Don’t count on it

Yesterday a poster asked where to park $400,000 for a year. It’s got to be insured, he said. And so others told him about CDIC – the Canada Deposit Insurance Corporation – and the limits it places on guaranteed investments. Too bad it’s bunk. In reality, in Canada, there’s no insurance against a big bank failing, and taking your money along with it.

Sure, I know all about the CDIC rules. The federal agency tells you it’ll insure deposits of up to $100,000, per account holder, per bank. So, a couple might think they have insurance of $300,000, a hundred for each and other hundred for a joint account. In fact, I’m constantly amazed at the people I run into who have meticulously doled out their nestegg among five or six banks, to ensure their money is ‘fully guaranteed.’

It’s also interesting how many people think this insurance extends to everything they buy through investment dealers and brokerages owned by the banks – outfits like CIBC Wood Gundy or TD Waterhouse. Of course, it does not. And unknown  numbers of Canadians also believe all the products they get at banks are insured, while the same products bought at non-banks, like Investor’s Group or Manulife, aren’t.

For the record, deposit insurance only applies to deposits, wherever they are. That includes savings accounts, term deposits and GICs. Yeah, the stuff that pays you less than inflation to own it, with a negative rate of return. Not covered are the other major product banks flog, mutual funds.

But all this is largely irrelevant, since deposit insurance for our Big Six is illusory.

As you may remember, during the financial crisis of three years ago, there were runs on banks. In the US, Indymac was emptied by freaked-out depositors (and failed), and in the UK, people lined up for hours desperately trying to get their cash out of Northern Rock. Both banks were ultimately taken over by federal authorities, who also moved to goose deposit insurance and stem public panic.

It worked. Along with massive injections of cash into the banking system, confidence was restored. But the cost was gargantuan. Even in Canada, the feds quietly spent the better part of $100 billion buying mortgage portfolios from our banks, to ensure they were flush with cash. Taxpayer cash. But unlike in the States and elsewhere, deposit insurance here was left at $100,000.

So, why do I say it’s illusory?

Well, let’s look at our largest bank, the Royal. It’s a massive corporation and, by all accounts, superbly run. It makes a pile of dough and shares it generously with stockholders.

Among RBC’s liabilities is $161 billion in personal deposits, held mostly by individual Canadians. And how much actual cash does the bank have (according to its annual report)? Just over $9 billion (and some of that is loaned out to other banks at any one time).

So in the unlikely instance the bank had to suspend operations or actually failed, there would be a shortfall of at least $150 billion payable to depositors. And that’s where CDIC comes charging in on its white horse. Sort of. Problem is, CDIC apparently has only $2.1 billion in assets. So that leaves RBC customers short about $148 billion. But that is more than half of the entire federal government’s budget, which means the country would have to be shut down (including education and health care) to look after the depositors of one bank.

Sadly, though, if the Royal tanked, you can bet two or three of the other guys would as well – so you see the problem? There’s not enough cash in the banks or present within in the government to pay depositors if one of the Big Six folded.

So how does this work in the US, for example, where deposit insurance is $250,000 per account?

Well, they don’t have just six. There are 9,459 American banks with deposits of $100 million or more. Of those, only 22 have deposits of more than $50 billion. So the odds of getting your money back if the Second National Bank of The Adirondacks tanked are pretty damn good. With CIBC, not so much.

Am I saying our banks are at risk?

No. They’re not. And you won’t in your lifetime be reading about the failure of Royal, BMO, Scotia, TD, CIBC or National. If any one of these guys went down, you’d better have lots of ammo and canned squirrel.

But parceling money up and shipping it around between banks, in deposit instruments which guarantee you’re backsliding, just because you think this is a safe strategy, is actually augmenting risk. You’d be far better buying shares in these banks, or their bonds, or their preferreds because you’d be munching on their profits.

And your rate of return wouldn’t be less than zero.



#1 JohnnyBGood on 05.13.11 at 9:19 pm

CDIC insurance is a confidence game. Its purpose is to protect the banks by mollifying savers’ anxiety so savers will loan their money to the banks in order to help keep the banking system liquid. What would happen if a large Canadian bank actually failed is anyone’s guess, but don’t count on the CDIC to protect your ass(ets).

#2 Hoof - Hearted on 05.13.11 at 9:20 pm

Numero uno

#3 Keith in Calgary on 05.13.11 at 9:21 pm

Since 2006 I’ve had a 10% coupon paid by the government of Brasil on my bonds.

They mature in 2012.

I’ve doubled my after money after tax, and am now a multi-millionaire in another currency, and in another country, where the minimum wage is $250 USD+/-…… is less than 50 cents a can…….and it is 30+ degrees celsius on the beach. The tax bracket is lower, the cost of living is waaaaay less, and even the poor people are smiling.

FU Flaherty…….

Nah, Nah, Nah, Nah…….

Nah, Nah, Nah, Nah……

Hey, Hey, Hey……..


#4 Hoof - Hearted on 05.13.11 at 9:24 pm

I wonder if this epiphany will scare people ?

I recall a news feature in the US where Gov’t officials walked into a bank, informed the manager they were closing it down, but held depositors hands and assured them they were covered up to $250,000

#5 Oli on 05.13.11 at 9:29 pm


#6 DBL on 05.13.11 at 9:38 pm

Someone , I’m not sure who once said “there is often more risk in not taking a risk than there is in taking a risk.”

#7 Crazy on 05.13.11 at 9:39 pm


#8 rooser on 05.13.11 at 9:39 pm

Aaawesome fiiiirst.

#9 Howdy There on 05.13.11 at 9:41 pm

“Among RBC’s liabilities is $161 billion in personal deposits, held mostly by individual Canadians. And how much actual cash does the bank have (according to its annual report)? Just over $9 billion (and some of that is loaned out to other banks at any one time).”

“Problem is, CDIC apparently has only $2.1 billion in assets.”

Go to your bank, and remove your money now.

#10 daniel on 05.13.11 at 9:42 pm

Can’t wait to see how many people say, “first”.

#11 Dirt Dog on 05.13.11 at 9:44 pm

Still HUGE sales prices on bad houses in North Van. Sale price $110,000.00 over ask on crap house. West Van… Offer from the 2nd place loser to buy the contract from the winner for $300,000.00 over the sale price…..Caucasian on both ends. I have been 30 years in the business, even the newbies are astounded. Unreal…just UNREAL… It’s going to be really Ugly getting out of this mess!!!

#12 Bill Grable on 05.13.11 at 9:44 pm

If this doesn’t scare the GIC out of you, nothing will.

Wait a sec’ – just thinking – there are a ton of squirrels in Stanley Park.

Sorry, gotta go – I have to grab my unregistered “Long Gun” and head out.


PS. One update – our owner decided to list this joint – I can’t too specific, but – there was to be a first Open this weekend.
NOTHING. NOT one person expressed any interest.
A year ago, even a few months ago – there would have been fistfights to get to this place – now, POOF.

As they say in Mexico = “Que La Vida”!!

#13 John on 05.13.11 at 9:49 pm

Sure, but where should he park $400,000 for a year?

#14 squidly77 on 05.13.11 at 9:59 pm

If you owe the bank $50,000 and can’t pay, you have a large problem.

If you owe the bank $50,000,000 and can’t pay, the bank has a large problem.

Only one thing is absolutely 100% guaranteed in this world. Death. Everything else ‘is at your own peril’

#15 Nostradamus Le Mad Vlad on 05.13.11 at 10:05 pm

“So, why do I say it’s illusory? . . . since deposit insurance for our Big Six is illusory.. . . to ensure their money is ‘fully guaranteed.’

About time sheeple realized the only two things guaranteed in life are taxes and (maybe) death. Okay, one thing. Bank bailouts, crooked govts., auto bailouts, etc. are all part and parcel of a freaked-out system.
#3 Keith in Calgary — Nicely done!
Thought For The Day

“Civilization and anarchy are only seven meals apart.” — Spanish Proverb —
Not only Manitoba flooding . . .

Apocalypse Bunkers Garth, you’re in good company!

Fukushima latest.

IMF They hold all the cards, so what do they care how much debts grow? Ireland and Greece Will they leave the Euro? What have they got to lose? Nothing.

Lone Star Great Way to go, Texas! Glaciers Al Bore may have given some fraudulent numbers.

Good Part-Time Income “Remember, the Indiana State Supreme Court just ruled that you have no right to resist an unlawful intrusion by a police officer into your home!”

Perpetuity War and its suppliers (TPTB) is all the US seems to have left. US Demands Guess they are becoming desperate. “Also, please remember; as of 3 May,2011, the US Embassy was closed indefinitely.”

Joke Of The Decade Obama’s re-election campaign is well underway, but dubya and Obama have to pass the buck somewhere!

Gold vs. Fiat Seems gold dows have a few good points. I am not a BB, and have no interest in becoming one. ‘Net Censorship How soon before Harper and his minions follow suit?

1:57 clip Ben Bernanke is confronted by WeAreChange.

#16 Daniel on 05.13.11 at 10:06 pm

My plan:

I have 500k
100k in silver (bought at $20)
200k in malaysian real estate (bought at 50k)\
200k in cash (CDN currancy making 4% per year)

#17 JohnnyBGood on 05.13.11 at 10:10 pm

@ #9 Howdy There:

You said, “Go to your bank, and remove your money now.”

Why so scared now? That’s how it’s always been. That’s why they call it “fractional reserve banking.”

I guess the CDIC has historically done a good job vis-a-vis by first comment.

BTW: When I see the CDIC ramping up their TV ads and PR activity, like they did recently, THAT’s when I get really concerned.

CDIC protection is an illusion no matter how you cut it. If a large bank/s failed and F covered the losses for political reasons, we would all pay for it via the devaluation of our money or a higher debt burden, which pays today’s bills with future income.

Socialized losses. It’s a tacit agreement that became fully realized in 2008. And many times before that.

#18 realinvestor101 on 05.13.11 at 10:10 pm

With BASEL III and similar new rules you will see the banks become boring again like in the 70s. No high level profit etc.
However this is not going to happen overnight. Will take time. Until then there could potentially be number of issues

#19 Devore on 05.13.11 at 10:11 pm

#4 Hoof – Hearted

I wonder if this epiphany will scare people ?


I recall a news feature in the US where Gov’t officials walked into a bank, informed the manager they were closing it down, but held depositors hands and assured them they were covered up to $250,000

When was that? These days, US banks are closed Friday after hours. You deposit your paycheck on Friday, on Monday your ATM card doesn’t work. Eventually, there is a letter in the mail.

#20 LJ on 05.13.11 at 10:13 pm

If a cheque comes back to you NSF, you should ask if it was your account or the bank itself which did not have the funds…..

#21 Drew on 05.13.11 at 10:16 pm

Garth will get a kick out of this:

#22 T.O. Bubble Boy on 05.13.11 at 10:17 pm

Bet $400,000 on the Canucks — they have better odds than the Vancouver housing market.

#23 Mean Gene on 05.13.11 at 10:17 pm

No money, no honey, but lots of stamps in my passport and memories to last a life time.

#24 Elmer on 05.13.11 at 10:19 pm

You say to buy shares of banks, but in another post a while back didn’t you say anyone with a networth < $1,000,000 who buys individual stocks is a fool?

So should I or shouldn't I buy RBC or BMO stock?

Or did you mean we should buy the shares of banks indirectly through an index fund?

If you have enough cash to worry about bank deposit insurance, you have enough to get some bank preferreds. — Garth

#25 Jsan on 05.13.11 at 10:21 pm

So the banks don’t have much money on deposit? I say we start a bank run by pulling all of our savings out (I’m not JOKING!). I for one am sick and tired of getting peanuts from the bank while they lend my money out to every Tom Dick and Harry who can’t borrow enough to feed their debt addiction. Here in Edmonton, try turning any local radio station on without hearing an ad from one of the many home equity loan companies basically saying non stop, 24 hours a day that you are one home equity loan away from living your dream life.

Meanwhile our illustrious Bank of Canada Governor continues to keep interest rates at what are generally called “emergency levels”. Will somebody please tell me where is the FREAKIN Emergency?

#26 TaxHaven on 05.13.11 at 10:22 pm

Unless you believe in Bernanke’s “transitory” food & energy price inflation, the return on government bonds, corporate bonds, preferred shares, REITs and general index funds is also likely to turn out to be less than zero.

Only gold is likely to keep up over time.

#27 Howdy There on 05.13.11 at 10:24 pm

“When I see the CDIC ramping up their TV ads and PR activity, like they did recently, THAT’s when I get really concerned.” – JohnnyBGood

Why so scared now?

#28 Dan in Victoria on 05.13.11 at 10:25 pm

I miss “Bank Eated Friday”
From our friend in Northern Virginia.

#29 Hoof - Hearted on 05.13.11 at 10:25 pm

Expensive homes ?

#30 Hoof - Hearted on 05.13.11 at 10:33 pm

#19 Devore

I recall it was a 60 Minutes story a couple of years ago when SHTF

This year:;lst;2

WASHINGTON – Regulators on Friday shut down a total of six banks in Alabama, Georgia, Minnesota and Mississippi, boosting the number of U.S. bank failures this year to 34.

There were 157 bank closures in 2010 amid the shattered economy and piles of bad loans.

The Federal Deposit Insurance Corp. seized the banks, the largest by far being Superior Bank, based in Birmingham, Ala., with $3 billion in assets and about 70 branches in Alabama and Florida.

A newly chartered bank subsidiary of Houston-based Community Bancorp LLC was set up to take over Superior Bank’s assets and deposits. The new subsidiary is called Superior Bank NA.

In addition, the FDIC and Superior Bank NA agreed to share losses on $1.84 billion of the failed bank’s loans and other assets.

Superior Bank received $69 million in taxpayer funds in December 2008 under the government’s financial bailout program, Treasury Department data show.

Its failure is expected to cost the deposit insurance fund $259.6 million.


#31 Fractional Reserve Banking = Massive Fraud on 05.13.11 at 10:42 pm


Three things:

1. Why on earth do we allow banks to lend out 10x more money than they actually have?

2. Why should someone have to repay his mortgage when the issuing bank never actually had the money to lend in the first place?

3. Doesn’t this essentially mean that banks create “money” from nothing?

No wonder they have the biggest buildings in (every) town!

#32 Hoof - Hearted on 05.13.11 at 10:44 pm

#15 Nostradamus Le Mad Vlad

Re Osama…great post

I’m not sure the average US citizen realizes how they were doubly screwed…
Osama simply baited the US the bankrupt itself after seeing how Russia did the same earlier.

9/11 made Haliburton rich ( Eisenhowers military industral complex warning )and concurrently the housing bubble was probably mind candy to camouflage the Goldman Sachs pillage….or some combinations of the aforementioned .

#33 Ron on 05.13.11 at 10:50 pm

Hoof-hearted, Oli, rooser = 5 yr old gomers; find a kid’s site..webkins maybe

#34 wes_coast on 05.13.11 at 10:51 pm

Doesnt that math Garth just laid out make fractional reserve banking seem like a big ponzy scheme? Canadian’s have 160 some odd billions in deposits that don’t actually exist anywhere in the system except in assets that back the loans the banks made – those same assets that can change in value over night? I’m not a gold nut but it makes you realize why the gold standard was seen as an anchoring force against inflation. Is there something in the middle between tied down by gold and flying freely in the wind like a helium baloon let go by a kid at the local fair (this is refernce to fiat currency and fractional reserve).

#35 Medic on 05.13.11 at 10:52 pm

Further to your point about death, life can be considered a terminal illness.

#36 BraveSirRobin on 05.13.11 at 10:55 pm

Who cares about that, when is the RE crash going to happen! FIRST baby!

#37 JohnnyBGood on 05.13.11 at 10:56 pm

#25 Jsan: “Will somebody please tell me where is the FREAKIN Emergency?”

In the banking system.

Without ‘mark-to-myth’ accounting and other devious schemes, many large US banks would be officially insolvent. Since housing tanked, banks in the US and Europe in particular are surviving by having governments in hoc to them. They always have, but now they are extremely important.

If rates go up, the govs won’t be able to service their debts––barring massive cuts and tax hikes, which the govs don’t want to do because it’s political suicide––and the banks could lose that income as well.

When things get really bad, like in Ireland, the banks go directly after the people’s money under the banner of “austerity.” The less money for the people, the more money there is available for the banks. Icelanders told the British and other Euro banks to go F themselves. But then, that’s Iceland.

The US can simply spend as much money into existence as needed, so inflation, rather than austerity is the larger threat there. The real risk of austerity is political, not economic in the US. But Bernanke has to protect the banks from this as well so he tries to manipulate rates using POMOs where they buy back Treasuries from the banks at prices that always insures a profit. To do that you need to keep rates low.

The Euro currency functions kind of like a gold standard in that individual countries technically can’t print their own money to pay their debts. So the risk their is biased more toward deflation and austerity in individual countries like the PIGS, if not Europe as a whole.

Any way you look at it, it sucks.

#38 Cato on 05.13.11 at 11:02 pm

CDIC – yet another useless institution administering yet another pointless tax. Defacto guarantor will always be the taxpayer, Canadians might as well be told the truth. If ever there was a true independent audit done on either the CDIC or CMHC I suspect all we’d find is a pile of IOUs.

If anyone needs warm and fuzzies they can always open investment account and fall under the CIPF protection for a cool million. Then give me a call, I sell alien abduction insurance for pennies on the dollar.

#39 Living In Edmonton on 05.13.11 at 11:06 pm

It’s amazing to still here about multiple offers in other cities still. Even with the price of oil & gas so much higher that a year ago lots of layoffs happening, or lower wages being offered.
In Edmonton you can get a 1 bedroom condo starting at $50,000 now! Houses from $129,000. They may need some work but this prices are down about 35% from 4 years ago.
It looks like we are going to go into 2005 Real Estate Market Prices here in Edmonton (formally the City Of Champions).

#40 Hoof - Hearted on 05.13.11 at 11:33 pm

SocGen On How China Has Tricked The World’s Central Bankers Into Believing They Control Inflation

Read more:

Chinese Real Estate Developers Profits Drop, Debts Approach One Trillion

Read more:

#41 Dark Sad Monster Bunny on 05.13.11 at 11:48 pm

4 HH – this 60 minutes episode was good

3 Keith – why are you STILL in Calgary??

30 LJ – if you’re not kidding, you’re not understanding

#42 VanBear on 05.13.11 at 11:49 pm

Garth, I am interested to know why you think any of the big banks in Canada won’t fail after the real estate bubble burst.

In the US, even Wamu, one of the largest bank failed in 2008.

#43 debtified on 05.13.11 at 11:50 pm

I once wondered which has the better rate of return: an investment on the equity market or a sailboat on the west coast.

Today, I decided that they both have the same likelihood of having a negative rate of return in the near future. So, I bought the sailboat. Might as well have fun while the funny money loses value. Life is too short to be too preoccupied on wealth accummulation.

Greetings from the BPOE!

#44 The InvestorsFriend (Shawn Allen) on 05.13.11 at 11:57 pm


Garth said the following amazing thing:

Among RBC’s liabilities is $161 billion in personal deposits, held mostly by individual Canadians. And how much actual cash does the bank have (according to its annual report)? Just over $9 billion (and some of that is loaned out to other banks at any one time).

So in the unlikely instance the bank had to suspend operations or actually failed, there would be a shortfall of at least $150 billion payable to depositors.

I suspect Garth kinows that the shortfall would not be anywhere near $150 billion. The deposits that are not held in cash are invested mostly in loans. Only if none of the loans are repaid even in part do we get to a $150 billion shortfall.

Most people don’t know much about a bank’s balance sheet. I suspect Garth knows enough to know that his statement here is way off base.

Banks are highly leveraged. They don’t have much equity. It’s around 10%. But that is not a problem since their assets although not cash are reasonably liquid. The banks that got in trouble in the U.S. had equity closer to 3% and they invested in toxic assets that our banks mostly kept clear of.

Garth is not even suggesting that we need to worry about the safty of our bank deposits. We don’t. But he makes it sound like the banks are near insolvent. They are not.

Most of the people who would worry about our banks don’t have deposits anyhow. They owe loans to the bank. People smart enough to have zero debt and money in the bank are generally not dumb enough to fall for this scare mongering about our banks.

I made it clear the banks are not insolvent, so your comment is baseless. The argument should have been clear to you: those who make investment decisions based on deposit insurance might as well go long on unicorns. — Garth

#45 nonplused on 05.14.11 at 12:01 am

Well Garth, your post tonight has both some important food for thought, some irreverence, some hyperbole, some details that are ignored, and another plug to sell preferred shares for the banks.

First, the ignored details. Yes, RBC might only have $9b in ready cash to back $160b in deposits (fractional reserve banking is a crime against humanity, but its legal). But if the SHTF, CIDC will step in and take over the bank’s other assets and sell them off (that 160b didn’t disappear, there are loan assets and various other stuff supposedly worth something), the share holders will be wiped out, bond holders will be lucky to get anything, and preferred shares will be worth, well, about as much as the class B shares (0). So when CDIC goes to make good on the deposits, they will have all of the assets and will have shunned all of the liabilities. It will not be a 150b hit to the government, although it’s hard to see how the government won’t go over 3b in payouts. But it will be the shareholders and bond holders that take the first hit, CDIC is there to cover any further losses.

CDIC also insures everything from the orange guy’s shorts to the local treasury branch, so there are some areas it works. To say it’s only the big 6 as compared to 9,000 state side isn’t totally fair, although there is some truth to it.

In short, the Greater Fool (.ca) website has transmogrified from helpful real estate commentary into a strange surreal world where we should be short real estate while loading up on bank preferred shares. This is nonsense. In a world where the SHTF in Canadian real estate, Canadian banks are a short and are at the mercy of the government.

You don’t short the Canadian real estate market and then go long Canadian banks, whether via Class A shares, Class B shares, or bonds. You short them all together. And if you think otherwise, I suggest you redo the math in your correlation matrix, because you screwed up the calculations some where.

And you will get your money back, no matter how woefully underfunded CDIC is, because the insurance is denominated in Canadian dollars, which the Canadian government can print, regardless that it may be 3 times our recent deficits. It might only buy a third as much gas, but you will get every dollar back eventually, however worthless those dollars might be.

Look folks, the trend in our currency is clear. They used to make dollars out of silver, because a dollar was worth more. They cut that out in 1968 and made the dollar out of paper. Even paper was too expensive because it wore out too fast, so they switched to the zinc slug we call the loonie. Still of very little intrinsic value but at least it was sturdy and didn’t need to be reprinted twice a year. They are talking about getting rid of the penny and they will, soon to be followed by every coin as they are all made out of zinc and it has an intrinsic value no matter how small. After that they will continue printing, but to save ink the numbers on the paper go up and up since it takes very little addition ink to print $200 as compared to $20, especially if they reduce the font size, plus it saves paper which also has a small intrinsic value. After that, $2,000, $20,000, and $200,000 are all just a font size adjustment away.

#46 Nostradamus Le Mad Vlad on 05.14.11 at 12:11 am

Mississippi Not good. More coming, not incl. the NMF. Montana Duplicate of prior.

Soros Nice to have lotsa cash!

The Toilet Speaks Where would the world be without a dead nemesis rebirthing every 45 minutes or so?!

Pristine Arctic Except it is being carved up for the spoils below.

Link in and 1:24 clip. ‘Quake time + full moon May 17 and flooding, and Three off Fukushima (moderate ones).

Banned cancer cures. Wonder if big pharma had anything to do with this?

US HAARP, Chinese HAARP and now — Spanish HAARP. When will the Toronto Maple Syrups get their own HAARP?

Central Banks bought a few bars of gold in Q1. Something coming (other than Christmas?), plus JPM bought 80% of copper in London recently, now increasing silver.

The Fall of an empire, as all empires must do.

Oz Things cooling off down under.

Energy Troubles ObL will be held accountable for this.

#47 nonplused on 05.14.11 at 12:13 am

PS, I forgot a point that is really bugging me.

You seem to be implying, and have been for some time, that preferred shares are safe and now you have stepped it up to suggesting they are even safer than CDIC deposits. I call bullshit. If CDIC has to step in, your preferreds are going to be worth zero, whereas depositors will get every penny back (although hyperinflated).

The idea that you seem to be festering that preferreds are as safe as deposits, only better because they have a higher yield, is bullshit. You need to be called out. Preferred shares are a risk asset, less safe than the bonds issued by the same bank, but better than class B shares.

I am beginning to suspect that the reason does not need advertisements is because it is funded by Canadian banks trying to flog preferred shares.

#48 Chris on 05.14.11 at 12:28 am

Garth, any chance of adding a blurb in red letters to the ‘Share your comment’ screen, along the lines of: “Just because no comments are displayed yet, doesn’t mean that you’re first, you moron”.

Just wondering… It would have to be bigger than the helpful reminders however. Otherwise no one would see it… Might not matter anyways, but worth trying…

On another note, I just have to ask aloud, how many people reading this blog do you think are attracted to it because of an obsessive compulsive disorder?

Seriously. The recurring doom and gloom that you hear from certain people, even if it’s warranted and likely to happen, is just as disturbing as the constant butt sunshine we see from some others.

Not healthy, one way or another.

#49 BPOE on 05.14.11 at 12:40 am

Another reason to own golden BPOE. Folks, when the world crumbles you want a home with gold bars buried in the backyard. Ammo and canned squirrel are good for a backup. Folks summer is around the corner. Hear that sound, wait a minute, there it is, Ttttiiimmmmmmbbbeeerrrrr. Folks that’s the sound of interest rates falling. Hey American never did hear back from you . What size shirt you take? No 40% correction and i gotta a great Vancouver Rocks Seattle Sucks t-shirt for you to wear.

#50 BPOE on 05.14.11 at 12:49 am

Keep those stories rolling folks. Proves everyday how wrong the basement suite renting dynamic duo American and Junius are in predicting the fall of BPOE. Laughable! LOL at those renter folks. The duo made a UFD Unrecoverable Financial Decision then post negative comments on Vanouvers outstanding success on the world stage. Folks, renting is bad, it’s bad for you , it’s bad for your family and it’s bad for your future generations. Do you really want to look in the mirror every morning like the dynamic duo and feel the shame. Do you want to feel the same way 10, 20 or 30 years from now?
#11 Dirt Dog on 05.13.11 at 9:44 pm
Still HUGE sales prices on bad houses in North Van. Sale price $110,000.00 over ask on crap house. West Van… Offer from the 2nd place loser to buy the contract from the winner for $300,000.00 over the sale price

#51 Cooliecat on 05.14.11 at 1:17 am

I believe that Coast Capital Saving Credit Union insures all of your deposits with no limit. They also pay better interest on your saving account than the big banks.

#52 Frank Dean on 05.14.11 at 2:53 am

I think this post is more than a bit misleading. There is no chance the Government of Canada would allow the CDIC to fail. The Bank of Canada would provide whatever funds were necessary to make depositors whole up to the $100k limit, and quite possibly well beyond it, albeit perhaps with a small haircut.

We even have a recent example where foolish UK depositors in failed Icelandic banks were made whole by the UK government. Nevermind that the deposits were not even insured by the UK government.

As Garth well knows, the Bank of Canada exists in part to provide liquidity in the event of a bank run. And it costs the Bank of Canada very little aside from the printing costs because the panic soon subsides and the cash returns to the banking system as people tire of hiding bills under the mattress. It has absolutely nothing to do with the federal budget.

For most people, it would make sense to put money elsewhere. But if for some reason you need absolute liquidity, CDIC-insured deposits are as about as close as you can get to cash, without the expense of armed guards or the worry of your banknotes being lost in a flood.

Scaremongering just encourages the metalheads with their silver coins hidden in their sock drawer next to Uncle Jimmy’s unregistered old revolver and a carton of wrong-calibre bullets.

#53 westopia on 05.14.11 at 3:59 am

Carefull Garth, illusory insurnace, fractional lending, liabilities far exceeding assets – you’re making a good argument for owning gold.

#54 keny65 on 05.14.11 at 4:30 am

Wow Garth!Best post ever…finally talking some paper money sense.Telling the truth in a time of deceit is revolutionary thing.Now go on now and keep telling the sheeple about how the banking system is a massive ponzi-scheme transfering wealth to the elite.

#55 Jody on 05.14.11 at 4:38 am

In Alberta the Alberta Treasury Branch insures all your deposit, even more than $100,000, and this province will always have money to back that up, if the feds go tits up (one can dream), we’ll just come out with our own currency. Not that insurance matters, why not, like Garth says, have that money invested, making you more than a deposit? If the banks go under anyways do you actually think you’d get your pathetic GIC out before the big boys do? Really? Duh! Your money is just as safe in an ETF as it is in a GIC with the purple people or scumbags at BMO.

Seems the asian markets are talking about their own gold/silver market, bypassing the CME.

Story is from Zerohedge though, and some of the stuff there is questionable to say the least, but if its true, it could be a real game changer.

#56 disciple on 05.14.11 at 6:32 am

Banks don’t need your deposits, when they can create debt out of thin air. We don’t need banks one bit either. It’s time we eliminated these unnecessary parasites out of the market equation. Lincoln, Jefferson, Jackson and Kennedy all tried, two of them were ritually murdered.

#57 disciple on 05.14.11 at 6:35 am

Here in Canada, that dead-dog-talking Mackenzie allowed these parasites into our house, and they’ve been milking us ever since, especially considering the monopoly they have in their “industry”. As if financial usury were a legitimate industry, promoting humanity. Do what is right and stand up for it, you spineless nematodes…

#58 Tiny on 05.14.11 at 6:41 am

Serious question…say the guy puts his 400K to work and invests it wisely.

He’d likely do so either through an investment brokerage house or perhaps through an online investment account.

What happens if the brokerage firm goes belly up?

What happens to his bonds, bank preferreds and any cash on hand at the brokerage?

Similar question…invested via an online resource which is part of a Bank (think BMO Investorline, CIBC Investor’s Edge, etc.)

What happens in the (unlikely) event that the bank gets into trouble?

You own and retain the assets. Any cash in accounts is covered by the Canadian Investor Protection Fund – to $1 million for registered, another $1 million non-reg. — Garth

#59 LH on 05.14.11 at 6:56 am

Since the Great Depression, domestic depositors under the cap (100k now) always get their ass saved. This is true in USA, Canada, Western Europe, etc. Can’t be so sure about investors in bank shares, bank preferreds and bank bonds!!

On the other hand, current savings yields really do suck. I would highly recommend anyone with cash to:

1) pay down any debt. now.
2) if no debt, congratulations! sock it all into non-financial equities

Garth, sorry for my allergy against any bank securities. I work for a bank and I already own a quarter million of that crap (can’t sell until it vests.. alas) and the stock isn’t going anywhere. It is highly likely that we’ll get leverage (and profits) squeezed out of us by the vengeful public. It’s not easy being a BANKSTA !

#60 Jas Girn on 05.14.11 at 7:23 am

If RBC has so much less in assets than what the depositors have put in, then where did all their money go to? Lol. Let us do a big nationwide bank run!!!!!!!!!!!!!!!!!!!! Lol.

#61 Min in Mission on 05.14.11 at 7:54 am

” No money, no honey, but lots of stamps in my passport and memories to last a life time.” @ #25 Mean Gene.

X2. Except that I am fortunate to have bumped into an Awesome Lady about 10 years ago.

First quit work when I was about 30. Lived on my sailboat, not large by any means, and visited where I wanted. Minimalist kind of life-style. Now back at work, and am “just as well off” as my co-workers. They have a few more toys, but, we drive the same kind of cars. For me, it is a matter of balancing “needs” and “wants”.

#62 Mikey the Realtor on 05.14.11 at 8:22 am

“CDIC apparently has only $2.1 billion in assets.”

what’s your point, Garth? the government would step in and everyone would get paid, it’s called a bailout. Just like the banks and CMHC walked away with 75 billion in taxpayer money back in 08, they would do the same for depositors. Does CMHC have the capital to fund all these insured mortgages? Of course not, the taxpayer is on the hook all around.

#63 AG Sage on 05.14.11 at 8:28 am

>Previous thread #103 John on 05.13.11 at 11:59 am
>Up for renewal. Should I fix or float? Where will BoC prime be at end of 2012?

You are asking for serious advice on the internet? Sure, why not. My advice, worth about what you paid for it: Fix it for the longest time period you can stomach.

>#4 Hoof – Hearted on 05.13.11 at 9:24 pm
>I wonder if this epiphany will scare people ?

>I recall a news feature in the US where Gov’t officials walked into a bank, informed the manager they were closing it down, but held depositors hands and assured them they were covered up to $250,000

Of course they insured the deposits, that’s what they do. They are an insurance scheme, funded directly by the banks. And they’ve been closing two or three banks a week since the crash.

This may be the radio piece you are thinking of. Fascinating listen.

If we were smart, no bank would be allowed to be larger than can be closed by the FDIC. But regulatory capture makes something that rational completely impossible.

#64 Basil Fawlty on 05.14.11 at 8:47 am

Even Steve Forbes is predicting that the US will be on a gold standard in 5 years. Buckle up kiddies this is going to be a wild ride.

#65 JO on 05.14.11 at 8:52 am

CDIC insurance also acts as a subsidy to allow weak but aggressive FIs to offer high interest rates to lure new deposits at the expense of taxpayers and also the few prudent FI’s….CDIC or not, never ever deposit money into an FI that offers the highest deposit rate on the market (or 2nd/3rd highest for that matter).

If you want to consider bank preferreds, do some research on two great ETFs that own a basket of preferred shares…horizons ETFs has one, and Claymore ETFs also offers one (ticker is CPD).

One way or another, we will go into another severe bear market between now and January….QE 3 or not…Canadian RE looks set to take a beating now through at least mid 2013…lots of homeDEBTRENTERS going to get hurt real bad.

#66 Cowboy on 05.14.11 at 8:57 am

In my experience, I have seen banks being CRAZY conservative in Canada. Granted, I am not a sub-prime borrower but have experienced difficulities in building my own house…
If any were to fail, it would be friggin pathetic (my 2 yr old could do better running these corrupt cartels) as the amount they gouge us in RIDICULOUS. You would have to be extremely corrupt and/or stupid to run unto problems…

On a side note, Direct Energy does very well charging for thin air. We moved out of our old house in November and shortly afterwards, the furnace died. You would think my heating bill would be very cheap? No, in fact, it has been a huge fight getting over one thousand dollars off of these pricks in over charges. Despite cancelling with them months ago and having many irate phone conversations, all they are good for is charging you for nothing. When I told my other utillity guy, he said he sees it all the time. Think about how many people it happens to (many people just pay it and give up the fight or do not even notice the discrepancies) Invest that money, make a KILLING. (his words not mine, he is IN the business)
Typical of the worlds greed.
Check your utilities bill, they pull your energy consumption out of their ass, I promise you, anyone with a broken furnace can easily see this. Try and get an answer from them about how this is fair, you won’t get one.
These fu$%^ know what they are doing…

#67 Tim on 05.14.11 at 9:13 am

On another note why does gas not go up at all in the states but goes up 5 cents per litre over night in Canada….. ridiculous, good thing I live close to the border “eh”

#68 Jsan on 05.14.11 at 9:33 am

“#39 Living In Edmonton on 05.13.11 at 11:06 pm

It’s amazing to still here about multiple offers in other cities still. Even with the price of oil & gas so much higher that a year ago lots of layoffs happening, or lower wages being offered.
In Edmonton you can get a 1 bedroom condo starting at $50,000 now! Houses from $129,000. They may need some work but this prices are down about 35% from 4 years ago.
It looks like we are going to go into 2005 Real Estate Market Prices here in Edmonton (formally the City Of Champions).”


I agree, prices have come down in Edmonton but they have allot further left to fall. A 50,000 dollar condo or a 129,000 dollar house in this city would be a condemned building. Prices are still 40- 50% higher than they should be. This is Edmonton after all. I was born here but face it, this city is a 7 months of the year winter locked city in the middle of the prairie moonscape full of slobs and rednecks. Right now people are emerging from their cocoons to enjoy the few months of warm weather before winter once again arrives in only 4 months. For that reason alone if you pay more than 150,000 for an average house you are getting royally ripped off.

This is one of the reasons why I refuse to buy here. Job and family keep me here for the time being and the thought of spending anything more than a couple hundred grand for a house in this city is laughable. I will never do it for the fear of prices coming down and than being stuck here.

BTW, high oil prices really only help a small portion of this province. It really hurts the majority as most people work in jobs or industries that have nothing to do with oil. So when Oil skyrockets, so do most peoples costs, even in Alberta.

#69 JohnnyBGood on 05.14.11 at 9:47 am

@ 56 disciple

I have no great love for banks, but we do need them. Chartered banks are like brokers for government credit. They help put government credit to work in the real economy. They have a special and privileged relationship with government that they leverage into huge profits, which basically come from the future productivity of the people, which is the collateral for government credit.

The banks help to keep the government in check by necessarily insinuating market forces that help dictate the supply and demand of money and help money retain some value, while the government does everything in it’s power to devalue the money via spending.

The issue is not so much that banks are bad per se. The issue is how banks operate and how they are regulated.

Many of the American founding fathers were not opposed to banks. They were opposed to a private central bank controlling their nation’s money supply. They realized that under such a system the large banks and corporations could game the system to basically steal the wealth of the people. Not to mention the fact that they would also have more power than the governments themselves. Government people don’t like that. But today, that’s in fact the situation.

Since 1914, in the US the Fed and the gov have conspired to appropriate as much wealth from the people as possible. But this is a political problem, not an economic one. There is a reason some call the masses the “sheeple.”

#70 Barry in Pickering on 05.14.11 at 9:52 am

[Garth} But that [$148bn] is more than half of the entire federal government’s budget, which means the country would have to be shut down (including education and health care) to look after the depositors of one bank.
No. Of course there would be other financial consequences of paying $148bn, but stating that the “country would have to be shut down” to pay this amount is ridiculous. What you should have pointed out, is that in this scenario, CIDC holders would get paid in full (by the govt simply printing money in Canadian Dollars), but bank bond, equity and pref share holders would get NOTHING.

If **every** CIDC insured account of all Canadian banks had to be paid by the Canadian Gov’t, this would be about $500 bn CAD for the gov’t to pay. A huge amount of money – yes. But big enough to shut down the gov’t – no. This amount ($500bn CAD, 30% of GDP) would equal (per capita) the amount of money that Ireland has already paid to their banks (Ireland has paid $100bn , and their economy is 1/5 the size of Canada. The amounts represent 30% of Irish GDP).
Yes, it has been a ‘struggle’ in Ireland, but nothing is shut down. And the ‘struggle’ in Ireland is largely because they cannot print euros.

Canada’s CDIC insurance is 100% in Canadian Dollars. This allows the amount to be printed by the Canadian Gov’t. This would result in more currency in circulation (inflationary) , but the bank failures themselves would be deflationary (as in the Great Depression).

#71 TheBigLebowski on 05.14.11 at 9:53 am

Utopia here is a link

And yes, Cazenove Capital has been around a long long time, this guy is not a metal pumper he is the real deal

#72 JohnnyBGood on 05.14.11 at 9:55 am

@ 45 nonplused

“And you will get your money back… however worthless those dollars might be.”

Are you listening to yourself?

#73 Hoof - Hearted on 05.14.11 at 10:12 am

Churchill had a saying about Americans….they always do the right thing after exhausting all other possibilities.

Can’t say where he has been proven wrong….the right thing occurs via default/failure, not via planning.

#74 dd on 05.14.11 at 10:14 am

Am I saying our banks are at risk?
Of course they are not at risk. However another fall off in banks in the US or around the world will have effect on shares short to medium term. All banks are interconnected in someway.

#75 Steve on 05.14.11 at 10:31 am

One thing that is failed to be mentioned is something called a segregated fund (or a seg fund).

Now seg funds are like mutual funds except they have a 75 to 100% guarantee upon maturity only through an life insurance company. Maturity is usally 10 years though, so if you need something that is VERY liquid (say within 3 days) this may not be the product you need. If memory serves me correctly you can put the aforementioned $400K into most conventional investing vehicles – stocks, bonds, GIC, etc.

The guarantee works as follows:

– $400K invested in a balanced portfolio with a historic return of say 6%. It should take roughly 12 years for that money to double to @$800K.
– a 75% guarantee will insure (no pun intended) that $300K will be there if the account value falls below that percentage of 75%. You could go to 100% but the MER increases as well.
– if the aforementioned investor with $400K decides to reset the account becaue the value has increased by $50K and has grown to $450K he is welcome to do so BUT the maturity date also resets to 10 years later from that date.

Now if any insurance company goes go bankrupt the seg fund is backed up by Assuris (a federally recognized governing body from the insurance industry). Now lets assume the $450K is from insurance company ABC Life Co and ABC Life goes bankrupt. Well if the $450K was guaranteed at 75% the account value has a minimum of $337,500. Assuris will guarantee 85% of the $337,500, which falls to $286,875. Going with a 100% guarantee changes the two values to $450K and $382,500 respectively.

Is this worth the extra cost to guaranteeing an investment IF ABC Life becomes insolvent? Well that is up to the consumer. The honest chances of any insurance company in Canada becoming insolvent are very low.

Just here to provide some more information that is available to investors that you might not get from a bank or a financial advisor normally.

My current book, ‘Money Road’ details how seg funds work. Be aware that they are unsuitable for short-term investors and, more worrisome, the carry a huge premium in the form of high management fees for a guarantee that will prove useless in most instances (markets rarely decline over 10 years). It is a very high price to pay for trying to eschew risk. — Garth

#76 BrianT on 05.14.11 at 10:38 am

#52Frank-Many of these people you call “metalheads” could buy and sell you a hundred times over, often because of their logical investment decisions. As I type this there are people making purchases of physical gold by the ton, and they are not living in shacks in West Virginia.

#77 S.B. on 05.14.11 at 10:41 am

Beware of the Squamish Sasquatch!

“Now being offered at $25,000 below current BC Assessment”

#78 Tim on 05.14.11 at 10:43 am

Another Vancouver leaky condo:
Vancouver’s Prestigious Wall Center is leaking

Some owners face a $100,000 repair bill. Thanks to shady developers and inept city councillors who continually let them get away with this. Who would buy a condo in the Lower Mainland given the track record of so many?

#79 Willie on 05.14.11 at 10:48 am

Garth said:

“If you have enough cash to worry about bank deposit insurance, you have enough to get some bank preferredWill. — Garth

Garth – I would like to keep my powder dry, as my personal view of the markets is that in the next 6 to 12 months it may be critical to be cash heavy… too many balls seem to be in the air … Can. real estate, US stimulus etc.

Garth, considering my short term thinking, how well protected and how liquid is my principle in those bank preferred stocks compared to cash with CIDC protection in the case of a market drop or , heavens forbid, a bank failure?

Sleep like a baby. — Garth

#80 Blacksheep on 05.14.11 at 10:53 am

Nonplused # 45,

” you will get your money back, no matter how woefully underfunded CDIC is, because the insurance is denominated in Canadian dollars, which the Canadian government can print, regardless that it may be 3 times our recent deficits. It might only buy a third as much gas, but you will get every dollar back eventually, however worthless those dollars might be”

100% correct.

Inquire with your bank, how long you would have to wait for “compensation” if a failure occurs?

You will get handed a little CIDC brochure stating the repayment schedule is based on a “reasonable” time line. Thaaat sounds reassuring.
Garth & Dogs,

I always suspected it, but now I’m sure,
Garth is a closet BULLION BUNNY!

It all makes sense, Garth has the standard Bunny equipment: Bunker, Genny, beard, Hummer, Harley and Canned Squirrel.

And now with this public admission of his deep distrust of banks [and government insurance] all doubt is gone.

I think it’s time to come out of the closet Garth!
No need for shame, we are your people, there will be no judging :]

take care

#81 BrianT on 05.14.11 at 11:14 am

The Texas insurgents are fighting back-time to send in the troops

#82 Ronaldo on 05.14.11 at 11:43 am

excellent interview with Marshall Auerback on housing…..

#83 Waiting To Escape from Edmonton on 05.14.11 at 11:50 am

#39 and #68

20 years ago Mordecai Richler dubbed Edmonton the “boiler room” of Canada. Some years later, the City awarded itself the pretentious title “The City of Champions.” Well, that title is long gone and Edmonton still remains the boiler room of Canada.

I sold my house in late 2008 and couldn’t believe how much I sold it for. Sure, it was in the “desirable” area of Belgravia but it was still a poorly insulated 1,400 sq. ft. bungalow, built in 1950, with three bedrooms (if you can call a cubby hole a bedroom) and one bathroom. I also couldn’t believe that real estate prices picked up again in 2009 and houses were selling for 10-15% higher. Even today, there are still people asking $620,000 for a similar bungalow in that neighbourhood but those are now sitting on the market for months and not selling.

So yes, I agree that prices have come down in Edmonton but you will not get a decent condo for $50,000 or a house for $129,000. Far from it. If you find something in that price range, it’ll surely be a condo in some grubby walk-up or a collapsing shack in a neighbourhood littered with hypodermic needles and used condoms.

Yes, prices are still at least 40% higher than they should be. Will they come down to a reasonable level again? Who knows but at this point I don’t care. I’m renting and slowly plotting my escape from this hell frozen over. Just spend a few minutes around the downtown library and you’ll see what I’m talking about. I live in this “winter locked city in the middle of the prairie moonscape full of slobs and rednecks” – as I imagine many others do – only because I have a good paying job here.

Here’s a house that’s been on the market for over a year and now listed with a 4th real estate company. More than a year ago the delusional owner was asking 1.3 million, now it’s down to “only” $799,000… I walk past that house every weekend and really, it’s nothing to look at.

#84 Ben on 05.14.11 at 11:58 am

On the real estate front, house prices and rents are totally ridiculous across the nation:

#85 canali on 05.14.11 at 12:15 pm

hey garth, did you read this latest G&M book review? took an excerpt which reflects your repeated sentiment here:
“You should also be aware that many professional investment advisors believe diversification of investments is crucial to long-term success. Sinking most of your wealth into a house does not allow you to diversify. Thus, home ownership is actually the opposite of a good investment strategy. In some circles, it is now being acknowledged that the so-called wisdom of home ownership was actually a government strategy after the Second World War for preventing social unrest. The rich and powerful felt they could better control the majority if that majority felt they had a stake in society through fixed assets: their houses. The masses would be less likely to object to social conditions if they thought this stake was the ultimate dream. Hence, the American Dream was created through government policies and subtle advertising. The same thing happened in Canada.”

#86 canali on 05.14.11 at 12:16 pm

sorry forgot to mention the book is called ‘financial hacks’ by Vesna Milevska (not familiar with her).

#87 realpaul on 05.14.11 at 12:17 pm

Garth, there is always ‘The National bank’ which has been judged as ‘the strongest bank in the world’ by the IMF auditors. It has been stress tested up the ying yangs and there are zero skeletons in the closet. Oddly…TD Bank was number three……..these are international rankings. In fact the headline of the report was ‘Canadian Banks Dominate Ratings’. If thats any small comfort.

I was accused of being ‘hillarious’ because I reported the fact that a person could be deported for minor infractions while in the US at ones own ‘vacation home’…such as painting etc….Read the following. There are plenty of examples listed …including the guy who tried to fix his bilge pump on his cruiser moored in Pt Roberts….and others of owning businesses in the US. The rules have REALLY changed guys…..and a lot of Canadians are getting into trouble because they are unaware and in denial.

As far as the US customs are concerned Canadians are just another kind of alien trying to sneak into their country and stay. Note hoe they use ‘Canadian’ and ‘Mexican’ as interchangeable terms.

#88 Mister Obvious on 05.14.11 at 12:28 pm

#48 Chris

“On another note, I just have to ask aloud, how many people reading this blog do you think are attracted to it because of an obsessive compulsive disorder?”


I will admit to a lifelong case of OCD. Fortunately, its only a very mild case and has not caused me excessive misery unlike some other poor souls for whom it is a crippling disease. Although a full-blown case of OCD is no joke, one might argue that a touch of OCD is actually benefical in some ways.

I now have a different attitude to this blog than when I started over a year ago. I now get the point and the point is simple. Canadian real estate is in the final stages of transitioning from a reasonable investment to an extremely poor one. That’s about it. The rest is window dressing. But then, I kind of enjoy window dressing sometimes.

#89 Rene on 05.14.11 at 1:15 pm

Garth, I’m not well-read enough to know when you’re right and when you’re wrong. I do read some comments from posters that lead me to believe that you’re wrong on occasion. Rather than admit fault, you insult or belittle the poster. My question is the following: Have you met my mother-in-law? I suspect you two would really get long.

When I’m wrong I will say so. BTW, I just emailed the above comment to your wife. — Garth

#90 MikeT on 05.14.11 at 1:31 pm

@26 TaxHaven:
because you should be really scared when the govt tells you not to worry. That’s why.

#91 MikeT on 05.14.11 at 1:32 pm

sorry, that was for Howdy There, #27

#92 VanLarry on 05.14.11 at 1:59 pm

Comments on the smaller, other banks?

Canadian Western Bank, Laurentian? Credit unions?

#93 Devore on 05.14.11 at 2:43 pm

#66 Cowboy

Check your utilities bill, they pull your energy consumption out of their ass, I promise you, anyone with a broken furnace can easily see this. Try and get an answer from them about how this is fair, you won’t get one.

Do they read your meter every month?

#94 V Fekete on 05.14.11 at 3:00 pm

Can anyone provide an analysis on the available inventory of Toronto homes from 2008-20011

It seems that when prices were the lowest, listings were the highest and now when prices are at record highs, listings are low.

I don’t understand why more people aren’t listing their homes when they can get a record price for it. What does this mean for real estate in the coming years?

#95 V Fekete on 05.14.11 at 3:01 pm

Also, please see this graph — number of homes sold from 2008 – 2011:

Would love to get your thoughts on the above two graphs!!

#96 Devore on 05.14.11 at 3:07 pm

#85 canali

Not to mention people are so much easier to push around when they owe a half million bucks.

#97 Siddelly on 05.14.11 at 3:32 pm

I have to agree somewhat with Nonplused and Blacksheep. In this post you have outlined your best case yet for owning physical gold, silver or even copper ingots for that matter. In a related story released a couple days ago by Americas Garth Turner, Texas A and M University recently took delivery of a billion dollars worth of gold bullion in the HSBC bank vault in New York city.
What happens to the price of these assets when this institutional investing becomes more of a trend?
The fact that gold has no apparent usefulness compared to paper money isn’t the point, ask yourself how much time and effort goes into printing 15 pieces of paper that say 100 dollars on the face of it and compare that to the cost and effort of extracting a troy ounce of Gold from under the mountains of Argentina or Peru for instance.

We live in dollars. That’s why I like having lots of them. — Garth

#98 David on 05.14.11 at 3:51 pm

I bought my first house in South Edmonton with a 25% down payment on a cheque from Northland Bank which cleared only hours before the institution collapsed in September 1985.
My own view is that banks should be treated like any other public utilty monoply and held accountable.
Community and state banking set up by socialist politicians in North Dakota and Minnesota in the early 1900’s seems to be functioning just fine these days.

#99 SMOKING MAN on 05.14.11 at 3:52 pm

Just came back from a drive, visited the old hood in the boonies.

Astonishing to say the least.. SOLD signs everywhere…

But this is the thing, the 3 car garadge mc mansions + 4000k sq ft are the ones selling… the smaller two car encono homes are sitting…

What gives?

#100 Behavioral Finance on 05.14.11 at 3:59 pm

Basil Fawlty

If US goes to Gold Standard. What do you think will happen to all the Gold in the US that that would be held as reserves?

Personally I think Forbes is delusional and in my opinion going to gold standard when all the other currencies are backed by thin air is totally irresponsible.

Second it will be very expensive for the central bank to hold all this gold in the storage and in the event of payment deliver all this gold to party that needs to be paid.

Third the Fed would have to remove a lot of cash out of the system to have back up for a fraction of the money that is in circulation.

Bottom like Steve Forbes is working on a Gold Standard Fairy Tale Book.

#101 Hoof - Hearted on 05.14.11 at 4:28 pm

I think rocks should be our currency

Denominations proportional to weight

They are natural products, very durable….and have other uses when democratic systems collapse.

If you are short of $$ simply pick one up.

Can’t be any worse than current system

#102 Hoof - Hearted on 05.14.11 at 4:29 pm



WHERE is this

and what were your smoking

#103 No sales on 05.14.11 at 4:45 pm

Just came back from a drive, visited the old hood in the boonies.

Astonishing to say the least.. For SALE signs everywhere…

But this is the thing, the 3 car garadge mc mansions + 4000k sq ft are the ones selling… the smaller two car encono homes are sitting…It seems only the top 10% are selling but 90% of the market at a stand still and looks set to crash and crash hard.

What gives?

#104 Devore on 05.14.11 at 5:09 pm

#94 V Fekete

I don’t understand why more people aren’t listing their homes when they can get a record price for it. What does this mean for real estate in the coming years?

Because then they would “have to” buy another equally overpriced house.

In other words, they realize there is no way they would be able to afford to buy their own house at the current price. The cognitive dissonance must be suppressed at all costs.

#105 BlorgDorg on 05.14.11 at 5:15 pm

Maybe Americans just aren’t dumb enough to keep buying houses:

#106 Timing is Everything on 05.14.11 at 5:18 pm

We live in dollars. That’s why I like having lots of them. — Garth

Garth, it seems to me that some folks just have to fight the system, rather than use it.

#107 Harry on 05.14.11 at 5:19 pm

#99 SMOKING MAN on 05.14.11 at 3:52 pm
“But this is the thing, the 3 car garadge mc mansions + 4000k sq ft are the ones selling… the smaller two car encono homes are sitting…

What gives?”

If true, it is a clear sign that first time buyers are not entering the market like they need to in order for the ponzi to continue.

#108 45north on 05.14.11 at 5:21 pm

realpaul: Wayne Liptrot has fond memories of crossing the U.S. border

But the border is not friendly any more for Liptrot

well that’s his story, wonder what’s US Customs

#109 eddy on 05.14.11 at 5:41 pm

Here is an interesting interview with Ian R Crane about, Libya’s debt, BP’s gulf oil

#110 eddy on 05.14.11 at 5:48 pm

Libya and its gold

#111 funderwater on 05.14.11 at 6:05 pm

#88 Mister Obvious

If you think OCD is bad you should try my CDO. I’m also a lifelong sufferer of it. It really sucks.

#112 Patz on 05.14.11 at 6:09 pm

I ran into a REmax agent at my garage today. He told us that his office has just taken on 3 new agents. I thought he was going to say it was because sales were booming but no, he said it was crazy to take on new sales people when their business is in such a slump. He was wondering how these newbies would be able to keep up their monthly nut. In a few months he might be wondering about his own.

I didn’t know but REmax charges agents a ‘desk fee’ and ‘ad fee’ each and every month which the agent says amounts to about $2000/month. Not chump change if you’re just starting out and deals are scarce.

#113 The American on 05.14.11 at 6:14 pm

BPOE, you’re so stupid you can’t read? I responded in the previous string. Go back and read it. Idiot. Sheesh, how dumb and pathetic can a human being be? You really do have a hard on for Seattle, don’t you! Its okay. Its so nice here you try everything you can to be just like it. So many Canadians here in our beautiful city enjoying the sites and weather today. BC plates everywhere! Unfortunately, BPOE is only 64% of the population behind. You don’t need my size. I’m winning this bet, and you already know it. So sad you are :-)

#114 The InvestorsFriend (Shawn Allen) on 05.14.11 at 6:43 pm

I would think that deposit insurance is what allows people to put money into some of the tiny banks in this Country. There are a few.

Bank West part of Western Financial Group is an example.

And what about when you put your money into foreign banks that are licenced to operate in Canada? It’s nice to know that even if they fold up the Candaian subsidiary, the deposits are safe.

#115 realpaul on 05.14.11 at 6:47 pm

#108 45…What a whole generation of Canadians have yet to understand is that the US has become a very differant place. The friendly drive across the border is a thing of the past. Since 911 the US under DHS has become deeply suspicious ( and some would say ‘paranoid’) of everyone. It’s their country…I say let them do what they want within their own borders.

But really…its not a stretch to see that they are enforcing existing laws regarding working and/or residing in the country…every country has the same laws…some country’s enforce them more stringently than others. In Canada..under the Liberal Party ‘mind control dictatorship’ it wasn’t politically correct to ask anyone to leave..under any circumstances. If you dis speak up regarding border security or immigration issues the pc lapdogs would start yapping at you calling you ‘rascist…’bigot’….. ‘anti’ this and that.

We have laws against illegal entry..but they have been put into place as political balloons and never enforced… least the American s are honest about what their laws actually mean…give them credit for that.

#116 The InvestorsFriend (Shawn Allen) on 05.14.11 at 6:54 pm

Fractional Reserve Banking.

People who are against fractional reserve banking are misguided.

If you don’t like banks lending your deposit to your neighbour, why don’t you just go out and lend to your neighbours yourself?

If your bank was going to just store your deposit in its vault until you wrote a cheque against or made a debit card purchase, how much do yo think the bank would charge for that service?

Anyone with an ounce of success in this country needs and uses the terrible fractional reserve banks every day.

Banks only create money because when they lend out money it is usually deposited back to the banks. But the created money belongs to the depositors not the banks.

5% or whatever of your deposit remains in the vault and 95% is loaned out. What business is that of yours? If you don’t like it, keep your money (if you have any) under your matress.

If banks are such usurious money makers then for gosh sakes go buy some bank shares.

You know we have the lowest mortgage rates in 50 years, we can borrow for 3% and people are thinking banks are bad???? They are highly efficient and do a great job.

Some of you are born whiners. You know it, I know it and God (I mean Garth) knows it.

#117 S.B. on 05.14.11 at 7:02 pm

#80 Blacksheep on 05.14.11 at 10:53 am

On the internet I found a video of Garth’s appearence on CBC’s The Hour (with George Sumbledoffabus). Strangely the video is not found on CBC’s site, maybe because George used the “P” word. Anyway, Garth clearly recommend Gold as something to buy (as part of a balanced port. I am sure!). I think this vid is from 2009?

#118 S.B. on 05.14.11 at 7:03 pm

…make that George Stumbledoffabus (hey I got that from this blog!).

#119 Hoof - Hearted on 05.14.11 at 7:15 pm

#112 Patz

It’s ponzi scheme upon ponzi scheme.

Openings result via space via quit or resign via can’t earn a living.

The attrition rate is quite high…

#120 S.B. on 05.14.11 at 7:18 pm

May. 14 2011 5:40:50 PM | The Canadian Press

New player enters game for control of TSX

Thomas Kloet, CEO of TMX Group, attends a press conference in Toronto on Wednesday, February 9, 2011 to announce the proposed merger of the London Stock Exchange and the TMX Group. (THE CANADIAN PRESS/Chris Young)
The operator of the Toronto Stock Exchange is being targeted by a Canadian takeover bid as it tries to push through a controversial merger with the London Stock Exchange.

TMX Group Inc. (TSX:X) said on Saturday that it has received a written proposal for acquisition by a corporation formed by a number of unidentified Canadian financial institutions.

TMX Group is in the midst of an attempted multibillion-dollar merger with the London Stock Exchange, a proposal that has met with some opposition, including from some of Canada’s big banks.

#121 Nostradamus Le Mad Vlad on 05.14.11 at 7:20 pm

#32 Hoof – Hearted — Some good and truthful stuff on the ‘net about Ob/sama. In Os/bama We Trust (NOT!) BTW, didja know English Translation (first and text only) clearly states that ObL died in Dec. 2001; the Pakistani (13:50 clip) is at the end. ObL is buried in N. Pakistan.

Some may recall that links have been posted saying FEMA camps were being put up a few months ago, then the US Govt. took (is taking) land away in Utah, Colorado plus other western states illegally, and the former landowners have been shushed up.

Well, FEMA Camps are opening soon for those who have been, or will be flooded by the Mississippi. Seems Bill (Peterborough) was right all along! Welcome to Depopulationville! 2:06 clip Morganza Floodway paths open.

#37 JohnnyBGood — “In the banking system.”
— and —
#101 Hoof – Hearted — “I think rocks should be our currency”

The problem is solved! GS, JPM, Bear Stearns, Chase Manhattan Transfer are boulders of immense proportion, the rest of us are graveled gravol!

#54 keny65 — “. . . the banking system is a massive ponzi-scheme transfering wealth to the elite.”

With help from the fed. and prov. govts. shuffling money back and forth, but yes — you are correct — the transfer of wealth is taking place behind our backs via wars, depopulation, poisoned (Monsanto) foods, etc.

#88 Mister Obvious — “Canadian real estate is in the final stages of transitioning from a reasonable investment to an extremely poor one. That’s about it.”

Good point about RE being a very poor investment. It is simply a place to live, four walls and a roof. Better to rent something reasonable and use the net proceeds to better oneself, rather than relying on fed. and prov. govt. handouts.
New Bank “The US Congress (the finest congress money can buy) sneers at Iran on behalf of Israel … and drives Iran into China’s sphere of influence! Well done, idiots.” New Insurrection “This would interrupt Pakistan’s use of this resource rich, strategically located province, prevent Iran from sending a pipeline to India, as well as eject the Chinese from the region.”

Fukushima Gittin’ kinda nasty, and 11:44 clip.

Balkanization Libya is being balkanized.

Bushama “The 2008 election brought to the White House another CFR-controlled puppet.” Same for Harper and the CPC.

Quitting Tractors Further evidence NAmerica is going backwards.

#122 BPOE Evil Twin on 05.14.11 at 8:07 pm

#108 45north

Answer: Americans are war-mongering assholes

Just ask poster # 113

America will be on sale soon…then Canada can go to CMHC and buy it.

#123 pathrik M on 05.14.11 at 8:15 pm

But why would someone buy a bank share if housing is cratering. Sure the CMHC is supposedly carrying the risk – but a lot of the profits of the big banks (about 1/3 if I am not mistaken, comes from real estate. Bonds might be a better idea if it is a guarantee that the banks will be bailed out by Ottawa.

Bank have gone into decline everywhere a massive bubble has blow (Japan, US Europe).

So why not here? Canadian banks – a risky investment?

#124 Hoof - Hearted on 05.14.11 at 9:09 pm

Greece failing on debt terms, EU warns

VIENNA/BRUSSELS – Bleak European Union economic forecasts on Friday showed Greece will miss its debt targets this year without further reforms, and a senior policymaker said Athens was not meeting the terms of its rescue package.

Greece would have a budget deficit of 9.5 per cent of gross demestic product this year rather than the 7.6 per cent it is tasked with hitting, if it did not change its policies, the European Commission said in its twice-yearly economic forecasts.

European Central Bank Governing Council member Ewald Nowotny appeared to give the first public confirmation that an EU/International Monetary Fund inspection team visiting Athens has found shortcomings in Greece’s implementation of the bailout plan.

“Greece has apparently not fulfilled the conditions sufficiently of late. The issue of privatizations will be the most sensitive point here,” Austria’s Kronen Zeitung quoted Nowotny as saying.


Get out the Vaseline

#125 disciple on 05.14.11 at 9:26 pm

Business is indeed booming for realtors, but they think this because of the high prices meaning high commissions, so for them it is all good. What they don’t want to face up to is that we are on the precipice of the parabola.

#126 disciple on 05.14.11 at 9:29 pm

#69 JohnnyBgood…
I’m feeling you on the banks. But I still don’t think we need them, all we need is a medium of exchange and a record-keeping system without usury. If this ever happened, the private banking families’ fortunes would evaporate overnight, including all assets they “own”, as the sheeple would simply take them back. Let’s get on with this task, stop electing banker puppets…

#127 45north on 05.14.11 at 9:30 pm

Charles Hugh Smith looks at housing prices around Atlanta Georgia: Conclusion:

housing is not coming back

#128 Mike Rotch on 05.14.11 at 9:36 pm

>112 Patz:

“I didn’t know but REmax charges agents a ‘desk fee’ and ‘ad fee’ each and every month which the agent says amounts to about $2000/month. Not chump change if you’re just starting out and deals are scarce. ”

My father was an REmax agent up until a few years ago, happily retired now.

Residential through the 80s, and then when the SHTF at the end of that glorious decade, he upgraded his credentials and mostly dealt in commercial for the rest of his career.

The desk fees are part of it, but REmax (and others) also take a 20 to 30% cut of the agents share of the commission split.

Residential RE is a tough way to make a living, and I truthfully think that only a select few are making a very good living at it.

The guy that worked for me on my last purchase had to spend about 40 hours plus expenses to get me into a home. What does he get for that? I guess his half of the split grossed him maybe $100 per hour, netted him what? half of that after taxes and expenses?

Seems a modest return for working hard, taking lots of risk, and not having the benefits that go with being a salaried schmuck (paid sick days, health benefits).

#129 Hoof Hearted on 05.14.11 at 9:45 pm

Realtors will soon be extinct

I say within 10 years……

#130 Junius on 05.14.11 at 10:05 pm

#50 BPOE,

Normally decisions whether to rent or buy are based on the relative economic ratios. For example, in about 80% of the US right now it is probably a better idea than renting. However you are now advocating something called the family embarrassment ratio. You are an idiot.

Want to know how to be a failure to your family? Become a bottom feeding, greed and fear mongering low life pumper. Want to know what that looks like? Just look in the mirror.

#131 BrianT on 05.14.11 at 10:09 pm

The prestigious IMF knows what we need even if we don’t think it is advisable-good thing they are out there doing God’s Work

#132 Junius on 05.14.11 at 10:14 pm

#102 Hoof-Heated,

Smoking Man lives in Never Never land and smokes BPOE’s best BC weed.

#133 Junius on 05.14.11 at 10:16 pm

#125 disciple,

Business is not booming for realtors. Sales are down and have been for most of the past year. However it is getting worse as prices go down. And down. And down.

Good news is it gives them plenty of time to take another 3 week course.

#134 Junius on 05.14.11 at 10:23 pm

#94 V Fekete,

You asked, “I don’t understand why more people aren’t listing their homes when they can get a record price for it. What does this mean for real estate in the coming years?”

The pool of buyers is exhausted. We have passed 70% home ownership which is a record level. With the tightening CMHC rules, inflation and other cost increases the pool will shrink to nothing in the coming months.

As for the future, it means the market will turn downward for a long time.

#135 Hoof - Hearted on 05.14.11 at 10:44 pm

Buying a Trump property, or so they thought

#136 Nostradamus Le Mad Vlad on 05.14.11 at 11:40 pm

Surfing The Wave Spot the surfer, if you can. The wave is, well, somewhat large!

Suicide A better description of the cycle changes — the west is basically strangling itself.

Debtquake Again in Japan. Reliant on exports, as Canada is.

Exit Stage Left Adults 30 and under are leaving New York State, and going to cheaper places.

Joseph Stiglitz says austerity is bad. So spend as if there is no tomorrow!

Oil or Food? “Is anyone surprised by Obama’s decision to protect the oil refineries?”

Travelers — Be wary of the TSA.

Pot – Kettle – Charcoal Sure, China doesn’t have a great human rights record but TPTB are using the US Fed, the Pentagon and the WH for their own ends and causing all this trash in the first place, along with The Negative Force tossing us around like broken zombies.

A HAARP a day spends money like we’ve never seen before!

CIA Country Account Balance “Take a look at who is in last place.”

Hmmm. “But I have a really good guess! And it involves standing next to the world’s worst nuclear disaster.

“But I guess when CNBC is owned by the company that designed those reactors, certain things must be left unsaid!”
Polls Apparently, Obama doesn’t stand a chance in 2012, so that leaves the door wide open for Billary (Dumbs) and Sarah (Rethugs), so it will be a real cat-fight!

Pacific Ocean A radioactive garbage dump.

China Stopping exports of diesel fuel due to their own troubles, so that may push prices up here thus increasing food and other costs.

Oilbama — Links in. Why indeed, allow new drilling permits when there are trillions of barrels of oil on land in a few states?

#137 Dodged-a-Bullit-in Alberta on 05.14.11 at 11:44 pm

Greetings: BPOE===Arsehole

#138 JohnnyBGood on 05.14.11 at 11:58 pm

@ #126 disciple

There is a case to be made for making banking a public utility, as you describe. Not sure, because I have not looked into it in sufficient depth to form an opinion.

However, I do feel strongly that governments should not be able to spend/print money unchecked as some advocate. An institutional approach would not work because the agencies involved would simply be tools of the government and they would always find ways to bypass or nullify any regulations or laws designed to prevent over spending/printing.

Even under a much vaunted gold standard governments always find ways to devalue money and confiscate the people’s wealth. They can simply go off the gold standard. Done. Like Britain did in (I think) 1931 and the US in ’71.

I think I favour a market-based system, such as we have now where market demand and thus market-driven interest rates help keep government spending in line. Of course such a system does have its flaws or loopholes as we are seeing now. Which, again lends weight to the Founding Fathers’ warning about central banks/banking cartels.

#139 Living In Edmonton on 05.15.11 at 12:06 am

#68 Jsan

The Condo’s for $50,000 ARE NOT condemed they are a 600 sq ft condos in the Quenen MAry area, just do an advanced search $129,000 is for a 3 bed 2 bath townhouse in Norwood in EXCELLENT Condition or a fixer upper in Norwood that is a SFH but not condemd.

And yes, Edmonton prices have a big correction ahead, we are seeing forclosure up every single month for the last several years…. (Foreclosures up 600% since 2007 in Alberta).

Try to get a job over $12 an hour in this city!

#140 JohnnyBGood on 05.15.11 at 12:06 am

@ #27 Howdy There

“Why so scared now?

Touchez. But it’s not so much fear of systemic risk in Canada, so much. But when the CDIC starts ramping up their ads and PR, it could signal that they see fear of systemic risk rising, and they are trying to calm the herd. Have you noticed that since the last crisis passed, you don’t see CDIC TV ads anymore? Remember, it’s all about confidence. Perception is reality. Etc.

#141 Peter on 05.15.11 at 12:21 am

Check this out these guys who seem to think 12 days of expensive sales makes a trend in Calgary.

I am sure if you pick the day that someone bought a multimillionaire dollar mansion you could get that average price up even more.

#142 Utopia on 05.15.11 at 1:05 am

#71 TheBigLebowski

Sorry, that does not cut it Lebowski. I read through the material you sent and it DOES NOT support your claim that Queen Elizabeth is accepting personal investment advice from the individual in question nor does it even show that he made claims Gold would reach into the stratosphere never mind tens of thousands of dollars.

Stop posting lies and fabrications on this site.

#143 The American on 05.15.11 at 1:59 am

At #108: Exactly. There’s something big missing to his story. It simply does not add up and I know the border patrol would have been reprimanded. Besides, Canada is so perfect, why would anyone want to go to the U.S.? :-) Oh yeah, that’s right… Our border patrol IS GOING TO MAKE MISTAKES. They’re processing well over 300,000,000 people across our borders (not including the ones who run, jump, or swim unnoticed) each year. That is an insane amount of people crossing our borders, and the volume alone is tedious. Everyone wants in whether you want to admit it or not. Numbers don’t lie.

It is funny to me how Canadians CONSTANTLY complain our borders are too weak, and we allow everyone in illegally. However, when enforcement comes into play and actually begins doing its job then all of a sudden we’re a “police state.” Its totally laughable and hypocritical. I cannot tell you how many times the CBC has treated me like complete shit crossing into Canada. Guess what? It goes with the territory. I do not agree with the mistakes that have been made and I am not condoning it, but at the end of the day there are going to be mistakes made with the type of volume we are processing given the number people banging to get into our country. I don’t really care if you like it or not. Every year, the U.S. processes immigrants crossing into our borders at TEN TIMES THE ENTIRE POPULATION OF CANADA. That speaks volumes. If you don’t like it, don’t come. Seriously, I mean it.

I love going to Canada, and I despise the CBC when I arrive. But, I recognize it for what it is, and I accept it. They are SUPPOSED to intimidate you. Nobody ever handed me a flower and a kiss when I entered into Canada. I’ve been pulled over FOUR times by the CBC because I drive a “nice vehicle” and it is “odd [I] would have so many friends in Canada to visit.” Each time they were complete pricks in attitude, body language, and had some of the dumbest lines of questioning I’ve ever heard in my life. I’m not shitting you, but one asked me if I had any other kind of documentation other than my friggin’ PASSPORT. I said “No, like what? Isn’t my passport the sufficient and required documentation to enter?” He said, “like a utility bill to prove you live where you live.” I said, “No, sorry. I am not in the habit of traveling with my utility bills in my car. All my bills are sent to me in the form of e-copy and are taken care of via auto debit from my bank account each month. I am completely paperless with my bills.” Of course, he didn’t care for it, but it was pretty damn stupid of him to ask me that. It is what it is. Every country does it. Get used to it. Its the world in which we live now.

#144 Deliverator on 05.15.11 at 2:33 am

With BASEL III and similar new rules you will see the banks become boring again like in the 70s. No high level profit etc. However this is not going to happen overnight. Will take time. Until then there could potentially be number of issues

Keep dreaming. They couldn’t even agree on the Volcker Rule in the US, which was basically a re-implimenatation of a tiny part of Glass-Steagal.

#145 Renter-X on 05.15.11 at 2:51 am

#121 mad vlad

“New Bank” – so Iran does business with China. What does that have to do with Israel? Who cares – just another excuse for the blog’s favourite nazi to take his daily shot at the only moral/human rights respecting country in the region.

Oh, and pardon me for asking, but what does any of this have to do with Canadian real estate?

Looks like you’re the idiot vlad …

#146 jiminey on 05.15.11 at 3:31 am

It would take a long tim to collect $250k at $1000 /month. Thats how F would manage a bank colaps with 2.1 Billion.

#147 jess on 05.15.11 at 7:14 am

…”Background on the Repatriation Tax Break: In general, income earned by U.S. companies in the United States is taxed currently while income earned abroad is only subject to U.S. taxes when it is “repatriated” back to the United States.

In 2004, Congress allowed multinationals to temporarily bring offshore profits back into the U.S. paying only a 5.25% corporate tax rate, not the regular 35% rate.
Rational: tax break invest the repatriated profits To create jobs. however, evidence suggests used for stock repurchases and dividends—uses expressly prohibited by the legislation.

The Joint Committee estimates that repeating the tax break will ultimately cost taxpayers $78.7 billion. You can view the Joint Committee on Taxation’s full response to Mr. Doggett’s revenue request by clicking here.

..”If you will recall, the 2004 “Jobs Act” bill provided for a repatriation holiday for multinationals. It was to be a “one time only” “never to be repeated” provision that would let the bad companies who had not been repatriating regularly bring home the dollars (and then behave better thereafter). The purported rationale for the provision (never really believed by anybody) was that repatriation at a very low tax rate would mean lots of money would come home, the money would be used by companies to invest in America, and there would be a springtime of jobs creation here at home as a result.

“This means we will have to borrow more from foreign creditors or shift a greater burden to American small businesses and families,” Doggett said. Congressional estimators projected that companies would repatriate about $700 billion if offered a 5.25 percent rate, compared with $300 billion during the tax holiday enacted in 2004.

Read more:

..”Kristen Forbes, who was on President Bush’s Council of Economic Advisers when the last repatriation holiday was approved, told the Boston Globe that the policy “didn’t accomplish the stated goals of bringing jobs and investment to the US.” But that hasn’t stopped several other Republicans, including 2012 presidential hopefuls Mitt Romney and Tim Pawlenty, from endorsing the idea

#148 Cowboy on 05.15.11 at 8:17 am

#93 Devore,

Yes, I have Atco come in once a month to do readings.
My Atco guy says he sees overcharging by Direct Energy a lot. He told me once he had to go back 5 TIMES to read this lady’s meter because Direct did not ‘believe’ his readings .
Interestingly enough, this lady was overcharged by loads and had such a fight to get her $ back.

HA, HA, I call bullshit, not believing readings? Pathetic!
No WAY would they make mistakes on the too little side being too cheap for us.
Again, they know what they are doing…
Just one example of those heads of company getting away with thievery from the little people from practices they have created for their own benefit…

#149 disciple on 05.15.11 at 8:31 am

I think you are perhaps missing my central theme, which is that interest in and of itself is what is causing the problem. Financial usury = slavery. Profits by corporations that actually make things like fabulous technology (Apple) are REAL. Profits that banks and their gravy train of shell corporations (ahem…BDC, CHMC, Canadian Senate..etc…) are non-REAL. They are imaginary, a shared illusion backed up at the point of a gun. It’s a fraud. All systems, be they religious, political, economic, technological or scientific that become corrupted, do so because truth is mixed with lies. It is our moral duty to separate the wheat from the chaff.

#150 SMOKING MAN on 05.15.11 at 8:38 am

Thanks for the insults kids.

Kids if you want to make big money the most difficult thing to do is to step away from your personal beliefs, jealousies, strengths, and weaknesses. Step back and observe, you need to be like an alligator hiding in the mud waiting for prey, with out thinking.

Over thinking and second guessing will only lead to losses.

In real estate the mob rules. The mob does not know how to buy and sell stocks, they don’t know what a balanced portfolio is. The mob has no understanding of the term income to price ratio. The Mob hates paying the land lord, The Mob knows that all their friends that had the nuts to buy real estate have made out like bandits.

The over thinkers and there are a lot on here, are certain that Carney and the bad banking Cartel want to stick it to the little people by spiking rates.

Let’s look at this from Carneys point of view, hum do I spike rates and destroy the housing Market then the general economy like the Yanks did, or do I put up with a little inflation for a few years and hope and prey the USA gets it’s act together so that when I do spike slowly the effects will be minimal, I can just talk tough and scare the MOB a bit so we don’t get massive spikes in real estate price.

What do you think Carney is going to do?

Clear and concise my comment, yet the bubble heads will attack it from all sides.

#151 the new american on 05.15.11 at 8:58 am


Stop calling yourself “American”; you are a naive slave–get used to it.

#152 Daisy Mae on 05.15.11 at 9:14 am

Cash does not mean ‘cash’ –it means Money Market.


“Trading in the money markets involves Treasury bills, commercial paper, bankers’ acceptances, certificates of deposit, federal funds, and short-lived mortgage and asset-backed securities. It provides liquidity funding for the global financial system.”

#153 April Showers on 05.15.11 at 9:29 am

Responding to 148 –

Ben, I want you to stop and think very carefully about what you just wrote. You can’t get work in our own country, so you go to the U.S. to find work. You can still find a job in the U.S. and yet they are in the worst economic recession since the Great Depression. You chose a profession in which there isn’t work to be found in telecom in Canada? That doesn’t surprise me. You are going to the U.S. to find work and you are in a job in which their country is able to provide you. I wouldn’t complain too much about your experiences there if I were you. Now repeat over and over. It goes to show things aren’t all they’re cracked up to be here when Canadians go to the U.S. for work and find jobs to support themselves and then we whine about how different things are in the U.S. I always get a good laugh about that.

#154 eddy on 05.15.11 at 11:08 am

Toronto city hall is a den of corruption.
This spring Toronto city council voted to keep fluoride in the water. The vast majority of Torontonians do NOT want fluoridated water! Health Canada pressures councilors to keep fluoride in tap water, as does the Canadian Dental Association (who swear to publicly and professionally endorse fluoridation in tap water), convenient if they get sued by over fluoridated patients to spread the liability to a city:,Fluoride,&Liability.htm
Who benefits? The bottled water industry, retailers, the Dentists who spread the liability (of fluoride related problems) to Municipalities, the Federal and provincial governments (HST-harmonized sales tax)
And the Rabbis who collect the kosher tax also benefit. (It’s hard to find non kosher bottled water). Visualize pallets of unsold water in countless warehouses.
SO MANY groups benefit financially, but the big losers are the citizens of Toronto

#155 NorthYork on 05.15.11 at 11:23 am

Comment for Garth,

Not too long ago, you mentioned how investing in dividend paying stocks (banks mainly because of high dividend payouts) would have been very clever during the 2008-2009 crisis in the stock market. The investor would not have even noticed being in the stock market crisis because the payout would continue to come along. Well I thought that was a great suggestion from you and it makes sense. But I just finished a book from Robert Kiyosaki and he just mentioned that during the 2008-2009 crisis approx. every dividend payout was 90% reduced or completely cancelled because companies were hurting financially. I just wanted to say you would not be receiving those payouts depending on where you invested. But other than that, like always I agree with your suggestions and enjoy reading your blog.

Pay more attention and stop reading American books. During the financial crisis not a Canadian single bank reduced its dividend on common stocks, let alone preferreds. Investors received their regular income stream without interruption. — Garth

#156 Utopia on 05.15.11 at 11:25 am

#143 The American

I have to agree with you that Canada Border Customs is a pain in the ass. Mean buggers really but the security is good even if the attitude stinks. They do ask interesting questions though, I will grant you that.

Want a really wild experience entering a country though? Go to Israel for a visit. By the time you get past the storm troopers you will be so pissed you might decide to not even enter…and just get back on a plane and go home again.

It is VERY intense.

#157 confused and a little crazed on 05.15.11 at 11:30 am

#143 american

yeah there is a lot more people going to the US… i mran really . it’s better shopping with more selection and prices.

i went to vegas last year and will this year. $400 for 4 nights in vegas as opposed to $400 spent in a kelowna bed/ breakfast for 3 nights

all this arguments about whether real estate will go up or down …i just want to reiterate you can be financially successful w/o it . people have done it before and will continue to do so way after this blog has gone into obscurity so relax both bulls/ and bears

#158 eddy on 05.15.11 at 11:57 am

An interesting take on Strauss Khan, Greek debts etc

#159 Utopia on 05.15.11 at 12:16 pm

#120 S.B. on 05.14.11 wrote…..

“TMX Group Inc. (TSX:X) said on Saturday that it has received a written proposal for acquisition by a corporation formed by a number of unidentified Canadian financial institutions.”

That is fantastic news S.B.

I have been very concerned that this country might lose its exchange in a merger with London’s bourse. I believe such a loss would be extremely damaging to our nations prestige.

Do we really want to join the ranks of Third world countries who do not have an exchange on home soil?

How can that be a good thing?

A question I have posed to those I know is this..”If the merger proposal is truly such a great idea for both parties then why not have the two merged entities reside in Canada instead of London……”?

That won’t happen of course. The LSE would have none of it nor would the English policy makers. Why? Prestige of course. I think you get my point. This is a one way trade in favour of centralizing activity in England and we can hardly imagine the consequences that will accrue as we lose influence in the coming years.

This may be one of the first tests for our new Conservative Government. They have the power to kill this deal and I encourage them to exercise that power at this time. With a stable government now in place this country is in a position to again assert itself on the world stage.

We are ill advised to play second fiddle to London again particularly where the keys to our own fund raising are concerned and some national interests may be impacted. The problem really is that nobody knows for certain what negative impacts such a change might bring. We do know that our own exchange will fall under the law of another country after a merger and deprive our own policy makers of control over how some aspects of business is developed in the future.

We should not therefore go into the future with no exchange on our own soil and by doing so potentially pass off some of the economic center of this country to London of all places.

I am certainly not against mergers however this particular one will impact on our national identity and cause ripples in the global community. It is a mistake to allow it to go through at time when our country is actually gaining influence amongst our peers. It is doubtful it can be reversed either if it does proceed.

If the LSE and TMX want this merger so badly, let them come to Canada. Let them use the same logic and arguments in favour of locating an expanded exchange in Toronto.

What’s the difference, right? (all of you out there know in your hearts there is a difference of course and this is why we also know intuitively that a merger is a bad idea and a bad deal for Canada).

How soon before we lose our status as a G8 member too?

#160 Desi on 05.15.11 at 12:23 pm

Garth, F and H won’t change CMHC insurance rules as long as you are predicting a housing correction. If they do so, market will be corrected and your prediction will come true which will make you a hero and conservative would look bad that let go a hero from their coccus. If you really want to see housing market corrected start predicting that housing market will go up forever. That will do it for H and F.

#161 Vik on 05.15.11 at 12:24 pm

Has the melt begun ? Here’s an
example of a $100 k haircut.

Scarborough bungalow :

Old price here :

#162 Richard on 05.15.11 at 1:13 pm

#158 Eddy,

fluoride is actually beneficial to the population as it strengthens enamel by making it harder to dissolve under acidic conditions, and interferes with bacterial metabolism in the oral cavity. If anything, taking fluoridated water away would benefit dentists’ wallets because the cavities rate would increase and people would need more work done.

I dont see how dentists would benefit from the implementation of fluoride financially, actually its part of their mission to help people keep their oral health and retain their natural teeth for as long as possible.

#163 Richard on 05.15.11 at 1:19 pm

Of course, you try not to ingest large enough amounts to give yourself fluorosis, but the amounts in water are very minute, and unless you swallow your toothpaste instead of spitting it out there shouldnt be any problems.

#164 Utopia on 05.15.11 at 1:35 pm

#134 Junius said….

“The pool of buyers is exhausted”.

Amen Junius. And despite that I spoke to a guy last night (late thirties know-it-all) who just made out like a bandit on his home selling as a result of his divorce.

He was telling anyone who would listen that real estate was the Golden Calf. Very forcefully too. Could not be swayed by any logic to the contrary. He held his stubborn opinion for the whole night and I would say he was absolutely convinced of his own logic.

Real Estate always goes up of course. You and I and everyone here know the song and dance when these types enter the room and start puffing up their egos from the “high” of a successful sale home sale.

Sanctimonious and as full of shit as you might expect.

He did well see, and now he is going to buy another. He landed all the typical renting-is-for losers arguments on me because “you are just throwing away good money that benefits other people” logic until I was exhausted from his stupidity.

The guy is a cook in a restaurant! I told him I have a background in economics and finance as a balance and pointed out some of the obvious flaws in his argument.

Nothing could sway him.

As I was leaving (or trying to leave) he launched into how he had invested 3000 dollars in a crappy house in the Battlefords and it yielded him a 35 thousand dollar gain after one year. “I did a lot of reno’s” he insisted “and I earned that money the hard way”.

I almost burst out laughing at the idiocy of it all. “Do you really think that is a normal market” I answered in disgust as I finally escaped the oppressing gravity of his monologue?

It is not normal of course. It is just another sign of a top.

#165 bridgepigeon on 05.15.11 at 2:01 pm

145 renter Can you not make a comment without using nazi? I understand it’s one of the favourites for anyone who critiques ‘the only human rights respecting country in the region’ but give us a break, it really doesn’t apply.

#166 Utopia on 05.15.11 at 2:03 pm

#126 disciple wrote….

“….all we need is a medium of exchange and a record-keeping system without usury”.

I think it is time you went bck to your dictionary and familiarized yourself with the term “usary” Mr Disciple. Bank spreads are low. Certainly they are not out of line for mortgages right now.

Credit cards…now that is a different story.

#167 MikeT on 05.15.11 at 2:21 pm

Glad for the TSX potentially staying here.
LAst week, my old Chinese friend who’s now a Senior VP at CITIC Securities (largest Chinese inv banking firm), was in Canada looking for energy and mining businesses to buy for their clients back in China. Their clients got a lot of money and are now very energy and resources hungry. And even if he’s my good friend from old, hungry and poor times, I still felt somehow uncomfortable and actually sad about Canada being sold to foreigners – even though I am an immigrant…

#168 jas on 05.15.11 at 2:22 pm

#163 Utopia
Agree with your views.

And folks, are the following good buys for income?

PWE/Penn West Energy 9.48%
ERF/UNEnerplus Resources Fund 9.15%
PVE/UNProvident Energy Trust 8.61%
PGH/Pengrowth Energy Trust 7.45%
BTE/UNBaytex Energy Trust 6.86%
BCE/Bell Canada 6.26%
T/Telus 6.02%
CM/CIBC 5.42%
BMO/Bank of Montreal 5.23%
TA/Transalta 5.10%

#169 Industrial Guy on 05.15.11 at 2:29 pm

A Canadian chartered bank fail? ….. That could only happen after the elction of Belinda Stronach as Canada’s first NDP Prime Minister.

#170 Hoof - Hearted on 05.15.11 at 2:31 pm

#154 Ben

Re Suites….

Well…..IMHO…this just delays the inevitable, and a means to ad bubble air.

In addition, most Cities charge annual fees or licenses for suites…..

The rental market will be glutted with SFH turned into rooming houses.

#171 TheBigLebowski on 05.15.11 at 3:42 pm

here is what I wrote on 5/13
“garth, if Barry Sottero and his gaggle of criminals and the Fed stop QE then the whole system collapses, simple as that. Collapse or inflate, they are in a box and those are the only two choices left to the den of thieves that wear $5,000 suits and pretend to have any morals at all.”

…Note what I wrote about Morals. These criminal bankers are sociopathic demons in $5,000 suits. And this is who Garth claims will save us from our stupidity ? Hmm
Now here is a story that came out 2 days later. The truth is stranger than fiction. This is the head of the completly undemocractically formed IMF who just put Ireland into Usury and is now working on Greece.

IMF chief set to resign: reports
World-finance official faces attempted rape charges

These are the Trolls who have been appointed to run the world’s financial structure.

#172 vancouver on 05.15.11 at 4:41 pm

Inter pipeline ipl.un
Brookfield renewable energy
Atlantic power
Chart well seniors housing
Power financial

#173 Siddelly on 05.15.11 at 5:11 pm

Comment for # 159 North York

I think what Garth was really trying to say was that if you had the balls to buy BMO common stock after the crash at 30 bucks a share, you would have been receiving a 10% dividend and if you held it till Friday you would have experienced a 100% capital gain and still have a 4.6% dividend to keep you company. Kiyosaki had some great investing ideas for 25 years ago, but even he has been out of real estate and into commodities personally for some time now.

Some American books you may want to pursue that may be a little more helpful at this time are names like Benjamin Graham, Peter Lynch, Peter Schiff and of course Warren Buffett. I don’t however recommend that you stop reading Canadian books , the more informed you are, the better your chances at success.

#174 jess on 05.15.11 at 5:12 pm

corporation formed by a number of unidentified Canadian financial institutions.”

banks and pension funds = maple group?

#175 betamax on 05.15.11 at 5:36 pm

#143 The American: “Each time they [Canada customs] were complete pricks in attitude, body language, and had some of the dumbest lines of questioning I’ve ever heard in my life.”

Have to agree. I’m Canadian and I’ve always received better treatment by US customs than by Canadian customs.

#161 confused — Yes, a trip to Vegas is often cheaper than a trip in Canada, and ten times the fun. I traveled extensively in Canada in the past but don’t bother anymore — it’s too expensive for what you get.

#176 VICTORIA TEA PARTY on 05.15.11 at 5:49 pm

“NAKBA” in more important places than Canadian RE

Druge Report’s latest headline:


While the world’s news media seem more concerned about allegations, in New York, about a tired old hack, who used to run the IMF, a lot of much younger folks, in the Middle East, are revving up oil and gold prices, once more (IMF’s new guy: please take note)!

As explained in the latest from the Christian Science Monitor’s Site:

“Palestinian protesters clashed with Israeli security forces in the West Bank, Gaza, and East Jerusalem on Sunday during protests to mark the anniversary of the founding of the state of Israel in 1948, a day many Palestinians call “nakba,” meaning “catastrophe.” Dozens were wounded.

“…(Also, there were) deadly clashes…on Israel’s borders with Lebanon and Syria, reportedly resulting in the deaths of eight people.

The Israel Defense Forces (IDF) accuse Iran of orchestrating two waves of fighting along its northern borders, as Palestinian protesters tried to infiltrate from Syria and Lebanon during nakba protests.

…The Palestinian news agency, Maan, reports that demonstrators set tires on fire and threw stones at security forces near Birzeit University north of Ramallah, where police responded with rubber bullets, tear gas, and stun grenades.”


This is another element, along with all of the rest of it that’s been ongoing throughout the region for several months, that bodes we know not WHAT until something settles out whenever THAT will be.

News reports suggest that the Palestinians want a piece of the freedom action as do the Egyptians, Tunisians, Libyans, Syrians, the list keeps getting longer.

Israel accuses Iran for fomenting border skirmishes with Syria and Lebanon. Probably true, as that frightening Islamic kingdom begins to flex its huge regional influence.

As long as all that continues, or gets worse, economic fundamentals throughout the world will continue to be sloppy on their geopolitically earthquake-prone foundations. In other words, there are NO foundations.


As this goes on, the rumpled-looking former head hack for the IMF is charged with attempting to sexually abuse a hotel maid in New York.

Kind of poetic justice, regardless of the outcome, I’d suggest. Why?

There are some former national leaders still out there who probably remember the royal screwing this old guy’s predecessors did to THEM: namely charging usuriously high interest rates in exchange for bailouts. How exciting all of this financial subterfuge.

And now Tim Geithner, the US treasury-secretary, warns that US will be headed for a double-dip recession unless Congress ups the debt limit, now at an astounding $14.3 trillion!

Memo to Timmy: Your empire’s heading deeper into the Great Depression 2.0! Double-dip recession? In your dreams pal!


Back in Canada we’re getting bent out of shape about decaying real estate prices. Give it another six months of what’s shakin’ outside our borders (today’s events being but one example), and these will look like the best of times.

Mr. Harper and crew must be scurrying for their economic battle stations by now. I sure hope so! Hang on! “Nakba” indeed.