Cry wolf

Twice in the last two weeks, Mark Carney has raised the alarm. The dude in charge of setting interest rates warned house prices are extreme during a talk in Vancouver (the city erupted in civil unrest and rioting as a result). Then he did it again the following week, telling Canadians they are debt addicts.

If you think this does not presage higher rates, you don’t know my buddy Mark. Fun guy. One time, on a Saturday, he actually removed a cufflink.

Of course, some people don’t get it. I get so many blog comments like this, I don’t even bother posting them anymore:

When are you losers going to get it?
Interest rates CANNOT and WILL NOT be rising any time soon. Any references to “reversions to the mean” in relation to real estate metrics are idiotic.
Garth – you are sooooo yesterday.

But there may be a little truth in that. After all, if Europe sinks, the US stagnates, commodity prices wilt and a new recession emerges, rates will in fact stay low. Carney well knows raising them in the midst of chaos and decline would simply exacerbate the situation. But how is any of that good for real estate?

Fact is, a double-double recession, replete with more job losses and shuttered businesses is a death sentence for markets like Vancouver and Calgary. This, remember, is exactly why the American housing market is marking its fifth anniversary of decay. Interest rates in that country are also at historic lows, with people able to get a mortgage at 4.2% for 30 years. That’s right – three decades at four percent. No renewals. No rate roulette. No uncertainty. Moreover, US homeowners can take all that interest and deduct it from their taxable incomes, which makes mortgages even cheaper.

Has cheap money saved housing in, say, Tampa? This was a Vancouver-like boom city between 2001 and 2005, as buyers flocked to snap homes which were destined to rise forever. A house worth $150,000 in 1995 was changing hands for $400,000 by 2005. But that summer, everything turned as public sentiment shifted and housing started to look too expensive to buy.

Since then Tampa prices have plopped 46%, and are still declining. This is 15% more than during the Great Depression – and all the while, rates have been at historic lows, interest deductibility’s been available and the feds have doled out cheques to new homebuyers. Now the $400,000 house is worth $250,000, and on its way to $220,000.

The median house price in Tampa, St, Petersburg and Clearwater is $120,000, compared with $239,600 five years ago this month. Now economists at Moody’s Economy.com are predicting the 2006 price will not be seen again until 2025 – a full twenty years of decline and slow recovery.

In fact, 2006 prices may never return again. Because that was a bubble, when values were based on emotion, desire and public mania, rather than economic fundamentals like household income levels, employment and the cost of money (interest rates).

Worse, if there’s one lesson we should take from places like Tampa, it’s that people come out of a bubble in far worse shape than they were in. Gasbag prices encourage families to speculate in housing, moving up the property ladder until they’re sitting on both massive wealth and bulbous debt. Once house values start to drop (they always do), the debt remains. And this is why a stunning 30% of all house-owning families in America are now under water. They can’t afford to sell. They can’t move to a new city to grab a better job. They’re trapped.

It’s what Mark Carney fears awaits us. People with no equity and a mess of debt, he knows, don’t buy new cars and iPads. The guy understands if he leaves rates low more fools will gorge on it, adding to future risk. But if he jacks, the party ends fast.

However, it’s ending anyway. Cheap money alone will not sustain house prices. Not even horny Asians can do the trick. Or places like Phoenix would be rising from the ashes.

So, Carney will pull the trigger in due course. Everybody will be shocked. Markets will rage a little as dumb virgins try to beat the increase, and then freeze.

I told you yesterday five ways to protect yourself. Now you have one day less.

253 comments ↓

#1 Fires, floods and debt oh my... on 06.24.11 at 9:21 pm

I just wanna be FIRST!!!!

Cuz it ticks people off….. hahaha

#2 Raincouver on 06.24.11 at 9:24 pm

lets see how long it takes for mark to pull the trigger.

#3 .9999 Silver on 06.24.11 at 9:32 pm

Dammed… if you do and Dammed… if you don’t…
trapped like rat’s

Love your site even if our end conclusions are different

Rae
methland bc

#4 Desi on 06.24.11 at 9:36 pm

A house in Scarborough is listed for $360K by the first owner. Old lady told me she bought the house for $15K 50 years ago. Scarborough is the worst in terms of real estate appreciation but even in Scarborough she would have been okay even if she had bought for $30K (100% more than the price she paid). You think it’s worth waiting to buy a house if I am planing to stay in the house for next 50 years?

#5 Mr. Lahey on 06.24.11 at 9:39 pm

Listen Randy, listen real carefully. The shit hawks are coming and they’re going to shit all over real estate in this grand land.

#6 Pity The Fool on 06.24.11 at 9:42 pm

I agree that the interest rate has to change at some point. Maybe Carney is worried his name will forever be associated with the great housing crash of 2011 if he moves it up.

#7 tigerbaby on 06.24.11 at 9:47 pm

> obediently pay them back with our labour and ingenuity, money which DID NOT EXIST in the first place …

you pay them back because you got something in the first place. Your debt didn’t just appear … you asked for it and signed for it.

> the reason why families in the 50′s could own a house 2 cars and have 4 kids with no credit cards and with only papa working is …

because the rest of the world was totally devastated by the second world war, period.
Now that there are millions of Brazilians, Chinese, Indians and others who are equally capable and deserving of better life, we will have to learn to share …

> the U.S. left the gold standard in 71 …

US will still have to leave the gold standard after China redeem it all …

> Every new dollar deposited can be lent over and over throughout the system …

this is the money/paper trail as it moves through the system … not creating out of thin air. It works the same if gold is used.

The so called “money creation” is due to the non-ideal way accounting works, such as counting the deposit once and counting the loan from the deposit again … etc. If A deposit 5 gold coins in a bank and it lends out 4 coins to B and so on, is the bank creating gold coins out of thin air too?

Also note that bank not only lend out 90% of deposits, but also funds obtained through bonds – hence mortgage rate is related to bond rate of corresponding duration. So banks can lend out more than total deposits alone.

> today, families struggle to own a smaller house with only one child and both parents working …

still much bigger house and much better environment than most people in this world have …
better to be thankful that you happen to be born on this continent than to assume you deserve more.

#8 Devore on 06.24.11 at 9:48 pm

#4 Desi

You think it’s worth waiting to buy a house if I am planing to stay in the house for next 50 years?

A lot of people plan to do a lot of things. Mostly, they end up disappointed.

Buy a house when it makes sense to buy. Is it worth it to make a bigger downpayment, or buy a bigger house, or in a better location?

#9 BrianT on 06.24.11 at 9:58 pm

#4Desi-The place was worth 15 in 1961, probably 250 in 1989. Now 22 yrs later she lists it for 369. If you can figure out why it went up 1600% in 28 yrs then up 45% in the next 22 you have your answer. Realize that any RE that isn’t wanted by the small % of the public that is going to get rich will defintely struggle more in the next 22 yrs than in the last 22.

#10 April on 06.24.11 at 9:58 pm

Why does Carney have to give so much warning of a rate increase when he knows another bunch of idiots will jump in to beat the hike adding to the debt load. Why not just do it?

POCO, thanks for that info re Sapperton. Interesting. Not a bad area but I was actually referring to the area of Royal City Mall and streets behind where Woodwards used to be – mostly high-rises.

#11 LJ on 06.24.11 at 10:00 pm

But, it’s different here…..

How can you compare Canada to the US when they can walk away from their worthless houses “scott free,” while Canadians are encumbered with FULL recourse mortgages (backstopped by our faithful and loving government, of course).

#12 BrianT on 06.24.11 at 10:01 pm

#4Desi-One hint-that 28 yr period 1961 to 1989 was the all time glory period for the average middle class home owner to profit from their middle class home. This was caused by the greatest expansion of the middle class we will ever see. Now we are in the downsizing phase of the economic story.

#13 DBL on 06.24.11 at 10:03 pm

#4 Desi
The problem with 50 years is it’s a long way in the future and we can’t see that far. A lot of unforseen things can change brother, so best to hedge your bets a bit.

#14 JSM on 06.24.11 at 10:04 pm

Well, the US housing market has bombed without increases in short-term rates by the Fed so I don’t see why Canada needs to see a real estate bust without many increases in the short rate.

Of course, if interest rates stayed low in Canada for any longer then that would be because our economy isn’t doing well which would have the same effect as in the US: unemployment rises, interest rates stay low, house prices go down, people still at historically high levels of indebtedness.

So, while interest rates may rise, which will have an effect on real estate, we could see other factors wreak as much, if not more, havoc on the RE market.

All the more reason to ensure RE is not a big part of one’s net worth.

#15 WhoKnows on 06.24.11 at 10:06 pm

“When are you losers going to get it?
Interest rates CANNOT and WILL NOT be rising any time soon. Any references to “reversions to the mean” in relation to real estate metrics are idiotic.
Garth – you are sooooo yesterday.”

I remember hearing something very similar about 13 years ago. It was during the dot com boom when a lot of people thought that the old rules regarding financial bubbles didn’t apply anymore.

What surprises me most, is how long these bubbles carry on. I predicted that the dot com bubble would soon bust back 1997, but it didn’t happen until 3 years later. I’ve been predicting a Canadian housing crash since 2007 but it still hasn’t happened.

#16 Ian Jose on 06.24.11 at 10:10 pm

Phoenix rising from the ashes, amazing prose Garth!

#17 Lisa on 06.24.11 at 10:15 pm

We’ve been living in a false economy for too long. Our “wealth” here in North America is based on the slave labour of the oppressed people in China. Even closer to home, in Mexico, the workers earn a few cents a day producing goods for us to consume. Major Canadian companies employ people in India as call centre customer service reps. The list goes on and on. Our “wealth” is an illusion. Best to see things as they really are than to delude yourself. So many of our jobs and industries have disappeared offshore. What is left? I think a shell of an economy.

#18 Kim 1 on 06.24.11 at 10:16 pm

Its about time he pulls thedang trigger!!! Honestly … how long are they going to let this ‘Credit is King’ mentality go on. It helps no one. (Except those of us who are waiting in the wings… SHOOT ALREADY!!! ) SHOOT!

#19 Utopia on 06.24.11 at 10:19 pm

“Carney well knows raising [interest rates] in the midst of chaos and decline would simply exacerbate the situation…….Fact is, a double-double recession, replete with more job losses and shuttered businesses is a death sentence for markets like Vancouver and Calgary……The guy understands if he leaves rates low more fools will gorge on it, adding to future risk. But if he jacks, the party ends fast.

However, it’s ending anyway. Cheap money alone will not sustain house prices.”~~Garth Turner
——————————————————————————-

And there is the rub.

Low rates are not leading to economic salvation anymore. Nor are they generating the kind of economic activity that is preferred. They are only drawing more fools to a doomed party, creating consumption demand in inflated assets like housing while draining savings and reducing productivity.

But higher rates will send us into recession as the lights get turned out on the easy money policy while leaving hundreds of thousands strapped financially and unable to save let alone pay down existing debt.

Catch 22. You cannot win for losing as low rates inhibit productive investment while diverting wealth to the acquisition of overpriced assets yet higher rates result in declining consumption, a negative debt spiral and natural correction of the malinvestment of the past few years.

The economy loses in both scenarios.

I think this is called a lose-lose scenario and we cannot envy Carney his next rate decision. He can forestall the inevitable for awhile by keeping rates low but if Canadians continue to allocate savings and the bulk of their income to housing instead of productive activities the verdict for them will be harsh.

And the economy loses all round as debt repayment consumes an ever greater share of financial resources that were once available for ordinary consumption that is normally associated with this countries economic activity.

Recession is the certain outcome.

There is really no way to avoid one now in my opinion as housing begins to correct with or without rate hikes. The irony of course is that we can go recessionary despite the fact we have an easy money policy. I think you have it right in your comments today Garth. Low rates can no longer guarantee the economy will grow in a healthy way.

The seriousness of our situation cannot be underestimated anymore.

We are trapped like wet rats.

#20 Kim 1 on 06.24.11 at 10:20 pm

If I hear one more person say that the bank will not raise rates because it would sink so many people … I think I’m gonna hurl.

#21 Cato on 06.24.11 at 10:25 pm

Moody’s is optimistic, a return to ’06 levels would require a return to a 06′ per-capita GDP. It was a false economy, a mirage – there will be no return to those levels in our lifetime.

Carney is bound to ideology, and that ideology dictates a need to reflate the bubble. He can huff and puff but his hands are tied, the genie never should have been let out of the bottle but its out and he can’t put it back in.

The US economy is on life support, the patient may even be dead. Stimulus is being removed and the patient is already crashing hard. Politicians on all levels are starting to freak out, things aren’t going according to plan. We were supposed to be in recovery with job growth & rising asset (home) prices. It won’t be long before those in power lose their nerve and push the button.

The next round of stimulus will be epic, and so will the unintended consequences. At this point the BoC and gov’t are now irrelevant. Canada is just along for the ride, pulled by much larger economic forces. These forces won’t be kind to the canadian middle class and its too late for many of them to do anything about it.

#22 MikeT on 06.24.11 at 10:27 pm

@117 Cato from yesterday’s post:
Thank you for taking the time to elaborate on your opinion. Much appreciated.
I want to say you are so right! And here’s why:
I have a good friend from my old student times back in the US. He is Chinese and now works for an inv banking company in China. He visited us in TO and actually had many meetings with inv banking companies from here. The purpose: buy energy and mining companies in Canada. Why? Because Canada has a much more stable political situation. My father in law works in inv banking with companies from Africa and has several mines ready (and assessed) for sale to foreign investors and I told my Chinese friend about that. He said it’s “interesting”, but they are not going to pursue this very seriously because Africa is not as politically stable as Canada. Now they are going for the best bets and these are Canada and Australia.
Thus, Chinese big money are now flowing big time into countries that are political safe havens. I am not sure how much HAM will flow into the housing sector, but it’s certain that Canadian resources are huge goal for Chinese money. I am actually scared: what my friend told me is just surreal: Chinese business people have so much money, they easily spend 600$ on custom-made dress shirts, a BMW X5 there costs around 200k USD because of the import taxes, but people seem to have no problem with that. And most importantly, they are hungry for safe opportunities to park their money – mostly tangible assets. We spoke mostly about business, so I didn’t get to learn much about private money, but that was enough for me to feel uncomfortable for my kids’ future: are they going to work for an overseas boss? Is Canada going to be sold to overseas businesses?
I think Harper & Co should wake up asap and do something about it. We will definitely not like the outcome of all this…

#23 obert on 06.24.11 at 10:32 pm

And rich people from the North are trying to save the collapsing US of A housing market…

#24 Uki_7 on 06.24.11 at 10:33 pm

#7 tigerbaby : “because the rest of the world was totally devastated by the second world war, period.
Now that there are millions of Brazilians, Chinese, Indians and others who are equally capable and deserving of better life, we will have to learn to share …”

How come Brazilians and Indians were involved in Second World War ?
And what exactly we have to share with them ?

#25 TaxHaven on 06.24.11 at 10:36 pm

But Carney won’t “pull the trigger” and raise rates out of concern for irrational exuberance in the housing market. Or for too-high debt levels. That’s where I think you’ve got it wrong.

He’ll do what central banksters always do: worry about his precious CPI. Or perhaps even worry about REAL inflation, down on Main Street. He’ll fret about “inflation expectations”, fearing that the “recovery” will drive up wages demanded and paid, leading to price inflation…

Soooo 1970s thinking. So backward, so Keynesian.

But that’s why rates will rise. And they’ll probably, as always, be six months behind actual price inflation with their rate rises, so expect it to come slowly…

#26 Devore on 06.24.11 at 10:41 pm

#7 tigerbaby

The so called “money creation” is due to the non-ideal way accounting works, such as counting the deposit once and counting the loan from the deposit again … etc. If A deposit 5 gold coins in a bank and it lends out 4 coins to B and so on, is the bank creating gold coins out of thin air too?

It’s not “gold” or “no gold”. You’re getting hung up on the wrong details. It is fractional reserve. Dollar was 100% backed by gold in the 1920s, why would banks run out of money when depositors came to claim their deposits? Because of fractional reserves. (So in effect the dollar was not fully gold backed. There were more deposits than physical currency.)

#27 45north on 06.24.11 at 10:41 pm

Mr Lahey: Listen Randy, listen real carefully. The shit hawks are coming and they’re going to shit all over real estate

pretty funny

#28 InvestX on 06.24.11 at 10:47 pm

So now there’s some truth to rates staying low longer?

Looking at Japan’s recent history, I had asked a whileago here if Canadian rates could stay low like they did there (not necessarili as long, but still quite a bit longer than most suspect) but was told that it ain’t gonna happen, without much justification except for the pressure of the bond market (which magically didn’t affect Japan?).

Hmmmm…

#29 Smoking Man on 06.24.11 at 10:52 pm

Oh man can’t fn belive I killed a bottle of fontara by mt self.

Bubble heads you just don’t know the herd, you worship celbs kiss their ars like gartho.,,,,,

He has been wrong for a long time, he and you look at fundimentals never puting any weight toward where it counts. the dumb ass herd.

Thats why im a gazilionare and most of you are in poverty.

Your are to smart for your oun good.

#30 gman on 06.24.11 at 10:52 pm

Carney is doing his best to scare Canadians to decrease debt consumption without having to increase rates by using his words, warnings, mortgage rule chnages, etc. But eventually he will have to raise rates. He can’t keep crying wolf and not risk losing credibility. Credibility is critical for the BOC to be successful. It WILL happen. He has to have the ammo to help the economy the next time the economy goes into a recession. He needs to reload the gun. Lock in some, if not all, of your debt NOW.

#31 Smoking Man on 06.24.11 at 10:57 pm

Know this bubble kids, Carney does his best to talk down RE. but he anit going to act…………

We are at emerency rates……….hello we are at the new norm………

when just a few own the monopy board, and they want to still play, low rates is the only place to go to keep their heads attached to their bodies.

pther wise their heads get choped off and a brand new game starts. still enough players in the game

#32 Kris D. on 06.24.11 at 11:01 pm

Real estate bulls argue, the influx of 200,000+ immigrants into Canada annually can sustain housing demand (or as you’d call it, provide ample supply of greater fools) – Maybe like London/England has sustained insane prices (far worse than Canada’s) by catering to demand from the world over.
I’ve never seen a convincing analysis of Canada’s housing (by bulls or bears) that incorporates our immigration numbers – Could you shed light on it?

#33 JohnnyBGood on 06.24.11 at 11:07 pm

#4 Desi on 06.24.11 at 9:36 pm

If your numbers are accurate and your “old lady” sells at or near asking, she got an ROR of about 6.5%. It helps that she bought not long before the great inflation that began in the 1960’s and went ballistic in the 70’s. Now she is selling in the midst of another, historic RE inflation. I don’t know what her real rate of return would be once you factor in all her costs, but her timing has been pretty darn good.

#34 Toon Town Boomer on 06.24.11 at 11:08 pm

The guy understands if he leaves rates low more fools will gorge on it, adding to future risk. But if he jacks, the party ends fast.

It was never a party for all the Canadian people who were displaced from homes they rented at more reasonable prices because owners wanted to sell, and for all those that had to get second jobs to try and make ends meet because there rents doubled.
Either way all this insanity needs to end, so you think maybe dealing with it might be an answer. Maybe you don’t raise rates now, but tighten morgage lending rules. Let the risk & problem get bigger that sounds like a good solution. Now maybe he gets a taste of how many Canadian families feel. Pay bills or pay rent? Dammed if you do or dammed if you dont.

#35 bsallergy on 06.24.11 at 11:11 pm

Mark Carnival can warn and warn. Why doesn’t he just do what he should have done a year ago instead of continuing to allow the distortions of the ‘conomy? He’s as serious in his warnings as our minister of funandance is serious in trying to blame the tanking of the FIRE (Finance, Insurance, Real Estate) economy he’s created. Cut taxes and borrow and spend. Hell cut jobs and borrow and spend. Get tough on crime and borrow money to build prisons, me wants shares in Corrections Canada, can’t wait ’til this privatize that because we can’t afford to pay for it. Vive le selfservatism libre!

#36 Debtisforever on 06.24.11 at 11:16 pm

I love you Garth (don’t tell my hubby). You make me feel sane in delusional Vancouver.

#37 JohnnyBGood on 06.24.11 at 11:17 pm

Here’s an interesting dichotomy, which follows on my previous observation that this market is operating on BOTH greed and fear at the same time:

Garth is advising people sell their homes NOW because interest rates are going to go up. Mortgage brokers are advising people BUY homes now because… interest rates are going to go up.

Meanwhile, Mr. Carney is trying to jawbone Canadians to prudence because interest rates CAN’T go up (yet).

Fascinating.

#38 Hoof - Hearted on 06.24.11 at 11:18 pm

Re: previous blog

Fractional Reserves (F.R.) et al…

Interesting intellectual discussions,but more F.R. for Dummies is the repeal of the U.S. Glass – Steagall Act…….whereby the legislative ” wall” (circa 1930’s) between Investment Banks and other banks was torn down.

http://en.wikipedia.org/wiki/Glass%E2%80%93Steagall_Act

This allowed ratios to move from 10:1 …..to 30:1 …even 100:1

Then the banksters took this fiat currency to a point that they went to the casino…ie OUR Gov’ts…..crying their rape and pillage gamble on the general public ” lost”.

IMHO…the more people are aware of this FIAT system, and its continual corruption……E-X-P-L-A-I-N-E-D … in basic and easily understood terms…the quicker the solution.

If and when I become PM…Goldman Sachs incubi like Mark Carni-val get tried for economic war crimes…

#39 Patrick on 06.24.11 at 11:18 pm

Everyone is panicking that there are millions of Chinese coming to Canada but it’s all smoke and mirrors courtesy of BC realtors and local media. Don’t trust what anyone says unless there are facts to back it up.

Last year in the BC Lower mainland there were 195 homes sold to non-Canadian’s out of 55,512 home purchases or less than 0.4% of all sales. Read the financial post link:

http://business.financialpost.com/2011/06/23/data-firm-pinpoints-housing-bubble/

The article continues that foreign investors own .5% of all the 774,600 homes in the lowermainland or 3873 homes. So draw you own conclusions but this game is going to end ugly.

#40 betamax on 06.24.11 at 11:19 pm

I just talked with the owner of a SFH construction company in Vancouver, and he was surprisingly pessimistic about the future of his business.

Though he acknowledged that his company had a great run during this long boom, he also said that the company almost went bankrupt in late ’08, and he was worried about a replay when rates go back up 5 – 6%.

He said lot prices went up 10% in the last year and his company just finished building on its last lot, so he was going to have to pay more for new lots and was worried that a fall in house prices would wipe out his profits. He said he’d rather have the stability of house prices that increased with inflation rather than the boom and bust scenario that had been set up in Vancouver.

I was impressed with his acumen and honesty.

#41 greg on 06.24.11 at 11:26 pm

there is over 18 million homes vacant right now in the states, more vacant houses then we have houses in all of canada and plenty of more to come as there is a lot of families who haven’t been kicked out yet as the banks are back logged. Something like 90 percent of all houses in Vegas are underwater, 1 in 7 homes in florida are vacant. few months back Macdonalds wanted to hire 50,000 people, 1 million people applied, harder to get a job at mcdonald’s statistically then it is to get into harvard, at least that day it was. Half of all the jobs created in may were Mcdonald jobs. Jobs arent coming back to the states so housing has a ways to drop yet . we export 75 percent of our goods to the states, our economy wont get as bad as theirs as long as commodities stay high but it still wont be good for us.

#42 Nostradamus Le Mad Vlad on 06.24.11 at 11:28 pm


Cry wolf to all the sheeping bleatles, or something similar. Wot about roast lamb with mint jelly and all the trimmings instead?

“. . . (the city erupted in civil unrest and rioting as a result).” — They all went to a Timmies instead of a Barstucks instead!
*
#6 Pity The Fool — Interesting post. Maybe Carney has timed it (with Tim, Ben and the rest of the US Fed) to coincide with US Default date is Aug. 2, and possibly that is when Yemen and / or S. Arabia is invaded, so sheeple don’t have the slightest idea of what is going on, plus this.
*
Things That Go Bump In The Night Even space is getting crowded! or this — Link in; Midwest When Yellowstone spews its guts out, that will warm things up a little; 4:21 clip Earth changes.

Gradual ascent of China’s economy, but it’s not so much an ascent, more of a descent of the US$ and other western currencies; World markets round-up — nicely summed up; Greek crisis = European empire; 1:26 clip Speech at the CFR — Bloomberg (NYC mayor) wants more immigration; Cloud Cuckoo Land We’re in it!

Interesting that when the Taliban controlled Af’stan, the heroin trade was almost gone. Then the west invaded, the drug trade revitalized. Now the US is leaving (like the USSR), to invade Yemen, S. Arabia, Pakistan and Iran, the Taliban will take Af’stan back again and things will settle down again. Somewhat; Good way to ‘smuggle’ nukes in and a couple of FFs; Flying New means of flying, based on old technology.

Global everything natural update, link in; UN and CC Phoney propagandists exposed; Mining Helium-3on the Dark Side Of The Moon (not Pink Floyd); Facebook Not all it’s cracked up to be; Wkileaks, Obama and a few others trying to control our minds (or what’s left of them). Link in; Germany is finishing with nuke reactors around 2022, but Tennessee gets their nuke waste.

#43 Vik on 06.24.11 at 11:42 pm

This just in .
Will this slow HAM inflows ?

Changes to economic immigration programs – July 2011. The highlights :

Limit the number of new federal skilled worker applications that are considered for processing to 10,000 a year, beginning July 1 – half of last year’s
limit.

A cap of 700 on new federal investor applications.

Temporary moratorium on new federal entrepreneur applications – program under review.

Here’s the link :
http://www.cic.gc.ca/english/department/media/releases/2011/2011-06-24a.asp

#44 Mr Buyer on 06.24.11 at 11:43 pm

#7 Tigerbaby…you assert that we need to to share and imply that this sharing prevents us from having a single income house. I have heard this many times in many different ways but I would like to point out that WE initiated this sharing of our own markets when we entered into globalization and exported our jobs many places around the world. We could (Canada anyways and at an initial huge expense) close our markets and rebuild our manufacturing base that was dismantled over the past generation. If we did so we could build largely automated factories now and position ourselves at the leading edge after all is said and done. What we have done is share the experience of not having enough time or money to support our families. It is still our choice to continue to proceed with globalization.

#45 Peter Pan on 06.24.11 at 11:56 pm

“reversions to the mean”

Dude, like, mathematical laws are so like, yesterday.

Get with the times… Trees grow to the sky…

(sarcasm off)

#46 wes_coast on 06.25.11 at 12:18 am

It seems there is a race to the bottom when it comes to currencies and raising rates will only send the loone higher. I think Carney&Crew need to look into tighter regulation of credit versus rate hikes. They did that with killing the 40yr amort.and that was a good move. Time to expand that type policy to other forms of consumer debt. Perhaps letting the banks bear their own risk is a good start too – but – who am I to propose such radical ideas. Either way – these types of things may be the only way to let the air out slowly. Of course if further shocks in the market send bonds to where they should be – Carney&Crew will only be an opening act for the main sh#t show.

#47 LG on 06.25.11 at 12:32 am

The basic fact remains, we need shelter and depending on our financial situation sometimes it is better to rent, sometimes it is better to buy. Forget the investment part because that is a gamble.

The irony is that the people who will not take an investment risk in any other arena will do it in real estate and assume it is ‘no risk’.

Keep it coming Garth – always an interesting read.

#48 greg on 06.25.11 at 12:32 am

#7 Tigerbaby….. I dont find any of your points very valid , people get a mortgage from a bank cause they have no choice if they want to own a house, they have a monopoly on Lending. Its not a fair system where the richest in the world don’t contribute to the world in a beneficial way, rather they are leaches who suck the money out of people who actually produce things as opposed to paper fraudulent manipulation. In the 50’s americans were better off because of Bretton woods agreement in 1945 as the British empire was over and it was the american dollar taking over the sterling as the reserve currency not exporting war supplies that got america out of the depression. I dont get what you mean by america will still have to leave the gold standard? that doesnt make sense. The gold standard isnt perfect but in reigns in governments and banks and puts them on a leash, thats why they hate gold and do everything they can to suppress it. we are so bloated on debt and bad credit that one of 2 things have to happen , we deflate the credit balloon or we keep blowing credit into it till it pops, one is deflation the other is hyperinflation and both lead to depression. I know we have a good life in Canada, but if we let the governments and bank do what they want our grandchildren will be sleeping under bridges, debt slaves to the banks and big governments. Biggest problem in the world today is we consume too much in the west and live over our means and asia consumes too little and lives under theirs, money flows east as cheap goods flow west. but we dont need any more trinkets from china and we have lost many jobs to them, and they want to live a better life but the government suppresses their dollar so they can export more goods. but we arent buying as much so they in turn arent buying as much american debt. And every country is doing their best to devaluated their dollar to compete in the world export market. the dirty little secret is america and canada want to break all the unions, make everyone earn a lot less meanwhile devaluating the dollar, they will never tell you this but this is exactly what is happening .

#49 Increasing that 1% on 06.25.11 at 12:33 am

Had the Rick Mercer show on in background, and then Garth comes on, then Rick says “Garth Turner, the backbench Nostradamus does it again–hang tough..”
hunh, you were shown like the Wizard, from Wizard of Oz
—————————-
“Fact is, a double-double recession, replete with more job losses and shuttered businesses is a death sentence for markets like Vancouver and Calgary.” –Garth

Though TO is booming in certain ways, ie: entertainment district last weekend–MMVA’s, Lady Gaga, Bieber–ooooh

This weekend–Queen of- Jazz Festival–Aretha, Kings and Queens of Bollywood. Next weekend– Pride Parade…

But hearing some sh#$ going on in health care that was only happening in early 90’s–not ’90, but ’91 –from one year to next, like day and night
And, out of province hiring people from here? questionable , bs going on with that too

#50 Mr. Reality on 06.25.11 at 12:35 am

When the S&P 500 breaks the 200 day moving average. Hopefully Monday, it’s on. The storm will have officially begun.

Mr. R.

#51 Basil Fawlty on 06.25.11 at 12:38 am

Jimmy Rodgers has an interesting perspective on commodity prices. He figures, if the economy does well commodity prices will rise. If the economy does poorly Ben Bernank will print money so fast his beard will catch on fire and commodity prices will also rise.
Sounds like the worlds easiest hedge.

#52 Gtaguy on 06.25.11 at 12:54 am

World is going to hell. US starting wars with everyone not aligned with them and all Americans are to busy struggling to get by day to day to care at all about whats going on. With the withdrawal from afganistan they will be moving on to other nations more influenced by china and Russia to asset more and more pressure on them.

Media just tries to distract everyone with stupid celeb scandal stories and paint all these other nations as evil and taking away American jobs. Well these jobs are being lost because of the policies created to make it easier for corporations to be more profitable by outs icing American jobs.

Guess nobody thought there was any harm in this.

Sure things are ok if you want to outsource low paying unskilled jobs but what’s going to happen when now even higher paying skilled jobs are outsourced. Now you have to take on any job you can, work more hours for less pay and try to add a second job to cover the expenses of ever increasing food, gas and home and if you have four kids and a ex with spousal support and child support to pay for well you are screwed.

#53 nonplused on 06.25.11 at 1:17 am

I’m not sure rates will stay low even through another financial crisis. It depends on what our lenders in Asia think of the chances of getting repaid, and inflation rates. Remember the 80’s? Everyone who lived through them does, although they try not to thing about them. High inflation and high rates. It was of course preceded by the 70’s, which had high inflation but low rates, and a mania in housing that culminated in the early 80’s.

2006 pricing will return again. Inflation is an official if unacknowledged policy of the government. Even if they stick to their target of 2% inflation after hedonic adjustments and on the fly weighting adjustments, their official numbers will double every 35 years. Still, 35 years is a long time. But still, if we aren’t on a gold or some other commodity standard by then (it will be fractional if it occurs and electronic, not everyone carrying gold around like in the old days), 35 years from now I guarantee prices will be back to 2006 levels or above.

However, a GarthPlan ™ is a better place to put the money if you can. And in the medium term, prices can fall a lot.

But overall, great post!

PS. The 50 day is about to collide hard with the 200 day average on a lot of charts. I wouldn’t be surprised to see some bad news over the weekend, and the 7 week drawdown in stocks turn into a route in the near future, rhyming with 2008.

#54 Randis on 06.25.11 at 1:19 am

Sad but people wouldn’t learn from history or past mistakes. When the pain strikes they cry and mourn. When the pain is gone and they forget it right away. How stupid.

When ppl tell me that rates will never rise again I give them a dirty look and like ” Are you nuts?” and they will in return give me back a dirty look as if I am on crack. It becomes a dirty look staring contest from that point on.

#55 Will on 06.25.11 at 1:36 am

“If A deposit 5 gold coins in a bank and it lends out 4 coins to B and so on, is the bank creating gold coins out of thin air too?”

Your forgetting a few things, gold is real and can’t be mined by the central bank on demand. If a particular bank tried that and A came back the next day and wanted his coins his 5 coins couldn’t be produced by some magical power, the bank would be considered insolvent and would close. Under our current system the missing paper dollars could be created on demand by the central bank if necessary.

I would suggest anyone interested in how the banking system works read:
http://mises.org/Books/mysteryofbanking.pdf

#56 nonplused on 06.25.11 at 1:37 am

Simply incredible chart. Click the link, anybody can understand it after reading the legend.

http://www.theeconomicanalyst.com/sites/default/files/article_inside/2011/05/06/house_prices_vs_mortgage_debt.jpg

Now we know why Garth’s friend Mark is jumping the shark.

#57 Deliverator on 06.25.11 at 1:39 am

Tigerbaby: You don’t understand how money is created in the modern fiat money banking system.

The moment you sign to a loan with a bank, the money deposited in your account, a liability to the bank, is created with the press of a key. The loan held on their accounts is their asset.

The bank is NOT lending depositors’ money. It is NOT lending money earned from bonds or any other investments. It CREATED that money the moment the loan was signed. The only thing that limits the amount of money that the banks can create is their reserve ratio.

Think. Read. Understand. THEN you might not spout nonsense.

http://en.wikipedia.org/wiki/Fractional-reserve_banking

“Funds received by the bank are generally on-loaned to other customers. This means that available funds (called bank reserves) are only a fraction (called the reserve ratio) of the quantity of deposits at the bank. As most bank deposits are treated as money in their own right, fractional reserve banking increases the money supply, and banks are said to create money.

#58 Canuck Abroad on 06.25.11 at 1:42 am

Garth, I found these articles and I think you will like the charts. First one on demographics and the impact on Canadian house prices:

http://theeconomicanalyst.com/content/revisiting-demographics-another-reason-why-next-decade-will-be-nothing-last#comment

Next, house prices versus rent in major Canadian cities:

http://www.theeconomicanalyst.com/content/examining-house-prices-and-rents-major-canadian-cities

Finally, house prices have been driven by mortgage debt:

http://www.theeconomicanalyst.com/content/whats-really-driving-house-prices-canada-must-see-graph-day

#59 The Original Dave on 06.25.11 at 1:54 am

ok, here’s my rant!!!!!!!!!!!!

I don’t think there’s anyone out there with more pressure to buy than me. I also don’t think there’s anyone more against purchasing real estate than me…..and it’s not because I gobble up everything Garth says (although I agree with just about anything he says).

Here’s my story….I’m of Italian background. Land ownership to Italians is an obsession that even the children of Italians, whom never had to do any farming, are obsessed with. They say things like “you need the land, it’s all about the land when you buy a house”. I think they’ve gotten the message from their parents and grandparents who needed the land to plant stuff. Sorry, but these 20’s, 30’s, 40 year old people don’t even have a garden. The almighty land they’re talking about is an absolute must if they want a pool or something like that….but even having a pool isn’t life or death. These people sound “off”.

Secondly, my parents did exceptionally well with real estate. They retired early and live off of rental income and have sold some almighty bulk land and made a hefty profit. This still hold a lot of real estate that they’ve purchased in the past 30 years. Most of their buying was in down markets…………….I rent.

Thirdly, I got married less than 2 years ago to one of the most house horny women out there. Wife is addicted to buying at market tops and selling at bottoms. She did this with tech stocks, wanted to dump everything in early 2009 etc. If people are panic purchasing dog food at the grocery store, and she sees the frenzy, she gets the itch to buy some…….complete opposite of me…oh, and we don’t own a dog.

Wife’s friends are a few years older than me and so they’ve bought real estate over 5 years ago. They look at me like I’m an alien for not getting in now before I’m “priced out forever”. They feel sorry for my wife (being cashed up with no debt apparently is a bad thing).

My wife has absorbed all this. My parents are now oblivious to macro- economics and get all their top notch from city pulse and global. Worst case scenario, they’re getting pats on the back from fellow Italians who got into the buying and renting out houses a handful of years ago. These people continuously tell them how bang on they’ve been and reassure them that real estate will always go up. Wife’s family feels the same. Just buy is the mantra.

I know that all those Italians are nuts. My wife is a great person, but she follows the mania.

I guess the point of all this is: if you ever feel alone in your decision to stay away from real estate and hate the peer pressure, know that there’s someone that is likely getting battered a lot more than you. I’m at the point that I’m cutting people off from my life. If my financial decisions is what these people want to talk about, then we won’t be talking. Tired of the convincing and pressure.

Good luck to all. The market will turn. Don’t get absorbed into this. All mania’s end the same way.

#60 Chicken Little on 06.25.11 at 1:55 am

I love Vancouver, and would rather live here than in almost any city in the word, but it hailed today. We have had, so far this year, more riots than sunny days.

We have really nice mountains and trees, and parks, but there there is very lttle industry, and the few jobs around pay much less than almost everywhere else.

I can’t figure out why a small house or condo costs so much here?

#61 Shawn Petriw on 06.25.11 at 2:07 am

“People with no equity and a mess of debt, he knows, don’t buy new cars and iPads”

Sorry, they’re still going to buy iPads. AAPL is cheap, cheap, cheap…

#62 dosouth on 06.25.11 at 3:07 am

A while ago we were lucky enough to sell our place here in the Okanagan at a small profit after expenses.(took 4 months to sell) So we wait to find a rental on Van. Island. Placed a FREE ad in Kijiji and Craigslist and we are overwhelmed with offers.

So our neighbour decides to put theirs on the market. A lesser house he built (on spec 2 years ago) and now lives in. Complains to me that we undersold our place, we could have asked so much more and that put him in a position where he can only ask 70k more than we did for a lesser house.

We have dampened his chances…. we are such losers. No showings last two weeks for him and at 755k he will be waiting quite a while here in the North Okanagan…us losers will be moving on, not much more to add to this legacy!

#63 Utopia on 06.25.11 at 3:10 am

“I told you yesterday five ways to protect yourself. Now you have one day less.” ~~ Garth
———————————————————————————

One day less……..and counting down.

For two years now, we (on this site) have been discussing the hazards of buying homes at inflated prices. For two years we fretted the economy was being killed by a bubbling housing market and by all the fools who were spending mountains of borrowed money with wild abandon on overpriced castles in the sky.

We hated that CMHC insured idiots with more hormones than brains seemed to be getting richer daily while we all worried like a bunch of school children about the inevitable outcome.

Some of the Dawgs here lost their way as time went by, lost faith, bought houses against their better judgment and gave in to the momentary hot flush of house porn that rules the land these many past months. Geniuses.

They know everything about the five minutes it takes to make a baby, nothing about the twenty years of effort to raise children up to being full adults. (We need a whole book on that subject).

Happily, most of the Dawgs did not lose faith.

We kept warning friends and family about how the risk of ever-higher levels of debt were crippling our countries competitiveness. About how easy credit was killing our country inch by loving inch. They scorned us to a man though. We were ridiculed at family barbeque’s, at parties, at social events.

Just idiots to those who seemed to know better. But we were unrepentant.

To them, we were just simple-minded stooges who could not see easy opportunity when it was blindly obvious and hitting us in the face like a frozen mackerel thrown from a passing truck.

As a group of like minded people we worried together about the state of the nations affairs, about how historically low interest rates might be damaging to our country and to our economy.

We were thoughtful and engaged. We ripped into each other more ferociously than we even tore into the fools who were wrecking the country as we debated the new ideas each day here on this blog.

We worked hard at understanding the issues, even became friends.

We were branded as fools by some in the media, attacked by CREA and their minion representatives from some of the countries leading real estate organizations and even belittled by know-nothing idiot (hack) quasi-political types who would weigh in with stupid questions daily to confuse the issues. You know who I mean.

But we were right all along.

For two long years we were mocked by the house-humper’s, the brainwashed newbies, the deluded octogenarians who only ever knew rising prices and by a pack of moronic Realtors who felt threatened by a message that they in fact knew was the truth.

We persisted though.

We talked to each other. We brought forward the evidence and the truth of the dangers each and every day. We had more charts and graphs and calculus than Newton himself. Still, our message did not resonate with the deluded buyers (or even our own families for that matter).

Cripes! We even had Mark Carney on our side the whole damn time! The guy is a fave here whether you know it or not. I even hear he is one of the regular Blog Dawgs.

When the likes of the Certified General Accountants Association weighed in with hard data we felt we were finally vindicated. Still nothing happened. When Capital Economics led with a startling report on the state of the housing market in this country, the media responded with a big fat yawn.

Dancing with the Stars still got more airplay. Buying never slowed.

It seemed that little changed despite all the legitimate warnings. Interest rates remained low. Our detractors seemed to get richer on real estate while the message was minimized by those with a big stake in the game.

We were surely the greater fools for two long years according to them. We listened somberly as the Banks issued denials month after month about the obvious problems percolating in our credit markets, endured the silence of most of our MP’s from all sides (!) of the house and suffered through a barrage of idiotic commentary from those with an agenda and a big stake in the bubbles continued growth.

We got sick of the double talk and the constant attacks and accusations from the large crowd of deniers who claimed that we knew nothing at all about the hazards we were all facing as home prices rose higher and higher daily. Sickened to be sneered at and told that we were in fact the greater fools, not them.

But no more.

The chickens have now come home to roost. Too bad there is no satisfaction to be gained by being right. I hope you all took prescriptive action yourselves and never lost hope though.

The fools were right about one thing. Our timing was wrong.

For two long agonizing years we have jointly issued warnings and talked about the risks of ever rising home prices. In all that time we were wrong about when real estate would finally meet it’s Waterloo.

Two years is a long time.

But for some 35 years to come the naysayers will pay the price of their arrogance and they will empty their wallets endlessly for having refused to hear the basic message. Get out of debt! Sell high! Invest those fat one-time-only-lottery-house-profits and proceeds into cash flow and dividends. Get out while you still can etc, etc, etc……

For two long years we talked.

But the audience was deaf. For decades to come, they will pay for their stupid arrogance. In fairness, we should probably close our ears and close our minds to their sad, sad complaints as housing finally falls back to earth and they finally come face to face with reality. We should feel no sympathy for them at all, (but we surely will anyway if we have any shred of decency at all).

Because we were right all along. And we always knew it.

#64 Jody on 06.25.11 at 3:12 am

AAAgggghhhhhh!!!!! Why do people put so much faith in the goverment? Some people call it moral hazard, I call it downright stupidity, a failure to see the forest for the trees, a failure to acknowledge what may really happen. To quote the Turd:

“a person who is insulated from risk will have an insatiable appetite for risky bets because any gains will be theirs to keep but any losses will be covered by the central bank or government. The global financial authorities’ success in propping up assets (stocks in the U.S., real estate in Canada, banks in Europe, etc.) over the past three years has strengthened this asymmetric disregard for systemic risk into a dangerously quasi-religious faith that central banks and governments have essentially unlimited power to keep asset prices aloft via printing money, manipulation of markets and financialization of their economies.”

What happens when another country defaults, their banks go under? Iceland worked out okay but what about Greece, Italy, Spain? To say that the Canadian Federal government will never let a Canadian bank fail is a cop out, it’s a refusal to look at possible realities. If the system starts to fail more, then more people are going to move onto something else, and there will be no support structure. Greece is on it’s knees, people there are getting their assests out of the banks, and rightly so. Government workers in Greece haven’t been paid for a year, how much longer do people think they will keep going into work? How can people say it’s different here in Canukistan when we pay our government workers much more than Greece does, or Italy, or Spain? We’re in hoc to their pensions and salaries even more than the Greeks are to theirs. The whole thing is a giant pyramid scheme. People use the government to screw each other over and tahdah, you get a situation like Greece. The Canadian consumer is the most indebted consumer on this planet, now that will never affect anything, nope.

“Oh, but it will never happen here, nope, no way, it’s different here. The government would never let that happen, you’re just a doomer, go back to counting toilet rolls.”

What do people think the Greeks were saying when Iceland defaulted? Hmmmm? Anyone care to guess?

A couple of great articles about the CMHC, the second one is even better than anything written on this blog, maybe even better than some of Garth’s stinging rebukes.

Zero Hedge – What’s really driving Canadian house prices? Take a look at that graph, it should scare the hell out of you. Debt to GDP nearly 150%, HELLO!!!

http://www.zerohedge.com/article/guest-post-whats-really-driving-house-prices-canada-must-see-graph-day

The Canadian Moral Hazard Corporation, from the Ludwig von Mises institute

http://www.mises.ca/posts/articles/the-canadian-moral-hazard-corporation/

#65 Canuck Abroad on 06.25.11 at 3:42 am

4 / Desi – Your post is interesting. First, an increase from 15k to 360k over fifty years looks impressive but is in fact around 6.5% per year. Now, that’s tax free, which is good and so arguably after tax it appears at first to be even better than a well balanced portfolio. BUT not so fast! Such a simple analysis completely ignores all the costs of ownership over 50 years: 50 years of property taxes; 50 years of maintenance/ improvements (new roof, new kitchen every 10-15 years, new bathrooms every 10-15 years, painting, carpeting, boiler etc etc). Over 50 years, pretty much everything in the whole house has to be replaced at some point. So what did all this cost? Finally, she must now pay the real estate agent a sales commission.

So, to your question is it worth waiting…if you find somewhere nice and you like it and can afford it and plan to stay there 50 years, go for it. But don’t assume you are going to get rich buying it. Don’t assume with a 50% divorce rate that you will be one of the lucky ones and won’t need to sell in a divorce. Don’t assume you will never need to switch jobs and move. A house purchased to live in is a consumption item, not an investment. And it will require a lot of follow on costs. People forget this.

#66 phil on 06.25.11 at 3:54 am

To Desi #4 Future returns are not indicative of past performance. This fine print does not apply only to mutual funds. Talk to Japanese real estate investors of the lost decade or two about their real estate prices.

#67 Imstupid on 06.25.11 at 4:21 am

#4 Desi

Just because you plan to stay for 50 years doesn’t mean you will. Things happen, life is unpredictable and the last thing you want is to be in a situation where you can’t sell. Secondly, your augment is not logical. Why would you want to pay more for something just because you ”plan” to be their for 50 years. Your rationalizing your purchase. Its like buying a 5k watch, it will last a life time. That’s what I thought when I bought it but in reality, I wanted it. The truth a $300 dollar watch will last just as long so the truth is that $4700 was a waste of money. I don’t post that here because its not an investment it’s pure consumer spending. Like your purchase (if you decide to do so) only true market value is what is logical the rest is just consumer spending and will inevitably be a loss. In conclusion buy if you like but don’t think you will be better of if you do just because you “plan” to be their for 50 years. Remember, your going to have to pay for it with sweat and tears.

#68 Imstupid on 06.25.11 at 5:22 am

Yesterday Cato 117

Interesting theory, it only lacks one thing. What happens to HAM money when no one buys western debt? It’s true that China has the second largest GDP but they have 1.3 billion people. In the short term your theory is correct but just like the trade inbalance this too will eventually mean losses as austerity measures will force downward pressure in western world.

#69 Canuck Abroad on 06.25.11 at 5:35 am

4 / Desi – Another thought…
That $15k, invested at Garth’s highly achievable 8% over 50 years would be worth $703k today (pre tax). You stated that even if she had bought for $30k she would be okay. But £30k invested at 8% over 50 years would be a portfolio worth in excess of $1.4 million pre tax.

But “she would have to pay rent!!!” many will say. Yes, but as an owner she paid 50 years worth of taxes, insurance and running costs too which I have not factored in. So, I’m not convinced she is better off by owning. I’m not a financial planner, so maybe someone else could comment on my numbers?

#70 bullion.bunny on 06.25.11 at 6:06 am

I had a relative that died at the age of 91 in April 2011. I just sold the house in Etobicoke (Toronto) for 350k, the house is 35 years old and 1200 square feet! It sold in seven days with five offers……..prices still going up.

#71 detalumis on 06.25.11 at 6:42 am

#4 Desi, I bought a similar house as yours in south Oakville, the proverbial old lady house with good mechanicals but no pretty-pretty and bling-bling. She even had a “fur storage” fridge in the basement and neatly stacked jars of old nails and such. If the location is good (the name Scarberia scares off the hoi polloi) and the mechanicals are good I would buy it. I actually bought mine at the peak in 1990 and it fell in price after but it was still a good move for me and I still have it 20 years later.

#72 Cow Man on 06.25.11 at 7:24 am

Amigos:
Would any one care to comment on the following line of thought? The mess we are in is because in Canada we have basically socialized residential housing. As the government has artificially lowered real interest rates below their normal levels, and made housing available to those who financial institutions would not lend to at the present rates, via CMHC loans, Canada now has a social housing policy for 90% of current home purchases. If this line of thought is correct our housing market will fall, like the Berlin Wall, and the CCCP.

#73 allister on 06.25.11 at 7:24 am

There was another Florida Land boom and bust in the 1920’s, it took 45 years for prices to recover.

As for Carney, the man flips and flops with each weekly economic report. He can’t make decisions. He doesn’t have the guts to pull the trigger. So he sits and watches the country self destruct by gorging on credit. Typical economist type, always waiting for the next report which is a rear view mirror anyway. Doctor Do-little.

#74 No where man on 06.25.11 at 7:27 am

And the Banks are shoveling the money out the doors as fast as they can (source is a mortgage broker) – refinances and real estate purchases and credit card credit limit increases.
Banks are not stupid (time will tell). Are banks selling off all of this non CMHC insured debt to foreign banks/institutions? taking advantage of the vaunted Cdn banking reputation? (ala the US bank lesson – only of course our banks would not be so silly as to buy their own product – would they?).

Yes, CMHC will take the high ratio real estate secured loans but the banks are shoveling the money out on just about anything to just about anyone – cash backs are back to pay out penalties on competitors’ mortgage loans (if the cash backs ever really left). fees waived! ( most have been for years – now even the small ones are being waived and other costs being paid by the aggressive lenders).

“Hold your nose and do the numbers ” one bank lender informed. The lender was told when questioning some of the wisdom of some of the loans being granted (from the customer’s viewpoint – ie the trust your banker idea is – make them all sharecroppers of the bank – only this particular lender cares about the customers financial well being).

As the bank heads are bright and intelligent, the banks approach only makes sense if they are offing the risk to CMHC and others. Where is CMHC offing the risk? Read somewhere that CMHC is packaging the mortgages and selling them off on CDO basis. Any truth to this? If so who are the buyers?

CMHC should pass a reckless lending penalty (if it does not already exist) and refuse to cover obvious recklessly lent loans – (stupidity and greed not being excuses). And if such a rule against reckless lending does not exist, the rule should be made effective as of January 1, 2007 and if it does exist the lenders should be told it is being enforced effective oans made on or after Jan 1, 2007 (or earlier). The lenders would howl through the roofs of all those properties that represent a reckless lending practice in many places across our country. This would probably eliminate cover for all of the Vancouver loans for many years and many of the Toronto loans, saving the citizenry from the excesses of the mortgage lenders. But, alas Falstaff this will not happen.

Lenders tell an applicant to apply for a variable rate currently at 2% (for example) because they do not have a chance of qualifying for a fixed rate of 4% (for example) – this is unfair to the borrower and reckless of the lender. The citizens should not cover, even as “last resort”.
Should we fear the future soundness of some of our financial institutions when they actually are consciously enabling this fantasy land to continue? Or is the salvation of debtors everywhere by hyper inflation really going to happen?

Too few listen to your warnings – so many dreams of good young people in danger.

Should we be considering dumping our bank shares?

#75 zombiedelight on 06.25.11 at 7:57 am

#7 tigerbaby on 06.24.11 at 9:47 pm
> obediently pay them back with our labour and ingenuity, money which DID NOT EXIST in the first place …

you pay them back because you got something in the first place. Your debt didn’t just appear … you asked for it and signed for it.

___

Dirty mouth crytigerbaby.
All your post is trash
You dont understand the ponzi, they are the rulers that removed other currencies like gold and silver…
With gold and silver as currencies you are your own bank and your currency appreciate in value each year increasing your buying power instead of decreasing each year and decreasing your buying power each year.

#76 Renter with lots of cash on 06.25.11 at 8:01 am

Think we are definitely running out of “greater fools.” Here is a perfect example: 1+1 condo at yonge and st. clair, listed May 11 @ $588K, price change June 1 to $549K, another price change June 23 to $499K! Love it!! Greedy, greedy! http://www.realtor.ca/PropertyDetails.aspx?&PropertyId=10838763&PidKey=-1021536129

#77 John Doe on 06.25.11 at 8:06 am

#7 tigerbaby

You are an idiot. Period.

#78 David Jensen on 06.25.11 at 8:15 am

Carney – BOC may keep interest rates low for an extended period of time.

It was pretty hard to NOT see that coming. But some people still managed. When 100 basis points would throw the economy of Canada into a huge recession, its madness to think we can turn back the clock to 7 percent variable rates. Can I get some $20 oil with that?

#79 unbalanced on 06.25.11 at 8:18 am

To # 29 Smoking Man. I have to apologize to you now. I come here to learn and read. Maybe I’m not as smart as you. Who cares! There are alot of great contributors here. Sorry , you are and will never be one. When ever I see Devil’s Advocate, BPOE or Smoking man I will just hastily scroll past your names. I wish other readers would do the same. Oh well Goodbye and good luck.

#80 Renter with lots of cash on 06.25.11 at 8:24 am

Keep up the great work Garth! Can’t resist, another example of declining greater fools. This 2 BR was listed May 27 for $599K; reduced to $549 Jun 10; removed from MLS Jun 24; relisted today as “new” (Jun 25 @ $519K). Open house tomorrow if anyone is interested. http://www.realtor.ca/PropertyDetails.aspx?&PropertyId=10838991&PidKey=1933304000

#81 bigrider on 06.25.11 at 8:25 am

#4 Desi.

So she bought the house for 15k fifty years ago and now worth,or for sale for 360k..wow 24 times her money in 50 years. Sounds about right.

That means that house today for 360k in Scarborough will be worth 24 times 360k or 8.64 million ,fifty years from now in 2070. That is what you’re implying with your “buy now if you are going to live in it for fifty years’ mentality.

Stop thinking that we will ever see a repeat of the past 50 year inflationary effect on housing again in the future.

And lose the realtor career and get yourself a better job as a Walmart cashier.

#82 Kim 1 on 06.25.11 at 8:40 am

Obert …And rich people from the North are trying to save the collapsing US of A housing market…
—————————
#41 Greg … Hi
I have a question if so many houses are empty in the states, why do they have a 6 month rule on Canadians living there? Wouldn’t letting more Canadians … let say buy the houses there, I know lots of people who would do that .. its like the US is the new ‘Mexico’.
Anyone have thoughts on that?

#83 jerry on 06.25.11 at 8:40 am

Hello Garth

Have your book and as timing as it we have sold our house. Also retired with income investments like AAA bonds etc as per suggestions from the book. Safe boring but 4-7 % range with tax efficiencies etc. Income and principle protection strategy. (no pension for us)

Recently our bond values have sky rocketed!

Is this good or do the wheels fall off in bonds as well during recession fears and market dips ahead?

As stocks fall, bonds usually jump when investors seek safe haven. I’d consider selling and reaping your capital gains. — Garth

#84 bigrider on 06.25.11 at 8:41 am

#59 Original Dave.

Totally understand the Italian obsession. You could have written your post for me.

The only difference is I did not marry an Italian girl so I get no pressure about having a granite countertop or viking appliances.

Yes, I too am surrounded by Italians who have made millions upon millions of dollars from RE investments over the past 40 years and there is no way you are going to convince them that RE is not the KING of all investment asset classes.

#85 bigrider on 06.25.11 at 8:48 am

#71 Detamulis. “still a good move for me”

If you bought at peak in 1990 and still have it 20 years later, could you elaborate on why, how you perceieve it to be a good move? What was rental you received if rented? what were total ownership costs? what was price paid and what’s it worth today?

Just trying to ascertain a true rate of return on your example.

#86 Hoof - Hearted on 06.25.11 at 8:48 am

I don’t give a shite about Carney .

He’s a Goldman Sachs incubi.

He knew each and every scenario before going in….no skin off his back what happens…all we will see is massaged BS from here on in.

#87 Hoof - Hearted on 06.25.11 at 8:56 am

#40 betamax

I just talked with the owner of a SFH construction company in Vancouver, and he was surprisingly pessimistic about the future of his business.

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

I agree….

Poor schmucks who are building now that you know bought at peak prices. A raise in interest rates or drop in market and they’ve lost while they are still building.

#88 Hoof - Hearted on 06.25.11 at 9:05 am

#59 The Original Dave;

Here’s my story….I’m of Italian background.

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

Thats Ok Dave…we won’t hold that against you. modern medicine can change your ethnicity. Womans minds? thats tough…even when right you’re wrong.

RE ownership is ingrained in immigrants, because in the old country they couldn’t afford it. It’s something they desire for rots and stability.

It worked for their generation, but the funny thing is no more.
Why?

For the very reasons described on this blog.

Its tough to fight old school thinking when the rules have changed.

#89 JO on 06.25.11 at 9:05 am

Carney and F are using the unusually blunt language to distance themselves from the inevitable credit contraction that is coming over the next several years. Ironic that these two clowns are the same ones providing the rocket fuel for the advance (CMHC, artifically low rates). Carney will probably not raise rates unless the market forces him too, but in Canada at this time, there is no worry about that. Make no mistake, rates will rise one way or another although I doubt Canada will see a sustained uptrend until after 2015.

After the greatest debt bubble in Canadian history, most of it subsidized through financial represssion (robbing savers throughh low rates and inflation, CMHC taxpayer subsidies to the banks) against the prudent and most vulnerable, the economy is now left with massive debt, declining GDP (=income, which is weaker now that the rate of growth in debt is slowing quickly) asset prices which are declining due to less credit chasing them, and a crushing debt load at record low nominal and real rates – The societal line of credit is past its limit and rates are at their lowest.

The idiots in power and their masters will now complete the greated fraud against humanity over the next several years. One only need to look south of the border and especially at Europe for the playbook. Neo-liberal philosophy at work. Having used their debt counterfeiting operation to make inflated claims against our inflated incomes and assets, they now wait and see: their options are to first try everything to continue growing the mountain of debt and restore the lucrative status quo, or 2) if that fails, then time to execute the internal devaluation – ie., crush government balance sheets by transferring the junk debt (already done in Canada through CMHC), force “austerity” and reduce pensions and health care budgets, and take over public assets at pennies on the dollar, among other despotic steps.

Look for financial repression to go into overdrive in the next several years folks.
BTW, great pic Garth, maybe you can find one showing the sheep about to fall over a cliff !
JO

#90 X on 06.25.11 at 9:12 am

Rates will be rising…when is the real question. Cdn household debt is at concerning levels…however PIIGS, and the economy are another concern.

I am sure it will seem funny to most coming here to this site, but when rates rise, and they will, so many won’t have even seen it coming, and won’t be in the greatest of financial positions.

#91 zombiedelight on 06.25.11 at 9:12 am

Lisa
We’ve been living in a false economy for too long. Our “wealth” here in North America is based on the slave labour of the oppressed people in China.

___

Why do you think “our wealth” is based on China, are you stupid or what?
You think its good for us to send “our wealth” in China to buy a piece of crap that?
You think its good to send all our manufacturing along with our “jobs” ?

Get a clue!
Our wealth does not come from Made in China Ipads.
Its rather the opposite, when we buy too much from China without taxing their products, it lowers our own standard of living by creating competition with a slave labour, offshoring our manufacture and most important of all giving away forever our money (wealth) thats never gonna go back in the system.

#92 Sumadartson jr. on 06.25.11 at 9:25 am

But there may be a little truth in that. After all, if Europe sinks, the US stagnates, commodity prices wilt and a new recession emerges, rates will in fact stay low.

?????

#93 TurnerNation on 06.25.11 at 9:43 am

Do not obsess over the “200 day moving average” test seen on a number of indicies.

Something I heard, when you see on TV pictures of professional traders’ screens you see news, numbers, analysis. Charts, if present, are small in size and secondary to the analysis.

All trading firms hold mandatory morning meetings for their trading/sales/analyst employees. The depth of knowledge and insight shared in these meetings is way beyond our level.

But on our screens we the “Little People” use charts. There’s no shortage of expensive courses for retail traders on “chart reading”.

Well guess what, professional money managers & traders use way more than charts. We’ll never gain access to their proprietary reports and analysis.
So go ahead and try to beat the market by using charts. Ain’t gonna happen.

#94 ballingsford on 06.25.11 at 9:46 am

In my opinion, it looks like the party is over here in Ottawa. Lots of places for sale but no buyers.

#95 GTA Girl on 06.25.11 at 9:47 am

I enjoy reading the Toronto Realty Blog by a young agent, who seems to have his clients interests at heart

http://torontorealtyblog.com/2011/06/22/the-one-bedroom-effect/

In past entries he has expressed anger at developers and new condos. He ferules that the consumer is being ripped off. His latest entry explores investor groups being used by the development community.

He fount up to 80%+ of new builds are 1bedroom efficiency condos. Remainder are tight 2bedroom units. The 1bedrooms are easily sold to investors/groups. The 80%sales in one project then kickstarts the bank so project can begin. Does this sound like a ponzi? Get deposits from investors then cash in full amounts from banks? At full prices, that have never been exposed to the market place. I’ve heard some of these investors may be off-shore.

With last weeks announcement that the amount of inventory is way over the amount of renter/buyer demographics, how can this ponzi stay a float?

With thousands of 1bedrooms built, and not much else, I believe the average sucker who bought to actually live in 1of these condos is royally screwed.

#96 zombiedelight on 06.25.11 at 9:49 am

#4 Desi on 06.24.11 at 9:36 pm
A house in Scarborough is listed for $360K by the first owner. Old lady told me she bought the house for $15K 50 years ago.
___________

The thing is that house could sell for 15k again in 20 years…
Did you hear about the beautiful decent Detroit homes selling for 500$??
I’m not kidding! Thats where its at!! These sit empty and they want somebody in to pay the taxes and spend in the city!!

When baby boomers start to die off, we may experience an oversupply of houses that could sell for 500$ each, stay positive!

#97 Jsan on 06.25.11 at 9:50 am

Here is an interesting and different twist on raising interest rates. You know this one would be popular with our Central “Bankers”. Even more so as lending tightens.

FDIC’s Bair suggests time right for rate hikes:

“Outgoing Federal Deposit Insurance Corp. Chairman Sheila Bair on Friday said it may be time to think about implementing a slow increase in interest rates to make bank lending more profitable. ”

http://www.marketwatch.com/story/fdics-bair-suggests-time-right-for-rate-hikes-2011-06-24

#98 zombiedelight on 06.25.11 at 10:00 am

Detroit Homes selling for 1$:
http://www.guardian.co.uk/business/2010/mar/02/detroit-homes-mortgage-foreclosures-80

#99 eaglebay on 06.25.11 at 10:02 am

#92 zombiedelight

iPads are not made in China. They are assembled in China. This makes your post useless.

#100 Borrow to go bankrupt (Mark Carney I laugh at you) on 06.25.11 at 10:12 am

Mark Carney is a joke and a useless person who likes to talk. We debter’s don’t even care as he will do nothing but talk. I’ve heard Mark Carney talk and warn me for over two years and this clown is still talking. Why am I calling Mark Carney a clown without fear ? The answer is simple , Mark Carney is a nobody loser who likes to talk buy doesn’t do anything since Canada will be left in economic ruin. You will have hundreds of thousands of immigrants leaving Canada. We own mark and the bankers since we will go BANKRUPT and NEVER pay back the debt. I never had any thoughts of paying all the money I owe. NEVER!. I’ve talked with some others who are in massive debt and the respones is the same if we win with housing the debt will be paid with unearned money. If we lose then Canada will pay for it. The conservatives are the best as they will be the ones who ruined Canada with 40 year and nothing down sub prime mortgages. I voted conservative since I got free money. The day might come when I will give Canada the middle finger and leave it in economic ruin like hundreds of thousands of others. Thanks Mark Carney and the conservative for the free lunch. People just borrow until your bankrupt. What is mark going to do? TALK? LOL

#101 Utopia on 06.25.11 at 10:25 am

#77 Mikey the Realtor

“CMHC is the REAL problem and it always manages to escape the press conference without mention”
———————————————————————————

You are right Mikey. CMHC had been getting a free pass in this country for a long time. When I start discussing problems in real estate and the insurer’s name comes up, I only get blank looks if the commentary veers away from the basics of what CMHC offers.

Most see that outfit as a means to get qualified and get into the market. They are the ticket to home ownership, not a potential threat. Almost nobody knows about the trillion dollars in mortgage debt that is carried in Canada today nor that the majority of it is on the books of our friendly little unregulated insurer.

Try it yourself. Ask anyone you meet if they are concerned about CMHC insuring high risk debt. Start in easy though. Suggest the crazy idea that large down payments might be a good idea for first time buyers.

I promise, your ideas will get rejected out of hand. We must surely be some of the dumbest Okeys on the planet right now. Everyone else wised up….why not us?

#102 Sandpiper on 06.25.11 at 10:26 am

I gotta admit – the more Garth writes, the more I begin to disagree with your views..(not on what may happen – but the steps towards the final outcome).

G-Man, there are a number of factors that led to the housing meltdown – “Sub-prime”- if you could fog a mirror – you got a mortgage (hell, people are now claiming they couldn’t speak a word of english but were signing mortgages worth half a million dollars meanwhile they made $17K per year picking strawberries”….come on Garth, don’t compare our banks to the blinded greed of the Americans.

Secondly – Sub-prime and to a less degree Alt-A mortgages have teaser rates that after a year or two – rocket to the strastophere – thats what started that mess.

Thousands upon thousands of mortgage holders who had no right owning homes in the first place – who bought only to flip the home in 6 months to make a $50k profit – the hot potato game came to an end.

With the wave of defaults from sub-prime defaulters, that’s what started the panic – when one house on every street had a foreclosure, the rest of the herd actually stopped and smelled the coffee.

Here in Canada, the vast majority have taken out fixed 5 year rates…rates shoot overnight – the wheels don’t fall off overnight…geeez….Garth, remember your book on cementing your propane tank, hiding food and cash … I guess I was the bigger fool to buy your nonsense book – once bitten – twice shy – if I want to read fairy tales, I’ll go to the children’s section.

Yes, the sun will eventually burn itself out – hey, guess what, if I keep saying that day after day – one day that will come true….. to watch the housing market fall – will awash all of us in financial hardship – so you basement dwellers, keep up the chant will you – a-holes!

Giving mortgages to people without money is sub-prime. Emergency rates are teaser rates. And over 90% of new originations in the last three years have been VRM, high-ratio, 5% down. This comment discredits only you through the condescension and fear. — Garth

#103 maxx on 06.25.11 at 10:29 am

#19 Utopia on 06.24.11 at 10:19 pm

“And the economy loses all round as debt repayment consumes an ever greater share of financial resources that were once available for ordinary consumption that is normally associated with this countries economic activity.”

Very well put. It is decidedly unhealthy that so much consumer spending is polarized by housing and little else. “Little else” would be essentials, like food, energy, etc. and even that is often managed by way of credit.

Using low interest rates as a way to “stabilize”, “stimulate” and buy time is, IMO, useless. Central banks have lost their way and haven’t been able to find a solution. The solution is obvious. Get people who actually have cash to spend by raising rates. The only way economies will recover is to cool down borrowing….and trying to inflate debt away is a farce unless you have tons of great jobs available to the majority. The jig’s up.

#104 BrianT on 06.25.11 at 10:30 am

#86Big-For the hundredth time, YOU ARE A GUY-SHE IS A CHICK AND SHE LOVES HER HOUSE. What is the return? It is like an accountant quizzing a jazz guitarist-what do they pay you? How much do you make playing this guitar thing?

#105 BuBu on 06.25.11 at 10:34 am

#4 Desi

You think it’s worth waiting to buy a house if I am planing to stay in the house for next 50 years?

are you sure you will live 50 more years?

#106 jas on 06.25.11 at 10:36 am

#63 Utopia
Sell high! Invest those fat one-time-only-lottery-house-profits and proceeds into cash flow and dividends. Get out while you still can etc, etc, etc

I hear about investing in dividend paying stocks, but fail to understand that in the event of a recession, how will these businesses generate profits in order to pay dividends?
And one’s networth as well as income from it will certainly take a hit…would it not?

#107 Junius on 06.25.11 at 10:43 am

The Blog has been full of predictions lately. Even more than usual.

I am one who has learned to be careful about making predictions when it comes to things involving human behaviour. The housing market has defied fundamentals for a lot longer than I thought it could. Perhaps Minsky is correct when he says that every bubble needs an event to bring it down.

Nevertheless, I recently made the drive from Alberta down through the Okanagan. It was pretty shocking to see the house price reductions on the signs as you drive down from Sicamous through Vernon and into Kelowna. Once place in Sicamous was down more than 30%. Word in Vernon and Kelowna were that the market was very soft and prices had fallen dramatically.

Interest rates will rise. The reason is that gov’ts have a limit to how much they can continue to keep them artificially low by purchasing each others treasuries. When we return to a “market” in gov’t bonds the rates will jump – perhaps considerably. Carney knows this is only a matter of “when” and not “if”.

However anyone who thinks they can predict when is lying or delusional. The following quote from a post on Yves Smith’s blog Naked Capitalism sums up this difficulty pretty clearly,

“Even if you can specify PERFECTLY the rules that govern how a system works, in a system subject to not all that many forces, it quickly becomes impossible to make an accurate forecast. This issue was identified in 1899 by mathematician Henri Poincaré, who won a prize for demonstrating that a long-unsolved puzzle from physics, that of determining the movements of three or more celestial objects (meaning their gravitational forces could affect each other), was for all practical purposes unsolvable. You needed to specify their initial conditions (mass, location, velocity) to such an extraordinary degree of precision that even a miniscule error leads the
actual path of the object to diverge from the predicted path. Those deviations increase as time passes, so that the actual path may lose all resemblance to the predicted path.

Think of how much more complicated our financial system is than the movements of three celestial bodies. We can’t specify how actors operate with highly accurate mathematical formulas. We have a lot more than three actors. Therefore any attempts to predict what will happen are likely to be subject to the same problem that Poincaré stumbled upon: even if you can describe the forces at work accurately, you cannot make useful predictions, at least not over anything other than very short time frames.

But you could nevertheless very clearly see in late 2006 and 2007 that Things Were Going to End Badly merely by reading the Financial Times. You could tell we were in the midst of a global credit mania. There was regular discussion of the “wall of liquidity”. Credit spreads for every type of lending were at unprecedented, astonishingly low levels by any historical standards. It was not hard to anticipate with so much profligate lending going on in every sector of the market that there would be tremendous losses down the road.”

#108 not 1st on 06.25.11 at 10:44 am

How can a world mired in extreme levels of debt continue to function, unless it is repudiated.

Here is a list of technically insolvent entities:

Greece
Ireland
Portugal
Spain
Netherlands
Belgium
Italy
U.K.
Japan
U.S.A
IMF
ECB
U.S. Fed Reserve
AIG
Bank Of America
General Electric
General Motors
JP Morgan
Freddie/Fannie
Citigroup
Illinois
California
New York State
New Jersey
Iceland
Dozens of pension funds

an on and on

#109 BrianT on 06.25.11 at 10:46 am

#72Cow-The USA did the identical thing. Now there is talk of actually scrapping the whole mess after billions of dollars of grift.

#110 BrianT on 06.25.11 at 10:48 am

#27-It was the funniest post ever on this site-I could hear that trailer park manager’s voice when I read it.

#111 Dave in Victoria on 06.25.11 at 10:49 am

It’s astounding the degree to which people have gone to avoid calling our current times a depression. Double double recession, lengthy recession, continuing recession, blah blah. Every day data is released that describes current times and economic costs as being comparable to or worse than the great depression. But great Orwellian orators go to great lengths to avoid a proper ‘label’. I suppose history will need to represent with accuracy in future years. For now, look for green shoots and watch out for socialists, or communists, or softies, or whatever is contrary to neo-liberal conservative economics, a disease of paradigm plaguing our times.

#112 Abitibidoug on 06.25.11 at 10:53 am

@WhoKnows, post #15:
That’s consistent with my observations. It’s impossible to predict how long bubbles will go on for and how high they will go. That bubbles do go on for so long and so high just goes to show you there really are a lot of greater fools out there.
I remember in 2001 when the tech sector correction (tech wreck or dot bomb, as it was called) was going on, some analyst said: there will be another bubble, the only thing we don’t know is what kind it will be. Fast forward 10 years, and now we know.

#113 Utopia on 06.25.11 at 11:04 am

#59 The Original Dave on 06.25.11 at 1:54 am

Loved that post of yours Dave.

I might just have a bit of Italian blood myself but I make no admissions here. About the only thing I miss about Vancouver is the local Italian coffee shops along Commercial Drive. Best cheese and Salami sandwiches anywhere. I swear, it’s all about the bread.

Good coffee too. The places; always dirty and disorganized with newspapers strewn across all the side counters and tables. Terrible service too. But you always got a little Italian culture with your strong drink.

Those people are stupido about real estate. Theya gonna learn.

#114 VICTORIA TEA PARTY on 06.25.11 at 11:07 am

MORAL HAZARD: IT’S EFFECTS WILL DO ALL OF US IN!!

As we come to end of the first half of this “investment” year, while some of us await fiscal/monetary armageddon, and others mana from money-heaven, some prescience herewith to report upon for the interest of both parties.

GARTH & CHARLES (lesson for a healthy financial life)

Garth’s latest contribution matches perfectly with another offered from the Website: “of two minds” by Charles Hugh Smith.

The issue these two chaps write about is the EFFECTS of our spending madness that is now rotting our financial socks, in Vancouver, DC, Greece, Brussels, etc., these days; it’s about Moral Hazard’s eventual and always-fatal effects.

First a couple of quotes from Garth:

“Twice in the last two weeks, (BoC boss) Mark Carney has raised the alarm. The dude in charge of setting interest rates warned house prices are extreme…telling Canadians they are debt addicts…

…Worse, if there’s one lesson we should take from places like Tampa (Florida real estate crash), it’s that people come out of a bubble in far worse shape than they were in.

Gasbag prices encourage families to speculate in housing, moving up the property ladder until they’re sitting on both massive wealth and bulbous debt. Once house values start to drop (they always do), the debt remains.

And this is why a stunning 30% of all house-owning families in America are now under water…It’s what Mark Carney fears awaits us…Carney will pull the trigger in due course. Everybody will be shocked. Markets will rage a little as dumb virgins try to beat the increase, and then freeze.”

NOW QUOTES FROM MR. SMITH

Inevitable Catastrophe: The Fruits of Moral Hazard on a Global Scale (June 24, 2011)

Insulate participants from risk with policies like the Bernanke Put and you guarantee destruction of both the market and institutional legitimacy.

…the common characteristic(s):

1. The Federal Reserve will never let the stock market decline, i.e. the “Bernanke put”

2. The Chinese government will never let property prices decline

3. The European Central Bank will never let Greece default

The answer of course is moral hazard: a person who is insulated from risk will have an insatiable appetite for risky bets because any gains will be theirs to keep but any losses will be covered by the central bank or government.

The global financial authorities’ success in propping up assets (stocks in the U.S., real estate in China, banks in Europe, etc.) over the past three years has strengthened this asymmetric disregard for systemic risk into a dangerously quasi-religious faith that central banks and governments have essentially unlimited power to keep asset prices aloft via printing money, manipulation of markets and financialization of their economies.

What happens if markets crumble despite massive, sustained central bank and government intervention? The institutions that created moral hazard will be revealed as false gods, and that faith will be destroyed…what you eventually end up with is catastrophe…There is no other possible end state.”

THIS LESSON HAS NOT BEEN LEARNED IN MANY CIRCLES. BUT, YOU CAN LEARN IT RIGHT NOW!

As I wrote on Friday, the Canadian and US stock markets ended very badly, we await Monday.

What will that day hold? What about next Tuesday, and then after that? I don’t know, but the feeling that one should be more in cash than stocks and bonds, has been travelling with me for some time now, an unsettling “companion” to be sure.

IN THE MEANTIME

Moral Hazard’s effects ALSO eludes the effete, silk-suited battalions of bankers, poseurs and other assorted flicks and flacks as they parade their “solutions for Greece” through the cobbled streets of old downtown Europe.

In the process of course they are spindling, folding and mutilating the lives of those now impoverished but formerly lazy, tax-dodging Greeks who must know that their end is truly nigh.

That is, of course, unless they continue to, and successfully, push back against their domestic and EU “betters” and wrest control of their country from them.

Then you have a revolution and/or a civil war. And then you have default. And then you have cancellations of contracts debt repayments EVERYWHERE ELSE.

Oh, there’s a knock on the door!

“Why, Hello there, Moral Hazard, what took you so long? Have time for tea and a biscuit?”

#115 TS on 06.25.11 at 11:08 am

Maybe C has a problem with raising interest rates but F could change CMHC lending rules. A limit on the insurance amount for starters may just slow that Vancouver binge down. It is all about supply and demand, fear, envy and greed..
The government has many tools to implement a slow down.Apparently it is not politically acceptable.

#116 Mister Obvious on 06.25.11 at 11:10 am

#60 Chicken Little

“I can’t figure out why a small house or condo costs so much here?”
————

Neither can anyone else. Run!

#117 JohnnyBGood on 06.25.11 at 11:12 am

Hoof-Heated: shame on you for making such a half-headed comment.

Dave and Bigrider:
The fact is, most family fortunes have been made in real estate or in some other family business. I bet most commenters here know people who have made such fortunes in RE. How many of you know people who made fortunes in stocks and bonds? (Not including executives at major corporations who get huge stock options and benefit from insider info and well-timed corporate buy backs.)

Bob Precther did a study that showed even people who invested in the best performing funds of all time did not capture anywhere near market-beating performance, mainly because of poor market timing on their part. How many people on this blog are trying to time the RE market? Good luck.

Ray Kroc, founder of MacDonald’s, even said, “I’m not in the hamburger business. My business is real estate.” What Kroc meant was rental income on McDonald’s restaurants represented a higher percentage of sales than royalties. Not to mention the capital appreciation of the land.

Yes, given the current situation, now is a very risky time to be going deep into debt to buy a home, but don’t take that to mean RE is a bad investment in general. Don’t base your decision on opinions, look at the numbers. Do your own DD and use your own brain.

I’m sure our illustrious blog host would agree, as even he recently made an investment in commercial RE. And Garth’s message is not that RE is a bad investment. It’s that now is not the time to assume a large debt in this overvalued asset class.

It’s basic, sound investment advice that too many people on this blog are turning into some Nuremberg-style religious dogma.

#118 Ret on 06.25.11 at 11:13 am

Carney feels that a 1/4 or 1/2% rise in interest rates will kill the economy. That should tell you that the party in Canada has already ended many moons ago, full moons that is. Every day he lets this go on will bring even greater pain. Maybe a slow RE melt if he acts soon, a train wreck if he waits for another year.

No pressure Mark. Chugga, chugga, chugga, whooooo, whoo!

Odds are that he will…???

#119 Ronaldo on 06.25.11 at 11:33 am

#4 Desi – If she had paid an extra $15,000 for that house 50 years ago as you suggest rather than invest it at say 10% per year, it would be worth $1.9 million today, at 7% it would be worth $480,000. That is just the extra 15,000 not including the house. Rule of 72. That extra $15000 would have been pretty much all she would have needed the fund her retirement today. Ain’t compounding great?

#120 TurnerNation on 06.25.11 at 11:40 am

Best Place on Earth?? Letter to Editor, from the Whistler BC weekly newspaper:

“RMOW “SUSTAINABLE” TAXATION LEVELS
Today, I paid my taxes at Municipal Hall and
was absolutely flabbergasted at the size of the
cheques I had to write.

That negative experience led me to do
a little research and I documented that the
administration under Mayor (Ken) Melamed
and CAO Bill Barratt has dramatically
increased our taxes during the past six years.
In 2005, we had a mill rate of 1.7831 and the
2011 mill rate is 2.5154 for municipal taxes
only. That is a whopping increase of 41 per
cent. The Consumer Price Index for British
Columbia sat at 106.3 in 2005 and is now
116.3 in 2011, an increase of just 9.4 per cent.

So, net-net we have had real tax increases of
32 per cent above and beyond the increase in
the Consumer Price Index.

This is unsustainable for me and I am
sure most of the citizens of Whistler. As I
look forward to retirement I simply cannot
afford taxes outstripping inflation by fourfold
just so we can tell the world how green
and sustainable we are. The fact is, we
have completely passed sustainability from an
economic standpoint.”

(Where is blog dog Whistler Dude these days? Did the Squamish Sasquatch get him?).

#121 Imstupid on 06.25.11 at 11:41 am

103 Sandpiper

You want to see sub prime mortgages first hand? Walk into a new development and see the promotional offers they have. I’v seen 30k cash back on closing. This means you can buy a home with 0 down. The developer has increased the price 30k more than it should be, you use the 30k for the 5% down and chmc covers the risk. Then the city uses sale price for tax assessment and eceryones happy except the fool stuck with the mortgage. The point is that everyone can buy a home, take out a line of credit for 20k use it as the deposits required to get home and pay it back with developer cash back offers. Can’t afford the payments no problem some developers offer you a 5 year mortgage for 2% and no payments for 6 months. In 2008 a developer was offering a 5 year mortgage a 0% to move homes. I don’t want to say which developer but you can figure it out yourself.

Do I own a home yes I do. Do I think it’s worth what this market says it is no way in hell. I have no mortgage no debt and plenty of savings. Am I going to sell no because I don’t care personally If it goes up or down it’s not an investment it’s only an asset.

I hope it goes down so I can reduce my property tax. I wish the city will probably increase the tax rate to sustain current tax revenues. What scares me is what happens to my business when everyone who is broke begins felling broke.

#122 Ronaldo on 06.25.11 at 11:43 am

#15 – Who Knows – http://www.ssga.com/library/exchng/Stock_Market_Crashes_Financial_Bubbles_Marcus_Schulmerich_7.26.10CCRI1281018432.pdf

A good read on “Bubbles” from the past…..the Tulip Bubble only lasted a couple months…..yes…predicting when a bubble will burst can be very annoying…but…in the end….they all burst…some with a bigger bang

#123 Mr. Reality on 06.25.11 at 11:55 am

Carney and his cronies are scared. Why? Because this low rate environment is increasing the risk of CMHC default!

The more people pile in and increase their debt load the more risk to the CMHC. They know they are screwed regardless of a rate increase or not.

What was it again? 560 billion in liability with 10.4 billion in equity?

That is the real reason people should be scared. If the Canadian tax payer has to bail out a broke CMHC along with tanking home values = Perfect Storm. Add a global recession in 2012 and you get……

you do the math = ugly.

You should have started the shorting the TSX and S&P 500 weeks ago.

Mr. R.

#124 Ronaldo on 06.25.11 at 12:01 pm

#4 – Desi – further to my post. Did the old lady tell you that 50 years ago the average worker made only about $1.00 per hour in which case that $15,000 house and assuming 2000 hrs per year of work (if lucky back then), this would represent a house that would have been 7.5 times average income or 15 times if she had paid an extra 15,000 for it. My parents bought an older house in 61 for $6000. This would have been around 3 times average income for one wage earner (about what it should be today) and what it was when I bought my first home in 1970. Something to think about.

#125 Republic_of_Western_Canada on 06.25.11 at 12:02 pm

#22 MikeT

We already are inundated and compromized to the core by foreign labour and their friends and relatives. It’s like crabgrass or bed bugs invading, where none has been before.

The UofA engineering faculty is riddled with foreign Chinese at all levels now, who simply hand off foreign grads/ students directly to their friends at Suncor, using the university as a spike camp. It’s a pipeline which bypasses most development of the legacy population. It’s maybe not much different over at CNRL or Husky Oil either, although they don’t seem to be plugged in as much at the uni level.

That whole campus expanded massively in the last few years too, taking on high levels of debt and mirroring all that is wrong with the housing industry. It seems more buildings and infrastructure was put up in the last 10 years than before over the last half century. Even the grading system was changed to an american format. Mostly to ‘compete’ with foreign universities to bring in foreign students. Now it’s broke and is laying off all sorts of support staff and teaching staff where possible. But still the pipeline runs, the rhetoric flows, and as many foreign (especially Chinese) students are brought in at high tuition differentials to try to cover financial shortcomings as possible.

The politically-correct atmosphere there nowadays is stifling. PC rhetoric and related subtle oppression is as bad as it was within the Soviet Union to promote the communist ideal, or within Nazi Germany to promote the war effort, or even within the US to promote blatant consumerism. Only now, politically-correct rhetoric and subtle propaganda is used to rationalize and gloss over threads of the takeover and quiet invasion.

It’s consistent with the rationale spouted by bleeding-heart liberals or short-sighted industrialists to let in as many asian/eastern immigrants from those regions as possible. Ostensibly to rev up consumption, depress wages, and perpetuate the housing bubble.

Decades ago the typical Chinese student looked like a kind of greasy HK resident, relatively poor, crude and dishonorable as the day was long. An amazing contrast to today, where the sense of entitlement and queer smugness is incredible. Not any more honorable, just slicker about it. Luxury clothing, consumerist orientation, luxury vehicles, and the kind of attitude rampant in overpriced nightclubs.

What started on Robson Street/UBC before has moved inland. Mostly due to bitumen, global conflict and overpopulation, and local left-wing naivety or vindictiveness.

The front door of our home is propped open, with characters running through it with muddy boots, carting off anything not nailed down.

#126 Utopia on 06.25.11 at 12:27 pm

#52 Gtaguy wrote……

“Sure things are ok if you want to outsource low paying unskilled jobs but what’s going to happen when now even higher paying skilled jobs are outsourced.”
———————————————————————————————-

I think we are already finding out. I met a guy in Ethiopia who works full time for an Architectural firm in the US. They gave him a nice new laptop, 200 dollars a month income and a wireless connection. He was over the moon because that is a decent salary in his country. The high speed connection made him almost like royalty. Smart guy too. Had little idea of how much architects in the US really earn or what the real professional benefits were there but he cottoned on fast when I told him.

So who needs local talent when you can buy a whole graduating class for the same price as one single income and not have to pay benefits or pension?

#127 Snowboid on 06.25.11 at 12:31 pm

#83 Kim 1 on 06.25.11 at 8:40 am

” …And rich people from the North are trying to save the collapsing US of A housing market…
—————————

We are by no means ‘rich’ but did buy a home in northwest Phoenix. We were told that nearly 50% of out-of-state sales in the Phoenix area were Canadians (Dec 2010).

We have several Canadian owners within our own neighbourhood – from the Kootenays all the way to Ontario.

If there was an option for Canadians to spend more than 6 months down there, not many would take advantage of it because of the brutal summers (45.5 C forecast for the coming week) and the loss of Canadian medical coverage.

The US citizens in our area welcomed us, even though we aren’t full-time residents, so from their perspective they may see us as helping to ‘save the collapsing US market’

What is an interesting comparison is the costs of living between there and BC. Overall about 40% less in Phoenix when averaging the difference in costs for housing (taxes, utilities, maintenance, etc), food, fuel, entertainment and alcohol.

#128 Dorf on 06.25.11 at 12:47 pm

Love your site even if our end conclusions are different

It’s OK to have different ideas of what will end up as a result, nobody can predict exactly how it is going to play out, but remember….

If someone suggests that we walk up the river to cross it at a shallow spot, and you decide you can swim across the rapids and get towed down to the bottom and ripped to shreds against the sharp rocks as a result…

Is it any consolation to you that you called yourself right ? Or that you couldn’t admit you were wrong or that someone else had a better, much more well “though-out” plan ?

Go to 25 different industrial locations and talk to ten workers at each location to ask them how business is going, and what they know about the economy.

You will get an honest answer all about how the company is doing, and they will have virtually no idea how that relates to the economy, let alone know anything about where we presently sit.

Blissful ignorance. That’s why you never tell your wife that she’s wrong unless you are prepared to fight about it or ditch her.

#129 Mister Obvious on 06.25.11 at 12:54 pm

#107 jas

“I hear about investing in dividend paying stocks, but fail to understand that in the event of a recession, how will these businesses generate profits in order to pay dividends? And one’s net worth as well as income from it will certainly take a hit…would it not?”
——————

Houses are an interesting asset. As far as I know, the only asset one actually lives in. Its hard to convince anyone that ‘home, sweet home’ could ever turn financially sour (ask Garth). It’s especially hard if one grew up in a cozy SFH owned by wise, all-knowing parents (and seemingly), always increasing in value in a predictable way.

But let’s pull the ‘warm and fuzzy’ out of it for a bit. A home has no investment potential beyond capital gain. For that, you pay dearly year after year in taxes, interest, insurance, maintenance and renovation. Not a scrap of ‘gain’ goes into one’s pocket until the day of sale.

In a climate of irrational public mania combined with artificially low interest, highly unjustified home equity turns ordinary citizens into the financial equivalent of drunken sailors. But the money spend at the party is not real. There’s the point… IT’S NOT REAL. It has not yet come into existence. In time it could easily loose the potential to do so. Now that’s serious risk.

Dividends are a much different animal. You buy easily liquefiable, negotiable instruments and you are paid regularly by the issuer at a rate far in excess of the usual ‘risk-free high interest savings account’. In addition, because you ‘took a risk’, the money you earn gets very favourable tax treatment. In fact, far better than simple interest, capital gain and good old fashioned wages.

One might choose preferred shares in long established financial institutions. These shares fluctuate in value far less than common stocks. In Canada, some of those financial institutions are backed by taxpayers (that’s all of us) and unlikely to become insolvent any time soon. If they did we’d have much bigger concerns than investment return. Instead we would probably be out hunting squirrel.

You pay to own a house under the assumption that it will increase in value faster than the sum total of money you pour into it, less the sum of money you would have otherwise paid in equivalent rent. You may claim that these considerations are unimportant since you are the owner and master of your own castle and there is no substitute for that. However, imagine yourself slipping into deep negative equity or loosing a few hundred thousand in potential gain and tell me if being the king of your depreciating domain still seems important.

Dividends pay you to own them. Certainly they can loose (or gain) in value but the income stream remains. Here’s the other point… IT IS REAL. It certainly puts you in a far better position than ‘living’ in an illiquid cage firmly planted in an environment of multi -year descent.

#130 BrianT on 06.25.11 at 1:10 pm

#94Turner-Don’t you worry your pretty little head-it is all way over your level. Those professionals know everything and they will take care of everything real nice.

#131 Samson on 06.25.11 at 1:19 pm

This article gets closer to the heart of the matter: confidence.

By “confidence” I mean a tendency to act or not act based on beliefs about the future.

When potential buyers lack confidence, it seems to me that it doesn’t matter how low interest rates are. People sit and wait, according to what Garth says here.

But when confidence is soaring, it doesn’t really matter how high interest rates are. Or how highly-priced houses are, for that matter. People borrow anyway.

If I honestly believe that I have a “guaranteed” 50% return on my money, so what if I have to borrow at 20%? Likewise for bloated house prices. Buying a $1.4 million shack is no problem for me while I believe some greater fool is “guaranteed” to buy it from me later.

It’ll be interesting to see what happens after the herd realizes the “guarantee” of big gains is pure fantasy.

#132 BrianT on 06.25.11 at 1:24 pm

Shocking poll results-just when you are convinced the sheep are totally brain dead they go and surprise you http://www.thestar.com/news/torontog20summit/article/1014891–new-poll-finds-monumental-shift-in-public-perception-of-toronto-police-because-of-g20-actions?bn=1

#133 debtified on 06.25.11 at 1:26 pm

A Financial Post article about some company’s research on the influence of Chinese money on Vancouver’s real estate market: http://www.webcitation.org/5zi7hUO9f

#134 jess on 06.25.11 at 1:32 pm

Interesting timing ..the bond guy is channeling FDR type job creation programs and saying the usa needs to educate its students towards science and math.

I heard those speeches back in the early 90’s. At a time when there were 250 food banks in Chicago and i believe not many science teachers. So the usa had plenty of time to make changes . Although, food stamps got rebranded to nutritional suppliments and voucers replaced with a plastic card as this was less shameful and more cost efficient .
==

“Buffalo’s Housing Court judge says problems with absentee landlords who live in other states or countries are ‘out of control,’ and he’s endorsing a plan to license most property managers. ‘We have thousands of pieces of property owned by people in Utah, California, North Carolina, Pennsylvania,’ Carney said.”

“South Council member Michael P. Kearns said banks are among the biggest culprits hurting communities. ‘We have banks that are prostituting our neighborhoods, because they are starting the foreclosure process but are not finishing [the process],’ Kearns said. Judge Carney said the foreclosure process is ‘an absolute nightmare,’ noting that some banks reverse foreclosures long after the owners are evicted. ‘They’re running away from [properties] as fast as they can,’ Carney said, referring to some banks.”

“The problem of abandoned homes worsened from 2000 to 2010, the records show, as foreclosures spiked and banks and investors took control of distressed property. The one-story house near the corner of St. Cecilia and 25th streets has been abandoned for five years. Boards cover the doors and windows, and thieves are alerted that ‘no copper’ will be found inside. Danny McDole, who lives next door, cuts the grass and watches for signs of trouble — like the time drug addicts broke in to get high.”

“‘We need money down here to get these homes straightened out,’ McDole said.”

“A Cuyahoga County grand jury on Wednesday indicted nine employees of California-based Argent Mortgage Inc. for their suspected roles in approving fraudulent home loans. The indictment alleges that Argent employees helped coach mortgage brokers about how to falsify loan documents so that they misstated the source or existence of down payments as well as borrower’s income and assets. Employees at an Argent loan processing center in Illinois ultimately approved the loans knowing that the company’s own lending rules had not been satisfied. ”

“These cavalier lending practices resulted in speculative property purchases and rampant fraud. This fraud was facilitated by the practice of subprime lenders that, with the help of Wall Street, pooled mortgages into asset-backed securities and sold them to eager investors. ‘The securitization and selling of these fraudulent, subprime loans to Wall Street typified the rampant greed of the industry that ultimately led to the financial crisis,’ Cuyahoga County Prosecutor Bill Mason said in a statement.”

#135 The InvestorsFriend (Shawn Allen) on 06.25.11 at 1:48 pm

THIS BLOG – EDUCATION OR ENTERTAINMENT?

Garth’s posts are clearly both educational and entertaining (and on the good days mildly titillating as well).

But what of the 180 odd (often VERY odd) blog posts per day?

Garth indicates there are about 10 viewers each day for each one who posts.

We can all see that many of those who post have nothing educational to offer. Many are certified members of the lunatic fringe.

I think most of you read the posts here for the entertainment value. It’s fun to see people bash each other. It’s entertaining although disturbing to read just how mis-guided, bitter and downright stupid some people are.

It’s fun to see how some posters will attempt to bait others into a rant…

RANT ON…

#136 eaglebay on 06.25.11 at 2:04 pm

#93 Sumadartson jr.

What do you mean commodities wilt?
It costs a certain amount, including fuel, to produce these commodities. Whether it’s grain, copper, oil…
Nobody would ever produce such at below cost and without profit (return on investment). Eventually supply adjusts to demand and up goes the price.
Invest wisely in commodities and do your DD.

#137 Kitchener1 on 06.25.11 at 2:06 pm

#43 Vic

Nice find on

http://www.cic.gc.ca/english/department/media/releases/2011/2011-06-24a.asp

in terms of immigration, this is huge news.

as of july 1st

– temporary moratorium on new federal entrepreneur applications

– a cap of 700 on new federal investor applications (on top of the already increased requirements– increase of minimum net worth etc..

– the government will further limit the number of new federal skilled worker applications that are considered for processing to 10,000 a year, beginning July 1
Within the 10,000 limit, a maximum of 500 new applications in each of the current 29 priority occupations will be considered

So only 700 max investor program– LOL that will be reached in 30 days.

All it will do is increase the “fake marriage” scheme that is already in full swing in amongst many folks wanting to immigrate to Canada as an easy way in.

The price just went up to 100-200k from 15-30K it is right now. LOL

BUT– the important part is that the govt is taking a very proactive stand against people buying their citzenship via the investor class program and entrepreneur program. Watch for even heaver restrictions on both those programs in the future and even the marriage citizenship will probely see heavy restrictions in the future ie.. increasing minium time from 2-3years to 5-6 years etc…

The Harper govt is not very pro immigration, they already made changes to the live in care giver program– stating that perspective employees have to pay for all costs (including flight, visa fees etc..) for new applicants– how is someone supposed to hire a caregiver without meeting them first? this was done under the premise of “protecting the workers”.

Makes me wonder how bad-unstable things are in China right now, there are HUGE capital outflows from that country. Something we can call smart money– and its fleeing and parking its capital anywhere but China. Why? Its not the one child policy, as anyone knows that in China, rules only apply to those who are not connected– the people with money can buy their own rules.

#138 AG Sage on 06.25.11 at 2:32 pm

I was doubtful that Carney would raise rates, but as soon as I saw Smoking Man say “new normal” I changed my mind.

If Carney’s smart, he does it without warning this time. Lesson learned, Carney??

And it won’t lead to a bloodbath, so many mortgages were re-financed early after rates fell that the bloodbath will be in 2013. Immediately will be a small depressive effect (5-10%) on sales prices because banks are qualifying (like idiots) on carrying costs alone. But that’s it.

If the banks won’t limit credit based on total consumer debt load, then limits on leverage are the only thing that can significantly touch the growth in debt and hence the price of houses.

#139 Beach Girl on 06.25.11 at 2:33 pm

I am semi-retired single 53 year old woman. Own a six bedroom house and rent 4 rooms out. The house is worth 400,000. Paid for. I own another rental in Toronto. Am I a loser. Live for free. Inground salt-water pool. Do not care if my tenants are on welfare, prefer it. Guaranteed rent. And when everyone sells their houses, where are they going to live. My Beach mansion is mint.

#140 Timing is Everything on 06.25.11 at 2:46 pm

#97 zombiedelight – WRT Detroit

Man, I’d be worried if I owned in Windsor. Detroit north. Yes, they have to pay folks to live in Detroit

http://www.detnews.com/article/20110623/BIZ/106230436/Quicken-explores-Detroit-incentives

http://www.forbes.com/2007/06/11/ghost-cities-future-biz-cx_21cities_ee_0611ghostcities_slide_3.html?thisSpeed=undefined

#141 Cellar Dwellar on 06.25.11 at 3:00 pm

Where ….pray tell …..is BPOE ?
I miss “his/her” mindlessly optomistic delusional rants about “Rich-man” and “Vancouver-the-world-class-city”.
Still trying to make bail after the riot?

#142 zombiedelight on 06.25.11 at 3:09 pm

#100 eaglebay on 06.25.11 at 10:02 am
#92 zombiedelight

iPads are not made in China. They are assembled in China. This makes your post useless.
____________
If they were only “assembled” in China, Apple wouldnt be sending them overseas for assembly only for the costs of transportation and time it takes

-Currently, Apple has contracted with Foxconn to make their iPad 2′s in China, where employees are reportedly paid (after receiving a 30% raise) a king’s ransom of 1,200 Yuan/month, or about $185 at current exchange rates (y/$ = 0.154), or, if we assume an average 8-hour/day, 250-day/year (probably unrealistic assumptions), $1.11/hour. But what if Apple decided to do the “patriotic” thing, and hire U.S. workers in the U.S. to make its heralded tablet? How much more would it cost to make the iPad 2 in the U.S. versus in China?

Your post was more than useless, it was a piece of trash

#143 Hoof - Hearted on 06.25.11 at 3:24 pm

Breaking News: Changes Announced for Three Canadian Immigration Programs

http://www.cicnews.com/2011/06/breaking-news-announced-canadian-immigration-programs-06845.html

Federal Skilled Worker Program

To qualify for the Federal Skilled Worker Program, applicants must have at least one year of paid work experience in one of the 29 eligible occupations or have a valid job offer from a Canadian employer. CIC has just announced that the list of 29 eligible occupations will remain the same for the coming 12 months; however, fewer applications will be accepted for processing. As of July 1, 2011, only 500 applications will be accepted for processing per occupation and only 10,000 applications will be considered in total for the coming 12 months. Applicants who have a validated job offer from a Canadian employer will not be affected by the caps.

Attorney David Cohen encourages applicants to submit their applications as soon as possible, “These 29 open occupations will fill up very quickly. Speaking from my own experience, a number of our clients have anticipated that the same occupations would reopen and they already have their files ready for submission for July 1st. It is important that your application gets submitted quickly and that you get it right the first time. There will be no room for error as occupation caps will be filled quickly, especially in the popular occupations.”

Find out if you qualify for Canadian Permanent Residency by completing our Canadian immigration assessment form.

Federal Immigrant Investor Program

CIC has announced that as of July 1, 2011, the number of Federal Immigrant Investor applications accepted for processing will be capped at 700 for the coming 12 months. Canadian financial institutions, which act as facilitators in this program, are reporting that applicants will be required to submit government processing fees, a copy of their passport, and completed simplified forms to the Centralized Intake Office in Sydney, Nova Scotia. All other supporting documents will be required at a later stage of the processing.

To qualify for the Federal Immigrant Investor Program, applicants must have:
• Prior business experience;
• A minimum net worth of C$1,600,000 CAN; and
• Make a C$800,000 CAN secured investment.

“Given the demand for this program, especially from Chinese nationals, we expect this imposed cap limit to be reached extremely quickly… probably within a matter of days,” says Attorney David Cohen. “Applicants should keep in mind that Quebec has its own Immigrant Investor Program which could be a great option for applicants who cannot submit under the Federal Investor Program as Quebec will be increasing the number of applications accepted under its program.”

The Government of Quebec is expected to make an announcement regarding its Immigrant Investor Program early next week.

Moratorium on the Federal Immigrant Entrepreneur Program

As of July 1, 2011, CIC will not be accepting any new Federal Entrepreneur applications. CIC has not stated when the Federal Entrepreneur Program will begin accepting new applications. Applicants are encouraged to submit their application to the Quebec Entrepreneur Program or to one of the various Business Immigration Programs offered by the provinces.

#144 Hoof - Hearted on 06.25.11 at 3:26 pm

Anybody heard of this scam?

I caught this on YOUTUBE

I checked out some items at home….and several products do contain several of the symbols mentioned.

UNBELIEVABLE

http://www.youtube.com/watch?v=oe2ZxVvHR4g&feature=related

#145 maxx on 06.25.11 at 3:39 pm

#81 Renter with lots of cash on 06.25.11 at 8:24 am-

…am increasingly seeing more listings with asking prices below municipal assessment…..and this during the best time of year….wow…

RE agents telling us: to “make an offer”; …very easy to show as it is empty; price is very negotiable and as always: showings on the same day or within hours of a call.

I’ve been screening for waterfront properties and cannot believe how many listings of all kinds are popping up in cottage country. Prices are still waaaaaay too high.
Wait: picture the current owners enjoying the income generated from your (former) pile of equity.

#146 REdiculous on 06.25.11 at 3:53 pm

Why would they be codifying some of these existing arrangements and making amendments to the NHA?

http://opinion.financialpost.com/2011/06/20/how-to-wind-back-cmhc’s-dominance/

Surprised you haven’t talked about this yet Garth?

#147 jess on 06.25.11 at 3:54 pm

read this on another blog:

1. When they foreclose on a property, they report the “transfer value” to the county recorder.in California the property taxes are assessed based upon the transfer value, as are the transfer taxes. The property was reported to the county as having a transfer value of $143,000.

2.xxx then issued to the previous owner a 1099-A, as required by Federal law, to report the amount of the obligation and the fair market value of the property. In this case the outstanding principle was $283,000.00. In spite of the fact that they had shown a transfer value of $143,000 to the county, xxx reported that the Fair Market Value of the property was $345,000, more than $200,000 higher!

3.xxx then put the property on the market for $147,000, even though they had already turned down a short sale offer of $150,000 cash. They ultimately sold the property for $130,000.

What this means is that they now showed a capital loss of the difference between what they reported as the Fair Market Value ($345,000) and the final selling price ($130,000). Using those numbers, their capital loss was $215,000 which they could now offset against the capital gains from their stock dealings, saving them $32,250 in Federal taxes, and who knows how much in state taxes.

but multiply that by 100,000 foreclosures and you come up with something like $3 billion dollars in fraudulent tax evasion.

#148 Junius on 06.25.11 at 4:00 pm

#103 Sandpiper,

Thanks for confirming yet again the depth of ignorance Canadians have about the similarities between Canada and the US. It remains shocking how few people seem to grasp this reality.

#149 Cato on 06.25.11 at 4:02 pm

#22 MikeT –

Thanks for the anecdotes, your findings match many of my own personal dealings with friends who have close ties to China.

I think much of China’s involvement in Africa is more at the state level. Reason being they need military assets to protect resources and that level of co-operation only exists at state level. China providing money to Mugabe to build military bases around chinese state owned mines in Zimbabwe as an example.

Something equally interesting is the influx of Chinese merchants setting up shops in Africa. I have a few friends who tour africa extensively doing humanitarian work, they are seeing that in many places merchants are all chinese. These are peasants from China seeking a better life on a new frontier – similar to the entrepreneurial spirit that saw chinese labourers and merchants come to the old west.

China is now africa’s largest trading partner and by looks of things that trade is set to strengthen. But you hit on the achilles heal, stability. One has to question what will happen to chinese oil infrastructure & newly minted refineries in Libya once western powers put another puppet government in place. Which leads to an even bigger question, would we be seeing Nato bombs drop on the country had Gaddafi not started selling oil to the chinese.

I think Canada is once again walking a fine line (as it did in the cold war) sitting between two super powers. Unlike the cold war we simply can’t choose one side, we will be forced to placate both sides who wish to claim ownership over our resources. We simply can’t expect to expropriate chinese investment and not pay a heavy price (wars have started for far less).

Overall I’d still put my money on the US re-asserting itself, we won’t be bowing to Chinese masters. There has always been two americas uncomfortably co-existing – the empire & the republic. The empire starts needless wars & debt, feels the need to intrude and control every aspect of personal and financial lives. Empires limit freedoms. The Republic revolves around liberty & freedom and unleashing the human potential. It was the republic that mobilized for WW2, it was the republic that gave us the internet, the space program & other technological innovations that moved mankind forward. The empire will eventually fall and republic once again rise from the ashes.

#68 Imstupid

I suspect its going to be a case of choosing lesser of two evils. I believe the power structure in China is now split into two camps. The old guard who fears change and desperately wants the return to previous unsustainable model of trade imbalances. The new guard recognizes the unsustainable trade model will collapse and wants china to prepare for the aftermath.

A collapse in demand from the west would no doubt be rough on china which is why the old guard fears it. But the new guard recognizes China has a significant advantage in controlling much of the word’s industrial base. While the transition will be rough China can transition from an export economy to a consumer economy. Over time chinese production is shifted internally, goods made in China are sold in China. Western consumers face competition from the chinese themselves. From western perspective cost of living rises but from chinese perspective if falls.

Question becomes what to do in the meantime with excess trade imbalances. If the consensus in China is that west will default on its existing debt, then its in chinese interests to diversify holdings into hard assets. Instead of repatriating trade imbalance into western debt instruments as they did in the past they repatriate the imbalance into whatever hard assets they can acquire without causing western collapse.

The US may never default on its debt, but thats not the perception of the chinese. The perception is the US is already defaulting by monetizing its current debt (QE). If you have a bankrupt friend who needs money you probably don’t want to give him a loan. Then again you also don’t want him to starve, so you might be willing to help him out by buying the boat sitting in his garage. Maybe you give him a little cash & use some of the debt he already owes you as payment. He gets money to live another day, you get partial repayment of money he owes you from previous loan. Maybe you don’t need or want a boat, but its better than nothing. This is the choice China is facing, this could be reason Chinese appear willing to overpay to acquire assets.

Here in Canada we’ll know soon enough if HAM is simply local speculation using leverage or if its a sign of larger diversification trend from mainland china. If its speculation we’ll see it unwind with the rest of the Canadian market. If its being driven by diversification then the trend could be much longer than many of us realize. One side of Canadian housing might collapse, while the other sees continued strength.

#150 BoomerBoy on 06.25.11 at 4:05 pm

.#118 AG Sage:

Educate yourself. Learn what TDS and GDS ratios mean and then write something coherent.

#151 Steady Eddie on 06.25.11 at 4:24 pm

Another look at CMHC: Canadian Moral Hazard Corporation

http://www.theeconomicanalyst.com/content/another-look-cmhc-canadian-moral-hazard-corporation

http://www.zerohedge.com/article/guest-post-whats-really-driving-house-prices-canada-must-see-graph-day

#152 Fleabitten Monkey on 06.25.11 at 5:08 pm

Sandpiper #103

Honestly, where do you get your defacto position from?

Vast majority of Canadians taking out 5 year fixed money?

Show me the data buddy.

#153 garrulous squirrel on 06.25.11 at 5:14 pm

Garth, central bankers talk twaddle all the time. The term they use to ‘jawbone’ the market is ‘suasion’. This is common practice by central banksters when they want to move the markets with words instead of actions. Suasion can take many forms…threats…denials…hawkish/dovish statements of oblique character and outright obfuscation or trial balloons.

As I have said…the Cons have abandoned the west coast to the Chinese. We are now a province of China and Canadian economic predictions no longer apply. The real estate market in Rat-Couver will be driven by the goings on in the mother country until the Chinese decide to change it…….I repeat….there are no Canadaian influences that Carney can apply that will have anything to do with the tsunami of Chinese ‘investors’. They could less about Carney and high intrest rate bafflegab.

Politics are controlled by Chinese intrests here as well. The numbers are overwhelmingly in their favour. We have lost control of the Canadian agenda to the Chinese special intrests. The bulk of tax dollars now goe’s to serve the Chinese community lobby efforts.

Driving through Richmond today I saw a new immigrant family unloading an aged parent in fron of a olg age care facility. I thought “how nice” . Especially for people who haven’t contributed a dime to the tax base that built these facilities.

Don’t hold your breath for Carney to act……it is in Ottawa’s best interest to keep rates low….they have a lot of debt maturing and they’d like to roll it over at zero . This is totally screwing the youth and the seniors for special reasons all their own…but……do you really think Flarhety gives a rats ass? The view from 360000 ft says no.

#154 tony w. on 06.25.11 at 5:21 pm

re: #96 GTA Girl
1. 4 bachelor suites because this provides a low price point to advertise + building design may call for some left over spaces to be “filled in”

2. 1 bedroom + den are often considered 2 bedrooms by the investor crowd since bodies can sleep in these windowless rooms!

#155 greg on 06.25.11 at 5:29 pm

Kim #83…. I dont have an answer for you, i wasnt even aware of the 6 month rule, you would think the american government would lower the taxes for canadians as well to invest in their housing market. everything i hear housing still can go down another 25% in most of the country. I think Texas is doing ok as whole but most states have a very high unemployment rate . there is a bigger question that needs to be asked about their housing market. was this crash done on purpose? it took a massive amount of deregulation to allow the 2008 stock market crash and housing crash to happen, it was no accident. same with whats going on in europe. are the politicians and banksters stupid or evil? I say they are evil and this is a world wide robbery where they crash markets and buy everything for pennies on the dollar and you are their debt slave.

#156 brainsail on 06.25.11 at 5:36 pm

#143 zombiedelight

Eaglebay is 100% correct!

■NAND flash from Toshiba Corp.;
■dynamic random access memory (DRAM) made by Elpida Memory Inc.;
■an electronic compass from AKM Semiconductor;
■the touch screen overlay glasslikely from Asahi Glass Co;
■and the system battery from Apple Japan Inc

http://www.lifewithtech.net/headlines/enough-ipad-2-components-to-maintain-production-for-2-3-weeks/

“This could be one of the most surprising news of the week – but from a recent report released by WSJ/Korean Economic Daily, Apple (one of the largest corporations out there) will be buying some major components from their very fiery rivals, Samsung.”

“The components will be worth near $7.8B (billion), and will include components including: LCD (Liquid Crystal Displays), Mobile Apps and NAND Flash Memory cards. Once this deal is finalized, Samsung will officially become the largest supplier for Apple.”

http://ijafri.com/2011/02/14/apple-to-buy-components-from-rival-company-samsung-of-7-8b/

The key component the Apple A5, the cpu, and probably the most expensive part was designed by Apple and is manufactured by Samsung.

http://en.wikipedia.org/wiki/Apple_A5

#157 BrianT on 06.25.11 at 5:53 pm

Another Basel Circle Jerk-naturally the puppets don’t discuss the trillions of dollars in derivative exposure that make another taxpayer looting a virtual lock http://www.bloomberg.com/news/2011-06-25/basel-committee-reaches-deal-on-capital-levels-for-too-big-to-fail-banks.html

#158 Ravishing rick on 06.25.11 at 6:29 pm

@ desi

You are an idiot… In the example you talked about at 6% annual rate of return the owner of the house that paid $15k less would not only own the house 50 years later but also have $270,000 in their bank account more than the goof that paid 100% more.

Get an education before you decide to open your mouth again!

#159 Ravishing rick on 06.25.11 at 6:36 pm

Garth you have got to run for the Liberals in the next fed election! Screw the tories and your old buddy hon S Harper

#160 jess on 06.25.11 at 6:42 pm

don’t forget about all those eastern europeans who took out swiss loans

Hungarians struggling to pay back mortgages taken out in ever …
2 days ago

The Hungarian Maltese Charity Service set up its debt counseling program in 2009 … Under the plan, the Swiss franc’s exchange rate will be fixed at 180 …Washington Post – 64 related articles – Shared by 10+

#161 The Original Dave on 06.25.11 at 6:47 pm

Hoof-Heated: shame on you for making such a half-headed comment.

Dave and Bigrider:
The fact is, most family fortunes have been made in real estate or in some other family business. I bet most commenters here know people who have made such fortunes in RE. How many of you know people who made fortunes in stocks and bonds? (Not including executives at major corporations who get huge stock options and benefit from insider info and well-timed corporate buy backs.)

Bob Precther did a study that showed even people who invested in the best performing funds of all time did not capture anywhere near market-beating performance, mainly because of poor market timing on their part. How many people on this blog are trying to time the RE market? Good luck.

Ray Kroc, founder of MacDonald’s, even said, “I’m not in the hamburger business. My business is real estate.” What Kroc meant was rental income on McDonald’s restaurants represented a higher percentage of sales than royalties. Not to mention the capital appreciation of the land.

Yes, given the current situation, now is a very risky time to be going deep into debt to buy a home, but don’t take that to mean RE is a bad investment in general. Don’t base your decision on opinions, look at the numbers. Do your own DD and use your own brain.

I’m sure our illustrious blog host would agree, as even he recently made an investment in commercial RE. And Garth’s message is not that RE is a bad investment. It’s that now is not the time to assume a large debt in this overvalued asset class.

It’s basic, sound investment advice that too many people on this blog are turning into some Nuremberg-style religious dogma.

————————————————————-

Well, it’s all about timing. I’m still very involved with my family’s real estate holdings. I disagree with holding all those positions.

As far as timing goes, it’s a horrible time to buy real estate. In 1999, someone that was up a fortune with tech stocks could’ve said “real estate, bonds, gold, and stocks in general, have all crashed in the past. Internet stocks never have and keep going up”. That statement, in 1999 would have been true. An obvious bubble to those that are paying attention, but the statement was true at the time.

#162 Jenn on 06.25.11 at 6:48 pm

The new immigration policy is sure a bomb to the lawyers and realtors. They have complained it is the darkest day. I personally think it’s good for canada. We as working hard tax payers of course cannot win the bidding wars with those either greedy or corruption money. Meantime, we have to pay the cost for those investors’ kids education and their 3 generations health care, what a hell! Finally Harper is standing on our shoes. Better late than never!

#163 Bruce on 06.25.11 at 6:57 pm

LOVE the picture, Garth. And no truer words have been spoken. Carney may be a putting on a good face, but stupid he’s not. IMO, his presence at the Bilderberg meeting earlier this month speaks volumes about who’s working for who. Don’t forget too that the Bank of Canada is after all a central bank who’s primary concern is making sure the green stuff keeps moving around. You know, the money-game. Record-low interest rates, easy money, foolish pride, all combined with the public’s insatiable taste for debt and need for instant gratification are just what the banks need to keep this game going. Fiat money loaned out at a fixed interest rate is perhaps the most brilliant scheme ever devised in the history of mankind. Another interesting thing I noticed last week; A newly built subdivision not too far from here has three homes that went into foreclosure this month. Families either fled the premises or were evicted, as everything–even patio furniture–was left behind. Notices have been posted on the window, and the doors all padlocked. An omen, perhaps? In any event, I tend to agree with the following site:

http://tinyurl.com/3h567ow

#164 45north on 06.25.11 at 7:06 pm

The Original Dave: I don’t think there’s anyone out there with more pressure to buy than me.

I don’t think there is either

take up Karaté redirect mental stress to physical stress

Utopia: talking about Italians Those people are stupido about real estate. Theya gonna learn.

“theya gonna” (in a faux Italian accent) easy for you to say sitting in the middle of Saskachewan try it in Woodbridge next year

Rediculous: thanks for the link about CMHC

#165 TurnerNation on 06.25.11 at 7:20 pm

#133 BrianT on 06.25.11 at 1:24 pm

I agree. G20 turned me slightly anti-police in Toronto. I look closely at them now and most often see a nasty smirk on their faces. They no longer enagage with people. I imagine it’s different in rual areas, but the cities are h-ll. I saw one huge fellow who with his tattooed arms looked like some sort of convict.

From what I’ve heard if you report a robbery or break in they no longer investigate or drop by. Just what do they do except enforce the 1001 laws against cars & drivers, generating revenue?

Last week I saw two different cops on road construction duty (they earn 65/hr to watch the work mostly) and one was driving a new BMW 3-series, the other had a new mid-sized Infinity! Enjoying their 100k salaries and gold plated pensions/benefits I guess. The days of cops being local boys done good, working class heros, are long over. They are militarized now.

Listen to them, they refer to us as “civillians”.

What’s this year’s tax increase? And next years? And the next year’s? We have Boss Hog for a mayor.

#166 doctore on 06.25.11 at 7:22 pm

Problem is majority of people have no concept of interest rates or the function of BoC. As matter of fact I bet if they did a poll to ask people who Mark Carney was, only 1 in 100 would know, if that.

#167 Dan in Victoria on 06.25.11 at 7:26 pm

JohnnyBGood @118
Exactly, its always a good time to buy.
As long as you understand.
PS. enjoy your posts.

#168 eaglebay on 06.25.11 at 7:39 pm

#143 zombiedelight

Faxconn only assemble the iPad. The various components and parts come from all over the world including Japan and Taiwan. Foxconn’s manufacturing facility, in China, is fully automated. Shipping costs of the finished units are minimal as opposed to cars or steel. Apple could probably assemble the units in the US for a very small increase in the final cost.
Now, get a life.

#169 Nostradamus Le Mad Vlad on 06.25.11 at 7:44 pm


Good posts 2day. It’s great getting up half an hour before I go to bed, then rummaging thru the various comments.
*
1: 39 clip Family Guy. Stupid undecided voters, or Sheeple Inc.

NMF “The fault zone is criss-crossed with major gas and oil pipelines delivering these volatile energy sources all over the United States”, and don’t ferget the PNW, SAF and the Casades! 1:51 clip In loving memory. ” We need a mock funeral for the dollar.”; Gary Schilling Timelines are pointless — look at unemployment #’s; 15:14 clip EU — Where have all the elites gone? Hint: Enjoying themselves watching us destroy ourselves; Ponzi The end of civilization as we know it (not that we were that civilized anyway); US Fed “The government doesn’t have to rely on tax receipts any more. It simply issues bonds to borrow the money.” Sucker for Punishment EU and IMF toying with US.

Collapsing China? It’s the west that’s doing that! Leaving Las Af’stan to eventually enter Pakistan and Iran; NATO Gadaafi has more credibility; 3:32 clip The real reason for NATO’s illegal invasion; Questions “EU and US intervention in Syria is designed to harm Iran and to protect Israel and Lebanese Christians, not Syrian people, according to Robert Baer, a retired CIA officer with experience of the region.” Venezuela As if the elite (sorry, US) doesn’t have enough to do in the ME.

Here it is — the pre-prep stuff “This feels like the prelude to some blockades and inspections on Iranian cargo ships by the US, the EU, and NATO. A blockade is an an act of war.” wrh.com; Iran New oil and gas discoveries; China “While this story is not even being mentioned in the US corporate media, it is currently the top story on Asian news sites.” What is the m$m good for? Toilet paper; Martial Law provision quietly passed.

Google blew it with Chromebook; Denmark Computer police state? Felony Penalties for ‘streaming’, whatever that is; Job Losses Science jobs bailing.

#170 smoking man on 06.25.11 at 7:46 pm

Life is just not fair………..
Smoking man un schooled drunk at senica casinoi just won 12k on a slot on my second push…………..
Why did craigs list kill the ho section. Darn now its up to my bald head my missing tooth and charm to find and disapoint my next conquest,
I love reading bubble head posts perfect spelling smart stuff but you all lack something. The school system has feminized u you have no nuts.
Scard of risk

Working downtown just hosing a hedge fund so I can see.and steel the trading modle if its any good. I come accos buble heads. U are an insult to males

I forgot my point a blond lady of the night just made eye contact. Got to go.
More of why u guys are lossers later

#171 smoking man on 06.25.11 at 7:58 pm

What. 400 hundred for haff an hour. She aint that good looking. But her boots got me hooked. Never paid more than 200

What to do……………….

Sold on the boots. Its going to be a good night bye bubble heads if u oly knew how cool it was to be me

#172 The InvestorsFriend (Shawn Allen) on 06.25.11 at 8:07 pm

It may seem strange but Mortage arrears are low in British Columbia.

http://www.cba.ca/contents/files/statistics/stat_mortgage_db050_en.pdf

Arrears in British Columbia are at about the same level as the national average. Yet in Alberta the late payments are almost twice as high.

Why is this? Houses are most unaffordable in BC and yet people pay the mortgage on time. Meanwhile in Alberta homes are much more affordable but more people pay late.

Here is the explanation.

House prices have still been rising in BC. If the house price has risen the borrower has equity. He woulkd be a fool to stop paying and let the bank take it. Instead he finds the money some way (often through a line of credit).

In Alberta house prices have been flat to down and so more people threw in the towel and said take the house.

Once house prices stop rising in any jurisdictiopn or especially start to fall you then may see a spike in delinquencies. It happened big time in the United States but that was partly due to non-recourse mortgages.

Still, it will happen here to some degree if house prices plop.

Are you listenting CMHC? (right, I thought not)

#173 Mr Buyer on 06.25.11 at 8:17 pm

I have heard the rhetoric many times that places blame squarely upon the consumers of debt. You know, the people that go down to the bank and sign the mortgages. I really have to question such assertions. Along with the blaming of the sheep there is often an extraneous denigration of the hopped up assumers of debt (describing them as greedy and the like, a little vilification goes a long way towards muddying up the waters). It doesn’t sit well with me because it is kind of like blaming the sheep for their own slaughter, but the sheep did not in fact build the slaughter house. I remember playing a real estate board game with my friends for hours at a time when I was a kid. Sometimes my friends would be on trips during the summer and I would play the game with one of my younger siblings on a summer weekday afternoon. Needless to say it was a fiasco. I mean really, who gives up a low end property to a competitor allowing him to complete the pair in exchange for three utilities (next turn hotels sit just past go). My younger siblings had free will. They lived and learned from the experience with a certain amount of emotional duress. Here lies the difference, my siblings caught on with each iteration of the game to many of my obvious traps with relatively minor penalties of a few hours of duress localized mostly to the living room, not half a life time and not an entire country. My friends came up with some interesting variations to the game that involved messing with the bank or the payday somehow or another that had the usual unintended net effect of shortening the game considerably (looking back it is interesting to recall how the shortened playing time made the game seem much less interesting). Anyways, more to the point, we say people are free to chose regarding many things in life, but not all things. If people chose to shoot up heroin there is the extreme likelihood of lifelong addiction coupled with penalties imposed by our governments for even simple possession of the substance. We as a people have come to understand human behavior, addiction and heroin and have come to the conclusion that it poses a huge threat to our communities and the nation to have it openly available for ‘free people’ to chose to indulge in or not (I wonder sometimes if we could not handle that plague better but I am sure that is for another blog). The road to recovery for many addicts often involves assuming responsibility. Yes, people are responsible for their own actions (the element of choice must be owned regardless of the lay of the land), there is no question about it but the story shouldn’t end there for our strung out RE addicts. Canada, the second largest country in the world, with a miniscule population and relatively huge amounts of natural resources, is now a largely service economy (composed of low paying jobs and a bleak future, PRESENTLY, BUT WE CAN CHANGE ALL THAT) in which the only way for most to get out from under is to play the real estate game and our government messed with the banks leading to this devastating bubble. That’s a fairly level headed assessment of the lay of the land I would say. I really think that this period in our history could serve as the point at which the era of extreme self indulgence comes to a close for now and we take measures for future generations of Canadians. This bubble was a trap. We have the ways and means to fully investigate the exact nature of this trap, every nut and bolt of it and even the exact moment each nut was turned and for whose benefit. We all know that an ounce of prevention is worth a pound of cure (sorry, 28grams of prevention is worth about 0.4536kg of cure). In the coming years just ask yourself if you want your children and grand children repeating our same mistakes (mistakes are ok but in my mind we have to be making new ones in order to progress). People are weak, people are stupid, people are greedy, people are bad, people are lazy. I hear these things said from time to time (sometimes by other people preying upon people). In my mind what people are more than anything else is willing to put up with a great deal to preserve peace and tranquility. Most of our Lamarckian types factor that into their survival of the fittest risk assessments of herding the sheep. Peace and Tranquility. It is a tricky balance to maintain, relative peace and tranquility while devastating an economy and a country (a truly very rich country at that). It requires a scale of time that camouflages what is happening. This bubble may prove to be a blessing. We may come to understand, accept and become comfortable with the ever present fear and awe inspiring life and death aspects of our existence. We may then hopefully find the courage, resolve and tenacity to take appropriate measures for the benefit of our young.

#174 Utopia on 06.25.11 at 8:19 pm

#165 45north on 06.25.11 at 7:06 pm

OK, maybe I can’t do the Italian thing very well. But if I was Italian I would still have a great cheese and Salami sandwich and I would get it on Commercial Drive. Hands down thee best. What’s Woodbridge?

#175 Pr on 06.25.11 at 8:26 pm

It’s what Mark Carney fears awaits us.- In governments in Canada and around the world, nothing works the way you think it does…NOTHING!

#176 American Werewolf on 06.25.11 at 8:45 pm

“That’s right – three decades at four percent. No renewals. No rate roulette. No uncertainty.”

But remember, its easier for a camel to make it through an eye of a needle than to get the banks to open up their purse strings these days. Even if people wanted to borrow in the US (Im not saying they do), there are few willing to lend.

I had a family member just take 15% HELOC out on a million dollar property that was owned outright. Total win-win for any bank, but it was incredible hard to get the loan. And at the end of the day, no, it wasn’t ~4%. It ended up being 6.5% or so, due to myriad bank excuses.

So, if anyone even wants to try and compare that to what *might* happen in Canada, when the shit hits the fan, even if rates stay low, they might simply be unattainable to the masses still wishing to play. Having a low interest rate and having the population being able to access it are two different matters. Time will tell.

#177 Utopia on 06.25.11 at 8:49 pm

#50 Mr. Reality on 06.25.11 at 12:35 am

“When the S&P 500 breaks the 200 day moving average. Hopefully Monday, it’s on. The storm will have officially begun”.
————————————————————————

Agreed. I also have a bad feeling about this coming week Mr Reality. An ominous setup is ahead and my gut tells me Monday could bring one hell of an ugly sell-off. Gold will fall below 1500, possibly to the mid 1400 range before Friday, Silver to 27.00 by the time summer is out which will be a brutal gut-check for those who bought heavy on the dip. Grains should get whacked again as well and will trade down leading to harvest. It is all about commodities correcting. I am looking for a bounce of the US dollar above 77.3 on the week, Canuck buck below par and bonds on the rise.

We will see. Hey, where is Oasis lately by the way? He has not bugged me in quite a long while. Hey Oasis!, I got my US dollar rise……exactly as predicted.

#178 Lisa on 06.25.11 at 9:01 pm

@zombiedelight
I see our “wealth” here in N.A. as a perceived wealth…much like a paper gain. We feel rich and act rich yet we are sorely middle class and losing ground quick! If products weren’t manufactured by slave labour, they wouldn’t be so cheap, making us feel even richer. Then we buy all this stuff with credit which plays mind games with our sense of personal wealth even more!

#179 Jchencs on 06.25.11 at 9:02 pm

I followed this forum since 2008 and believe that the house price is going to fall. But sadly, the price is out control. I immigrated to Canada from in 1998 from China and worked since then. If you see the house price in China, the average house price in Toronto should be over 1M now. The large amount of immigrant is the cause of high house price in Canada. Except we find a way to stop/reduce immigration, the house price will keep going up until it reaches the Chinese level.

#180 .9999 Silver on 06.25.11 at 9:03 pm

The housing market bubble entertains the shit out of me…
but what terrifies me is the government dept obligations built on the assumptions of massively increasing property value’s hence increasing property tax streams…hmmm….what were the public sector pay raise’s again?

Rae
lower Methcouver B(ubble).C(ountry).
check out “Crocodile” in Russia i think the cancer is coming here.
I think it describes us better

#181 Mr Buyer on 06.25.11 at 9:13 pm

Crap, I meant choose not chose in my previous post. Aw to hell with it. There is some guy at the door right now. BTW, Lamarck put forward the notion that people acquired traits over the course of their lives that they passed on to future generations (soft inheritance). I threw him in there only because I think some sheep herders may mistakenly think that levels of docility and stupidity may amplify and courage may be extinguished in a population over the course of a few generations. The Japanese have a long history that has a few incidents which saw the unwashed handing out a huge wake up call to their elites so I feel somewhat confident that courage, resolve, and tenacity persist in a population even if they go largely unseen for a generation or two.

#182 zombiedelight on 06.25.11 at 9:13 pm

#169 eaglebay on 06.25.11 at 7:39 pm
________
He’s NOT 100% correct, our money is still sent to a chinese company (Foxconn) that subcontracts the different parts and export it from China.

#183 waterloo Resident on 06.25.11 at 9:37 pm

Oh CRAP, I just read a glimpse of what is in store for Canada. Read this little bit and then in about 5 to 8 years the exact same things will be happening here in Canada to new Canadians who have recently bought a house.

I read it here at this site:

http://www.theglobeandmail.com/news/world/spains-unemployment-devastates-residents-adds-country-to-european-nations-in-crisis/article1643243/singlepage/#articlecontent

This is a shortened version of the article:
——————-

The 44-year-old construction worker sat at the folding table in the tiny living room of his basement apartment on the outskirts of Barcelona and tried to grasp the larger meaning of a letter from the bank informing him he no longer owned the property. ((( this is exactly what many Canadians will be finding out too.)))

The apartment will be auctioned at a fraction of the price he’d paid for it four years ago, when his fast-rising salary seemed a sure ticket to middle-class stability for his family.

— ( big chunk of text removed here ) —-

Mr. Cadena’s case is typical in many respects. An immigrant who worked hard for a dozen years, married, raised a family and was stably employed enough to became naturalized. A house seemed a logical next step; in fact, his neighbours told him, it was insane to continue renting. ((( That is exactly what many ‘new Canadians’ are finding themselves doing; their friends are telling them they’re crazy to be renting. )))

In 2006, a Barcelona bank offered him a mortgage – with no down payment – that was offered, signed and closed in one day. His salary of €1,100 a month was combined with his wife’s earnings of €600, and the bank asked them to claim they worked weekends (they didn’t) in order to make their income appear high enough to qualify them.

Before he had a chance to think about it, Mr. Cadena was given the keys to the apartment and was told the mortgage payments would be €900 a month, withdrawn from his account. He paid an extraordinary €253,000 for the 3-bedroom basement apartment.

The monthly payments, he soon learned, were calibrated to rise over time, first to €1,100 euros and then, in 2009, to €1,600 – a mortgage structure, also popular in the United States, that only made sense under the assumption both the borrower’s income and the house’s value would rise quickly and constantly.

They didn’t. The collapse of Spain’s property bubble coincided with the rising mortgage rates faced by Mr. Cadena (and many others). In early 2009, his construction company cut his shifts to six hours per day; in November they folded completely.

His wife left him, apparently frustrated by his sudden loss of fortune, and he is now a single father watching over children aged 14 to 21 who face even worse prospects than him.

#184 Mr Buyer on 06.25.11 at 9:39 pm

#169 eaglebay…I suspect the same but unfortunately I am not privy to exact numbers. Common sense tells me that robotics in Canada can operate as well as robotics anywhere else. Robotic assembly of iPads, now that is something I would like to see but the wife prefers to see the great wall (that is pretty cool too). She is not interested in robots if you can believe that. For some reason I thought they were assembled by hand but it would make more sense to design them so the assembly could be automated.

#185 eaglebay on 06.25.11 at 9:39 pm

#154 garrulous squirrel

Another doomer that believes in conspiracy.
How many Chinese are actually buying RE in the lower mainland?
Not that many compared to the original Canadian, if any.
They may be Thaiwanese or South Koreans as far as you know. They may all look the same to you.
Their money is as good as anybody else’s.
I suspect that you’re an immigrant yourself. Maybe even a first generation. So what.

#186 Mr Buyer on 06.25.11 at 9:48 pm

I can not tell you how much of a time sink this blog has become. It is amazing how fast the time passes when I am looking at these posts and reading the article. I never got into the whole blog thing but this subject has captivated me. I have a heavy work schedule and three beautiful kids so something has to give. I spend way to much time checking my spelling (and never ever get all the mistakes). I am actually going to stop checking mls listings for a month or two (easy way to burn up 30 for 40 minutes by accident) and maybe back off to 2 or 3 times a week stopping by the blog. It is great but I am just too busy as always.

#187 The InvestorsFriend (Shawn Allen) on 06.25.11 at 9:59 pm

Number 183 Zombiedelight complains that when we buy an ipad “our money is still sent to a chinese company (Foxconn) that subcontracts the different parts and export it from China.”

Yeah well, it’s no longer “our” money once we purchase an ipod or what ever else. Once we choose to buy the product it’s really not our business where the money goes. But if you don’t like where the new owner of your former money wants to send “your”money, then don’t buy the product.

And anyhow free trade is always good, whether within a village, a city a province a country or the world. Free trade is good. Period. I for one, don’t want to be “protected” from the availability of cheap imports.

I only wait now for free trade with aliens. Bring it on!
.

#188 Devore on 06.25.11 at 10:09 pm

#177 American Werewolf

But remember, its easier for a camel to make it through an eye of a needle than to get the banks to open up their purse strings these days. Even if people wanted to borrow in the US (Im not saying they do), there are few willing to lend.

I think I hold the contrary view on this blog, which is that US households, far from shunning real estate or thinking it is not sexy anymore, are still very much hot to get into the market, even those who got burned. Only thing stopping them is low access to credit, despite low rates, and, in some cases, crappy job market (although many fields are doing just fine).

#189 JohnnyBGood on 06.25.11 at 10:29 pm

#168 Dan in Victoria
Thanks.

#190 Utopia on 06.25.11 at 10:45 pm

#104 maxx ~~ Thanks Maxx.

#107 jas said….

“I hear about investing in dividend paying stocks, but fail to understand that in the event of a recession, how will these businesses generate profits in order to pay dividends?”
————————————————————-

Sure. Good question Jas. All stocks are not created equal. Some will rise and fall differently according to the varying stages of the economic cycle. What we call “defensives” are stocks that prevail through thick and thin.

These companies are the ones who provide products and services that we all need, all of the time. They generate revenues by simply doing what they do best. Selling what we need and cannot do without.

Let me give a few examples. Alcohol, soap, tobacco, tampons, cellular services, electricity, gas, food, health care products, medical supplies, medications and even eye-wear.

What we can do without are subscriptions to magazines, periodicals and certain kinds of auto repairs. Food comes long before cable TV, frivolous consumption, expensive suits, new cars versus used, the latest gadgets, computers cameras and other miscellaneous electronics.

Would you buy a fur coat if you could not afford dental work?

Think practical. Very practical. If you were laid off tomorrow and your income was cut by two thirds, what would you give up and what would you keep?

For example, most people would forego that new set of snow tires and nice rims before giving up their telephone or cell plan. We value communication ahead of good tires and good car looks.

That is the key to understanding defensive stocks and the companies behind the products we depend upon daily. Do you need to shave for example? So then shaving cream is a more important product suddenly than say a crystal vase, a framed print or a box of crayons.

This goes to the heart of elasticity of demand. That’s why booze and tobacco are usually fairly good bets.

The trick is to find quality defensives that also pay good dividends and have done so for more than a decade running. The other trick is to not buy them when you think the market is rolling over but rather to stay in cash temporarily until that preferred buying opportunity arises.

From Wiki: the following quote defining necessity-goods.

“Necessity goods are goods that we cannot live without and won’t likely cut back on even when times are tough, for example food, power, water and gas”.

See the link here to get more familiar with the idea and to understand better why investors reach for defensives when markets seem uncertain, the economy unstable and the usual income sources appear threatened.

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

Keep in mind that at this time, as Governments around the world grapple with debt issues that seem insoluble, that some kinds of bonds can be risky (think US municipal’s and Greek Sovereign debt issues) and why corporate debt is in favour. The reason of course is that good companies generate revenues and growth and most have very strong balance sheets and plenty of cash on hand these days.

Governments at all levels do not offer such certainty anymore.

We are headed into a world of corporatism in my opinion. A time when we will depend more upon the potential of good companies (and the revenue streams they provide) to generate our income for our long term security than we will upon governments to fill our daily needs. This is important to understand and I really cannot understate this point.

Please note, these are my opinions only. This is not investment advice.

#191 Mr. Reality on 06.25.11 at 10:54 pm

“#178 Utopia on 06.25.11 at 8:49 pm

#50 Mr. Reality on 06.25.11 at 12:35 am

“When the S&P 500 breaks the 200 day moving average. Hopefully Monday, it’s on. The storm will have officially begun”.
————————————————————————

Agreed. I also have a bad feeling about this coming week Mr Reality. An ominous setup is ahead and my gut tells me Monday could bring one hell of an ugly sell-off. Gold will fall below 1500, possibly to the mid 1400 range before Friday, Silver to 27.00 by the time summer is out which will be a brutal gut-check for those who bought heavy on the dip. Grains should get whacked again as well and will trade down leading to harvest. It is all about commodities correcting. I am looking for a bounce of the US dollar above 77.3 on the week, Canuck buck below par and bonds on the rise.

We will see. Hey, where is Oasis lately by the way? He has not bugged me in quite a long while. Hey Oasis!, I got my US dollar rise……exactly as predicted.”

Utopia – The thing about the 200 day moving average is that drop will occur the same week that liquidity is removed from the markets via the end of QE2. After the long weekend is really what concerns me. The party is over.

Mr. R.

#192 Utopia on 06.25.11 at 11:25 pm

#171 smoking man on 06.25.11 at 7:46 pm

“Life is just not fair……….. Smoking man un schooled drunk at senica casinoi just won 12k on a slot on my second push…………..”
————————————-

Just got off the phone talking to a friend. Doctor so and so (never mind). A specialist in linguistics though. He looked at your posts I offered and suggested that you were doing a fake. Your dyslexic commentary and wording are inconsistent with norms. Said you were probably just inebriated and could not be bothered to wear glasses or do a usual spell check. Said you were probably lazy and anti-social too. Medically speaking of course.

#193 greg on 06.25.11 at 11:35 pm

Interesting video with max keiser and gerald celente talking about the times today http://www.youtube.com/watch?v=DaMPDGQ05W0

#194 Hoof - Hearted on 06.25.11 at 11:44 pm

#184 waterloo Resident

The 44-year-old construction worker sat at the folding table in the tiny living room of his basement apartment on the outskirts of Barcelona and tried to grasp the larger meaning of a letter from the bank informing him he no longer owned the property. ((( this is exactly what many Canadians will be finding out too.)))

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

Simple strategy:

Do what farmers did.

Go to the ” foreclosure” auction…make sure that outsiders not welcome…had a deal amongst themselves to bid low..buy it for next to nothing…then give the farm back to their fallen comrade.

Very simple…legal and tells the Banksters to F*ck off, with more to come.

Two can play at this game.

#195 betamax on 06.26.11 at 12:18 am

#187 Mr Buyer: “I can not tell you how much of a time sink this blog has become. ”

Stop writing long posts. Summarize.

#196 shanks on 06.26.11 at 12:35 am

here is an observation, probably nothing to it…
70% of canadians own homes, so that leaves the other 30% as renters. I read somewhere (on this site most likely) that only about 3 in 10 canadians have savings. coincidence? lolz

#197 BPOE on 06.26.11 at 12:55 am

Garth,
It’s called herd mentality and Carney WILL NEVER stop the herd in Vancouver. It is a mentality. A belief. If you have a certain mentality that housing is the WAY then you MUST follow.

#198 newbie123 on 06.26.11 at 1:05 am

i wouldn’t put too much into a rate hike crumbling the housing market…worry about employment that is the main driver for demand of any goods including homes. It was the increase in the unemployed that crumbled and continues to crumb the U.S. economy. Its the first domino that needs to tumble to set off that chain reaction. Increase in consumer debt just means a bigger domino affect.

#199 Utopia on 06.26.11 at 1:05 am

#145 Hoof – Hearted on 06.25.11 at 3:26 pm wrote……..

“Anybody heard of this scam?”
————————————————————–

No I have never heard of that.
Your posted video was in very poor taste in my opinion.

#200 Jaydee on 06.26.11 at 1:41 am

The old mantra for social settings is that you should never discuss politics, religion or money. I think it should be changed to “politics, religion or real estate”. Real estate has become equivalent to ones “worth”, synonymous with money. Probably because real estate is the only asset people own and have invested in, and they are so poor due to 20 years of stagnant wages that you threaten their entire way of life with any negative commentary.

For those who own your house outright, if you have positive cash-flow on your rental properties, or for those who have small mortgages compared to income, chill out. You have some risk, but you are in a different class compared to the general public, and you will likely come out even or ahead if you follow Garth’s advice to diversify.

For those who have financed 95%, spend > 30% of income on your home, and can only afford to live in your home based on future appreciation…sorry, you’re f*cked. Get out now!

#201 Utopia on 06.26.11 at 1:48 am

#147 REdiculous

Thanks for the link.

Here is the full commentary from the C.D. Howe Institute of January 2011 in an article written by Finn Poschmann discussing the role of CMHC. It is titled “What Governments Should Do in Mortgage Markets” and it provides a deeper look at CMHC than usual. The PDF article runs 15 pages and leads with the following comment…..

“This Commentary makes the observation that there is no reason for federal taxpayers to be exposed to large mortgage insurance liabilities”.

It ends with the following summation:

“Independent of whether Ottawa pursues this recommendation, Parliament should adopt legislation that formally requires CMHC to comply with and report on compliance with OSFI guidelines.” [OSFI = Office of Superintendent of Financial Institutions]

Takes a while. Interesting stuff if you have lots of free time and don’t have a normal life. Pour a nice Chardonnay first. (not you Smoking Man)

http://www.cdhowe.org/pdf/Commentary_318.pdf

#202 mikef on 06.26.11 at 4:43 am

@32KrisD

Can’t speak more other parts of Canada,but here in
Quebec,with newly built condos coming up the
pipeline there are about 110k condos for about
32K immigrants coming in.

Since so many newcomers are refugees and
family reunifications,I doubt that immigrants will have an effect on the real estate market in Montreal

#203 zombiedelight on 06.26.11 at 7:14 am

#188 The InvestorsFriend (Shawn Allen)
_________

You miss the original Lisa point, which was that our “wealth” in the west is fake, undeserved, stolen and exploitative of China and we are the real devils lowering the quality of life of chinese, not their slavemaster governments.

#204 Mr Buyer on 06.26.11 at 8:04 am

#196 betamax…It doesn’t seem to matter whether I post or not 40 minutes vanishes instantly

#205 Mr Buyer on 06.26.11 at 8:29 am

#188 The InvestorsFriend (Shawn Allen)…And anyhow free trade is always good, whether within a village, a city a province a country or the world. Free trade is good. Period. I for one, don’t want to be “protected” from the availability of cheap imports….
I guess if you have a great job and no kids or grand children that need jobs at some point in the future then free trade or no free trade may not matter. It is not you I am concerned with really it is my kids and their kids. What exactly will they be doing? I guess buying and flipping 300 billion dollar 200sq ft condos somewhere in Canada. Maybe I would be open to keeping our markets open if the importers paid their workers say $20 Canadian an hour. That would level the field quite nicely. Strategic markets in Japan may not have direct tariffs but they do have subsidies. I suspect that free trade may not actually exist. No matter how cheap it is, it is simply too expensive and I have lost another 20 minutes. The Japanese have a saying ‘free is very expensive.’

#206 BrianT on 06.26.11 at 8:32 am

#188Inv-Free trade is a myth-it doesn’t exist on Planet Earth. Economists love to deal with theoretical models that have absolutely nothing to do with reality. Taxes fund the operations of government (now often surpassed by debt). Tariffs are simply taxes on global business-the special name asssigned is to confuse the sheep. Every time you hear some windbag go on about “free” trade that same windbag is never asked why he supports taxes on workers, why he supports every law restricting individual liberty, why he supports huge military spending funded totally by the sheep, etc. etc.

#207 tomohawk on 06.26.11 at 9:34 am

@#126 Republic of Western Canada

As a contrast to your remarks, my experience with dealing with Chinese immigrants and their children has been overwhelmingly positive. My experience in teaching them chess is that they are generally two years ahead intellectually and three years ahead in terms of maturity (self-reliance, determination, listening skills, etc.). The sorts of sacrifices the parents are willing to make to better their children’s lives is not the sort of thing that you see much of in the Caucasian community, sad to say. True, the ones that come here are not your average Chinese, but if they become our overlords I for one say they deserve it.

#208 Bottoms_Up on 06.26.11 at 9:36 am

#179 Lisa on 06.25.11 at 9:01 pm
—————————————
I like to think of the following when it comes to ‘stuff’ that we ‘need’.

‘If your house was on fire, and you had 30 seconds to get out, what would you grab?’

I think most people would be happy to get out alive with their loved ones. Perhaps get their pets or even a picture or two.

Ultimately shows that we don’t ‘need’ much stuff (especially stuff made in China).

#209 Vik on 06.26.11 at 9:43 am

#180 Jchencs on 06.25.11 at 9:02 pm

“Except we find a way to stop/reduce immigration, the house price will keep going up until it reaches the Chinese level.”

Your wish has been granted.

Refer to my post :
#43 Vik on 06.24.11 at 11:42 pm

#210 brainsail on 06.26.11 at 10:02 am

zombiedelight

The Ipad2 “Bill-of-Materials” shows the manufacturing cost to be $10.

http://www.isuppli.com/PublishingImages/Press%20Releases/2011-03-12_iPad2_BOM.png

#211 Ben on 06.26.11 at 10:29 am

Posties ordered back to work……

In a statement released Saturday night, union president Lamelin echoed the concerns of opposition MPs, saying the passing of the bill sets a dangerous precedent.

“The government is clearly willing to side with employers to grind down wages and working conditions,” he said.

…… believe me, i’m happy about that because now i can get my paycheques. But the gap between wages and the housing pyramid isn’t closing, it’s widening.

Good luck if you think housing is going to continue it’s unprecedented climb in Canada.

#212 Gord In Vancouver on 06.26.11 at 10:41 am

#198 BPOE

Your best post in awhile and that’s what makes Vancouver’s real estate market a ticking time bomb.

#213 Beach Girl on 06.26.11 at 10:53 am

I believe we are headed into a Depression, which my parents who were children told me about. I am not worried. I know how to make homemade soup, my only problem is were do you purchase squirrel traps. There are alot of them here. Or should I invest in a Jack Russell.

#214 zombiedelight on 06.26.11 at 10:56 am

Garth says there is no inflation in Canda, well funny:
http://www.youtube.com/watch?v=l_FH1YBUZws&feature=feedlik

#215 SallyT on 06.26.11 at 11:00 am

#57 Deliverator

“The moment you sign to a loan with a bank, the money deposited in your account, a liability to the bank, is created with the press of a key. The loan held on their accounts is their asset.”

Yes! You get it! You understand the inherent fraud involved in our banking system. Through the miracle of double entry accounting the banks create the money they lend to us based on our debt pledge. This money did not exist before, it was created as a deposit (bank liability) based on the asset (your promissory note) when you signed on the dotted line. And for this privilege, we get to pay compound interest to the banks for the duration of the “loan”. No wonder our world is so screwed up! Banks are parasites living off the slave labour of the people!

http://www.webofdebt.com/articles/dollar-deception.php

#216 Hoof - Hearted on 06.26.11 at 12:19 pm

#200 Utopia on 06.26.11 at 1:05 am

#145 Hoof – Hearted on 06.25.11 at 3:26 pm wrote……..

“Anybody heard of this scam?”
————————————————————–

No I have never heard of that.
Your posted video was in very poor taste in my opinion.

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

What’sin poor taste.
Several others have stated the same.
aka Called the truth.

#217 jess on 06.26.11 at 12:29 pm

…”The bare bones outline of the argument is that the trusts, the legal vehicle that holds the mortgage loan, in virtually all securitizations, elected New York law as the governing law for the trust. New York law is well established and very rigid. A trust can act ONLY as stipulated; any deviation is a “void act” and has no legal force.

But the problem is that the notes appeared not to have gotten to the trust. As we wrote earlier:

…. there is substantial evidence that in many cases, the notes were not conveyed to the trust as stipulated. As we have discussed, the pooling and servicing agreement, which governs who does what when in a mortgage securitization, requires the note (the borrower IOU) to be endorsed (just like a check, signed by one party over to the next), showing the full chain of title. The minimum conveyance chain in recent vintage transactions is A (originator) => B (sponsor) => C (depositor) => D (trust).

The proper conveyance of the note is crucial, since the mortgage, which is the lien, is a mere accessory to the note and can be enforced only by the proper note holder (the legalese is “real party of interest”). The investors in the mortgage securitization relied upon certifications by the trustee for the trust at and post closing that the trust did indeed have the assets that the investors were told it possessed.

The pooling and servicing agreement also provided that the transfers had to take place by a particular cutoff date, which was typically no later than 90 days after the closing of the deal. That means notes cannot be transferred in at a later date.

HENDRICKS v. U.S. BANK, BofA – MI Court Destroys MERS Finds “MERS Transferred Nothing” with Bonus Securitization FAIL

Defendants’ failure to strictly comply with the terms of the PSA means that the loan at issue was never properly transferred to the trust. Any transfer of mortgage loans, such as Plaintiffs, was mandated to comply with New York Trust law and the terms and conditions of the PSA governing conveyance of mortgage loans into the Trust. PSA pp 155 and 36. This the Defendants did not do.

The Court finds that the “Assignment”, recorded on December 30, 2009 in the Washtenaw County Register of Deeds, serves to transfer nothing. The alleged conveyance failed to comply with the terms and conditions of the PSA and New York Trust law which governs the PSA. The alleged conveyance stated that MERS assigned the Mortgage and Promissory Note to USB, however, there has been no evidence presented to support the chain of the required assignments and endorsements of the mortgage and note as required by the terms and conditions of the PSA.

http://www.scribd.com/doc/57506508/Hendricks-v-US-Bank-June-6-2011
http://livinglies.wordpress.com/2011/06/15/michigan-court-relies-on-new-york-trust-theory-rules-loan-never-made-it-to-trust/
——————————–
Fraud in the Registry
On June 7, Massachusetts Register of Deeds
John O’Brien is first in the Nation to say no to recording ROBO-SIGNED documents

According to O’Brien, the Essex South Registry of Deeds has found 25,187 fraudulent documents that contain the signatures of more than
30 known robo-signers. These documents effect 1,282 homeowners in the City of Salem, 1,246 in the City of Beverly, 1,404 in the City of Peabody and 795 in the Town of Danvers.

In the case of Linda Green signatures, he has found 6,047 documents recorded with 22 different variations of her signature.

“I believe that the only way that the banks can begin to repair the damage they have inflicted on the chain of title of thousands of Essex County homeowners is for them to immediately re-file each and every
one of these fraudulent documents that they have recorded and replace them with a valid, legal document containing an authentic signature, with a valid notarization along with the proper recording fee.” noted
Register O’Brien.

http://www.salemdeeds.com
http://www.salemdeeds.com/pdf/60Minutes04-01-11.pdf

#218 Dorf on 06.26.11 at 1:30 pm

Another indicator:

The toys are starting to appear on the market in droves this summer.

The first to go on the block ? Big gas-guzzling boats !

They are going cheap in most cases (others have big dreams) as the owners don’t have the time to use them (too busy trying to keep the cash flowing) and they cost around $45 – $55 an hour to run, just in fuel alone.

They are still not selling, so when they go really cheap I’ll buy them up and turn them into barges.

#219 The InvestorsFriend (Shawn Allen) on 06.26.11 at 1:42 pm

Mr. Buyer 206 rejects my free-trade-always-good positiona nd gives his reasons why.

I think he is as misguided as the Luddites being “the textile workers opposed to mechanization who rioted and organized machine-breaking between 1811 and 1816”

Free trade creates more goods and services for the world as a whole. When each nation, province, city, village and indeed person is able to specialise in what he can do best the production of the world is maximised.

Capitalism and freedom then will divide the spoils according to the value of each person’s contributions as voted on by our collective spending decisions.

“Contributions” include contributions of investment money that is accumulated by foregoing consumption in the past (allowing others to consume that past production) in order to accumulate it and investment.

Free trade and capitalism have lifted about half the world’s ever-growing population from subsistence levels to a life including much leisure (witness those of us with time to waste arguing on the internet) in just a few hundred years.

In another 50 years there will likely be no real poverty on earth. Unless, that is, free trade and capitalism and the rule of law and property rights continue to be thwarted in some countries.

#220 bill on 06.26.11 at 2:13 pm

”Oh man can’t fn belive I killed a bottle of fontara by mt self.”

I call ‘ear of the bullsh-t’ on that one.
I think he took the ‘night train’.

#221 Renter-X on 06.26.11 at 2:30 pm

#145 Hoof Hearted

Calm down – there’s nothing sinister about those symbols.

Those symbols are not a “scam” or a tax. They’re certification marks (a type of trademark) that a food is kosher. Food producers may choose to get it because it expands their market. If they don’t want it or need it they don’t get it. Get it?

There is something sinister however about the motives of the video you linked to …

#222 Utopia on 06.26.11 at 2:35 pm

#217 Hoof – Hearted wrote…….

“What’s in poor taste. Several others have stated the same. Aka..Called the truth.
————————————————————————-
I see your weakness Hoof. You are a sheep. When others state nonsense and present lies then you are therefore justified in propagating and promoting more of the same.

I expected a lot more of you. Been a big disappointment friend.

#223 jess on 06.26.11 at 2:48 pm

Change Agent
‘I Paid a Bribe’ may be a model for anti-corruption
The Indian website ‘I Paid a Bribe’ asks people to post their encounters with corrupt officials. Now reformers in other countries are following its lead.
http://www.csmonitor.com/World/Making-a-difference/Change-Agent/2011/0623/I-Paid-a-Bribe-may-be-a-model-for-anti-corruption
=======================

I Paid a Bribe,” begun last August, invites people to post anonymous reports on instances in which they have had to bribe an official. They can also share ways that they have been able to avoid paying a bribe.

“Bribery is routinely expected in interactions with government officials – to register your house, to get your driving license, domestic water connection, even a death certificate,” Swati Ramanathan, the other co-founder, told the BBC. “We said, ‘It’s not enough to moralize, we need to find out what exactly is this corruption? What’s the size of it?'”

The site has recorded more than 10,000 incidences of bribery.

The driving test for a driver’s license now has been automated. Applicants wheel their way around a track with embedded electronic sensors that record their actions, rather than a human test giver. Applications also are received online. Between them, the changes remove two opportunities for an official to ask for a bribe.

The website is funded by the couple’s nonprofit group Janaagraha. The stated aim of the Bangladore-based organization is to work with citizens and the government to improve the quality of life in Indian cities and towns.

“I had two tins of top quality saffron and the customs officer took one (stole in broad daylight) and put it in a hidden drawer. Then without checking anything else told me to go,” says one poster on “I Paid a Bribe” June 21 under the title “Greedy Customs Officer.”

“I Paid a Bribe” has already been copied in China by a number of sites, including “I Made a Bribe” and http://www.522phone.com, reports Reuters news agency. Although the Chinese government is officially in favor of anti-corruption efforts, it’s not clear whether the authoritarian regime will allow such citizen-led efforts to go forward. Both “I Made a Bribe” and “522phone.com” could not be accessed from a computer in Boston June 23.

#224 Beach Girl on 06.26.11 at 3:29 pm

Owned 5 houses in 2007, saw this coming, dumped 3. I have only intuition, about things. But I know a lot of useless and nice young people out there. Crips, I made more an hour in 1982, at 24, than they could possibly get now. This is destruction. I was depressed then. I cannot for the life of me imagine these young people, who are mad, are going to pay for my retirement. Whch I paid into. My plan, and I have one, is, I will own my home and rent to destitute boomers, love that welfare, or Ontario does not work. Because there is not a job worth getting up for.

#225 Beach Girl on 06.26.11 at 3:42 pm

Also, am putting two idiot sons through Electrical Enginering courses at University, from my hard earned RESPs. Which, if and when they complete, will only earn 60,000, which half would go to to taxes. In my day retards could assemble a car, on a grade 8 education and have a better life. Squirrel traps or Jack Russell. Vote.

#226 Timing is Everything on 06.26.11 at 3:45 pm

#219 Dorf – said “The toys are starting to appear on the market in droves this summer.”

Hogs too. Ya can only use ’em for 4 or 5 months of the year in ‘most’ of Canada anyway. Not to mention ‘repair time. So really only 3 months of the year. Look for cheap Harleys starting this summer. Better deals come fall. ;)

http://tinyurl.com/64p4u2q

#227 Killer Chicken or Imploding Boomer? on 06.26.11 at 4:01 pm

216 Sally T – I’ll bet you’ll take my cheque too!

Think about it.

#228 Immigrants going bankrupt(going home)? on 06.26.11 at 4:03 pm

Talked to a realtor buddy who works in Brampton and he tells me stories behide the power of sales there. One story was of a family who were indebt to their eyelids and fell behide on all their debt payments . It turned out the family just left everything . How many will pick up and leave when the credit taps are shut off?

#229 BrianT on 06.26.11 at 4:13 pm

#220Inv-Your ignorance on pretty well every single topic is appalling-re global poverty, currently about 70% of the global population is living at a subsistence level. At the median, the global standard of living is declining, not advancing.

#230 TurnerNation on 06.26.11 at 4:18 pm

Realtor’s condo listings in Whister BC:

5 ads state New Price, or Reduced!
11 ads, and one is sold.

http://whistler.kijiji.ca/c-PostersOtherAds-W0QQUserIdZ4334620

HAM doesn’t want to drive 1 hr up the mountain from Van??

#231 BrianT on 06.26.11 at 4:21 pm

It is a good thing we won WW2-I hate to think what would be happening to 95 yr old women with leukemia if we had lost to the Nazis http://www.newsherald.com/news/mother-94767-search-adult.html

#232 TurnerNation on 06.26.11 at 4:26 pm

Oh oh. Will Harper CONS sell us out?
Is the pope Catholic?

As someone pointed out, now, too, Canada is reduced to a country with a basic “left vs. right” paradigm in the house of commons with no middle ground. A sharply divided population is easier to control.

http://www.google.com/hostednews/ap/article/ALeqM5jXRDJIz7pnuwdYadK2Fdm7SO9N1Q?docId=24bca30bf01645dab8ba622e6429475e

China eyes Canada oil, US’s energy nest egg
By ROB GILLIES, Associated Press – 1 day ago

CALGARY, Alberta (AP) — In the northern reaches of Alberta lies a vast reserve of oil that the U.S. views as a pillar of its future energy needs.

China, with a growing appetite for oil that may one day surpass that of the U.S., is ready to spend the dollars for a big piece of it.

The oil sands of this Canadian province are so big that they will be able to serve both of the world’s largest economies as production expands in the coming years. But that will mean building at least two pipelines, one south to the Texas Gulf Coast and another west toward the Pacific, and that in turn means fresh environmental battles on top of those already raging over the costly and energy-intensive method of extracting oil from sand.


However, Canadian Prime Minister Stephen Harper, freshly and convincingly re-elected, is an oil man who has suggested he supports building the pipeline. Also, Calgary-based Kinder Morgan has plans to expand an existing pipeline route to Vancouver so that oil can be shipped to Asia

#233 no guts on 06.26.11 at 4:27 pm

#142 Cellar Dwellar on 06.25.11 at 3:00 pm
Where ….pray tell …..is BPOE ?
=================

He’s doing a bake sale to make house payments.

#234 Bill Grable on 06.26.11 at 4:37 pm

The Open Houses in the West End of Vancouver are populated by increasingly desperate owners, agents and tumbleweeds.
The concierge at my building told me, on the QT that, once again the 1100 sq foot million dollar ($680.00 a month fee as well) attracted one couple in two hours.
I was coming back from shopping and I was walking in, as they were coming out…here’s a killer ” I wouldn’t pay 400 K for an apartment right on the busiest corner in the West End, greedy pigs”.
BINGO.
The last Train has left the Station, and now the mess is gathering steam. A lot of angry and broke boomers are going to look for someone to blame.
Try looking in the mirror.
There is no free lunch.
No one works here – in much more than service jobs, or finance, and maybe mining Company front offices. Oh, and before somebody says Silver Wheaton is a major employer here – they have a handful of people and a peeny office.
Boy, what a mess.

#235 VICTORIA TEA PARTY on 06.26.11 at 4:43 pm

SERFS’ UP! THE EMPEROR’S IN TOWN!

Downtown Europe is all atwitter this weekend.

That’s because China’s premier Wen JiaBao, visited Europe and Great Britian, the newest outposts of China Inc., the world’s latest, greatest empire.

CHINA’S NEW CAR FACTORY IN THE UK

After visiting the pathetically busted Hungary, he eventually wound up in what used to be Dark Satanic Mills Country, the heart of the once glorious Working Class Britain, Birmingham.

That is where the British Empire both rose, thanks to the 1700s transatlantic slave trade (the slaves picked cotton in the US colonies for export to the UK — see Amazing Grace, the movie), only to then eventually collapsed into a strike-bound heap of pointless working class rabble and rubble, post-Suez Crisis 1956.

PLUS SA CHANGE

Premier, that should really be, Emperor Wen toured the shiny new-robotic Shanghai Automotive Industry Company’s car-assembly plant, in Longbridge, near Birmingham, where MGs are put together for the domestic Chinese market ONLY!

The BBC’s business-guy Robert Peston dogged the Big Guy’s footsteps:

“…it was impressive to hear…an unambiguous statement that China’s massive trade surplus is a contributor to global economic and financial instability – and…is unsustainable…”

MORE ELABORATION FROM EMPEROR WEN HIMSELF

“The goal in tackling the financial crisis – we need to achieve strong balanced and sustainable growth in the world…China will play its due part…we are going to further stimulate domestic demand and…reduce our foreign trade surplus…reliance on exports…”

“When some European countries were hit by the sovereign debt crisis, China has actually increased the purchase of government bonds of some European countries and we have not cut back on our euro holdings…
I visited Hungary. We reached agreement on the Chinese government buying a certain amount of government debts of bonds on the Hungarian side… that is China lending a helping hand (loan sharking!!)…and we will do the same thing for other European countries…a friend in need is a friend in deed (indeed! With friends like that…).”

SO THAT’S THE REAL REASON FOR THE EMPEROR’S TOUR

In addition to becoming a loan shark for impoverished Europe, he’s also doing something much more profound.

He’s reining in Chinese exports and increasing consumption at home, to protect this nascent empire from what he knows will be some serious current and future economic trauma (apart from what the industrialized world, especially, has ALREADY experienced post-Lehman’s).

Setting up assembly plants at the Birmingham colony, for instance, allows the Shanghai Automotive Industry company to satisfy domestic market demand for these cars. BUT, should the Chinese get tired of those vehicles, it’s the BRITS who’ll get fired, NOT the Chinese workers back at home who are actually building the car’s parts for shipment to Birmingham’s final assembly!

The beauty of controlling production back at home MEANS the state will just re-educate and re-deploy their domestics into other work and thus keep building up the new Chinese middle class!

THE TERRA COTTA WARRIORS HAVE MORE JOB SECURITY THAT THE EURO-WRETCHES!

Back out in the colonies, it’ll just more of what’s going on right now: jobless oatmeal-guzzling savages pounding salt on a picket line somewhere whining for bigger welfare cheques from their broker than broke sovereign governments which will soon be in hock to their eyeballs to the Shanghai Bankers. Talked about being Shanghai-ed!

It seems, therefore that even the all-clay Terra Cotta Warriors will get more work that their still-live confreres in Birmingham!

BTW

Dark Satanic Mills indeed, because that lovely new plant only employs, get this 40 people!! The rest of the workers are robots! Claynation anyone?

REPRISING

Remember, the New China is a mainly domestic empire with international repercussions. Please read your history.

The outposts of China Inc. are on-again, off-again plug-ins that will ALWAYS BE THERE. That’s because China will keep them underfoot with debt and, in return, will just keep “buying” their non-renewables (see just about everywhere, by now) in exchange for fleeting part-time jobs for the locals.

In other words, it’s all to the good, if you’re a bankster or a party functionary living in downtown Shanghai!

“Pass the Peking Duck, Comrade, and none of that British treacle. It’s so YESTERDAY! Pip, Pip and all that…”

#236 SallyT on 06.26.11 at 4:59 pm

Killer Chicken or Imploding Boomer?

229 Sally T – I’ll bet you’ll take my cheque too!

No. You can pay cash.

Think about it.

#237 Hoof - Hearted on 06.26.11 at 5:17 pm

Utopia and Renter X:

What’s the problem..do the homework..not buy into the propoganda.

If its misinformation…point it out.

If its not, don’t be kneejerk apologists

I know an Orthodox Jewish Deli owner…he tells me about the Kosher qualifications and Rabbi involvement, as he operates a kosher deli.

The videos bluntly imply something which I find appalling.

Yeeshhh.

#238 Nostradamus Le Mad Vlad on 06.26.11 at 5:54 pm


#234 TurnerNation — “China eyes Canada oil, US’s energy nest egg”

Interesting that the US has the largest domestic supplies of oil, yet are creating and causing wars thruout the world to steal other supplies, with Yemen and Saudi Arabia next on the chopping block.

Now they are on to Canada? WE could end up being the next big warzone!

#237 VICTORIA TEA PARTY — “Dark Satanic Mills and none of that British treacle.”

Well, treacle is good with porridge! “Their Satanic Treacle Majesties Request?”
*
Flood Wall fails at Fort Calhoun; Power Shutdowns lead to other biz. weekly (or more) shutdowns; Boric Acid being used at #3 reactor. “BULL BISCUITS! Boron is added to absorb neutrons. They are worried about spontaneous fission.” wrh.com; TEPCO — a disaster in slow motion, much like the west’s economies and Strontium 90 found just off the coast; 4:34 clip Losing Nuke Nevada?

First Greece, then the UK followed by NAmerica; Banker occupation of Greece, but Greeks are buying gold because of the possibility of disintegration of the Eurozone. But never fear — the Chinese are here! RE Agents don’t have a good track record in Tucson; US taxpayers on hook for Greek banks’ failures.

At last! Something credible from the m$m re: Gadaafi; Food One, Food Two and Food Three; Monster Homes Slightly bigger than your average; Shark Flying over surfers.

With Aug. 2 being the US default day / deadline, Sept is shaping up as quite an interesting month; Obama “Because we need a good excuse to invade and steal their oil while Chavez is still in the hospital!” — Official White Horse Souse” — wrh.com; Genetically Engineered Crops “This is very scary news, not only for the US, but for the planet as a whole.” wrh.com.

#239 renters rule on 06.26.11 at 6:15 pm

Sorry if I missed that someone else has already posted this link:

http://opinion.financialpost.com/2011/06/24/lawrence-solomon-deregulate-housing/

Very interesting opinion piece suggesting deregulating Cdn housing market — i.e., removing ALL of the government subsidies that prop up home ownership in Canada. Very interesting.

#240 Junius on 06.26.11 at 6:39 pm

#198 BPOE,

One thing about the herd is that eventually it changes directions. Carney is looking to challenge the herd. He is just positioning himself so that when it does turn he can say “I told you not to take on too much debt.”

Just because Vancouver is pretty much the last place on earth for this sentiment doesn’t mean it is not going to change. Get ready because the shift is already underway.

#241 Junius on 06.26.11 at 6:48 pm

#174 Mr. Buyer,

This is why we have consumer protection legislation. It is not just that people tend to be overly optimistic and naive regarding their finances. They also do not have access to the market and other information like the banks do. Meanwhile the media floods the public with misleading information on all of these matters. This is why the notion of free markets in financial services is such a myth.

If you watch the battle in the US that Elizabeth Warren is facing you can see how powerful the forces are aligned against the consumer. The financial services industry has a powerful chokehold on the consumer. It may ultimately be the undoing of our society.

#242 Mark on 06.26.11 at 6:50 pm

Also, am putting two idiot sons through Electrical Enginering courses at University, from my hard earned RESPs. Which, if and when they complete, will only earn 60,000, which half would go to to taxes. In my day retards could assemble a car, on a grade 8 education and have a better life.

Most of my 2002 graduating class in Electrical Engineering/Computer Science from a top university in Western Canada are underemployed or unemployed even to this day. Rarely even receiving the professionalism of a resume response from employers (like members of the ITAC industry lobby group) who claim a 100,000 person shortage in technical professions in Canada.

Its a real travesty. These people should basically be at the top of the food chain in terms of jobs, yet they can find nothing after sending out thousands of applications.

#243 Killer Chicken or Imploding Boomer? on 06.26.11 at 7:11 pm

238 Sally – I have thought about it – and the guys who
print the cash have always taken my cheque.

#244 Mr Buyer on 06.26.11 at 7:24 pm

#220 The InvestorsFriend (Shawn Allen)…And free trade has reduced Canada and Canadians to a nation a minimum wage earners. We can get back to work. Do you think the Japanese threw open their markets? The world’s so called climb out of poverty has been on the backs of North America’s slide into debt and unemployment. Free time, relaxation. There are many Canadians enjoying ‘free time’ provided by ‘free trade.’ On top of all this you are assuming that exporting raw materials and importing manufactured goods is going to continue to make economic sense over the long term. Your points are old and thread bare. I heard them in the 70s, 80s, 90s, and by a fewer people recently. I am for building new machines, factories, call centers, code monkey hot houses and laboratories here not tearing them down. You still have not answered my question…what are the Canadian kids and grand children going to do for work? Your expanding world population promises to do so beyond the carrying capacity of the planet in relatively short order. Good luck securing trade then. Can you ‘free trade’ your way around that impending game changer. You do not seem to understand that 40 years into what now appears to be a failed experiment that you as a free trade proponent (as I once was) now sound like the luddite.

#245 LB on 06.26.11 at 7:33 pm

#52 gtaguy

True. It is now not just the outsourcing of North American low paying and unskilled jobs that is occuring, but of professional jobs as well.

“Dental Tourism” is but one example. I know those who are combining sunny vacations with dental procedures which are very costly in Canada and the US, such as crowns,dental implants and bridgework, and which can be done for a fraction of the cost in state-of-the-art clinics in Mexico.This is just the beginning of a burgeoning outsourcing of professional jobs and earnings which will negatively impact these sectors of our countries, just as it has been to the unskilled and manufacturing sectors.

It is this continual demise of jobs and incomes, across all sectors, which will ultimately cause the decline in Canadian real estate prices, regardless of interest rates.

#246 Bruce on 06.26.11 at 7:41 pm

#244 Mark,

An interesting article appeared back in March in the TO Star. Most students were starting to realize that for all the time and money they invested in College/University turned out to be for bullshit degrees. Hell, Harvard has an entire school dedicated to them… It really IS a travesty because I can remember the days(not so long ago)where one finished high school, and unless you were going to be a doctor/lawyer, you went straight into the workforce. Keep your job for 90 days, kiss up to the Union, and you were set for life. My, how times have changed. Now all I’m seeing are graduates with a $50,000+ piece of paper, no job security, indebtedness for the rest of their lives, and a future full of BS McJobs that barely pays the rent. A perfect example of this is my neighbour’s 35yr old son, who despite having 6yrs of post-secondary education, currently works at WalMart stocking shelves. Welcome to the “new” economy… And what’s that old saying, isn’t it “who” you know to get anywhere?

#247 TurnerNation on 06.26.11 at 8:29 pm

USD fiat currency is here to stay and doin’ well in the overnight session. :lol:

#248 American Werewolf on 06.26.11 at 8:29 pm

@#220 The InvestorsFriend (Shawn Allen)
“Mr. Buyer 206 rejects my free-trade-always-good positiona nd gives his reasons why.”

When someone dogmatically believes in the extreme, they can not be taken seriously. “Always” arguments, inclusive of trading freely with circa 1850 Southern plantations or with WWII-era Dachau-labor, show blind faith akin to religious extremism. Honestly, I’d rather listen to a pedophile in a dark robe tell me how many candles I must light than take real estate advice from someone such as this.

“When each nation, province, city, village and indeed person is able to specialise in what he can do best the production of the world is maximised.

Free trade and capitalism have lifted about half the world’s ever-growing population from subsistence levels to a life including much leisure”

Sounds good. Lets hope this perpetual production and uplifting of the standard of living gives every man, woman, child and dog in Africa, China and India a fridge to put their Key-Lime Pie & Beef in (sans India for the Beef). And as we bask in the glory of the contributions of capitalism and endless production, I hope we find a nice place to put a shack on a hill as the sea levels rise and bark beetles reach new utopian forests to devour.

Hail it as progress if you will. The coal & oil fueled uplifting of China at the behest of capitalism is nothing more than a swift march to our death if you will. Nevermind that, the show must go on.

“In another 50 years there will likely be no real poverty on earth.”

Earth, the BPOE. LOL.

#249 SallyT on 06.26.11 at 8:31 pm

#245 Killer Chicken or Imploding Boomer?

I have thought about it – and the guys who
print the cash have always taken my cheque.

That’s cause the guys who print the cash know that if your cheque’s no good they’ll just come and take your stuff under force of law.
Are you equating your writing of a cheque with the banks method of creating deposit accounts on the other side of the ledger from the asset created by one’s promissory note? Your cheque is a promise to pay from assets on deposit with a bank. The bank has to honour the check if the funds are there. If they aren’t, I’m SOL!

#250 bullion.bunny on 06.26.11 at 8:35 pm

#227 Beach Girl on 06.26.11 at 3:42 pm

Also, am putting two idiot sons through Electrical Engineering courses at University

Wow, nice! I’m sure your sons would be happy to hear that wonderful attitude!

#244 Mark on 06.26.11 at 6:50 pm

Most of my 2002 graduating class in Electrical Engineering/Computer Science from a top university in Western Canada are underemployed or unemployed even to this day.

Buck up! The work is out there, stop acting like a victim.

#251 Timing is Everything on 06.26.11 at 8:39 pm

#244 Mark – said EE/CS underemployed or unemployed

Supply and demand. Maybe they can find work in China or India.
They can always sell RE if they can pass the course.

#252 American Werewolf on 06.26.11 at 8:40 pm

@#241 renters rule

I don’t think you should throw the baby out with the bathwater. Promoting housing affordability so that the working class can have stability and build wealth is not an inherently bad idea. Subsidizing the banks’ risk in giving out 40 year, 0 down loans to unqualified buyers who want half a million dollar homes is.

The government’s meddling in housing has been twisted and perverted from its core, underlying philosophical foundations to benefit the banks alone (yes, those who have the money & power to lobby the government to work in its interests). But not all meddling must be classified as “bad” because this backwards, extreme example turned out to be.

Remember, everything that has happened up to this point, and that will happen unfortunately after, is by design–and the design is not to benefit you. By no means does this prove a program designed thoughtfully to benefit you could not.

#253 Killer Chicken or Imploding Boomer? on 06.26.11 at 8:54 pm

Mark/Beach girl – I graduated in 89 – EE was a large class with Mech a strong second. Chem, Civil etc far behind. Could there be a glut of guys with 20 years experience? Neighbour has a masters in EE from a few years later. $100K+ job for about 10 years. Buddy a few years younger is a mech. Not as much $$, but has had steady work since I’ve known him – 15 years.

BG – if your kids have good grades, let them stick with it.