Doomers and Humpers

You gotta admit this is an interesting site. On one hand, barefoot, wailing and smelling of eau-de-ashes are the doomers, all gold, canned tuna and ammo. On the other are the house humpers and China-huggers, dissing renters, wagging ringed fingers and saying, buy now or buy never. The doomers claim housing will lose 80% of its value, money will collapse and by this time next year we’re in depression. The humpers say we live in an oasis, the world wants in, rates will never rise but real estate prices continuously will.

They’re both nuts. But late in the third period, I’d say the Doomers are ahead by a goal.

In case you missed the latest news, here’s a quick recap: Japan just went into recession, thanks to the quake-flood-nuke disaster. Japanese are hoarding cash. Safes are flying out of the stores. Consumer spending is tanking. Lousy news, since this is the world’s third biggest economy.

Greece will default on its debt. All but certain now after its credit rate was slashed to Tidy Bowl status. The unemployment rate’s over 16% and this will not go down quietly. Augments the odds of Spain, Portugal, Italy following.

My econo buddy David Rosenberg of Gluskin Shiff has turned bear again. Utter grizzly, in fact. Bloomberg asked him yesterday what odds he is putting on a new recession. “I would give it a 99% chance,” he said. “Economists call this a soft patch. It’s not like this is a soft patch. Basically, when all the stimulus is gone, you get to see what the emperor looks like disrobed. It’s not a pretty picture.”

Wednesday noon Mark Carney stands before a SRO crowd in Vancouver. His topic, “Canada’s housing market.” In a city where the average home costs 12 times more than the average family earns and takes 72% of disposable income to own, he will have this message: Trash your debt. Now.  And he really, really means it.

In Ottawa it’s started. Parliamentary Budget Officer Kevin Page, a thorn in Harper’s paw, let it slip the feds are about to can 6,000 civil servants. That is even before the aggressive deficit-bashing austerity program begins. And to think of all the people here who justified paying Toronto prices for Ottawa igloos, ‘because it’s different here.’

Of course, there’s America. Hollowed-out middle class, housing deflation and a real unemployment rate something north of 20%. The country’s mired in debt, and yet may be forced into spending billions (or trillions) more on new stimulus to keep the 1930s at bay – all in the year leading up to a Presidential election. How polarizing is that?

Against this morose backdrop, Canada actually looks good. But it’s more like we avoided a mess, rather than escaped it. Cocky and provincial, Canadians apparently learned nothing from the experiences of others. Now we have 70% homeownership, more debt than beer, while 40% of all families are without savings and only a third of people have a pension. How is this supposed to turn out well?

So while Airbuses full of horny Asians may make us think we’re impervious, and rising real estate makes us feel wealthier, even with less money, Rosenberg’s right. This economy is softer than Rob Ford’s abs. Even if Carney thinks rates therefore can’t rise, housing is cooked. New money going in today is money at risk.

But when will the unraveling happen?

Rosenberg says his 99% odds are for a 2012 recession. Not a double dip. Not part deux of the last boner. A brand new period of negative growth based on deflation, unemployment, faltering corporate profits and endless debt. And there’s no quick fix for that stuff.

Cue the doomers? Nope, far from it.

Recession does not mean depression. A real estate correction does not mean crash. Money fleeing from houses will migrate elsewhere. Smart people will continue to score betting against the decisions dumb people make. Fortunately for them, dumb abounds. To prove it, we have Vancouver.

Coordinated fiscal and monetary policy, global intervention and political intervention can push off the reckoning for years, maybe even decades. Systemic financial collapse may be the wet dream of the bullion-lickers who come here, but it ain’t happening for a long time yet.

Having said that, it’s the humpers who are most at risk. Without consumer confidence, there’s no real estate market. And without jobs and growth (or horny Asians), no confidence.

This pathetic blog may make no sense at all. Usually I don’t understand it myself. But I wouldn’t waste my summer building a deck.

216 comments ↓

#1 First? on 06.13.11 at 9:17 pm

First..?

#2 Crashing Debt Tide on 06.13.11 at 9:19 pm

Its all over, except the crying.

#3 mississaugasold on 06.13.11 at 9:19 pm

We dont need interest rate hikes to destroy housing. Debt will.

Interest rate hikes will only make it go downhill faster.

#4 WeEeeee on 06.13.11 at 9:20 pm

2nd, 3rd, 4th, 5th, 6th, 7th!

#5 Duke on 06.13.11 at 9:29 pm

Blame Tesla! And I’m not talking about the car company.

http://www.gasolinegangsters.com/

If you want to blame one person for the last 100 years of suburban wasteland and a consumer automobile society with cars at the center, you need to blame Nikola Tesla. Without him we would never have overpriced suburbs and more subdued boom and bust periods because we wouldn’t have the surplus energy to waste on housing bubbles.

Yes friends blame Nikola Tesla.

#6 Kim on 06.13.11 at 9:30 pm

Wow … your early. Great blog … one I will forward to my Dad.. not my friends, who seem to think housing in Vancouver is going up and ‘Credit is King’.

#7 Jamaican_Gal on 06.13.11 at 9:36 pm

FIRST time I read this blog I was hooked. The chickens are indeed coming home to roost.

Thanks for keeping us informed, Garth.

#8 Rafa on 06.13.11 at 9:39 pm

First?

#9 Nemesis on 06.13.11 at 9:41 pm

“I wouldn’t waste my summer building a deck.”

Good advice, GT.

Can you hear it… it’s coming…

War.

#10 squidly77 on 06.13.11 at 9:44 pm

“Prices are down as much as 20% from peak levels reported in 2006-2007, bringing ownership within reach to many potential purchasers,” said Elton Ash, regional executive vice-president of Re/Max in Western Canada.

On British Columbia’s Salt Spring Island, for example, starting prices for oceanfront properties have fallen to $669,000 today from $1.3-million in 2008.

In the North Okanagan Valley, a three-bedroom, winterized recreational property on a standard-sized waterfront lot — the common measures used in Re/Max’s report — that sold for $1.5-million in 2008 now sells for $995,000.

Starting prices for similar properties on Alberta’s Sylvan Lake are now at $800,000 from $1.25-million previously and in the Rocky Mountain resort town of Canmore, a two-bedroom condo has fallen to $229,000 from $320,000. edmontonjournal.com/business/property+market+bouncing+back/4938705/story.

#11 renting in leaside on 06.13.11 at 9:45 pm

1st loser!

#12 Tim on 06.13.11 at 9:46 pm

There’s a middle ground, Garth. I have no debt, own no real estate and I’m making just under 10% on my investments, which total about four years of my gross income right now.

On the other hand I’ve got some precious metals, relative food security and indepence from the grid with a couple days work.

Doomer? Only if you stretch the term. I prefer ‘prudent’. I’ll vulch the Fraser Valley when the vulching is good, and coast quietly until then, watching others commit everything they have to RE, or go crazy and bet their wad on bullion.

#13 Fires, floods and debt oh my... on 06.13.11 at 9:55 pm

Man, this blog….

I am mortgage free… decent money in savings, rrsp’s and tfsa’s maxed out….

and you still scare the shit out of me….

and no…don’t care if I am first, I just want to be standing at the end…..

#14 Dmitry on 06.13.11 at 9:55 pm

Garth,

“This pathetic blog may make no sense at all. Usually I don’t understand it myself.” – your greatest wisecrack by far. Really like your style :-)

D.

#15 Aussie Roy on 06.13.11 at 10:00 pm

Doomers, Pumpers and us old guys who bailed and took our profits from our RE portfolio after 40 years because we can smell the delusion.

What can one possibly say about Vancouver,
BPOE – Biggest Payments On Earth?.

Aussie Update

NEWSFLASH

No bubble here, it was all a mistake. Prices expected to go to the moon, could be as soon as next week. So buy now or be priced out forever.

This important message is proudly sponsored by the RE Industry.

#16 Fires, floods and debt oh my... on 06.13.11 at 10:00 pm

In the North Okanagan Valley, a three-bedroom, winterized recreational property on a standard-sized waterfront lot — the common measures used in Re/Max’s report — that sold for $1.5-million in 2008 now sells for $995,000.

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

actually sells??? or just what the list is now?

#17 CREA Circle Jerk on 06.13.11 at 10:04 pm

It’s sad really Garth. The only thing holding up RE, and in fact causing it to still grow in Vancouver and Toronto specifically, are record immigration allowance by our government and cheap interest rates. In 2010, we let more outsiders than ever into Canada – officially 350,000 I believe. Of course, this doesn’t count undocumented individuals flooding in (mainly migrating north from Central America) and University (VISA) students who are supposed to be temporary but end up applying for citizenship in due course.

And it’s making Toronto unlivable. Global news reported the other day that commute times in Toronto were the HIGHEST in all of North America, averaging 80 minutes per round trip. That’s higher than LA, NY and Chicago. The urban sprawl stretches undisturbed for 60-70 km from Pickering through Milton, and north from the Lake through King City. Now the geniuses in government are front-running the population by saying it might be necessary to put a permanent toll structure in place on the 401 to control the traffic, which is basically a parking lot from 3:30-6:30.

Is there anything which will put a halt to the goliath out-of-control urban sprawl that is Toronto? And that Vancouver traffic is just as wretched nowadays. It took forever to get anywhere when I was out there last month. The Balkanization of Canada is slowly gathering pace.

#18 jas on 06.13.11 at 10:08 pm

Why the BOC doen’t have the balls to adminster bitter medicine?

#19 Cash is King on 06.13.11 at 10:10 pm

“This pathetic blog may make no sense at all. Usually I don’t understand it myself. But I wouldn’t waste my summer building a deck.”

Unless of course, the deck is covering the opening to the bunker.

#20 Lisa on 06.13.11 at 10:12 pm

Top trend analyst Gerald Celente has predicted the coming of the “Greatest Depression” for the last several years. Recession, again? No, it’s been one big slide all along! Look at the fundamentals! He bases his predictions for future trends from current events and he has one heck of a track record…Google him if you dare.

#21 Republic_of_Western_Canada on 06.13.11 at 10:13 pm

“for a long time yet.”

Priceless.

Don’t get your hopes up for another NEP by any other name, though.

On the other hand, it’s high time we equally distributed all the metal down by Sudbury to all parts of Canada, namely Calgary and Edmonchuk. Tithe should be paid to same by all inhabitants east of Winnipeg, in gold bullion of course, for the privilege of being tolerated. Not that it’s going to be worth very much anymore, in the foreseeable future, judging by the commodities markets this week…

#22 Tim on 06.13.11 at 10:16 pm

Rising Corporate Profits Mean More Jobs

http://business.financialpost.com/2011/06/13/rising-profits-mean-more-jobs/

“Earnings will climb an average 10 percent a year through 2013, more than three times quicker than the economy, after what has already been the fastest rebound since the late 1940s, JPMorgan Chase & Co. projects.”

“Earnings, adjusted for depreciation and inventory costs, surged at an average annual rate of 29.9 percent in the eight quarters through the end of 2010, the strongest such growth in more than half a centur”

“Operating profits increased a cumulative 44 percent since the recovery began, six times faster than the 7 percent rise in nominal GDP”

For folks who can’t grasp why they should be invested in stocks

#23 Mr. Reality on 06.13.11 at 10:17 pm

Mr. Reality told you to start shorting months ago…….

Get your finances in order for this ride…..

Mr. R.

#24 Carp on 06.13.11 at 10:18 pm

Stock market is a leading indicator….

http://www.theglobeandmail.com/globe-investor/investors-feel-economic-chill/article2059326/

I have a landlord who I’ve offered to move anytime so he can sell if he wishes and still choses to hold on since I’m a great tenant. I tell him, I think RE is going down, he says is family are builders and made millions on RE so he won’t. Meanwhile he can’t pay for a needed fixing and goes to dad for help.

He is also putting his other home for sale cause it’s time since all other homes on that street are up for sale and nothing is selling ….

#25 BPOE on 06.13.11 at 10:18 pm

The real suprise will be no suprise at all. Carney doesn’t have the jam to ever raise interest rates. Calling your bluff Carney. The interenational investor buys with cash so what Carney says has no effect. The stats regarding income posted are totallyh skewed and in no way represent the people of Vancouver. Stay tuned for Conservative government paving the way to sell Canada under Canadians noses
+++++++++++++++++++++++++++++++++++++++
Wednesday noon Mark Carney stands before a SRO crowd in Vancouver. His topic, “Canada’s housing market.” In a city where the average home costs 12 times more than the average family earns and takes 72% of disposable income to own, he will have this message: Trash your debt

#26 Tim on 06.13.11 at 10:20 pm

“In Ottawa it’s started. Parliamentary Budget Officer Kevin Page, a thorn in Harper’s paw, let it slip the feds are about to can 6,000 civil servants. ”

Under Harper’s watch the Neo Cons racked up the biggest deficit in Canadian history. How else are they going to get out of the red? Certainly not by having Corporations pay their fare share of taxes, this burden is being transferred to you and I.

#27 BPOE on 06.13.11 at 10:21 pm

Another point supporting investment in Vancouver and not a balanced portfolio. Folks when the world gets tough folks want HARD ASSETS
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
My econo buddy David Rosenberg of Gluskin Shiff has turned bear again. Utter grizzly, in fact. Bloomberg asked him yesterday what odds he is putting on a new recession. “I would give it a 99% chance,” he said. “Economists call this a soft patch. It’s not like this is a soft patch. Basically, when all the stimulus is gone, you get to see what the emperor looks like disrobed. It’s not a pretty picture.”

#28 Tim on 06.13.11 at 10:24 pm

Re #5: No, blame the evil Robert Moses:

“he displaced hundreds of thousands of residents in New York City, uprooted traditional neighborhoods by building expressways through them, contributed to the ruin of the South Bronx and the amusement parks of Coney Island, caused the departure of the Brooklyn Dodgers and the New York Giants Major League baseball teams, and precipitated the decline of public transport through disinvestment and neglect.”

Wikipedia

#29 Holding on on 06.13.11 at 10:24 pm

I just want to say thank you Garth for regularly updating your blog with insightful info on the world around us. It’s nearly impossible to get this type of outside perspective from friends, and family. It must be hard to be the only contradicting voice to the now common belief the RE will rise indefinitely. I have no doubt that you will be vindicated in the coming months ahead.

#30 Elmer on 06.13.11 at 10:26 pm

Why does Garth mention Greece in every post? It’s such a small insignificant country. If France or Germany default then I might care.

Dominoes. Zeus. — Garth

#31 Ex-Cowtown on 06.13.11 at 10:29 pm

Greece bothers me the most. There’s a misconception that the U.S. won’t be much affected by it, but the ‘muricans have been busy selling default insurance to the Europeans, so when the fat lady sings in Greece, the U.S. stands to lose as much as the EU. Maybe more as they will be the first to have to pay off. And they may have to use real $$$.

But don’t worry, the Wall Street dudes who sold the default insurance got massive bonuses, so they’ll be OK.

It’s funny and kind of sad I confess, for the past couple of years I’ve been telling everyone who would sit still and listen that a second show was yet to drop. Now that it’s staring us in the face all I can think of doing is to STFU.

Lots of people gonna be hurtin’.

#32 Calgary Illusion on 06.13.11 at 10:34 pm

Oh Garth, you forget about all those CDS and derivatives that will be triggered when Greece folds. It could be another Lehman event….easily.

Money fleeing from housing into something else….would that be bankruptcy lawyers?

#33 Ex-Cowtown on 06.13.11 at 10:35 pm

BPOE = Biggest Payments On Earth!! That cracks me up!

#34 BrianT on 06.13.11 at 10:39 pm

#17CREA-You will always have worsening traffic congestion in the city of TO itself, but $2.00/litre gasoline will impact suburban sprawl in a major fashion IMO.

#35 BC Bring Cash on 06.13.11 at 10:43 pm

Garth. You sound a little more pessimistic than usual. You must have had a good chat with David Rosenburg. You have been quite optimistic about the state of economy versus the RE crash. What happened? You are leaning more toward the Bullion Bugs (Doomers) than the Humpers. 2008 is being talked about as a financial crisis. The problems were never solved. The can has been kicked down the road a little further. http://news.goldseek.com/GoldenJackass/1307649600.php

#36 Jim on 06.13.11 at 10:43 pm

A Greece default has already been priced in.

#37 Jed on 06.13.11 at 10:47 pm

Greece–it starts a negative mentality among investors/markets who are as easily swayed as useless Vancouver Sun paper blowing in the wind. Blog Useless? No, I think you are trying to house clean this messy comment section; unfortunately, the extremists have not got the message.

#38 The InvestorsFriend (Shawn Allen) on 06.13.11 at 10:51 pm

New Recession equals Opportunity?

If there is a new recession, new credit crisis then stock markets will presumably fall.

Those with cash, or even lots of home equity to leverage against, and umm “gonads” will be in a position to once again scoop up corporations at bargain prices.

Even if there is another recession, growth will follow recession as sure as day follows night. The difference being that the length and intensity of recessions and growth periods are about impossible to predict.

Nevertheless positioning yourself to buy stocks during recessions will pay off over your life. Even better if you can sell at the peaks. But you don’t have to.

Just buy low and hold, buy low and hold. Rinse and repeat, you will do just fine.

But you will need cash to do this.

No cash? Start with a paper route (or three). That’s how Warren Buffett got a good part of his first grub stake. Worked like a dog delivering a few hundred newspapers per day in Washington DC. Oh, and if you have no cash, first thing, STOP the discretionary spending.

#39 Mister Obvious on 06.13.11 at 10:52 pm

#17 CREA Circle Jerk

“And that Vancouver traffic is just as wretched nowadays. It took forever to get anywhere when I was out there last month.”
——————

Sorry we can’t even offer you a freeway to park on.

#40 realpaul on 06.13.11 at 10:54 pm

I have noticed that liquidity drying up in Japan has done a real number on social norms. The social net is collapsing…with compounding velocity. The parks are filling up with down and out pensioners. The Japanese economy is in free fall.

It is an interesting example of what happens when the states ability to ‘fix’ things by intervention and manipulation is extinguished. Paper money is virtually worthless and no one wants to admit it. Japan is a zombie economy…dead on it’s feet. Japan needs an enema….on fiscal policy, social policy, economic policy and immigration. Frankly they need to hand the governance of the country off to someone else…….anyone else.

Lets compare…Japan has a debt/GDP ratio over 200%, the UK is at 140%…the US at 160 and Canada brags that 120% debt/GDP makes us a winner! There is zero chance of growing out of this debt….this is why the economy of these countries resemble a drunken stagger from crisis to crisis. Its as plain as the nose on your face.

Political petticoating won’t help…..machete policy is all thats left. Otherwise we all go down into a freakish type of Orwellian nether world where reality and normal are posted on public bulletin boards every morning because nothing today will remain the same long enough to corral into a semblance of predictability. It will be in our lifetime that we see the world swirling around us as we head down the toilet. Like in Japan and the US houses won’t be worth squat when we see our future in the Japanese example. Only things that produce value will remain valuable.

And no…I don’t spell check…what would the secretaries and editors do?

#41 marcus aurelius on 06.13.11 at 10:55 pm

BOSTON GOES TO DINNER ON THE NYUCK NYUCK ‘NUCKS….

So, on a night when even a former Maple Leaf stiff can score on Vancouver, consider the fact that one of the Banks – with a real interest in determining how much opportunity is left to convert your low-return cash into fees and charges – recently concluded that Canadians are sitting on boatloads of cash.

For every pumper with a grandmother in Tehran or 1 billion fellow assimilees into the Eastern Borg plotzing over the next planned ‘flip’ to other asians in Toronto or that village on the Pacific, there is another Canadian sitting on cash – lots and lots.

That Canadian on the sidelines wants to buy real estate, but considers it nutzoid to do so anytime before the economy is weaned off the crack cocaine of destructively-low interest rates. At least, that’s what the Bank has found.

So Garth’s comment tonight may be another “I can’t prove it but I have a spider-sense” moment: so many Canadians afraid to risk anything in this asset class, despite the desire and the means to do so at any time (gnashing of teeth among the commissioned prostitute classes) and so many (somewhat poorer) Canadians still willing to risk it all on that asset class. No way to avoid the crying towel now…..Someone gonna get ahurt real bad…..

Boston takes the Cup, and the streets are filled with happy Vancouver-hating revellers in Toronto. Life always works out the way it should. Vancouverites riot as usual, and piss all over their own cages. Bad Dog.

#42 Bill Gable on 06.13.11 at 11:01 pm

Greece is bad – but Jim Chanos maintains the USA is in worse shape.

That is our number one trading partner.

That augurs well, doesn’t it?

The USA is in a surly mood – flew to Los Angeles yesterday – and I was grilled like I was a common criminal, by US Customs at YVR.

They literally ripped my bags to pieces, asked me to the penny how much money I was carrying in cash – and then asked to see it…they were so rude and irritable, it was incredible.
Said NOTHING – unless asked – and smiled and was very cooperative.

One BIG hint = no matter how poorly you are treated entering the USA – for Gosh sakes smile and shut up – the Agent can bar you for 5 years, on the spot.

I had a business trip planned to NYC – and to also cross “see Yankee Stadium” off my bucket list.

Cancelled it this afternoon – and will do the business on SKYPE.

We have so many weird and wacky things happening, I think I will start building the bunker,(* like Mr. Turner), and better get the squirrel rifle cleaned – I just have this gut feeling that we are in for even nastier economic weather.

Remember the Sailing Maxim – “If you are at sea and you feel it might be wise to put a reef in the mainsail – do it now” – BEFORE the 45 footers and the Gale hits.

#43 McSteve on 06.13.11 at 11:03 pm

There’s always a bull market somewhere.

Energy’s looking good now. You can buy some great blue chip oil companies (or ETFs or mutual funds) at 2005 prices. Hard to see how this won’t be a winning strategy long term.

#44 Basil Fawlty on 06.13.11 at 11:03 pm

Without the lowest interest rates in history and the Fed being the largest purchaser of US debt, where would the economy of the US be right now? There are over a Quadrillion dollars in OTC Derivatives outstanding, with more being created every day and only God knows what this means, other than it is likely not a positive. The middle class shrinks daily as more pension plans and jobs go belly up and 45 million are on food stamps. In many European countries unemployment for people in their twenties is at 50%. In North America manufacturing continues to be outsourced, killing middle class jobs, while the cost of living steadily increases. What economy do we have to drag us out of the current malaise? The situation is bad and it’s time to quit putting lipstick on the Pig. It is time to admit openly that the debt situation in the US is as bad as Greece. It’s time to admit that we have three China Syndromes in Japan. Most of the big fish in the oceans are gone. Climate change is wreaking havoc and it will continue to put upward pressure on food prices.
Labeling people Doomers at this late stage is akin to running around on the Titanic telling everyone to relax and have another cocktail.

#45 Eva on 06.13.11 at 11:06 pm

One comment/question.
When a real estate boom begins and flows it does so in the centre of the city, and spreads,correct? And, when the bust begins it does so with the outskirts and moves inwards..Is this true?
Thanks,
Garth, love reading your take on this crazy situation!

#46 Calgary boi on 06.13.11 at 11:12 pm

I can see it now. Vancouver loses in OT in game 7. City gets trashed. The long decline starts on that day. Their collective Olympic euphoria but a distant memory. The only evidence it happened are some sites used by a few and the bill yet to be paid.

…or they can start taxing crack on the eastside and avoid all of that.

#47 Randis on 06.13.11 at 11:12 pm

I don’t understand … since when did “you are” or “you’re” got replaced by “your? … i.e. “you are early” or “you’re early” turn into “your early”, as #6 Kim would put it

#48 Bottoms_Up on 06.13.11 at 11:16 pm

Ottawa ain’t all that bad, with average family incomes of ~$90,000 and the average residence going for ~$350,000, for a ratio of slightly under 4:1

http://www.cmhc-schl.gc.ca/odpub/esub/64187/64187_2011_M05.pdf?fr=1308023440620

However, when I see listings like this, I do wonder if a bit of T.O. real estate madness has encroached our wonderful city:

http://www.realtor.ca/propertyDetails.aspx?propertyId=10731145&PidKey=2109936163

#49 Industrial Guy on 06.13.11 at 11:23 pm

Just imagine what would happen if everyone in Canada decided to pay down their $26,000 in non-mortgage debt over the next five years ……. It’s not chickens that have come home to roost … it’s turkeys …

#50 Abitibidoug on 06.13.11 at 11:27 pm

@CREA Circle Jerk, #17:
About the only thing that will stop this insanity of endless urban sprawl is peak oil. Let’s hope Jeff Rubin is right and it happens soon while there is still enough agricultural land left to produce one bushel of corn in a good season, and it takes less than a week to get from Toronto to Barrie.

#51 DJH on 06.13.11 at 11:29 pm

“Coordinated fiscal and monetary policy, global intervention and political intervention can push off the reckoning for years, maybe even decades”. Garth.

I’m a little confused by the above statement. Sounds like you’re saying real estate could drift along for years or decades with only relatively minor changes in value.

No. The reckoning refers to the financial system. — Garth

#52 Don on 06.13.11 at 11:54 pm

The doomers may be leading, but one important difference is that as commodities crash, the doomers can watch it minute by minute on Bloomberg. Real estate takes months to produce a score, and even then, everyone argues about if it’s really happening, or what it means.

So what’s the smart investment (besides shorting) as a bet against commodities in the long run?

#53 oldmac on 06.14.11 at 12:02 am

Looks like we’ve got a long hard slide ahead. Maybe after the economy is tanking year after year businesses will FINALLY flesh out people not fit to be there. We may actually see some gains in efficiency and innovation.

I thought last time… ‘maybe this time we’ll see it’; only we saw maybe 15% of it. I’m growing tired of learning other people’s jobs and then teaching them how to perform them properly (even though that’s my job, good thing I have a contingency plan).

One of the major implications of an economy built on false pretences are people in careers / doing jobs they just plain shouldn’t. The ones who have no skill. The ones who have no passion. The ones who thought it would be an easy way to make money. The ones who got jobs only because they knew someone. The ones who haven’t learned a damned new thing in 30 odd years.

You all know who I’m talking about. You may even be that person. Hell I’ve sure been that person a few times. I can tell you this, there’s nothing like heaping dose of ego crushing self-realization to spurn personal development. In a world of deficits, we may finally have that in spades. Here’s to hoping, and hoping even more there’s not a job in government for said individuals.

#54 wes_coast on 06.14.11 at 12:03 am

This playoff run has really made me realize the power of pack mentality. Wipe all the fundamentals aside and you can see how just hype alone could cause a market to rise uncontrolably. Funny thing is, win or lose the cup – you know that the hype will be dead come june 30th. Hype is fickle yet dangerous especially when its tied to 70percent of the populations net worth.

#55 smithers on 06.14.11 at 12:03 am

An article in yesterdays New York Times implied that money market funds were at risk if Greece defaults. Is that true of money markets held by Canadian banks as well?

#56 Nostradamus Le Mad Vlad on 06.14.11 at 12:03 am


‘Owzaboud Hoomers and Dumpers? Has a nice ring to it!

“. . . Canada actually looks good.” — Here is the great mystique. When America catches a cold, Canada is used as the tissue, then thrown away. NAFTA will be tightened to keep jobs, and the loonie may soar to 1.10 – 1.20, so our exports are kaput.

“To prove it we have Vancouver — more debt than beer . .” — Yes, and we have ice-cold Kokanee beer. It’s so cold it makes Winnipeg seem mild!
*
5:35 clip Radiation going into Japan’s groundwater, and 2:28 clip Radiation 1K higher than normal. Thorium technology could lead to new inventions.

No US Default Experts also say The Titanic is unsinkable. US readers FYI. China’s energy future, possible prices of oil and shale. BoA A further US$27 bln. loss covering homes, etc. I seem to recall BoA was the one who had to hold the bag for all the toxic mortgages.

Top Ten List Garth, your name ain’t here. Should be at least in the top five! 3:14 clip George Carlin. Very funny, strong language (from The Thought Police). Financial ‘Quakes are similar to EQ’s — destruction and death in their wake.

Monsanto may be behind this. Not Obama, but the elite. Bankrupt coal, electricity rates shoot higher. Obama is just the front man. Obama Will he be a one-term prez? Politics make strange bedfellows.

The Toilet is still alive, unflushed, and taking the ‘net down with it. New IMF Chief I would like to run, but I’m too busy being retired!

#57 nonplused on 06.14.11 at 12:14 am

But this house could really use a new deck.

I may be a doomer, but I don’t think the world is going to end. Probably just more of the same, slow grinding inflation that makes it really hard to save real purchasing power, which is why I have some gold related investments (no need to invade my home, it’s all liquid stuff that trades on exchanges. I figure whatever happens we’ll keep eTrade running and there will be some form of currency.)

Of course this assumes no more Fukushimas. A few more of those and maybe the world will end. The situation there is bad bad bad, and might have just shaved a year off the average life expectancy planet wide, more nearby. So the worst case scenario at this point is that the good people of Japan figure it’s time to all move to Vancouver.

Even if that doesn’t happen, it will be years before the world’s third largest economy is running at full steam again.

#58 LJ on 06.14.11 at 12:14 am

“Money fleeing from houses will migrate elsewhere.” -GT

Where exactly? And, will there not be less of it when it tries to flee?

#59 Broken Hearted Canuck Fan on 06.14.11 at 12:25 am

Sold my home of 10 years recently needing something bigger and have a fussy eye to my next purchase that I hope will be a home for 20-30 years. Have a ok rental lined up as a fallback but to be honest, I want to own something as I have a family and we are rooted in our community and plan to buy and hold. We want stability for our kids and ourselves.
We have pensions and some RRSPs but are soon “houseless” but not homeless.
Any advice? Oh yeah-we are in the suffle known as Vancouver.

#60 Aaron - Melbourne on 06.14.11 at 12:47 am

Auction clearance rate 15% in Adelaide (South Aust.)

http://www.adelaidenow.com.au/property/news/home-sellers-feel-chill-of-changing-market/story-e6frefgc-1226073993388

#61 Aaron - Melbourne on 06.14.11 at 12:47 am

http://www.theage.com.au/business/house-prices-to-fall-but-not-bank-profits-20110614-1g10n.html

#62 DML on 06.14.11 at 12:56 am

Yes,the U.S. has spent trillions keeping a depression
at bay and will no doubt spend trillions more.This makes
about as much sense as a drunk who keeps drinking to
avoid the inevitable hangover.
Does this mean a depression is on the way?Or another
recession,or a GREAT recession,a double dip,a multi-year
L-shaped recovery?Do the semantics realy matter?
The U.S. is in trouble,the middle class are experiencing the economic equivalent of the Bataan death march,and
many will not survive the journey.

#63 UK lurker on 06.14.11 at 1:20 am

Some countries, like the UK, will be in a perma-recession for a decade or more because they have so much debt and little means of paying it off. Canada will have a ropey few years as Europe and the China bubble implodes, but it does have stuff to sell that the rest of the world needs, so will be able to pay off its debts in the long term. Australia and Canada are the only anglo-saxon countries worth living in for the next twenty years IMO. There will be less of an adjustment in the standard of living in these two countries than in the US, UK or most of Europe.

#64 not 1st on 06.14.11 at 1:20 am

Garth, when did you experience an epiphany? You finally realize how deep the U.S. is in debt and how the recent stock market boom was a total fake out fueled by QE. There are no corporate profits or GDP growth, just financial shenanigans and debt.

If only you could realize the size of the last financial time bomb out there – with this I mean the shadow banking sector with $600T credit default swaps then there may be hope for you yet.

#65 skyce on 06.14.11 at 1:27 am

There are several reasons why a potential market decline may be more “reasonable” than “severe” this time. The S&P 500 trades at a reasonable 12.8 times forward earnings estimates, and earnings are what ultimately drive market prices. As long as U.S. companies can maintain their earnings trajectory, the market may ultimately not care much about unemployment, Europe’s problems, the Middle East, or much of anything else. After all, stocks rise through horrible wars, natural disasters, and persistent unemployment and wage stagnation — the market is not known for its compassionate nature.

#66 Vulture Fun on 06.14.11 at 1:34 am

“Smart people will continue to score betting against the decisions dumb people make.” Yeah, I wish. The humpers always seem to win. Looking south at our American friends, it seems that it was very easy for them to get huge loans. The banks didn’t care about credit worthiness because they sold off all the garbage mortgages as MBS. Then, when it all exploded, many homoaners strategically defaulted…but never left. I believe the record is some guy in Florida who’s lived payment-free for 5 years.

And here’s me, with my big fat down payment that’s being eroded by financial repression. Let’s assume humper used to pay $1000 a month to his mortgage. He’s saved $60,000 over that time. I guess I’m the dumb one. I’m going to sulk now. Maybe later I’ll lick some of my Maples.

#67 LeBrongo on 06.14.11 at 1:36 am

This year’s Canucks’ playoff run is prophetic of Vancouver’s real estate market.

Chicago Series was 2008. Scared shitless, but survived.
Boston Series is 2011. We’ll see if they crash and burn.

#68 le Connard on 06.14.11 at 2:21 am

Airbus loads of horny asians have been coming to London as well bidding up high end real estate.

http://www.dailymail.co.uk/news/article-2002999/Wealthy-Chinese-squeezing-cash-strapped-Britons-property-market.html

However, converse to the Canadians, the Brits don’t feel as rich as the rest of the property market is stagnating as the banks have put the kibosh on lending.

http://www.dailymail.co.uk/news/article-2003252/Estate-agents-sell-just-home-week-average-property-market-struggles.html

#69 Tim on 06.14.11 at 3:03 am

Germany’s GDP alone is over 10 times the size of Greece and Germany is doing just fine. The size of the economy of Greece is insignificant relative to the rest of Europe, but the media sure seizes on it’s problems and blows them out of proportion relative to Europe in general, as the GDP of Germany and France dwarfs that of all the PIGs in Europe

#70 CaptLou on 06.14.11 at 3:03 am

Meanwhile, on Canadas poverty stricken, welfare East Coasts-

A bus load of Aisians showed up in Chester a few days ago. Later saw the same bus entering Mahone Bay. Could it be? Could the realtor with them be there by chance?
The only answer to this real estate problem for all of us debt ridden peasants is to join the government.(I’m told senator’s positions are good) Free wide screen tv’s $700 dollars coffeee machines, corpulent pensions, fat expense accounts!
Garth, you seem like a pretty sensible guy, how come you left all of these wonderous perks to preach the truth?

#71 Live from the EU on 06.14.11 at 3:11 am

I think we can all agree (except for BPOE) that from now to 2012 we won’t have a new boom except in rising interest rates, unemployment and people suffering from the debt buffet.

BTW: CCC rating for Greece. When Greece goes there will be a even less money in the world (ie DEFLATION) thus gold will go down in value.

#72 Canuck Abroad on 06.14.11 at 3:12 am

30 / Elmer – Read the post of 31 / Ex-Cowtown – he gets it. The European banks are loaded up with Greek debt. They are not capitalised sufficiently for Greek defaults. The size or population of a country does not matter. All that matters is the DEBT, and who bought it. Think I’m blowing smoke? Just look at all the havoc little Iceland caused. Defaulted on its debt and this would have resulted in losses to small investors across the UK who had retail bank accounts in Icelandic banks on UK high streets, so the UK government made retail bank accounts whole. Then tried to make Iceland pay its debt, and Iceland told them to take a hike. UK and I think Netherlands are still trying to collect.

31 / Ex-Cowtown – the US has already stumped up a fortune. Pretty much entire QE2 went to bailing out the European banks! Wait till this goes mainstream – there will be rioting in the US streets. Personally I don’t care if the US has to bail out Europe, since the toxic fraudulent securities all originated from the big US banks in the first place and they sold them to the Europeans. (Plus I live over here). So I’m all for making the European banks whole. I think maybe the average american might see things differently.

Reads it here:
http://www.zerohedge.com/article/exclusive-feds-600-billion-stealth-bailout-foreign-banks-continues-expense-domestic-economy-

Garth I think you are still a little optimistic but it is nice you are starting to move over to the dark side.

#73 aaron on 06.14.11 at 3:30 am

rosenberg hasnt had the best track-record for predicting the stock market.
i hope he’s wrong again.

#74 Canuck Abroad on 06.14.11 at 3:33 am

Bill Gable – I am fascinated by a comment you have made a couple of times about owners putting a tenant into their property, then listing it for sale and the tenant is stuffed. Would you kindly explain how this works. Why not just put the house up for sale? Why is the tenant disadvantaged if they just have new landlord? Sorry if my questions are dumb…

#75 Phil S on 06.14.11 at 3:51 am

Seeing as PMs are a spec. investment anyhow, why not invest in something “useful” if you are in the “Doomsayers” camp? Wind turbines offer a better ROI than solar PV (about 2 x better), and with the interese in “Green Energy” bound to grow, one or two linked either to the grid via a Grid-Connect inverter, or as a standalone power supply (with battery backup) might not be a bad investment at all, especiallys eeing as even the “Chinese Crap” (alleged – but in reality VERY well made!) turbines will last around 20 years if looked after.

We’ve invested in Agri., Solar PV and Wind for the home, and in case it all goes very badly wrong we’re doing a Bus Conversion to act as a “lifeboat” (as well as acting as a holiday RV!), just in case. Seems a better bet than life insurance in these “Interesting times”!!

#76 daystar on 06.14.11 at 4:26 am

Dr. Doom see’s perfect storm:

http://www.businessinsider.com/noriel-roubini-perfect-storm-economy-2013-2011-6

China in for a hard landing?

http://www.businessinsider.com/nouriel-roubini-hard-landing-in-china-2011-6

Euro’s fracture seems inevidable:
http://www.businessinsider.com/nouriel-roubini-eurozone-division-inevitable-2011-06

Dark clouds are rolling in… is it getting windy? (I’m putting a jacket on)

#77 Bobby on 06.14.11 at 4:48 am

I’m in the market for a condo in Ottawa. Certainly is worthwhile to wait with this impending downsizing of government. There will be some great deals!

#78 SMOKING MAN on 06.14.11 at 6:07 am

Anyone try and get a contractor to do some work on the house, o ya forgot most of you don’t have one. Well it aint easy these guys are busy as hell. Call 5 lucky if 1 calls you back.

Anyone go to a home show lately, packed to the nines.

Well you can all sit around hammering perfect key stroke combinations telling each other how bad things are. But for those of us who have a life and get around we see a different image of the economy.

Money is flowing to the safety of Canada in record numbers, enjoy the coming boom times..

#79 bullion.bunny on 06.14.11 at 6:11 am

Doomers and Humpers

Utter nonsense, the depression is right on track. Starting with the market crack in 2007 and going down from there. Greece will default sending a shock wave throughout Europe, like the rodents there are the Greek political class are warming up the escape route.

http://coveringdelta.wordpress.com/2011/06/13/the-greek-government-has-hired-foreign-workers-to-clean-out-the-underground-tunnel-leading-from-the-parliament-to-the-sea-port-of-piraeus-in-preparation-for-an-evacuation-of-all-mps/

Then what happens when the U.S. start to run into trouble?

http://www.cnbc.com/id/43378973

No,no doomer here , just someone that crunches the numbers and looks at the facts. Things are very simple, you cannot spend more than you make. This includes governments, North America’s prosperity is owed back plus interest. Now tell me, how is that going to be paid? Also why is it different this time?

#80 BrianT on 06.14.11 at 6:18 am

#69Tim-No. The reason Merkel is going along with the “Greek bailout” is that German banks are in big trouble. Yes, Germany has a strong overall manufacturing economy and somehow the political structure has managed to avoid turning the country over to the grifters entirely, but still there will be a big bar tab for the workers of Germany to pay before the mess is settled.

#81 Future Expatriate on 06.14.11 at 6:36 am

Hate to be an “I told you so”, but I did tell you there would be a GreatEST Depression, and all the well wishes and balanced portfolios in the world won’t stop it. Places like Vegas are 85% under water, AND prices are STILL falling and banks have tens of thousands of repos they will not put on the market for fear of forcing prices lower. Before this is over real estate won’t be at the 1980’s prices they’re at now, but at the 1960’s. And it will be decades before there’s ever another real estate bubble again, if ever.

It’s not called a Great Depression for nothing, and the Fed Reserve can’t print enough money for a way out of it either.

#82 bigrider on 06.14.11 at 6:58 am

I have always believed that part of the problem with peoples belief in RE as the “asset that can’t lose” is the fact that there is no ticker tape, or red and green arrows showing the second by second change that a financial security (equity market)is subjected too day by day.

I mean, picture a neon sign on everybody’s front lawn ,valuing their RE property second by second, showing the odd decline in price.

Would it create a lemming effect? Cascade? much like equity market is experiencing right now?

You can delude yourself very easily into believing your home is worth more than it is and there is no BNN telling you otherwise minute by minute.

IF a share of TD bank opens up at 59.27 this morning at 9:30AM there is no one going to give you 59.28 but in Milton the guy with 1700 square feet of townhouse next to another 1700 sq. ft .believes his is worth 10k more because he painted his garage doors black instead of the white ones next to him.

Nobody on this blog talks about the crack cocaine that is BNN or worse, the quotation bar that runs at the bottom of your TV screen.

#83 Fisher on 06.14.11 at 7:04 am

Recession does not mean depression. A real estate correction does not mean crash. Money fleeing from houses will migrate elsewhere. Smart people will continue to score betting against the decisions dumb people make. Fortunately for them, dumb abounds. To prove it, we have Vancouver.

Just like Luongo you may eat your words. I would have never guessed 0% int rates. Never guessed 0/40 Mort after what we saw in the USA. Never guessed increasing TFSA limits. The rich will always find a way to get richer and the poor will get poorer. No matter what hapens the rich will win.

That is history. Over and over and over again. I would bet on 100 Mill Canadians. War with anyone weak. And a housing correction that will dwarf USA (ofcourse the rich will long before get out). Canada is dependent on USA for our economy and at some point it has to catch up to us. High dollar and no trade south of the boarder spells trouble. Trouble even China can’t save us from.

#84 eaglebay on 06.14.11 at 7:07 am

#26 Tim
Tim, Tim, Tim.
For an investor you’re diappointing.
What is a “fare” share of taxes?
Corporations do not pay taxes. Shareholders and consumers pay the taxes. Wake up boy.

#85 Utopia on 06.14.11 at 7:08 am

Here is a link to the Bloomberg interview with David Rosenberg (via Mish) that todays article mentions. It is directed to an American audience however it is pretty safe to assume Canada will follow, if not exceed troubles down there. Our own housing market problems are just getting underway. We did not miss the bullet at all, just delayed the inevitable.

Anyway, the vid runs eight minutes or so and covers a lot of territory. David hits on all the major points we are familiar with and rather casually says that there is a 99% chance of a recession.

Good thing he is sort of an understated kind of guy. By the end of the interview you don’t feel surprised or even worried. You just kinda say,..oh, hmmm, so we are going to have a new recession. Yup. I can deal with that. All just matter of fact. No worries at all. Business as usual.

He may have a point. We might overstate the fears sometimes. Tuna sandwich anyone?

http://finance.townhall.com/columnists/mikeshedlock/2011/06/14/rosenberg_says_99_percent_chance_of_recession

#86 charles on 06.14.11 at 7:18 am

Toronto has the biggest inmigration on earth. Until interest goes up, I dont see any correction in the near future. In my opinion, this gov think to keep interest low for many years to come, screwing up savers money. I have seen people doing what ever it takes to keep their homes.

#87 eddy on 06.14.11 at 7:24 am

The Founders Did Not Intend For America to Be Run By Big Banks and Wall Street

http://www.youtube.com/watch?v=n0gjVjyUlro&feature=player_embedded/

#88 Bottoms_Up on 06.14.11 at 7:33 am

#77 Bobby on 06.14.11 at 4:48 am
—————————————
I wouldn’t count on it if I were you.

Here’s the thing — when the government discusses reducing staff, most likely they are talking about FTEs (or, full time equivalents).

That means they accomplish their cutbacks by not filling spots of retired people (the only effect on real estate is that newbie employees aren’t brought in, thus lessening demand for entry level housing), or don’t renew contract workers (who are less likely to be in the real estate market anyway).

I do think the market will come down a bit, but don’t expect anything drastic or you could be waiting a long, long while!

#89 Bottoms_Up on 06.14.11 at 7:35 am

#74 Canuck Abroad on 06.14.11 at 3:33 am
——————————————–
If a tenant’s residence is sold, the new owner has the right to kick them out.

#90 Steady Eddie on 06.14.11 at 7:39 am

The U.S.A will tank. If they increase interest rates they will not be able to service their debt. In fact, the US has already defaulted. Please consider, http://ca.news.yahoo.com/china-ratings-house-says-us-defaulting-report-054309883.html

If you notice for at least as far as I can remember which is about 30 years, the CAD has always been below or at parity of the USD. The dollar as the world reserve currency has it’s days numbered. Even if the US had it’s fiscal house in order and it lost it’s reserve currency status it would suffer a significant devaluation. The exporting lobbyist groups in Canada will bring the CAD to parity with the USD. We will loose purchasing power. Although housing plays a role, it’s all about currencies. This is where the trouble lies.

If you love ETFs, please consider: http://www.zerohedge.com/article/are-hft-algos-taking-aim-dominating-and-manipulating-wonderful-world-etfs-next

I would be 25% gold as a minimum right now. The chinese have a saying, make your first fortune and save it in gold.

All the western nations are debitors and the creditors are in Asia. Investing in asian denominated currencies via whatever divident yeilding investment vehicle will be the future to a good retirement in Canada and will help in the reconstruction of our country.

If you have ETFs please consider, http://www.zerohedge.com/article/are-hft-algos-taking-aim-dominating-and-manipulating-wonderful-world-etfs-next

I knew I should have stocked up on tin foil today… — Garth

#91 Jack Russell on 06.14.11 at 7:39 am

I guess my only beef with you is that you talk as if all you are looking at is a bit of a price correction. But it means that many of these people will be underwater on properties, and will have to figure out how to get out from under them. There the details of local bankruptcy laws become really important.

I will make this observation however. Many people here in the states who got caught with too much house and too much debt went and raided their retirement accounts in order to try and stay current on the mortgages. On houses they would likely end up losing anyways, so at the end of the day these people end up even more screwed than if they had just walked away from the house at the first sign of trouble.

The banks as well are going to have troubles – they will see first a trickle and then a flood of foreclosures. All on properties that are worth less than the original mortgage. How much of that can they endure before the banks themselves go belly-up? I suspect you are about to find out.

Businesses will get hit hard. Anyone in the building trades will find out that jobs are a lot harder to come by. And anyone selling building materials or home furnishings will likely see a steep drop-off in sales. Anyone in the business of writing mortgages will see workflow drop like a stone. If things up there are anything like down here, you probably have an oversupply of realtors now – many drawn in by the promise of making easy money, but who have never experienced a down market. Everytime there is a downturn here, there is a shakeout as the rookies get squeezed out, as the more seasoned realtors know how to get through it all.

#92 Canuck Abroad on 06.14.11 at 7:51 am

89 / Bottom’s Up…”If a tenant’s residence is sold, the new owner has the right to kick them out.:

Yes, I guessed that but my question was more along the line of why the vendor would bother to intentionally put a tenant into the house first, before listing?

#93 steven harper on 06.14.11 at 7:57 am

Garth,
Great site, thanks for all the information.
ps: you are still fired.

#94 steven harper on 06.14.11 at 7:58 am

and first !!!!!!!!

#95 PEI Red on 06.14.11 at 8:00 am

Garth…what does this mean for those of us that aren’t mired under debt and mortgage free, but only have a couple hundered thousand tucked away and a so-so pension coming in? Will we be eating more KD and canned tuna for the next decade? Should I learn how to can my own vegetables? Do you see cat food in our future?

#96 pbrasseur on 06.14.11 at 8:03 am

No doubt if CBC reporters start losing their jobs it’s going to be a “MAJOR depression” ;-)

I otherwise don’t think so and disagree with your new “perma-bear” friends. (althought I agree with you on Canadian RE)

Check out Scott Grannis blog for example, it will help you balance things out.

http://scottgrannis.blogspot.com/

But I know, gloom&doom sells…

#97 fancy_pants on 06.14.11 at 8:07 am

watcha think?

Canucks win the cup and the humpers celebrate another year of pumped RE prices in Vancouver,
Bruins win the cup and the doomers’ forecast comes to fruition sooner than expected.

It fits the mentality perservering in the land of blue milk and green honey.

#98 eaglebay on 06.14.11 at 8:08 am

#76 daystar
Roubini doesn’t have a clue.
China has a controlled economy and lots of cash.
So, they built a couple of towns that have yet to be occupied. Big deal.
Shanghai, Bejiing, Guangzou may have a housing bubble.
Big deal.
Half of China’s population lives in the country and they want to have what we have and they will.
China has the largest manufacturing base in the world.
China, India, South Korea, Indonesia, Brazil, Russia and many others need commodities, including base metals.
Canada will be there to supply them.
I feel sorry for the doomers. They’ll miss fantastic opportunities.
Lots of jobs in Canada. Northern BC, Alberta, Saskatchewam, Manitoba, Northern Quebec.
The world is our market, including the USA.
The USA may be growing slowly but they’re growing.
Our economy is much more than housing.

#99 Utopia on 06.14.11 at 8:11 am

#63 UK lurker on 06.14.11 at 1:20 am

“Canada will have a ropey few years as Europe and the China bubble implodes, but it does have stuff to sell that the rest of the world needs, so will be able to pay off its debts in the long term”
——————————————————————————

You have made a good point Lurker. Those commodity reserves, oil in particular, are what allows a country like Canada to run up large public debt levels with much less concern than most other countries. There are ready means to pay down our debts and so we are much less likely to be in a jam if a real crisis arrives. We will not be nationalizing resources already discovered to pay down debt though so it is not really that straightforward. Nonetheless, our currency is still a petro-buck to some extent and it is for this reason that the currency has a built in strength and why is is not necessary for our central bank to keep a gold hoard as other countries do. If Gold is indeed the proxy for determining the level of control of a central bank, then black-gold might be the ultimate backing and insurance a country has. It certainly assures the public purse is a little heavier than it is for those living in resource poor nations.

#100 Bobby on 06.14.11 at 8:17 am

For#88 Bottoms up,
Spoken like a true civil servant. But I disagree with you. Now that the Cons have a majority, they will quickly reduce the size of the civil service. Just look what has happened in Wisconsin to see what will happen here. It is unrealistic to believe the civil service can continue as is given what has happened in the private sector.
Look at both the Canada Post and Air Canada strikes. They are both about the unaffordability of their pension plans, nothing more. And there is a huge underfunded liability with the federal pensions. The only way to fund that is to raise taxes. But do you think that the public, many who don’t have similar pension plans, are going to tolerate that. I doubt it, and since the goal of the Cons is to be re-elected in four years, there will be little outcry from the public, especially out west when measures are taken for a smaller government.
Yes, it will get ugly out there as the threat of downsizing breeds uncertainty and uncertainty leads to rapidly falling prices.
So #88 your point was?

#101 debtified on 06.14.11 at 8:20 am

#18 jas on 06.13.11 at 10:08 pmWhy the BOC doen’t have the balls to adminster bitter medicine?

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

Because Harper has Carney’s balls.

#102 Utopia on 06.14.11 at 8:21 am

#91 Jack Russell…

“How much of that can they endure before the banks themselves go belly-up? I suspect you are about to find out”.
———————————————

The Banks here are just fine Jack. Mortgage risk has been assumed by the taxpayers of Canada via the insurance provided by Canada Mortgage and Housing Corporation (CMHC). The public is on the hook, not the banks. This is one of the reasons our banks are in an enviable position of strength despite much the rest of the global financial world facing a train wreck of defaults as deleveraging continues.

#103 Mikey the Realtor on 06.14.11 at 8:41 am

“rosenberg hasnt had the best track-record for predicting the stock market.”

Rosy’s predictions depend on what side of the bed he woke from; take everything he says with a grain of salt. Even a broken down clock is right twice a day.

Carney will be leaving rates low for years, a RE retrace is all dependant on this, people today don’t care about the cost they care about their monthly payment.

#104 Daisy Mae on 06.14.11 at 8:42 am

Kim on 06.13.11 at 9:30 pm “Wow … your early. Great blog … one I will forward to my Dad.. not my friends, who seem to think housing in Vancouver is going up and ‘Credit is King’.”

Yes, I give up, too. Some disagree, others have their heads in the sand and just don’t want to talk about it. Too bad….

#105 Lisa on 06.14.11 at 8:43 am

Please note what 19th century philosopher Arthur Schopenhauer said: All truth passes through three stages. First it is ridiculed. Second it is violently opposed. And third it is accepted as self-evident.

#106 stealth on 06.14.11 at 8:54 am

Garth,

What happened to the bunny realestate girl selling condos in Vancouver? Did you lose track?

#107 BrianT on 06.14.11 at 8:59 am

#81Future-Yes-the average person is told repeatedly that Bernanke or Carney can create real wealth by changing interest rates or monetary policy. This financialization of reality never ends well-look at Greece-the pie doesn’t grow, pieces are simply sliced off the pumped up version before the inevitable shrinkage. Greece is not an outlier or exception-Greece is the rule right now, just the first to succumb.

#108 Alberta Ed on 06.14.11 at 9:03 am

Hey, not to worry… ReMax says there’s no better time to buy recreational property! Canmore’s condo prices have dropped from absurd to merely ridiculous!

#109 David B on 06.14.11 at 9:10 am

How can Carney raise interest rates and bosses not give out a good raise all-a-round with news like this?

Household debt hits record $1.5-trillion
JULIEN RUSSELL BRUNET
Globe and Mail Update
Published Tuesday, Jun. 14, 2011 9:29AM EDT
Last updated Tuesday, Jun. 14, 2011 9:43AM EDT

Bills and energy consumption must be paid on time.

#110 Utopia on 06.14.11 at 9:11 am

#58 LJ on 06.14.11 at 12:14 am

“… will there not be less of it [money] when it tries to flee?”
————————————————————-
There will be a lot less money following a correction LJ. The asset value of your home cannot be considered real until an actual sale has taken place. Until that time it’s value is really only theoretical.

That is why we worry over the looming correction as values fall but debt remains. In other words, debt is real but your homes value is only worth what a willing buyer will pay you for it on the date of the sale. Arizona prices were able to drop something in the range of 75 or 80 percent I think but the mortgage debt there remains essentially unaffected as it is slowly paid down. So an overhang exists that must eventually be paid by one of two parties; the lender or the borrower or a combination of the two.

Someone always pays. There is no free lunch. Cash in the bank following a sale that can be deployed elsewhere is only available to those who were savvy enough to have sold out before prices dropped. Too few have seized on this golden opportunity and have instead gone deeper into debt in the mistaken belief in theoretical home values.

And that is why the fiction of current high prices are so damaging as people come to rely on them as gospel and as we have seen, far too many Canadians have been living well beyond their ability to repay the debts rung up should those same values suddenly start dropping.

I think this will be a really traumatic experience for a lot of people in this country. A wake up call that only really comes when it is already too late.

#111 45north on 06.14.11 at 9:16 am

Bobby: And there is a huge underfunded liability with the federal pensions.

easy to say but federal public servants have paid for their pensions, in fact the government has taken the surplus for its own operating costs:

The surplus has been at the centre of a historic legal battle for more than a decade, which began shortly after the Chrétien government used the surplus in 1999 to help offset the deficit.

Read more: http://www.ottawacitizen.com/business/court+appeal+unions+pension+fight/4736579/story.html#ixzz1PG5s362F

#112 refinow on 06.14.11 at 9:17 am

FOR IMMEDIATE RELEASE
CMHC REPORTS SINGLE-DETACHED HOME STARTS UP
TORONTO, June 8, 2011 – Single-detached home starts were up in all three municipalities of the
Hamilton Census Metropolitan Area (CMA) in May, according to preliminary starts data released by Canada
Mortgage and Housing Corporation (CMHC) today. While starts of all home types continue to be well
below historical levels, they continue to trend higher month-over-month, led by the rise in single-detached
starts. Nearly three-quarters of all housing starts were single-detached homes.

I only wish I could attach the graph that was included in this press release…

Yes Single Family House starts are up , if you compare May 2011 (53 homes) to May 2010 (48 homes) in Burlington there was a 5 home increase. But on the same graph, showing stats for Jan – May 2011 and comparing it to Jan – May 2010 there is a 73.8% decrease… Funny how that was not discussed in the “PRESS RELEASE”

HAmilton is down 53% for the same time…

Do they really think the public is that stupid???

MAybe we are… Because remember it wont happen here, things are differenct in Canada…

We believe it when we are told everything is going to be ok…

It’s just I have never seen CMHC try so hard to make us believe that we are fine…

And it looks like they are running out of positive trend stats, the minuses are spreading across the graphs like a virus.

#113 The American on 06.14.11 at 9:24 am

Canada’s Fights “Dirty” :

http://marketplace.publicradio.org/display/web/2011/06/06/pm-canada-fights-dirty/

What happens, not if but when, the protesters get their way? Not good for the commodities markets…

#114 unbalanced on 06.14.11 at 9:26 am

To # 89, Canuck Abroad. In my opinion, it would show the new buyer that there is an income coming in. The vendor doesn’t care about the tenant. Just sell this place ASAP and who cares what happens. Fill my pocket with money and let the renter find some new place. What have we become??

#115 Mr Buyer on 06.14.11 at 9:27 am

I live and work here in Japan and they are doing fine. This is not their first crisis and it will not be the last. Most families with living grandparents have a safe in their house. My in-laws have one. As for a slowing down of spending, that happened a few years ago when the US melted down (they call it Lehman shock). It started picking up a few months ago but the earthquake has left the local shopping mall half empty every second Sunday recently (but still full every other Sunday). They have huge reserves of savings as a nation (I live in an area that has the highest savings rate in Japan and thus most likely the world). As far as the Tsunami and Fukushima recovery goes they have sources of cash we would not have. An acquaintance informed me today that bonuses are temporarily being cut nation wide. In Japan workers get 6 month bonuses (I felt so bad for the 60 to 70 hr a week Japanese worker until I heard about bonuses). These bonuses have shrunk considerably since the bubble burst here (in a good company one bonus can be as much as 1 million yen and the second bonus 8 hundred thousand yen, thats like 20k bonus in addition to your salary every year. In a bad company these bonuses can be as little as 30 thousand yen which is just over 300 dollars). Well the story I heard today was that these bonuses are being cut considerably to help cover the loses and costs resulting from the earthquake. You guys have to live here longer than 2 years to understand the predicament the Japanese are in. There is no place for the population to take their money and run to in order to hide. They know they have to keep swinging no matter what. Production, production, production. I bet if the Emperor said it was necessary for everyone to go without their salary for a month for the good of the country there would be a huge number of people that would voluntarily comply (maybe not, but it is an option not available to most other countries) . When you say Japan has the largest governmental debt in the world you have to remember that a large majority of it is owed to the Japanese people. That means they will go without collecting on the debt for the benefit of the country (what choice do they have, unrest would open the door for the competition). There may be panic but not to the same degree as we would expect in our culture. Even if a couple of million made a run on the banks that would only be a small percentage of the population. Most people would not even be able to get near the banks (I sat in a routine 40km long traffic jam coming out of Osaka one Sunday). The very land tries to kill them every 10 or 15 years. Paper money is not such a threat (especially when you have some on hand in your safe). TEAMWORK and PRODUCTION. People that get jobs here even now have jobs for life. Even now, even after the bubble (4.8% unemployment, sure you can say there is some fudging going on to arrive at that figure but the same can be said of most other countries). In the small town of 300k people I live in I have not seen a single street person. I drove through a local industrial park last weekend and it consisted of brand new state of the art structures. New trucks new roads, new. This was not a new industrial park it was just that spendthrift companies spend money where needed to remain competitive (more like set the bar nowadays). Even in Osaka, a city of 20 million, I saw fewer street people than in Toronto. If we want to regain our manufacturing base it will not be a hail Mary pass from mother nature or financial instruments that will do it. It is going to take working as hard or harder, as smart or smarter and as long or longer as/than the Japanese. If that is too hard then another alternative is to call it a day for the globalization experiment we entered into in the 1970s and start laying down tariffs to level the playing field that way (while globalization is a good idea in theory, I do not think we entered into it well prepared).

#116 Mr. Plow on 06.14.11 at 9:35 am

#23 Mr. Reality

Did you just refer to yourself in the 3rd person?

Mr. Plow thinks that’s lame.

#117 Bottoms_Up on 06.14.11 at 9:42 am

#100 Bobby on 06.14.11 at 8:17 am
—————————————
Sorry, I thought my point was clear:

**there will be no condo crash in Ottawa**

You say the Cons are going to slash the PS…but they have explicitly stated that they will not do so. They are finding 5% savings in travel budgets and ‘efficiencies’ (here’s where you can find out where each department is saving money: http://www.tbs-sct.gc.ca/rpp/2011-2012/index-eng.asp)….not slashing people’s jobs. They promise they will not repeat what the Liberals did in the 1990’s. Look up the stats on the Ottawa market during this time. I believe the worst year for real estate here in the 1990’s was around -3%.

The federal government is actually committed to a ‘public service renewal’ (http://www.clerk.gc.ca/eng/feature.asp?featureId=19&pageId=225). They have been and are hiring people. What gets reported in the MSM is polar opposite to what actually occurs. **Perception is reality**

Also, federal government jobs are not the only jobs in Ottawa. There are a plethora of municipal and private sector jobs. The number of people employeed in Ottawa has never been higher (522,000):

http://www.cmhc-schl.gc.ca/odpub/esub/64187/64187_2011_M05.pdf?fr=1308023440620

Just thought you’d appreciate some insight from the inside so as to not miss the boat. ; )

#118 Mr. Plow on 06.14.11 at 9:47 am

#82 bigrider

That’s an interesting idea. Would be curious to see how it would play out.

The only thing I think you are missing is the housing market and the stock market do not react or perform in the same way.

There is a lot more emotion and perspective that come into play in the housing market.

#119 JohnnyBGood on 06.14.11 at 9:47 am

#82 bigrider

Yes. While BNN does offer some good business/economic reporting and discussion, people should always filter the info through the knowledge that BNN is Canada’s PR outlet for Bay/Wall Street.

#120 Mikey the Realtor on 06.14.11 at 10:00 am

Looky looky, Garth and poodles

Boomers are really hating their doomer and humper children

http://www.torontosun.com/2011/06/13/reverse-mortgage-demand-rising-for-cashstrapped-boomers

#121 Mr. Plow on 06.14.11 at 10:06 am

http://business.financialpost.com/2011/06/14/no-rate-hikes-in-2011-td/

I am for sure not a doomer, not too sure I am a humper either cause TO and Van are getting absurd and the HAM money will disappear eventually.

By low rates will continue to be good for housing regardless of where you live.

#122 vreaa on 06.14.11 at 10:07 am

‘Stanley Cup Finals and Vancouver Housing Prices’

‘Socionomics’ at work?

http://wp.me/pcq1o-2w2

#123 Ret on 06.14.11 at 10:08 am

#102 Utopia -Canadians willingness to help the needy does not extend to helping the CMHC insured greedy.

If HF&C think that the Canadian public will be joyfully stepping up to the plate to back the mortgages of their greedy CMHC defaulting fellow Canadians for a couple of hundred billion dollars, they would be wrong.

Financially conservative Canadians would not accept huge tax increases to help their reckless over extended neighbours or to save the banksters who have bought back this secutized debt from CMHC. The political fall out would be huge for the Conservatives come election time.

HF&C are playing a dangerous game with the economy. There will be heavy collateral damage for both Canadians and politicans if the unthinkable happens.

#124 JohnnyBGood on 06.14.11 at 10:11 am

#30 Elmer

The problem of Greece is not the economic hole it would leave if it exits the Euro. In that regard, you’re right, Greece is pretty insignificant.

As Garth put it so succinctly, it’s the domino effect. A Greek default would inspire other PIGS to default. This could blow up the ECB (European Central Bank) itself. The European oligarchy/banking elite wants a unified Europe where they are in control.

If Greece demonstrates that it’s even possible to leave the Euro and regain their monetary sovereignty, it could be the end of Euroland. The question is: how far would the oligarchs go to prevent succession in order to realize their objectives? For the people of Europe, I fear they are willing to go quite far.

Then there’s the whole Zeus thing that Garth mentioned. By Jupiter, you don’t want the king of Olympian gods raining lightning bolts down on you!

#125 Canuck Abroad on 06.14.11 at 10:23 am

114 / Unbalanced – okay thanks, it seems nothing to worry about then. Properly constructed lease agreement takes care of it.

#126 SMOKING MAN on 06.14.11 at 10:28 am

O Bubble heads, some more bad news for you…….

Interest rate increases delayed again
DAVID BERMAN
Globe and Mail Update
Posted on Tuesday, June 14, 2011 10:49AM EDT

I called it sereral months Now I am calling for a cut( what are you nuts, Yes Im)

Bahahahahahohohohohohoho

http://www.theglobeandmail.com/globe-investor/markets/markets-blog/interest-rate-increases-delayed-again/article2060038/

#127 Utopia on 06.14.11 at 10:40 am

Speaking of demographic shifts….

It really was not so long ago when almost everyone who posted on this site seemed to come from Toronto, Vancouver and the Okanagan. Plenty of the contributors then were undersexed and overzealous males with an axe to grind and a chip on their shoulder who only seemed to show up for the weird pictures of grannies in bikini’s! Just kidding.

Lately though this place has gone Intenational. There are a lot of Americans, Ozzies and Brits here now and first hand reports from far flung places like Spain, Greece, Italy, Hong-Kong, Egypt and lately, Japan too. Lots of women posting as well. Nice change of pace.

Perhaps it is a mark of success in the Blog world when you have even come to the attention of the Chinese monitors and the site gets blocked by Baidu. The bubble message must really scare the crap out of the Communist overlords who rule over there.

So Greaterfool has gone global. Very Cool.

#128 JohnnyBGood on 06.14.11 at 10:41 am

#117 Bottoms_Up

Where does it say in the report you linked to that they plan to increase the public service?

#129 disciple on 06.14.11 at 10:59 am

You never receive the original signed copy of your or your children’s birth certificates. You only get a certified copy. The original copy is passed from one bank to another and traded as a commodity on the exchanges. Your Social Insurance Number or equivalent in other countries is your identifying number with the IMF.

YOU are being traded by the financial parasite class. You can look up who currently owns stock in your exchanged fund by the identifying number on your birth certificate.

To be a “doomer” is to only see half of the truth. “They” need you. “They” feed off of you, like parasites. Parasites aim to control the mind first, maintaining a state of insanity. A doomer is then only “half-sane”, partially awakened from their stupor. A humper is fully insane.

You’d know, apparently. — Garth

#130 Alex on 06.14.11 at 11:00 am

Re: my post yesterday touching upon Brian Morton’s slimy, lying, immoral piece in the Vancouver Sun entitled, “Recreational property market gains steam; local buyers pushing Whistler sales” and subheaded, “RE/MAX expects busy market this year.”

I predicted that my “reader comment” would be pulled, and indeed it was. To steal one from the oft-quoted Gomer Pyle, “Surprise, surprise.”

So let’s get this straight. The Sun takes a purely bogus Re/Max press release, mixes it up a bit so it makes even less sense and confuses readers even further into thinking the oppposite of what is true, then sticks a filthy lie of a headline on top. They then offer space for reader comments, yet they pull those comments that cross some invisible boundary.

Hmm…it’s not like I called Brian Morton a “real estate industry pimp,” is it?

It’s not like I called the story “repulsive adver-news” and “an utter distortion of the truth,” is it?

It’s not like I claimed the media’s pandering to the real estate industry is “a sickening, vile practice,” is it?

It’s not like I ended with, “Whistler is dead. Don’t believe the lies. The correction is already here,” is it?

Oh wait. It is?

#131 Alex on 06.14.11 at 11:01 am

What’s $1.5 trillion between friends?

http://www.theglobeandmail.com/globe-investor/personal-finance/household-finances/household-debt-hits-record-15-trillion/article2059905/

#132 Ryan Limerick on 06.14.11 at 11:08 am

The association says Canadian household debt has reached a record $1.5 trillion, and calculates that more than half of indebted Canadians are borrowing just to afford day-to-day living expenses such as food, housing and transportation.

Low interest rates will make it easier of Canadians to keep borrowing, setting them up for a fall further down the road

http://www.google.com/hostednews/canadianpress/article/ALeqM5j_UCZ6jUqI6wq48rMAK659qMpsZA?docId=7145667

I can smell the blood…

#133 Utopia on 06.14.11 at 11:18 am

#123 Ret to #102 Utopia

“If HF&C think that the Canadian public will be joyfully stepping up to the plate to back the mortgages of their greedy CMHC defaulting fellow Canadians for a couple of hundred billion dollars, they would be wrong”.
——————————————————

Ret, who the hell do you think is backstopping the CMHC?

It does not matter what H, F or C think about the issue anymore. The insurance risks are now obligations of Canadian taxpayers and not the banks. The potential defaults have been socialized as a means to guarantee our banks did not face insolvency due to a domestic credit meltdown. That is how the program was designed and the expansion of its use was part of the emergency intervention that resulted from the Credit Crisis of several years back. You will recall that all parties in the house voted on the stimulus measures and there were few if any objections to modifying CMHC insurance rules. Hell, the whole topic is still almost taboo and verboten in Parliament. Very little has ever been said by any party on the issue of our developing housing bubble. Few politicians want to open that can of worms although almost all follow the drama through sites like this one. You will note that it has only even been in the past week that two of the big banks have finally made formal statements regarding the situation despite the continual warnings that have been coming from economists, think-tanks, the blogosphere and a few select media outlets. Bashing Conservatives is just a waste of your breath and a waste of time. Everyone gets to share a little of the responsibility here.

But seriously Ret….would you have preferred that even one of our banks went bust? Do you even know how much carnage that would have brought to our economy? Think it through for a minute and count your lucky charms instead of counting theoretical taxpayer losses that do not yet exist. There is a reason we got through the credit crisis with both wings fully functional while almost everyone else has crashed and burned.

Try to enjoy it while it lasts.

#134 disciple on 06.14.11 at 11:19 am

Sending kids off to die in war – Insane
Working for non-existent money – Insane
Using money to make money – Insane
Burning oil derivatives in vehicles – Insane
Using plutonium instead of thorium – Insane
Dumping waste into water table – Insane
Using rat poison to brush your teeth with – Insane

Not heeding disciple – Insane

The list goes on and on. If you don’t change anything, nothing will change.

#135 Steady Eddie on 06.14.11 at 11:35 am

Garth,

I don’t think “tin foil” is a fair rebuttal to the analysis done by ZH… or to your readers.

Please consider:
http://en.wikipedia.org/wiki/Strauss_and_Howe#Works

It’s 1929 right now.

Paper is done. People will want to own real things in the future and ultimately that cycle will end too.

The U.S has defaulted in the past, please consider:
http://articles.chicagotribune.com/1996-02-01/news/9602010022_1_debt-limit-default-principal-payments

Default will just come as inflation, QE3 will start as soon as the stock market takes a dive.

If you think a depression is not coming, calculate the unemployment statistics in the US using the formula before LBJ changed it.

Have you ever studied Canada’s debt? See how it goes parabolic in the late 70’s from 19b to 500b today? That’s when we stopped borrowing from the central bank of canada and started borrowing from our private banks… 45% of our taxation goes to interest payments… wouldn’t it be nice if that went to health care or poverty… It will be a debt that we can never repay.

It’s all joke I suppose.

Keep buying houses, ipads, iphones and be merry.

#136 smartalox on 06.14.11 at 11:46 am

Okay, so what’s next. We have already seen that Asian buyers tend to flock together, and have poor impulse control. We also know that they perceive Canadian real estate as a “safe” investment, with one commentator saying that the Chinese view Canada as a ‘land bank’.

What happens next? If Canadian home values start to drop, investors will be eager to cash out their holdings at the “land bank”, right? My question is what’s the tipping point? How much value do homes have to lose before the HAM starts bolting for the exits?

My guess is that when the time comes, the HAM will be dumping real estate faster than they bought it, and the crash will be accelerated – and prolonged as a result.

Of course, the realtors will make money either way.

#137 AG Sage on 06.14.11 at 11:58 am

>#27 BPOE on 06.13.11 at 10:21 pm
>Another point supporting investment in Vancouver and not a balanced portfolio. Folks when the world gets tough folks want HARD ASSETS

When the world gets tough, there is no liquidity to buy the hard assets with. Or, mores the point, they will be bought with cash, at the cash rate, which is 1/3 of what they are selling for now. So good luck with that.

#138 Carruthers on 06.14.11 at 11:59 am

G-Dude. If Carney is advising us to trash debt is he covertly signalling a coming deflation? If so, in the economy overall, or just housing with inflation in other sectors?

Thx.

#139 WINNIPEGER on 06.14.11 at 12:03 pm

http://money.canoe.ca/money/business/canada/archives/2011/06/20110613-153516.html

reverse mortgages rock

#140 Betamax on 06.14.11 at 12:18 pm

Canadian debt rises and equity drops as owners borrow to splurge on consumer goods:

http://online.wsj.com/article/BT-CO-20110614-709071.html

#141 BrianT on 06.14.11 at 12:19 pm

#113American-Another 6.6 billion of your hard earned money has gone missing-tractor trailers full of cash-a Tony Montana wet dream-don’t worry-they are going to take real good care of you http://www.zerohedge.com/article/was-iraq-war-merely-smokescreen-largest-theft-taxpayer-funds-national-history

#142 TS on 06.14.11 at 12:26 pm

Stress level is rising….

CGA Canada report called A Driving Force
Some highlights….
The first one is for our B.C. promoters.
The national perspective conceals significant regional differences. British Columbia has the highest debt-service ratio, paying 9.4 per cent of disposable income to service debt interest payments. Residents of New Brunswick enjoyed the lowest debt-service burden that claimed only 5.6 per cent of their disposable income.
If household debt was spread evenly across all Canadians, a family with two children would owe an estimated $176,461.
Consumption rather than asset accumulation remains the primary cause of the debt run up: 57 per cent of indebted respondents said day-to-day living expenses are the main cause for the increasing debt.
The extent to which residential mortgages were backed by residential assets continued to deteriorate over 2010. This indicator stood at 65.7 per cent at the end of 2010, a level much higher than the 55.0 per cent average observed between 1990 and 2007.
By the end of 2010, total owner’s equity reached a 10-year low of 67.7 per cent while housing equity reached a 20-year low of 34.6 per cent.xvi

http://www.cga-canada.org/en-ca/ResearchAndAdvocacy/AreasofInterest/DebtandConsumption/Pages/ca_debt_default.aspx

#143 Kevin on 06.14.11 at 12:34 pm

Reverse mortgage demand rising for cash-strapped boomers
http://money.canoe.ca/money/business/canada/archives/2011/06/20110613-153516.html

About 77% of the average seniors’ net worth is tied up in their home, according to Statistics Canada.

“That doesn’t leave a lot of liquidity to fund what can be some ambitious retirement plans,” Bandler said.

“We do know that most people have not saved enough for their retirement to be able to maintain their standard of living once they are no longer working,” Gormely said.

The numbers back Gormely up. The average 55 to 65-year-old has just $125,000 in their Registered Retirement Savings Plan (to stretch over decades in some cases) and more than half of working adults aren’t contributing to an RRSP whatsoever.

#144 bigrider on 06.14.11 at 12:34 pm

#118 Plow replies to #82 bigrider.

Absolutely more emotion when it comes to housing over the stock market . I would go much further and say religious fervor towards RE.

Friends I have who are RE humpers will often ask me how a stock I may like is “doing today”. I often answer, “I don’t know ” about today and continue to ask them how their RE investment is “doing today” with a blank expression as their reply.

#145 JohnnyBGood on 06.14.11 at 12:41 pm

RE: More on Greece

This just in from a trader whose reports I subscribe to:

According to Andrew Lilco (economist and Managing Director of Europe Economics), if Greece defaults:

-Every bank in Greece will be insolvent
-The Greek government will nationalize every bank in Greece
-The government will forbid withdrawals from Greek banks
-The government will implement a curfew to avoid riots in the streets of Athens
-Greece will redenominate all its debt into its new currency
-The new currency will devalue by 30 to 70 percent effectively defaulting on 50 percent of Greek euro-denominated debts
-The Irish will, within a few days, walk away from their debts
-The Portuguese government will consider doing the same
-French and German banks will take such significant losses that they no longer meet regulatory capital requirements
-The European Central Bank will become insolvent
-French and German banks will have to recapitalize the European Central Bank or allow the ECB to print money
-ECB money printing will then recapitalize all banks in the euro zone

He also said, in the event of a Greek default he would take his entire portfolio immediately to cash.

However, he believes, as I do, an actual default is very unlikely. As he put it: “Greece is too big to fail.” How ironic.

#146 realpaul on 06.14.11 at 12:47 pm

Its as bad as I said….and worse than they admitted to. Taxes, stagnant wages, rampant inflation and the ‘wealth effect’ has kneecapped an entire generation of consumers.

http://www.vancouversun.com/business/Household+debt+puts+Canadians+dire+situation+warns/4943502/story.html

And you think it’s bad in Japan? Just wait……Canada only has a fifth the population. When an entire 2/3rds of the population not only stop spending but can’t borrow what is going to happen? It won’t matter if rates go to negative zero.

The growth projections released in the recent budget make no sense when compared to the debt stats……it has proven to be an exercise in accounting masturbation. Flaherty say’s that he’ll squeeze blood from a stone and the economy will grow 3%……..Uh….on who’s back?

Seniors have already been wiped by the ZIRP…..Parents can’t afford hockey or dance classes…let alone food or incidentals like school lunches. These people are strapped with debt more than at any time in history. As it was pointed out a couple of days ago…”It was one thing to have a mortgage with a 25% equity down/pmt that could be paid off. But….the half million dollar whoppers, along with massive increases in inflation, taxation and strata fee’s has hamstrung any expectation of getting out from under.

The stats on retirement debt are already making this clear….read the article. Stagflation and increased poverty….sounds like a ramp up to a wave of political change. Like a pendulum people will always swing to the biggest fantasy and the party blowing the most smoke up the voters ass when times get tough. The coming collapase of the Canadian economy as we know it…..mat spell an NDP government in Ottawa as people become desperate enough to think that the lies of socialism will ‘save them’.

#147 The InvestorsFriend on 06.14.11 at 12:47 pm

#110 Utopia says:

The asset value of your home cannot be considered real until an actual sale has taken place. Until that time it’s value is really only theoretical.

Well there is some truth to that…

But an asset has to be valued somehow and the best estimate of the market price is a resonable way to value assets.

If we take your concept to the limit, cash also has no known value until you excahnge it for goods and services.

$100 cash may fill your SUV tnk today and next week it may take $120.

One thing for sure, build your wealth and you will tend to become better off. You can “store” your wealth in houses, land, stocks, bonds, cash, gold, collectibles or whatever. Just don’t forget to diversify. Don’t take on too much debt. save and build your wealth and you will do fine.

#148 Rulze on 06.14.11 at 12:48 pm

124th!!!!

#149 bigrider on 06.14.11 at 12:49 pm

Before anyone makes a comparison between the merits of RE investing or financial market investing, let’s make sure the parameters of such comparisons are the same. For example:

1) If you employ leverage to enhance return of your RE example or purchase, place same leverage on financial portfolio. You see RE pumpers constantly do this when comparing RE to equities.. Leverage to buy RE no leverage on stocks

2) If you are going to assess the value of your portfolio of financial assets regularly(everyday for some people) then get an RE appraiser to appraise your house everyday. Lets see what kind of a frenzy that whips people up too.

3) Make it as equally difficult to liquidate financial assets(and equally costly) as it is to liquidate RE. Garth may disagree with this one but it will prevent people from bailing like rats on a sinking ship like they did in late 2008 early 2009 from equities thus aggravating situation. RE enjoys less volatility because of this fact. The liquidity factor that is such an advantage to financial assets have increased bad investor behaviours. The introduction of ETF’s have only increased trading and volatility. Impose a hefty exit fee on them like mutual funds and get rid of second to second quotations…people’s net results would be much better.

Buy and hold for RE and buy and hold for equities ,same dollars in on both fronts..let’s see what does best

#150 bigrider on 06.14.11 at 12:59 pm

Yup, that is what we need in order to improve financial market results for everyone. Less liquidity, high exit fees, elimination of second by second price quotations, legal fees/lawyer to sell your ETF’s/preferred’s etc. and an open house for people to view your financial securities in CERTIFICATE FORM ONLY before they buy. Once buy /sell decision has been made 30 to 60 days for completion…LOL

Only in this matter can we control the frenzied behaviour of financial market participants and INCREASE returns respectively of all participants.

#151 Utopia on 06.14.11 at 1:30 pm

#147 The InvestorsFriend

I think you understood what I was getting at was that value is not fixed for homes. They are evaluated relative to each other, when one falls in a neighborhood then others can follow. There is no doubt that in a real estate correction in this country, hundreds of billions can be wiped from the ledger. Book prices for homes do not truly represent the value attributed to them unless and until the asset sells. The sense of security some people feel in “knowing” their house is worth X number of dollars may turn out to be a fleeting one.

#152 disciple on 06.14.11 at 1:30 pm

A Greek default would be an amazing victory for humanity. Iceland did it and they are prospering quite well. It’s only the bankers and their henchmen media that are worried. The size of the Greek economy is roughly that of the Greater Toronto Area. No biggie to the world. It’s the principle that the Greek people would dare to defy the parasite class that is at stake. Solidarity will deflate the illusion of fake wealth.

#153 shifty on 06.14.11 at 1:31 pm

Don’t know about you, but I’m spending my time putting my squirrel recipes in alphabetical order.

#154 Bottoms_Up on 06.14.11 at 1:47 pm

#128 JohnnyBGood on 06.14.11 at 10:41 am
——————————————
Just google ‘public service renewal’. You may get an 08 or 09 article but that is the plan going forward. Lots of retirees in the pipeline and they will need to be replaced with young blood.

With 350,000 new Canadians every year, I would anticipate that the public service will be growing too.

#155 Soylent Green is People on 06.14.11 at 2:05 pm

re Rob Ford’s abs.

What do you mean Rob Ford’s abs. He’s just one big stupid fat ass, two tons of fun… ^NOT. There are no abs. No brains. No nothing. His brother runs City Hall.

……………….

“Ford, Hudak and Harper: A trifecta cabal of republican-style, right wingers.”

Our Prime Minister Stealin’ HarperCon was behind Rob Ford’s appointment.

And Mike Harris as well was behind Ford’s campaign. Rob Ford’s dad used to work for Mike Harris. With help from Guy Giorno, who happens to be Harper’s recently departed Chief of Staff. Guy Giorno used to be chief of staff to former Ontario premier Mike Harris.

Are you starting to notice a neocon circle jerk going on here?

http://www.thestar.com/News/Canada/article/428557

.
.
.
.
.

#156 BPOE on 06.14.11 at 2:06 pm

Even the banks now following BPOE advice. Like I said Carney I’m calling your bluff. Interest Rate CUT coming. Mark my Words!
****************************************
OTTAWA – The TD Bank says Canadians can expect borrowing costs to remain near record lows for the rest of the year.

That’s because the pace of the economic recovery is expected to slow sharply in Canada, the United States and much of the world.

#157 BPOE on 06.14.11 at 2:10 pm

Again like I have been saying all along. Canadians have no business buying Vancouver. CANADIAN boomers will have to sell and these weak bids to be snapped up by international investors. Amazing how many of my predictions are dead on.
*******************************************

OTTAWA — Household debt has soared to a new record of $1.5 trillion, leaving many Canadians with lower or stagnant incomes in a “dire” situation, says a report Tuesday from the Certified General Accountants Association of Canada.

“The debt of a typical household is rising,” said Rock Lefebvre, the group’s vice-president of research and standards and co-author of the report. “And the financial situation of certain groups of households is much worse than average and continues to deteriorate. This is concealed if you focus only on the national or aggregate picture.”

The report shows that more than half of indebted Canadians are borrowing money just to meet their day-to-day living expenses

#158 JohnnyBGood on 06.14.11 at 2:16 pm

#153 shifty

How about Chilli Con Chipmunk? Yummy…

#159 Abitibidoug on 06.14.11 at 2:18 pm

@Tim, #69:
You are right, Greece is a small player and in theory if they default on debt payment it should’t have a big overall effect. However, the psychologal effects could still shake up markets. Consider that in 1997 a small southeast Asian country (Thailand?) had troubles while other Asian countries were doing fine and the contagion spread, the Asian Flu it was called, and it shook up markets for a year. The second wave of the lingering effects of Asian Flu occured in summer and fall of 1998 when there was worry about trouble in Russia. It’s not out of the question such a shakeout could happen again.

#160 jess on 06.14.11 at 2:20 pm

“FSA warns wealth management firms of ‘significant failings’FSA’s ‘Dear CEO’ letter raises concerns about investment risk

The Financial Services Authority warned firms looking after wealthy investors’ savings that it had identified “significant, widespread failings” that could pose a risk to their customers, and revealed it was already taking action against up to 16 firms.

In a letter to the chief executives of 260 wealth management firms, the City regulator said it expected investments made on behalf of clients to match their “knowledge and experience, financial situation and investment objectives”.

The FSA gave the firms until August to reply to its concerns, after a sample of 16 firms found that 14 were a high or medium-high risk of detriment to their customers, where client files were found to have a high risk of unsuitability, or where the suitability could not be determined.

Around 79% of the files reviewed by the FSA had a “high risk of unsuitability” – or the suitability could not be determined – while 67% were not consistent with either the firm’s approach to risk, the client’s approach to risk or the client’s objectives for their investments
…”

http://www.guardian.co.uk/business/2011/jun/14/fsa-warns-wealth-management-firms-investment-risk?intcmp=239

#161 thecomingdepression on 06.14.11 at 2:32 pm

“recession doesn’t mean depression”..Again.. 44 million on food stamps, real estate dropped to DEPRESSION LEVELS, unemployment over 22%, US facing default, the list is endless! THIS IS A DEPRESSION..PREPARE

#162 JohnnyBGood on 06.14.11 at 2:35 pm

#154 Bottoms_Up

A quick read of http://www.clerk.gc.ca/eng/feature.asp?pageId=165 does not indicate to me a net expansion of the public service.

As a matter of fact, he uses words and phrases like “cost-effective”, “efficient”, “targeted recruitment”, “We must remain dynamic and relevant…”. “align and integrate”.

This sounds more like a heads-up about cutting costs rather than expanding the workforce. Reminds me of euphemisms like “right-sizing” and “flexible workforce.”

And who says retirees NEED to be replaced, anyway?

#163 Bill Grable on 06.14.11 at 2:38 pm

Hi to Canuck Abroad –
Realtor has owner who wants to rent out the overpriced condo…gives lease to renter, and soon as the renter is in – boom, the owner says “tenanted” to make it look like the place is a cash cow, and renter is subjected to open houses and disruptions.
One very wise poster here says that one should only sign a lease with a clause saying that if property is listed during lease, reserve the right to give 30 days notice.

We have a new place lined up – dropping owner on his pointed Shanghai head – we move and the place drops to bottom of rental pool, in this half empty building, and so owner has to either move in – long commute from Shanghai – or leave it empty.

This sleazy rental abuse widespread in Vanpoover, I am not sure. Anyone else have this kind of stunt pulled on you?

We sold all RE here – and are waiting for the Crapnucks to lose, ( fascinating study of mobs) and watch the tsunami hit this burg, with a vengence.

We would leave Vancouver in a nonce, but because of ongoing major health issues, it is not possible right now.

#164 Mr. Plow on 06.14.11 at 2:58 pm

#145 JohnnyBGood

“Greece is too big to fail”

That is priceless. I would stop subscribing, and it basically discredits everything he said prior to that.

#165 The InvestorsFriend on 06.14.11 at 3:08 pm

Kevin at 143 says:

The average 55 to 65-year-old has just $125,000 in their Registered Retirement Savings Plan (to stretch over decades in some cases) and more than half of working adults aren’t contributing to an RRSP whatsoever.

Actually there is not such thing as an average 55 to 65 year old. No average family either.

This should read the goup of people who are 55 to 65 years old have an average savings of $xxx. But of course the variances across people are HUGE. The top (say) 0.1% may have over $10 million. Mabey the the broad middle swath of population say from the 80th percentile down to the 20Th percentile ranges from $1million down to close to zero. The bottom 20% probbaly have zero or are net debtors even at age 55 to 65.

So the concept of average is pretty useless.

As the ladies say, all men are not created equal (nor average)

#166 Mr. Plow on 06.14.11 at 3:09 pm

#131 Alex

I don’t think you should be posting MSM links, with all of your CRTC complaints, its kind of hypocritical.

You are against the MSM when they report pump pieces, but when they report non-pump pieces you are all for it and post it because it fits your reality?

Seems a little inconsistent to me.

#167 vyw on 06.14.11 at 3:17 pm

http://www.huffingtonpost.ca/miro-cernetig/vancouver-china-investment_b_876248.html

About 37,000 immigrants settle in Vancouver every year. Building permits, housing starts, new home sales (all SFH) are up. With strong demand, low numbers of listings, and low interest rates, these high prices are likely to be with us for awhile. We have media attention and enthusiasm, need to get through the manic phase to greed, delusion and the new paradigm to reach the top. Are we there yet? Other markets in BC ie the Okanagan have already started to correct since last year. Maybe Vancouver is a couple of years behind due to the increased demand from foreign buyers but correct it will – it always has.

#168 VICTORIA TEA PARTY on 06.14.11 at 3:18 pm

#145 JohnnyBGood

Yes, it would be bit of a Greek salad, minus the olive oil, if the people of that ancient country defaulted.

But the effect would be to begin to clean the pipes of our clogged economic system, a shot that would be heard ’round the world. In the end that would be good for our future prospects on all levels, Greeks included.

My betting, however, is that the bond holders have the EU members in a stanglehold by employing various economic conflicts of interest. So the default option won’t happen. Instead it’ll be the more damaging “extend and pretend” ways of handling debt loads. Which is to say that the debts only get larger.

The main issue remains, the credibility of the Euro experiment itself. Eliminating traditional European sovereign customs boundaries in favour of a one-size fits all political and economic arrangement still makes no sense, and it shows up with these various traditional economic fault lines that fall under the aegis of only one currency!

I expect the main reason the rulers of Europe want the single euro is to counteract the effects of the US dollar’s reserve currency status. It is still a mighty buck inspite of its serious ill health and US’s extend and pretend “debt management” activities.

#169 Kevin on 06.14.11 at 3:27 pm

#165 The InvestorsFriend
That was not me, that was part of the article, I just forgot to put in the “” for the quote.

#170 BPOE on 06.14.11 at 3:34 pm

Obama now agreeing with BPOE. If debt ceiling not raised America = Fail. I have stated for months now the possibility of the US defaulting on its debt. *****************************************
Congress must raise the American national debt ceiling or risk causing another global financial crisis, says U.S. President Barack Obama.

In an interview Tuesday with NBC’s Today show, Obama said “the full faith and credit of the United States is the underpinning not only of our way of life, it’s also the underpinning of a global financial system. We could actually have a reprise of a financial crisis, if we play this too close to the line. So we’re going be working hard over the next month,” he said

No default will occur. — Garth

#171 jess on 06.14.11 at 3:37 pm

A Greece default has already been priced in.”

..how can one know this without knowing all the counterparties?
=========

Countries ability to tax it’s citizens …collection is a different matter.

“Between the launch of the scheme in November 2008 and the end of March 2011, Time to Pay struck more than 400,000 deals, allowing breathing space on £7.4bn of tax debts.

The scheme was widely welcomed when it was introduced, but HMRC faces a challenge to unroll the arrangements. If the structures are dismantled too quickly as the economic situation improves, many businesses could go to the wall.
Research shows that one in four corporate insolvencies is caused by another business going into insolvency,” Coulson said.

“This means that should the businesses who have had multiple Time to Pay arrangements fail, not only will the government be left out of pocket, but a considerable number of businesses would be left exposed.” (guardian uk)

==========
According to a study by the Federal Reserve Bank of St. Louis:”Residential real-estate foreclosures doubled between 1926 and 1929 – before the Great Depression actually began. , the foreclosure rate jumped from 3.6 per 1,000 mortgages in 1926 to 13.3 in 1933. In that year, in fact, 1,000 home mortgages were being foreclosed each day.

The effect of foreclosure moratoria

This study shows that future borrowers had to face a marketplace where loan capital was in short supply and interest rates were sky high. Lenders made loans tough to get – and then charged a lot for them via high interest rates – because they needed to compensate for the very real possibility that these new laws would restrict their ability to foreclose on delinquent loans.”

#172 new_era on 06.14.11 at 3:53 pm

#112 Do they really think the public is that stupid???

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

They don’t have to think. The public is stupid!!!!
You should watch the Chinese Station and listen to the Chinese radio.

All is good, better get in. The Ancient one listen to word of mouth. They don’t understand statistics.

Proof is in the pudding, they see their neighbours making money and the greed machine gets fed…. They don’t understand the concept of chasing the unicorn..

I hope Carney pumps up the vancouverites tommorrow and get them to buy more

BPOE ==> Biggest Pump On Earth
Best Ponzi-scheme on Earth
Bullshit Published onto Everyone

#173 charles on 06.14.11 at 3:56 pm

Garth you are too canadian. In my neighbourdhood I can see people from all over the world: Iranian, Indian, chineese, Pakistanisn, Iraqui people. I am not in Brampton but in a former “Canadian” neighbourdhood. My point: low interest rates in the next 4 years, high inmigration, fewer cities than USA; will keep prices where they are right now for many years to come.

That makes utterly no sense. — Garth

#174 Alex on 06.14.11 at 3:57 pm

#166, Mr. Plow: Seriously?

The Canadian public is besieged on an almost daily basis with heavily slanted real estate industry press releases that are mysteriously re-branded as “news,” presumably, IMO, to keep the mania alive. Why would any thinking person not have issue with salesmen trying to paint an overly rosy picture of their product via “trusted” news sources?

On the other hand, today we see a factual report on the increasingly worrisome and very serious state of personal indebtedness in this country.

According to the report, which has now circulated worldwide, more than half of indebted Canadians are borrowing just to afford day-to-day living expenses like food, housing, and transportation. This is deep stuff, and it is not the product of some over-imaginative marketing team.

You say it fits “my reality” that I jump all over the former for its deceipt yet simultaneously point to the latter as an example of how it really is. I say that doing so doesn’t fit “my reality.” It fits “reality.”

#175 JohnnyBGood on 06.14.11 at 4:12 pm

#164 Mr. Plow
Maybe my comment wasn’t very clear. But there was no contradiction in what the trader said. Not to defend him, but back in ’08 when oil was approaching its $147 peak, and almost everyone was forecasting $200, $250, $300 oil, he called for a pull-back to $30. Oil went to $33 in only a few months.

#168 VICTORIA TEA PARTY
I think your comment has merit in principle. I don’t think many market watchers doubt what most Euro leaders want to do. The risk to them is how much opposition the people will put up. European “union” has always been problematic. Just ask Marcus Aurelius… or Napoleon… or Hitler.

#176 R on 06.14.11 at 4:37 pm

So we’re basically looking at our best hope being a never ending series of can kicking in order to avoid the eventual decline of civilization. The multi million dollar bonuses and runaway commodity inflation will continue no doubt. It will be a good run.. for some.

Oh what new lies they’ll have to invent so that people will want to go on living.

What did they call it in Rome? Bread and circuses.

#177 Dave on 06.14.11 at 4:47 pm

In response to comment #20 from Lisa:

Gerald Celente’s track record at predicting global events is a joke. I looked back at his specific predictions for previous years and he was wrong on almost every point. Every year he predicts economic oblivion, and every year he’s wrong. It’s just like the church group that made headlines by predicting the end of the world on March 21st. The date came and went, nothing happened, and the group just says, “oops” and recalibrates the date of its prediction. Celente does the same thing. He predicts this “greatest depression” every year, and he’s wrong every year. How is that a great track record?

Has he ever made a correct prediction? Yes and no. I’ll explain by example. If every morning I wake up and say “it will rain tomorrow”, eventually I will be correct. Does that make me a great prognosticator of future weather trends? Of course not. That’s the same thing Celente does with his silly economic and social predictions. He predicts upheaval every year. We know that economic activity is cyclical, so eventually that prediction will be correct. As the old saying goes, “even a stopped clock is correct twice a day”. Celente is the ultimate stopped clock. He repeats the same tired, old, gloomy predictions every year; ignores the 50 that he gets wrong and points to the one that came true and says, “see I told you so; I’m a brilliant forecaster of future trends”. And even for this one so-called “correct” prediction, he has to ignore the fact that he got the timing wrong year after year.

Garth’s blog is interesting, but many of his readers seem mired in depression. There’s seems to be a fixation on the end of real estate, the end of the monetary system, the end of oil, the end of affordable food, and the end of social order. Come on people. Yes, the world is reaching the peak of a debt bubble that will have to be unwound. Yes, it will be painful. Yes, there will be a recession (or recessions) at some point in this process — probably a nasty one. But the world will not end. Financial systems will survive. They may be forced to endure painful transitions and alter the way they operate, but they will survive. It’s summer time… forget the doomsday blogs, put down your rifle and canned tuna, come out of the bunker and go enjoy the sunshine. Find a restaurant with a cool patio and have a cold beer with some friends. The world will still be here when you get back. I promise! :-)

I notice from your email addy you’re a federal government employee. Might colour your view. — Garth

#178 poco on 06.14.11 at 5:05 pm

an analysis of the UK housing market–scroll down to the start–especially read the conclusions–sounds alot like what sellers are doing here—disjointed pricing

http://howestreet.com/2011/06/stocks-bear-market-rally-mantra-busted/

#179 Timing is Everything on 06.14.11 at 5:14 pm

Hey Nosty…Losing it…by the plane load! It’s all just ‘funny’ money anyway. The money never really existed in the first place, did it? Kinda like those WoMD.
Just another ‘curveball’. We’ll never know.

http://www.bbc.co.uk/news/world-us-canada-13768882

http://www.latimes.com/news/nationworld/world/la-fg-missing-billions-20110613,0,4414060.story

http://en.wikipedia.org/wiki/Curveball_%28informant%29

#180 Nostradamus Le Mad Vlad on 06.14.11 at 5:14 pm


#186 disciple on 06.13.11 at 11:23 pm — “Welcome dear readers to the netherworld of this blog . . .”

Aha! Certifiable proof that I trooly am living in The Pineapple ZombieWoofZone! Succulent, sweet and joocy as always . . .
*
#38 The InvestorsFriend (Shawn Allen) — “New Recession equals Opportunity? first thing, STOP the discretionary spending.”

Opportunities abound in all markets, no matter whether they are up or down. If sheeple would just learn to invest and be patient, instead of wasting banks’ money (HELOCs and the like) as if it’s going outta style, most would be in a relatively healthy position.

#53 oldmac — “Looks like we’ve got a long hard slide ahead.” — With an upside-down crash-landing to follow.

#61 Aaron – Melbourne — Good link. Govts. are under the illusion that they must let the free market operate by itself, and banks are ‘entitled’ to make yearly profits, but couldn’t care less about homeowners taking a bath financially. Something will change, just not sure what or when.

#76 daystar — Interesting links, but unfortunately, most won’t even know what’s happening until they’re caught with their pants down, mostly because they are too lazy to educate themselves.

#97 fancy_pants — “. . . in the land of blue milk and green honey.” — That goes nicely with the The Pineapple ZombieWoofZone I am currently engaged in!

#105 Lisa — Nice reminder. Just have to figure out what part we’re in!

#135 Steady Eddie — “Default will just come as inflation, QE3 will start as soon as the stock market takes a dive.”

Leap 2020 said the second half of 2011 and on would be the ‘Tumblin’ Dice’ for numerous economies, so everything seems to be running accordingly. Markets may head south in a short while.

#145 JohnnyBGood — Well written post about Greece, then the other dominoes which may not necessarily tumble, but will screw up the big players enough so that everyone throws up their hands, and there is a mass default.

The IMF is then outta business. See #152 disciple’s post.

#146 realpaul — Good post about the realities of life. Most here (including me) only see the exterior, very rarely do we ever see the inside.

#152 disciple — Excellent post. Just as the Icelanders stood up for themselves, rid themselves of the IMF parasites, so the Greeks (and others) could well follow suit.

#181 Hoof - Hearted on 06.14.11 at 5:39 pm

Was at a friends old house yesterday..sold last year.

SFH..about say 3000 sq.ft.

New owner paved the front lawn

The fence to the North had 1, 2, 3 , 4, 5, 6, as stalls for cars painted on the fence

The other side had 3 cars…no numbers on the fence yet….so lets say 10 cars

= Rooming house baby…and the house is a vintage 1970’s……split level.

What till the McMansions take over.

It will be an ugly black hole for RE…

#182 Imstupid on 06.14.11 at 5:40 pm

#74 Cunuck Abroad

I’ll tell you why the owner puts the tenant into the home before listing for sale.

Here is how it works if you have rental income from your home, the new buyer can use 50% of that income and add it to his/her income so you can get more qualified buyers. If you have a house hold income that does not qualify for mortgage the use of 50% of future rental income can get you qualified.

For example rental income of 1000 per month bumpes up your household income by 6000.

Hope this answers your question.

#183 realpaul on 06.14.11 at 5:47 pm

Standard Chartered Bank of the UK has made a new call on gold…..this time having nothing to do with any of the traditional arguments of inflation or fear. The conclusion is bases SOLELY on the supply side. It seems that everything has been thrown out of wack since the central banks have become heavy buyers as opposed to net sellers.

http://www.cnbc.com/id/43396080

Read it and weep if your one of those naysayers who learned about the economy when Christ was still on the cross (1970’s). Apparently there is a new paradigm to consider.

Speaking of new paradigms….consider the HAM effect that is literally sweeping the world and causing discomfort to all but those wise enough to step in and control it….like the Aussies. The HAM effect out of China’s 1.5 billion population has thrown all the historical numbers in Canada out the window.. It could be here to stay.

#184 Carney the stupid man on 06.14.11 at 5:50 pm

Immigrants are smarter then the Canadian born. We have all come to Canada for an easy life without work and reap the rewards. Why work in Canada and save when you can borrow all the money you want with cheap interest. Many of us have borrow more money then we can pay back. What do we as immigrants have to lose. If things go well we pay back using our wealth from our home. If things go bad we will leave Canada in economic ruin by the hundreds of thousands. We laugh that you all think Canada is so great. Tyhe only great thing about Canada is cheap easy money you never have to pay back with work. Carney has to watch what he does. If he raises interest rates or forces us to pay back the money we will leave Canada in economic ruin. You will have goast towns. Guess which one will be the biggest goast town.

I think you should work on your immigrant impersonation. Sucks. — Garth

#185 1milcrackshacks on 06.14.11 at 5:54 pm

How is it that somebody who takes 6 weeks to get a real estate license, or a house flipper going to make this economy any good to live in?
Jobs like dental hygiene for instance make the same in downtown Vancouver or a small town in BC. In AB. they make even more then BC.
What does Vancouver have that Squamish or Whistler doesn’t?
Shopping? Fishing? Ocean? Hiking? Camping? Weather? I’m just curious to what makes Vancouver so much more desirable.

#186 Laurenda on 06.14.11 at 6:01 pm

Garth – why won’t the States default… also what do you think of Gerald Celente, is legit or just kinda??

#187 poco on 06.14.11 at 6:06 pm

#163 Bill Gable
One very wise poster here says that one should only sign a lease with a clause saying that if property is listed during lease, reserve the right to give 30 days notice.
______________________________________________even if sold –lease runs to the end in BC–check sec 49 to 52 of bc tenancy act at this link.
good renters have more rights than owners—if you can decipher the mumbo jumbo the new owner or present landlord may owe you a months rent to boot

http://www.bclaws.ca/EPLibraries/bclaws_new/document/ID/freeside/00_02078_01#section50

if you can’t figure it out call the BC rental agency–they will tell you your rights

#188 Mr. Plow on 06.14.11 at 6:07 pm

#174 Alex

Hey man I agree with you about the pieces you complain about.

It just seems hypocritical to have a hate on for the MSM, to the point that you file complaints with the CRTC, but the hate on only apply’s to pieces you disagree with.

Someone like Cam Good could say the same things you are, about the Globe piece, that it is people with a vested interest in making sure Canadians get out of debt and stop spending.

#189 Herb on 06.14.11 at 6:14 pm

Driving home, I listen to the CBC radio news: Personal debt in Canada has never been higher; some people have to use credit to buy the essentials to survive, putting them even deeper into debt. This is bad.

Get home, unload the car, check the news: Obama wants to raise the debt ceiling to keep the US afloat.

I’m confused. Someone please explain the difference between the personal and the national fiscal predicaments, and why more debt should be bad for one and good for the other.

#190 TurnerNation on 06.14.11 at 6:22 pm

Best place on earth??

FortisBC to increase propane rates July 1
2011-06-14 13:31 ET – News Release

FORTISBC RECEIVES APPROVAL TO MAINTAIN NATURAL GAS COMMODITY RATES FOR CUSTOMERS
Fortis Inc.’s FortisBC has received approval from the British Columbia Utilities Commission to maintain its natural gas commodity rates and increase propane rates, effective July 1, 2011, following its quarterly review of commodity rates. Residential propane customers in Revelstoke will see an increase of approximately $191 on their overall annual propane bills, depending on consumption.

#191 jess on 06.14.11 at 6:44 pm

The False Dichotomy between Banking Honesty and a Sound Financial System by william black

…”George Akerlof echoed Swift’s words in a formal economics argument in his seminal 1970 article “The Market for ‘Lemons’: Quality Uncertainty and the Market Mechanism.”

“[D]ishonest dealings tend to drive honest dealings out of the market. The cost of dishonesty, therefore, lies not only in the amount by which the purchaser is cheated; the cost also must include the loss incurred from driving legitimate business out of existence.”
This is the article that led to the award of the Nobel Prize in Economics in 2001 to Akerlof. Akerlof went on to explain that fraud could lead to a “Gresham’s” dynamics in which bad ethics drove good ethics out of the marketplace.

The bad idea that rules designed to reduce business dishonesty harms business is premised on a false claim that markets automatically exclude fraud. Alan Greenspan is the most famous anti-regulatory who once held this view. He has, subsequently, admitted his shock at the financial fraud that defined the current crisis. He admits that his belief that markets automatically self-corrected by excluding fraud proved false. Frank Easterbrook and Daniel Fischel (1991) are the most famous proponents of the view that markets automatically exclude fraud: “a rule against fraud is not an essential or … an important ingredient of securities markets.” A generation of American law students has been taught to believe this theoclassical dogma. Easterbrook & Fischel did not alert their readers that Fischel had, in his consulting work on behalf of three of the leading control frauds of the 1980s, applied these dogmas to make a series of predictions. Those predictions proved embarrassingly false because Fischel did not understand accounting control fraud. He ended up praising the worst frauds and claiming that regulators were incapable of providing any useful information because the markets price already incorporates all useful information (he adopted a perfect markets hypothesis). …read more

http://neweconomicperspectives.blogspot.com/2011/06/false-dichotomy-between-banking-honesty.html#more

#192 Bottoms_Up on 06.14.11 at 6:51 pm

#162 JohnnyBGood on 06.14.11 at 2:35 pm
———————————————-
It’s true that the words are chosen carefully.

I would just like to suggest that actions speak louder than words (especially words that make it into the MSM), and I would hope that people wouldn’t bank on a housing crisis in Ottawa when it is reported the feds are shedding 6000 jobs, as there is much that goes into achieving this number and does not necessarily mean these are actual jobs lost by people currently working them.

However, one can always speculate all they wish about what the future may hold…..

#193 Devore on 06.14.11 at 7:08 pm

#69 Tim

Germany’s GDP alone is over 10 times the size of Greece and Germany is doing just fine. The size of the economy of Greece is insignificant relative to the rest of Europe, but the media sure seizes on it’s problems and blows them out of proportion relative to Europe in general, as the GDP of Germany and France dwarfs that of all the PIGs in Europe

Although scale is a factor, I think in general the impact of the so-called systemic risks has been greatly overstated and is used to a smokescreen to obtain concessions and austerity from taxpayers. Wealth transfer and corporatism in action.

Iceland went under, and we’re still here. Lehman Bros went under and we’re still here. Ireland could have gone under, and we’d still be here. Greece can go under, and we will still be here. Goldman and JPM could have gone under, and everyone would still be here. It’s just money. Paper money. Sometimes, it’s even less.

The only thing at risk here are bank profits, and the profits of everyone else who made stupid loans to countries, companies and people who had no chance of paying them back.

#194 Devore on 06.14.11 at 7:14 pm

OECD: Canada underproducing: (one week ago)
‎http://thechronicleherald.ca/Business/1247199.html

Canada’s growth losing steam: OECD (today)
http://www.ctv.ca/generic/generated/static/business/article2059818.html

Oops. Does OECD know something we don’t?

#195 Devore on 06.14.11 at 7:22 pm

#89 Bottoms_Up

If a tenant’s residence is sold, the new owner has the right to kick them out.

Any owner has the right to kick a tenant out, mileage may vary by province, regardless of when they bought.

If it’s month-to-month, you have to give notice, if there is a lease, if can only be done if owner intends to occupy, there is much regional variation there. In BC, I believe this means two month notice (possibly 3) and 1 month free rent.

#196 bridgepigeon on 06.14.11 at 7:35 pm

Rob Ford’s abs….for someone who was so against the gravy train, he does appear to enjoy a little gravy himself…

#197 Devore on 06.14.11 at 7:46 pm

I notice from your email addy you’re a federal government employee. Might colour your view. — Garth

Don’t they have some rules against that?

#198 Daisy Mae on 06.14.11 at 7:47 pm

“We do know that most people have not saved enough for their retirement to be able to maintain their standard of living once they are no longer working,” Gormely said.

I remember years ago, alot of employees with the local school district, both spouses employed, spent every penny then made on toys, trips and good times because “the government will look after us…”

#199 garrulous squirrel on 06.14.11 at 7:49 pm

#185 The one thing that Vancouver has that any of those places mentioned do not is decent Chinese food. You have to give this point to the Asians….they really know a good nosh. If you get stuck out in Barney Land where Burger King, Pizza Pizza and Mc D’s is a big night out you notice the people getting ever more loathsome…fat….and contrary…… because the food is so freaking terrible. Theres nothing worse than a night in Squamish/Whistler surrounded by fat white chicks stinking of nicotine, beer and undigested burger meat. The Asian women on the other hand……well thats another sweet story.

#200 poco on 06.14.11 at 8:02 pm

195 Devore
) Subject to section 51 [tenant’s compensation: section 49 notice], a landlord may end a tenancy for a purpose referred to in subsection (3), (4), (5) or (6) by giving notice to end the tenancy effective on a date that must be

(a) not earlier than 2 months after the date the tenant receives the notice,

(b) the day before the day in the month, or in the other period on which the tenancy is based, that rent is payable under the tenancy agreement, and

(c) if the tenancy agreement is a fixed term tenancy agreement, not earlier than the date specified as the end of the tenancy.

(c) is the one –check link in post 187–this refers to occupancy by landlord or family and upon selling rental unit

#201 MikeT on 06.14.11 at 8:53 pm

@184 Carney the stupid man:
you are a moron. Don’t speak for all immigrants, because most of them are far superior than you.

#202 JohnnyBGood on 06.14.11 at 8:53 pm

#192 Bottoms_Up

Let me be clear. My comments had nothing to do per se with an outlook on housing prices in Ottawa. I was merely interested in analyzing the information which you offered as being supportive of housing prices. From what I read, there is nothing in the report that would have either a positive or negative effect on housing.

#203 JohnnyBGood on 06.14.11 at 8:54 pm

Cookie Monster

Thanks for the additional info re: photons, light and colour. Very interesting stuff.

#204 Bobby on 06.14.11 at 8:59 pm

For #111 45 north,

Yes, you are correct everyone has made their contributions, but that doesn’t mean the pension funds are fully funded. In fact, they are far from it. That is why Air Canada and Canada Post are on strike.

Pension sustainability is based on a number of assumptions. Given that people are living longer, it makes sense that the pension fund will have to pay out more. With low interest rates and lousy market returns, companies are required to make up the shortfalls. That comes from profits. Pay up and you go bankrupt. For the federal government, it just comes out of general revenue.
Here’s a ditty for you. When the CPP was originally envisaged the average person lived to 66 years old, a scant year longer than the year one is allowed full entitlement. With an average lifespan now in the 80’s the payouts are significantly more. The same principles apply to your pension.
Sure the Chretien government raided the pension plan to seek revenue and added the liability to general revenue. Even if it remained untouched there would be a significant unfunded liability simply because people ate living longer.
The Greeks offered full retirement and benefits to everyone at 53. I’m sure you know what is happening there. They are bankrupt.
Smiling Jack, the leader of the NDP, promised to double the CPP entitlement, but he forgot one interesting point. Who will pay for it?
Just a quick dose of reality. You’re not a postie, are you?

#205 zombiedelight on 06.14.11 at 9:01 pm

1101101001 1110 011000110

#206 Herb on 06.14.11 at 9:05 pm

Bottoms_Up,

your faith in the veracity of the federal government is touching.

Now what do you suppose will happen if the 5% savings and efficiencies turn out to be a drop in the bucket, that further measures become imperative, and this Conservative Government remembers that it is supposed to be “conservative”, small government and all that? Have you not learned that “reengineering” (even couched in softer terms) is “newspeak” for reduction?

Yes, there are hundreds of thousands of jobs in the Ottawa economy. But what do you suppose drives a good part of these other than the federal government’s requirement for goods and services, as well as the provision of goods and services to the employees of the federal government, and the provision of goods and services to those involved in supplying the same to employees of the federal government? Reduce the economic requirements of the federal government and you reduce “demand” in the local economy, with all that this implies for the businesses, institutions and individuals involved on the “supply” side.

If you weren’t in Ottawa in the ’90s and you think that this government has found a way of making an omelette without breaking eggs, wait for it.

#207 CrowdedElevatorFartz evil twin on 06.14.11 at 9:05 pm

I know how to get rid of tenants…guess how….hahahahaha

More beans please …….time to watch blazing saddles.

#208 disciple on 06.14.11 at 9:35 pm

#189 Herb…
If you are not being facetious and truly don’t understand, it’s really simple…your confusion is entirely orchestrated by the bank-controlled media. Both personal and national fiscal debt is bad, the difference being that the national fiscal debt is imposed upon you and personal debt is lured upon you via consumerism.

On a national level, there is no sane reason why a government must borrow capital from a private central bank when they could just as easily print it themselves and avoid interest and debt. This is the simple answer to ALL of the world’s problems. GREENBACKS. Executive Order 11110 Kennedy’s last stand before his ritual murder.

#209 Concessionman on 06.14.11 at 10:34 pm

More debt than beer?

WERE SCREWED! There goes our identity…

(Just checked MY beer to debt ratio, I’m ok.)

#210 Bottoms_Up on 06.14.11 at 11:32 pm

#206 Herb on 06.14.11 at 9:05 pm
————————————
With $100 oil and gas tax filling the government coffers, a promise for a balanced budget in 2014/15 (3 years away), and a promise that they won’t repeat what the Liberals did in the 90’s, I find it very hard to believe there is going to be a ‘slash-and-burn’ of the public service followed by a real estate crash.

Sure, there’s currently a real estate slow down due to changes in mortgage dp and amortization, and future demand having been pulled forward….but I think the market will be flat if not follow inflation over the next 3 years.

#211 disciple on 06.14.11 at 11:42 pm

Welcome back to the netherworld: as promised, here’s info on rototoids and dopplegangers…

Russian scientists half a century ago succeeded in engineering human vessels that have no souls. Remember that Communist ideals have their origin in the Black Nobility of Venice (Royal bloodlines). Unrestricted by ethics, they had produced these soul-less creatures otherwise known to us as Manchurian Candidates. There are several varieties, but suffice to say that there is a reason that Hillary Clinton could be at two separate functions at exactly the same time. You may have noticed lately in the news GARBLED SPEECH by newscasters, politicians, Judge Judy etc…this is the reason. The programming failed. When these creatures have served their duty they are decommissioned, sometimes publicly, as in the case of Michael Jackson.

But, dopplegangers are a different breed. These are real soulful humans that look identical to celebrities but on closer examination are different people: McCartney, Lennon being the most famous and obvious examples. Michael Jackson may have been both a robotoid and a doppleganger it seems. There were several Clintons, Bush Jr.’s and at least 4 different Obamas have been pointed out so far. Saddam Hussein had many and the latest bin Ladin was likely the third to be “killed”.

Now, on to clone wars…robotoids can be thought of as clones but there are technical nuances that distinguish the two. Your real rulers are attempting to re-create Man into their own image,so to speak, and that will eventually exclude the necessity of YOU. Figure it out…

#212 daystar on 06.15.11 at 12:13 am

#98 eaglebay on 06.14.11 at 8:08 am

I take it you are a “glass half full” kinda guy. ;)

#213 daystar on 06.15.11 at 12:14 am

Last! :)

#214 maxx on 06.15.11 at 8:20 am

117- Bottoms Up-

“**Perception is reality**”

….only if there’s a critical mass….and wishing won’t make it so…..too much aprehension already.

“Also, federal government jobs are not the only jobs in Ottawa. There are a plethora of municipal and private sector jobs.”

…mostly all dependent on PS.

Just thought you’d appreciate some insight from the inside so as to not miss the boat. ; )

….the “boat’s” an illusion. :)

#215 dave_in_TO on 06.15.11 at 4:18 pm

Nice more penalizing the savers. Just heard an advert on the radio for getting your credit card bill reduced if it is over $10,000. So they negotiate with the cc companies to lower what you owe.

Course they don’t mention any details on how this works.

So while I am responsible, and driving a 10 year old car and live in an apartment with zero debt but tons of savings trying to save up for a house, everyone else gets to live it up with big house, SUV, 60″ plasma and the banks will take care of the bill.

#216 Rae on 06.15.11 at 6:54 pm

pissed in vancouver
Decided to sell today, property tax’s increasing at some 25% a year,..the compound on that is murder. my tax asssessment has gone from 317,000 at purchase to 760,000 currently A 236% property tax increase in five years. Polititions don’t need to adjust the mill rate , instead just increase the property assessments, that way you don’t get to vote on the hidden tax increase. And the stupid people don’t complain because the assessment validate’s their notion of increase in value and net worth.
from $5000 to $12000+. My property tax’s are now double my mortgage costs. Council member wanted to know how I… “could not understand the need to pay the increase, after all cost’s were going up and the cost’s of the union contracts was increasing. you don’t expect us to dishonor these contract’s “…she said.
I’d just drove by a city crew 20 min before, 5 sups.,supervising ..9 labor’s.. 5 standing chatting in the sun, and 7 vehicles i could see. 4 people working
so I end up at a couple hundred thou in tax’s in another 10 or so years to cover this shit.
the city had the nerve to tell me this was sustainable. the american entertainment companies that hire me get 40% of my wages back as tax kickback and it access to that break has been a condition of hire now. that’s a lot more than I pay in tax’s. I’ve been told there’s a tax credit now for bringing out of country employee’s here if they are hired at full value.
some local politician is in on this apparently. (Will try to confirm this better). Some interesting questions about the LED lighting contract’s at Van airport…
can’t compete against that
gonna cash out high and sit on UI for a while in some out of the way location and watch the fun.
closing down my company and moving the [email protected] work offshore.
And removing the real cash from the financial system if property sells.
nice shave (90%)on the bondholders in Erie Bank today. their now talking about shaving the seniors as well…about time. Wonder what this will cost the american insurance banks.
This is truely not going to end well….
Gonna go fishing and have fun for a while..
RAE