His next door neighbor just sold an identical house for $290K in July 2009……and the comps from the RE sales section of the City of Calgary Tax Department website shows that the identical comps on his street, all sold for between $261-332K over the last 2 years……with the median being around $320K +/-.

Guess real estate doesn’t always go up eh ?

Anyone wanna calculate this guys losses…….or his age ?

#105 Cowboy on 03.08.11 at 11:02 am

Has anyone recently heard about Americans selling their second vacation homes in other countries? During this cash strapped time for them (and obviously coming for us eventually), I just wonder, you don’t hear anything about all of these luxuries for sale. That is the first thing I would sell. For example, I have seen alot of Americans buying in Nicaraugua several years ago, as cheap as it is there, they can easily spend $700,000 for a place on the beach. I wonder if prices have fallen in Costa Rica etc. It makes sense that they would but I have never found any concrete info regarding this.
This was/is yet another facet of self-indulgence Americans and Canadians purchase and think they can afford because everyone else is doing it.

Anyone? Anyone?

#106 Sid on 03.08.11 at 11:02 am

Garth is not implying that all 30 your olds need to have 100K, he is just saying that the ones who are not losers should.

This is very possible through frugal living and hard work, even for those who go to university and grad school. If I can do it anyone can.

#107 NP on 03.08.11 at 11:13 am

#28 Elmer on 03.08.11 at 12:33 am

I’m surprised you didn’t propose that the govt. ship all the old geezers to an ice flow in the Arctic. Do you have any respect for your parents that brought you up. Did they help to pay for your education? Why do seniors continue to live in TO instead of going to a small town. Might be because they like familiarity or because they have children and grandchildren and want to be close to them. And, it might be because, should a health issue arise, they’re close to better medical ER services.

And then, IIRC, you’re blaming geezers who bought small homes, with a reasonable 2 to 3 times avg wage, for remaining in them. Those geezers were not responsible for the values, it was the RE pumpers and our current govt. who brought in 0/40 down and then 5/35. You have displaced anger. We all have choices to make, don’t blame your choice of career on others.

#108 Macrath on 03.08.11 at 11:16 am

#85 Montrealer
I would love to know how many % of people have $100k saved at 30
——————————————————————–
I would venture to guess not many. Most of my boomer buddies are worse that broke. The frustrated lady at the bank said she had yet to see anyone without serious liabilities and that was a Yorkville branch.

There is some dated data from Moneysense
Young couples are by far the most indebted Canadians.
Fewer than 60% of families have RRSPs. The median amount in those RRSPs is a mere $30,000.

http://www.canadianbusiness.com/my_money/planning/article.jsp?content=20071127_094158_5856

Perhaps Garth could enlighten us with some recent statistics ?

#109 Moneta on 03.08.11 at 11:18 am

Brushing aside the arrogance of the comment from the poster in today’s column, I think he or she was a little off. People of boomer age don’t have teenagers, they have grandchildren. The “deadbeat” the poster was referring to would be of a younger demographic.
—————-
Boomers = 1945 to 1965.

They are now 46 to 66. Split in 3 waves. The largest one in the late 50s to early 60s.

Many started their families around 30. So a large number would have teenagers.

#110 Bottoms_Up on 03.08.11 at 11:24 am

I guess we now know who doesn’t have the cash. — Garth
———————————————————
And, **”he who dies with the most cash wins.”**

#111 Ottawa on 03.08.11 at 11:26 am

News:

http://www.theglobeandmail.com/report-on-business/canadians-feel-retirement-dreams-fading/article1933557/

#112 Chappy on 03.08.11 at 11:37 am

Here’s something that won’t escape me. Maybe smarter people can give me a clue.

Why would boomer’s sell for penny’s on the dollar when they can get a reverse mortgage and live off the equity in their house?

Garth has said previously only those that hate their children would do such a thing, but maybe faced with selling for pennies on the dollar vs. reverse mortgaging and being able to live relatively comfortably for the remainder of their lives, I’m sure the choice of doing such and upsetting spoiled children wouldn’t be all that difficult to make…yes?

Hardly. The max you can borrow with a reverse mortgage is 40% of the fair market value of the home. So on a $500,000 house, that’s $200,000. Try living on that “relatively comfortably for the remainder of your life.” Of course, after 20 years of scraping by on $800 a month, your estate owes $400,000. This is no solution for anyone with a brain. — Garth

#113 Bottoms_Up on 03.08.11 at 11:38 am

#37 Shane on 03.08.11 at 12:55 am
————————————————–
Have you ever stopped to consider if your parents shared the same mindset as you (regarding children) that you would not exist? Try saving 100k as a non-entity!

#114 bystander on 03.08.11 at 11:43 am

Garth, what you’re saying is so real.

My landlord is retiring this year. At least that what he told me after offering me to buy his house. I can’t afford to buy it. Not at these prices. He is a boomer. I’m a very through of the bust generation.

boomers have choices:

– sell high (?) today
– sell low tomorrow
– go bankrupt
– take a reverse mortgage
– transfer the property to their children and have children take care of them

The following is certain to me:

– taxes are going up
– government will fight deflation with either % rates, or printing money (which they do), or both.
– CAD is going to go down big time (not against USD, but against other commodity based currencies, like RUBCAD for example.)

#115 Utopia on 03.08.11 at 11:50 am

Now that’s my generation baby!

http://www.youtube.com/watch?v=hnFZsrs32Co

#116 Boombust on 03.08.11 at 11:51 am

“Vancouver City Council Hearings on Massive Casino Development tonight

http://www.vancouverobserver.com/Casino/2011/03/07/battle-long-brewing-comes-head-tonight-city-hall

Just what this soul-less town needs, another mega casino. Christ, if it wasn’t for the ocean and mountains”

Are you kiddin’? The best thing about Vancouver is Bellingham.

#117 WINNIPEGER on 03.08.11 at 11:53 am

A Fly in the ointment!

Reverse Mortages booming!

Stay in your house until you expire—- eats up your equity….. then you die….. perfect…..boomers will sign on to this huge! ….

Instead of selling your home — get a reverse mortgage and rent it to yourself.

Comments?

***

HomEquity tops $1 billion in reverse mortgages in 2010
| Tuesday, 8 March 2011

In announcing its financial results for 2010, HOMEQ Corporation and its wholly owned subsidiary HomEquity Bank revealed that it originated $206 million of reverse mortgages, an increase of 87 per cent over 2009. HomEquity’s mortgage portfolio also grew by 17 per cent to $1 billion.

“We are seeing broad market demand for reverse mortgages as the demographic wave and other macro economic factors affect retirement trends in Canada,” said HOMEQ President and CEO Steven Ranson.

The company said it expects that demand for reverse mortgages will remain firm in 2011 and aims to increase the mortgage portfolio by between 15 and 20 per cent this year.

See my comment on this, above. Bad idea. — Garth

#118 Lorne on 03.08.11 at 11:56 am

#49 nonplused

Jon Stewart exposes the lavish lifestyle of Wisconsin teachers.

http://www.mediaite.com/tv/jon-stewart-exposes-the-lavish-lifestyle-of-the-american-public-school-teacher/

#119 AG Sage on 03.08.11 at 11:58 am

Everyone should regret using all caps of a decorative font to write out a word. That’s just nasty.

#72 george on 03.08.11 at 6:22 am
> Most old people just stay in their house until they drop dead in my experience.

You want to know whether a boomer will be in his/her house in 20 years, here’s a decision tree:
Is it under 2k sq ft? (Y/N) N: They won’t stay. Y: Next Q.
Does it have stairs? (Y/N) N: Probably they will stay. Y: Next Q.
Can it be converted to single floor living? (Y/N)
Y: Probably they will stay.

On that note, if you are hoping to sell a decade from now, buy 2k single level and you may do just fine offloading it to an aging boomer who needs something livable. Make the demographic bulge work for you instead of against you, if you can.

#120 Prof ANON on 03.08.11 at 12:03 pm

@ #90 Scarecrow.

I lost about $2500 on a single hand of pot Limit Omaha once. Aces full of threes against quad threes that were rivered.

#121 Mackie on 03.08.11 at 12:10 pm

You know what would be interesting Garth? If everyone on this blog gave their: age, marital status, number of dependants, city where they live, renting or own, mortgage cost, rental cost, RRSP value, TFSA value, net worth.

You forgot, boxers or briefs. — Garth

#122 YEG on 03.08.11 at 12:15 pm

#119 AG Sage

Worst advice ever.

If you are buying a house to look to sell to a boomer in 10 years you are really shooting yourself in the foot. Is this blog post not about how boomers will be selling not buying?

If you are buying a house thinking about who you should be selling it to in 10 years you should probably not be buying, but if you must then maybe consider the largest market segment of buyers not the smallest.

Just a suggestion though…

#123 Mr. Plow on 03.08.11 at 12:22 pm

http://www.cbc.ca/news/canada/british-columbia/story/2011/03/07/bc-richmond-real-estate-scam.html

The sad thing is that this realtor, while extremely slimy and sleazy, may not have done anything “wrong”. It is a lesson for sellers/buyers to do their due diligence on their own behalf and not completely rely on a realtor.

I have no clue what the dual agency rules are for realtors, but I wouldn’t be the least bit surprised if this sleazeball could argue that he could not disclose the higher prices because it would hurt the agency he had with his buyer, who just happens to be a friend or family member I bet.

#124 Mr. Plow on 03.08.11 at 12:23 pm

Totally off topic.

Does Garth or anyone have someone in Edmonton they would recommend to help set up a family RESP account?

Thanks.

Set up your own self-directed account. Steer clear of the baby plan-pushers. — Garth

#125 Matthew on 03.08.11 at 12:27 pm

Dear Garth,

To all those who say having $100K by the time you are thirty is impossible – you are dead wrong.

I am 22, paid for university myself and have about $40K in investments. All of which came from my savings – no handouts here. If my savings rate remains constant, even with 0% growth, I am on the track to 200K at the age of thirty. That represents $16,000 of savings per year. Not impossible.

What brought me here was the choices I made. I chose:

1) Not to buy a car. I take public transit to work. $40/mo vs. $500/mo. That saves about $4K per year. I actually get to work faster, not to mention, save the $13/day on parking.

2) Live in an apartment. 650/mo rent vs. >1,000 for a condo (plus those stupid fees). Another $4K per year. I can improve this further when I move in with my girlfriend next year – will cut my rent costs significantly.
(Montreal here – rent is reasonable)

3) Actually cook my own food vs. my colleagues who buy lunch 3x/week. Saves about 30-40/week. $1500 a year. Plus, the food is better and I have time to walk around after!

….this isn’t rocket science folks….

however, my colleagues:

1) Go to Mexico 3 times a year. $3-4K and don’t bother shopping around for the best deals.

2) Have a car, or two. Then pay for parking each day.

3) Pay 400/month for useless condo fees. 10-20% of their salary in interest.

4) Don’t even take advantage of the pension contribution matching available from the employer…a free 66% return on your contribution!

5) Pay crazy sums for weddings and put themselves into massive debt.

$100K by 30? A joke.

#126 Macrath on 03.08.11 at 12:29 pm

#85 Montrealer

From Moneysense:

A household headed by someone under 35 typically has a net worth that is $145,000 below the median.

The net worth of a median Canadian household in 2005 was $148400.

The median net worth by the age of major income recipient of the household:

Under 35 – $15,000
35 to 44 – $140,000
45 to 54 – $230,000
55 to 64 – $407,000
65 and older – $300,000

Those numbers could be a lot less since consumer debt has exploded since then.

On va pas loin avec 15 milles !

#127 Matthew on 03.08.11 at 12:30 pm

Before I am flamed…
(math error in previous post – 160,000/8 years – 20,000)

#128 Herb on 03.08.11 at 12:31 pm

Reading some of these comments, I suspect that the greatest crime the boomer generation committed was not having more abortions. Years ago it was estimated that it cost $250K to raise a child, so each child raised to maturity cost a boomer $250K he now does not have for retirement. Dumb boomers!

Shall we try to reconcile some irreconcilables? In the mind of some here it seems to be easy to come up with $100K by the age of 30. OK, for some it may be, but how many people at any age have jobs that allow them to save $15 to 20Ka year to get there and beyond? What would one have to earn to leave that excess to requirements? How can one earn it? If wise investment is the answer, has anyone ever lost money investing? Please identify the rewarding investments that are not the flavour-of-the-month and are guaranteed to perform adequately as long as necessary. Following Garth’s advice may lead 3% to financial security, but it’s the other 97% that are the problem.

So boomers will have to work past retirement age. OK, but then their children and children’s children complain that boomers are holding down the jobs they need. Is there or is there not an employment problem? Does forcing people to stay in the work force solve or intensify that problem? How long can body and mind function well enough to earn their keep?

Forget the blame game – we need solutions. They happen to be your parents, and some of you may not be content to park your parents in unheated garages.

And reading some commenters, I now know where the Malicious Conservative Party of Canada gets its recruits.

Yours truly, Herb, a grumpy old pre-boomer contentedly and adequately retired for the duration.

#129 Azza4 on 03.08.11 at 12:32 pm

It’s nice to see that our intelligent discussion with Brian1 and Moneta yesterday inspired today’s blog entry.
Still question remains what impact boomers will make on stock market. I personally think they will first burn through their mutual funds, RRSPs, company RSPs and other financial assets. Even though there could be very little to their name in terms of absolute amount (still even 50K-70K is something), they are big part of population (1/3) and their cumulative impact could be huge. I see it as stock market crash first or at the same time as housing market tanks. There could be no safe haven in next decade, especially considering inflation that will emerge sooner or later and eat cash in GICs and bank accounts.
Ugh…

There will be zero impact on the stock market since for every mutual fund unit or stock they sell, there is a buyer. How does this possibly cause a ‘crash’? That money will not disappear, simply change hands. How did you arrive at this conclusion? — Garth

#130 Oakville Owner on 03.08.11 at 12:32 pm

Garth:

Sounds like a great opportunity for the banks and financial companies to start getting aggresive with there rates on reverse mortgages to supply the boomers with the cash they need. I know they are not very attractive at this time but with such a large chunck of the population looking to get money out of their house, supply and demand MAY change that.

It’s still a very bad choice. I have never met a person for whom this has worked out. — Garth

#131 Mackie on 03.08.11 at 12:39 pm

Ok boxers or briefs would be good too.
I think a lot of people compare themselves to their neighbors who are spending money like they stole it. It would be an interesting experiment to see how this – money conscious – group fares compared to the big spenders of the world.

#132 Stevie B on 03.08.11 at 12:44 pm

#58 Peak Oil.
I keep seeing numerouse references to this. Is the US going to become the next Petro Currency and is this the next Black Swan? Everything happens for a reason.
Okay I know the limbs about to break and I’ll be thrown to the ground because I’m way out there but ….

#133 NP on 03.08.11 at 12:48 pm

#37 Shane on 03.08.11 at 12:55 am

Times have changed. I’m sure I’m old enough to be your Mother. I actually worked part time since 13 and babysat up the street NY’s eve (no TV, etc.) in a small town since 9 as I could earn a $.

I’ve only equiv. to 2nd yr. univ. (mature student), but had a work ethic and did relatively well over the years. I also traveled and learned to appreciate other cultures – while I was young.

#134 fancy_pants on 03.08.11 at 12:49 pm

OK, so in the medium to long term we worry about the geezers….

in the short term we should worry about the “Day of Rage” in Saudi Arabia is set to take place this Friday, March 11th.

Polish up the bicycle and put away the SUV if this turns into another ugly revolution.

#135 Alex on 03.08.11 at 12:50 pm

Global BC ran a spot this morning saying that part of the reason for the current housing boom is the flock of buyers that are rushing to enter the market before the March 18 mortgage rule changes. A questionable philosophy for sure, but fair enough. It *is* true.

But halfway through the spot, they turned to – guess who? – a local realtor for his “expert” opinions. Mr Expert Realtor then offered two options: 1) Wait for your income to increase so you can one day “buy what you really want,” or 2) Buy something less luxurious today.

Mr Expert (who is clearly considered a more expert expert than an economist because he passed a grueling, demanding 6-week realtor course) never did put forth the option of renting. Of course, neither did the commentator. Nor was the option given of waiting a few months or years in the likelihood that prices will drop, as they have done virtually everywhere else in the world.

Once again – sickening.

For those who are still interested, my ongoing CRTC/CBSC complaint against Global has entered another phase. Global now has 17 days to satisfactorily “resolve” the issues I addressed in my complaints. To me, that means an on-air admission that Global ignores the other side of the story completely in favor of merciless real estate pumping for its Number One Advertiser. I somehow do not think Global will do that, which means my complaint will not be satisfactorily resolved, which means the whole thing will move into another phase.

Global has no idea just how much of a pitbull I am when it comes to this sort of stuff.

#136 Expand Your Means on 03.08.11 at 12:54 pm

Some posters are funny! To be clear, $100k is not a lot of money. $200k is not a lot of money. If you are in Toronto or Vancouver, to have $200k by age 30 is pocket change.

Canada has been very good to me, my young family, and my friends (understatement). We all benefited from the country’s strong economy; namely real estate and stock market. When the world crumbled around us, Canada kept on going with barely a misstep.

My friends and I all bought multiple one bedroom condos over a decade ago, and as we needed homes to raise our new families, we sold (most of them) to give us mortgage free primary residences. Selling a single 1 bedroom condo can easily net $100k after tax; nevermind the rent we all got from our tenants (thank goodness for tenants). How long would it take to save that amount? Too long.

Most of my friends made hundreds of thousands and some of us cleared a million quite easily in our 30s. What are we doing now? We have bought in the U.S. Despite all the fear mongering about the ‘dangers’ of investing in the U.S. we haven’t seen what you guys are all shivering in your boots about.

I have a novel idea? How about getting educated? Go to this website:

http://www.altrolaw.com/media-resources/book-order-form/

The book is free. Surely a few of you can afford that. Like freebies? I’ll give you guys some more.

I own properties in Phoenix, AZ. Not a lot. Just a few of them. So I have a little knowledge of what I am talking about (unlike the posters who own nothing yet talk like they understand the ‘dangers’ of owning U.S. RE).

Go to the City of Phoenix web site. Visit their crime statistics. Look at this map:
http://phoenix.gov/police/cristat_maps.html

Don’t buy property in ‘red’ areas. Need more hand-holding?

Use this web site to check on the status of your property with regards to the Maricopa County Assessors office:
http://www.maricopa.gov/Assessor/ParcelApplication/Default.aspx

Make sure everything is registered properly. U.S. officials get confused with our alpha-numeric postal system. Make sure they get that right or all your mail from the U.S. government might get sent into a black hole.

The title company that handled your closing should have also registered the deed here:
http://recorder.maricopa.gov/recdocdata/

Fill out a Form W-7 and get an ITIN so you can pay your taxes. Google it. I’m sure anybody who’s genuinely interested can figure it out.

How are the properties doing? In one word: awesome. All our properties are rented. The vacancy rate is misleading. Individuals who have overpaid are asking for ridiculous rent; why do you think they’re going vacant? My friends and I, on the other hand, have purchased property at pennies on the dollar – $55 per square foot or less to be exact. How easy are these to rent after being bought at $55 per square foot? REALLY easy.

What kind of margins you ask? Try 20% gross rental margins. That’s right. For every $100k of rental real estate, I’m collecting $20k in total rent. Even IF expenses take away HALF of my rent, I’m still left with a 10% before-tax return. Don’t believe it? My U.S. Wells Fargo account doesn’t really care if you don’t believe it.

Worried that the USD will be worthless soon? Good for you. Won’t happen.

Stay scared. Stay poor.

Canada rocks!

Interesting that your email leads to California and your IP is in Europe. Tell us more about what you are trying to sell on this blog. — Garth

#137 somejerk on 03.08.11 at 12:55 pm

re: reverse mortgage… See my comment on this, above. Bad idea. — Garth

Isn’t this adding to the fire sale when the reverse mortgage companies need to sell all these homes to recoup the money, in 10year time extending the hurt? (like all those shadow foreclosure homes in the US?)

#138 morry on 03.08.11 at 12:55 pm

… anyone who hits thirty without a hundred grand is a loser

That would be approx. 90% of our yoots. hard to fathom.

#139 morry on 03.08.11 at 12:59 pm

“That money will not disappear, simply change hands. How did you arrive at this conclusion? — Garth”

One scenario: if i paid 100 per unit and i can only sell it for 10 that sounds like la merde hitting the fan to me. There is always a seller and a buyer. the question is for how much!

Why would stocks decline 90% just because there are sellers? This is fuzzy thinking, tinged with paranoia. — Garth

#140 Quora on 03.08.11 at 1:00 pm

Is 2011 a good year to invest into real estate in Ontario, Canada?…

No. We’re still in a housing bubble. The market will correct itself as interest rates rise and old people get older. Like the market in the states crashed, so will Canada’s (it’s unsustainable – everyone’s in debt, just like the States was 5 years …

#141 TEMPLE on 03.08.11 at 1:02 pm

There will be zero impact on the stock market since for every mutual fund unit or stock they sell, there is a buyer. How does this possibly cause a ‘crash’? That money will not disappear, simply change hands. How did you arrive at this conclusion? — Garth

Garth, I partially disagree with your statement here. If there are fewer bids, the price of a stock drops in a way that is partly analogous to housing markets. I assume that Azza4 is predicting an excess of sellers in the stock markets.

However, I completely agree with you in that we can’t conclude that there will be a “crash.” Obviously, I would be a fool to make predictions, but the case for stocks remains strong, especially in view of the cash flow they generate and the value they represent.

TEMPLE

If Boomers think that selling their meagre RRSPs (most of which are full of GICs and loser mutual funds, not traded on any exchange), will trash anything other than the local fruit market, they’re being true to their delusional selves. — Garth

#142 Cellar Dwellar on 03.08.11 at 1:13 pm

@#46 Elmer
Correct me if im wrong but if it wasnt for your “boomer” parents.

You wouldn’t even BE here. :)-

#143 GTA Girl on 03.08.11 at 1:14 pm

My inlaws fit into this category. They lived the high life for many years. No savings, no pension, bought property. To which they’ve been having to sell off to clear credit card debt.

I’m becoming very worried, because they now want to sell there home, and buy a condo in the posh area downtown. Tried to explain that with taxes, condo fees they will go broke. “Rent” or stay where they are. But they have this idea that renting is for the downtrodden.

So when people complain about the younger generations, I look to some in the boomers who are still living big. They don’t think they will get old, even at 70.

Meanwhile, I fully expect to be the sandwich generation. And have to clean up the mess.

#144 observer on 03.08.11 at 1:17 pm

From new report just released today by CMHC:

“In Toronto, new home prices rose 2.3 per cent in December 2010 versus the same month one year earlier. The gain in prices was slightly better than the Canadian average of 2.1 per cent comparing the two Decembers.”

Oh the humanity! New home prices across the nation barely keeping pace with inflation – this simply cannot be sustained.

New home prices are irrelevant since sales of SFHs have plunged. You are an information manipulator as well as a condo slinger. — Garth

#145 kilby on 03.08.11 at 1:17 pm

It’s interesting being one of the much maligned “boomers” and taking a great interest in this blog. I am 60 years old and like most of my friends, I have no mortgage and have carefully saved over the years from my $50k and wife’s $70K year jobs. I just sold our home of 20 years,we are leasing a condo in Vancouver that I would never buy because of the price and horrible build quality (all flash poorly done). We own a 998 sq. ft condo in Victoria that we bought for our children to attend University, we bought it 8 years ago for $107k. We will eventually sell it for whatever it is worth at the time. We are going to purchase a home in a small town on Vancouver Island in the next year or two, we will pay cash and plan to own because we like it, gardening etc…It will be, as our others have been…a home. We enjoy our life, we travel, eat out, drink wine etc.. but we do “pay ourselves first” and just spend the extras on treats. We have a 2007 Nissan truck (4 cylinder), a Suzuki motorcycle and a 1993 BMW, all paid for, don’t need a new leased car or all the extras it seems, according to this blog all my demographic cohorts seem to own. Anyway, there are lots of us out there that picked up some of our parents financial values at some points in our lives, we don’t have debt, always paid extra on out 12% mortgages, enjoy life without the excess that some people on this blog seem to think we all have. It does not have to be a generational war, we all have something to contribute. I encourage our 23 and 26 year old girls to save a bit in TSFA’s and RRSP’s, they don’t have much but are starting what I hope will be a lifelong habit that will pick up speed when they finish their schooling and start earning.

#146 BrianT on 03.08.11 at 1:32 pm

There isn’t anyone more connected to the US financial and political power than Bill Gross-which makes you wonder why he is stating the obvious after all this time http://finance.yahoo.com/tech-ticker/%E2%80%9Cno-way-out%E2%80%9D-of-debt-trap-gross-says-u.s.-living-standards-doomed-to-fall-536001.html?tickers=%5EDJI,%5EGSPC,%5ETNX,GLD,GDX,TLT,MUB&sec=topStories&pos=main&asset=&ccode=

#147 kilby on 03.08.11 at 1:40 pm

#121

Boxers.

#148 FormerVanCityOwner on 03.08.11 at 1:43 pm

$100K at 30.

How much at 40?

#149 new_era on 03.08.11 at 1:43 pm

My parents are both close to 80 now. Living in a vancouver special. They are worried about having the ability to upkeep the house.

They are seriously thinking about down grading to a townhouse or a condo complex where the upkeeping is done by someone else.

I’ve seen other old people retire and move into the interior where life is alot more simple and the cost of real estate is just a fraction of the price of a place in Vancouver.

But only time will tell

#150 DaBull on 03.08.11 at 1:47 pm

From a typical baby boomer Canadian.

By the time I was 30 I had a net worth of $108,221.35 and I made sure that only 1/3 was ever keep in empty beer bottles. When my empty beer bottle stash got bigger than 1/3, I made a trip to the bottle depot to balance out my portfolio again. But due to liver damage from keeping such a high portion of my net worth in empty beer bottles, I’ve had to drop that ratio down to 1/10,000th as of late. Plus as I get older I find the kidneys just don’t seem to hold as much fluid as they use to.

#151 Calgary Hat on 03.08.11 at 1:51 pm

I have a question for any economist out there…

Q. It’s easier to amass debt than weath today, so how are people in debt going to amass enough weath to ever pay it back?

#152 NP on 03.08.11 at 1:51 pm

The boomers really screwed up this country by investing in real estate instead of in telecoms, factories, mines, etc. That’s why Canada has such run down infrastructure, why Canadians today pay the most in the developed world for internet and cell phone plans, that’s why we have some of the lowest salaries in the developed world for engineers and software developers. Thank you so much, boomers. What a useless generation.

………….

Did you tell your Mother and Father that they were useless. Maybe they were – they produced you.

#153 Kitchener1 on 03.08.11 at 1:58 pm

Ive said before on this blog and will say it again and maybe some boomer readers can chime in.

Boomers will NOT retire at 65. thats going to be the big story.

Im already seeing it in my circle of friends. Guys aged 65-67-69 etc.. still working, some because they have too, others because theey have nothing else to do.

In this era, 50 is the new 30, 60 is the new 40, well, its not really, but thats what the marketing firms are pushing.

Well, when these gezzers dont retire, all of the people under it are going to be screwed. We really should bring back forced retirement at 65. As in ASAP.

People the world over are rioting and shuting down countries over raising the age from 60-62 and Canadians brought the fight to the human rights council to ensure that we can;t force people to retire at 65.

Seriously folks, you think that Gen X, Y have it in for boomers now, wait a couple of years, when maybe only 20% of all boomers have retired.

Note– no one I know who is 55-60 wants to retire at 65. Not one.

#154 morry on 03.08.11 at 2:02 pm

“Why would stocks decline 90% just because there are sellers? This is fuzzy thinking, tinged with paranoia. — Garth”

If there are too many sellers who have run out of money and if 90% of yoots have no money to buy, it means that equities can go down… colour me cautious paranoid

#155 Devore on 03.08.11 at 2:04 pm

#64 The Original Dave

wait a minute, you’re saying that companies increase advertising when things are tough? I always thought that the marketing dollars were the first to go.

Which is why you will never run your own business?

When things get tough, the strongest not only survive, but get stronger. They don’t do it by curling up in a corner.

#156 Moneta on 03.08.11 at 2:05 pm

Reading some of these comments, I suspect that the greatest crime the boomer generation committed was not having more abortions.
——-
Then we would have gotten some good jokes…

What did the old boomer in a wheelchair say to the other boomer pushing his wheelchair…

LOL!

#157 kilby on 03.08.11 at 2:06 pm

#149 New_era

Oualicum Beach.

#158 NP on 03.08.11 at 2:07 pm

#145 kilby on 03.08.11 at 1:17 pm

Agree Kilby though we are not as fortunate as you to have children. I really detest this boomer bashing. Every generation lives during what is happening at the time. Parents try to do the best for their children and circumstances change. When I grew up we did not have 24/7 propaganda media. It’s a whole new ball game. I can honestly say that I fear for the younger generation and glad that I’ll not be around to experience the next gen. Orwellian world.

#159 Victoria on 03.08.11 at 2:09 pm

I am looking at the homes on the mls in Winnipeg (I grew up there) and I am shocked at the prices. I don’t know what I was thinking but my God are they expensive.

Maybe I am just living in the past.

#160 Moneta on 03.08.11 at 2:11 pm

Sounds like a great opportunity for the banks and financial companies to start getting aggresive with there rates on reverse mortgages to supply the boomers with the cash they need. I
————
If I were expecting house prices to fall and building up my bankruptcy departments, I wouldn’t be dropping rates on reverse mortgages.

That’s something the feds could come up with using you know who, not bankers.

#161 Hoof-Hearted on 03.08.11 at 2:13 pm

On the Richmond scene;

The locals call it Hot Asian Money (HAM)

On Friday, were in the West Richmond area…..the so-called HOT area.. More For Sale sugns than sold….

More convinced its the Realtors doing a final flogging of a dead horse to scare the drying up pool of greater fools

#162 Victor on 03.08.11 at 2:15 pm

Uninformed intentions have a way of morphing into disparate results. Wait until Boomers see what a 2-bedroom urban condo costs (a) to buy and (b) maintain. — Garth

Which then begs the question: If boomers want to downsize from their McMansions, and if they can’t afford an urban 2 bedroom, then where exactly are these millions of people going to live in the years to come?

#163 Hoof-Hearted on 03.08.11 at 2:15 pm

#149 new_era on 03.08.11 at 1:43 pmMy parents are both close to 80 now. Living in a vancouver special. They are worried about having the ability to upkeep the house.

They are seriously thinking about down grading to a townhouse or a condo complex where the upkeeping is done by someone else.

I’ve seen other old people retire and move into the interior where life is alot more simple and the cost of real estate is just a fraction of the price of a place in Vancouver.

But only time will tell
============

What I am hearing is stories of people who are living too long and running out of savings. Especially those that sold and moved into assisted living.

#164 Sitting on the Sidelines on 03.08.11 at 2:19 pm

My most recent favourite retirement story has to do with some people who live up the block from me. They are in their late 60s, early 70s, with no pensions other than the government ones, so they have decided to become developers on Vancouver’s West-side. They purchased a knock-down on a 33′ lot for $1.3M last week and (if the financing comes through) plan to build a new house and make money to live on. In the meantime they will have huge payments, they’ll be living in their own house which is basically falling apart (let’s hope the roof lasts) all the while living a pipe dream of continuing increases in the costs of housing. They’ve also got relatives in on this delusional scheme so the possiblity of more than one aging couple going broke is there. As an aside, why on earth do the banks give people like this money?!

#165 Moneta on 03.08.11 at 2:25 pm

$100K at 30.

How much at 40?
——-
If you want to retire and not work at all at 60:

500K

#166 SAD on 03.08.11 at 2:25 pm

This is one of the reasons why Garth likes those bank dividends. Our sound and non- competitive banking system has it all going there way. No risk lending courtesy of your Federal government and CMHC.

http://www.theglobeandmail.com/globe-investor/personal-finance/rob-carrick/retail-lending-rates-still-hovering-near-crisis-levels/article1933035/
Though it’s rarely talked about now, the banks found another way to juice their revenues from borrowing. As the Bank of Canada made a big cut in its trend setting bank rate back in December, 2008, the banks chose not to make the customary identical cut in their prime rates. The central bank slashed the overnight rate by three-quarters of a percentage point, the banks cut their prime by half a point.

Bank of Canada data for the past 10 years indicates the spread between the prime rate and the overnight rate is still higher than average right now. That means all lending products where rates are linked to prime are affected, including lines of credit and variable-rate mortgages.

The increase in line-of-credit rates has generated a large and continuing number of complaints to this column. One in particular asked the question of whether the premiums built into borrowing costs “will become permanent (just like what happened with the income tax).”

#167 pjwlk on 03.08.11 at 2:26 pm

#83 jane54: “…Makes sense as a 25 year old will do the same job for half the money so why hang onto the boomer…”

Agreed. I know several people in their 50’s who have lost their jobs within the last few months and none are working yet. If I were running a business, I’d do exactly as you mentioned. But then I’d have to fire myself… lol

#168 SAD on 03.08.11 at 2:34 pm

To: #146 BrianT on 03.08.11 at 1:32 pm

There isn’t anyone more connected to the US financial and political power than Bill Gross-which makes you wonder why he is stating the obvious after all this time http://finance.yahoo.com/tech-ticker/%E2%80%9Cno-way-out%E2%80%9D-of-debt-trap-gross-says-u.s.-living-standards-doomed-to-fall-536001.html?tickers=%5EDJI,%5EGSPC,%5ETNX,GLD,GDX,TLT,MUB&sec=topStories&pos=main&asset=&ccode=

It was not in his Bill Gross interest to tell the truth. The stage was set 2o odd years ago. Canada heading down the same path. Just not as dramatically.

#169 T.O. Bubble Boy on 03.08.11 at 2:35 pm

Get US homeowners some scuba gear, because they are soon all going to be underwater!

http://news.yahoo.com/s/ap/20110308/ap_on_re_us/us_underwater_mortgages

(ok, not all, but 23.1% underwater is scary enough!)

#170 Debtfree on 03.08.11 at 2:37 pm

Just read this on OKhomesellers …..

Million dollar Shuswap view .. reduced to 850 .

I laughed so hard I almost pee’ed . And this one ” Kelowna bans public smoking but don’t have the money for the signs ” Who needs to go to yuk yuks when you can get laughs like these for free.

#171 Junius on 03.08.11 at 2:52 pm

#128 Herb,

You said, “Reading some of these comments, I suspect that the greatest crime the boomer generation committed was not having more abortions.”

I see you have the typical boomer mindset. It is all about you and then you die. Don’t care about the future so let’s destroy everything from the economy and the environment before we leave. The locust generation.

They should have done the opposite. We should have developed policies and incentives that gave us a 2.2 per couple birth rate so we had a sustainable society. We have been looking at these demographics for decades and doing nothing.

And please don’t tell me immigration is the entire solution.

#172 Junius on 03.08.11 at 2:56 pm

#135 Alex,

Good for you. Please update us on the status of your complaint.

#173 Junius on 03.08.11 at 3:01 pm

One interesting thing of note recently is the shifting ad strategy for the HELOC companies here in BC. Anyone who is a sports junkie like me and listens to sports talk radio will notice that about 30% of the advertising is for home equity loans. It is unbelievable.

Last fall I noted that the ads were of the high testosterone variety with captions like, “We will give you a loan if even your mother won’t” and one with Wagner music and Apocalypse Now sounds with the tag line, “I love the sound of Yes in the morning.”

Well, that has all changed. Now the entire tone has gone from take the money for the things you want to come to us to consolidate your debt. Very low key starting with headlines on how indebted Canadians are.

Very interesting shift. Of course, we all know why.

#174 kilby on 03.08.11 at 3:05 pm

#152

Thanks for the bitter, shallow comments, what do you do to contribute to Canadian society…besides complain. My parents taught me to share, help others, raise children, listen to the experience of elders, and maybe old and corny now. “never a borrower or lender be”

#175 Edmonton Guy in Alberta... on 03.08.11 at 3:10 pm

I don’t hear much talk about all the boomers who planned ahead & bought condos at the peak prices for retirement using equity in their homes. It’s fairly common here in Edmonton. In addition to having massive condo/housing speculation from investors here, from other cities & abroad a huge portion of the condo market seems to be boomers approaching retirement that have bought condos to sit on, or rent out until they are ready to retire. IN 2007 thousands & thousands of people bought CONDOS at $290 per sq. ft. & HOUSES for an average of $327 per sq ft . NOW almost 4 years later still with historically LOW INTEREST RATES & 35 YR Mortgages still on the table prices have softened today to $223 for condos & $255 per sq ft for Houses. That’s ver 25% decrease before mortgages become much more unaffordable.
Now what about all these boomers that bough the $300,000 condos because they thought they could get $500,000++ for their house? They’ll own a condo that’s worth about $100,000++ less, and have to sell a house that’s worth $150,000++ less! And I can guarantee you here in ALberta with the highest debt levels in Canada they have most of the equity in Real Estate! Scary!

#176 dd on 03.08.11 at 3:32 pm

US is toast – Bill Gross

“Gross suggests that living standards doomed to Fall in the U.S. The gold market, and experts that interpret it, has been conveying this message for years. The secular trend in gold will accelerate when the pubic finally recognizes the severity of this message. Acceleration in gold tends to be associated with some sort panic.

Headline: “No Way Out” of Debt Trap, Gross Says: U.S. Living Standards Doomed to Fall

PIMCO founder and co-CIO Bill Gross has previously said that if the United States were a corporation, no one in their right mind would lend us money. For the last decade, we’ve been “relying on the kindness of strangers” to help cover our debts, he tells Aaron in the accompanying clip.

By “strangers” he is referring to our foreign counterparts, like China for example. Basically, for years Americans have spent their hard-earned dollars on less-expensive Chinese made goods. With great gratitude, China turned around and used all those dollars to buy up U.S. Treasuries and other dollar-denominated assets.

But now after years of reckless spending, America’s debt level is nearing a breaking point and can no longer rely on foreign capital as a last resort. “When a country reaches a certain debt level, confidence in that country’s ability to repay that debt becomes jeopardized,” says Gross, citing the work of Ken Rogoff and Carmen Reinhart in This Time Is Different”

#177 YYZ on 03.08.11 at 3:42 pm

1. It is not only the boomers. Just read the comments by the 20-something in this thread, living their lives as if annual vacation in Europe and lavish wedding at upscale banquet halls are the norm. This young generation has a massive entitlement complex.

2. People don’t grasp the concept of exponential growth very well. If you put aside $7000 every year (avg. $583/mo), invest it at 7%, you’ll have $100,000 after 10 years. Life is about choices. Choices imply trade-offs. In x years, you could be 30yo with $100,000, or you could be 30yo without $100,000.

3. To those of us young folks who DO have $100,000 by 30: don’t get too cocky either, especially when the bulk of it is in RRSP. From whose pockets do you think the government is going to put its hand in, to subsidize the have-nots when OUR generation grows old? Marginal tax rates on our RRSPs have only one way to go.

#178 smw on 03.08.11 at 3:43 pm

Another half story from our friends at CBC.

http://www.cbc.ca/news/business/story/2011/03/08/house-starts-canada-february.html

YOY, MOM? How about is shit up/down?

#179 Kits on 03.08.11 at 3:44 pm

shell shocked in Vancouver ….

Between November 2010 and February 2011, the MLSLink® Housing Price Index (HPI) benchmark price of a detached home in Richmond increased $190,739 to $1,099,679; in Vancouver West, detached home prices increased $222,185 to $1,850,072. In comparison, detached home prices across the region increased $51,762 between November 2010 and February 2011 to $848,645.

#180 bystander on 03.08.11 at 3:46 pm

Wealth measured in $$$ figures is useless. It’s how much one makes vs. spend that counts. And more important to look at where the make/spend trend is going.
Don’t remeber who said the following: Wealth is measured in time, not money. In other words if you have a lot of money but not many years to live, the money isn’t any good. Or if one stop working, how many months can you afford to be without a job? If you only can live for two months, then your wealth is two month :)

#181 edmonton mortgage broker on 03.08.11 at 3:56 pm

#175 Edmonton Guy in Alberta… on 03.08.11 at 3:10 pm

I would say on newer built stuff current going rate is more like $180/sqft for condo and $200/sqft for SFH. At least that’s been my personal experience.

the rest of your post, yeah pretty much bang on. we’re in some deep shit here. hope folks packed their paddles.

#182 Herb on 03.08.11 at 3:56 pm

Junius @ 171,

“I see you have the typical boomer mindset. It is all about you and then you die.”

What gives you that idea, Junius? Which generation is known as the “me-generation”?

Besides, life is a bitch, and then we all die.

#183 early mid life crisis on 03.08.11 at 3:57 pm

Correction: think i sold high. Time will determine that. Back in the day Eskimo seniors used to send themselves off on ice flows so they wouldnt be a burden to their family or village but i doubt any would step up to the plate now. C’mon old people, do you really want to bring your country down with you? Already we have the beginnings of a health care collapse, i shiver to think of what it will be like over the next 20 years. Just last week we had a lady die after a stroke, but it ‘wasn’t linked to the fact that she was being treated in the hospitals Tim Hortons’ because there were no rooms available. If I was a boomer I’d be very nervous around hospitals. When we start seeing the financial collapse b/c of the boomer weight i wont be surprised if poor prognosis patients start getting a little extra morphine for comfort.

#184 jess on 03.08.11 at 3:59 pm

The logic is that the private sector always provided better service at lower cost.That doesn’t seem to be to what happens in reality.
============================
If It Sounds Too Good … What You Need to Know, but Don’t, About Privatizing Infrastructure
Saturday 05 March 2011

….”The truth is that, rather than making money on just tolls and fees, private contractors make their money through big tax breaks and by squeezing state and local governments for payments for the life of the contracts.
In fact, tax breaks explain why the deals last generations. One tax break for leases that last longer than the useful life of the infrastructure allows investors to write off their investment in just over a decade. A second tax break lets private companies issue tax-free bonds to finance their deals. While tax-free bonds and tax breaks make it less expensive to finance these deals, the downside is that governments lose tax revenue. Losing tax revenue puts government budgets deeper in the red and worsens problems privatization was supposed to fix.”

“Highway privatization contracts also often include terms that forbid building “competing” roads or mass transit. Some even require making an existing “competing” road worse. …
Auckland, New Zealand. The private company, Mercury, that bought the electrical service for Auckland decided to save costs by eliminating backup power, by not replacing parts of the system that were years past their normal life, by doing no maintenance, by having no electrical cables in reserve and by terminating its repair crews. When they were terminated, the crews left New Zealand to find work elsewhere. All these decisions were made to increase company profits.
Those decisions may have lowered the company’s costs, but at a huge price, most of which it did not bear when the power cables to Auckland’s central business district failed. Banks, stock exchanges, restaurants and all functions that depended on electricity were hard hit. Water, sewage and all systems went down and the power outage lasted nearly two months, because it had no repair crews or replacement components on hand.
Auckland’s businesses lost millions of dollars. Companies tried to stay open by using generators, office workers climbed stairs in skyscrapers in mid-summer and generator noise and diesel smoke filled downtown. At one point, Auckland was provided power to essential facilities through an electric cable plugged into a large ship in the harbor….”

#185 kilby on 03.08.11 at 4:00 pm

NP #152
Sorry I read your bit in a hurry. Meant #46, Elmer.
K

#186 Kits on 03.08.11 at 4:03 pm

From new report just released today by CMHC:

“In Toronto, new home prices rose 2.3 per cent in December 2010 versus the same month one year earlier. The gain in prices was slightly better than the Canadian average of 2.1 per cent comparing the two Decembers.”

Oh the humanity! New home prices across the nation barely keeping pace with inflation – this simply cannot be sustained.

New home prices are irrelevant since sales of SFHs have plunged. You are an information manipulator as well as a condo slinger. — Garth

__________________________

Garth, this is from the Real Estate Board of Greater Vancouver:

Looking across the region, the REBGV reports that residential property sales of detached, attached and apartment properties in Greater Vancouver reached 3,097 on the MLS® in February 2011. This represents a 70.3 per cent increase compared to the 1,819 sales recorded in January 2011, an increase of 25.2 per cent compared to the 2,473 sales in February 2010 and a 109.3 per cent increase from the 1,480 home sales in February 2009.

Sale volumes and prices have increased in certain areas.

#187 Moneta on 03.08.11 at 4:06 pm

They should have done the opposite. We should have developed policies and incentives that gave us a 2.2 per couple birth rate so we had a sustainable society. We have been looking at these demographics for decades and doing nothing.

And please don’t tell me immigration is the entire solution
———-
Interesting point. Had boomers had more babies in the West, they would have had less money to spend so consumerism would have been contained, we wouldn’t have outsourced and then emerging country populations wouldn’t be bursting at the seams.

Aren’t what ifs wonderful?

#188 betamax on 03.08.11 at 4:28 pm

#90 Scare Crow: “one of your readers was writing about 2 co-workers who just opened up about their financial situation – royally screwed – I call total BS on that, I have never – Never – come across anyone who claims they are in a financial mess”

It was me writing about it, and they don’t think they’re “royally screwed” nor “in a financial mess”. They think they’re doing fine.

And it’s all because they think their house/townhouse is going to be worth a fortune a decade hence. I’m not kidding. One of them literally said “My townhouse is my retirement plan.” She thinks her Port Moody townhouse, currently bubble-priced at $650k, is going to be worth at least twice that in ten years (thanks to rich immigrants). She also thinks she’s going to work till she’s seventy, to give herself more years to save seeing as how she’s not doing any now, despite making six figures.

The other person has a big house way out in the sticks, which he needed for his four kids, but he similarly believes it’ll fund his retirement — and he believes that for several mythical reasons, but the real reason is that the alternative is too frightening to contemplate.

I know about their divorces and financial situations from previous conversations — they didn’t just sit down and blurt out their entire life history one day.

#189 April on 03.08.11 at 4:40 pm

#135 – Alex
Good on ya!

#190 Jim on 03.08.11 at 4:41 pm

I have 500.00 a month to invest. Currently the money is going in to 3 different types of index funds. What also do you suggest? How about a dividend stock index fund? as it would be expensive for me to buy individual preferred stocks! any suggestions

#191 betamax on 03.08.11 at 4:41 pm

#94 Happyplace: “People of boomer age don’t have teenagers, they have grandchildren.”

There are lots of boomers still in their fifties, and some didn’t have kids till their thirties. I know a couple of guys who got remarried to younger wives and had a baby at 50.

Google “boomer” — the demographic is wider than you think.

#192 JeffinPickering on 03.08.11 at 4:46 pm

Why is it every time this comes up it turns into an inter-generational mudslinging contest?
The generalizations that get made become absolutely absurd. Do people not realize how ridiculous they are when they assert that their generation is better than the one that came before it, or the one that came after?

Here’s the facts when it comes to housing, finances, environmental issues, and everything else:

*There are boomers who made wise choices. There are Gen X-ers who made wise choices. There are Gen Y-ers who made wise choices.

*There are boomers who made dumb choices. There are Gen X-ers who made dumb choices. There are Gen Y-ers now making stupid choices.

I’d almost go so far as to say they probably make them in similar proportions too.

So instead of blaming your parents, or your kids, or your grandkids, for f**king up the world, take responsibility for you can LEARN, CAPITALIZE on, and DO!

#193 Mr. Plow on 03.08.11 at 4:49 pm

Set up your own self-directed account. Steer clear of the baby plan-pushers. — Garth

Thanks Garth. But what is a “baby plan”? And where is a good spot to set up a self directed account?

Thanks for your help, number two comes at the end of the month so once he is here I want to get this set up.

#194 Gord In Vancouver on 03.08.11 at 4:51 pm

More Proof That Garth Was Right

http://www.ctv.ca/generic/generated/static/business/article1933557.html

Canadians are shifting their priorities. Paying down personal loans, credit cards, and other debt has moved ahead of saving for housing or retirement and is now the number one financial priority.

#195 Al on 03.08.11 at 4:53 pm

Real Estate prices are sky high agin in the GTA Toronto. Buyers seem to think they will be “left out” if they don’t buy now.

#196 Renting in Rosedale on 03.08.11 at 4:54 pm

#171 Junius on 03.08.11 at 2:52 pm…

“I see you have the typical boomer mindset. It is all about you and then you die”

Junius, you just don’t get it, so we (boomers) will spell it out…

The point is this — only losers blame previous generations for their own issues. Thats called entitlement and its a disease. Its akin to blaming the tide, or the seasons!

So you non-boomers stop whining, get a grip, take accountability, and solve your own problems before its too late.

If you’re too poor, do something about it for crying out loud.

#197 betamax on 03.08.11 at 5:00 pm

#153 Kitchener1: “Boomers will NOT retire at 65. thats going to be the big story.”

Today’s Globe & Mail article agrees:
http://tinyurl.com/477rveq

However, as people posting here have already suggested, not everyone who expects to work longer actually will. Lay-offs and health issues will cause many to retire at 65 or even earlier.

#198 Rick in Japan on 03.08.11 at 5:01 pm

#58 Peak Oil?

If you take the time to read the analysis of that oil field:
http://www.theoildrum.com/node/3868

You’ll find that the impact will be minor in the world situation.
As one Oil Drum poster stated:
“You know how the old saying goes: A gold mine is a hole in the ground with a liar on top.”

#199 BrianT on 03.08.11 at 5:10 pm

#168SAD-You have to understand that when a guy like Bill Gross talks it is NEVER about “telling the truth”-he is speaking out/has been told to speak out to attempt to get a result.

#200 Devore on 03.08.11 at 5:12 pm

#162 Victor

Which then begs the question: If boomers want to downsize from their McMansions, and if they can’t afford an urban 2 bedroom, then where exactly are these millions of people going to live in the years to come?

They won’t go anywhere. After they run out of money, they will look to Ottawa and whine. Sell? Sell and live where?

#201 BrianT on 03.08.11 at 5:16 pm

#163Hoof-I gotta laugh when I read comments like yours-the old people I see are running out of their physical health a lot faster than their savings. When it comes to this subject, the average person is totally delusional thanks to the MSM-I know people in their 50s who think they will be in the same shape or better in their 80s (100% of them are confident they will be around)-these people aren’t even in good physical shape NOW. You hear all this nonsense-people are living longer, people are living longer BLAH BLAH BLAH. Those old people who have actually survived didn’t weigh anything like the younger people of today when they were that age-those people are all DEAD.

#202 steve p on 03.08.11 at 5:26 pm

the true rate of interest for a 30 year mortgage is 5% not what everybody is doing now which is using a VRM at 2.2%
and ammortizing it over 30 years

$537/100k with a 5% rate vs
$380/100k with a 2.2% variable rate

this is a huge difference in the amount one can borrow

#203 Utopia on 03.08.11 at 5:27 pm

#46 Elmer

“The boomers really screwed up this country by investing in real estate instead of in telecoms…… That’s why Canada has such run down infrastructure, why Canadians today pay the most in the developed world for internet and cell phone plans…..
Thank you so much, boomers. What a useless generation”.
———————————————————

Pardon? You don’t have a clue what you are talking about Elmer. We don’t even come close to being the most expensive country in the world for land-lines, cell networks or broadband costs.

Even in terms of absolute costs we are not the most expensive. High maybe, but not the worst. We have nothing to complain about though.

When you look at our costs as expressed as a percentage of Gross National Income (GNI) we fare even better (as in dirt cheap) and are near the top ten lowest cost places on earth to buy service.

You want to see expensive? Try most of Africa (Egypt and South Africa excepted) where a broadband connection will set you back between two and ten times your annual income!!!

In Ethiopia, that high speed connection will cost the average person more than 20 times income while In Canada by comparison, our costs is estimated at .71% GNI. In other words, we pay peanuts and chump change relative to the rest of the planet. We get awesome service too. First class.

Lets keep the bitching and crying in perspective here ok. Look at last years International Telecommunications Union (ITU) report for comparative costs of information and communications all around the world. You will see we live in a pretty blessed country.

http://www.itu.int/ITU-D/ict/publications/idi/2010/Material/MIS_2010_Summary_E.pdf

#204 Coho on 03.08.11 at 5:39 pm

Guys, people lived to be about 70 a few decades ago. And one needs to work a week now to live on what 2 days work bought back then. Furthermore, we’re living on average 10 to 15 years longer. So we know where this whole retirement thing is going.

Expecting average people to become millionaires to fund their retirement is ludicrous when the majority are going more into debt each day to fund a lifestyle they are accustomed to or feel they deserve. After all, they are working hard, both husband and spouse. Why shouldn’t they deserve what their parents enjoyed, and more? But, hard work never really helped people get that much ahead, and it especially doesn’t now particularly with the mindset of using any extra cash or access to credit to buy newer, bigger and better as long as the monthly payments can be met.

Of course this can be viewed as irresponsible and that these very ones who spend like crazy will be burdens to society. But it takes all kinds to run this kind of system. Not all people are good with money. Sure, there are those who have made sacrifices to put away that 10% each month. Some have a knack for being frugal. It comes easy for them, either an inherent trait or taught at a young age to be that way. Others chase money and accumulate wealth because they are hungry for it or they enjoy it. Not all people are emotional towards money. They make money to live — not live to make money.

So, without spenders, businesses couldn’t survive, investors couldn’t make money and consumption would be minimal. We all can’t be savers in this system or it will implode. For the few winners, there need to be many losers. That’s just the way it is in this eat or be eaten system.

How many times have we heard of affluent individuals or groups going to product fairs and exhibitions and buying nothing. Of course, there are affluent people who spend, are generous and philanthropic, but many others don’t spend, per se. Instead, they accumulate wealth for its sake. They wait for Joe and Mary six-pack to spend on Kraft, Coca Cola, Sony, Apple, Microsoft, Chevron, LOC’s, while they invest in those companies and in the banks. So those who feel they’ve done their part by amassing a tidy little sum for their retirement, but view the spenders with disdain , should not, because it is those spenders which make 5, 10, 15 percent return for investors possible.

#205 Junius on 03.08.11 at 5:40 pm

#196 Renting in Rosedale,

Yes, we are losers for pointing out the obvious. Right.

You squandered so much of what was left to you by the “greatest generation” that came before you. Sorry for pointing out that you crapped the bed.

Deal with reality. The rest of us have to.

#206 Two-thirds on 03.08.11 at 5:43 pm

Now turning to the topic of newer generations…

As per Garth’s recommendation earlier today to stay away from “education savings plans”, do any of the knowledgeable b-dogs care to comment on CBN for a 2-yr old’s RESP?

Looking to build an all-ETF four-figure (for now) portfolio with growth orientation. This one seems to have pretty decent diversification across sectors and regions.

The self-directed RESP is set-up and waiting for some holdings. Thanks for any ideas.

#207 Marc H. on 03.08.11 at 5:49 pm

Who do you believe, the CMHC or StatsCan? It seems that the media can spin any story if they pepper in enough “seasonally adjusted” or “regional gains”.

Building permits fall unexpectedly
http://www.cbc.ca/fp/story/2011/03/07/4394991.html
“Lower construction intentions, particularly for the residential sector in Ontario…”

Housing sector gains in February: CMHC
http://www.cbc.ca/news/business/story/2011/03/08/house-starts-canada-february.html
“Ontario experienced a jump of nearly 30 per cent in the number of urban housing starts in February…”

WaS
Waiting and Saving

#208 Devore on 03.08.11 at 5:55 pm

#193 Mr. Plow

I think Garth just means the RESP equivalent of GIC/TFSA, or clunky mutual funds in RRSPs. Hand over your money, we’ll “manage it” for a pitiful return, while re-investing it behind the scenes for much higher rates, or skim “egg management fees”. I think with RESPs people are much more willing to look the other way because they get “free” money from the government for every dollar they put in.

RRSP, TFSA, RESP, are just investment vehicles, containers, that you can put things into. You’d manage an RESP similarly to how you manage an RRSP.

#209 Alpha Bravo on 03.08.11 at 5:59 pm

“The Canadian housing sector appears to be settling to a sustainable level that will likely ease concerns about super-low interest rates triggering a housing bubble.”
– Canada Mortgage and Housing Corp

http://ca.news.yahoo.com/canadian-home-starts-show-further-growth-february-january-20110308-054737-430.html

#210 Rob on 03.08.11 at 5:59 pm

#178 Edmonton Mortgage Broker

If you really are a broker I would love to pick your brain. GF and I share a reasonable house (income wise) with some equity, but are seriously thinking of selling.
I know many middle class earners with spec properties here in Edmonton.
Oh to have the info a mortgage broker has…would make the decision so much easier.

#211 Utopia on 03.08.11 at 6:11 pm

#71 Brian1

“There is only one country which has gone before us and will show us the way and that country is_ _ _ _ _ Japan. In Japan their stock market and real estate have never recovered yet they are doing fine, thank you.”
——————————————————–

They are not doing fine Brian. With a debt to GDP exceeding 200% that is almost all funded out of national savings they are headed to hell in a handbasket. In other words, they are dead-ass broke. The government can never repay the citizens the money that it borrowed through bond sales, there is nothing left for a rainy day and the country has one of the oldest average populations on earth. They are going into retirement (the whole country) with no money set aside and it is not likely they can borrow from abroad to fund the huge shortfalls on the horizon.

Presto: Hyperinflation will be the outcome. Only deliberate devaluation of the Yen can cancel the debts. I guarantee that the presses will be running non-stop.

#212 mac on 03.08.11 at 6:12 pm

From a loser at 28…

Downside…

-I worked through high school to save for college. That didn’t net me much at 5.25/h.
-Bubble burst while I was in college, didn’t do much for job prospects
-Lived like a rockstar though my early 20’s.. paid for it
-Moved more times than I can count
-No where near 100G in liquid

Upside…

-Own my vehicles
-No debt
-Own a crap load of tools for nearly every profession and even more toys
-Own land
-Lived like a rockstar through my 20’s!
-Actually enjoy myself
-Investing in learning about technology new and old that will allow me to live free(ish).

I know that this may not sound like a stellar plan, but I don’t think anyone has a grasp on how things are going to shape up in another 20 years. My plans are recession proof, inflation proof and deflation proof. Best part is the government isn’t going to take a huge chunk out of my savings because I HAVE NO RRSP!!! I know… terrible right?

Garth I appreciate your arguments but your perspective is limited to your life experience and education. Those who wish to buy rural, live a sustainable lifestyle and invest in having skill over savings will do quite well (and will be mobile if need be). Do I feel like a loser because I don’t have 100K? Absolutely not sir, in fact I feel sorry for those who do; as they haven’t seen what I have and likely do not posses the skills.

Invite me over for moss and snails some time. — Garth

#213 Derek on 03.08.11 at 6:28 pm

#121 Mackie on 03.08.11 at 12:10 pm wrote:

You know what would be interesting Garth? If everyone on this blog gave their: age, marital status, number of dependants, city where they live, renting or own, mortgage cost, rental cost, RRSP value, TFSA value, net worth.

You forgot, boxers or briefs. — Garth

Hey, what about us Scotsmen ?

…or frost. — Garth

#214 Expand Your Means on 03.08.11 at 6:38 pm

Tell us more about what you are trying to sell on this blog. — Garth

Salvation.

Thanks for clarifying that, Jim. — Garth

#215 hafshik on 03.08.11 at 6:52 pm

There are lots of comments that saving 100K by the year 30 is almost impossible… well I think with proper planning and attitude it can be done….

I am 29, immigrate to Canada 9 years ago with $26 in my pocket, took OSAP loan did my engineering … started work with 45K in late 2005 now in low 6 figure with NRC. I had paid off my student loan, own my car (no loans) and have 250K in liquid assets and 60K worth in pension fund.

Though, to get to this level, I worked at odd jobs while taking 5 courses and full time co-ops jobs at RIM with full engineering course load. Don’t eat out, rent the brand new 2bd condo for $850, efficient tax planning (good with basic math) download pirated movies and find deals for everything else…

By the way I am married (3 years now) and my wife doesn’t work (taking free ESL) and my mom 64 no income and pension live with us plus we don’t live cheap, eat well, take lots of small vacations… it just I never ever pay full price for stuff….

Shop in US… :)

Just need to figure out where should I invest my savings of about $4K a month as buying house is 3 to 5 years away… any advise ?

Thanks Garth for sharing you depth knowledge of investments and house porn.

#216 bystander on 03.08.11 at 6:58 pm

#207 Mark H. said

” Who do you believe, the CMHC or StatsCan? ”

Believe neither one of those, nor anything else except your own logic. Stop looking at their press-releases. Go out and see the world through your own eyes.

#217 Renting in Rosedale on 03.08.11 at 7:01 pm

Junius, I sincerely hope you’re not in charge of anything, ’cause based on your comments you wouldn’t make a good leader

#218 JJ on 03.08.11 at 7:03 pm

I think the opposite to what Garth is suggesting might happen. Boomers might have no choice but to stay exactly where they are, in their current home and trim back their travel dreams and RV. When the SHTF, a roof over your head is #1 priority isn’t it?

No, it’s income. — Garth

#219 Brian1 on 03.08.11 at 7:03 pm

I am humbled that I was part of an —-intelligent discussion but my thesis is with the crash of the Dow. It may be that when a house crash occurs here then there will be many who will be raiding their RRSP’s and mutual funds. If the Dow does crash then I don’t see how the TSX will escape. If it does then ‘it is different here’. Much of this depends also on China and the prediction of deflation from Gary Shilling. If we have deflation the the I think the oil sands are finished. Yet, so far in my reading of Shilling, he has high hopes for the oil sands. So I don’t get him yet.

Why would the Dow crash now if it survived 2008-9? — Garth

#220 Coho on 03.08.11 at 7:10 pm

#118,
Jon Stewart exposes the lavish lifestyle of Wisconsin teachers.

http://www.mediaite.com/tv/jon-stewart-exposes-the-lavish-lifestyle-of-the-american-public-school-teacher/

Very good! It just goes to show how mouth pieces for the parasite Wall Street crowd support such a wide disparity of “entitlement” between two groups of people. It really shows why this world is in such a mess, when people that produce nothing of real value and under such dubious means are viewed by those populating the airwaves as being “worth” many dozens if not hundreds of times more in annual salary than mere teachers.

How is it fair that trillions in taxpayer bailouts have kept these parasites in multi-million dollar a year lavish lifestyles without a skipped beat, but 50K plus benefits for teachers is feeding at the public trough?

Another example of how black is spun to be white and deserving while white is demonized and blackened as being unworthy.

#221 EB on 03.08.11 at 7:14 pm

#35 – Personally I come here for solid financial sense, but Garth’s not the go-to guy for compassionate understanding of the human condition.

Bite me. — Garth

#222 Tony on 03.08.11 at 7:27 pm

#85 Montrealer says:

I’m far from $100k invested, but I’m ahead of most with mortgages. and I rent a house, convinced the girlfriend that we’d be renting for a long time and she finally understood it was the wise move.
She still tells me sometimes “it will be fun when we will be house hunting” but I try to change the subject.

________
You’ve just explained what keeps driving the house economy. . .women want families and women want houses to raise their children. Men want a roof over their heads that they can tell their buddies is “theirs” when they invite them over for beers. Wait until you marry your girlfriend and see how happy she is about renting forever.

I always hear a common theme from the “renters” on this forum. . .”Me! I don’t need a house! Who wants to be tied to that ball and chain! I’d rather be liquid!” Yadda Yadda Yadda. . .It’s almost like they are pissed because they missed the boat and now ownership is like a “club they can’t afford”. . .so they sit on the sidelines and sling stones at all the home owners who are partying it up because they decided they wanted a roof for their families and a place of their own.

News flash for Garth et. al. . .not ALL home owners are speculators looking for a fast buck, or broke rejects looking for equity to finance a new car.

I could say that investing in the markets is ludicrous too. I actually believe that too by the way. You can’t hold a bag of money over your head when it has devalued to the extent that it won’t even soak up the rain water falling on your head. Markets crash too. Just revisit the DOW 2 years ago. Real estate crashes also. . .and the cycle continues. People hold onto things of value when times are tough–that usually means things that are tangible–like gold, and silver, and homes built out of wood and bricks. I had many friends brag to me about the 6%-8% they were making on their mutual funds back in the day. . .I was too lazy to care about the 2.3% that I was averaging. . .odd thing is. . .once the merde hit the fan I was unaffected. . .lot’s of my friends lost their shirts.

The same people that are complaining about how they would “never want to own a home” are the first ones that will be looking to purchase a home once the prices take a tumble of 15-20%. Try extolling the virtues of renting to your teenagers. Or. . .try inviting your kids friends over for playdates and when the parents get there see what their faces look like when you tell them you “only rent it”. Owning is a way for people to be upwardly mobile–it always has been. Get a good job, buy in a nice neighbourhood for your kids, meet the next generation of people who make policy decisions. Become their friends. . .it’s always been the same and it always will be.

Owning a home is larger than just an investment–it is what humans have done since they moved to caves. Speculators be damned, they will be the first to scatter like bugs once someone shines a good flashlight on the RE market. . .but the families who are in for the long haul, the ones who bought what they could afford (wisely). . .the ones who wanted a home for their families (not to turn a fast buck) will remain and prosper. . .and mark my words. . .they WILL live to see the day when their house investment grows beyond what they paid for it. They are not making more beach front properties, but the world is making more people every day. . .there is over a billion people in China that want the quality of life many of us have–many are more educated then us, with more money to spend. Wake up.

If you don’t believe me follow Garth into his bunker for another sermon and take a toke from his peace pipe. And don’t forget to buy one of his books on your way back to the light–remember folks, that IS how he makes his money. Lighten up Garth!

Actually that is not how I make my money, so stop embarrassing yourself. Your argument pumps houses and denigrates financial assets. Successful people have both. Maybe one day that will include you. Keep trying. — Garth

#223 Utopia on 03.08.11 at 7:35 pm

#87 eddy

“Here’s a good article about the history of banking”
‘How Venice Rigged The First Global Financial Collapse’
———————————————————-

Thanks Eddy. I read the article end to end.

It was fascinating. Notable was how comparisons were made to Gold versus Silver ratios and how this resulted in trade degenerating. How commodity speculation destroyed farming itself and conclusions about why the collapse of most Eurasian societies and the resulting depopulation actually led to higher prices and shortages instead of a greater supply of goods.

Got any more of those?

#224 jess on 03.08.11 at 7:38 pm

From the tax justice blog:

Tough questions to be asked on U.S. Foreign Account Tax Compliance Act (FATCA) says expert Cayman News Service
Mar 7 – Although FATCA does not come into effect until 2013, offshore banking jurisdictions face tough questions on handling US accounts and wire transfers.

All wire transfers around the world using US currency must pass through a US bank regardless of the starting country or final destination — a currency never leaves its country of origin — this is standard in international banking back-office operations. Once the wire passes through the American bank, the US Internal Revenue Service therefore effectively has control on how that transfer will be treated for tax purposes. And If the US receives a large increase in tax revenue following the enforcement of the FATCA then other jurisdictions, including the EU, may follow suit.
=========================
U.S. Sanctions uncover billions of dollars Financial Times
Mar 7 – The sanctions, imposed by President Barack Obama just over a week ago, are so wide-ranging that they caught assets US banks were merely looking after on behalf of overseas banks in an arrangement called sub-custody. Read this. It’s significant. Again, as per the Cayman link above – standard back-office operations are coming into play in the deterrence of illicit asset flows and custody.

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

Clearstream refresher
http://en.wikipedia.org/wiki/Clearstream

[17/02/2011] Because the journalist Denis Robert has been finally cleared by the Court of Cassation after sixty trial, his books about Clearstream will finally be reissued. Back ten years of legal harassment

Denis Robert: “What they have done is too … disgusting” Nouvelobs.com

Journalist Denis Robert exposed a secret system of hidden accounts within Clearstream (formerly Cedel), the Luxembourg-based securities clearing house. The core business of Clearstream is settlement and safekeeping/custody – back-office operations” – for Eurobonds. From the Clearstream site Sep 2010: “Clearstream’s customers comprise approximately 2,500 financial institutions in over 110 countries. With almost €11 trillion in assets under custody [Clearstream] is one of the world’s largest settlement and custody firms for domestic and international securities.” Denis Robert has finally been vindicated after 60 trials and 10 years of legal harassment, and his books are being re-issued.

#225 NP on 03.08.11 at 7:42 pm

#90 Scare Crow on 03.08.11 at 9:47 am
Okay – I am itching to add my 2 cents to today’s blog – one of your readers was writing about 2 co-workers who just opened up about their financial situation – royally screwed – I call total BS on that, I have never – Never – come across anyone who claims they are in a financial mess

……………

I can assure you that a younger couple we know told us about 2 mos. ago that are screwed financially. Both have been divorced, pay alimony payments and she has a great young son and is paying for her daughter’s univ. in another prov. We like both. My husband told me the other day they’re going down south tho they are in debt up to their eyebrows.

#226 Derek on 03.08.11 at 7:51 pm

What happened to our pension fund ?. Russian sabotage? SMERSH ? Time to bring in the CIA.

You couldn’t make it up.

#227 S.B. on 03.08.11 at 7:55 pm

New condos in Toronto, opposite Roy Thompson hall.

Starting at $489,000 :o :twisted:

http://www.theatrepark.ca/flash.php

#228 Tony on 03.08.11 at 7:57 pm

Actually that is not how I make my money, so stop embarrassing yourself. Your argument pumps houses and denigrates financial assets. Successful people have both. Maybe one day that will include you. Keep trying. — Garth
________

I am not in the rat race and refuse to take part in it. I don’t believe in the sustainability of “market money” or what it stands for. Investing, and trying to “time” the trade of commodities or whatever is a game. I don’t subscribe to this game because I don’t believe that people who make their livings this way are contributing any “usefulness” to society–rather they are playing with a set number of cards and consistently trading those cards until they end up financially ahead. The price of someones gain is someone elses failure. I don’t need to be rich and diversified like you Garth. i am content with my lot, and thankful for luxuries I do have.

I try to live sustainably by the means I have created for myself. I have no debt and own a home bought at the right time (years ago) with a lot of disposable income that I have not invested because unless I risk it the bank will give me nothing. I am not willing to risk my money on a system I don’t subscribe to. I’d rather purchase things I need and experiences for my children. I hope house prices go down (even below what I paid) so that my children can afford to live near me. I teach my children the value of real labour, and contributing to society.

Don’t assume that everyone’s end goal is to have a successful portfolio. . .many people, good people, just want to get by and take the odd holiday. I knew a long time ago I would not be a millionaire. . .but in this world, it’s almost common place to think that if we raise a responsible citizen (instead of a movie star or singer) we’ve somehow not “won”.

Meaningful lives are lived outside of the spotlight, outside of money. . .and dare I say, in debt.

The problem is not your opinion, it is the way that your thinking (and the thinking of many people on this forum) is so wrong but yet so endemic.

Who let all these damn hippies in? — Garth

#229 Azza on 03.08.11 at 8:11 pm

There will be zero impact on the stock market since for every mutual fund unit or stock they sell, there is a buyer. How does this possibly cause a ‘crash’? That money will not disappear, simply change hands. How did you arrive at this conclusion? — Garth

Alright, “crash” was wrong world, but depreciation. Who will be buying at current (or higher) valuations? We are almost at pick in TSX. If 1/3 of population is selling there is not enough buyers to buy to support valuations levels. 1/3 of population that is in school or diapers will not buy stocks and young adults are busy loading on cheap credit, tuition credits and iPads. I know that retail investor is not the major player on stock market, but it can shape market down.

#230 pigeon patties on 03.08.11 at 8:30 pm

#90 Scare Crow
there are a hundred different variables that can alter any outcome – so relax – buy your home that was intended for shelter – I do hope for a moderation in prices and live life as its meant to be……

===========================
Are you crazy?
Everyone on this blog knows there is only ONE outcome. Prices fall15%, everyone who owns a house is going to lose it. Kibbles and Bits and tent cities til you die.

#231 Elmer on 03.08.11 at 8:32 pm

Renting in Rosedale:

I call it how I see it and if that hurt your feelings it’s not my problem. So up yours.

#232 Elmer on 03.08.11 at 8:37 pm

Correct me if im wrong but if it wasnt for your “boomer” parents.

You wouldn’t even BE here.

Nope, my parents aren’t boomers. They are the silent generation. They had me in their 40s.

#233 Elmer on 03.08.11 at 8:39 pm

Pardon? You don’t have a clue what you are talking about Elmer. We don’t even come close to being the most expensive country in the world for land-lines, cell networks or broadband costs.

I never said most expensive in the world, I said in the developed world. Looks like you need to work on your reading comprehension, buddy (in your defence you’re probably a boomer so your eyes aren’t too good).

#234 hahaha ouch my ribs! on 03.08.11 at 8:45 pm

hey a few assorted comments

#136 Expand Your Means; gotta say man you sound like a total wanker. Or a con man. Go pound some sand, please.
#212 mac; ignore Garth’s taunts about inviting him over for moss and snails. FWIW I didn’t even have $100 in the bank when I was thirty (am 52 now). No worries, pretty sad that the $$$ in the bank is the yardstick of life huh?

#235 hahaha ouch my ribs! on 03.08.11 at 8:47 pm

one more comment to #228 Tony…..good for you!

Good night.

#236 pigeon patties on 03.08.11 at 8:49 pm

#105 Cowboy on 03.08.11 at 11:02 am
Has anyone recently heard about Americans selling their second vacation homes in other countries? During this cash strapped time for them (and obviously coming for us eventually), I just wonder, you don’t hear anything about all of these luxuries for sale. That is the first thing I would sell. For example, I have seen alot of Americans buying in Nicaraugua several years ago, as cheap as it is there, they can easily spend $700,000 for a place on the beach. I wonder if prices have fallen in Costa Rica etc. It makes sense that they would but I have never found any concrete info regarding this.
This was/is yet another facet of self-indulgence Americans and Canadians purchase and think they can afford because everyone else is doing it.

——————————-

Americans bought all the beach property in North-west Costa Rica. Pumpers, dumpers and developers moved in and made a killing. Like Chinese buyers in Richmond, they liked to be together. Many million dollar condos with limited water supply and daily power outages. Too many houses ,not enough infrastructure.

Prices now are 50% off , another30% and they will be priced right. Other parts of CostaRica prices are more stable and affordable.

#237 Elmer on 03.08.11 at 8:50 pm

It’s not impossible to have 100k by 30, but it’s very unlikely unless you were given some kind of help from your parents.

It takes most people 5 years to complete a 4 year degree, and until recently most people didn’t even start university until 19 because of grade 13 which was only recently canceled. So on average people were graduating with a bachelors degree at 24. Assuming one graduates with the average student debt of 23k, and pays it off in 3 years (very optimistic) one would be 27 before he could finally start saving money. Assuming one then starts socking away $1000/month and earns 8% on it, he would have 40k by age 30 and 100k by 34. Now some will say “well if you’re smart you woulda worked part time during university and graduated with no debt” but that is very unlikely. I worked while going to university and still needed a student loan because part time work doesn’t provide enough money for tuition (although I also bought a used car).

#238 Nostradamus Le Mad Vlad on 03.08.11 at 8:52 pm


#222 Tony — “. . . Wake up. Lighten up Garth! . . . stop embarrassing yourself.” — Tony and Garth. Are You Embarrassed Easily? Sorry, couldn’t help myself. I’m off to have my next life’s mid-life crisis while I’m still here. Sort of killing 13 birds with one stone!

Frazier vs. Ali Forty years ago. Anyone remember? I do. This was the first of their encounters.

#239 Mister Obvious on 03.08.11 at 8:55 pm

#83 jane54:

“…Makes sense as a 25 year old will do the same job for half the money so why hang onto the boomer…”

You forgot to mention that the 25-year-old will also eat twice as much crap while working at half productivity.

#240 Herb on 03.08.11 at 9:25 pm

Junius,

a personal question if you don’t mind.

Are you the for-real Junius, or the jackass who impersonated him a while back?

#241 BrianT on 03.08.11 at 9:36 pm

#220Coho-Look-the people in Wisconsin that have to pay that teacher $50000 plus benefits aren’t making that much and they don’t have a pension. So what are you saying-they should just pay and hope it will trickle down? That taxpayer in Wisconsin cannot get money from Wall Street grifters-jeez they voted for hope and change and look what they got.

#242 john m on 03.08.11 at 9:38 pm

125 Matthew on 03.08.11 at 12:27 pm

Dear Garth,

To all those who say having $100K by the time you are thirty is impossible – you are dead wrong.

I am 22, paid for university myself and have about $40K in investments. All of which came from my savings – no handouts here……………….<<< yeah right .. your either a remarkable genius or most likely an extraordinary bullshitter :-)

#243 edmonton mortgage broker on 03.08.11 at 9:39 pm

#210 Rob on 03.08.11 at 5:59 pm

i’m the real deal. not sure how i’d get you my contact info. i’m not about to post it on this board for fear of a lynch mob showing up to my office with pitchforks.

They’re coming with Glocks. Relax. — Garth

#244 Herb on 03.08.11 at 9:40 pm

The Harper Government in a nutshell:

http://www2.macleans.ca/2011/03/08/the-commons-stephen-harper-ever-undaunted/#more-176474

#245 bridgepigeon on 03.08.11 at 9:58 pm

212 , 228
Respect

#246 Brian1 on 03.08.11 at 9:59 pm

The Dow may crash because of severe decline of consumer spending.

Why? Consumers have more to spend now than they did two years ago, and the market survived. Did you just make this up? — Garth

#247 BRando on 03.08.11 at 10:06 pm

If someone works hard, sets goals and sticks to them, hitting $100K by 30 is realistic (not saying it’s easy).

Too bad the ‘average’ person is not willing to give up their ‘nice-to-haves’ to get there.

I’ve had no hand outs, paid board to live at home growing up, fully paid my own way through school, etc. And yet I’ve never felt that I’ve ‘gone without’. As some others have pointed out, holding off on getting that ride as soon as I could ‘afford it’ was the easy financial decision to get me where I am now. Currently 26 and should hit 100K at 29 no problem.

All the naysayers need to own up to the decisions they’ve made and stop whining.

#248 S.B. on 03.08.11 at 10:16 pm

Laid-off Boomers do not stand a chance. Not even with an entry level job for scraping by. They are forced out of the workforce by socialism.

http://www.torontosun.com/news/torontoandgta/2011/03/02/17473531.html

15,000 Pan Am jobs for diverse workers

A short-list of companies competing to build sporting venues for the 2015 Pan Am Games have been whittled down to three. More than 15,000 construction and other jobs will be created during the next four years of building in Toronto, Hamilton, St. Catharines, Caledon, Minden and Welland, said Peter Wilson, vice-president of Infrastructure Ontario.

About 200 Toronto-area business people on Wednesday packed Victoria College at the University of Toronto, seeking opportunities available under a 2003 City of Toronto diversity policy, that gives preferential treatment to Aboriginals, women, visible minorities and the handicapped.

Wilson said the policy ensures that a number of workers getting construction jobs are from disadvantaged Toronto communities.

#249 Dan in Victoria on 03.08.11 at 10:18 pm

Hmmmm. Pretty disgusting display of manners here the last few days.

As my grandma would tell me “I’m going to take you out behind the woodshed and give you a good thrashing”
Some of you need that, to bad granny isn’t here anymore to dole out her frontier justice.
That old girl had a grip that no one could break.
Not too bad with a piece of willow neither.

You have someone who is gracious enough to share with you what he foresees as the possible future.
Right or wrong day in day out he puts up with this shit.
All in the hopes that someone somewhere will benefit from it and have a better life.

Why is it so evil and hard to grasp for some of you?

If you came into my house and displayed manners such as some of you have the last few days I’d kick your sorry asses out.
I appreciate the thoughts of some of the better posters who come here and contribute, sadly less and less.
I don’t agree all the time with all the posters but I politely listen to their thoughts, think about it, retain or disregard it.
Who the hell cares how old you are, how much money you have, or how frikin big of an ego you have.
Leave it at the door, contribute to the discussion and leave your petty gripes somewhere else.
Then maybe all of us collectively can make this world a tiny bit better.
Its not hard, but it requires compassion, patience,sharing and kindness.
Smarten up.

#250 edmonton mortgage broker on 03.08.11 at 11:00 pm

#210 Rob on 03.08.11 at 5:59 pm

Rob, i wouldn’t go so far to assume that a mortgage broker is privy to more info on the state of our market than the typical participant of this blog. In fact, i would say most brokers are drunk on the cool-aide and haven’t a clue just how bad it is and how much worst it’s about to get.

i’ve been in this business for 9 years now and i’m also a real estate investor. it was my real estate investments in edmonton that brought me here from Toronto. i’ve been actively liquidating my portfolio for the last 3 years and even sold my principle residence and renting. i can say that in Edmonton and Calgary, more so than Toronto, speculative buying was rampant among my clients and those of my colleagues. It certainly seemed like everybody and their brother owns an investment property and although alot of idiots made alot of money in 2005-2006 buying up what they could, it was shear luck.

There is no doubt in my mind that prices here will continue to fall. Alot of those idiots are still holding onto often vacant properties that are bleeding them dry.

in my middle-upperclass neighbourhood where i sold, i’m starting to see a handful of bank owned and foreclosures. The builders are pricing their inventory lower and lower everyday and all i hear now on radio are ads flogging starter homes. it drives me nuts.

so to answer your question, if you have equity in your house, price aggressively and sell. i way i look at it, in Edmonton/Calgary the downside risk right now is far greater and any upside potential.

#251 Utopia on 03.08.11 at 11:13 pm

#233 Elmer

“I never said most expensive in the world, I said in the developed world. Looks like you need to work on your reading comprehension, buddy. “(in your defence you’re probably a boomer so your eyes aren’t too good).”

——————————————————–

Oh I know exactly what you wrote Elmer.That’s why you got the post response from me. You seem short on perspective and long on attitude.

#252 meh on 03.09.11 at 12:23 am

student_loan @10: I too graduated from my master’s program at 26, and I just turned 30 recently…I’m nowhere near having my student loans paid off. Most of my friends who did a master’s degree haven’t finished paying off their student debt either, except for those who were fortunate enough to have some form of parental help somewhere along the line. If you’re in your late teens or early-to-mid twenties, you generally don’t have the resources to be able to fund one degree yourself, much less two, without going into significant debt.

Although I suppose that depends to some extent on your major. It’s quite possible I wouldn’t’ve needed a master’s degree if I’d majored in something other than the humanities in undergrad (and I know I would have had more earning power in my part-time and summer jobs). You have options with a bachelor’s in engineering that you don’t with a bachelor’s in history. But not everyone is cut out to be an engineer.

(Do I need to note here that as a student, I never owned a car, cooked 99% of my own meals, and certainly never spent more than $400/month on rent? Usually less – I always had roommates. Being frugal as a student doesn’t mean you’re piling up money in a savings account; it just means you’re not accumulating quite as much debt.)

Maybe I *should* have a hundred grand at this point in my life – I’d certainly prefer that to be true. But I don’t quite see how *I* could have managed it, given my talents and circumstances and the jobs available to me. I have never led an extravagant lifestyle, and still don’t, but there’s only so much I can squeeze out of my paycheque. (Plus, right now all my extra money goes toward paying for some long-postponed dental work…which is quite expensive, and is a direct result of never being able to visit the dentist as a child or teenager. I would point out that the consequences of abusive childhoods can be financial as well as emotional and physical.)

I may not have much in the way of savings, but I do have fairly good career prospects, and I expect my salary and savings will continue to increase from here on out. I’m proud of what I’ve accomplished so far in my life; it wasn’t easy to get here. If not having a hundred grand right now turns out to mean I won’t have financial security later in life, then that’s just the way it is. I’ve run the numbers, and I think (hope…) I’ll do all right. I don’t have any problem with spending frugally and saving; I *know* what it’s like to be poor, really poor, and I’m determined to never let myself be put in that position again. I didn’t have any choice about it as a child, but I do now.

#253 morry on 03.09.11 at 12:44 am

“This week a magazine that leaves glossy droppings on the doorsteps of Toronto’s horsey set ”

Can you name the mag and the issue that will feature you and the others you mentioned. Curious as to what Sherry Cooper has to say. a well as you of course …

I will reprint here. — Garth

#254 Brian1 on 03.09.11 at 6:28 am

The American housing crisis is not over.

#255 Brian1 on 03.09.11 at 6:40 am

Utopia: James Fallows The Atlantic 26 Feb 2011;
Current Account surplus $194 billion
The Yen has risen 65% against the U.S. dollar over last 20 years.

#256 Brian1 on 03.09.11 at 6:45 am

Consumers will retrench when things show worse. If our house prices fall along with Australia there will be pressure on the faith of Americans.

#257 Steven Rowlandson on 03.09.11 at 9:09 am

Hello Garth.
When a young man graduates from high school he needs 2 things to proceed in life while in Canada.
1.

#258 Abitibidoug on 03.09.11 at 12:52 pm

In response to post #74 by Rick in Japan:
Interesting comments you make. All we hear are the horror stories about how poorly Japan is doing but, except for the nagging debt problem, you tell a different story. Contrary of what we’ve brainwashed to believe, a society without growth could be quite civilized (as well as respecting environmmental limitations) and a model for the rest of us to follow. So how did Japan get so much debt in the first place? Likely because they bought into the flawed western model of continuous growth forever, and borrowed like crazy to try and maintain it. Again, Japan could serve as a model of what to do, and what not to do, in the years to come. Good posting, Rick in Japan!

#259 Abitibidoug on 03.09.11 at 12:57 pm

In response to posting # 239 by Mister Obvious:
Also keep in mind the older boomer may have their debts (including mortgage) paid off so they don’t need as much income and be quite willing to work for less than the 25 year old.