Four years ago when the federal government initiated the housing bubble by allowing 0% down payments and 40-year mortgages, it also opened the door wider to Genworth. Today those insane mortgage provisions are gone, despite the damage having been done. Genworth, however, remains – the leading private provider of mortgage insurance in Canada.

Of course, CHMC is the 800-pound gorilla (actually, a 600-billion-dollar monkey) of the mortgage insurance business, underwriting the lion’s share of high-ratio, high-risk mortgages on houses bought by people who have no money. Because CMHC stands behind lenders like BMO or CIBC, it takes away their risk in the case of default. That means banks have no reason not to give money to people they’d otherwise laugh out of the branch.

Behind CMHC, which is an agency reporting directly to the federal government, stands you. If CMHC, which last year had its lending authority extended to six hundred billion, a number roughly equivalent to the national debt, were ever to stumble, Ottawa would bail it out with tax dollars. At least, that’s the theory.

Of course, that was the logic in the US, as well, when its quasi-governmental mortgage insuring and securitizing giant, Fannie Mae collapsed in the housing bust. Well, $164 billion later, it is still an orphan of the state, bleeding from a million sores as the foreclosure crisis continues and defaults mount.

Now, like Canada, the US also has private insurers of high-ratio mortgages. Surprise, surprise, one of the majors is Genworth Financial, based in Virginia. So here’s the news: this week the company said it just lost another $100 million thanks to “worsening trends” in the mortgage business. Genworth has about 40,000 mortgages which have been non-performing for at least a year. Yes, that means the families who took the money and bought houses with it are no longer making payments.

Things are dire enough that Genworth has to take $375 million from other activities (it sells life insurance, for example) to shore up the mortgage-guarantee business. Says the company, prospects are getting bleaker along with the residential housing market. In response, its shares were hammered to a two-year low Friday on the stock market.

In this country, Genworth Financial Canada (a division of GE) is still making money, headed by the sunny Peter Vukanovich. In fact, if it weren’t for profits from subs in Canada and Australia, the whole enterprise would be on  shakier ground. Genworth in Canada, as proven by its own promotion, provides insurance for mortgages handed out to self-employed people who can’t (or won’t) verify their income, recent immigrants, buyers without any savings and people who want to purchase a house with 0% down.

Several of those practices are now either illegal or unknown in the United States.

My point is simple. We are far down the financial path that led to the housing bust in the States. Our government supports an agency which supports high-risk lending. We allow private insurers to promulgate even more risk. And by insuring loans to people who have no resources or no financial discipline, we court an inevitable outcome.


#1 Dr Doom on 07.22.11 at 9:06 pm



#2 Davey Boy on 07.22.11 at 9:14 pm

Currently living in Vancouver, trying to make friends “aware” of the coming implosion of real estate, they all think Vancouver is immune… What else can you do?

#3 The Final Solution on 07.22.11 at 9:20 pm

The Final Solution, is for all smart canadians and mexicans (like amaericans) borrow 1 mil with 0 down and try to sell with 1.5 mil in 6 months, if market crashes (due to un-affordability, rates, or credit squeeze) let the bank reposses it, after leaving few more months. Then let CMHC and Bank-elos fight on who bankfrupt first. If you are ready, post a comment and let’s do it. Let’s bring the bastards down.

#4 T.O. Bubble Boy on 07.22.11 at 9:20 pm

but… but… but… defaults are still low!

Oh wait, who would default on a mortgage when house prices have continued upwards? The banks will always let you just take out more on the HELOC and kick the can down the road another few months/years.

Nothing will be obvious until prices start dropping and HELOCs and other household debt products dry up… then it will be all too obvious that CMHC has created the mother of all bubbles.

#5 Dr Doom on 07.22.11 at 9:35 pm

In this age of “need it now”, people have no patience.

When Garth says there is a shit storm coming, people expect it to happen tomorrow. Then of course when it doesn’t, the mockery begins……..

But be assured…..the shit storm is in fact coming……..

#6 KIM on 07.22.11 at 9:42 pm

Its very troubling to see so many people in my office who have no savings or money and yet the banks lent them money to buy condos. They always complain they have no money yet go out every night . One of them tells me they skip or allowed to miss one mortgage payment a year. With the money they save they go on vacation. Garth what’s the point in saving money when I can lie and get a mortgage without using a penny of my money. They get to skip payment . These people are living it up. I think its better to risk going bust then waiting for the bust. Everyone lives off credit and live like kings while I suffer.

#7 The InvestorsFriend (Shawn Allen) on 07.22.11 at 9:47 pm


Since the topic is banking, I will set the fractional-reserve-banking alarmists a howling with the following facts.

The largest 8 banks in Canada as at the end of October 2010 had total loans (including mortgages) outstanding and due from their customers of $1.483 trillion dollars. At the same time they had total deposits (which are a liability) owed to (mostly other)customers of $1.833 trillion.

Here’s the data: (see page 2)

So ya see kids, the bank is mostly in the business of lending out deposits.

It may seem like “everyone” is in debt. Not so, there are plenty of people with no debt and who have large amounts of money on deposit at the bank. Most people over 50 are in that category to one degree or another. Some of the deposits certainly are from corporations, and some of the loans are to corporations.

Now I know some of you want to believe that the bank creates loans out of thin air and all. But really look, the figures show that deposits that are owed to customers exceed the loans. They hold back some deposits as cash (the reserve). They also invest some of the deposits into government bonds rather than loans. And they have to have a certain amount of shareholder equity (minimum capital ratio – not to be confused with the cash reserve ratio).

Well Rant On fractional bank alarmists.

The rest of us might just want to invest in bank shares. (Preferred or common) Banking can be a very good business. Why not get some for yourself instead of whining and being jealous of what others are getting?

In fact with today’s low interest rates one could borrow from a bank and invest in its own preferred shares and make money on the spread. It’s tempting, no?

#8 Gord In Vancouver on 07.22.11 at 9:51 pm

Great post, Garth.

Regardless of its potential severity, Canada’s mainstream media will continue to give this issue minimal coverage.

#9 GenXer on 07.22.11 at 9:53 pm

I noticed in the latest CMHC release this week that “CMHC insured just 643,991 homes last year – 187,091 less than it had expected.”, but that ” the volume of insurance that CMHC provided was $106.1-billion in 2010. It had planned to provide $123-billion.”

So – they came in at 77% of their unit target, but achieved over 86% of their insurance distribution target. In the end, CMHC covered $10.8B (or 11%) more than they forecast they should have to cover the 643,991 homes.

Seems like a solid indication that CMHC is approving more high-risk mortgages.

#10 Patz on 07.22.11 at 9:55 pm

And meanwhile the non–bank HEL lenders seem to be still thriving. All of their ads–which drive me crazy–have the same tilt. Nasty banks won’t give you the money but we will. One particularly crappy one has a woman saying, after hearing she can get a loan in one day, “OK who put you up to this, the last bank I asked for a loan?” Guy says, “No, we’re not like the banks, blah, blah…”

Message: you’re gonna be under water soon, may as well dive real deep into that debt pool.

#11 Imstupid on 07.22.11 at 9:57 pm

I have a friend who works for chmc. He told me that the default rate is increasing month over month. He hasn’t seen anything like since he began working their. Now I’m going to be honest I didn’t ask where the home where that were being defaulted. If it was in one city or country wide or little towns. Nor do I know the exact number increase month over month but needless to say, the fact that he notices more defaults is a major concern to me.

#12 Keen Reader on 07.22.11 at 10:03 pm

Despite all the talk about oil development and “being different here”, the market is significantly down in Cold Lake, AB. With military personnel rotating on a 3-5 year basis, many are now waking up to the very unpleasant reality of having bought at the peak in 2007, as I unfortunately did. Readying for a move, I listed at purchase price, below the recent appraisal value, then took two significant haircuts before getting and accepting an offer. I end up losing over 10%, as many colleagues also did. So much for RE always going up… While it would have cost me slightly more to rent, I would have been further ahead investing the equity, saving on taxes and skipping the heartaches of maintaining a house. Once usual selling conditions are lifted, it’ll be nice to stop chasing the receding wave, gladly settling into very affordable rental housing at my next base. The RE downturn may not turn as bad as some expect, but safely watching from the sidelines will be nicer than worrying about where the tide will take me… Cheers!

#13 Amarillo on 07.22.11 at 10:03 pm

Housing problems are nothing compared to what Norway is facing today, how long can Canada avoid those maniacs who did it?

#14 VICTORIA TEA PARTY on 07.22.11 at 10:15 pm


This song written by Canadian singer Robbie Robertson first hit the airwaves in 1969.

A sad song about the wind-up of the Confederate forces against overwhelming Union odds, it deals with a painful era of American Civil War history in 1865, that saw torn-up railway tracks and a siege near DC.

It’s therefore appropriate to remember this song in the context of what’s been going on, this week, in the “southern” city of Washington DC.

The debt-ceiling debacle is about more than gridlock, wounded egos, Tea Party crazies, and genuine concern that the US is in deep, deep hock to some of the world’s finest creditors, China chief among them.

The Night They Drove Old Dixie Down, I shall transmute into what’s really going on here: continuing deaththroes of the American Empire. It’s about attitude, in the end, and all that that encompasses.

Sure, Congressmen will meet with President Obama Saturday morning in the White House.

Sure, there is hope, amongst the American Liberal news media elite that, by Sunday night, there will be a new debt-ceiling framework to magically emerge as a long-range “solution”, to America’s debt woes, to be approved by the August 2 debt default deadline.

That outcome seems very far-fetched at this already very late stage in the game.

Meanwhile, whom else is thinking such thoughts? China?
Mr. and Mrs. Bond Mutual Funds, in the USA? The banks?

If I was one of the above I’d be having kittens about now, hoping to be the first one in line next Monday to “get out of Dodge.”

Sure, sell orders of such magnitude may precipitate a serious “Black Monday”, but what the heck, this debt train’s been puffin’ down the tracks for a while now, and what happened Friday and what will probably not happen this weekend, in DC, amount to a defacto default in bond holders’ eyes.

While China can console itself knowing that it’s been unloading Greenbacks for actual hard assets for three years now, it’ll still be taking a haircut but knows it will recover shortly by skinning the American some more.

Other bond holders won’t be so lucky, because they don’t have the power. But 30 cents on the buck is better than no buck at all, eh?

If there is a run on bonds, the stock markets will also capitulate.

And the bond vigilantes, after having America for breakfast, will then move over to the Euro bourses for the main course later in the day.

“What wine would you like with your meal, Monsieur Bond?”

“None, thanks; a ‘Bloody Mary’; carefully stirred; not shaken.”

#15 JohnnyBravo on 07.22.11 at 10:21 pm

The sub-prime mortgage industry, which ramped up in the US in the ’90s, was riddled with fraudulent practices…

Forged documents. Cooked figures. Predatory sales tactics. Punitive origination fees. Usurious rates. And lots of pure and simple deception…

Of course they preyed on the most vulnerable, and destroyed many lives in the process. All in the name of generating huge profits by shovelling more and more mortgages into Wall Street’s securitization machine.

Canadian banks and mortgage brokers are getting more and more desperate to turn people with no money into debt slaves with overpriced houses. Over the past several years, the mortgage industry in Canada has come to increasingly resembled that in America.

Do you really think some of what went on in the States is not happening here?

#16 nonplused on 07.22.11 at 10:23 pm

Well, why wouldn’t Genworth do what they are doing? After all, they aren’t using any of their own money. The plan is simple: borrow money from someone else at 2%, lend it out to whoever comes in the door at 4%, and its not a 2% profit on their own money but literally an infanite rate of return because they have almost none of their own money in the game! And as long as houses go up 10% per year, how can you loose? Even if they have to foreclose they might sell at a profit. Then, if house prices actually decline, bankruptcy for Genworth but the court won’t be able to get the dividends back. Its so simple, a banker could do it!

#17 Bottoms_Up on 07.22.11 at 10:31 pm

I have said this before and I will say it again: Canada’s real estate market has held up because lending by our big banks WAS prudent.

I was turned down twice for a modest mortgage (once in 2007 and once in 2008) because I didn’t have the steady income required. Once I acquired the job that gave me the steady income, I was approved for that modest mortgage.

There is no doubt in my mind I would have been approved in the USA. For at least double what I was looking for in Canada. And without the job.

This was my anecdotal experience, but to me is very telling of why Canada has held up where other countries have faltered.

Come on, everyone on here knows our banksters were/are/will be stiffs (i.e. very conservative) don’t they?!

#18 Devore on 07.22.11 at 10:33 pm

#13 Amarillo

Really? What effect does it have on your life? You should turn off the TV for a week.

#19 Utopia on 07.22.11 at 10:35 pm

Exactly Garth. We are so screwed in the next few years it is not even funny anymore. The whole affair makes me sick to my stomach. Have you seen all the data on consumption trends lately or read the sentiment and maybe even said silently to yourself….oh shit.

I want this all to be OK but I am really getting worried now.

#20 TurnerNation on 07.22.11 at 10:36 pm

#13 Amarillo on 07.22.11 at 10:03 pm

Well Amarillo you could start by dropping food onto Somalia (the lastest man made crisis) instead of WMD onto Libya (destroying their peace, soverienty, and economy). But the death cult who run this world would never allow it. Do you think we’re immune? No way.

#21 TurnerNation on 07.22.11 at 10:39 pm

By the way, this weekend, every weekend, at least 10-25 people will perish on Ontario’s roads and waterways. Ditto in most every province. There are far more important risks in life…

#22 45north on 07.22.11 at 10:40 pm

Amarillo: Housing problems are nothing compared to what Norway is facing today, how long can Canada avoid those maniacs who did it?

yeah like him?

Investors Friend: In fact with today’s low interest rates one could borrow from a bank and invest in its own preferred shares and make money on the spread.

my boss did that in 1980, but it was the opposite situation, interest rates hit 20% he borrowed and bought preferred shares, the rate on his loan declined but the preferred shares kept on paying at 20%.

Imstupid: I have a friend who works for chmc. He told me that the default rate is increasing month over month. He hasn’t seen anything like since he began working there

CMHC should have refused to insure any mortgages in Brampton. I can just see a press conference with Stephen Harper and CMHC president Karen Kinsley. “Today the Government of Canada announces a new program to put the Canadian housing market on firm footings. At the same time the Government of Canada in co-operation with CMHC is announcing new opportunities for the private sector to insure new mortgages in Brampton.”

#23 waterloo Resident on 07.22.11 at 10:41 pm

Garth, you said this statement:

(” My point is simple. ——-. Our government supports an agency which supports high-risk lending. We allow private insurers to promulgate even more risk. And by insuring loans to people who have no resources or no financial discipline, we court an inevitable outcome. “)

Well, what’s so bad about that?

I have a lady friend who works in Revenue Canada and I have just advised her to buy the biggest / most expensive house in Toronto that she can possible qualify for, then once she buys it she will simply make one or two payments and then stop. We know of at least half a dozen ways to stop proceedings to take back the house without having to actually continue to make payments to the banks so we are going to try this and live rent-free for 3 to 4 years. I suggest everyone do the same, it will save the a ton of money.

Eventually the house will be taken back, but the point is she will live for free in a house for half a decade ! How great is that ?

#24 waterloo Resident on 07.22.11 at 10:57 pm

Here’s the web site to show you how bad things are in America right now:

Lets just hope Canada does not follow them the same way or we’ll be in a lot of pain !

#25 waterloo Resident on 07.22.11 at 11:04 pm

Norway seems to be doing things the right way. Read it here:

The article said that Norway never suffered a housing decline and their market has been growing due to low interest rates.
They have had their core rate of inflation is 1% (compared to our 2%), yet despite of this they have raised their interest rates up to 2.25% while ours is still at 1%. If we will need to follow in Norway’s footsteps then does that mean our rates will need to be raised to 2.5% or maybe even higher to 3% over the next few months? My GOD, that would almost DOUBLE mortgage payments for a large number of people !

Frankly I think that Mark Carney is just going to vegetate again and leave rates at 1% for the next 40 years, that will solve all problems won’t it.

#26 Hovering on 07.22.11 at 11:05 pm

re: the final solution.

um if you borrow 1 million and try to sell for 1.5 (like alot of richmond for instance) that well and good..

but you do realise that if home prices plummet the bank will still come after you for their 1 million right ? first they’ll forclose, then sell the house for pennies, then sue your ass for the remainder. Everywhere expect Sascatchewan i think.

#27 garrulous squirrel on 07.22.11 at 11:06 pm

At the faintest smell of trouble Genworth will be bailed out by the CMHC…..they know that,we know that, everyone knows that , so whats the big deal. The real estate bubble is a federal government darling. It’s ‘apple pie’ in Canada…

Bottom line is …the taxpayer will be the only ones getting screwed when GE Capital pulls the plug. Doesn’t anyone remember the billions we payed for the 4500 auto jobs?

#28 Midas on 07.22.11 at 11:08 pm

Shawn Allen: “So ya see kids, the bank is mostly in the business of lending out deposits.” — No kidding.

SA: “…there are plenty of people with no debt and who have large amounts of money on deposit at the bank.”

And guess who owns most of that money? The borrowers or the previous owners of the houses the borrowers purchased from. Not the depositors.

The minute you make a deposit, it belongs to the bank, until it lends a portion of that money to a borrower.

#29 Golden Stewie on 07.22.11 at 11:12 pm

Great post, Canada’s subprime mortgage problem is literally a time bomb in the waiting.

When the 08 crash was still fresh in people mind the risk here in Canada was not on most peoples radars, and probably still is n not to the pour souls who don’t read this blog :-)

#30 JohnnyBravo on 07.22.11 at 11:12 pm

#7 The InvestorsFriend (Shawn Allen) on 07.22.11 at 9:47 pm

Still in denial, are we?

Canada does not have fractional reserve banking because deposits are greater than loans, eh?

But what you are forgetting is that one person’s loan becomes another person’s deposit. Look at the figures below to see how $100 in deposits is turned into $368.50 in loans and $468.50 in total deposits as it works its way through the banking system.

Bank Deposit Reserve Loan
Bank #1 $100 $10 $90
Bank #2 $90 $9 $81
Bank #3 $81 $8.1 $72.9
Bank #4 $72.9 $7.3 $65.6
Bank #5 $65.6 $6.6 $59
Bank #6 $59 $59 $0
Total $468.5 $100 $368.5

Of course the process is not 100% efficient. There is leakage as not all proceeds that originate from loans are deposited in banks, but that is basically how it works.

The simple, and perhaps twisted, fact is: deposits come from loans, not the other way around. But that of course is how it must be in a debt fiat money system where first money is created and the wealth that imparts value to it is created later, in a perpetual game of catchup that is designed to never end.

#31 Kitchener1 on 07.22.11 at 11:35 pm

#23 Waterloo Resident

I call BS on your theory.

Please indulge the rest of the blog on these “half dozen ways” to stop banks from taking the house. Please do.

Please dont tell me that one of them is declaring bankruptcy and having the trustees tie it up in court cause that will not last 5 years.

There are other minor legal details, but you sir are a fool if you think that you can out smart the banks legal departments. Read the fine print on a mortgage.

It is a lot easier for a bank to legally evict you and takes less time for non mortgage payment then it is for your landlord to evict you in Ontario (were 6 months is pretty much the norm once tribunal gets involved)

A bank can have you out of your home within 3-45days, lets call it 60 if they need to get the sheriff involved.

#32 Vlad de Mad on 07.22.11 at 11:37 pm


One proposal winning support among some federal officials would sell thousands of foreclosed federal properties to private investors who agree to rent them. Investors would rehab homes, run the leasing process, and contract with national property management firms to handle day-to-day tenant demands.

#33 Not 1st on 07.22.11 at 11:47 pm

I love waking up every day and watching the U.S. punch itself in the face squarely with 2 fists. They have already defaulted and are too stupid to figure it out.

#34 BC Bring Cash on 07.23.11 at 12:10 am

Check out the US debt clock. It shows not only accumulating debt but also other numbers like unemployment , families on food stamps etc… sobering to say the least. The US problems are staggering.

#35 Cognizant on 07.23.11 at 12:18 am

Thanks Garth. This is such an enormous issue that is getting zero coverage in the MSM. The taxpayer exposure via CMHC is obscene. Nobody I paying an attention because I isn’t an issue until property values start dropping and people start defaulting, once this train wreck starts there will be no stopping it. I really worry for my kids future, they will be enslaved fo their whole lives paying these debts. Meanwhile the banks and their hreholdrs skate away with enormous profits.

#36 cj on 07.23.11 at 12:19 am

#23 Where is your sense of responsibilty???? Living rent free for 3-4 years because you know many loop holes of how to avoid payments….

#37 Smoking Man on 07.23.11 at 12:19 am

sming man fell of the wagon dam it feels great,,,,,

Like a dying man in desert finding a glasure

wo room is spining shit

#38 Cognizant on 07.23.11 at 12:19 am

Sorry for the typos. Hit submit before proofing. Damn iPad!

#39 timo on 07.23.11 at 12:22 am

good documentary on the subject a vision into the future when there is the next credit bubble collapse.

#40 Cookie Monster on 07.23.11 at 12:32 am

#7 The InvestorsFriend (Shawn Allen) on 07.22.11 at 9:47 pm
Well done Shawn I thought you had me, but hang on a second, don’t get fooled by the balance sheet deposit to loan ratio because you have to remember, like you said yourself last week, that one banks liability is another banks asset, such that all that is done with double entry accounting is where one loan is created out of thin air such as with a line of credit, as the line of credit is spent, the lending bank’s asset entry grows, and if the spender is spending the money in Canada lets say, which is likely, another Canadian bank’s deposit or liability entry will grow by the same amount.

So you can still have a huge credit expansion without any change in the banks equity, where Equity = Assets – Liabilities. The assets and liabilities can grow and contract as much as they want, while the difference will remain near constant.

Another example of this could be for a single bank to create an entry for $1 trillion dollars and inflate their own balance sheet by simply creating an asset and a liability at the same time in one double entry. It’s essentially the same thing but internal to one bank. The problem is, when they do it normally in the form of an actual loan, they give up control over the cash and often how it’s spent. Or in the case of a house mortgage in a bubble market the collateral is bad, or overvalued, such that eventually if the money is lost it becomes a bad investment and can not be recaptured, which in turn is a bad loan and becomes an expense for the bank, which in turn must come out of their retained earnings or equity.

So, in a nut shell, banks can blow up one anthers balance sheets via low interest rate credit expansion, or contract their balance sheets during high interest deflation, while their equity only changes by actual earnings or losses, hence their reserve ratios can expand from 10:1 to 100:1 if they make enough loans, it’s just that if they make to many bad loans they can be wiped out right quick and become Insolvent. And in an environment where money is cheap and loans are easy, a lot of bad lending tends to happen, it can be a very risky business. Notice the Bank of America recently lost $18 billion. Whoops!

Once they wipe themselves out by losing all their equity they would need to raise more capital through issuing debt or equity in the markets, and good luck doing that after just proving themselves incompetent.

#41 WatchingTheDetectives on 07.23.11 at 12:36 am

Its very troubling to see so many people in my office who have no savings or money and yet the banks lent them money to buy condos. They always complain they have no money yet go out every night . One of them tells me they skip or allowed to miss one mortgage payment a year. With the money they save they go on vacation. Garth what’s the point in saving money when I can lie and get a mortgage without using a penny of my money. They get to skip payment . These people are living it up. I think its better to risk going bust then waiting for the bust. Everyone lives off credit and live like kings while I suffer.

I think a lot of people feel your pain…myself included. You can thank our monetary policy that punishes good citizens like you who want to be responsible. Be patient and your time will come.

#42 Cookie Monster on 07.23.11 at 12:45 am

Hence, this is why it was so criminal what happened during the 2008 crisis. The Canadian government stepped in via the CMHC or the Bank of Canada and bought $60 billion worth of bad loans of the banks balance sheets, as well as in the USA the Fed bought $700 billion of their banks and insurance companies bad balance sheet assets. All those losers should have been allowed to fail, but their incompetence was rewarded and the government is the problem of moral hazard.

If we were on a gold standard with capped leverage regulation at say 20:1 maximum, the crazy expansion and bailouts would not have been necessary or even possible. We would have had real interest rates based on actual savings and loan demand by ‘real’ productive businesses.

#43 Patrick on 07.23.11 at 12:46 am

Canadian Government realizes that asian investor wealth is contributing to the overheating of our real estate market and they are taking measures to cool it down to protect the average working class of Canadians.

1. Canadian Immigrant Investor program limit of 700 people per year starting July 1, 2011. Chinese immigration companies are panicking and saying that quota will be met in a matter of days. By the way, this annoucement was made June 24, 2011 so that gives it 7 days notice. I think I gave my mother-in-law a longer notice about last weeks BBQ.

2. Yesterdays news. Canadian Gov. announced 1800 Canadian citizenship passports will be revoked. Guess what ethic group?

3. USA announces to all Chinese immigrants. BUY a HOUSE, get a GREEN CARD!

Connect the dots and see what is really happening.

#44 Basil Fawlty on 07.23.11 at 12:55 am

CMHC at $600B in loans outstanding, for comparison purposes, is roughly equivalent to the US federal mortgage entities having $6T outstanding. So obviously we are talking huge money, which leads to my question.
What were the Cons thinking to implement such lax standards, after the US mortgage market had just recently imploded? I swear the only person who could have possibly come close to such a bad decision is Ace Ventura Pet Detective.

#45 debtified on 07.23.11 at 2:18 pm

#7 The InvestorsFriend (Shawn Allen) on 07.22.11 at 9:47 pm


Give it up. You didn’t know about fractional reserve. You were embarrassed (instead of being grateful) when people educated you about it. Your arrogance prevent you from learning. You still don’t know what fractional reserve is yet you keep bringing it up. Give it up.

#46 T.O. Bubble Boy on 07.23.11 at 2:52 pm

The kid in the pic looks a lot like John Baird:

#47 salonist on 07.23.11 at 3:19 pm

maybe some interesting reading if your inclined
history of debasement
history of default through debasement
richard nixon and the u.s. currency
coinage act

#48 Coraline on 07.23.11 at 3:30 pm

Smoking Man: Get into rehab before you end up like Amy Winehouse. Seriously.

#49 principal on 07.23.11 at 4:42 pm

43 patrick
number 1. is untrue. it is a cap on applications not entry to lower the backlog.

In addition, the minister is introducing a cap of 700 on new federal investor applications. Although last year, CIC made changes that raised the minimum net worth and investment requirements, it continues to receive applications in excess of what is required. An annual cap on new applications will allow for progress on backlog reduction while ensuring that the Department has a sufficient volume of new files to meet its commitments.

#50 TurnerNation on 07.23.11 at 5:10 pm

Is this scotch fueled weblog back in business?

I think we need some blog bumper stickers so we can recognize each other while on the road.


My other car is a Hummer
Best Place on Earth??
Follow me to my bunker
Doomers do it Better
Blog Dog on Board
Stephen who??

After months of denial-of-service attacks, slow response times, server crashes and too many guys with noserings pretending to be techies, the blog moved this weekend to a hugely secure facility behind high fire walls on Uranus. Sorry for the 15-hour outage. It’s a long trip. — Garth

#51 TurnerNation on 07.23.11 at 5:16 pm

InvestorsFiend: time to get your own blog sonny boy.

#52 Imstupid on 07.23.11 at 5:39 pm

People, two groups of investments you must have in your portfolio. Pharmaceuticals, and bank prefered shares. As for the first group buy into companies that deal with weight loss, or obesity problems. Also companies that deal with old age related problems. Profits will increase 10 fold in the next decade or two. Bank shares will go threw the roof when thus housing crisis comes. This is because the fees and surcharges from foreclosures will exceed profit from interest in the short term, plus it will give the big banks huge amounts of capital for investment bringing in more revenue. Once interest rates go up the people with too much equity will not walk and pay huge amounts of interest to maintain an illiquid asset. PM has peaked it will continue to grow but not at the current rates. Even at the current it hasn’t grown that fast. The problem is that the PM increases are being reduced by the strength of the CND. I bought gold at 945 per once, it sounds like I made slot of money but in actuality it resulted in an increae of 25-30% over 3 years.

This is why, for all you stupid pm collectors, CND at the time was 80-85cents us. So my actual buying cost was around 1000 per ounce given conversion rate delivery and bank profit on each ounce plus insurance. Now if I sell at 1600 per ounce usd I need to convert back and pay fee for conversion pluse I get charged fee for each ounce. So what remains is probably a profit of 300-400 per ounce over 3 years. Remember that these three years were the most volatile since the great depression. Sure if I lived in the US it would make more sense but I buy groceries with CAD.

#53 vyw on 07.23.11 at 6:12 pm

The Vancouver SFH chart:

looks like the bubble curve here:

But the NASDAQ graph is also instructive – up 100% between late 1999 and spring 2000. So we may be ‘shorting’ the Vancouver and Toronto market a little too early.

But say this is the top in Vancouver, then phase I drops prices to the depths of spring 2009, then phase II to 2005 level prices and a final over-correction to 2000 prices. That would mean the median price (currently $900K) would fall to 650K, then 475K, then 325K, which need to be inflation-adjusted.

If we assume 2 years for each phase, and 2% inflation, then phase I in 2013 would be to $700K ($650 X 1.08 for 4 years inflation), phase II in 2015 would be $570 ($475 X 1.20) and phase III in 2017 to a low of $435 ($325 X 1.34) – a drop of 52% from the top.

RE prices in Calgary

and Kelowna appear to be correcting; we should track the numbers and pattern as this could indicate the path for Vancouver and Toronto markets.

#54 miketheengineer on 07.23.11 at 6:31 pm

#27 garrulous squirrel

You said, “Doesn’t anyone remember the billions we payed for the 4500 auto jobs?”

And I say, What Jobs? Billions were spent…yet GM is a spending vitually all its new cash in the good old USA and not hiring very many good old Canucks. The good old Canucks were able to maintain some existing jobs. Any of new the jobs created were all CONTRACT. And the new guys in the good old union most likely are working for less cash than the older union members. The OEM’s could give a rats ass about Canada. Within 20 years we will be lucky if one plant is still open.

Canada is a fly on the Butt of the OEM’s. If things get worse, they will not hesitate in a moment and shut everything down, and squish the fly to death.

If the trend continues…there will be no need to train technicians, engineers or any other skill trades needed for those industries, and the education system in those areas will collapse. Tax base will go down. Poverty for everybody. Are you guys getting it? When you take your money…only buy products that are made in Ontario. Corolla, Civic, Rav 4, Equinox, Impala, Camaro, Flex, Chrysler Minivan and 300. Don’t even look at the other products. Buy the products your neighbors build. Corolla and Civic are the top 2 highest in rated quality of the small cars.

I can hardly wait till the good old days, when an employer would hire you as a full time guy. As an engineer I am soooo tired of getting a call for a nice job, only to find out after 2 interviews, they only want you for a 3 or 6 month contract…with crap wages (often 15 per hour less than your last full time job), no overtime, and no benefits. Please lord bring back the good old days. I envy my relatives who work for the government, now the fattest cats on the block.

#55 Live Under Your Means on 07.23.11 at 6:48 pm

So sad to hear what happened in Norway. Another, alleged, right wing lunatic. My condolences to the families. I have relatives in Oslo.

#56 timo on 07.23.11 at 7:04 pm

Irish Bank Default Rumour – move along …nothing to see here…all the banks who are carrying bad loans are solvent and markets always go up! lol

#57 need a mortgage on 07.23.11 at 7:10 pm

Ah yes, the protective fire balls of uranus!

#58 TurnerNation on 07.23.11 at 7:27 pm

Yes Garth, what a long strange trip it’s been.

I first saw your column in the Toronto Sun ask a kid paperboy. There it was on the first page of the business section. This was mid to late 80s era.

A constant battle is fought against those who tune in, turn on, and drop out.

Keep on trucking.

#59 Byron on 07.23.11 at 7:34 pm


When you are gonna start banning the trolls that keep posting “first”?

#60 eaglebay on 07.23.11 at 7:38 pm

#53 vyw on 07.23.11 at 6:12 pm

What do you mean the Vancouver market?
Do you mean the TSX Venture? In Toronto.

#61 eaglebay on 07.23.11 at 7:55 pm

#54 miketheengineer
What kind of engineer are you?
Flexibility and mobility is good with RE. It’s also
good with jobs.
A lot of that bailout money to the auto industry
has been or will be repaid.
Canada has to change from a branch plant to our own
manufacturing. Innovation and the right education
should be our forte.
We have the raw material to process and supply our own manufacturing concerns.
Come on people, lots of jobs in Canada. Northern BC, Alberta, Manitoba, Saskatchewan and even Newfoundland. Ontario has to get rid of over regulations and over taxation and start to rebuild their economy.
Stop your entitlements and equalization payments and try free enterprise. You might like it.
Stop subsidizing your industries. Stop screwing the taxpayers and the consumers by subsidizing solar and wind power. What a rip off.
OK doomers, go at it.

#62 Golden Stewie on 07.23.11 at 8:16 pm

Some more juicy info at add fuel to the fire.

“Pension funds across North America are facing record shortfalls. Research shows that 33% of Canadian pension funds are struggling to meet liabilities(Figure 1); the Ontario Teachers’ Pension Plan funding shortfall, for example, ballooned to $17.1 billion in 2009, despite strong investment returns.”

Research shows that 33% of Canadian pension funds are struggling to meet liabilities

#63 bullion.bunny on 07.23.11 at 8:17 pm

#7 The InvestorsFriend (Shawn Allen) on 07.22.11 at 9:47 pm

You need to go back to reeducation camp. How you can sell a financial news letter making such statements? Just goes to show you the ignorance that surrounds us.

1.) Canada has a reserve ratio of ZERO. Here is the document, page 4 on the bottom footnote #4.

2.) Banks create money out of thin air period! It is called credit. Credit expansions and contractions cause boom and bust, it takes 11 to 13 cycles between depressions

3.) The Austrian School explains the business cycle based on credit cycles that are generated by BANKS.

4.) People that do not understand this SHOULD NOT write news letters.

5.) STOP writing about things you have no or little understanding of!

It is no crime to be ignorant of economics, which is, after all, a specialized discipline and one that most people consider to be a ‘dismal science.’ But it is totally irresponsible to have a loud and vociferous opinion on economic subjects while remaining in this state of ignorance.

Murray Rothbard

#64 Golden Stewie on 07.23.11 at 8:25 pm

Hope you didn’t move to Godaddy. Their Hillbilly CEO posted a video of him hunting elephants on safari thinking he was some cool hunter dude. They just lost our business as a result.

GoDaddy Elephant Slaughter Draws Massive Backlash

“GoDaddy CEO Bob Parsons may need a lesson in online reputation management. Lesson 1: Don’t kill elephants. Lesson 2: If you do kill an elephant, don’t post a video about it on the web. 3: If you do kill an elephant and post a video about it on the web, and then tweet it out to 33,000 followers. Really lesson 1 solves them all, but now he’s learning the hard way as the controversy has taken the web by storm”

#65 Hoof - Hearted on 07.23.11 at 8:50 pm

After months of denial-of-service attacks, slow response times, server crashes and too many guys with noserings pretending to be techies, the blog moved this weekend to a hugely secure facility behind high fire walls on Uranus. Sorry for the 15-hour outage. It’s a long trip. — Garth


Garth………too funny

#66 Hoof - Hearted on 07.23.11 at 8:57 pm

#54 miketheengineer

It was engineered by design….

Look at Detroit….it was going flusshhhh since 1950’s…

The industrial heartland has been gutted.

The final attack will be the unions…2 tier wage system….contracts will be the new norm.

Gov’t workers? ….are our new ” masters”….and I am tired of the old BS that they feel overworked …and could get more in private sector. You ain’t starving, and you ain’t underpaid…STFU

Remember the old Archie Bunker line…he was at the Unemployment office..and got so frustrated at his indifferent treatment he said ” the only reason you have a job is because I ain’t got one…”

Predict a lot more Archie Bunkers….

#67 vyw on 07.23.11 at 9:05 pm

Vancouver market refers to Vancouver housing market

#68 waterloo Resident on 07.23.11 at 9:25 pm

MikeTheEngineer said these things, with some parts removed : (and yes, he is correct):

(1) “The OEM’s could give a rats ass about Canada. Within 20 years we will be lucky if one plant is still open.” ———-

(2) “If the trend continues…there will be no need to train technicians, engineers or any other skill trades needed for those industries” ————

(3) “Tax base will go down.” ———–

(4) “Are you guys getting it? When you take your money…only buy products that are made in Ontario. Corolla, Civic, Rav 4, Equinox, Impala, Camaro, Flex, Chrysler Minivan and 300. Don’t even look at the other products. Buy the products your neighbors build. Corolla and Civic are the top 2 highest in rated quality of the small cars.”

(5) “I can hardly wait till the good old days, when an employer would hire you as a full time guy. As an engineer I am soooo tired of getting a call for a nice job, only to find out after 2 interviews, they only want you for a 3 or 6 month contract…with crap wages (often $15 per hour less than your last full time job), no overtime, and no benefits. —–

(6) “I envy my relatives who work for the government, now the fattest cats on the block.” ———–

Here’s my reply to these points:
1 = Yes, I totally agree on that.

2 = only 1/2 correct: the schools will still be training TONS of technicians and engineers, but those people won’t be able to find ANY work anywhere closely related to what they studied.

3 = Yes.

4 = I bought a 2006 Corolla CE, and I love it, its so reliable, only needed new tires at 150,000 kms, nothing else. No rust anywhere. My ex bought a 2006 Mazda3 and now it needs new front struts, new A/C compressor, new front wheel bearings, and there is rust on the roof and rust around the rear center brake light on the trunk. Lots of other crazy little things going wrong with it too. Just make sure that you ALWAYS use 100% synthetic oils on your Jap-Cars to prevent oil gelling ( Sludge problems ) as that will kill your little jap engines in no time. Something about todays engines running hotter, so oil breaks down much faster.

5 = You’re lucky that you’re even getting calls for interviews, I’ve had nothing but silence over the past month, everything just stopping now.

6 = My sister is a nurse and she’s got work coming out her wazoo, so I’m going to get trained in health technology and work for the government too, its the ONLY job out there now a days.

#69 Nemesis on 07.23.11 at 9:34 pm

…”too many guys with noserings”… Hon GT

That was harsh, GT – married guys need to earn a living, too.

As for selecting ‘Uranus’ to defeat DDNS attacks… Were your techies coyly referencing, “PrepartionH”?

#70 jess on 07.23.11 at 9:42 pm

Save the Gambling Bankers
July 22, 2011

Welcome back to Democracy Now!, Professor Hudson. What about these latest revelations?

MICHAEL HUDSON: If you’re talking about the revelations of the Senator, these are the second big story to come out in the last two weeks. The first story, really, was two weeks ago when Sheila Bair finished her five-year term at the Federal Deposit Insurance Corporation. And now that she left, she was able to talk about the arguments that were going on while all of this money was being given away. She opposed it. She said none of this money, not a penny, had to be given away at all. She said the job of the FDIC was to do what it did with Washington Mutual and IndyMac. They could have closed down Citibank, they could have closed down AIG and the others. Depositors insured by the FDIC wouldn’t have lost a penny. She said, “That’s what the FDIC does.”

She was overruled by Geithner and by the Treasury Department, and especially by Bernanke, who essentially said, “We have to save the rich first. We have to save the gamblers.” There was plenty of money in all of the banks to cover all of the retail vanilla deposits for businesses and families. What there was not money for was for all the cross-gambles that they had made on derivatives—that is, which way interest rates would go, which way currencies would go. And so, this was really a casino. These were bets. And people like the AIG couldn’t pay. And the question is, how are you going to get the winners in this casino to get money from the losers, who are broke? So these $16 trillion worth of loans were all for junk securities. They weren’t for the solid securities that did back out the deposits. These were all for junk gambles, having nothing to do with the real economy at all.

And the result was that while many of the $16 trillion have been repaid, there has been a residue of $13 trillion added to the government debt since September 2008, when all of this began. All this was created simply on a computer keyboard at the Treasury. So the question is, if they can create a $13 trillion on a computer keyboard, taking over Fannie Mae and Freddie Mac, and the Federal Reserve can simply give this money, why can’t they, over 50 years, pay the trillion dollars for the Medicare and the Social Security? It’s—obviously, it’s a charade.

JUAN GONZALEZ: Well, that was precisely my question. Where did this $13 trillion come from? So this was basically all paper, paper loans.

MICHAEL HUDSON: Well, not even paper. It’s electronic. We’ve sublimated the whole thing. The Federal Reserve can create a deposit, just like a bank does. If you go into a bank, you sign an IOU, and the bank adds money to your account. It’s done on a computer keyboard. That’s what money—how it’s created these days. And the government can do exactly what the bank can do. They can create the money on their own computer keyboards. And that’s—usually, they do that by running a budget deficit. That’s why the economy needs a budget deficit to grow. When the government runs a budget deficit, that puts money into the economy and helps us recover from the recession. That’s pretty obvious….

#71 Mr. Lee on 07.23.11 at 9:48 pm

Back in late 2001, my wife and I, both of us GenXers, bought a nice 1620 sqft home for $186000 GST in in Calgary. By April 2002 we moved in to our brand new home. Fast forward ten years and the same house today could be built for you for over 400K. That is either an impressive feat of inflation or a bubbel waiting to burst…… be the judge.

All I know is that today’s first time buyers are a wide eyed as we were, however their mortgage obligations far surpass anything that we would of dreamnt of.


Both my wife and I, now in our very early 40s,
looked a moving and upgrading the house. We were quoted anywhere for 560K to 700K.

That any reasonable and sane person would contemplate that sort of number is reason enough as too the realities of Mr. Turner’s warnings.

#72 Ben on 07.23.11 at 10:03 pm

#54 miketheengineer on 07.23.11 at 6:31 pm

You got to start looking outside Canada like I did. The bullshite wages they offered me in Canada barely paid my child support.
Go south to the good ol U.S.A. and make twice the amount of money and pay half the money to live. It’s a friggen no brainer.

#73 Behavioral Finance on 07.23.11 at 10:19 pm

The InvestorsFriend (Shawn Allen)

“So ya see kids, the bank is mostly in the business of lending out deposits.”

Very naive statement. I guess you forgot all the off balance sheet exposure that Canadian banks have which is no different what American banks had.

#74 Dr Doom on 07.23.11 at 10:41 pm

#59 Byron on 07.23.11 at 7:34 pm


When you are gonna start banning the trolls that keep posting “first”?


This is a crime??????????


#75 timo on 07.23.11 at 11:02 pm

at the 11:00 minute mark it makes you worry about how much the US insured the debt in europe. If anyone defaults this is going to collapse the system again.

good video with Steven Keen.

#76 Ben on 07.23.11 at 11:04 pm

#54 miketheengineer on 07.23.11 at 6:31 pm

I’m a journeyman telecom guy, nothing special. I’m working in the U.S. on a dead technology (Nortel) now owned by Ericcson.
I’d be lucky if I could find a contract job in Canada and if I did it was pulling cable or punching down two pair on some distribution frame in some dirty warehouse, contracting to some small time install tech company making $25 an hour, 40 hrs a week.
I’m making $50 an hr in the U.S. contracting to AT&T writing translations/scripts working 60 hrs a week and paying absolutely dick to live compared to bubble Canada.
The team of engineers I work with… half of them can barely speak English. What does that tell ya, there crying for engineers in every technology from Nortel, Ericcson, Nokia, Alcatel, Lucent.
We work remotely off our AT&T laptops through a VPN, no driving to work, fighting traffic. I could work from home in Canada if I wanted to but I don’t because it’s to god damn expensive up there to live.

#77 Mr. Lahey on 07.23.11 at 11:27 pm

Shawn Allen and fractional reserve banking. Shawn baby, even Ricky and Bubbles understand fractional reserve banking and yet you embarrass yourself in your ignornance. The fraction that is being held by the banks in cash is a mere pittance in relation to the amount of loans outstanding. This ponzi scheme went back to the goldsmiths in the 17th century. Read the following and learn.

It was called “fractional reserve” lending because the gold held in reserve was a mere fraction of the banknotes it supported. The scheme worked as long as only a few people came for their gold at one time; but investors would periodically get suspicious and all demand their gold back at once. There would then be a run on the bank and it would have to close its doors. This cycle of booms and busts went on throughout the nineteenth century, culminating in a particularly bad bank panic in 1907. The public became convinced that the country needed a central banking system to stop future panics, overcoming strong congressional opposition to any bill allowing the nation’s money to be issued by a private central bank controlled by Wall Street. The Federal Reserve Act creating such a “bankers’ bank” was passed in 1913. Robert Owens, a co-author of the Act, later testified before Congress that the banking industry had conspired to create a series of financial panics in order to rouse the people to demand “reforms” that served the interests of the financiers.
Despite this powerful official backstop, however, the greatest bank run in history occurred only twenty years later, in 1933. President Roosevelt then took the dollar off the gold standard domestically, and Federal Reserve officials resolved to prevent further bank runs after that by flooding the banking system with “liquidity” (money created as debt to banks) whenever the banking Ponzi scheme came up shot.

Randy grab me a drink and let’s see what Jay Roc is up to…

#78 Aussie Roy on 07.24.11 at 12:32 am

Utopia on 07.22.11 at 8:47 pm #135 Aussie Roy on 07.22.11 at 5:24 pm

RE –
(must watch video for those with any doubt where Aussie RE is heading)

That was quite a well done piece your M$M put up. Fascinating. I watched it twice. What a nightmare you are all facing down there right now. Much more severe than the US downturn. Actually, it seems it is even worse than in Canada too in many respects and I cannot understand why nobody rang the bells on it all before it was already too late. So many losses.

What a pity.

Yes it’s a pity, people had probably 3 or 4 economists warning of this for years but as the delusion here was so strong and being supported by the RE economists most decided not to listen. But now things are changing with the largest 2 house price index suppliers saying, Yeah prices are slipping but it will still be fine, go figure.

As with most of the RE crowd they are forever looking backwards to very recent history and making their predicitions to suit, by doing this it is no wonder they have not seen it coming or even believe that a price crash is possible, even though its happening now.

Investors friend, I’ve suggested before you read the best analysis of modern FRB by Prof Steve Keen, perharps after reading his work you could then enlighten us which parts of his analysis is incorrect. Here is a hint don’t loans themselves become deposits?. Steves work looks on target to me but what would I know after being a risk manager for 30 years including a stint at Australias largest rural bank.

Aussie Update – The carnage (sorry small not important correction) continues.


“We will not cut prices in the next six months,” boldly proclaims Cui Fan, a sales agent from Jingxu Real Estate Development Co, which offers non-furnished residences more than an hour from downtown Beijing at 19,000 yuan, or nearly $US3000, per square metre.

While such bravado was rewarded in the past when the property market seemed to only go in one direction, many analysts are starting to question that assumption, and increasing numbers of would-be home buyers are perched on the sidelines, hoping prices will fall.

MORE than 400 repossession writs have been served on home buyers in the past two months.

They are the highest figures for almost two years, more than double the number of repossession writs filed in the Supreme Court of Victoria six months ago.

Don’t you just hate it. A new post all ready to go, then some smart arse goes and sells a house. A house that’s been on the market over two years, already discounted 23% and wait for it, declares boom times are just around the corner. Of course, as this site and others have regularly proven, the real estate industry is damn adept at finger painting with poo and shouting, “look Mummy, I’ve painted the sun.”

#79 Golden Stewie on 07.24.11 at 12:34 am


1.) Canada has a reserve ratio of ZERO. Here is the document, page 4 on the bottom footnote #4.

I didn’t realise it was this low. The document is old, anything more current / up to date?

#80 Jody on 07.24.11 at 1:11 am

On Norway: Anyone who thinks that nuthead did all that on his own has their head shoved so far up their own arse they can watch themselves swallow. I like all the photoshopped pictures of him dressed up, I wonder how much the CIA and Mossad paid for those. I say it’s a false flag operation, there was involvement from some kind of foreign government organization, especially as Norway has been saying no to the international banksters and the scumbag EU. I think it’s sick, the depths the money masters will stoop to, getting a mental midget to kill young adults, bastards.

On the CMHC: Scum, all of them, total scum. Millions of Canadians will default and the tax payer will pick up the tab because Canadian tax payers are stupid morons. People who actually produce things will up and move, more than likely to South America or SE Asia, both places I’m considering going to as I’m already sick of being taxed and user fee’d to death. Of course inflation is the worst tax of all and we’re getting that all over our faces right now.

I would like to know exactly how much money the CMHC has on high risk loans. Looking at their fancy tax payer funded report I can’t figure out squat. But looking at their annual report they are into social housing as well, that’s just fuc**** peachy, wonderful. They even have objectives, like what the hell, why not just make them a government ministry and get it over with. Call it the Federal Mortgage and Housing Corporation because honestly I don’t think Canadians understand the banks take no risks and will just get the tax payer to cover them. Hell, let’s nationalize the banks, officially anyways, seeming how they already bloody are. Check out page 2 of the report and the pie charts that say “Prudent risk management,” oh hahahahahahahaahha! Good God, what a farce.

On Genworth: check out the forum of the website below

and a little primer on inflation – which is not an increase in prices – it’s an increase in the supply of money and devaluing your dollar.

“Governments like to tax us and inflation is a tax. Most people simply do not understand that.”

“How’s it a tax?” I asked.

“Let’s go back to the analogy of the island. As I said, if a second set of poker chips arrives, as they’re introduced into the island’s economy, the prices of everything on the island will begin to rise to reflect the number of chips. But before they do, the person who found the chips gets to spend them while the prices are still low. In effect, they’re stealing the value out of everyone else’s chips.

“In the same way, when the government increases the money supply, without a corresponding increase in the amount of goods and services, they devalue everyone else’s dollars—they’re worth less and buy less as prices begin to go up. But government gets full value with this newly created money because they spend it first.”

“So, with inflation, they’re stealing value out of every bill I have in my pocket,” Dave said,

“Stealing is exactly what they’re doing. Keep in mind that if introducing more money were harmless, the government wouldn’t care about counterfeiters.”

“So inflation amounts to legalized counterfeiting,” Dave concluded and the three of us laughed at what he’d said.

“You’re catching on,” Mac said.

This concept clearly intrigued Dave.

“What’s worse,” Mac continued, “is that the same people who would scream at a tax hike or a new tax imposed on us, blithely ignore inflation because they don’t understand that it’s caused by the government and it’s another tax. It’s the ultimate withholding tax because it comes out of everyone’s pocket even if you’re in the underground economy. But the worst thing is that it discourages saving and investment, the things that made this country great.”

#81 OnlyTheBankersLaugh on 07.24.11 at 1:15 am

I think Carney should lower the rates – perhaps to -2% or -4% on Uranus as they have those crazy nuclear heating bills. I mean it’s a new emergency here in Canada constantly, ain’t it? People are adding to their net worth at an extraordinary rates thru housing while being under or unemployed. People “making” far more money in their housing than their income. Makes complete sense. Might as well get gassed with Smoking Man as he keeps wheeling and dealing and by the 3rd bottle, he’s seriously starting to make sense. Sorry, SM. I’ll be your Huckleberry but probably not BD to SM

Sorry to hear about engineers heading south but it’s a reality. I see engineers in huge demand for Front End Engineering here with Canadian EPC’s overloaded for huge capital projects in process industries but ALL detailed eng work (30-50X x Front End) is going to Korea and back officed to India with China trying to emulate the Koreans. Accounting, HR, finance, marketing at these big multi nationals going back office as well… even legal advice is prepared there for review by Toronto or Calgary. Incroyable.

Oh well, if boomers are in trouble, think about Gen X and then those that follow. It truly was a golden age and will continue for the traditional middle class guy but only if you have a government pension. Higher taxes with much lower service levels will be the norm even with us being the most wealthy resourced nation on this planet per capita (Uranus, once again, fires out a winning gaseous, liquid and solid combo per cap compared to the underliving over mortgaged humans on Earth due to lack of homosapien interest in no money down igloos – amoeba and roaches on the other hand are creating Vancouver like blooms or bubbles)

Good luck to all but this is getting crazier by the minute. When housing has made more millionaires than actual invention or income, we really have collectively underperformed,

Only The Bankers Laugh …. how many bankers in jail for the big fraud of 2001-2006? Hmmmm. Son, you gotta get into banking.

#82 Ralph Cramdown on 07.24.11 at 1:17 am

We’re backstopping Genworth.

Yes, the gov guarantees 100% of CMHC’s underwriting. But it also guarantees 90% of private MI companies’, including Genworth.

#83 BPOE on 07.24.11 at 1:35 am

Folks, the government loves to loan money and no one can stop this practice. Gold hit $1600! My new target is now $1700 by Christmas. Foreign money pouring into BPOE as Vancouver is considered the defacto standard for safest investment in the world. Folks, things are going great in BPOE. Interest rates low, billions wanting to buy. Come join us in BPOE. Going higher everyday

#84 BPOE on 07.24.11 at 1:42 am

Looks like the debt deal might not happen like I predicted. Very little time left now to strike a deal.

#85 a prairie dawg on 07.24.11 at 1:56 am

“There is a pattern to this drama.”

Yeah, it’s called fleecing the sheep. Once or twice a generation the flock can be economically pillaged. They have short memories. bahhh…

#86 Bailing in BC on 07.24.11 at 2:41 am

Re:#59 Byron

When you are gonna start banning the trolls that keep posting “Garth, When you are gonna start banning the trolls that keep posting “first”?”

#87 Paul on 07.24.11 at 3:27 am

My partner went to the RBC today to transfer savings back to India, as the cost of living is much cheaper and can make just as much money their.
The teller at the branch said so many bank customers are moving out of Vancouver to other countries as they complain at the living costs. She said the rate of people coming in to transfer everything they have our of the country was shocking and never seen anything likecit in her career.

#88 Get Real on 07.24.11 at 4:09 am

#17 Bottoms_Up

What planet?

#89 bullion.bunny on 07.24.11 at 7:27 am

#65 Hoof – Hearted on 07.23.11 at 8:50 pm

No…..too stupid in the first place

#90 Utopia on 07.24.11 at 8:39 am

I don’t know why people seem to gravitate towards accidents. It is human nature though. We are fascinated by crashes. The Six-O-Clock is full of them.

Train wrecks, mid-air collisions, Formula 500 flame-outs.

Everyones favourite bit seems to be the dramatic point of impact…. or later, observing the carnage of twisted metal and smashed headlights as the emergency teams roll in. Then the pedestrian observers move on.

And that is what makes economics so interesting. The people who populate that world in the blogospere are not just casual observers who only notice the most gory dramatic parts of the accident scene.

No, they go one better.

Maybe they just have twisted minds as they speculate on accidents that have not even yet happened. They never tire of discussing all the fine details either.

How high the cars might fly through the air, how many broken headlights there will be, the amount of spilled fuel and busted up drivers, pedestrians and passengers.

Most of it is just guess work and speculation of course.

It is easy to see worst case scenarios at every intersection. Why have Laurel and Hardy style near-misses when you can instead imagine head-on collisions with plenty of injuries and collateral property damage to boot?

Which is why I try to avoid the doomer sites as much as possible. There is something to fear around every corner when you drop in to read. Even good news is greeted with horror and ideas quickly emerge that the drivers were not just drunk, but that they are deliberately causing crashes.

SOB’s, we shout!. They are doing this on purpose. Just look at all the wreckage they are causing. There is even mind control and guys behind curtains pulling levers to make the events as ugly as possible. We are all being manipulated in that world and there is plenty of blame to go around.

Which is what makes an earlier post about the 16.7 trillion in notional derivatives held by Canadian banks such a fascinating story.

It is a really big number. Of course it will result in a wreck of epic proportions. The global banking system is on the verge of failure as the dominoes knock each other over and the whole system finally collapses in heap of rubble and dust. Our own banks must surely be finished then too. Right?

We will really be f***ked then.

See what I mean? Is it really a set-up for a mega-crash or is it really just a misunderstanding of how derivatives function and perhaps understanding the meaning of the word “notional”. I am not worried to be honest.

If it becomes newsworthy, I will catch it on the late night news…..and then kiss my sorry ass goodbye. In the meantime, I actually feel pretty optimistic again about the future.

I do not worry like I used too.

#91 timo on 07.24.11 at 9:10 am

these videos are bloody scary.

is Latvia truly cutting 30% and telling people to leave due to imf demands that all countries cut spending to finance the debts given out in the good times? unreal!

#92 Sue on 07.24.11 at 9:24 am

#18 Devore

You have no soul.

#93 Utopia on 07.24.11 at 10:08 am

#85 A Prairie Dawg

Well I really appreciated the common sense approach in that FP article by Michael Nairne today. Some guys are getting it right and keeping the world of investing in perspective. These following few comments he made about recurring financial crises in reference to the Carmen Reinhart and Ken Rogoff research struck me as having the ring of truth.

“They also follow a pattern. The stage is set by a debt cycle when borrowing, often real estate-related, skyrockets. The onset of the crisis is marked by collapsing asset values as real estate prices plunge and bankruptcies soar. As asset write-downs proliferate, a banking crisis ensues. Lending and liquidity dry up, investment and consumption collapse, and a deep recession ensues.

That is only the start of the drama. As government revenues evaporate and spending jumps, deficits mount at an alarming rate. Typically, government debt soars by 86% in real terms in the three years following a crisis. Hence, sovereign debt crises frequently fall on the heels of banking crises” ~~ Michael Nairne, Financial Post.

Pretty good stuff actually.

Michael hit on all the main points in just a few sentences. So, we do not need to panic like chickens with our sorry heads freshly lopped-off if we understand the cycles. Just use our common sense and understand that we are in a different kind of investing environment today.

I particularly like Michaels references to growth in the BRICS and developing nations. We have become too self obsessed here at home with debt issues and tend to forget that much of the rest of the world is actually posting very strong growth numbers.

I have a belief that equity markets led by our large caps will deliver impressive performance over the coming years. In particular, those US and Canadian companies with good exposure to more robust overseas markets should do quite well.

I have been rewarded in this view during the current earnings season too as some of these companies (defensives are still my preference) have delivered outstanding results and the markets have responded very positively. Equities are on the rise. So are dividends.

Why would they not be? That is where to money now flows.

The average person cannot pick up a paper or read a blog without coming across a plethora of stories each day suggesting defaults on debts, credit risks, low bond yields (even below inflation rates) and the imminent insolvency of consumers, banks, municipalities or countries.

Typical investors are fear-stricken by debt problems.

So naturally, our all-star corporate performers with their fat balance sheets and solid customer bases offering income are starting to look pretty damn good to weary investors who have been stung so many times in the past.

We have even come to fear the sudden rise and fall in commodity markets. Boom and bust cycles often do not look good on the bottom line and retirees in particular are becoming aware that investing in strength and quality just makes good sense again. They are choosing to shun volatility, and buy quality.

So I was pleasantly surprised when I heard Larry Edelson (Uncommon Wisdom) talk about the solid growth prospects of equity markets over the coming years. He predicts a Dow of between 15 and 20 thousand to arise as Equities themselves become commoditized and monetized. And he is right. Retirees in particular, of which there are millions coming on-stream, want security, income and stability.

Not risky bets on potentially failing debt issues.

What I found most interesting was his use of the term “commoditization of Equities. It is brilliant turn of words really. I have not heard anyone else sum up the future quite so nicely.

I am very much in favour of this recent turn of events too. There has simply been too much pressure on the speculative side of commodities markets over the past year and it has caused damage to our long term prospects of a real economic recovery.

Prices for Oil, Corn, Wheat, Sugar and Copper amongst others have pushed us to the brink of a new slowdown and organic growth has been suffocated despite falling demand. Speculation alone is killing our prospects.

We just cannot continue to drive this investment class further and literally take food off the plates of people in the Third world and developing nations while expecting an economic revival to occur. The very idea is at odds with itself.

Anyone who thinks otherwise is an idiot.

Now Larry has great credentials, a good track record and a long history of making solid market calls. His opinion is well worth hearing too if you are an active trader.

You can watch his short daily video here:

(PS: For you Gold-Huggers, Larry is warning of a potential sell-off in the Gold markets as the debt ceiling issue is finally resolved. ).

#94 KIM on 07.24.11 at 10:39 am

Paul #87

thats funny as I heard that from my aunt who works in a bank in brampton and claims a lot of Indians are moving money back to India. I am surprised to hear other Indians from other parts of Canada are doing the same. if Things get bad how many will run , not walk away from Canada? Canada has a large amount of Canadians living outside of Canada now.

#95 cata on 07.24.11 at 10:41 am

I could predict everyone in this blog is going to die ……. the hard part is to tell when! Prediction of economy is easy to do, harder to give dates when it is happening.

#96 TurnerNation on 07.24.11 at 10:58 am

#80 Jody on 07.24.11 at 1:11 am

Weekend off topic re. norway: I’ve heard similar. These almost made-for-tv events complete with Youtube links are all neatly wrapped up the next day. Sept 11th was 100% solved by Sept 12th. I guess our local police forces must be incompetent boobs with all their unsolved cases??

In most of these cases we have suspects under control of psychriatrists and under mind bending drugs. See: Columbine, Virginia Tech, and so on.

In most cases all early reports and witnesses report at least two shooters – see Fort Hood, Virgina Tech – and more, in the case of olumbine. How did two kids get 80+ bombs into the school unnoticed and take out so many people at Columbine? All of their friends saw many others involved. The police were ordered to stay out of the school until the job was done. Really, two kids holding an entire city’s SWAT resourses at bay? Believable?

How did this Norway programed killer single-handedly hit almost 100 people?

After a recent shooting in Brazil their govt is tabling a gun ban bill. What is Brazil’s population, many hundreds of millions but a few people cause loss of majority’s rights?

The message of these events is clear: trust the government, enact new laws, submit to the government, live in fear, do not trust family or religion, and hunker down into a new world order. And above all TRUST the unsubstantiated, uncoroberated stories in the media.

I have in front of me the weekend paper edition of a US business news paper – with its usual laughable pro-war anti-everything else editorial section. This week they blamed the Norway incident entirely on Muslims and “al queda”!!! A completely fabricated report, with the usual propaganda included. War is a business, turning millionaires into billionaires.

#97 Utopia on 07.24.11 at 11:03 am

#92 Sue responding to #18 Devore

“You have no soul”

You just don’t know Devore very well yet Sue. He has a soul but he is also a practical and a realist. The world is full of tragedy every single day. So what? We cannot control it or change the outcomes of random acts in foreign countries 10,000 mile away from our own. It has nothing to do with us. So why should those sad events distract the rest of us from having full lives and enjoying our normal day? I have learned to block out all that crap. It does nothing for me but get me upset and wreck my day if I give it my attention.

You know the old expression. Shit happens. Get past it.

#98 TurnerNation on 07.24.11 at 11:08 am

India: I heard of an India ETF – symbol INDY – ISHARES S&P INDIA NIFTY 50. It’s going sideways for now.

#99 Killer Chicken or Imploding Boomer? on 07.24.11 at 11:08 am

Hello Shawn @7.

Wow, the dawgs sure came after ya today. Maybe we should try this simple re-word:


The point of the re-word is actually moot (at least after
the initial transaction).

I’m curious to know how many of the bloggers who replied (negatively) to your post actually have “savings”.

#100 TurnerNation on 07.24.11 at 11:16 am

From a Toronto Condo realtor’s web site, the 5% crowd:

“The fact that I’ve had 10-12 clients this year alone buy with 5-10% down has no bearing on my opinion.

The fact that I had a client purchase for $1,100,000 last year with 5% down also doesn’t matter.

And the fact that in 2005, I had a client purchase a $1,160,000 house with zero down and cash back via the 107% financing option also won’t factor into my opinion”

#101 eaglebay on 07.24.11 at 11:27 am

#80 Jody on 07.24.11 at 1:11 am

Nice conspiracy, doomer.
1 million foreclosures in Canada? Never happen.
Inflation without wage increases isn’t a tax. Duh.

#102 Utopia on 07.24.11 at 11:29 am

#92 Sue

Sorry Sue. I realize my previous comment sounded harsh. Look at it this way though….there are six billion plus people in the world today. Something crazy happens everywhere in the world all the time.

The news is filled with daily atrocities.

Nobody can possibly control all the madness in the world or even understand the random lunatics who roam the earth. The media, with its wide net and resources, is capable of gleaning the sickest, ugliest three daily stories for us for each fresh edition of the news every single day.

They pump “ugly” for ratings and attraction of viewer-ship. Fools stay glued to tragedies that are one-off events that nobody could have possibly controlled anyway.

Yes it is terrible. No, I do not care about it.

Those three nasty stories get delivered fresh and hot to your TV screen in living colour minute by minute each and every day. They are designed to bring tears and feelings of fear and remorse.

They are also designed to distract you from reality.

Some of you media consumers eat it all up of with your hot lunch of course. It is great drama. Other peoples lives. Even though it is the most extreme of the extreme you don’t seem to be able to turn it off. Maybe you have the real problem; not the outlets who pump the fear.

I call what you are watching “video voyeurism” and I consider it a sickness of the times we live in. What you need to do is throw away your television (put it in the dumpster) and stay focussed on real issues that actually affect you.

Like Devore said. Just turn your TV off.
Fewer tears. More common sense.

#103 eaglebay on 07.24.11 at 11:36 am

#87 Paul on 07.24.11 at 3:27 am

Very good. These people were not Canadian in the first place. Canadian by convenience.
The present Canadian Government will repair the flaws in our current immigration system and there are many.
Seen the news lately?

#104 Steadie Eddie on 07.24.11 at 11:52 am

Garth, I was half expecting you would delete our discourse from the “You Bet” posting. I knew you weren’t above censorship.

I don’t censor. I just delete. The rules here are clear. — Garth

#105 Imstupid on 07.24.11 at 12:02 pm


That’s why your stupid. Even if gold hits 1700 per ounce by christmas doesn’t mean you make a profit. Let me explain why

If you buy at 1600 and it goes to 1700 on the surface it’s 100 per ounce profit. But wait a second, your going to lose 1-2% by converting from CAD to USD then a further 1-2% by buying the gold. Then if you sell the at 1700 you must do the process again. On top of that you have to determine the value of the CAD at the time of sale it sits at 1.05-.06 right now if it is at 1.10 buy Christmas you actually lose money on the bullion even if it hits 1700.

Here is the math for your consideration.

1600/1.03 the bank rate Is 1553 USD
1553+ 2% service charge to buy gold is 1584 buy price

1700-2% sell price is 1660usd
1660-2% conversion back to cad is 1632 net

Profit is 1632-1584= 48 per ounce or a return of less than 1% in 6 months and that not considering the movement of currency. A savings bond will pay more.

And it is taxable. – Garth

#106 Aussie Roy on 07.24.11 at 12:15 pm

Irving Fisher, Friedrich Hayek and Milton Friedman Walk Into a Bar…

They are the four economists whose theories of the business cycle are the source of all the controversy today. They each have different views on the causes and cures of economic downturns. All economic policy stems from one of their prescriptions for the world’s economic troubles today. Thus, the one you agree with will shape your view of what should, or should not, be done about the economic crisis the world faces.

Remembering that debt and money are synonymous in the monetary system we live in, it should become obvious. Who controls the price and quantity of money? The government and/or the central bank do.

Along with the private banks that can create money out of thin air, as Fisher often laments.

#107 dd on 07.24.11 at 12:18 pm

the us government basically owns most of the mortgages in the states. this will have to change to see any lasting recovery in the housing market.

#108 Beach Girl on 07.24.11 at 12:19 pm

I have the right to a British Passport as both of my parents were born in Britain. There is only the 2 idiots and me, who I am sending to University, with probably not very good job prospects. If we moved to Goa, India we would likely live a very nice lifestyle. I am more concerned for myself. I am not Indian but admire the culture. Does anyone know a website about Canadians living abroad. Probably would never do it, but still curious.

#109 Timing is Everything on 07.24.11 at 12:31 pm

#54 miketheengineer – said “I can hardly wait till the good old days.”

20 years hence, these will be ‘the good old days’, for whiny engineers. Adapt or die. Ben ‘the engineer’ seems to be doing just fine. Be like Ben.

#110 brainsail on 07.24.11 at 12:37 pm

#94 KIM on 07.24.11 at 10:39 am

“if Things get bad how many will run , not walk away from Canada?”

I suppose many will leave Canada and never return as a method to erase debt and underwater mortgages. It would very difficult to collect in India vs. moving to the US.

#111 squidly77 on 07.24.11 at 1:01 pm

110 brainsail


#112 a prairie dawg on 07.24.11 at 1:04 pm

#93 Utopia

Yes, I agree with you on the analysis he provides. What ticks me off is that none of these articles ever address the 800 pound gorilla in the financial room.

Lax governmental monetary policy and lax financial lending standards by banks fuel these asset bubbles. (whether it’s gold, or real estate, or tech stocks, or tulips)

#113 a prairie dawg on 07.24.11 at 1:13 pm

#106 Aussie Roy

Irving Fisher, Friedrich Hayek and Milton Friedman Walk Into a Bar…

– – –

Was the fourth economist in the bar already? lol

#114 Utopia on 07.24.11 at 1:28 pm

#108 Beach Girl on 07.24.11 at 12:19 pm

What is wrong with you Beach Girl?

Just go down to the nearest ticket office, buy a flight to almost freaking anywhere outside of Canada and then start to learn what it is all about everywhere else…….

Learn it first-hand.

You will wake up the minute you are in a foreign country.

Africa and parts of Asia especially. You will be stunned by the poverty, amazed at how rich you really are too. Mesmerized by the fact that most of them do not even connect our reality with theirs in real terms.

Try the Third World. It is much safer than Canada.

Over there, people still have close connected nuclear families. They still have tribal loyalties and values that are almost unknown here in our country. Your passport and your Canadian identity will work in your favour too.

No problems at all.

All I am saying is “get out of your rut” and step up because it is a very big world and there is so much to see and to know. Everything is different once you leave our own sad, cold, isolated shores. Everything is new again.

Perspective comes easy then too.

#115 mousey on 07.24.11 at 1:49 pm

#102 Utopia
I very much like the term video voyeurism and we saw a version of it at the Stanley Cup faux riot in Vancouver. People at home watched the people watching the rioters. It was damn creepy. The theme of the event was watching – watch me watching you, watching them and please watch me. Mostly we did nothing. I call it a faux riot because it wasn’t really a riot about anything, ie. our election results were fixed, no food in the stores, no drinking water, no habeas corpus, paramilitary squads disappearing people. The riot watchers – and there were significantly more of them then actual rioters – are a new phenomenon in my view. Electronically connected to the rioters themselves, which is the way our new tech generation identifies with society. The rioters defining themselves by getting themselves on YouTube and the voyeur an active part of the process by filming and posting.

Back to real estate. Family is currently at swish resort in California for a short vacation. Been speaking to the bus driver, taxi driver, server and reading the local paper including military rag as there is a large installation close by. Word on street is divided on the general question of how the economy is doing. Real estate in this neck of the woods is luxury oriented, specificallhy for a resort ocean side buyer. Prices pretty much like Point Grey, Shaughnessy and Kerrisdale. Hardly any for sale signs. Only a few price reduced ads in the paper, just a couple forclosure notices in the paper. The bus driver’s view was “what recession?” She wanted to know where all of the dough was coming from – people travelling to the resort area with 3 or 4 kids, meals out every night. I suggested credit, and she said they know all about that in California. The server at the resort said that this was the first year since 2009 that seemed “normal” in that the people were coming out in droves, busy all season at the restaurant, full shifts for her right through the whole season.

#116 garrulous squirrel on 07.24.11 at 1:56 pm

It’s true that wages in Canada are the lowest in the G8. We are on par with Isreal……..seriously…..Isreal? Is that what we’re shooting for?

The 1800 non Canadian resident passport holders that were denied citizenship recently are just the tip of the ice berg. Wages are far higher in China for most professions and India has many opportunities to make as much and more than in Canada for the same jobs.

Canada’s bullshit team ( under the ex regime) clouded the issue of compensation with guilty pictures of snot nosed kids and farmers in the field.

The fact that you can make double in the USA has got to tell you something. Not did our ex Liberal ( thank God)government keep wages low but they coupled this with an artificially low Canadian dollar.

The old regime had the wacko idea that they would raise the rest of the world up by transferring our tax dollars to the third world dictatorships they seemed to lick at every UN meeting on third world ‘sustainable development’. They conspired to keep the wages lower in Canada in order to facilitate the idea that immigrants would be better able to afford to come here with their US denominated currencies and buy into Canada cheap.

While China was booming, Canada was still sending development aid to Beijing. The old regime sent money to Robert Mugabe and Bulgaria’s Chowchesku ( however you spell that savages name) among others. They gladhanded the Tamil Tigers at fundraisers in TO keeping that bloody war going for 15 years longer than it had to run.

Under the old regimewas run by a bunch of tax funded ideologues who couldn’t give a shit about the Canadian people.

Wonder why wages here are twenty years behind the rest of the developed world? Just look back at the policies of the thankfully dead Pierre Trudeau. We should dig that bugger up and burn him at the stake for the damage he and his cronies did to this countries progress.

You said: “Just look back at the policies of the thankfully dead Pierre Trudeau. We should dig that bugger up and burn him at the stake for the damage he and his cronies did to this countries progress.” This disrespect to any person, let alone a prime minister, is unacceptable. Apologize, or this was you last post on this blog. — Garth

#117 Anon on 07.24.11 at 2:04 pm

#76 Ben on 07.23.11 at 11:04 pm

Hi Ben,
I am also in Telecom field, an I am also looking for job.
I have 10+ year working exp on Alcatel PBX system.
Can you post link where I can submit my resume.

#118 Aussie Roy on 07.24.11 at 2:13 pm

a prairie dawg on 07.24.11 at 1:13 pm #106 Aussie Roy

Irving Fisher, Friedrich Hayek and Milton Friedman Walk Into a Bar…

– – –

Was the fourth economist in the bar already? lol

Yeah, Keynes was behind the bar serving the kool-aide.

#119 The InvestorsFriend (Shawn Allen) on 07.24.11 at 2:41 pm

BANKING and FRACTIONAL RESERVE and Money for Nothing.

Friday night at number 7 I posted some material explaining some aspects of how banks work.

As I anticipated those with an irrational fear of fractional reserve banking and a pathological hated of banks came out a-howling. God, they must have been beside themselves Saturday when this site was down for maintainance.

It may not be worth the bother as positions are entrenched but here are a few responses. (And there were also a couple of respectful responses from people with open minds).

Just because I don’t fear fractional reserve banking does not mean I don’t understand it. Yes Canada has fractional reserve banking. Banks keep a fraction of their assets in cash because deposits are constantly flowing out as well as in. In Canada there is I am told no regulaltory minimum cash reserve (oh horrors) but the banks on their own know they need to keep some money in cash.

Yes the banking system TOGETHER WITH THEIR CUSTOMERS) do have a system that allows a new deposit of $1 (say from outside the country) to be 95% loaned out and redposited as 95 cents and 95 cents loaned out and redeposited as 90.25 cents and so on until the original $1.00 of new deposit can create $20 in total deposits and $19.50 in loans and 50 cents on reserve in cash.

No, there is nothing alarming or nefarious about this system. Some describe it as the bank creating money out of thin air (forgetting that the customers are half the equation). Well, the money created is owned by depositors, not the bank.

When loans are made the borrower can have a loan and make a deposit. His wealth is unchanged. The bank similarly has a loan and a deposit. It’s wealth is unchanged. Bank’s don’t instantly create wealth for anyone by making a loan. The new deposits are offset by new loans that someone owes.

Believe me, if you are in debt up to your eyeballs, that is offset by others including corporations that have net cash on deposit at the banks. Not everyone is in debt.

It is useful to understand a bank’s balance sheet and I explained that in detail in an article some time ago that addressed the 2008 banking crisis.


Cookie Monster, thank you for the respectful reply at 40. Yes I agree banks are risky due to leverage. They have to be well managed and well regulated. I agree too, loans and deposits grow together. Can’t have one without the other.

In summary, it may be useful to know how banks work. To know the difference between a shareholder capital ratio and a cash reserve ratio. Banks are not inherently evil. Credit and debt is not inherently evil.

Consider a farmer with hand tools. Does it not make sense for him to borrow and buy a tractor? Perhaps the money comes from the retired farmer down the road who oer the years built up cash and deposited at the abnk.

Credit is the grease of our economy. Like everything (even food) it can be used to excess.

Nut bars who freak out when told about fractional reserve banking – reacting like a 6-year learning that Santa Claus does not exist – and run for the hills with guns, water, and tinned food, do themselves a huge dis-service.

Learn about banking. Do not fear it. Consider investing in banks.

Okay, school is out for now.

#120 a prairie dawg on 07.24.11 at 2:46 pm

Good thing our diplomats are showing such fiscal restraint. There’s no telling how high the bar tab would be if our economy was in better shape…

#121 vyw on 07.24.11 at 3:03 pm

Some Canadians may be investing in Indian Govt bonds (they pay 8%) and our dollar is high – about 47 rupees to 1 CDN. Looks like a neat carry trade.

Beach Girl should take a vacation and check it out first.

There is kind of an out for retirees/ pre-retirees – live in Asia or Eastern Europe or South America for $300 – $500 a month. Should be in good health though and be very alert re food and safety.

#122 jess on 07.24.11 at 3:31 pm


..”The striking thing is that the most liquid savers in today’s society are criminals and tax evaders. They have a good reason to avoid real estate or other tangible property. It is too visible to prosecutors and tax authorities. That is why balance-of-payments statistics classify capital movements as “invisibles.” Prestigious accounting firms and law partnerships busy themselves devising tax-avoidance ploys and creating a “veil of tiers” to provide a cloak of invisibility for the wealth built up by embezzlers, tax evaders, a few drug dealers, arms dealers and government intelligence agencies to use for their covert operations.
MH: That is what is being debated in Russia these days. It seems that the only kind of tax that can be collected from multinationals today is to tax what is visible, not what is invisible–that is, invisible to the national economic statistician and tax-collecting office. Russians are discussing a rent tax levied in the form of an excess profits tax on oil and mining exporters.

SS: If we look at the balance sheets as they stand, the offshore banking centers appear as net creditors, and the rest of the world’s countries are net debtors?

MH: Not quite. The “savers” who have accounts in these offshore banking centers have claims on them that, in turn, represent the liabilities of these enclaves that offset their claims on the rest of the world. But the financial claims held by these havens are owed in turn to their offshore “savers.”

What is missing from the data that should be there are the claims by these “savers”–the tax avoiders, criminals and so forth–on these offshore havens, classified in terms of their country of origin. These surreptitious savings get lost in the IMF’s “errors and omissions” line. This is because the Dutch West Indies, for example, may owe money to a Panamanian shell, which owes money to an Isle of Man shell, and so on. The ultimate hot-money claimants are hard to identify. Deposit inflows to these enclaves find their balance-sheet counterpart in their own rising indebtedness to tax avoiders and dodgers in Europe, North and South America, Asia and Africa. But the statistics are silent as to just who these invisible savers actually are and where they really reside.

An Argentinean or Russian exporter sells at a fictitiously low invoice price, asking the buyer to deposit the difference in an offshore bank account. Needless to say, the Argentinean or Russian will not declare this holding, so it doesn’t appear in the official accounts. But it exists in reality. This is why the world’s reported debts exceed the locatable savings by an “errors and omissions” margin.

SS: How exactly does this false invoicing work?

MH: In two ways. The simplest is for importers to claim to pay more for imports than their true economic price. This is what the oil companies do when they price crude oil so high to their refineries that the refineries have no room to report a profit, decade after decade….”

#123 Hoof-Hearted on 07.24.11 at 3:38 pm

#96 TurnerNation

Yeah….and wasn’t there a story about how stable Norway was before this ?

I’m calling strong suspicions of false flag…and an excuse for Norway for strong gun laws and other civil liberty restrictions.

#124 Kevin on 07.24.11 at 4:17 pm


“Banks create money out of thin air period!”

How can a bank lend money it doesn’t have?

That’s the thing that’s always confused me about people who are ignorant about fractional reserve banking. They just love saying things like “banks create money out of thin air,” but when you press them to explain how banks can lend money they don’t have, they don’t have an answer. It’s all just a bunch of hand-waving and nonsense about ledger entries and magic accounting. But when the rubber hits the road, and a borrower withdraws the cash, you cannot deny that the money being lent was deposited by another customer – and NOT “created out of thin air.”

#125 Helicopter Ben on 07.24.11 at 4:20 pm

Eagle Bay do you actually have opinions of your own or do you just come on here to bash people ? all knowing yet has nothing to say?. heres an idea go out on a limb and actually write something of your own, or that might cause people like your self to criticize you, cant have that. if everyone on here is some dumb why dont you enlighten us with your knowledge. people who go around calling others losers and stupid are never the brightest them selves.

#126 Devore on 07.24.11 at 4:30 pm

#99 Killer Chicken or Imploding Boomer?

Wow, the dawgs sure came after ya today. Maybe we should try this simple re-word:

It is not a question of rewording. It is a question of fundamental understanding of the process.

Loans BECOME deposits. Yes. But loans (credit) do not come FROM deposits.

It may seem like a trivial difference, but is in fact a critically important point. JohnnyBravo already explained why earlier in this blog, although I imagine even his point will be trivialized by those ignorant of monetary mechanics and their effect on daily life.

#127 Devore on 07.24.11 at 4:36 pm

#113 a prairie dawg

Was the fourth economist in the bar already? lol

Yes, Keynes was already passed out under the table. Too much “stimulus”.


#128 eaglebay on 07.24.11 at 4:42 pm

#76 Ben

PBX? Maybe one should update their skills.
I honestly didn’t know that the PBX systems still existed.
Sorry if I’m uninformed.
Ever heard of VoIP?

#129 Beach Girl on 07.24.11 at 4:49 pm

Have really no idea what Utopia was ranting about. Could I have a better life in a third world country, as ours is becoming. That is all I ask. I only expect to live 20 years. Not too worried about that. But why not do it in the lap of luxury. I might even be able to find the 2 idiots wifes. I am not racsist in any terms. But the odds here are not too good. Love the cuisine.

#130 Devore on 07.24.11 at 4:49 pm

#92 Sue

You have no soul.

On the contrary. It is the “if it bleeds it leads” style of reporting we now have everywhere which is soul destroying. But lets be honest, this just gives people what they want. People are voyeuristic. We’re rubberneckers. Even if we coach it in language of concern and compassion.

I am very much aware there are tragic and sad things happening all over the world, and in Canada, this very second. 2500 will die in vehicle accidents this year. 10 will die after being struck by lightning. 5 die every day from work related injuries. But it is not productive and improves no ones life to dwell on it.

#131 miketheengineer on 07.24.11 at 4:53 pm

#109 Timing is everything

You have not walked a 1 mile in my shoes.

All I want is a full time job with decent wages.

All I want is to not have to worry about my job surviving the next planning budget. (It is like having a gun to your head, it is the only way to explain the feeling.)

I don’t think that is too much to ask.

Sorry if I seem to wine.

God must have blessed you with a different life path with lots of abundance.

Have a great day!

#132 eaglebay on 07.24.11 at 4:53 pm

#124 Helicopter Ben

Did it hurt?

#133 Hoof-Hearted on 07.24.11 at 4:54 pm

The future….aka has IMF etc tipped it’s hand re true agenda?

Greeks resist opening up professions to foreigners

Lift tangle of rules, say lenders

Read more:


But even where the law was meant to free up a sector, such as pharmacies, the government cut a deal instead of truly freeing the profession from strict zoning rules, fixed drug prices and regulated opening times.

Pharmacists say they can’t face even the competition of a few hundred more shops while the state, whose health funds and hospitals make up 80 per cent of their business, does not pay its debts.

Analysts and industry officials said Greece won’t be able to protect professions for much longer, as it undergoes regular inspections by the so-called “troika” before every EU/IMF loan instalment is granted.

The inspectors said in their latest review that although some steps had been taken, the reform was not complete and further progress was needed.

“The government has been given until 2012 to truly liberalize professions,” Stournaras said.

So…What’s the real trojan horse agenda ?

#134 Beach Girl on 07.24.11 at 4:55 pm

Bad spelling today, very sorry. Must be the heat or white wine. Really sorry about Amy Winehouse. And all those children in Norway.

#135 debtified on 07.24.11 at 5:14 pm

The InvestorsFriend (Shawn Allen), you are a very shrewd self-promoting troll. I am sure you will attract the kind of ignorant and easily impressionable people to subscribe to whatever it is that you are selling. I can see how you can be successful in what you do. Good on you.

I will now skip and scroll over your future posts – just like BPOE’s.

#136 Imstupid on 07.24.11 at 5:27 pm

Garth this is a response to my post 105

This is why I’m stupid. It’s because I know how to do the math. If I were smart I would tale about things I know nothing of and give opinions based on absolutely nothing. Just like BPOE.

#137 Herb on 07.24.11 at 5:31 pm

Garulous Squirrel,

I must say that I really haven’t missed neandercon Kool-Aid dripping from my monitor.

Couldn’t you just enjoy it mindlessly without spewing it forth?

#138 Imstupid on 07.24.11 at 5:34 pm

Also did you notice that all the bullion freaks never respond to my post. They too have no idea what they are doing when buying PM’s. They only respond to theoretical opposition to their believes. Once actual numbers are in place they run for the hills because their arguments don’t hold water. But I guess a 1% gain in six months is really something to be invested in. And that number is best case. The downside can net unimaginable losses.

#139 The InvestorsFriend (Shawn Allen) on 07.24.11 at 5:38 pm

Devore at 126 said:

Loans BECOME deposits. Yes. But loans (credit) do not come FROM deposits.

Devore, this is great, is this not a bit like arguing that chickens don’t come from eggs.

The whole concept of fractional reserve banking is that a deposit begats a loan which begats a deposit which begats a loan… It does not really matter which comes first.

One man’s debt is another man’s savings. Check any bank balance sheet.

#140 timo on 07.24.11 at 5:39 pm

a perfect chart to show that the biggest ponzi scheme can show results.

1. open trade borders to ship off worker jobs that pay taxes
2. revoke glass steagall act to let banks form speculation funds that are Gov. insured.
3. Consolidate power with mergers and manipulate markets to increase market share of the wealth.
4. Avoid recessions by dropping interest rates to 0 and create false wealth housing bubbles.
4. bail out banks when same money could of paid off every mortgage and credit card in the land.
5. Depreciate dollar because no-one is buying the debt any more.
6. Promise of doing something when actually doing something will not work because you did the above already.

I hope Canadians realize that this is coming to you soon. That US dollar dropping will force more and more manufacturing south which will pillage our tax-base. As you can see you can only live on credit for so long after gutting your middle-class.

prediction in the US:
-2 party system which is actually controlled by the top 10% of wealth will come to a last minute compromise or wait….even better go just past the deadline for the theatre effect to scare.
implement budget cuts which will scare people into saving instead of spending which will really spiral things down

-print money like mad which as you can see in the graph above does nothing. When you do not put it in the hands of the people who actually spend it it consolidates and will seek a better return off-shore.

good luck with the illusion

#141 Hoof-Hearted on 07.24.11 at 5:42 pm

#122 jess

Re: invisibles

Wasn’t there some talk that one of the reasons for the 2008 crash was billions in drug money seeking liquidity aka a huge run on the banks ?

#142 The InvestorsFriend (Shawn Allen) on 07.24.11 at 5:47 pm

Debtified at 135 says this of me:

The InvestorsFriend (Shawn Allen), you are a very shrewd self-promoting troll.

hmmm well, thank you.

ironically, debtified posts this with a link to his web site.

The reality is that I contribute to the education and entertainment on this blog and I very rarely post a link to my Site. I am one of the extremely few here who posts under his own name.

Most of the material on my web site is free (but highly valuable).

What is wrong with self-promotion anyhow? Is Debtified against business in general? Is debtified a bank hating socialist zombie?

Some people come here to learn. I come here mostly to teach (you’re welcome!) and for the entertainment.

Frankly I find Garth’s posts draw me in everyday and I gain some amusement from the comments. And I enjoy posting here, sometimes baiting the nutbars for my own amusement. I’ve tried to wean myself from visiting but it draws me in.

#143 Helicopter Ben on 07.24.11 at 6:15 pm

#52 .. i AM Stupid. You made 30% on your gold purchase over 3 years i dont see the down side. there is fees and conversion rates applied to owning PM but the people who buy it i dont think overly care about that as they look long term and have a fundamental mistrust with their governments and the money that is issued from them. i think this is the big divide between the so called metal heads and conventional investors. PM owners do not trust their government to get them out of this mess and dont believe everything will be fine as opposed to the conventional thought that this is just a rough patch and no need to run for the hills. of course time will tell who is right. if silver and gold is shorted the way it looks to be ( gold 45:1 and silver 100:1) then the none of these minute details really aply, and thats what most PM owners believe, that Fiat money is coming to an end and governments helped destroy it. Its actually pretty amazing when you think about it that paper money has worth cause your government told you its worth something, i think when everyone awakes to the fact that it really is worthless you will see gold and silver take off, maybe that day never comes, i believe it will though.

#144 Nemesis on 07.24.11 at 6:44 pm

MikeTheEngineer… “I feel your pain.” No sarc implied or intended. Plights like yours are grim reminders of the colossally, nay stupendously, ignorant misallocation of capital/resources and wasted talent that characterize the political economy of the post post-modern developed ‘West’… However ridiculous it may seem, try to remain cheerful in the face of adversity… because, when the EndGame has finally played out… F**kM*, but we’re going to need some good Engineers. The last ‘ice-man’ always makes money…

Speaking of ‘money’, GT – judging by Asia’s ‘open’, the “barbarous relic” wasn’t such a bad ‘all-in’ call, was it?…

Pulleeeez! GT!… political insights from a former insider would be most helpful.

It’s going to be an ‘interesting’ week.

#145 palebird on 07.24.11 at 7:03 pm

Beach girl… like most Canucks you have not seen anything, that is just the way it is..the north american world is so far removed from the rest of the world population it is not even funny. You should move to Goa, I doubt if you would last a week and that respect you have for their culture would be very strongly tainted, but it would be one wild experience

#146 Utopia on 07.24.11 at 7:04 pm

So quiet here today. Where is everyone?

#147 TurnerNation on 07.24.11 at 7:11 pm

Sad insustry news: body of one of GMP founder is located.
He was not wearing a life jacket (who does?) but I thought a deadman’s switch & lanyard is used in many boats, so if you move away from the wheel it stops the engine? At least then you could swim to and hang on to the boat.

The body of Toronto investment banker Brad Griffiths has been recovered from the depths of Lake Joseph in Muskoka, Ont., about 200 kilometres north of Toronto.

Mr. Griffiths’s name is well known on Bay Street. He co-founded Griffiths McBurney & Partners in 1995, one of the most powerful independent investment banks in Canada. It is now know as GMP Capital Inc.

#148 BrianT on 07.24.11 at 7:16 pm

Raccoon stew eaters are real busy tonight-they have taken gold to a new all time high of $1623.

#149 Onemorething on 07.24.11 at 7:20 pm

Aussie Bubble – popping
China Bubble – ready to implode

Canada – not if, when….shortly.

Long drawn out 10 year downturn, no hurry to jump in kiddies.

#150 garrulous squirrel on 07.24.11 at 7:38 pm

DELETED. Over and out. This is the second time (under two names) your racist butt is being thrown off this blog. We don’t need another Anders Behring Breivik to tell us about immigrants. — Garth

#151 Mr Buyer on 07.24.11 at 7:54 pm

#142 The InvestorsFriend (Shawn Allen) … I contribute to the education and entertainment on this blog and I very rarely post a link to my Site…
The other day I was just about to reply to the assertion that I was mindless but my 18 month old was tugging at my sleeve. Following the example of an enlightened and evolved educator and entertainer such as yourself I started loading my child into the car to haul him off to the daycare so I could set about the business of life without his messy interventions. As I was loading him into the car I noticed the distress my child was experiencing and it came to me…Maybe some are less aware than others. Your skills as an educator are less than inspiring but I have to agree the you have some sort of entertainment value. That is all the time I am going to waste on you, this time would have been better spent looking at a picture book with my 18 month old.

#152 Nostradamus Le Mad Vlad on 07.24.11 at 7:59 pm

Gently smoked and crispy fried back bacon, with a hint of maple syrup covering cubes of extra old cheddar cheese, followed by a generous helping of Sticky Toffee Pudding, slathered with pure vanilla ice cream and meandering down a bowl of chocolate sauce, then washed down with a couple of yards of Beer — The World’s Most Famous Breakfast Drink, all of which is consumed prior to 05:00 and is a grand way to begin one’s day anew before TROTW arises slowly.

But enough of these Fantastically Fabulous Funky Frivolities, as there are far more interesting things to learn about in this wacky, wonderful world of ours (‘tho the above is a good starter).

By using a combination of interstellar travel, broken down toilet seats from Battlestar Galactica and spontaneous hypothetical combustion, it is easy to see the more things change (evolution), the more they stay stay the same (creationism). It is noted that, as nothing itself can evolve, creationism does take precedence. But once something is created, it cannot be un-created so evolution takes over and works in conjunction with the other.

By viewing the following 4:34 Animal Farm clip [sound up moderately, and F11 key to get the biggest viewing screen possible, then F11 to reduce screen] one sees mankind actually evolved from animal dung; consequently, we have the same sense of humor and family fights the animals used to have (they just stick to humor now). Their evolution has furthered into a series of grunts, whereas mankind’s has pretty much stopped.

We have newer bodies, but our IQ levels have turned into vast quarries, full of emptiness. Oh dear, wot a pity, not to worry, never mind. There’s always next life we can catch up a little bit!
#91 timo — In a word, yes. Instead of walking away, maybe they can take the opposite stance. The IMF-EU screwed Ireland by forcing them to join the EU, after voters clearly rejected it in the first poll.

So f*%k the EU-IMF. Sheeple have nothing left to lose.

#123 Hoof-Hearted — It is quite easy to find links which corroborate the theory of FF’s. You are correct and I could post the reasons, but I’m not gonna touch it.

#133 Hoof-Hearted — “So…What’s the real trojan horse agenda ?”

We’re all living it, right here, right now. Interesting to note that 18-30 months or so before Gordon Campbell dumped the HST on us, following orders from C-H-F, Campbell was a guest at the Bilderberg meeting, then the HST along with a lot of other previously untaxed items came in, Campbell slipped off covered in skunk juice.

Coincidence? Higher taxation and higher debt loads all happening simultaneously? Hmmm. Your call.

However, upon exploring Garth’s explanation that “. . . the US doesn’t need to repay it’s debts . . .”, this statement could apply to all countries, as debts (as far as I know) are only debt obligations to citizens (correct me where I’m wrong).

Deficits are another cup of tea and, like the bond market, most of this goes beyond my level of understanding.

#153 imstupid on 07.24.11 at 8:15 pm

#143 Helicopter Ben

Look Im not saying not to own PM’s. Sure some in yoiur portfolio is good for the reasons you mention. But like anything else you cant put all your eggs in one basket. Sure in the long run PM’s out preform fiat currencies, but im not saying to hold currancy either. If you buy into companies that make products that will allways be needed, like medicine or food, you do the same thing as PM’s iregardless of currency. Remember that most people that push PM’s have vested interest in them. If govenment collapses and we go back to the gold standard guess what you’ll have to pay for medicine with your gold its simple. But you will be paying for medicine or food with money, gold, labour, sexual favors what ever the point is that you will never get it for free. If you are wrong, gold retreats and you have all your net worth getting a hair cut. So if that day comes or not investing in companies that provide the basics to life is a much better way to protect your hard work. If thats what your afraid of yoiu should buy a farm at least you can make sure you have food water shelter and be self sustained. No matter how bad things get all the medal heads think that we will be back in the stone age. That wont happen because if it does chances are you me and another 6 billion people will not be here.

#154 Hoof-Hearted on 07.24.11 at 8:21 pm

#145 Nostradamus Le Mad Vlad

Well…lets try to keep it simple…..Vampire$ are no longer mythology…Taibbi’s not only used vampire (2 legs 2 arms and 2 teeth )…he used term vampire squid…….which implies numerous tentacles.

I see the NWO as creating problems that they can bloodsuck at macro and micro levels.

Greece? do they want to allow foreign professionals in so as to force the middle class to Dr’s etc. from 3rd world that have contracts via multi national health care consortiums ? Lets keep in mind the Greeks were sold out by own gov’t via Goldman Sachs treachery , yet the story is it was due to entitlement..

False Flags…..yeah let the dust settle…truth will ooze out…..enough on internet about old ones….f*cking pathetic the psychos in power, which I think most of our empowered parties are…and Campbell will go down as one of worst.

#155 bullion.bunny on 07.24.11 at 8:42 pm

#124 Kevin on 07.24.11 at 4:17 pm

WRONG, money is created out of thin air, it is called credit. Debt is the raw material from which money is manufactured.

Here is the book from the Federal Reserve explaining how it is done. Canada uses a similar method.

#138 Imstupid on 07.24.11 at 5:34 pm

Allow me to respond.

1.) Most of us have purchased gold at $375 & silver at $5.50 -> $7.10. If you have any investment ideas that can generate this type of result, please let me know. I’m in! Yes you are correct; gold is influenced by currency fluctuation. However the plan here is simple, in a credit contraction the price of Gold rises along with the reserve currency. Of course not all at the same time, we are witnessing the fight between inflation and deflation. Central Banks wish to inflate while the market wants to deleverage. In other words RISK ON & RISK OFF, have you not noticed the U.S. dollar goes down as all other RISK assets go up? Most of this action is generated by leverage or bank credit, this includes the gold market. The next phase of the credit contraction is upon us, we will witness the U.S. dollar rising with asset prices falling.

2.) Financial History is replete with these events here are a few of the dates.

a. 1720 South Sea Bubble. (John law and company took down England & France)

b. 1770 Bubble land returns with out of control land speculation.

c. 1825 Massive speculation in the East India Company brings down most if not all of the English banks.

d. 1873 A massive European building boom financed by mortgage paper that was insured against default melted down. All parties became over leveraged and could not service their debt, including some governments. It resulted in a twenty year depression.

e. 1929 Massive stock and tech bubble melted down when everyone was over leveraged.

f. 2000 Massive tech stock bubble fuelled by bank leverage.

g. 2008 Massive over leveraging in the mortgage market results in meltdown and bailouts. In fact this one is so close to the 1873 bubble the sequence of events repeat with remarkable fidelity.

3.) Gold will continue to rise until everyone wants it, and then it is time to sell. It will respond just like every other asset that goes into bubble mode. We are a few years from that point, when taxi drivers and bank tellers are buying gold……it’s over.

I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.”

Thomas Jefferson

Insanity: doing the same thing over and over again and expecting different results.

Albert Einstein

“As a result of this audit, we now know that the Federal Reserve provided more than $16 trillion in total financial assistance to some of the largest financial institutions and corporations in the United States and throughout the world,” said Sanders. “This is a clear case of socialism for the rich and rugged, you’re-on-your-own individualism for everyone else.”
Among the investigation’s key findings is that the Fed unilaterally provided trillions of dollars in financial assistance to foreign banks and corporations from South Korea to Scotland, according to the GAO report. “No agency of the United States government should be allowed to bailout a foreign bank or corporation without the direct approval of Congress and the president,” Sanders said.

Bernie Sanders, Senator from Vermont

“Banking was conceived in iniquity and was born in sin. The bankers own the earth. Take it away from them,but leave them the power to create money,and with the flick of the pen they will create enough deposits to buy it back again.
However,take away from them the power to create money and all the great fortunes like mine will disappear and they ought to disappear,for this would be a happier and better world to live in. But,if you wish to remain the slaves of bankers and pay the cost of your own slavery,let them continue to create money.

“ -Josiah Stamp director of the Bank of England.

#156 Helicopter Ben on 07.24.11 at 8:45 pm

#153 i am stupid…. yeah i cant argue with that, i think commodities , health care, agriculture will all do great. deflation is the only thing i am concerned about, i dont think it will happen but doesnt mean it wont. as long as the u.s. is determined to devaluate their dollar every thing is going up while their people get poorer and poorer. they are basically telling you what they plan on doing, thats why i am so heavily waited in gold and silver cause i believe them, they will print and print till the whole system implodes and the oligarchs take over everything. it also the shorting of gold and silver that is the dynamite, times silver by 100 and gold by 45 and thats the real price and will be someday soon.

#157 Rocket Boy on 07.24.11 at 8:53 pm

Not 1st said..

I love waking up every day and watching the U.S. punch itself in the face squarely with 2 fists. They have already defaulted and are too stupid to figure it out.

LOL, that’s funny. I have to admit, deep down a little voice giggles when the States falls flat on its azz. I realize that we need the US, but I just get fed up with all there BS. My personal favourite, how many movies in the past 5 years which shows how a handful of GI’s can take out an entire Nazi platoon. WTF – why not just eliminate Hitler, war’s over. And for all those who have forgotten, the Axis included Italy and Japan. Appears hollywood has forgotten that. [rant off].

I don’t know what all the chatter is about the debt ceiling – it will come about. The old saying from my professor, don’t believe a word they say. They create alot of commotion over here, while the real issues are quietly being done over there where no one is looking.

I believe there is more to this Norway attack then what’s being let on. Did this “lone”guy just happen to buy all these explosives – without anyone even noticing. I just have trouble believing anything that comes from the media.

G – thanks for saying it as it is (actually shocked some government aka banking institution) hasn’t hired a hacker to take down your site.

We do indeed live in strange times!!