What to worry about

A guy who hangs out here just posted that the United States is two weeks away from a default. What does this mean, and should we be scared?

Well, of course we should be alarmed, but not at what this metalhead cries wolf over. In case you missed it, the US runs out of money on August 2nd when it reaches the limit imposed by American law on what it can borrow. It’s called a debt ceiling. Because America (like Canada) spends way more than it collects in taxes, borrowing to run the place is pretty much a daily event. No more borrowing, and government seizes.

This would mean Washington was unable to get new money to pay the interest to existing bondholders – most of whom live in other countries. It would constitute a bond default. Think of Greece with Lady Gaga, Steve Jobs and Oprah. In response the bond market would freak, massively devaluing US debt and sending yields skyward. Interest rates, mortgages, loans – all of that – would explode higher, as credit became less available and a new financial crisis erupt.

Stock markets would flame out and North America careen towards recession (or worse). Europe would be sold off for parts. The Canadian economy would be quickly impacted. Corporations would go into survival mode. Jobs shed, investment halted. Commodity prices would tumble and the resource sector shutter. It could mean a lost decade as America struggled to restore confidence in its debt and currency, while higher rates shackled growth. And if you own a house in, say, 416 or Kits, it better have no mortgage.

But, this ain’t going to happen. There will be no default. The debt ceiling will be raised. No crisis in two weeks.

You might think this is good news, but not exactly. More US borrowing without a serious haircut to the American federal budget just kicks the can down the road. This crisis will come back. But by the same token, if Washington (and Ottawa) go all austerity on us, then the economy will (at best) grow at a crawl. Either way, things are going to change. Get used to it.

This is why I tediously hit the same buttons on this wasted blog. (a) Do not have the bulk of your net worth in a house and (b) fear debt. Maybe, for Dan’s sake, I should add (c) don’t be a noob.

Here he is. And you thought you had problems.

A friend recommended you to me. I am 44 and am in serious need of some financial advice. I’ve lived a fairly adventurous life and I suppose in some ways I didn’t really expect to live this long. Well, I am now realizing that I need to get serious about making sure that I can actually retire comfortably someday. I am hoping that late can be better than nothing.

Here’s my finacial situation…
I have no debt (credit cards, loans, etc.). I own a consulting company and pull dividends from the company of approx. 90K – 110K yearly, pre-taxes. I have a very small savings of approx $40,000 in a checking account and $12,000 in RRSP & stocks. I rent my residence.
Although I’ve been frivilous with my income, I have no need for a high-cost lifestyle. I could save a fair amount of the money that I make. Can you give me some advice or point me in the right direction so that I won’t be living in a VW van at 65?

Dan, of course, is probably screwed. In his mid-forties, he is self-employed in a business with no inventory or equipment and no pension. He has no personal assets. No investments to speak of. Total net worth of fifty grand. Of course he’s headed for a crash.

But on the bright side, Dan has managed to piss his life away so effectively he has neither real estate not debt. So is there any hope?

Some. If Dan were to invest his entire net worth and manage a consistent return that would double it every decade, he’d have about $200,000 at age 65. That could throw off about $1,300 a month so, with his CPP, he’d have an income of $27,000 a year. Or, he could start eating up his capital in retirement, boosting that to maybe $40,000, and hope for a timely demise. Then again, in twenty years will forty grand be enough for groceries?

The startling truth right now is that four in ten Canadians are in worse shape than Dan. They have no savings. Fifty per cent of us have no money (at all) set aside for retirement. Over 70%, like Dan, have no pensions other than the few lumps of coal Ottawa doles out. A third of all families can’t meet their monthly expenses and, like Canada and America, constantly borrow to make ends meet. And among people over 50, almost 80% of their net worth is in their homes.

So, why is it the media, politicians, economists and doomers are fixated on a bond default crisis that won’t happen, when we have a real one engulfing us?

Dan can spend less and save more. He can empty his chequing account. He can invest aggressively in things like ETFs and pray for a market collapse to jump in. He can open a TFSA and pack it with growth assets. He can work 24/7 to grow his company, get a second job, or buy a $3,000 suit and look for rich women in singles bars (do they 44-year-olds in?). But he sure can’t carry on the way he is.

That VW van is already fully booked.


#1 TurnerNation on 07.12.11 at 9:28 pm


Latest downtown Toronto condo update…prices up up will always go up they say, well everyone’s a hero with 2.25% interest rates right?



Toronto Real Estate Board sales in May were just over 10,000 units. This was 6% higher than for May in 2010, and marked the first month this year where sales exceeded the same month in 2010. That trend will continue for June. We are looking at 10,000+ sales and June will be the biggest sales month of the year. Furthermore, expect every month for the balance of 2011 to surpass that of 2010. The final year end count will show that 2011 sales are greater than 2010. No one predicted that, except in this Market Report!!

All condo apartment sales in May were just 3% higher than for May in 2010. Downtown condo sales were also ahead by 3%. Unexpectedly, sales in the Etobicoke waterfront were down by 19% from May of 2010. Part of the reason was the introduction of several new pre-construction projects in a market much smaller than downtown. This had a negative impact on the resale market.

However the real brake on the real estate market has not been rising prices, but the lack of listing inventory. Even in the downtown condo market, with the registration of several major condo buildings that has increased product in the resale market, the sale to list ratio has risen from 32% last year to 38% this year!

The problem is that most experts cannot measure rising prices. Just look at the TREB stats for May. The average price for downtown properties west of Yonge St. was $370,000 – the previous May it was $373,000. East of Yonge St., the average was $405,000 and in May of 2010 it was $360,000. Now anyone who knows the market will tell you that prices west of Yonge for similar units are 10% higher than the east side. And buyers can tell you that prices certainly have not fallen over the past twelve months. But that is what the stats say and the experts rely on this information to tell you what to do in real estate! Of course the problem with averages is that if the mix of sales changes over time – one year more expensive properties sell- then the resulting averages are meaningless. And this always happens. That is why this Report only tracks price changes over time for identical or similar units to get a real price change in the market. Unfortunately the experts don’t have access to this information.

In this Report w looked at sales at 21 Carlton St., The Met, a four year old building. It is just steps from the College subway station, and is located between U of T and Ryerson Universities. You can’t find a better building for Generation Y or for investors. The first unit we looked at was a one bedroom plus den with two baths, parking and locker on a high floor. It is 680 sf with a balcony. It sold in 2011 for $407,500. It previously sold in November of 2007 for $330,000. This represented an increase of 24% over 42 months, with a price just under $600 per sf. This is the most popular style of unit in downtown Toronto. The second unit we compared was a two bedroom, two bath unit, with parking and balcony. It is 870 sf. It also sold this year for $469,000 and previously in August of 2008 (before the market correction) for $457,000. You could argue that the person bought the unit in 2008 at the peak of the market- exactly at the wrong time – yet it still increased by $12,000 in 29 months. This unit is now selling for $540. Two points we can make: there is no wrong time to buy, provided you hold the property for at least three years; and over time the price appreciation in Toronto has not been speculative but steady.

#2 Two-thirds on 07.12.11 at 9:29 pm

So… no US default, but will the USD rally vs CAD?

Glad to see Garth acknowledge (yesterday) that the ghost of deflation is still hovering near us.

#3 Peakoilist on 07.12.11 at 9:34 pm

First !!!
Yesterday’s blog dawgs were very deep and philosophical …let’s see how things unfold today..

#4 Bill Gable on 07.12.11 at 9:45 pm

I cannot get anyone to listen to me on ‘debt’, or, in Vancouver – Real estate.

People look at me when I use cash, like I am from Mars.

Dunno’ ’bout a squirrel gun. AK-47, and 5 k worth of AP would be swell.

I was not in the bunker mentality until one of the Club Stupid Country bonds hit 30% – that was it for me.

Volcker echoed in my Media addled head.

Memories of: FLARES.

21% mortgages on South Kingsway near Bloor.

Jim Brady (*Toronto joke for the wrinkled)

Mazda Rotary engines.

I am lost, Mr. Turner. Where do we find yield?

Safety – in STOCKS? REALLY>?

Inflation, er, deflation, uh, correction, uh, crash, uh – HUH?

#5 Mean Gene on 07.12.11 at 9:46 pm

Dan should look at moving to the Philippines when he retires, Puerto Galera looks nice.



#6 2MKid on 07.12.11 at 9:49 pm


#7 Harvard Grad on 07.12.11 at 9:53 pm

I would just like to quickly reply to yesterday’s post from the likes of GTA Girl and Betamax, Harvard afforded me a world of opportunities that you can only dream of. I used a skill in high school (Lacrosse) which was so impressive that 3 US scouts made offers for full scholarships – all I had to do was fulfill a commitment to play – keep a specific grade point average – and guess what, I walked out with a fully paid degree on Harvard’s behalf and has opened doors using a simple word as “Harvard Educated”. I live in a world of substance and instant gratification while the likes of you spend your days whittling away your days mocking anyone superior to you (aka..me). An income in excess of $150K per year, applying the skills learnt from the very school you so easily mock – I actually have to pinch myself some days and tell myself it was just too easy.

So your “assumption” I paid is laughable – actually, I laugh at your ignorance of facts and your quick reflection of which I made ZERO mention of. You just proved a very important point – as a lab rat that you are, you took my bait, and my synopsis was dead on – like minds always take the road of least resistance – sad in deed.

The housing market moves higher because the world see’s Canada as one of the last gems – free of political turmoil, land in abundance, resources of which will last decades (especially fresh water) they will propel our home values ever higher – there will obviously be markets that take a hit – but your fooling yourself – why did the Canadian market move in opposite directions as that of the States – simple – Canada is the untapped treasure that most who actually live here – just don’t see – open your eyes – and less with your mouth, and you will become enlightened!

#8 GTA Girl on 07.12.11 at 9:57 pm

He’s screwed. At this point he should have opened a beach bar in some Caribbean island for last 20 yrs. At least he’d have great stories, damned fine excuse…and we’d admire his tan.

#9 Andrew on 07.12.11 at 9:58 pm

Garth, I know you’re very anti-metal, but I just can’t wrap my head around why you would hold this position given everything you said about the US kicking the can down the road. Given the ever-growing debt, do you really believe that the US is going to be able to keep its hands off the printing presses?

First, my books clearly spell out my PM position – hold 5% to 15% of your portfolio in it for inflation protection. Beyond that, you are overweight. Gold is not a useful commodity (like food, shelter or gas), but merely an alternative storehouse of value. In a world where we spend dollars, your principal goal should be to have lots of those. As for US hyper-inflation, it can only happen as the result of a conscious political decision – one which will never be taken by an American president. — Garth

#10 Jwb on 07.12.11 at 10:02 pm


#11 Nick on 07.12.11 at 10:03 pm


The Japanese stock market crashed 20 years ago, and is still 75% down from the peak. Could something similar be in store for US markets? I’m not crying wolf, just curious.

No. Pure lupus. — Garth

#12 T.O. Bubble Boy on 07.12.11 at 10:12 pm

Looks like we’re being Enron-ed by F and Harper… the government exceeded the budget for 73 different programs, but we’re told that the end result (probably a goosed number) is all that matters:


#13 specuskeptic on 07.12.11 at 10:13 pm

Harvard grad says, “housing market moves higher because the world see’s Canada as one of the last gems”. Well, I “see’s” your blowhard post as bullshit.

I’m thinking of doing a blog post on punctuation. Who’s in? — Garth

#14 somecatchphrase on 07.12.11 at 10:20 pm

Assuming Dan is 45 and wants to retire at 65, he’s still in the accumulation phase of life for another 20 years.

With his income, he could easily sock away an additional $10K-$20K each year, without even severely crimping his ‘style.

If he chooses his socks (stocks) wisely, that could make a huge difference.

Dumb luck could also play a huge role, if we get a massive correction in the next few years, Dan could do quite OK if things turnaround within the next two decades.

In fact, Dan might even want to consider an aggressive “go for broke” asset allocation, considering that life-to-date he seems to have taken a devil may care attitude toward life in general, finances in particular.

At this point, what does he have to lose? Especially if the aforesaid massive correction materializes sometime within the next five years.

#15 bill on 07.12.11 at 10:24 pm

#7 Harvard Grad
hey did you know that unabomber guy?

#16 BarbM on 07.12.11 at 10:24 pm

Yes to the blog post on punctuation!

#17 Marnic on 07.12.11 at 10:25 pm

Harvard clearly isn’t the fabled institution it once was. Do it, Garth.

#18 Elmer on 07.12.11 at 10:27 pm

He can move to another country like Belize or Thailand where 20k a year will provide a luxurious retirement. I don’t know why any retired person would choose to stay in Canada. Soon as I hit 55 I’m outta here.

#19 Kitchener1 on 07.12.11 at 10:27 pm

here are my odds

80% that the US will resolve its debt issues and raise the debt ceiling

20% that the GOP will play politics with it and hold out for maybe a month to get what they want, they know its going down, better to go down on Obama’s term then a GOP president

#20 Lisa on 07.12.11 at 10:31 pm

I don’t think Dan has it so bad…he’s debt free and renting…i.e. he’s not underwater like millions of others. He makes a good income and has lived a good life. Lots of guys with a padded portfolio and lots of cash are total lousy human beings.
Everybody needs to remember two things:
1. You Can’t Take It With You
2. Your Days Are Numbered

#21 Mr Buyer on 07.12.11 at 10:33 pm

#7 Harvard Grad … What exactly did you study @harvard.edu . I am impressed, but Canada is running on vapors presently in the midst of an abundance of resources and debt along with decreasing levels of production and manufacturing. Your analysis seems a tad shallow for a Harvard man.
PS. Please no punctuation policing Garth. That will add 20 minutes to each post’s creation.

#22 2deep on 07.12.11 at 10:33 pm

So 35, zero savings, no debt, no second income (cause the wife won’t work) and $160 in a mortgage basically means I’m screwed right??!?

#23 Ivy League? on 07.12.11 at 10:34 pm

@ Harvard Grad

The housing market moves higher because the world see’s Canada as one of the last gems

Let’s see…you graduated from Harvard and you don’t even have a grasp of the English language? You don’t put an apostrophe before an s in the example above unless it’s possessive. I suspect that you’re a TROLL or completely delusional.

#24 Kitchener1 on 07.12.11 at 10:35 pm

#7 Harvard grad

interesting complex. Are you trying to say that on a global scale, Canada is more sought after then say the US is? That the economy is more resiliint in Canada? That Canada offers more opportunity then the US?

Are you on crack man?

Canada does have many advantages, and in my opinon is a better place to live but in terms of economic advantage and open market, even corporate tax rates etc.. worker production etc.. it beats Canada.

TSX is NOTHING compared to the Russell/Nasdaq/Dow jones etc… there is more equity in the american penny stock companies the the whole tsx combined.

#25 Min in Mission on 07.12.11 at 10:36 pm

I wouldn’t mind having Dan’s problems.

#26 Andrew on 07.12.11 at 10:37 pm


“As for US hyper-inflation, it can only happen as the result of a conscious political decision – one which will never be taken by an American president.”

Many would argue that those decisions are already being made, and have been made for years: Printing money to cover the malinvestments. Suppressing interest rates in a failing attempt to resuscitate the economy. I’m guessing you also take Bernanke’s word that there will be no further QE. I’ll bet you that the next QE program, whatever they name it, will be back this year, probably within a few weeks.

#27 Patz on 07.12.11 at 10:38 pm

#7 Harvard

Siddartha, the Buddha became enlightened. It is obvious from his teachings that smug superiority was not his path.

#28 Ty on 07.12.11 at 10:41 pm

I wanted to be the FIRST to beak Garth about gold.

Not raising the debt does not mean default if you use the 200 bill a month to pay it.

#29 immigrantvoice on 07.12.11 at 10:42 pm

Man, you people are acting as if Dan is doomed. He’s got no debt, a business that makes him money (that he could sell) and 40k saved. He’s GOLDEN. Lemme tell you, my family and my close friends don’t have a f*ckin’ dime saved, not to mention liabilities: mortgages and loans. Engineers, business owners, real estate brokers, we’re not poor people… Not a dime. Why? Living out of our means. Trust me, Garth, even you are underestimating how much sh*t will hit the fan. This is a message from an immigrant guy who knows his community inside-out. We are BROKE, we just don’t FEEL it yet.

#30 Basil Fawlty on 07.12.11 at 10:42 pm

What will be the outcome of the US and other countries continually kicking the can down the road? Their efforts to add more debt, as a solution for the problem of too much debt, are about as practical as a dog chasing it’s tail. However, it’s like the “Emperor Has No Clothes” fable, in the sense that no one wants to discuss the adverse consequences associated with our collective insanity. No one wants to discuss the fact that on every major policy issue, Ben Bernanke has been totally wrong. No one wants to discuss the fact that while the US has not and likely will not default on their bond payments, they are like Chinese water torture, slowly eroding the purchasing power of the US dollar. This is effectively default, but it’s in disguise. No one wants to discuss that big money, sovereign money, is moving from financial assets to real assets, as the western worlds governments all print in unison and undermine the purchasing power of currency. Pay attention to the Chinese who hold large amounts of US dollars and are in the process of using them to purchase mines, farmland, precious metals and strategic minerals. These people are not stupid, they see the writing on the wall and understand well the folly of the western financial system.
Default, hyperinflation, ongoing money printing, a massive drop in government spending, more debt? Who knows for sure, but it all spells a decrease in living standards. We are living through the largest wealth transfer in world history.

#31 kimi on 07.12.11 at 10:45 pm

The airline I work for just lifted its retirement age. Now we got a gal who is 69 and still working and tons of other old birds that are following suit. My seniority will suck forever.
Tell Dan that its probally a sure bet he’ll be working into his 70’s. If he can’t get a job at the airline, tell him he can always say ‘Goodmorning and Welcome to Walmart.’

#32 somecatchphrase on 07.12.11 at 10:47 pm

Also, further to my earlier comment, retirement is an overrated concept –

“Boredom’s not all in your head”


#33 not asian on 07.12.11 at 10:51 pm

Mr. Harvard Grad,
“there will obviously be markets that take a hit – but your fooling yourself – ”

your fooling yourself – s.b. you are fooling yourself, or you’re fooling yourself.

Did you not go to class?

#34 Tim on 07.12.11 at 10:53 pm

Don’t worry Dan, all you need to do is to shack up with one of those happy and cheerful “career women”…

#35 Tim on 07.12.11 at 10:55 pm

Carney has hinted at keeping rates near all time lows due to global risks. This gives people who bought more time to pay off their mortgages. Anyone who bought around 2000 should have such little principle left a rate increase won’t matter much

#36 Outta curiosity on 07.12.11 at 10:59 pm

What “should” your (a) net worth (b) retirement savings be at ages 30, 40, and 50?

#37 JohnnyBravo on 07.12.11 at 10:59 pm

The debt ceiling issue in the Unites States is a silly joke. Not the debt, the debt ceiling itself.

For some reason I remember when Reagan allowed the US federal government debt to hit 1 trillion back in ’81. I was too young to understand the significance of it, but there was almost a party atmosphere, like the US had reached some vaunted milestone. Well, here we are 30 years and 13 trillion dollars later.

Since that time Congress has raised the debt ceiling almost countless times. Meaningless.

Of course, unlike Euro countries, the US can never actually run out of money. They can simply spend what they need (in theory) into existence because the dollar is backed by nothing of intrinsic value, and currency values are relative.

No matter what happens, the US can always rollover its debts. It’s just that, if they print too much money, the money they use to repay the debts will be worth less, or worthless. Bond holders don’t like this of course, so before they’ll let that happen they will revolt and force rates higher. There has been no revolt yet, despite QE, because the US dollar is still the world’s reserve currency, and still the currency of last resort (though behind the scenes it looks like this may be changing, we’ll see).

If things get really out of hand, they can just crash the stock market again. Risk: off. This cannot work forever, but for now the US is still top dog (don’t forget the military that keeps everyone in line).

While some people predict hyperinflation, I cannot accept the idea that The Bernank and his brethren are stupid enough to actually destroy the dollar.

If the US did have some kind of technical default (I believe it’s happened before), the market would lose faith, not in the USs ability to pay its debts per se, but in the USs commitment to honour its debts.

They got religion in ’80 or thereabouts and hiked rates to prevent a bond market collapse. They can do it again.

Only this time, the debt is not just a monetary or fiscal problem, it is a very hairy political one. The cost of higher rates will be much more onerous this time and the full burden would fall on the people at time they can least afford it, in the form of more taxes, cuts to programs, gov lay offs, suspended services, etc.

Do you think the people will take being hosed again, after ’08, lying down? Don’t forget how many guns American have. This is why I believe that a default, at some point, is actually possible. And not just some temporary, technical faux pas, but an actual, “go F yourselves” repudiation of their obligations. If the depression gets worse and the people become truly revolting, suddenly default may not sound like such a bad option.

Don’t forget who holds most of the US’s debt. Somehow I don’t think, if push really came to shove, “we the people” would have any compunctions about telling their Asian “bankers” to go stuff dumplings with their T-Bonds. Take your pick: political anarchy or economic collapse. Could this one day be the choice?

#38 Robins on 07.12.11 at 11:00 pm

One million more people are expected to come to Vancouver by 2030. How does the Government of Canada anticipate this regional growth will affect housing and the ability for newcomers and established Canadian workers to find jobs?

Join The Vancouver Board of Trade to hear The Honourable Jason Kenney, Minister of Citizenship, Immigration and Multiculturalism, speak to Canada’s immigration policy, his objectives and how immigration contributes to a strong country.

Tuesday, July 19, 2011

Tuesday, July 19, 2011

Registration: 11:45 a.m.
Lunch & Program: 12:15 – 2 p.m.


#39 Debt's Dark Embrace on 07.12.11 at 11:03 pm

#5 Mean Gene on 07.12.11 at 9:46 pm
Dan should look at moving to the Philippines when he retires, Puerto Galera looks nice.


Puerto Galera is nice. I live in Cebu. Better infrastructure here. The sun is warm, the beer is cold, and the girls are friendly.

#40 Jsan on 07.12.11 at 11:07 pm

“What To Worry About” you ask? Why nothing of course, this is Canada, the land of responsible lending and borrowing.

Ontario-Wide Financial Corp


(Wasn’t “Creative” financing the exact thing that got most Americans in trouble?)

“We lend money for any purpose against the equity in your property up to 90% of the appraised value for both purchasing a property and refinancing the property you already own with a new 1st, 2nd, or 3rd mortgage. ”

(Why just have 1 mortgage after all, I mean really, isn’t it normal to have 3 mortgages nowadays?)

“We specialize in difficult credit situations, self employed, no income verification, mortgage and tax arrears, former bankruptcy’s and new immigrants.”

(No income verification, no problem. Your Bubble house is your ticket to riches.)

Oh yeah, things are really different here in Canada!



#41 Dan in Victoria on 07.12.11 at 11:13 pm

Actually there Harvard Grad, I find that most people who are smart don’t need to come back and tell everyone how smart they are.
Me, I kinda like the smart guys/gals down in the trenches.
Some of them hang around here and post once in awhile.

You know, the ones that make it on their own
and try to help others along.

Please Garth, no spelling bees or punctuation seminairs.

#42 Canucklehead on 07.12.11 at 11:15 pm

Dear: #7 Harvard Grad

Didn’t your fancy school teach you the difference between “you’re” and “your?”

Just sayin’

#43 Kate on 07.12.11 at 11:15 pm

Garth – just wanted to say ‘thanks’. I thought I was the only one who thought this way until a nice person told me about your blog.
I exited the home ownership market because I didn’t buy into the ‘always going up’ Koolaid. At least once every few months someone tries to explain that I am making a mistake in renting instead of owning. I used to try to explain that home ownership is a lifestyle choice but cannot be considered an ‘investment’. Now I don’t bother. I am very happy with my decision.
Love seeing what you write each day.

#44 this is wonderland on 07.12.11 at 11:17 pm

.#7 Harvard Grad

An income in excess of $150K per year.


Oh god I can’t stop laughing, literally Iv got tears running down my cheeks.

#45 Not 1st on 07.12.11 at 11:18 pm

Forget about Dan. He’s screwed. He should blow whatever money he has on strippers and beer.

Let talk about the real elephant in the room, the U.S. default which will indeed happen and will affect every corner of the globe. Of course you understand the definition of a default. In fact the U.S. has already defaulted. Garth just doesn’t under stand the technicalities.

If you need to borrow more money to pay your bills without creating an equivalent cut in your spending habits, that tells your creditors you can’t pay your bills and that they are going to be last in line for payment if you get some money. This is default.

Conversely, if you decide not to borrow money to pay your creditors and obligations, then the same message to creditors is presented. This is default too.

The only solution is for the U.S. to lock the cap as it stands and cut exactly 700 billion dollars from its budget which will signal that they are serious about getting their fiscal house in order. This is about the size of their annual defense budget. of course the resulting austerity, job losses, and economic slowdown would cripple uncle sam and send it into a spiral and possible revolt. They know this and cannot do it.

On top of that ugly scenario, the U.S. real obligations are not $14.5 trillion, they are more than 100 trillion which of course can never be paid back.

The U.S. is insolvent and their only way out is to inflate their way out which they will try to do.

#46 Carp on 07.12.11 at 11:19 pm


Aside from taking out all your money in dividends. Keep some cash in your company and start accumulating. I assume you single. I’m not and kids cost cash but I pull out a lot less from my company than you do being single. Your probably a 1/2 smart guy and pay less taxes already, don’t be an idiot and blow all your cash. Consider also you probably have a good 10 years as a consultant before you get deprecated and younger guys replace you. So consider that in the next 10 years you bettter be ready for a less paying job. You have 10 years to accumulate – say 400K (without considering gains on that). That’s 40K per year saved. Start budgeting.

#47 Nostradamus Le Mad Vlad on 07.12.11 at 11:23 pm

Well, all the packing is done (save for a couple of odds and ends), I’ve mowed the driveway and shovelled the lawn (climate change for those that are unaware), so tomorrow we’re off to Europe for a couple of weeks, just to throw some gas on the fire to cool things down a little.

So, to paraphrase someone, we Wish You Were Here on the Dark Side Of The Moon, Shining On like y’all Crazy Diamonds!

And to keep y’all happy, here are some hyperlinks . . .
Thought For The Day: “We’ve got to ride this global warming issue. Even if the theory of global warming is wrong, we will be doing the right thing in terms of economic and environmental policy.” — Timothy Wirth, President of the UN Foundation, followed by So nothing changes.
Eminent Domain granted to China, as the US can’t pay its debts, leading to a Military Dictatorship. It leads to this; There is an alternative to western govts. paying off their bills — loot the public! CMHC Does this sound familiar? “Before QE2 there was QE1, in which the Fed bought $1.25 trillion in mortgage-backed securities from the banks.”

#48 BLSW on 07.12.11 at 11:29 pm

Garth, I have read your most recent book, Money Road, and I have been reading this blog for a couple of weeks. I feel that I must relate this story of my family’s real estate experience during the last boom in Toronto in the late eighties. In the spring of 1990, my parents purchased a 4 year old home in a nice neighbourhood of midtown Toronto for $700k. The house right beside ours was built at the same time by the same builder (same style, features, identical lot size, etc.) and they purchased it for $356k in 1986 when it was brand new. My parents lived there for 14 years until they downsized into a condo. They sold the house in June 2004 for $785k losing money after paying real estate commissions and inflation. There was no intention of flipping the house; they just needed a place to live.

1989 – Toronto real estate peak
1996 – real estate prices reach a bottom
2003 – recover to 1989 nominal price levels
2005 – inflation adjusted prices recover to 1989 levels
2005-2011 – starting to make money

How many investors wait 15 years before making money on a so called “investment”? They say in real estate that you make your money when buying. I’m wondering if there have been any comparable economic studies from the late eighties price levels to today’s market for the GTA.

Buy Low Sell High….

#49 BLSH on 07.12.11 at 11:32 pm

typo in my handle -BLSH

#50 Kurt on 07.12.11 at 11:32 pm

I think a blog post that uses sexual allusions and innuendo to talk about punctuation and its relation to real estate would be hard to write – and bloody hysterical to read. Go for it!

#51 HouseBuster on 07.12.11 at 11:35 pm

Dan is not so screwed. He just has to save, save, and save. In 20 years he could easily have $1 million assuming his income stays the same.

Neat trick. Show us how. — Garth

#52 waterloo Resident on 07.12.11 at 11:44 pm

You’re kidding right?
Dan earns $110,000 per year and YOU call him screwed?

I am a professional Engineer, both Mechanical AND Electrical, and I would gladly PAY ANYONE $10,000 if they could get me a job that pays even HALF of what Dan is making now !

My job pays only $38,000 per year and they are beginning to lay off employees once again, so I’ll probably be looking for a new job soon. There’s not much work out there, even Ford (mayor of Toronto) is planning on letting go of thousands of Toronto employees.

If everyone is like DAN and earning $110,000 per year then there is no problems in Canada.

If everyone is like me, earning just barely enough to buy food, up to my neck with education and skills but no one to hire me even though I’m bending over backwards to get any kind of work, then sorry but we are all going down the toilet very soon.

#53 Michael on 07.12.11 at 11:58 pm

I don’t really see him as that screwed. He said he took out between 90 – 110K/year. That is, I am pretty sure, not what the company actually billed out. Meaning: He probably has quite a bit of liquidity in the company.

Secondly, the job he’s doing is not going to kill him or disable him physically preventing him from working past age 65.

So, I don’t think the VW is already booked, not yet anyway.

#54 Will on 07.12.11 at 11:59 pm

Thank god Ben Bernake came from an Ivy League school, otherwise we might be in real trouble!

#55 Get Real on 07.13.11 at 12:00 am

# 7 HarvardGuy

Harvard would sue you for defamation if they read your post.

#56 02139 on 07.13.11 at 12:01 am


What happened to Expository Writing @ FAS? Are jocks now exempt from Expos? 02138 sure isn’t what it used to be! Forget math and english, I had better teach my kids squash or lax instead!


02139 grad (class of ’06)
toronto C01 and C02 house-owner 4 times over (less than 50% LTV)

PS: 150k doesn’t get very far these days
500k is the new 150k

#57 Axehead on 07.13.11 at 12:02 am

I’m with #14 SOMECATCHPHRASE. Why can’t a single guy with not debt live on 60k per year. Why, that’s a better salary than most retail managers and they happen to live very fine, thank you. So – if Mr. Dan socks away at minimum 20k/year * 20 years, that would add 400-600k to his 200k leaving him with 800k to retire on – sweet. What’s the problem? Other than self employed people don’t always work full time.

#58 rental monkey on 07.13.11 at 12:07 am

Harvard grad….well, we all know that not all grads from there retained the edumacation they learnud. Remember Georgie? Wasn’t he a Harvard grad? I think we all can recall how he, uh, conversed. Just because the paper says so, doesn’t mean you are really all that smart.
I’m going with troll or “astroturfer”. Check that craziness out.

#59 Page on 07.13.11 at 12:09 am

#7 Harvard Grad

Dude, it’s awesome the way you’re still able to write at a Grade 5 level after enduring a Harvard education. We’re all so grateful that you took the time to talk stupid sh!t to us on a school night.

#60 Carp on 07.13.11 at 12:12 am

Anyone who can read French, this article is pretty good … I like La Press … a lot more objective than Anglo News. Anyhow, I think this guy reads this blog …


#61 Fleabitten Monkey on 07.13.11 at 12:13 am

#7 Harvard Grad

I love lacrosse games. This is Canada’s national sport after all. Great athletes and incredible fights sometimes. My guess is you got your head pounded a few time’s eh?

#62 Hoof - Hearted on 07.13.11 at 12:23 am

I didn’t know Harvard had a “Skull and Bones” frat?

A-Knee – weigh….4Q

#63 oslec on 07.13.11 at 12:30 am

#7 Harvard Grad
The reason why so many of us uneducated people are pissed off at HIGHLY EDUCATED

#64 randman on 07.13.11 at 12:35 am


Mean Gene and Elmer….

You said it boys…just returned from both those spots
(Philippines and Thailand) been there many times

Those countries will soon begin to fill with elder
Canadians bugging out of our oppressive cost
of living…

I’m thinking of being there soon myself ….$20,000
should do it in in both places

Maybe its best to arrive early to the party?
What do you think?

#65 MM on 07.13.11 at 12:37 am

> I have no need for a high-cost lifestyle. I could save a fair amount of the money that I make.

What is a “fair amount”?

$1.5k per month @ 7% = over $800k by 65

#66 Deliverator on 07.13.11 at 12:54 am

An income in excess of $150K per year, applying the skills learnt from the very school you so easily mock – I actually have to pinch myself some days and tell myself it was just too easy.

Not enough to buy more than a box in the sky in Vancouver. You’re pretty high on yourself for such a measly income.

#67 wes_coast on 07.13.11 at 12:59 am

Wow, Dan sounds a whole heck of a lot better off than so many I talk to….. if someone pulling in 100k per year and no debt is screwed we may as well all throw in the towel and just enjoy the show when the shit hits the fan. This blog can be depressing. Going back to HGTV now. buh bye.

#68 from kits on 07.13.11 at 1:03 am

someone is pretty proud to be from harvard…should that make us think you know what your talking about?

you went there on a scholarship, not because of your academics

#69 Don on 07.13.11 at 1:11 am

Harvard Grad

You assume that a Harvard degree is valuable to society. US education system not rated that high these days. If you could measure POMPUS, they might rate high. lol.

#70 Al on 07.13.11 at 1:13 am

“Dan, of course, is probably screwed.”
I don’t think so.

Assuming that Dan is not full of it:
” 90K – 110K yearly, pre-taxes.”
“I have no need for a high-cost lifestyle. I could save a fair amount of the money that I make”

If he will use his RRSP and TFSA at 100%, each and every year, plus whatever he can use from the past years, he should be OK in 20 years or so.
His RRSP limit is close or at the max allowed by law. Together with the TFSA he should be able to save a pretty penny, if he has the discipline, of course.

#71 Cato on 07.13.11 at 1:16 am

Dan has plenty of company. Dan and his compatriots are definitely screwed and here’s why. The days of easy gains & easy money are over , its going to prove far harder to accumulate real wealth going forward and big brother is all out of goodies. If someone like Dan couldn’t accumulate a nest egg when times were good why would they have a hope now that times are bad. Mad Max here we come, you know “two men enter, one man leaves ..”

The debt limit is just political theatre. The game being played by all US career politicians is get the limit increased just enough for one more turn at the trough. Once the credit card is truly and utterly maxed out it becomes someone else’s problem. Thats the great thing about politics – no accountability. You can run the country off a cliff and still keep your pension.

Truth is the US is already in default. The Fed has been monetizing debt and we’ve gotten a peek at what the end result is going to look like. It isn’t pretty, some will win and most will cry.

The world economy as a whole isn’t in that bad of shape. Thanks to the human population exploding there are plenty of consumers taking their rightful place on the planet. Multinational profits are fine,overseas hiring is robust. We were just victims of our own arrogance which kept us blinded to fact the world changed, and so has our place in it.

#72 Burnt Norton on 07.13.11 at 1:37 am

#7 Harvard Grad

Two guys in the men’s room at a bar in Boston. One wearing a Harvard sweater the other wearing an MIT shirt. Harvard guy sees MIT guy walk away from the urinal straight to the door and says: “Ugh, at Harvard they teach students to wash their hands after using the toilet”. MIT guy replies over his shoulder: “Yeah? Well at MIT they teach ya not to piss all over yer hands”.

#73 palebird on 07.13.11 at 1:44 am

Harvard grad you are full of it loser..18 and 20 you are so right..you can live so good elsewhere for so much less and nobody gives a damn about your “material status”..

#74 Harlee on 07.13.11 at 2:44 am

No to a punctuation post.It would be unfair to Smokin’ Man.

#75 Steven Rowlandson on 07.13.11 at 2:55 am

Garth if anything the debt ceiling should be lowered to zero and governments access to credit should be taken away. No borrowing and no issuing bonds in any way shape or form for any reason what so ever. All cheaters go to the guillotine or gallows. No spending more than tax revenue and no raising taxes beyond where they are.
Spending far less than tax collection is to be encouraged so that government can have income creating investments and eventually get out of the tax racket.
As for social programs and subsidies, identify and eliminate them. Any government beyond what we had in 1867 is a luxury Canada can not afford. Control diplomacy, the military, the mint, the courts,taxation,transport and communication. Any thing else should be left to the provinces or the people to deal with and at their own expense.

#76 betamax on 07.13.11 at 3:59 am

#7 Harvard Grad: “I would just like to quickly reply to yesterday’s post…blah blah blah blah blah blah”

You already replied in yesterday’s post. Compensate much? Too bad you didn’t understand the criticisms made. The point was not the cost of the education, but the waste of it, which you consistently reaffirm.

#77 Jody on 07.13.11 at 4:55 am

#7 Harvard grad – you’ll be tossed on the pile of bodies like all of us will, you to will join us in the prison camps, keep laughing while you can.

The great recession instead of the great depression. Massive taxes on the poor and middle class to pay the debt brought on by bankers who wrote the tax laws to exempt themselves.

Who is taking a shred of responsibility for the complete failure of Tarrp and the stimulas plan and all of the money that was blown and burnt and sent into the atmosphere to deal with this crisis? Now they want to rape us again and again and again, bend over and grab your feet.

Now they are using the word “sacrifice,” what a load of crap. They are completely out of control. Listen to all the rich pricks talking about how we need to sacrifice while they own giant yachts and airplanes, we need to sacrifice our modern living as we are supposedly the problem.

When the ruling class are backed into a corner because there BS and violence didn’t work you hear the term “shared sacrifice,” – y’all better be ready for a much lower standard of living while the rich grab whatever treasure they can get their hands on before the whole system comes crashing down. We need to push back on the idea of sacrifice. The west was built on the ideas of life, liberty and property rights, freedom and a growth in the economy so we could deal with things like environmental problems by wealth, not on let’s accept a lower standard of living, less information, more poverty. Wealth makes things cleaner, it makes you have less children, excess wealth lets you focus on problems other than just surviving.

They are trying to make it a virtue for you to surrender your last vestiges of middle class living, they will say it’s for the spotted owl, it’s to save the polar bears, it’s for the planet, the children, the future. Ignore them, tell them to go to hell and shove it up their arse.

#78 golden girls on 07.13.11 at 5:47 am

$90K a year in dividend income in a business that requires no equipment, no cash-flow-hogging inventory, and (I’m guessing) no employees.
No debt.
And he’s lived a fun life for 45 years.
Why is this guy bothering to write to this blog?
He’s got the world by the [email protected]

#79 prayforcrash on 07.13.11 at 5:58 am

I’d much rather move to the US than Canada. It’s only 16 degrees celsius here in Australia and it’s driving me and everyone else mental.

Much cheaper housing and better weather, sure health is a bitch but with all the money you save on the house you could afford a few heart attacks. Maybe even a stroke and a gall stone removal.

Anyway it’s half way through the year and some areas that nobody really cares about (like Perth and Tasmania) in Australia are quite substantially down, say 10-20%, but generally speaking middle class housing is still a f#cken rip off.

#80 Danforth on 07.13.11 at 6:08 am

#22 2deep on 07.12.11 at 10:33 pm
So 35, zero savings, no debt, no second income (cause the wife won’t work) and $160 in a mortgage basically means I’m screwed right??!?

You’ve got 30 years left before age 65.
Figure you need to put 30K a year towards mortgage and retirement.

Once you pay the mortgage off, you keep going at that same savings rate per year, but now it all goes into retirement plan.

Then, depending on how well you do with that savings plan:
Burn through the retirement savings from age 65 to, say, 80.
At 80, sell the house and live off the proceeds as invested.


Sell the house at retirement, and let it throw off income to support your living expenses.

The kids or local charities get the scraps at the end of the ride.

You’ll be fine, but it takes a LOT of money being set aside every year, without any notable periods of unemployment etc, to make it happen.

(And …as a general observation…a relationship breakup in a case where the married spouse doesn’t work often entitles the other half to a big slice of the pie, decimating retirement plans for seperated retirees).

#81 Homebound on 07.13.11 at 6:24 am

I’m a little worried here. I’m watching the US and Europe sink. China is falling and the Middle East is well, still in turmoil.

I know gold and silver is NOT the answer. Relying on that is like cutting off your feet to save your hands.

Money to me isn’t important, I have more than enough to last my life. And you quickly realise there is more to life than money.

What I think the world needs to fix itself is a change of attitude and morals. Greed isn’t good, fraud isn’t good. Debt doesn’t equal wealth. The Golden Rule, etc.

#82 JO on 07.13.11 at 6:26 am

The US will increase it’s debt ceiling – they are just putting on a show. It’s election year next year.

Harvard Grad – you would convince more people if you wrote like a Harvard grad. Canada has seen a massive debt bubble which has created the illusion of strong economic growth. The Nasdaq style credit expansion, funded through financial repression against savers and pensioners, has enriched the senior financial execs and gov’t sector while raising the costs of our shelter and living excessively.

Don’t confuse major credit expansions with genuine economic growth – most of the debt was used to speculate on housing and to buy consumer goods or renovate the inflated debt castles most call their home. Sadly, it will dawn on most come 2015 or so that they never owned anything. They are paying inflated rent and speculating on higher prices. After all, legal ownership of homes or property does not exist in Canada.

I love my country, and do thinkk we’ll come through this in somewhat decent shape relative to Europe or the US, but what has happened over the last 8-9 yrs, especially in the last 2 yrs, is more than wrong. Our country’s best investments exist in the resource sector – oil and gold to be exact.

When those sectors finish off their blow off phases, Canada will need to find a new gig.

#83 BrianT on 07.13.11 at 6:27 am

#26Andrew-The term hyperinflation is not useful, as most picture their large outstanding mortgage shrinking with ease as the dollars shrink. The USA is opening promoting a policy of dollar devaluation-at the same time TPTB are doing great damage to the USA economy. IMO most RE in the USA is going down from here, no matter what happens re inflation, as this money created is not designed to reach the overall public in any substantial way.

#84 big T on 07.13.11 at 6:36 am

Harvard grad got it right, Canada is the last paradise.

#85 seven Stars and Orion on 07.13.11 at 6:37 am

I recall last summer you were not enthusiastic about DB pension funds. Would greatly respect your opinion today, if you have downgraded or upgraded your long term outlook. Specifically, I’m thinking of HOOPP, circa 2038! Should I proceed as if it doesn’t exist? Or factor it in as a portion of saving and investing a fifth of gross income?
gross household 170k (both parents working)
total debt 9k (student loan set to retire in 26 months)
assets 90k cash savings (not yet invested properly)
house rented with 2 preschool age children.
I welcome everyone’s opinion.

#86 Not 1st on 07.13.11 at 6:47 am

What boomer is going to turn his back on his canadian citizenship and move to thailand or phillipines. You remember we have a thing called universal medical care and you would be stupid to give it up to go sit in a 3rd world country. On top of that, you give up your government pension and OAS since these are not paid to ex-pats.

#87 Danforth on 07.13.11 at 6:51 am

#36 Outta curiosity on 07.12.11 at 10:59 pm

What “should” your (a) net worth (b) retirement savings be at ages 30, 40, and 50?

What a loaded question!
Different people of different earning capacities should have different savings rates, so they can spread their lifestyle perks across all life’s stages.

Let me throw out there a number.
In today’s dollars, how’s 1M to retire.

Then you’ll need to figure out how you get there over various age brackets while you’re younger, but it does mean that by age 40, you might want to have 400K in net worth.

Of that 1M, lets say 500K is tied up in your primary residence, and 500K in various investments.

That gives you both a place to live, and money to invest and throw off income to live.
It offers some quality of life (car replacement, clothing, travel), but may not allow for a second property.

There are lots of models for this… this is just one.

But the ‘net worth’ question to retire, particularly for those of us without employer pensions, is a figure which is a lot higher than the value of a primary residence.

#88 this is wonderland on 07.13.11 at 7:06 am

# 60 Carp.

For anyone who is interested here is the translation, it’s not perfect but you’ll get the gist.


#89 TurnerNation on 07.13.11 at 7:18 am

Party’s over folks:

U.K. Unemployment Claims Climbed Last Month at Fastest Pace Since May 2009Q
U.K. unemployment claims rose at their fastest pace since May 2009 last month, casting doubt on whether the economy is generating enough jobs to offset the deepest government budget cuts since World War II.

Jobless benefit claims rose by 24,500 from May to 1.52 million, the highest level since March 2010, the Office for National Statistics said today in London.


#90 robert in london on 07.13.11 at 7:21 am

The US debt ceiling side show makes for good kabuki theatre. Everyone knows they will raise the limit (disregarding the ultimate immutability of the math of compounding interest) and gold will soar and the stock market rejoice. So predictable. So why is it win win for all the playuhs (unless of course the markets and politicians are now effectively 100% captured by the plutocracy)? And why would the converse (a profligate bankrupt getting some fiscal religion) be such a terrible thing? I have no skin in this game but here is a prediction. The limit is raised, the stock market goes orgasmic just long enough for the plutocrats who have fallen behind in the insider selling race to catch up but the bond vigilantes finally show up in the US Treasury market. This is when the economic ‘theatre’ of the absurd gets really interesting. Got your popcorn ready?

#91 GTA Girl on 07.13.11 at 7:53 am

Harvard is pretending to be Iggy. I appreciate the humor. Rainbows, sunshine and baskets full of puppies, back at ya, Harvard!

#92 Tom from Mississauga on 07.13.11 at 7:53 am

Well the CPP idea would be great as long as he decided to contribute as a self employed.

#93 John on 07.13.11 at 7:54 am

Wow, everyone ganging up on the harvard grad.

In this corner, weighing 2hundy pounds: Middleclass

In the other corner, weighing in at a buck-0-5: elitists/professionals

Good thing the boomers will be too old and wrinkly to storm the bastille!

A nice picture of class warfare here.

#94 T.O. Bubble Boy on 07.13.11 at 7:56 am

@ #36 Outta curiosity:
What “should” your (a) net worth (b) retirement savings be at ages 30, 40, and 50?

This would obviously depend on how much income you want to have in retirement.

Here’s what the average Canadian probably has:

Age 30
Net Worth = -$400,000 (minimal savings and a big mortgage with minimal home equity)
Retirement = $0 (RRSP pillaged for down payment on house)

Age 40
Net Worth = $200,000 – all in home equity (minimal savings, but mortgage 50% paid off)
Retirement = $0 (everything went into the house, and to the 2.4 kids)

Age 50
Net Worth = $400,000 (mortgage paid off)
Retirement = $0 (kids are in university)

So, just like the retirement crisis coming for the boomers, the average Canadian family will have the majority of their net worth in a home at age 50.

#95 Paul on 07.13.11 at 8:02 am

I received a letter from my CIBC advisor yesterday. She’s asking customers to contact her for mortgage advice if they’re worried about rate increases. The interesting bit is that she cites very specific predictions for rate increases: “Current forecasts call for a rate increase from 5.39% to a maximum of 5.90% on a fixed 5-year mortgage by the end of the third quarter, with rates possibly reaching as high as 6.40% by the end of 2011. One-year mortgages are expected to see increases from 3.50% to 3.90% by the end of the third quarter, and 4.40% by the end of 2011. Overall, when calculating the interest rate increase, it is expected to be in the range of 1.5% to 2% over the entire year.”

#96 The Original Dave on 07.13.11 at 8:03 am

The content of the comments the past couple of days has become crappy. Way too much focus on harvard grad. Unfortunate.

You just did it again. — Garth

#97 Carruthers on 07.13.11 at 8:17 am

#7 Harvard Grad: Your grammar is atrocious. Perhaps you spent too much time playing for the Crimson and not enough in class?

#98 mississaugaboy on 07.13.11 at 8:26 am

I had to laugh yesterday. My friend who bought the condo (the one I tried to warn) sent me an email containing an “article” about the housing bubble and “what bubble? there’s no bubble” argument.

Of course the “article” was written but a real estate agent.

I considered warning her and to consider the source and the author as they have an interest in keeping this party going but I’m not gonna bother at this point. I made my peace and I won’t bring her spirits down since she closes in 2 weeks.

I’d rather keep a friend than push push push, plus when it goes down in flames I can do the “I told you so” dance.

#99 Andrey on 07.13.11 at 8:33 am

#22 2deep on 07.12.11 at 10:33 pm
So 35, zero savings, no debt, no second income (cause the wife won’t work) and $160 in a mortgage basically means I’m screwed right??!?

Something doesn’t add up (or “new math”?)
how “$160 in a mortgage” = “no debt”?

#100 Kevin on 07.13.11 at 8:34 am

HouseBuster wrote: “In 20 years he could easily have $1 million”

Garth said: “Neat trick. Show us how.”

Assuming he’s starting with $52k, and earns 8% on his investments, he’d just need to save $1,050/month in his RRSP, and re-invest the tax refund. He’d end up with over $1 million after 20 years.

I don’t think $1,050/month is too much to expect someone earning $100k/year to be able to set aside.

This assumes a savings rate of 17.5% of after-tax income, which would put him among the highest savers in the industrialized world. Also assumes a steady income for 20 years (not exactly realistic for a self-employed consultant) and no increased living costs. Also $1 million in an RRSP is actually about $600,000, assuming marginal rates don’t rise by 2031 – a big leap. — Garth

#101 allister on 07.13.11 at 8:48 am

#52 Waterloo Resident

If you have experience you should look at emmigrating and becoming one of the brain drain people. If this country doesn’t want to pay you, go somewhere where they will.

Lots of people do it.

#102 pessimist on 07.13.11 at 9:04 am

#36 Outta curiosity

What “should” your (a) net worth (b) retirement savings be at ages 30, 40, and 50?

As a reasonable estimate, use the metric proposed by the authors of “The Millionaire Next Door”. You are considered to be a prodigious accumulator of wealth (PAW) if your net worth is equal to or exceeds:

your age * your current income / 10

I personally don’t see any difference between retirement savings and net worth. The whole purpose of my net worth is to support me in the future.

#103 kimi on 07.13.11 at 9:16 am

#29 Immigrantvoice … I think you may be right. Really even some of the bloggers want to trade places with Dan. And when I think about it … everyone I know is in huge debt and Dan isn’t in debt. Makes ya think. He just maybe better off, slightly, but about water all the same.

#104 Hoser on 07.13.11 at 9:17 am

“On top of that, you give up your government pension and OAS since these are not paid to ex-pats.”

Not true. You qualify or you don’t. It doesn’t matter where you live.

#105 BrianT on 07.13.11 at 9:23 am

#103Pess-Using that metric, a ton of people in TO and Vancouver qualify. IMO most Canadians don’t understand how huge this housing bubble has become and thus how uncommon it actually is to have a few mill in net worth (without a housing bubble). When you have a huge % of the population of these two cities qualifying as “prodigious accumulators of wealth” that says it all.

#106 BrianT on 07.13.11 at 9:29 am

#91Big-You are being too negative-if the average person wasn’t brain dead can you imagine how hard it would be to survive? Life is enough work as it is.

#107 BrianT on 07.13.11 at 9:32 am

#86Not-Actually, “medical tourism” is increasing dramatically. More of these foreign locales are starting to sell top notch medical service at WalMart prices.

#108 kimi on 07.13.11 at 9:36 am

#81 Homebound said …What I think the world needs to fix itself is a change of attitude and morals. Greed isn’t good, fraud isn’t good. Debt doesn’t equal wealth. The Golden Rule, etc
Its true. When you accumulate a bag of cash, you fiqure out that there is more to life. I can’t tell someone in debt how good it feels when you’re free. They don’t get it, resentment sets in, then the friendship changes.
It’s sad really, so many people are ego driven. Maybe a good smack in the face from the economy will make them wake up. I don’t have a lot of hope though, but maybe that will change some people, but most never learn.

#109 Peakoilist on 07.13.11 at 9:37 am

#18 Elmer..ummm..health care ? you must be exceptionally healthy..

#110 Cowboy on 07.13.11 at 9:37 am

Harvard Grad,

Too bad your fancy education didn’t teach you what an idiot you are…


#111 Peakoilist on 07.13.11 at 9:40 am

how about policing spelling, but not punctuation.thats just anal
ie.. lose vs loose :)

#112 Dad on 07.13.11 at 9:41 am

Better not try to find some older lady, our courts would still award her alimony!

#113 Contrarian on 07.13.11 at 9:42 am

>>Although I’ve been frivilous with my income, I have no need for a high-cost lifestyle

I would advise Dan to really focus on that “no need for a high-cost lifestyle”. Dude is making $100K and looks to be saving less than 5% of his after tax income. Let’s see if Dan can live on putting 50% (after tax, so about $40K) for a couple of years, then switch to 25% until he retires. He could have a decent base by the age of 50 (target should be about $200K), and if he continues to be successful, he could be within pissing distance of $1 mill (inflation adjusted) by the time he retires.

But let’s be honest here. He says he has no need for a high cost lifestyle, but what he really means is that he thinks he can handle low cost living in the future. Of course, you can always put off tomorrow, right? Yeah, right up until it smacks you in the face…

#114 kimi on 07.13.11 at 9:45 am

#86 Not first .. said what boomer is going to turn his back on his canadian citizenship and move to thailand or phillipines. You remember we have a thing called universal medical care and you would be stupid to give it up to go sit in a 3rd world country. On top of that, you give up your government pension and OAS since these are not paid to ex-pats.
The Universal medicare we got, we pay for through the nose. Our medicare isn’t free. Think about that. Our doctors charge 15 times more for things you could get in other countries like the US. Doctors here are paid by how many patients they see, which is why your rushed outta there and why they have to re-do tests and xrays and the whole nine yards. Free, accurate, a value?

#115 biil c on 07.13.11 at 9:49 am


Put an offer of 500K on house asking 620K.
Sold for 650K 18 months ago. I was only offer and now coming back to me at 529K with 7 day closing. Should I take it. Please advise asap.

#116 Danforth on 07.13.11 at 9:50 am

#103 pessimist on 07.13.11 at 9:04 am

You are considered to be a prodigious accumulator of wealth (PAW) if your net worth is equal to or exceeds:

your age * your current income / 10

Wow – that’s my net worth exactly!!
No kidding!

#117 disciple on 07.13.11 at 9:54 am

#77 Jody…That was dark, lady. But of course, all true.

Myopia prevails. Most people don’t understand how close we are to all-out total war. Boomers and their children (me) did not experience even a shred of it. Peacekeeping does not count, sorry. Most people don’t care about history. That’s why it repeats.

The English language itself is a war language, many idioms, expressions, and morays in English were meant to convey a certain action during war. English is made up of 75% other languages; therefore, there is no such thing as “proper” English. By extension, there is no such thing as “proper” language. Proof: one can learn more about a particular language colloquially than from a textbook. The language presented in the book is never the one used in a population.

The earlier language of humanity was not verbal, it was symbolic. Verbal language is related to the written language, traced to the Phoenicians, one of the few ancient sea-faring family groups who suppressed knowledge distribution in order to continue to profit from the metals trade. Yes, tin from Cornwall, England, was the reason why the Earth was flat.

And the irony is that language itself is used to conceal information, rather than spread it. The coming economic collapse, and subsequent totally destructive war, will also require language itself to be reinvented. For the old earth will be passed away…

#118 Cowboy on 07.13.11 at 9:55 am



I just read all the responses to Harvard Grad,
Spot On!

Please, please post again,
your grammar is brutal,
and I would love to see what else superior intellects
write about….

‘Your’ the best!

#119 Dave on 07.13.11 at 10:00 am

Worry about the credit rating agencies for the frauds they are!

This week Max Keiser and co-host, Stacy Herbert, report on declaring war on rating agencies and buying refrigerators to save the economy. In the second half of the show, Max talks to Professor Emeritus, Guy McPherson, who has exited empire to build a post-carbon community.

#120 Ben on 07.13.11 at 10:12 am



#121 Mr. Reality on 07.13.11 at 10:16 am

Oh come on Garth why can’t everybody just grow their way out of debt? It’s working isn’t it?

Rumrous of QE3 on the table even though the first two didn’t work. The kicked can down the road will come to a grinding halt and fall off a cliff………

The US Fed will bring the entire world down with it.

Short away!

Mr. R.

#122 Live Under Your Means on 07.13.11 at 10:17 am

#104 Hoser on 07.13.11 at 9:17 am
“On top of that, you give up your government pension and OAS since these are not paid to ex-pats.”

Not true. You qualify or you don’t. It doesn’t matter where you live.


Can you provide a link? My understanding was that if you live more than 6 months outside of Canada in a given year your CPP and OAS benefits would cease.

#123 Abitibidoug on 07.13.11 at 10:20 am

In this posting, as well as many previous ones, Garth has commented on how little most Canadians have saved for retirement. How can that be, in such a wealthy and prosperous country like Canada? has anyone heard of Derek Foster, the guy who has a wife and 5 kids, and still managed to retire at age 35? I heard him speaking last night and it all seems so simple, something anyone could do if they wanted. The only work he has done lately is writing and promoting books on how to accumulate wealth and retire.

#124 stage1dave on 07.13.11 at 10:29 am

Sometimes I think the decline & decay of Western Civilization can be measured in in interactive forums such as this…there’s a lot of differing viewpoints about specifics, but not a lot of disagreement about the overall direction our economy appears to be heading. (of which housing is a major part)

Well, OK; Harvard grads & West Van groupies excepted…

For my part, I approach the current housing problem the way a ten year old would approach grade 5 math. Consistently BORROWING to simply MAINTAIN a living standard is always going to end badly, irrespective of the amount of zeros involved! Extending the full faith & credit of the gov’t (CMHC) & ultimately the taxpayer to keep the party going is madness…

2 + 2 still equals 4; and if certain people made a ton of money on housing recently, great! Timing is everything because very few (if any) of us KNEW what price increases were in store back in 04-05. Being along for the ride is a lot different than KNOWING or manipulating the market, so I write those profits off as a stroke of luck to beneficiaries & carry on…right place, right time. (maybe the “housing lottery” has replaced 6-49?)

“Financial Genius” has always been a rising market. Making lots of money has become the ultimate indicator of one’s success & the ultimate judgement on their worth to society, apparently.

What I find interesting, & something that’s puzzled me (& lots of others, I’m certain) for over 30 years is the following: discriminating against others based on race, colour, creed, or religion is against the law (supposedly) & rather severe criminal penalties are enforced against violators; discriminating against others ECONOMICALLY is not only encouraged (conciously AND subconciously) but part of the national fabric!

And, most people seem quite comfortable with this dynamic…I’m not going to list a whole pile of instances here, because every person with eyes, ears, & a 3-digit IQ watches it in practice every day & has been on the receiving end (good or bad) on many occasions.

In the end result, I guess it provides a good external indicator of YOUR material progress compared to the next persons; & allows us to identify future goals…or perhaps simply future wants. Plus it gets rid of those pesky thought-provoking questions about others’ potential worth to society exclusive of their personal economic enhancement.

The post by Jody encapsulates the probable end result of these machinations. The majority of the Great Unwashed may be incapable (most times, not always) of acting as a single force, but the top economic layer of society is not, & never has been.

(United by a belief in the “common good” & undoubtedly parables such as “the system must survive” they & their descendants probably will survive, to fleece 95% of the next generation)

The very few comments I read on this board that could be loosely translated as thus: “You haven’t made enuff money…you’re an idiot…grow up, loser” make me squirm…those paraphrased thoughts give a good indication of societal attitudes that will become a LOT MORE severe once this storm breaks. (And they will be “stratified”, depending on what economic level you’re on, or PERCEIVED as being on)

In conclusion, the only certain prediction is that the people who have the LEAST to lose materially will be the FIRST with their hands out; as recent experience in the U.S. has proven. The accumulation of lots of paper is the ultimate wealth, & it’s PERCEIVED value MUST be preserved.


Looking over the RE market & the Canadian economy in general, I feel like I’m watching that scene in the movie “Airplane”…as the thoughts of the ATC guys when the perdicament of the jet is revealed:

“They’re screwed” “They’re history” “They’re gonna crash”

For all I can contribute to this scenario unfolding, I must be the guy at the end wondering “…did I leave the iron on?”

#125 Lloyd on 07.13.11 at 10:47 am

“Harvard Grad”,

I do believe you proved everyone’s point that ‘Ivy League’ schooling is SOOOOO like over rated!

#126 Samson on 07.13.11 at 10:49 am

Dan is screwed?

uh…am I missing something?

– Drawing dividends from an asset that seems to be doing well….
– No mortgage…low debt load…highly mobile….
– Modest lifestyle requirements…
– Plenty of time left to change course if necessary…

If that’s “screwed” I wonder what Garth would say about some of the other folks out there.

No assets… no salable business… no benefits… no pension… $50K net worth at 44… screwed. — Garth

#127 Jody on 07.13.11 at 10:58 am

We now have central banking. CMHC. Minimum wages. Government protection of labour unions. Fractional reserve banking. A massive public sector. Mandatory CPP. Unemployment insurance. CDIC. Fiat currency. FINTRAC.

Those are REALLY BIG examples of government interference in the free market….

Why not deregulate lending altogether? What are you afraid of? That some financial illiterate will get cheated? That someone, somewhere – God forbid! – will be allowed to FAIL? That some poor sod WON’T get to borrow hundreds of thousands of dollars with next-to-nothing down? That people will have to start SAVING to buy things again? God forbid!

#128 Beach Girl on 07.13.11 at 11:01 am

I think my retirement plan, to make my retirement more enjoyable, will be renting rooms with all their own facilities to destitute boomers in my basement. I also want the company and help with the yard work. I am a boomer, who has lived within her means. My parents who were in the depression scared the crap out of me. Worked hard all my life. How much is the maximum pension from the government in 2011 dollars?

#129 dd on 07.13.11 at 11:06 am

“United States is two weeks away from a default”

How many times has the debt ceiling been raised? Since the dawn of the confederation! It will not happen. Period. This is self imposed.

It is time to worry when the lenders do not show up. Which is soon enough.

#130 BrianT on 07.13.11 at 11:08 am

#125Stage-Your basic conclusion is incorrect-i.e. that one’s economic status is all important-at best this applies to 50% of the population, not 100%. Take any drop dead gorgeous girl from any third world dump, drop her at Bay and King as a homeless panhandler and she is not going to stay a homeless panhandler very long.

#131 disciple on 07.13.11 at 11:09 am

#116 Bill C…Run! Buying a house in Toronto for 500K is not a good bet, considering that prices most likely will fall. I think 80%, but others here have a more moderate view. In any case, try to lose the house lust (I know it’s hard, but…) just wait it out. You will be rewarded for your patience.

#132 Peakoilist on 07.13.11 at 11:10 am

#64 Randman…where are you going to get your hip replacement and double knee replacement..go live overseas and never come back .

#133 BrianT on 07.13.11 at 11:12 am

#116Bill-What makes you think 500 or 529 makes any difference?

#134 Peakoilist on 07.13.11 at 11:21 am

The debt ceiling will be raised.perhaps by executive order.. remember DEBT=MONEY…TPTB must have the debt ceiling raised to increase the money supply.and it will happen.
Garth , you are wrong on Hyperinflation..TPTB don’t fully understand how precarious things are. The herd just needs to be spooked enought to trigger US treasuries being sold off in droves. this will trigger an unstoppable event..they will try to print billions more but to no avail. History has shown us that this happens often, because the higher ups are really stupid. Greed clouds everything.

#135 blase on 07.13.11 at 11:22 am

Enough about Harvard boy. Trolling if I ever saw it. Don’t feed the troll people.

#136 disciple on 07.13.11 at 11:27 am

#125 stage1dave….thanks for the post. Enjoyed trying to understand what you were getting at, though. You seemed confused about something…why material wealth is so important in our society. Your awareness is relatively unique among your peers.

You and I and the majority of people are scrambling around picking at the leftovers from the feast of the top 1% of our global society. This is true for anyone making less than 999K per year.

It’s a sick joke. There exist single nuclear families on this globe that possess sufficient wealth that if they shared just half of what they have, poverty, disease, malnutrition and regional war would be virtually eliminated. Think on that.

I have been poor, I have been middle class, I have lived for months in Third World villages, I understand the disparities in perceptions of what wealth is. Heed my experience: wealth is labour and technology, and liquidity of that wealth in the form of paper, metals, commodities, or bonds/equities, allows you to contribute it towards the common good. If you are hoarding, it is utterly useless to you and everyone else.

#137 Chris L. on 07.13.11 at 11:34 am

#51 HouseBuster on 07.12.11 at 11:35 pm

Dan is not so screwed. He just has to save, save, and save. In 20 years he could easily have $1 million assuming his income stays the same.

Neat trick. Show us how. — Garth

Garth, it’s easy. Here are two reliable source… and I can personally vouch for the techniques expressed.

1) http://www.mrmoneymustache.com/
2) http://earlyretirementextreme.com/

This will be the great alternative between slave labour/consumption and poverty. Enjoy.

#138 JohnnyBravo on 07.13.11 at 11:40 am

The Bernank’s latest testimony summed up in four words: “We have no clue.”


#139 Devore on 07.13.11 at 11:41 am

#29 immigrantvoice

Yes, your friends are doomed, and so is Dan. Get the picture yet? But just because “everyone” is broke and has no savings, doesn’t mean it’s ok. You can aim a little higher.

#140 FormerVanCityOwner on 07.13.11 at 11:50 am

A couple of anecdotes from Vanity. Two families we know just upgraded in the Tri-cities area. Moving from a townhome and condo to SFHs to have have space for the growing family. Average two income families making probably a shade over $100K, now saddled with approx. $600K mortgages each, which seems entirely normal to them. Both desparate to quickly get mortgage helpers and both have indicated no vacations for a number of years, but a small price to pay to avoid being priced out by HAM.

#141 EdmontonJim on 07.13.11 at 11:50 am

The tipping point in the US comes when a majority of the voting population can no longer work (either from age or unemployment), and have no personal savings. As this new majority sees their standard of living deteriorate rapidly, they petition the government to spend more and more. This is first done by borrowing, until they can no longer borrow because all revenues equal just the interest payments on the debt.
Once this occurs, the government must either default, or raise taxes drastically. Or both. Either way, those few with the most wealth will protect themselves by removing their wealth from the economy by any means (legal or not). Unemployment skyrockets as the economy grinds to a halt, increasing the burden on the government while simultaneously crippling the stream of revenue. An increasingly impotent government stops paying most of its employees, hoping they’ll keep working. At the worst, the only ones they are paying are the police and army, to force striking public employees back to work, even though they aren’t being paid.
An enterprising and charismatic politician finally convinces one group of wealthy people that they can have the wealth of another group if they support him. Those rich people start spending and give credit to this politician as he is elected President in a landslide election. He invents some catastrophy and blames ‘libertarian terrorists’. He suspends congress and fires all the military officers that disagree with him. He then quickly seizes the assests of those ‘libertarian terrorists’ and the economy gets rolling again. The president is named ‘Man of the Year’. Then he annexes Canada.

And I just proved Godwin’s Law.

#142 Devore on 07.13.11 at 11:55 am

#50 Kurt

I think a blog post that uses sexual allusions and innuendo to talk about punctuation and its relation to real estate would be hard to write – and bloody hysterical to read. Go for it!

For this task Garth should partner up with hotforwords.

#143 EdmontonJim on 07.13.11 at 11:57 am

And in case anyone misses it, my post was satirical. Please put your pitchforks away.

#144 Devore on 07.13.11 at 11:57 am

Neat trick. Show us how. — Garth

Well, he clears $100k a year from his company after taxes, and has zero savings today. So all he has to do is cut his lifestyle by half for the next 20, and he’s set!

That’s pre-tax income. — Garth

#145 brainsail on 07.13.11 at 12:01 pm

#123 Live Under Your Means on 07.13.11 at 10:17 am

“Can you provide a link? My understanding was that if you live more than 6 months outside of Canada in a given year your CPP and OAS benefits would cease.”

I have never heard that before. Here is a link to receiving benefits in the US.


#146 An Cat Dubh on 07.13.11 at 12:05 pm

Canada should(does) not have a real deposit. Why doesn’t the govt. issue the currency based on the natural resources, labour, etc. Not a central bank issuing it’s own currency then lending it back at interest. This is just a counterfeiting scheme, which is ‘legal’. Thomas Jefferson said ” A central bank issuing it’s own currency is a greater threat than a standing army”. Look what happened when the Fedral Reserve Act was issued in 1913. Inflation, wars, poverty. Libya has it’s own citizen’s bank, and doesn’t belong to the IMF. Of course that has nothing to do with the attack on Libya. ;), like JFK’s assasination had nothing to do with him having the US govt. issue it’s red seal bills bypassing the Federal Reserve.

#147 arctodus on 07.13.11 at 12:06 pm

A few folks on here have a part of the puzzle but the bedrock truth of the situation is so much worse than most can really grasp.

The world hit peak oil (peak energy supply in reality) in 2004-2005….we then flatlined globally for 5-6 years. In 2010-2011 it looks like we started on the downslope of the worldwide adjusted Hubbert curve.

Peak energy speared the global economic system in the heart. It has killed globalization for all time and has revealed the utter joke of keyesian economics…and expansionist currency based economics generally.

We will now see demand destruction on a “biblical scale” as the world economies collapse (first functionally high-hyper inflation: yes political decisions WILL allow this to happen, secondly crushing deflation as the reality of true cost economics takes hold).

You all keep thinking that clever investment strategies in paper assets (dependent on government stability and relative economic congruity) will save you in 10-20-30 years…..you are suffering from cognitive dissonance on a shocking level.

Your fantasy worlds were gutted back in 2005 but it takes a while for such large beasts to fall to the ground…

but they will…

A World Made by Hand is getting closer every day….

#148 jwkimba on 07.13.11 at 12:09 pm

In no particular order:

Off topic:

Happy to not be 02138, sadly reminded I was waitlisted for 02139 but chose the sure thing m5s3e5 instead.

non-residents get dinged 25% ‘tax’ on the CPP, OAS payments. If you are eligible, you are eligible.

The more I read neo-con plans, the more confused I get. The southern neo-cons won’t approve any spending cuts unless they also get equivalent tax cuts. Is that harvard math? So we have a showdown because the conservatives refuse to cut spending. Awesome.

On Topic (somebody has to do it)
And I closed on a 3+1/2 on 1/2 acre house yesterday. Yay! Built in 2006, it has soaring ceilings, screened porch, irrigation sytem etc. Of course it would NEVER sell in Toronto becasue the appliances are WHITE, not SILVER as required by law up here. It’s in in Ft Myers, FLA and already tenanted at $875/mo. 72k. Hope to close on another next month….

#149 BrianT on 07.13.11 at 12:09 pm

The Bernank is pretty well a dream for any gold and silver investor.

#150 JohnnyBravo on 07.13.11 at 12:18 pm

#141 EdmontonJim on 07.13.11 at 11:50 am

“And I just proved Godwin’s Law.”

Doesn’t count; you did it on purpose. ;)

#151 JohnnyBravo on 07.13.11 at 12:23 pm

#148 arctodus on 07.13.11 at 12:06 pm

Don’t look back. You may turn into a pillar of salt.

#152 Carlos on 07.13.11 at 12:34 pm


In the exceedingly unlikely event that the US Congress can’t get their act together and raise the debt ceiling by 2 Aug (itself a soft date), the Treasury could and would continue to pay interest to bondholders via, amongst several items, current tax receipts. The markets know this which is why there hasn’t been a complete freakout.

Love the blog, dude.

#153 fancy_pants on 07.13.11 at 12:34 pm

debt ceiling will raise yes. And Garth is not wrong on hyperinflation. It has to get into hands of American spenders for hyperinflation. not happening. won’t happen. At a personal level, extra $ ends up filling the black hole called personal debt/mortgage/liabilities. It won’t increase demand for more things we dont need.

#154 Not 1st on 07.13.11 at 12:46 pm

People don’t realize that the U.S. already defaulted once before, in 1971 when they went off the gold standard. Back then, owning a treasuring was a promise that you would be paid back in bullion. The govt changed that and promised back pieces of paper instead. What happened after that event? The 1970s stagflation happened. We are in for that and worse.

For the life of me I cannot understand who are the hoardes of idiots who stand in line each month to buy new bond issue from an insolvent entity. It defies logic. The U.S. just keeps borrowing from others to meet obligations. Its classic ponzi scheme. The U.S. has no intention of ever paying those foreign bond holders back. They probably have a strategy to run up the debt as far as possible on the backs of foreigners, then screw em all big time and leave them holding worthless paper while the world fortifies the only standing empire.

The US did not default, and is not insolvent. The idiots are those betting against it. — Garth

#155 The InvestorsFriend on 07.13.11 at 12:47 pm

Waterloo Resident at number 52 says:

I am a professional Engineer, both Mechanical AND Electrical, and I would gladly PAY ANYONE $10,000 if they could get me a job that pays even HALF of what Dan is making now !

My job pays only $38,000 per year and they are beginning to lay off employees once again, so I’ll probably be looking for a new job soon.

Dude, get out to Alberta, now! I just heard this morning Ledcor is hiring another 4500 (I believe that is what I heard). Check their web site.

You are worth lots more than $38k.

Look for something that will give you good experience but any engineering job in Alberta will pay more that $38k, probaly lots more.

#156 vyw on 07.13.11 at 12:56 pm

#129 Beach Girl raises some good questions re retirement at home (vs. downsizing or renting).
Here is the CPP payment table:
and OAS and GIS:

Using averages => $512 average CPP triggers $951 OAS+GIS => $17,556.
use this table: http://www.servicecanada.gc.ca/eng/isp/oas/tabrates/tab1-18.shtml

Enough for a senior to stay in their mortgage-free home? Actually, many seniors currently live in their homes on less. But if not, perhaps take a cue from Beach Girl and take in some housemates. Use the HELOC only in case of emergency (roof, furnace, hungry relatives) but make sure it’s paid back.

How depressing. Sell the house, invest the proceeds, live rent-free with liquidity and freedom. — Garth

#157 Real Estate Investor Warnings on 07.13.11 at 1:00 pm

Even Ozzie Jurock is sending out the warnings now.

Major Points from him:
1. If you are thinking development. Stop! Our ‘market’ is right now primarily single family homes on the Westside, Northshore, White Rock (slowing), Richmond and some smaller areas in Greater Vancouver. Markets are sharply lower in Abbotsford, Langley, and Mission and the rest of BC.
2. If you are already on the market, price aggressively. Market vigorously with your main target to sell in September and October.
3. If you are a seller … anywhere … get an excellent WORKING realtor, inspect your realtor, declutter and stage your home and
4. sharpen your price pencil.
5. If you are a buyer, do a lot of research, make a dozen offers – buy the ‘deal of a lifetime’ only.
6. If you are an investor, (we have been reiterating to sell losers for a while) keep cask flow properties only, refinance your portfolio … go as much as 50% into cash
7. In the end however, remember, you are buying a specific property for your own specific purpose. You are not buying ‘the market’. If you have a professional realtor, have done extensive research and have made plenty of offers … .this may be your time to work out your ‘deal of a lifetime’.

#158 Chaos on 07.13.11 at 1:08 pm

At the moment, re-reading Patrick O’Brian’s Aubrey/Maturin “Master and Commander” series of novels. It’s a history lesson written as a serial story.


Career: to move in a prescribed direction. To plot a course in business, activity or enterprise.

Careen: to clean, repair or caulk a ship when tipped over.

While the word careen is an awesome sounding word that one would expect to represent exactly what is sounds like, something devilishly wild and dangerous,
in fact it is arcane jargon used in days past where wooden hulled sailing ships plied the oceans using wind to “career” across the oceans.

Often these ships would be becalmed in the doldrums or tied up in ordinary at which point aquatic vegetation would attach itself to the bottom of the ship and create a curtain of corruption that would diminish the sailing qualities of such ships.

When ever possible the Captains of these vessels would anchor the vessels to the unmoving shore(heave down) and at low tide with the ship now tilted toward the shore “careen” or remove the seaweed, corruption and other parasites off of the hull and thus improve the sailing qualities of their ships.

But let us not quibble so very harshly over the semantics of a letter transposed hear(here) or their(there)…

But instead… let us “career” forth and “heave down” to a bedrock anchorage and “careen” the living shit of corruption and parasites off of our mortally encrusted country.

Can you imagine how well our ship would sail with a clean bottom?

#159 Rock-O-Rama on 07.13.11 at 1:09 pm

According to most on this blog, Dan is screwed. If that’s the case I’m completely toast. 46, self employed, earning around $30-$32k/year gross before expenses/taxes (around $20k net), $6,500 in credit card debt, and around $500 in the bank.

But guess what? I also toured in rock n roll bands for almost 20 years, came inches away from a big US Record Deal, lived in 6 different cities at least 2 times each, took a lot of big risks along the way, and had the balls to do things most of my friends were too afraid to do or try. More importantly, I’ve lived on $20,000 a year or less for almost every year of my adult life, so I’m used to poverty. The only people who are screwed retiring on $20,000+ a year are people who got used to living on $100,000. My mom lives on around $17k at the age of 77, and is quite happy.

Life is short, and then you die. At least I can say I lived my life to the fullest. Counting money isn’t on the top of my priority list, and shouldn’t be on anyone else’s either IMO. Way too many people take their future for granted. Just ask my dad (RIP). He died quite suddenly at 65 after working 30 years for the Federal Government (Retired at 60). No investments, no life insurance. At least he had 3 of his last 5 years to enjoy the precious moments before he was diagnosed with cancer. The last 2 were pretty much a write off.

You know the last thing he said to me before he passed on? “Don’t work so much, and do what you want to do with your life, not what you feel you need to do.” That pretty much says it all.

Enjoy your day. You might not have tomorrow! :)


#160 Kitchener1 on 07.13.11 at 1:18 pm

dan is alright for now. No one knows that the future holds and being in cash and no debt is always a good posistion to be in (yea i know it actually costs money due to insane low rates ) but still. There are worse places to be.

Problem in Canada in this addiction to debt– you cannot sustain economic growth without production and innovation. Yes, GDP will rise with debt expansion but that is all future demand forward. Worst is, that there is a limit to what people can borrow or how much banks will lend.

basically debt makes a minor bump in the economy into a huge road block. When the majority of people have to service their debts at much higher rates, there is nothing left to grow the GDP or the economy. Govt stimulis plans are done.

basically, all the govts the world over bet the farm that we will see a V shaped recovery-made fiscal policy a reliant on V shaped recovery– thats how all the stimuls spending etc. makes sense.
They all figured it will be ok in a few years as the economy will work it self out. Well, thats like betting it all on Red on the roulette wheel. if we double dip. game over.

ask yourslef what if in 4 years the BoC rate is at 4% (the horror!!) 5 year variable rates are at 5.5 and fixed is at 7.5. What happens to RE market– to people in general? remeber those rates are still historically low.

those number mean bankructpy for a lot of folks.

After the euro tanks and the piggs eventually default in one way or another– interest rates will rise worldwide.

#161 Chris L. on 07.13.11 at 1:24 pm

“Well, he clears $100k a year from his company after taxes, and has zero savings today. So all he has to do is cut his lifestyle by half for the next 20, and he’s set!

That’s pre-tax income. — Garth”

He has to save 80% of his income to be financially free in 10 years. It’s possible and also possible to retire on half that amount because if you can save 80% of your income, you certainly don’t need all that much income to live. Give it a try – it’s possible. Very possible.

Saving 15% of your income is for jokers. Slaves… who like to drag work out for years and years and years. Tear it off, then enjoy life. Work part-time, find enjoyable work, etc.

Why pay out more than 85% of your income to other people? Why not keep that much and dole out the rest? Who exactly are most people working for exactly?

#162 Trailer Park Boys on 07.13.11 at 1:25 pm

Yep..seeing more and more NEW RE company signs….must be discount realtors.

IMHO….bubble has peaked….Cam Good is sure silent….
The prices reported were fraud…manipulated…

Developers selling now are hooped….you can see it.

#163 dogman01 on 07.13.11 at 1:37 pm

“bond vigilantes”

I have heard the term a few times, can anyone give a layman’s description.
What is the dynmaic and how does it come into play?

For me Bonds still = ETF’s. Not playing in that parking lot yet.

#164 GtaGuy on 07.13.11 at 1:44 pm

These debt debates are just a smoke screen to show that the politicians are working feverishly for the American people like Obama releases oil reserves to show he is there for the struggling American people.

Decisions have been made years ago as to where the US is heading and how it will get there and it ain’t gonna be pretty and painless.

#165 JohnnyBravo on 07.13.11 at 1:49 pm

#160 Rock-O-Rama on 07.13.11 at 1:09 pm

“Don’t work so much, and do what you want to do with your life, not what you feel you need to do.”

While I would much rather be rich than poor (all other things being equal), you touched on something very important with your late father’s words of wisdom…

We all struggle, to some degree, with the tension between what we WANT to do, and what we are EXPECTED to do. Those who choose the former will be the happiest, assuming they can accept the consequences of their actions, whatever they may be. In other words: go for it; and no regrets.

Having said that, being a parent changes the above dynamic considerably. But having kids is just one of those choices you make. Hopefully, if you have kids you did so because you wanted to, not because it was expected of you.

And hopefully, you bought that house for the same reason.

#166 dd on 07.13.11 at 1:52 pm


“The US did not default, and is not insolvent”

Funny. Greece, then Ireland, Portugal, Spain, now Italy. The numbers are adding up for too much debt. It will move onto UK, Japan, and then the US. Stick with your story Garth. However the bond holders are starting to wake up.

The only reason interest rate are not north of 10% for US bonds is because the US Fed is buying it all. Imagine when this stops. If it ever does.

#167 JSP on 07.13.11 at 1:59 pm


For everyone’s info…

#168 Devore on 07.13.11 at 2:10 pm

The US did not default, and is not insolvent. The idiots are those betting against it. — Garth

Is it not splitting hairs at this point? The US changed the terms of the agreement, otherwise known as restructuring. That’s a default. They did it in 1933, when the dollar was revalued from $20/oz to $35/oz, then did it again in 1971 when convertibility was ended. Holders of dollar debt got the short end in 1933, and they definitely took a bath after 1971 in the resulting inflation.

#169 crabby in mcmurray on 07.13.11 at 2:11 pm

to Waterloo Resident:
Save yourself $10K…here’s some free career advice. What are you doing wasting your talents in Ontario? All the engineering jobs are in AB and SK. Go on any career website or an oil company one…they’re begging for engineers. You won’t be working for peanuts either.

#170 Alex on 07.13.11 at 2:12 pm

#158, Real Estate Investor Warnings: Very interesting. Mind if I ask where you got those Jurock quotes?

#171 jess on 07.13.11 at 2:18 pm

Massachusetts Rep. John Tierney announced Monday he is introducing legislation in the House the same day to close corporate tax loopholes for hedge fund managers and others.

The congressman is pushing his bill as part of the conversation toward raising the nation’s debt ceiling to $14.3 billion by the Treasury Department’s Aug. 2 deadline.

The Tierney “Tax Equity and Middle Class Fairness Act of 2011” terminates nearly 30 tax expenditures that serve little or no public purpose, are poorly designed, or have not fulfilled their original intent. Ending these tax subsidies and giveaways would save over $60 billion in the first year and nearly $483 billion over the next 5 years. Here are additional details on Congressman Tierney’s “Tax Equity and Middle Class Fairness Act of 2011:”

The bill would eliminate the following provisions of current law:

o 8 oil & gas tax breaks ($4 billion in 1st year);

o 4 coal tax breaks ($136 million in 1st year);

o 1 change in business accounting methods ($9.2 billion 1st year);

o 5 international corporate tax subsidies ($7.7 billion aggregate in 1st year);

o Limiting itemized deductions for top-bracket taxpayers ($6 billion in 1st year);

o Closing the carried interest loophole which allows hedge fund managers to pay capital gains preferential tax rates on ordinary income ($2.3 billion in 1st year);

o Eliminating write-offs for corporate meals and entertainment ($11 billion in 1st year);

o Eliminating tax subsidies for agribusiness ($770 million in 1st year);

o Eliminating timber subsidies ($340 million in 1st year);

o Removal of the foreign earned income exclusion which allows U.S. citizens living overseas to avoid paying taxes ($5.4 billion in 1st year);

o Eliminating a special exemption from rules prohibiting use of losses as a tax shelter for rental-property investors ($13 billion in 1st year);

o Converting state and local bond exclusion to direct subsidy bond at 28% rate (revenue neutral in 1st year);

o Eliminating medical savings accounts/health savings accounts that have become tax shelters for the wealthy ($1.9 billion in 1st year).

#172 stage1dave on 07.13.11 at 2:35 pm

Right on , Brian T; I neglected to mention pretty girls…I do remember Vance Packard mentioning 50 years ago that marrying off pretty daughters was one of the few “upwardly mobile” assets left to poor people. And they always seem to have lots of drinks in front of them at the bar…hmmm…the pretty girls, not the poor people!

(Monetary worth means nothing if ya LOOK REALLY GOOD…even Dr. House observed sarcastically that people will just give you stuff if you’re attractive. Hell, they’ll come over to YOUR place & give you stuff!)

Disciple, upon re-reading my post, it does seem a bit obtuse. My point was simply that “the market” will frequently reward people for pursuing frivolous pursuits, period; with obviously no “thought” about potentially worthwhile nor potentially disastrous results. And that good timing is more important than good intentions.

Maybe “the market” & it’s human-directed appendages need a bit more more of a community-minded approach in some areas. Gee, I thought that’s what governments were for…

#173 Mr. Lahey on 07.13.11 at 2:41 pm

Dan baby, the solution awaits you in Sunnyvale Trailer Park. Randy and I will make you the assistant to the assistant trailer park supervisor. Your $40k in savings is enough to buy a trailer and have $20k left over for dividend paying bank stocks. You will in fact be one of our highest net worth indiviudals. Come on down Danny boy before the economic shit hawks do their thing all over your future. Get ready Randy, we have a new resident.

#174 The InvestorsFriend on 07.13.11 at 2:42 pm

Rock-O-Rama at 160

Thanks for the story about your well-lived life.

That was well put.

Take with a grain of salt all comments on this blog. Many of the comments here are over the top and are meant to bait people into responding just for the amusement of us all.

I live more traditionally. Now that I managed to accumulate some wealth at age 51 I am going to try to catch up with on the see the world front. It will cost me tons more than it cost you, but that’s oKay.

Hey good for you, live your life as YOU see fit.

Different strokes for different folks!

Rock on…

#175 Mr. Lahey on 07.13.11 at 2:43 pm

Forgot to proof my last post. That would be individuals. Don`t want the folks on this site to think us trailer park supervisors can`t spell.

#176 Mr. Lahey on 07.13.11 at 2:49 pm

no 27 Patz. Regarding your comment on Siddhartha , aka the Buddha, being enlightened. Randy, myself and Ug Krishnamurti (not Jiddah Krishnamurti) all believe enlightenment is a non existant state that charlatans spout off as being a reality. Come on down to the park and we will see how long before Ricky, Bubbles and and Cyrus get to your “enlightened state”.

#177 Mr. Lahey on 07.13.11 at 2:51 pm

You can find Ug Krishnamurti`s comments on enlightenment on Utube. Just search his name and enlightenment. Ug Krishnamurti was once a disciple of the great charlatan J. Krishnamurti.

#178 Mr. Reality on 07.13.11 at 3:13 pm

Yes I am in trouble. I live in a rental unit in a half million dollar home that is lakefront, with storage including internet, sattelite tv, heat hot water and electricity for $900.00 per month.

I’m in serious trouble. My problem is I’m saving so much money i am getting further ahead in savings and investments than any other home owner i know. We have so much time not fixing or maintaining the place i live in we can do whatever we want.

Renting sucks!

Mr. R.

#179 Carney on 07.13.11 at 3:29 pm

TD agrees with Garth. You can gloat now GT.


#180 Not 1st on 07.13.11 at 3:31 pm

The U.S. is ABSOLUTELY 100% INSOLVENT and thats according to their own tracking via the debt clock.

http://www.usdebtclock.org/ – see the unfunded liabilities section sitting at $114 trillion and change.

Garth, lets hear your ingenious financial plan to pay back that sucker? INSOLVENT

Go ahead and buy tuna, ammo and pieces of rock. I’ll wager on US renaissance. — Garth

#181 Rock-O-Rama on 07.13.11 at 3:46 pm

InvestorsFriend – Thanks man, I was just adding my 2 cents (which is about all I’ve got). :)

JohnnyBravo – No kids here, and yes, that would changed the dynamic a lot. I had no business having kids with the life I’ve led though. I can barely take care of myself and my cat!

#182 bill on 07.13.11 at 3:46 pm

dude : listen to uncle garth or marry rich.
its your only hope lad.

#183 poco on 07.13.11 at 3:48 pm

#168JSP—the author was also on BNN today–the call for the decline was a little more drastic on the tube than the article–goes out to 2013


#184 bcPaul on 07.13.11 at 3:53 pm

#7 Harvard Grad on 07.12.11 at 9:53 pm

You couldn’t possibly be a Harvard grad with your level of writing ability. Larvard grad more likely.

#185 BC resident on 07.13.11 at 3:55 pm

#52 waterloo Resident

Dude, you are in the wrong company/part of Canada.
I am an electrical engineer, albeit not a P.Eng. yet, and make well over $38000 (pre-tax) even my wife makes more than that in the arts/non-profit (sigh).

Move to BC, Rent, Get a job with say… the local electric utility… start building some savings up.

I would say I have been blessed with the work I have.

But in your case for having two degrees, and a P.Eng. I would say you are undervaluing your skills, and worth to a potential employer. 38k a year is selling yourself short. You could be making that or more at a university computer store.
Clearly living in eastern Canada is not all it is cracked up to be, not to mention I hear the car insurance is insane there.
There are lots of places in Canada with lower costs of living and more opportunities for skilled workers, you just have to be willing to find them.

Of course there is another factor here that no one ever talks about, and that is the increasing moral decay of the western civilization. Just look at the complete loss of Biblical values in our post-Christian society. I bet if you graphed moral decay (if you could quantify it) on the same page with the inflation and personal indebtedness, and the increase in financial problems you would see the evident outcome.

As social and personal morals decay and we go further from the founding principles of our nations (US/Canada) the faster the rise in sense of self (entitlement, rights, belief that you are your own best moral guide), then the greed and instant gratification increase, right along with our national, regional, and personal debts. We are no longer creating value for others, because everyone is looking after Number 1, they do not care for their neighbour, or really anyone else for that aspect. It is just all about make your wealth, store up treasure, and retire to a great life of luxury, doing whatever you want. Well at least that is the Canadian dream is it not?

Something to think about, Morals go down the tubes, sense of self entitlement goes up and along with it all the issues we are on the cusp of, including crappy jobs, and making ends meet.

#186 BrianT on 07.13.11 at 4:18 pm

#167DD-The actual plan so far is for the taxpayer shmucks to eat the vast majority of the inevitable losses. It is going well so far because the general public is unable to comprehend the size of the problem and its ultimate end game.

#187 Rob now in Nova Scotia on 07.13.11 at 4:25 pm

Dan, you sound like me me so don’t worry, you’re not alone. The only difference is that when I was 44, I had $50K in credit card debts, a $70K income and no RRSPs.

One of my best friends kept harping on me to buy silver and so I took my $40K and bought silver 6 years ago when I was 44. Back then I paid $12 an ounce for it. Today, my $40K investment is worth $120K and when silver hit $50 an ounce in May, my investments where worth close to $200K. Gosh, that felt good.

Silver is about to rocket to $70 an ounce so buy silver and don’t listen to anyone here telling you that gold and silver are for doomsayers. It is for you and me, Dan. A last chance to make up for past mistakes. Just look at a chart of silver and gold for the last 10 years and don’t sell your silver if the price drops right after you buy it. That’s important.

I also learned to invest (still invest myself) and borrowed $15K to do that. Those investments (also in gold and silver miners) are now worth $30K and my debts are down to $20K, which includes the loan I just mentioned.

I still rent but am seriously considering buying a home just to get a second mortgage on it so I can buy even more silver.

Hold silver in your hand and you will get it instantly.

Hope this helps.


That’s gambling, not investing. Hardly sage advice. — Garth

#188 BrianT on 07.13.11 at 4:29 pm

#160Rock-What you might not understand is that your need for happiness is unusual. Most people (and the overwhelming majority of women) will always choose conformity and status seeking behaviour over joy, pleasure or happiness of any type. It is politically incorrect to admit this publicly but it is very apparent to anyone willing to observe. The happiest people I have personally met didn’t have much money at all and the very wealthy (and miserable) persons looked down on this group with contempt.

#189 jess on 07.13.11 at 4:30 pm



ICMA, a Zurich-based trade association that sets guidelines for conduct in equity and debt markets
Regulators Investigate Banks For Lying About Investor Interest In …
https://www.tov-hazel.com/…/regulators-investigate-banks-lyin… – Netherlands13 Jul 2011 –
Yesterday it was revealed that at least one Spanish region had been openly … ICMA members have raised concerns that during the sale process, one or more … they had lined up about €1.5 billion ($2.1 billion) of orders, exceeding the original size of the planned €1 billion offering, according to
CREDIT MARKETSJULY 13, 2011.Debt-Sale Hype Under Fire in EU
EU declares war on agencies as Ireland’s rating gets junk statusEU commissioner Michel Barnier takes on the big three credit ratings agencies: Standard & Poor, Moody’s and Fitch
BP says that the Gulf economy has “experienced a robust recovery” and won’t need to spend the full 20billion.

< $5 billion of the fund has been distributed to about 195,000 /500,000 filed claims covering actual and future losses .

"New England Journal of Medicine states the actual health toll of the spill may never be known. The reason: A study being conducted by the U.S. National Institute of Environmental Health Sciences wasn’t started until six months after the April 2010 incident."


Decades of Austerity

Britain must brace itself for decades of austerity, even after enduring chancellor George Osborne's spending squeeze, to pay the price for an ageing population, according to the independent Office for Budget Responsibility (OBR).

#190 The InvestorsFriend on 07.13.11 at 4:31 pm

Number 167 dd says:

The only reason interest rate are not north of 10% for US bonds is because the US Fed is buying it all.

Maybe there is some truth to that. However the FED was never buying all the bonds. They only bought on the secondary market. They did not buy from the Trasusury dieectly a tthe auctions (or no significant amounts at least)

Billions in bonds are still being sold to willing purchasers at these low yields.

See http://www.treasury.gov/resource-center/data-chart-center/Documents/July%208_2011%20IC%20Coupons.xls

I don’t quite understand why these others buy at the low rates.

To some extent maybe insurance companies and pension plans are more or less forced to buy…

I know the Fed has an influence it keeps buying up bonds in the secondary market. Still, why don’t these buyers including the Chinese buy the bonds of strong corporations instead or stronger countries like Canada?

To some extent you have to think the buyers are simply satisfied with the yields. They simply don’t see ANY risk of a U.S. default. Perhaps they are blind.

Perhaps as in the days before the financial crisis, the intelligence of these big bond buyers is vastly over-rated? Each buys simply because all the other kids are buying? Mob behavior?

I think Buffett has observed that since the Americans send so many dollars to China they are forced to buy something and Treasuries are a good fit. An alternative is for them to come over and buy up shopping malls and such in the U.S. In fact, perhaps they can simply buy a whole state or two. Calfornia should be goin’ cheap about now.

#191 BrianT on 07.13.11 at 4:36 pm

#181-Not-That isn’t so much-only about 1.14 million dollars per US income tax payer. The funny thing is 13 YEARS AGO (1998) the respected financial experts were predicting the US debt would be greatly PAID DOWN by this point-remember that the next time you hear some respected financial authority figure tell you what the world will look like 13 yrs from now.

#192 Cookie Monster (Lakehead Grad) on 07.13.11 at 4:50 pm

Harvard Grad, C is for Cookie, and D is for degree, and that’s good enough for me.

Waterloo Guy, I almost got my Peng EE to. but I said stuff it, who the hell needs the title only to be opened to complaints and reprimand. I design and build electronic products and I don’t agree with the Ont Peng position saying that only PEng’s can make products, they’re trying to corner the market, monopolize. I reject their claim and authority!

I have my metal hat but it ain’t tin foil, I wear a gold and silver laminate. Gold on the inside, silver exterior.

Looking at getting work in Detroit, making exit plans from Canada.

I’m all stocked up on popcorn, start the show!

#193 EB on 07.13.11 at 4:57 pm

#160 -Rock-O-Rama – I heard that. I’m starting too damn late as well, but have already used what I’ve learned here to improve things and will continue to do so. In the long run though I’m used to the simple life, so I’m not too freaked out by the prospect of more of the same – the ones who have gotten used to 5-star living on a 2-star budget will have the hardest time.

#194 dd on 07.13.11 at 6:10 pm

#191 The InvestorsFriend

…They only bought on the secondary market..

Of course. It is run through the banks. Banks make the risk free spread. This is an outright subsidy! But really, the fed has been the major buyer of bonds lately (75%) or the “marginal” buyer. Just read up on that.

…I don’t quite understand why these others buy at the low rates…

Because they are stupid or they owe the fed a favour.

…I think Buffett…

Why bring him into this. He is part of the problem.

#195 Helicopter Ben on 07.13.11 at 6:15 pm

Lets see, massive inflation around the world as governments print and spend money endlessly , it seems pretty easy to me, buy gold and silver. call me a metal head i dont mind, you will be calling me rich pretty soon

#196 OMG on 07.13.11 at 6:17 pm

That’s not where the Trojan goes buddy. Stop trying to put it on your big head.

#197 TurnerNation on 07.13.11 at 6:45 pm

Boomers! Spendaholics?

Boomers struggling to meet their retirement planning goals
Survey shows those with advisors feel more confident about their savings

Tuesday, July 12, 2011
By Megan Harman

Baby boomers kicked off 2011 with intentions of putting more money away for retirement, but a survey conducted midway through the year shows many don’t feel they are delivering on their savings goals.

In a recent CIBC poll of 1,000 adults, conducted by Harris-Decima, almost one-third of respondents aged 45-64 felt they were doing a poor job of building their savings so far in 2011, including 17% who rated their progress as “very poor”.

Overall, less than half of boomers surveyed believe they are making good progress in building their savings so far in 2011.

These results suggest boomers are not placing enough emphasis on retirement planning – an area they cited as their primary focus at the start of the year.

Only half of respondents have a regular savings plan in place where they automatically put money away each month, 58% have a budget in place for themselves that they track each month, and 61% said they’ve met with an advisor in the last 12 months.

“While boomers have taken the important first step of identifying retirement as their top financial priority, some don’t feel confident about the progress they have made when it comes to building their savings so far in 2011,” said Christina Kramer, executive vice president, retail distribution and channel strategy, CIBC. “Savings is clearly a priority for Canadians who are approaching retirement, and seeing only half of Canada’s largest demographic with a regular savings plan in place suggests a significant opportunity for more boomers to start saving on a regular basis.”

Boomers gain confidence by consulting an advisor

Boomers who worked with a financial advisor were much more likely to be happy with their retirement planning progress. Of those who were confident about their savings, 72% had met with an advisor in the past year. Among those who felt they’d done a poor job of building their savings, only 48% had met with an advisor.

“There’s a clear link between feeling positive about your savings progress so far this year and certain key activities like having a regular savings plan in place, or meeting with an advisor to discuss your overall financial picture,” said Kramer.

Boomers in Manitoba and Saskatchewan were most likely to have consulted a financial advisor in the past 12 months, at 69% of respondents, followed by Alberta and Ontario, at 64% and 63% of respondents, respectively. Those in Atlantic Canada were least likely to seek advice, with only 53% of respondents having seen an advisor.


#198 Helicopter Ben on 07.13.11 at 6:49 pm

#5 Mean Gene, Ive been to Puerto Galera, its ok, Boracay is way nicer, less hookers and nicer beach :).

#199 Junius on 07.13.11 at 6:51 pm

#164 Dogman01,

The term “bond vigilantes” refers to a time when the bond buyers, specifically the professional investor community acts to impact the price of a specific bond. When they don’t believe a bond is properly priced (usually because it does not account for risk properly) they refuse to buy it and push the price down and coupon value up. For example, look at the quick rise in bonds for Greece, Italy and Spain.

The intervention of the Fed and the various governments in the bond market over the past few years has kept most of their bond prices stable. This is how they have kept interest rates down, by buying their own and each others bonds.

Some argue that this cannot continue forever. At some point we will have to return to a free market (whatever that is) in bonds and we will find out the real market value of US Treasuries and other gov’t bonds.

Some predict that the “bond vigilantes” will act and cause a radical change in bond pricing. This will drive interest rates up and perhaps cause hyper inflation.

What and when is anyone’s guess.

#200 Mandy on 07.13.11 at 6:57 pm

Beware of a building trend in Ontario called the Bungaloft. Tiny homes with finished living space in the attic and basement. More and more new homes are using this design because it means half the building materials & double the living space per square foot of home. A real cash cow for builders. Horrible design, as they cost more to heat/cool as they have less insulation in the attic space. Dumb ass design to remove insulation from the attic for a climate like Ontario. When you remove the attic and basement living space you have a tiny 1600-1800 square foot home. Unscruptulous scum bag realators than try to pass this junk off as a 3500 square foot home. If someone tries to sell you one tell them you are not a greater fool. Beware of how your total living space is calculated.

#201 randman on 07.13.11 at 7:04 pm

“That’s gambling, not investing. Hardly sage advice. — Garth

All investment is “gambling” Garth
even tucking cash under your bed!
The purchasing power of your money could go up or down…

You just calculate PM’s to be a higher risk

I calculate it to be much lower

Peakoilist …..I don’t need a hip or knee replacement
and if I did I would return to Canada….

#39 Debt’s Dark Embrace….see you at red lips in Cebu!!!!

#202 Helicopter Ben on 07.13.11 at 7:10 pm

there seems to be some confusion about hyperinflation on here, like somehow the president will or wont allow it to happen is laughable. you can have hyperinflation simply by having lack of trust in the dollar, when everybody seeks to get out of the currency it renders it useless, and this isnt that far fetched as inflation in the states is 12% right now (real inflation not government stats) it takes about 50% to make it hyper. with QE3 coming and spending around 3 trillion in a year it will kick start it, most of the money created is through fractional reserve banking, but that wont matter when people stop trusting the dollar. all money is trust, and thats what gives it its worth. just like housing went up cause people trusted it to be worth something, easy credit just made it attainable. as people stop trusting the dollar and start trusting real assets the value of each will change accordingly to peoples thoughts, we dont not live in a physical world. the great wealth transfer that will happen will coincide with the great awakening as they are one and the same.

Wrong. Hyperinflation is a politically-taken decision to devalue a currency. It doesn’t ‘just happen’ to the world’s reserve currency. And it never will. — Garth

#203 Beach Girl on 07.13.11 at 7:12 pm

And, I am sure Mr. Garth you are not renting. Must be nice that Government pension. I am not sure if you realize the life of renters. I am not suggesting people should buy homes that they cannot afford. But it is not all roses out in the real world.

Before that comment I thought you had something to add to this forum. My mistake. — Garth

#204 Peakoilist on 07.13.11 at 7:13 pm

Dan is doin ok …at least he’s liquid

#205 Utopia on 07.13.11 at 7:15 pm

#104 disciple on 07.11.11 at 10:38 am

Kimi and Utopia…

You both need to get an iPhone. It’s the new printing press. Light years ahead of anything similar. It will change your lives for the better…help you with your gardening Utopia…help you to think better Kimi.

Seems to me Kimi is thinking straight already Disciple, staying low tech and free of all the gadgets and stuff that clutters the mind (as if there is not enough confusion already!).

I actually do own an I-phone incidentally. It was given to me as a gift by someone who thinks like you do and it now sits forlorn and unopened in box on my desk (it is unloved).

I am most likely shipping it to a family in Ethiopia along with a small stack of Blackberries that were donated to me (even more unloved…..what is the Blackberry hate about lately anyway?). It will be greeted warmly there you can be sure.

There is a huge demand for mobiles in most parts of Africa and very little supply. The pent-up demand is incredible. Someone should really start a program to collect and ship used cell phones to where they are badly needed. Who does not have several sitting idle in their desk drawers that they would gladly give away.

That would be a terrific program.

Many thanks for the Tomato canning recipe Kimi. You make it sound too easy. I am a little intimidated by canning to be honest but need to try. Just worried I will get it wrong and make myself sick. I have my jars, lids, canner, pickling salt and all. Ready to go. Just waiting for harvest. It is going to be my fall drama!

Anyway, I was not actually so surprised that you left a near identical comment to mine (#24 and #25 yesterday) but then I thought you were perhaps writing that to align with my own comment. Then I noticed you actually wrote it during the exact same minute as me and could not have seen my remarks first.

Thus the tomato question for fun.

Not sure if we are sitting in a tree as “Bailing in BC” suggests but it was kind of cool I thought. Perhaps technologically disconnected people think alike.

#206 Utopia on 07.13.11 at 7:34 pm

So Ben Bernanke is ready and prepared to continue stimulus if the US economy again begins to flag. He said so following the most recent Federal Open Market Committee (FOMC) meeting to gleeful shouts from thee floors of the exchanges. Stocks and commodities rocketed ahead on that news and the fear trade dissolved. I felt sick about it. Everything that I felt certain of just days ago is now trash and getting thrown out the window. The Gold trade is back in play and Silver will again begin to appreciate. Who knows how high it will go on the next leg. This is the wrong policy though. Stimulative measures have not worked. They simply cannot address the structural issues we all face. The QE’s only succeeded in driving global inflation and bringing tremendous upheaval to the developing countries while threatening to blow up the Chinese property bubble as capital flooded their markets. Perhaps that is the plan. I don’t know. I am now assured that insanity rules and that inflationary forces will commence anew this fall. We should be prepared for a great deal more political instability around the globe. This also means that the secular bull market in commodities and precious metals will continue and the Gold-huggers will continue to be right (for now). The Fed is behaving irrationally now. By repeating a program that has failed by most measures they will only indebt all Americans even more than they are in debt already and possibly blow up the middle class altogether. I really cannot imagine what they are thinking but this is one dangerous game of chicken they are playing.

It cannot end well.

#207 dd on 07.13.11 at 8:02 pm

…Wrong. Hyperinflation is a politically…-taken decision to devalue a currency. It doesn’t ‘just happen’ to the world’s reserve currency. And it never will. — Garth…

Hyperinflation is when people lose faith in holding paper. China, Russia, and India are already trading in non US paper. The process is underway. If the US doesn’t watch out it will happen.

Never say never.

Wrong. It is the purposeful devaluation of currency by an expansion of the monetary supply so great that the government effectively redenominates its money. US hyperinflation will not happen in this lifetime. Get over it. — Garth

#208 a prairie dawg on 07.13.11 at 8:06 pm

“Q.E. 3 is definitely an option.”


– – –

I’m starting to hear ‘Rocky’ theme music…

#209 Utopia on 07.13.11 at 8:06 pm

#201 Junius

“For example, look at the quick rise in bonds for Greece, Italy and Spain”.
All of it led by ratings downgrades initiated by Moody’s, Fitch’s and S&P. No coincidence there at all. Hmmm.

The vigilantes are merely riding in on the ratings agencies downgrades, not initiating anything much on their own. The Europeans are apoplectic to say the least. Angela Merkel herself has railed against the agencies interference in European affairs accusing the US based agencies of harming their economies. Fitch’s incidentally has a Euro brand so she is only partially correct there.

Some believe the Euro itself is the deliberate target and that this is an economic attack that has come about as a result of so many European countries embracing austerity and abandoning the US to stimulate alone. If the Euro suffers a decline (and it will) that can only benefit treasury sales at this critical moment.

You may recall there was anger and consternation in Washington when the decision was made by Britain to attempt to contain it’s debts, tighten it’s belt and eliminate the deficit. This was seen as a betrayal.

The unraveling began in earnest as the Icelandic people refused to honour debts accumulated by the banking sector and Ireland fell apart. The Greek tragedy followed and now much of Europe is fenced in by a never-ending round of Soveriegn bailouts that simply cannot be sustained.

The end is near.

So that chicken has now come home to roost as Ireland itself just got a ratings downgrade to junk status. Tough break.

If this keeps up there is no doubt the European Central Bank (ECB) will eventually be forced to monetize debt and print in sympathy with current US practices. Stimulus by default is inevitable.

Not much else can save the Euro and the Union at this point. Even China does not have the wealth to bail out the Continent and save the sorry asses of those spendthrifts. This is a disaster of course for all Europeans and it is by no means certain that the electorate of the wealthier countries will accept the medicine.

2012 should be really, really interesting.

#210 palebird on 07.13.11 at 8:10 pm

It is a game of chicken and it is not being played for any of the “correct”reasons. Quite simply I don’t think the US is prepared to give up anything and will play this game until all those around them have fallen back on their butts. At that point the US will still be biggest baddest on the block and will rewrite the rules to suit itself and “save” the world. This is very simplistic but I think gets to the meat of the issue. Canada will just tag along as usual. There is no doubt it will be very ugly for a lot of people and there will be a lot of instability but keep your eyes open..

#211 garrulous squirrel on 07.13.11 at 8:11 pm

Unless Dan plans to park the V-Dub on an unused logging road where forestry workers won’t report him to the license holder and then the RCMP he better dump the ‘free living’ idea. It ain’t that easy being free…..unless you have a bit o’ coin.

I propose to all the guys/gals like Dan that they listen up and invest with ‘eyes wide open’……pay zero attention to ‘yield’ and products that promise to double in seven years……thats a mugs gane at his age. Dan need growth….and bad baby………he shouldn’t get sucked into paying too much for yield as is currently the case. People are getting suckered into ‘safety’ and forgetting the real enemy of the people……the government printing machine.

I won’t list all the trusts etc that were thought to be safe and have since reduced the capital of yield hungry investors. And lets face it…….costs are doubling every five years due to inflation….never mind waiting for ‘the rule of seven’ to apply. Wheres Dan going to get enough gas money to get out of the city?

For people who don’t get the ‘stock market’ I highly suggest you turn off the TV and get to the library.

I recommend Thackrays, Investors guide ( out as a new edition every year. Theres Don Vialoux’s free advisory at http://www.timingthemarket.ca and The Stock traders Almanac. There are simple strategies available that are right more often than they’re wrong. And believe it or not…..a LOT of pro’s use exactly these strategies using the exact same material….sorry to out you guys.

Growth is THE ONLY way to go for a guy with fifty grand to his name and fifty plus years under his belt.

Now…on another note…..do you old farts realise that there is a world outside Canada? There are a lot of nice places around the world where a nice comfortable one bedroom flat can be had for less than $200 a month. Why stick around here eating crap and being treated like a doofus? Like I said……library…..now!!!!!!

#212 rental monkey on 07.13.11 at 8:14 pm

@ Beach Girl: Your comment to Big Daddy was uncalled for. You are new here, so we will give you some slack. Garth donates his pension to charity and has repeatedly said owning is okay as long as it only represents less than a third of your net worth. Time for an apology…….and we’ll let you stay ;)

#213 garrulous squirrel on 07.13.11 at 8:20 pm

I missed ‘mean genes’ #5 comment….couldn’t agree more. There are lots of places in the Phillipines where there are no hookers and living is sweet.

But Gene……..you should have seen Puerto Gallera in the mid 70’s………….now that…….. was paradise. I had a chance to buy the only hotel in town ( 10 rooms and a bar/dining room – on the beach) for $6000 USD……some days I regret that decision……some days I don’t. Ahhhhhhhhh….the good old days in Asian before all the freaking dip sh*t backpackers.

#214 vyw on 07.13.11 at 8:30 pm

Hyperinflation is not going to happen. At the same time, Q3 is the wrong policy at this time. The problem in the US is on the demand side – low consumption, low investment. The US Govt should embark on a massive stimulus ie. Govt funded 500,000 (6-8 month) jobs X $25K ea. These dollars would be spent into the economy.

Q3 on the other hand would just get gummed up by the banks refusing to lend, and consumers in the mood to pay down debt and not borrow more (at least in the US). At least the unemployed would make use of these dollars, draw down inventories, businesses would have to staff up. The Fed would keep an eye on inflation and raise rates.

Unfortunately US, Canada and UK are in this austerity mode and we’ll be in a funk for years. No yields in the usual places so excess dollars invested (and maybe bubbles forming) in precious metals/commodities and Toronto/Vancouver real estate.

People need to watch their money like a hawk for the next few weeks/months.

#215 Utopia on 07.13.11 at 8:36 pm

#209 dd on 07.13.11 at 8:02 pm

“Hyperinflation is when people lose faith in holding paper”

Sorry DD. I have to agree with Garth on this one. Hyperinflations do not happen by accident but rather by deliberate policy. Hard to imagine the Fed destroying it’s own balance sheet, the banks, insurance companies and all debt holders (think bonds here) by turning the currency into worthless paper overnight. This is just the fantasy of homeowners in debt (that hyperinflation will deliver them from debt damnation). It is in fact the biggest flaw in the argument of the hyperinflation camp. It assumes that those in power and those with the most to lose would behave in a way completely contrary to their own financial interests and bring about their own destruction in order to benefit holders of precious metals, mineral wealth and other hard assets. It is nearly impossible to even dream up a conspiracy theory that would fit with those actions.

It will not happen. Not in your lifetime.

#216 confused and a little crazed on 07.13.11 at 8:59 pm

Hi Guys,

there will be massive swings in dow/ TSX until the debt ceiling is raised probably another 2- 3 trillion. they we do the same they over again. a bubble will form I do not know what ? . The equities and stocks will increase ober the next couple of years and it will falter again

For those who believe US won’t raise the debt ceiling …if you are right it won’t matter if you have gold/ silver. everyone will be looking for survival needs …that food / water/ electricity

but at the end it won’t really matter health / friends / family those are the critical points in life :)

#217 PesaMingi on 07.13.11 at 8:59 pm

If Dan is taking dividends out of his corporation he’s not accumulating RRSP room, cuz RRSP room only accumulates with earned income, if I understand my accountant correctly…the strategy of taking 100% dividends means you give up on RRSP and, as far as I know, CPP as well. That’s for plastic surgeons billing the provincial gov $1,000,000 and matching that doing stripper boob jobs and boomer liposuction…

#218 Helicopter Ben on 07.13.11 at 9:02 pm

Hyperinflation is a politically-taken decision to devalue a currency – garth ………. …………….WHAT!… Inflation maybe not hyperinflation. I am not sure its political as they come and go every 4 years with a 4 year plan. I do not see why it cant happen to the world reserve currency, its not like countries are lining up to buy american debt, i believe americans through the federal reserve BOUGHT 60% OF FISCAL DEFICIT so far this year , more than china and japan combined. you think they would be buying their own debt if other nations trusted it? if oil wasnt traded in the dollar the states would of been decimated a long time ago. i cant say for sure hyperinflation is coming or not but all signs and actions are pointing to it. deflation is whats needed but that wont get any politician re-elected and cause miss trust towards the federal reserve, bringing the whole ponzi credit scheme down that has been inflating since 71. when the dollar isnt pegged to anything and banks are allowed to run wild deflation or hyperinflation is a given, both are happening at the same time right now. the roulette wheel is spinning , place your bets. you may come out the biggest loser if you dont gamble at all. ……………….RIGHT! – greg :)

#219 Helicopter Ben on 07.13.11 at 9:06 pm

before i get ridiculed even more then usual:) i meant to say inflation and deflation are happening all at once not deflation and hyperinflation. my grammar is horrible and proof reading even worse

#220 Utopia on 07.13.11 at 9:12 pm

#180 Carney

Thanks for the link to the TD article about a housing slowdown in Canada. I tend to agree with their idea that a global shock poses a greater threat to the stability of the housing market than interest rates.

They wrote:

“In our view, a disruption in employment in Canada due to an unanticipated global shock is probably a higher risk scenario than a spike in interest rates at this stage.”

This makes perfect sense to me given all the systemic hazard in Europe. Furthermore, there will be resistance to any serious rate increases here in Canada especially as the US looks headed back into recession.

I cannot predict what Mr Carney might do of course but as it is unlikely the Government in this country is prepared to engage in more direct stimulus intervention then that leaves few tools to encourage the economy.

I am happy meanwhile to see another bank send the message of the hazard developing in the housing markets. Talk is important. Talking down those bubble buyers who are still blindly exuberant may make a difference at this point and reduce the risk.

If we are lucky.

#221 Cookie Monster on 07.13.11 at 9:28 pm

Oh yeah, yes the US did default in 1973, breaking their promise to exchange dollars for gold at 35/oz Au is default. Now when you try to exchange a $10 money at the fed all you can get is two $5.

The disconnect from the gold standard is why interest rates in the late 70’s and early 80’s went to 20%, Paul Volcker had to assure the world that holding US $ savings was worth MORE than holding gold. He succeeded. Since then the world seems to have forgot what that was all about.

Now, 40 years down the road and how’s it going? Ha, it’s a God damn disaster! Buy gold.

#222 Helicopter Ben on 07.13.11 at 9:30 pm

#215 GARRULOUS SQUIRREL ……dAmn those “young” backpackers, things were better in the 70’s when you were young lol. things are always better when u are young thats what makes them the good ol days.

#223 Utopia on 07.13.11 at 9:38 pm

Lets keep perspective.

Sales of Treasuries are just a fraction of overall US public debt. See the data for 2010 in this Guardian article.

Meanwhile, China is increasing buying of US Treasury debt.

#224 Devore on 07.13.11 at 9:44 pm

#206 Peakoilist

Dan is doin ok …at least he’s liquid

What does he have that is liquid? It is worrying that we would consider someone with no savings, no pension, and no retirement plan to be “doing ok”.

#225 Cookie Monster on 07.13.11 at 10:02 pm

Garth, Utopia, dd etc.
Hyperinflation can happen without intention by government. Once faith in the currency is lost US dollar denominated debt holders of all stripes foreign and domestic will dump their dollars and with no products on their shelves int he US because everything is imported in exchange for dollars there will be no more imports, a flood of cash will come roaring home chasing everything and anything not bolted down.
Like a precarious avalanche, all it takes is a little more snow and the whole thing goes whoosh!

Fiction. Stop visiting doomer blogs. Your mind has gone to chocolate chips. — Garth

#226 Abitibidoug on 07.13.11 at 10:40 pm

@Brian T#189 and Rock#160:
Good postings, and quite consistent with my observations being one who is not status motivated and is somewhat Bohemian. Most people don’t understand the idea that once you get beyond subsistence and into comfort, having more stuff doesn’t result in an appreciable increase in happiness.

#227 SE Asian Expat on 07.13.11 at 10:41 pm

Peakolist. I figure I’ve saved over 40k per year on taxes by being non-resident Canadian for the past 8 years. That’s the equivalent cost of 4 hip replacements per year in an international top notch hospital in SE Asia.

Health Care? Check out Bumrungrad Hospital in Bangkok, Thailand. It’s a world renowned 5 star facility. For under 500 cad I get a comprehensive Physical exam that I could only dream about in Canada.

I check out this blog from time to time to confirm what a great lifestyle choice I made at 45 years old. It’s just too expensive to live in Canada…and way tooooo cold!

In SE Asia and luvinit!

#228 confused and a little crazed on 07.14.11 at 1:57 am

180 # Carney,

the TD report doesn’t really mean anything. I remember way back when, TD mentioned about unaffordibility in late 2006. Human psychology is a weird thing and is hard to predict…of course that before emergency rates and the zero down policy ( I think it was just starting then).

I ‘m not saying real estate wwill rise just don’t put to much weight on that article

#229 the Phantom on 07.14.11 at 2:08 am

#7 Harvard Grad:

“like minds always take the road of least resistance – sad in deed.”

As someone who perhaps doesn’t have the name of the school behind my degrees like your degree has, but who nevertheless has graduate level studies completed, I wonder by what arrogance you are possessed to believe that your Harvard degree allows you to look down upon others as though they were pond scum…

One would think that some of what you learned there might translate into a sense of charity for the poor or, in the very least, a degree of compassion and understanding for those less fortunate than yourself that might contribute a shred or two towards a notion of social responsibility…

By the way, I think what you meant to say was “sad indeed” as opposed to “sad in deed”. You should probably rely less on your spell check function and more on the golden skills you allegedly acquired from Harvard.

the Phantom

#230 Beach Girl on 07.14.11 at 7:54 am

Sorry, Mr. Garth. Wish to stay on this site. But I just do not think renting is for everyone. I also appreciate the information I received about the about the amount of a pension one would receive.

#231 disciple on 07.14.11 at 10:55 am

#229 SE Asian Expat…
I’m interested in your situation. Are you now retired? If not, are you employed in Thailand in the corporate sphere, or are you dealing in export/import ventures? At what point do you have to relinquish your Canadian citizenship?

#232 sarge on 07.14.11 at 1:08 pm

a recent follower – really find most comments here so interesting. Wanted to share this article: http://www.bloomberg.com/news/2011-07-13/dial-a-crowd-confronts-debt-laden-spanish-banks-by-thwarting-foreclosures.html

#233 garrulous squirrel on 07.14.11 at 3:04 pm

#229 ….As long as you have severed all ties with canada and have no accounts, savings, property, affliations, licenses, relationships etc etc etc you can get out of Canada Revenue’s grasp.

Current rules for retirement in Thailand are

1) an 800,000 baht ( 24,000 CDN….no intrest paid) bond gets you a one year renwable visa. Money must remain in account at all times.

2) proof of pension income of equivelant …approx $2400 CDN at this time for same.

It is true you lose MSP and Canada pensions if out of the country for more than 6 months per year.

#234 Steady Eddie on 07.14.11 at 5:38 pm

ZH: $500 billion in maturing short and long-term debt in the next month and a half which there will be no money to fund unless a debt ceiling decision is reached, but not by August 2, but July 22.


#235 Mr Buyer on 07.14.11 at 7:03 pm

sitrep Japan… Fukushima, they have closed the cooling circuit on at least one of the reactors (if not more) and have replaced sea water with fresh water. The contaminatated sea water is being filtered and treated as much as possible (no idea of the actual effectiveness of the process) and that sea water is being released into the ocean. They are attempting to install lead shielding in the most belligerent of reactors (I believe it is reactor 3). The latest quake in the region of magnitude 7.3 had little adverse effect on operations.
In regards to clean up costs, three government employees have reported to me that salaries are to be decreased 8 to 10 percent for a period lasting anywhere from 1 to 3 years and their bonuses have been decreased over 20% (one person usually received a 1 million yen, about $12k Canadian, summer bonus and that was deceased to 800k yen, about $9.7k can). There have also been rumors of further cuts to what we know as baby bonuses but they are only rumors presently. There are a number of other cuts that I have no direct knowledge of.
On the production front they entered the phase a few weeks ago that involves improvements in present supply chain efficiencies. Upstream suppliers changed and reduced holiday schedules to maximize production downstream. Devastated subcontractors are being provided with necessary space and equipment in house and at no cost. Another point worth noting is that supply chain efficiencies are superseding competitive considerations with supplies being shared amongst competitors all to preserve market share. While I have been reasonably assured it is happening, I have asked friends for specific examples in which subcontractors are asked by parent companies to supply competitors. The overriding consideration is preservation of market share on a national level. Companies supplying North American and European companies have been asked to relocated manufacturing facilities to safer regions of Japan and these requests are being honored. New state of the art facilities are to be constructed (in some cases construction is already underway) in regions not known to be impacted by tsunamis.
Public honors for people simply doing their duty as expected is not done really (it is somewhat embarrassing if not shameful). Having said that, I wish to thank the samurai that stood by their posts and are working the problem in Fukushima. They have served to protect their nation and fortunately for me as a result my family.
On a personal note my daughter is now in grade 1 here and after teaching her how to carryout additions such as 47 + 39 and subtractions such as 45 – 18 I thought we were set on the math front for the remainder of grade 1 at the very least but such is not the case. We just received a shocker from her teacher when the teacher recommended that our daughter and her mother take summer classes so that our daughter can improve her speed and efficiency.