Extremism

Yesterday the webmaster for this diseased site gave me a new toy. It’s a page full of flashing lights, tumbling messages, gaily coloured maps, morphing numbers and crowning it all off – a big speedometer thingy. It tracks how many people are visiting the blog at any one time, with the needle swinging as people sign on, read my words, then leave in utter disgust. It even has two gauges below tracking who’s reading and who’s writing a comment.

Hang on a minute…

Okay, just checked. I’m scribbling this at 9:47 pm Wednesday night, and there are 178 people on the site. Of those, 11 are now writing comments. 141 live in Canada and the rest are all over the place. Several are apparently throwing up.

I mention this because only 1% of the people who come here actually leave a comment. I just pray to the goddess above they don’t represent society as a whole. Cuz then, we’re screwed.

The common wisdom seems to be that the world is about to flame out, the US will go bankrupt next Tuesday, banks, governments and financial markets are all rigged in favour of The Man, interest rates will stay low (or decline) for years to come, the money in your bank account is ‘worthless fiat toilet paper’ and nobody is ever, ever to be trusted. Yes, this is the guns-God-gold-tinned tuna crowd, and I expect over the next few days my speedo will be redlining with whackos.

Now, in the real world, big difference. There’s a new survey from Manulife, for example, which just asked people what they feel confident or worried about. Is it their money becoming worthless? Banks collapsing? Stock markets crashing? Those bubonic-laced roaches crawling over from The Coming Depression site?

Not so much. The two items of least concern — stock market volatility and the value of the dollar. The things people get horny over, their TFSAs and real estate.

This doesn’t mean we shouldn’t worry about the End of Days, running out of oil or C Difficile, but it probably means common sense lies somewhere between utter systemic economic devastation and looking at the Property Virgins babe in her tank tops. Let’s remember that what people think is going to happen actually plays a role in making it happen, since 60% of the economy is the result of consumer spending.

Of course, there will be no generational financial crisis next week. But between now and then, I sure expect wonky markets and dumb predictions. In fact the 267-point drubbing on the TSX Wednesday had me wiping drool off the monitor, as great companies went on sale. Still, this is not the time to be buying individual stocks. You are much better off spreading the risk around with exchange-traded funds, and making sure you have those bonds and preferreds to balance.

Sure, people love their tax-free savings accounts, but 80% of them contain (of all things) savings. That’s like me being celibate. A crime against nature. Instead, these things cry out to be stuffed with saucy growth assets and set loose in the sun.

But enough yammering, Here’s Sandy. Whazzup, dude?

Hi Garth: I’m writing hoping you can help a brother, help a brother out. The brother in question is 37, single, with a daughter who lives with him part-time. He earns $75K a year in a government HR job. No debts but investment holdings under $100K. He bought a Toronto condo at Yonge and Sheppard for $290K in 2007. Sold it last week for $355K. The reason? He wants to buy another 2 bedroom condo at Yonge and Bloor for about $425K to live the downtown lifestyle again. Fair enough that he wants to be in the centre of the universe. However, I have made the case countless ways that he would have more flexibility and be ahead financially by renting a place. He’s not listening to me, only boasting of the 3.7% rate he can get on a 5 year fixed mortgage. Could you spell things out for him in your usual gentle, mild-mannered way? <cough>

See what I mean? Manulife nailed this. People continue to have a high degree of confidence in the homes, believing them to be the best investments possible, after their TFSAs full of savings earning less than the inflation rate. And folks will continue to believe this until they see overwhelming evidence to the contrary – which is prices actually declining.

So what to tell Sandy’s brother? Well, I guess we could start by pointing out that with closing costs his old condo cost $296,000 (and maybe more if he had an ED down payment). And after commission, he walked away with $337,000 (less if a mortgage penalty). That’s a value gain of $41,000 in four years, or 13% — barely over 3% annually. At a time when inflation is 3.4%, that hardly cuts it as an investment.

More salient is the fact 17,000 new condo units will come on stream in 2011, and that about 60% of them are being purchased by investors, 90% of whom have no idea what the hell they’re doing. Prices have been forced higher by cheap rates and idiot speckers, but rents have flatlined. As a wise poster pointed out here yesterday, the $145,000 condo he rented for $1,650 a month years ago is now worth $300,000 and still rents for $1,650.

In fact, renters in this environment are being subsidized heavily by owners. Rents barely cover property taxes and condo fees, let along financing charges or the lost investment power of the equity. Condo renters can flit among the newest projects as they come on stream, while owners are stuck with last year’s model. And as supply overwhelms demand amid rising rates and slumping buyer demand (both are coming), those with a lease will look like geniuses. Your brother will look decidedly unhip, trapped in a concrete box where liquidity’s as rare as grass.

So, stop trying to save him. Let the sibling rivalry juices kick in. Two years from now you get to gloat and dominate, watching as the self-confidence drains from his limp form. What could be more satisfying?

Holy crap. It’s 10:28 and the speedo needle just jumped past 350. Gotta go. Barbarians at the gate.

196 comments ↓

#1 not 1st on 07.27.11 at 10:39 pm

The common man is a drone fully fed on propaganda from News corp and the like. if you follow any alt media, then you know the golds-guns-god crowd are closer to the truth than anyone.

Garth, take the blue pill already.

Another one? — Garth

#2 Priced_out on 07.27.11 at 10:42 pm

First, may be not

#3 Unforgettable on 07.27.11 at 10:48 pm

!yub yub yub. paehc si tekram kcots ehT

Pu worg. — Garth

#4 cazzobaby on 07.27.11 at 10:49 pm

Load up on bargain blue chip companies paying high dividends while you can. Corporate earnings have been great and after all this political posturing in the US is over, the market will rocket higher. By the way No need for blue pill for cazzobaby.

#5 waterloo Resident on 07.27.11 at 10:51 pm

Its beginning to look more and more like the US actually will be defaulting.

I didn’t want that to happen, but it looks like its going to be happening anyways.

Get out the popcorn and enjoy the fireworks !!!

#6 tigerbaby on 07.27.11 at 10:51 pm

– in essence the amount of gold is a relatively fixed quantity
In my humble opinion this is the main reason that gold is not suitable as money. I think the amount of money in the economic system needs to fluctuate with the size of the system. with the current population and productivity growth, gold simply cannot keep up.

Money anchored with gold will be very deflationary in this environment, as more and more people need to work harder and harder for the same amount of money. this strongly discourages investment, whether financial or personal (training and higher education) as people try to make money as early as possible and stockpile. industrious people and enterprise would leave this system as it strongly favours the “already have’s” at the expense of the “want to have’s”. the resulting equilibrium appears to be a society whose advancement is bound by the gold production rate.

gold had been more suitable as money in the past because the rate of economic growth are more in line with gold production. in our world today it is not workable. gold’s purchasing power (of daily living needs) over the last few decades fluctuated wildly, clearly exhibit the characteristic of speculative asset and not money, IMHO.

#7 waterloo Resident on 07.27.11 at 10:54 pm

(((“I just pray to the goddess above they don’t represent society as a whole. Cuz then, we’re screwed.”)))

—- Yes Garth, we are screwed. Sad but true.

#8 squidly77 on 07.27.11 at 10:55 pm

Great post man.

The bond markets are as quiet as a sleeping baby. people still prefer U.S. bonds over Canadian bonds.

The thing is, where else in the world would one keep their money other than the United States?

One more thing, when those cheeky Gold bugs cash their treasure in, any idea what their fiat currency of choice would be. I’m betting it would be the USD. I don’t (normally) bash the bugs, Gold has had a good run, but I can see $300-400 coming off the price of Gold once the theatrics end.

#9 Billy Dunboyne on 07.27.11 at 10:56 pm

“guns-God-gold-tinned tuna”? Geez that’s rich. Right about now I’ll settle for slingshot-Golden Retriever named Bill-sheet metal-Spork.

#10 waterloo Resident on 07.27.11 at 10:57 pm

If the US does default it WON’T be the end of the world. Interest rates will go up a bit, stocks will sink about 5%, but otherwise not much else will happen. The stock markets will level off and slowly begin to rise again.

The GOOD thing about the US not being able to raise their debt ceiling is that they WON’T be able to borrow any more money and their debt WON’T be going up. That was the whole idea of having the debt ceiling in the first place.

#11 CrowdedElevatorfartz on 07.27.11 at 10:58 pm

The Economist this week.
1 in 7 Americans are applying for FOOD STAMPS. Thats aprox. 45 million Americans. You have to be unemployed or earning at or less than the poverty line.
And the scary thing is, most only 2/3 of eligible applicants have bothered to appy.
So roughly 60 million Americans are earning poverty wages or less.
Stick that in yer pipe and smoke it.
Happy Days

#12 Unforgettable on 07.27.11 at 11:00 pm

Ok, I’m all grown up now. Buy big US tech companies. NASDAQ 100 …close your eyes and wake up richer in 5 years time than if you had bought a house today. This selloff is a nice opportunity to shift from bonds to stocks.

#13 A Fan in Van on 07.27.11 at 11:01 pm

Garth! Sold our skybox 2 months ago and made off with 240k from the deal (70 k down payment in 2005). Renting now. Spent the last 2 months reading up on investing. Still have questions, but feel confident enough to go shopping for ETFs now. In fact, I was bent on doing it this week, but every morning I wake up and the market is down. I know it’s the fools who buy when prices are rising and this downturn is a buying opportunity, but it’s hard to find the stones to dip in knowing I could lose 1 or 2% in day (like today).

My better half thinks we should wait till after this debt limit shakedown has played itself out, but I’m worried we could be missing out by waiting that long on the sidelines? Any advice for a fan in Van?

#14 .9999 Silver on 07.27.11 at 11:02 pm

don’t need to comment to often …
people on this page have such varied taste its hard to keep up with the reading.
cash paying self supporting financing my own R&D long hair lefty with austrian tastes in economics.
call me a preper if you want. mormen family
think our political’s are the equivilent(sp) of Larry,Curly, and MOE. and welfare bums at this point.
consider you ,and your site contributors required reading.
Its a blast here.
ok…it’s the pics make my day….
keep up the great work
Rae

#15 CrowdedElevatorfartz on 07.27.11 at 11:05 pm

@ #3 elbattgrofnU
!eno dooG

#16 wes_coast on 07.27.11 at 11:06 pm

This is why we should all thank Boehner and the Republicans for taking this debt ceiling issue to the wire. No matter how much you talk about consequence – people just won’t let it sink in until it becomes experience. Its amazing how so many of my coworkers that are normally more concerned with hollywood gossip mags were talking about the debt ceiling crisis. Human nature. This is why governments shouldn’t step in to save our asses with big stimulous – it just makes us cocky and blind to risk – like Sandy’s bro.

#17 Smoking Man on 07.27.11 at 11:07 pm

RISK vs REWARD master it and have the key to life time of prosperity……….

There is a family in Canada that gets treated like Royalty, They are wealthy beyond belief. I am talking about the Bronfman’s. Gramp’s back in the day of prohibition made fortune making moonshine. Very illegal But hey they have pic’s with prime misters presidents and kings.

Back in the day, a pall of mine who’s mom died when he was 17 got kicked out the house by the phyco new step mom.. My family took him in. He lived with us for 3 years in a moldy old basement rent free. His job delivering Pizzas and perhaps other commodities.

Amazingly with his pizza money (wink wink) He bought a house with an Olympic size pool way up north in gods country. Don’t think there was ever any water in the pool, it was always covered with wires going in, go figure……….He always was interested in growing bud, I had the recipe for some outstanding stuff, great dna. 70 child you know.

He then bought a small business with 3 employees about 1000 sqft building, laundry mat sort of. Two years after that he bought within the same industry a company with over 1000 employees massive buildings. At the same time he finaly put water in it, went for a swim and he sold the house ……He was done

When ever I go to Miami I get his keys to the sixty foot Searay, prick never lets me pay for gas even though, money is not a problem for me. Today he has companies in China, Indonesia, and manila.

What is so cool in his office in TO, he too has picks of him with Harpo, Chretian, and Mulroney. And lets not forget Mr who will always take payola Mc goofy.

Moral of the story, sometimes when you have nothing to lose , and the risk vs reward spread is so wide, Just Do it….Don’t be greedy… go main stream after a good harvest or two. Glad he listen to me, he always does, see I was smart back then too.

Our schools are designed to make dumb happy law abiding obedient workers to service the needs of people like my pal……Cause money runs the show. They what you to buy houses and to be indebt for your whole life…..And the males have no chance against Garnet loving female companions with small, medium or big boobs.

Why have I been so bullish on real estate, cause I know how stupid the human race is…..a hand full of smart bubble heads spewing out logic on this blog will not turn the tax farm slaves from their quest for the supreme look at me I made it. Look at my trophy house.

The only way to kill it is with rate hikes and we all know Carneys cahonas are tied…….Talks a big game, but powerless with they way world events are unfolding.
And even guys selling hotdogs on the street know it……

#18 DML on 07.27.11 at 11:09 pm

Yes,lots of good stocks on sale this week.Turn off CNN and start shopping.

#19 HouseBuster on 07.27.11 at 11:11 pm

“This doesn’t mean we shouldn’t worry about the End of Days, running out of oil…”
————————————
The oil thing is a big concern but not too many people seem to be worried about it. In fact, here in North America, especially in the US, people think that cheap oil is their God-given right. They think that peak oil is a scam.

They are in for a rude awakening and so are we all.

#20 NFN_NLN on 07.27.11 at 11:11 pm

Took some time to find a useful table but here you go:

S&P/TSX 60 best dividend yielding stocks

http://www.topyields.nl/Top-dividend-yields-of-TSX60.php#

Anything less than 2.5% elminated, Yellow Media is eliminated on principle. That leaves ~25 stocks. So when people are talking about these “unnamed” Canadian blue-chip stocks it is one of these 25?! I already own a chunk of them that I hand picked… what else is there?

#21 Utopia on 07.27.11 at 11:14 pm

#168 thecomingdepression on 07.27.11 at 1:09 pm

“UTOPIA go tell the Zimbabwe gov’t that the stock market is good when its HIGH. All is well. Learn some inflation/fiat currency collapse economics! DUH”.
——————————————-

And speaking of extremists….

Maybe thecomingdepression was drunk when he sent me that message. I can forgive that. Who does not send the odd post laced with liquor. Drinking and thinking are usually a bad combination though.

Hey, comingdepression! Unlike you I have actually lived in Africa. In economies suffering under both hyperinflations and bitter depressions.

What you lack is first-hand experience, so don’t preach. You don’t know what you are talking about most of the time. It is just pale recycled rhetoric.

#22 Just Jack on 07.27.11 at 11:16 pm

The same thing happening in Victoria. People are worried about the future of real estate. They know very little about equities and bonds and feel more comfortable in housing. So, they sell their home in the boonies and buy a home in the city, thinking that the mantra “location, location, location” will save them from a downturn. Unfortunately, by doing so they depressed the outlying areas and over inflated city prices. I’d bet the same is happening in Vancouver too.

#23 Tom from Mississauga on 07.27.11 at 11:17 pm

1%

#24 simkev on 07.27.11 at 11:18 pm

Hi Garth
This is a good article on why renting is better than owning.

http://ca.finance.yahoo.com/news/Rental-complex-canadianbiz-2184097582.html

#25 Kitchener1 on 07.27.11 at 11:25 pm

Lots of doom these past few days on here.

The US is having a hard time with there new “Auterity” measures.

Out here in Waterloo–Region, RIMM just cut straight through too the bone, a lot of folks very worried out here right now. The region cannot absorb 1500 job cuts– there are no high tech type of jobs for most of these folks leaving RIMM.

That should be a lesson to you all, dont put all your eggs in one basket– like Waterloo did with RIM.

#26 Ex-Cowtown on 07.27.11 at 11:26 pm

Only 1% leave comments?

I’m a 1%er! (If you don’t ride a motorbike you have no idea what I’m talking about).

That’s OK.

#27 not 1st on 07.27.11 at 11:28 pm

Regina!!! BOOMING – GET IN NOW

http://www.leaderpost.com/business/Regina+home+prices+rise/5168720/story.html

#28 nonplused on 07.27.11 at 11:29 pm

Well Garth, I have to admit I am somewhat perplexed by your ongoing distain for people who comment on your site. While I admit I don’t always read all of the comments, or like tonight when you have attacked them all as loons the numbers seem to be really low (only 4 so far), I think some of the responders are petty good. And, like you, I also have distain for some responders (Nostradamus comes immediately to mind). However, in any public forum, you have to take the good with the bad (or alternatively what you like with what you don’t.)

While I admit you get a lot of crap comments (like mine), some of your responders seem fairly lucid and present some good arguments. It’s not like zerohedge.com where they get thousands and thousands of useless quips per day, such that finding a useful comment is near impossible. The signal to noise ratio in your comments section is much better, even though it’s much harder to become a “member” on the zerohedge.com site or post a comment. And some of your responders put some serious effort into researching and composing their comments, no matter how misguided.

So I propose a simple test. Shut the comment section down for a month and see what happens to traffic. Let’s see if it really is all about you, or you are more the fearless leader of an unruly mob.

Nice post on the rest of it today, though. When you stick to real estate or investing I still think you are pretty good. But as a prophet, not so much. We can’t all be everything.

Everybody else,

If Garth won’t shut the comment section down, let’s boycott for one month and test how much of a part of the site we are ourselves. We are obviously not universally welcome by the eminent and gracious host, but that doesn’t mean nobody is reading what we write.

Signing off now, see you in September.

Be careful or I’ll raise the cover. — Garth

#29 Mark on 07.27.11 at 11:29 pm

A government HR clerk earning $75k? They don’t even pay engineers that in most positions. Ridiculous! No wonder this country is in so much trouble.

#30 Corey J on 07.27.11 at 11:33 pm

Well I guess now that your little speedo is watching I might as well peer out from the shadows of the internet. Spending a nice Wednesday night sitting in my underwear, downing a beer and reading blogs up in camp in beautiful Fort Mcmurray country. Amazing how many times I can refer the blog to the other twenty somethings up here and get told that they don’t have time to try to understand the crazy bearded mans ramblings and then go jump into a SFH in Nanaimo on a housekeepers wage and think they are the smart ones.

I guess I wont be considered “mature” anytime soon, unless I go out and find me some granite countertops and an ensuite bathroom… and maybe a big truck with those testicles hanging off the back to park in the driveway

Mine have their own little trailer. So cute. — Garth

#31 The InvestorsFriend (Shawn Allen) on 07.27.11 at 11:34 pm

Garth said this of the brother:

And after commission, he walked away with $337,000 (less if a mortgage penalty). That’s a gain of $41,000 in four years, or 13% — barely over 3% annually. At a time when inflation is 3.4%, that hardly cuts it as an investment.

Well hold on! Let’s not forget he collected a “dividend” of living there for only the condo fee and taxes, so I think he did okay. Surely he saved there versus rent?

I agree the next condo at $425,000 is probably a very poor idea. But let’s not pretend that he made a poor investment last time. It appears it worked out well in fact.

That was a point. Condo rents in Toronto roughly equal condo fees and taxes. Where’s the dividend? — Garth

#32 waterloo Resident on 07.27.11 at 11:38 pm

Nightly business report: just mentioned that Congress has settled upon voting for one of two possible debt packages over the next 24 hours, so it looks as if everything will be settled before the end of Friday.

Tomorrow morning I’m going to be buying, not selling stock ETFs.

#33 The InvestorsFriend (Shawn Allen) on 07.27.11 at 11:38 pm

I’VE NEVER BEEN AVERAGE!

Garth said:

I mention this because only 1% of the people who come here actually leave a comment. I just pray to the goddess above they don’t represent society as a whole. Cuz then, we’re screwed.

It probably goes without saying but as one of the 1% I can attest I certainly don’t represent the views society as a whole.

The average person out there and certainly on this blog seems very bitter, over-indebted and an under-achiever constantly looking for someone to blame their troubles on.

That ain’t me.

#34 Saskboy on 07.27.11 at 11:42 pm

I’m happy to be a 1%er from time to time.

#35 Steve on 07.27.11 at 11:47 pm

The Loss of Triple A will be the
“Tipping” Event.
It will happen because it is more
important to be right than to be
Helpful.

#36 FactChecker on 07.27.11 at 11:48 pm

Dude, his initial investment of 48K returned 41K, which is 85%. That is the dividend

He was leveraged, but you can’t say that his return was 3% a year. No preferred or bonds could match that.

I agree though, at this point he could take that money and run

Not exactly. He also invested four years of mortgage payments (since he could have rented for the equivalent of condo fees and taxes only) – more than $52,000. That takes his investment into negative numbers. I was being kind. — Garth

#37 The InvestorsFriend (Shawn Allen) on 07.27.11 at 11:52 pm

MORE SPANKINGS PLEASE!

Nonplused at 28 said: Well Garth, I have to admit I am somewhat perplexed by your ongoing distain for people who comment on your site.

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

Dude, the spankings and sparrings are why people come here. Ya didn’t think it was for the advice did you?, which is basically, house prices will crash. People don’t come back repeatedly to hear that. This is an entertainment site. (And a very fine one at that)

Now let’s get on with bashing each other and everything else in the world.

#38 dd on 07.27.11 at 11:54 pm

Yup,
just like when the fed chairmain said ‘don’t worry, be happy’ back in 2007. then bear S and Lemans blew up.
too funny.

#39 Basil Fawlty on 07.28.11 at 12:01 am

An interesting factoid released today was that Taco Bell has increased menu prices three times in the last 30 days. Most financial commentators are in agreement with Garth that the US will not default on their debt obligations. However, many of these same analysts feel that those who lend money to the US government will be paid back in dollars that have much less purchasing power then when the original investment was made. You will be paid back, but your dollars will not buy as much. So, while it’s technically not a default, the consequences would be similar.

Unless we adopt the historic Taco standard. — Garth

#40 Timing is Everything on 07.28.11 at 12:06 am

Garth – said “Your brother will look decidedly unhip, trapped in a concrete box where liquidity’s as rare as grass.”

And no dirt at all. I don’t understand ‘cliff-dwellers’ at all. Of course, I spent my first 25 years on the wide open prairies. I can understand renting a cave, but why buy one? Especially these days. Where is he going to bury his yellow rocks? To each his own.

#41 Chris no longer in England on 07.28.11 at 12:16 am

12:15 – how’s your needle?

#42 Randis on 07.28.11 at 12:18 am

Tonight, at a dinner event, the topic of RE was raised and ppl start praising how good of an investment it is and how others have already “made” so much holding onto their multiple 5% down condos. Everyone starts bragging and blah blah blah

What happened next? I simply said all “gain” is illusional and is on paper only as long as they don’t sell and crystalize the profits, and once market normalize they will be wiped out, along with the so-called “equity” built

And I thought I have all the right to voice out my opinion … TWO individuals sitting at the table start bitching at me for being so negative and trashing their billiant investment. All hell broke lose because I have short circuit and don’t take shit … The dinner event (among frds) got very ugly at the end and I left early. I left early because I was forbidded to speak of my thoughts and apparently in everyone’s eyes, I was wrong … wrong in my view of the economy, wrong in my view of RE, wrong in being negative and “trash” others, wrong in telling the truth ..

Friends are delusional and overrated, just like RE. F this world we are living in. Sorry if any of you think I am off topic here …

#43 Soylent Green is People on 07.28.11 at 12:26 am

Dear Garth’s Tech. Guy:

For the love of God, we want to be able to comment on each other’s useless and moronic comments.

That is all.

Thank you.
.
.
.

.
.
.

#44 Snowboid on 07.28.11 at 12:26 am

Let’s start the 1% club – each member recruits 8 new posters and charge them $ 2000 each, then they each recruit 8 more each, etc – we take a cut and…

Oh wait, that sounds familiar…

#45 Patz on 07.28.11 at 12:35 am

Jeez Garth, your stats monitors are scary. When I logged in it said there were 179 people on the page. A few minutes later I hit the refresh just out of curiosity and it was 160. Holy crap! did I scare 19 people off the site just ’cause they thought I might bring on some doom and gloom?

#46 nemesis on 07.28.11 at 12:36 am

Speaking of ‘barbarians at the gates’, GT… you did say [re: hegemonic decline], “No, they evolve.” — Garth

Well, if you take the ‘long view’ – that’s true…

But from this [remember Alaric?]….

http://tinyurl.com/3xc5og4

to this…

http://tinyurl.com/3cz2g4e

took about one and one-half millennia… betwixt which I do recall there were one or two spots of ‘bother’ along the way… One of them was especially problematic – darn!, what was it called?… for the moment it escapes me, something about “Dark” I think. ;)

Oh yes, Bill!… the RR glides on Ohlins. Naturally. ;)

#47 Cookie Monster on 07.28.11 at 12:42 am

#6 tigerbaby on 07.27.11 at 10:51 pm
Money anchored with gold will be very deflationary
—–
There would be no shortage of currency if the currency is pegged to gold, the smallest fractions of a currency can be infinitesimally small. Remember when your grandpa said a pound of chocolate only cost a nickel when he was a boy? Well, today a pound of chocolate might only cost three cents if it were not for inflation of the currency, since now we have cow milking machines and electric power to make the production of chocolate cheaper and easier for producers.

Gold is not deflationary, it’s slightly inflationary at about 1% growth per annum.
Under a gold backed money system with an economy built on savings and capital formation and preservation, low cost production of goods and services would increase over time, and therefore people could be paid the same wage their whole life, and as they age their wages would simply buy more, meaning they would have a rising standard of living.

Today, the government steals our rising standard of living, keeping us down. Now it takes to incomes to support a family. It’s because we’re being robbed. Not enough people are producing while too many are consuming of those who are.

#48 Nostradamus Le Mad Vlad on 07.28.11 at 12:46 am


“Hang on a minute…and leave in utter disgust. Several are apparently throwing up.” — The pic is extremely strange (Extremism), but not disgusting. Could be the minds of us perverted bloggers!

“. . . the US will go bankrupt next Tuesday . . .” — Not necessarily. Try Aug. 15 (see link).
*
#3 Unforgettable — Reverse speech is making a comeback! In Chinese, its esreveR hceeps si gnikam a kcabemoc!

#35 Steve — “The Loss of Triple A will be the “Tipping” Event. — These? — Adios AAA and here.
*
World’s Worst nuke plants — Ohio #1, Fukushima #5; China Going down! Submarines, that is, plus Getting into the aircraft carrier business; Libya The banxters are cleaning up nicely.

Aug. 2? Nyet. Aug. 15? Maybe; 15 Trillion Dollars, and its relative size; 2:41 clip GE — good corporate citizen. Pays little or no income tax, made a healthy profit last year and sent work to China; dubya vs. Obama The greatest spender; Unemployed need not apply (isn’t that discrimination?); Soros scales back? Hmmm; Time to break up the big US banks? Plus US frets over bank exposure to Europe.

#49 Peakoilist on 07.28.11 at 12:48 am

#37 The InvestorsFriend (Shawn Allen) on 07.27.11 at 11:52 pm

This is an entertainment site. (And a very fine one at that)
===================================
SO right..thats why I come here to read and laugh (and learn s/t)..now off to bed
thanks G

#50 Bottoms_Up on 07.28.11 at 12:52 am

I heard that some episodes of ‘property virgins’ are staged–they get people who have already bought a place, and they go around filming as if they’re looking to buy (i.e. it’s essentially filmed in reverse). It doesn’t matter though, because Sandra still looks nice in the tank tops.

Regarding the ‘centre of the universe’ comment, I had never heard that phrase until I left the GTA. It always comes across to me that the people that use it are actually jealous/envious of Toronto. So to those that use the phrase, you may want to reconsider how it makes you look. And, believe it or not, people in Toronto don’t feel/believe/behave as if it’s the ‘centre of the universe’.

Garth, congrats on the speed needle, what an exciting tool. Now it might be time to upgrade the comments section so that individual topic discussions can be contained within a single comment thread (i.e. allowing us to skip the discussions on gold and fluoridated water).

#51 Devore on 07.28.11 at 12:52 am

#6 tigerbaby

You may have noticed the value of money is not constant.

#52 P on 07.28.11 at 12:55 am

That was a point. Condo rents in Toronto roughly equal condo fees and taxes. Where’s the dividend? — Garth
————————
Not true. At least not in his area. If condo fee is $700 and tax is $400, that’s $1100/month. I was in the market to lease a 1+1 in the area and it’s near impossible to find anything under $1350.

You just made the point. — Garth

#53 Bottoms_Up on 07.28.11 at 12:55 am

#36 FactChecker on 07.27.11 at 11:48 pm
——————————————–
Also when people use ‘dude’ or ‘folks’ or ‘people’ they often come across as thinking they know more than everyone else. Dude.

#54 Helicopter Ben on 07.28.11 at 1:03 am

Hey Garth watch the plagiarism, “Worthless Fiat Toilet paper ” is this doomer’s saying. now where did i put my thinking tin foil hat? it gives me most of my good ideas. if you can call us gold bugs and doomers then i can call the majority of people sheep, as they get slaughtered everytime. so going around asking the average person what they think reminds me of late night talks shows where they hit the street asking everyday people what they think of politics or geography and i am sure you heard the types of answers they give. we live in one of the best countries in the world especially now as so many western nations are hurting and we are doing ok, ofcourse they arent that worried, they will be when they are getting sheered, thats when CBC will tell you thats something wrong. very reactionary not envisionary. but as robert downey jr so elegantly said in the movie “tropic thunder” …….. “It Aint Nothin But A Thang”

#55 Dirt Dog on 07.28.11 at 1:04 am

Your “speedo” huh??? Nawww just a real ugly thought!!

#56 Dubailurker on 07.28.11 at 1:04 am

Hey Garth,

I’m an expat living overseas but read your blog daily. I haven’t commented before but now feel compelled to remove myself from the 99% lurker category.

I can’t agree with your view of the housing market more. In Dubai I watched the creation and the destruction of an “economy” based around housing and building construction over a 7-8 year period. It has ended very badly here and is going to take a very long time if ever to recover. As if the American experience is not example enough I think it would be interesting to show a comparison with the Dubai/ Hong Kong/ Singapore/ US property Bubble-Burst cycles compared to interest rates.

I think that would change some peoples minds about “investing” in Canadian property as it would show that there is nothing special about Canadian property cycle…its only the Bubble du Jour.

I remember an article in Macleans about three years ago that making reference to the American housing market going off a cliff Thelma and Louise style and that the Canadian market would be more, in typical Canadian style, backing slowly over the cliff (old man with a hat driver style…my words).

I was fortunate to not be on the wrong side of the Bubble burst in Dubai but know plenty who were and its not pretty. I’ve looked continuously at Canadian property as an investment possibility and with the help of your blog and past experience concluded that that boat has sailed.

Thanks for the entertaining and informative blog.

Delurkered

#57 Bottoms_Up on 07.28.11 at 1:05 am

#13 A Fan in Van on 07.27.11 at 11:01 pm
——————————————
My advice to you is buy in segments. Drop 1/3 of your $ this week, 1/3rd next week (or month) and 1/3 the week (or month) after that. Either way you will be averaging your purchase. Average down and that’s good because you pick up more shares than you would have. Average up and that’s good because things are going/looking up.

#58 T.O. Bubble Boy on 07.28.11 at 1:19 am

Overheard in a coffee shop today:

“Someone on the news was saying house prices will drop 25%… but you should still buy a place, because you need to get some equity in a home to then sell and trade up if there is a drop”

un-frickin-believable

Apparently certain brains just shut down when real estate thoughts come up.

#59 tmg on 07.28.11 at 1:20 am

…just wondering how you would deal with the US debt problem…

#60 Blacksheep on 07.28.11 at 1:21 am

Garth is on a roll,

“economic devastation AND looking at the Property Virgins babe in her tank tops”

Doom AND Boobs, now THAT, is a great idea for a website.

take care
Blacksheep

#61 Mark on 07.28.11 at 1:27 am

Article from Australia…

House prices in capital cities are forecast to stay severely unaffordable for at least a decade.

http://www.abc.net.au/news/2011-07-28/capital-city-house-prices-to-stay-unaffordable/2813688

#62 Mister Obvious on 07.28.11 at 1:38 am

If only 1% of the visitors to this blog ever post, it suggests to me that only a small percentage visitors
even bother to read the comments section at all. At least, not on any regular basis.

After all, half the reason for reading the comments is to see if anyone else (or even Garth) gives a crap about your own previously posted brilliance. (Generally, they don’t, and he doesn’t either).

That gives us some insite as to the real attraction here: (1) the daily picture, and… (2) the wit and wisdom of Garth Turner himself. In that order.

I admit I had become addicted to this comment section. But on or about July 1st, I became tired of the same old crap (including my own crap) and swore off the comments section for a while. Of course, I still came around for reasons (1) and (2) above. But I neither posted or read comments on this blog for about two weeks.

Obviously (note the name), I couldn’t stay away indefinitely. But it was a nice little break. I would recommend others do the same from time to time. It gives one a chance to shake out some of those doomer cobwebs.

I’m also astounded that Garth still moderates this site all by his lonesome. He has to read every scrap of nonsense deposited here. That alone makes him a giant among bloggers, and unquestionably a patient soul. Think about that the next time you want to tear a strip off the old codger.

#63 Soylent Green is People on 07.28.11 at 1:42 am

http://www.facebook.com/sandrarinomato

http://www.rinomato.com/

[email protected]

[email protected]

#64 smartalox on 07.28.11 at 1:46 am

Wow Garth, I typically see 150 to 200 comments per post. If only 1% leave comments, does this mean you’ve got over 15 000 avid readers? (Maybe 10 000, if you discount the ‘sock puppets’)

Congratulations!

#65 Peter B on 07.28.11 at 1:48 am

I just want to say that housing prices going down is not a disaster. I bought my houses in 98 for 150k my Calgary tax assessment says it in now work 510k. At one point it was worth 610k am I worried. No because I am a few month away from paying it off and I am still ahead if drops 50%.

None of this will effect me because I plan to stay here tell I die.

#66 debt is good on 07.28.11 at 1:49 am

Garth, the Titanic US financial system struck iceberg in 2008, we have been sinking ever since, water’s filling the 4th compartment right now as we speak and the bow is starting to sink into the ice cold Atlantic ocean…where have you been? Still sipping bourbon in the upper class deck? As much as I agree to your commentary on RE, you are way off on the severity of the economic predicament we are in, all fiat system fails and it will fail again and again.

#67 Peter B on 07.28.11 at 1:50 am

Read my last post. Too much home made wine makes for grammatical mistakes.

#68 Helicopter Ben on 07.28.11 at 1:57 am

James Turk explains why gold is money ………………http://www.youtube.com/watch?v=RBuHTYv7V08

Now there’s a household name. — Garth

#69 au79 on 07.28.11 at 2:10 am

fact:
gold has been the best performing asset over the last 10 years, bar none. avg 18% – 20% per annum.

fact;
all the worlds major currencies (including the cdn dollar) have seen huge declines in purchasing power compared to gold.

fact:
s&p down 89% in the last 10 years priced in gold.

fact:
dow flatlined last 10 years.

fact:
gold top callers and bubble callers and all the new precious metals experts have been wrong year after year and will continue to be wrong for the forseeable future.

fact:
We are in the early stages of the biggest bull market( precious metals) the world has ever seen. yes there will be a mania and a blow off but that point is way off.
I am not a tin foil hat wearing gold bug, I make my living investing.
Look at Canadian newspapers from 1978 to 1981 to see what a gold market top looks like.

#70 Pat on 07.28.11 at 2:32 am

G: “Yes, this is the guns-God-gold-tinned tuna crowd, and I expect over the next few days my speedo will be redlining with whackos.”

Good for you – whackos can’t threaten your credibility. The old ladies will keep on worshiping you.

#71 Bogdan on 07.28.11 at 2:35 am

> only 1% of the people who come here actually leave a comment.

Does this 1% include the comments posted by your multiple personalities too? :-)

If you’d just leave your DNA on more comments, you can probably boost it to 5%. We are all so desperate for attention… However, let’s look at it from a different perspective, only 1% have the balls to take on the sexy&almighty G.

#72 Stampede Sam on 07.28.11 at 2:42 am

I’ve said it before and I’ll say it again: Elvis memorabilia- the only safe investment!

#73 timo on 07.28.11 at 2:44 am

http://finance.yahoo.com/news/TempurPedics-2Q-profit-surges-apf-1146854560.html?x=0

proof that the US is in trouble.

Unemployed and lazy might as well relax in style and if your worried about your bank being solvent, your going to need more of these to stuff.

#74 unsquiddly on 07.28.11 at 2:52 am

“300-400 coming off the price of Gold once the theatrics end.”

Ooooh. Then I’ll only be up 50% in three years instead of 100%. And people who bought in 2001 will only be up 500% instead of 700%.

Gold is hauling @ss. I’ll put up my returns against G’s bank preferreds any day. As for the rest of the stock market, good luck suckas.

#75 Jody on 07.28.11 at 2:55 am

Who cares if the US defaults or not, it’s the willy nilly printing off of trillions of dollars people should be worried about.

It’s not just the US dollar losing value against other currencies and stuff. The markets are up? No the US dollar is down vs the markets, yes you can buy more on the markets because the US dollar markets have lost value because the US dollar is losing value. Anything associated with the US dollar will lose value as the US dollar loses value.

The US currency is afloat thanks to foreign wars, the yanks bomb the hell out of anyone wanting to trade oil in currencies other than the US dollar. China is dumping it’s US cash reserves by buying up companies and physical assests like mining equipment. When you have more of something it’s worth less, that’s why a Ford costs much less than a Ferrari. If the yanks print off $40 trillion US dollars then those dollars ain’t gonna be worth sh**. You can say “Don’t bet against the US,” blah blah blah, all you want but the US can’t keep adding QE after QE without consequences. Maybe if they would cut $900 trillion from the air force budget things would improve. How will the US not implode if they keep doing this? Not to mention the US is losing it’s middle class, soon they will be like Rio, the very, very, very rich in their well guarded enclaves and the very, very, very poor in their slums. The wealth keeps getting concentrated into fewer and fewer hands, thanks to government and corporate interference (that is the dictionary definition of facisim, we’re living in it now, corporate controlled government.) in the market. And if the US response to other countries who question this stupidity (Libya and Iraq) is to bomb the hell out of them the very day they decide to start trading oil in currency other than the greenback, how much longer can the over extended empire last?

Wait until the Canadian dollar is worth $1.30 US, coming soon, if we make it through Europe imploding and the hyperinflation coming to the US. I just can’t see a way out of this mess unless the US guts the hell out of it’s military spending and raises everyones taxes, but neither one of those is going to happen because it would be political suicide and all those numnuts care about is keeping their cushy job in the house or senate. To hell with whats best for the country, it’s whats best for ME, ME, ME!!!!

#76 Bilbo Bloggins on 07.28.11 at 3:20 am

75K for an govt HR job is nothing.
Don’t laugh but I personally know of a receptionist who makes over 100k. And no, she aint attractive.
She’s over 60 yrs old. Isn’t hard to find as all BC govt
salaries are public.
I worked as a contractor for this organization for over 6 years and the amount of salary thrown at some of these employees as ridiculous.
So if you want to know why your taxes are so high, go do a little homework and find out for yourself.

#77 Tony on 07.28.11 at 3:44 am

#4 cazzobaby

The only bargains are on bear funds and tza and the faz. P.T Barnum said it best a fool and his money are soon parted. Who’s kidding who? The stock market will likely lose 80 percent of its value over the next 5 years.

#78 Merridith on 07.28.11 at 4:02 am

Can we see the speedo too? I’m curious!

#79 Phil S on 07.28.11 at 5:22 am

Looking on the “bright side” we’re all going to be dead soon enough, so we may as well enjoy the ride. Amazing how the coverage of teh squabbling in the US of A has made all my colleagues “Instant Economic Experts” – the same people who are rock-solid convinced that “Property” is THE “Guaranteed route to NO-EFFORT, NO RISK Riches!”

However, this is in the Land of Oz, where the cost of living is rising VERY fast, and the new “Carbon Tax” is already causing quite a headache for some.

Interesting also that there is an increasing “new” crimewave in the wealthier suburbs – people who have had Govt. subsidised solar panels fitted are coming home after weekends away to find the panels have “disappeared”, and it’s also interesting that there seem to be an increase in solar panels for private sale via e-bay. No connection of course . . . . .

When times get tough, people can be very inventive.

#80 Ben on 07.28.11 at 5:50 am

So let me try and understand WTF is going on…

The Loonie is at $1.06+, the highest it’s been since that 2007 one week spike and Canadians are still paying 25% more for retail goods then Americans?

I remember a couple years back I bought a half G memory stick at Future Shop in Deadmonton for $60

There selling 4G sticks down here for $5 bucks !!!!!!!!

LMAO

#81 March of the Pigs on 07.28.11 at 5:53 am

1%er. When do I get my patch? I can picture it now 50 Hummers tearing down the 401

#82 BrianT on 07.28.11 at 6:22 am

The basic premise being promoted, which appears to be that the historic rise in the value of gold,silver,Swiss Francs and Aussie dollars is all being driven by crazies with barely two nickels to invest, is not only absurd, not only makes no common sense, but also depends upon absolute ignorance of basic mathematics.

#83 David B on 07.28.11 at 6:49 am

It is now the best of times and the worst of times …. smart investors (Big Boys) will make millions over night while many more will get the shaft thinking they are smart. The mighty USA is in deep deep, ” DEEP TROUBLE” but and it’s a “BIG BUT” they have more financial resources and military might y’all could dream of shaking a stick at. Nothing in politics happens by accident and this ain’t no accident.

As for greater fools ….. go for it buy all the Real Estate you can get your hands on and then run to Home Depot and buy buy … how could you possibly go wrong? !!!!!

#84 Gill Taylor on 07.28.11 at 6:57 am

What does all this mean for office real estate http://tinyurl.com/TorontoOfficeStats

#85 Fred on 07.28.11 at 7:35 am

Don’t despair… Here’s something to cheer you up!

http://www.youtube.com/watch?v=dQw4w9WgXcQ

#86 MO on 07.28.11 at 7:39 am

Great commentary by Robert Shiller on the state of the US housing market. Like looking into a crystal ball…

http://www.planbeconomics.com/2011/07/28/robert-shiller-on-outlook-for-u-s-housing-market/

#87 Shane on 07.28.11 at 7:39 am

Garth, What about buidling your own home you dont mention that much?

Shane

Are you a builder? If not, forget it. — Garth
Garth, No i’m not a builder i was just thinking a getting a house built over he next year or 2?

Shane

Why? Resales are better value. — Garth

#88 Laurenda on 07.28.11 at 7:40 am

OK so blue chip/tech ETFs into my TFSA.. fine. Nasdaq or TSX ones…. and from there… how the hell do I know???
I like a good sale as much as anyone else (maybe more..), don’t wanna miss out but is blindly buying an item better than not buying at all!? If anyone, including the G man, would like to throw this 26 year old a bone, perhaps even some general categories I could work with, I’d be greatly obliged.. thx guys!

#89 bill c on 07.28.11 at 7:43 am

in past 6 months 8 companies in toronto closed down and moved to U.S. Thats all you have to know. We are in deep do do…

#90 househornyhousewife on 07.28.11 at 8:03 am

Garth,

I like the new element of voyeurism that you have added to what you have referred to in the past as a “depraved blog”.

If I may be permitted to shed some light on how most home owners feel when faced with an economy such as ours, then perhaps it will help shed some light on our rather illogical but nevertheless self comforting behaviour.

When most of us see our supposedly balanced mutual funds going up and down but not progressing on an upward trend, we think, “Well at least I own a house that, if all else fails, I can always sell or rent out or barricade myself in or whatever ..” In an economy such as this, a house gives us all a sense of security somehow .. a tangible place that is ours that we can retire to when the cruel world is biting at our heels. I realize that this makes absolutely no sense whatsoever but many of us like the solid reality of a house vs the capriciousness and lack of growth that we are seeing in the market at the moment. Even people who do not necessarily own their home yet (but who are essentially in a rent-to-own contract with the bank) espouse the state of nirvana that this kind of security will eventually bring them. I know the numbers don’t add up and the logic doesn’t jive but there it is nevertheless …

I firmly believe that once interest rates do go up and we begin to see some sort of growth and real promise in financial investments, then perhaps people will begin to make the switch from real estate to more liquid investments. The difference between the two choices must be enormous and quite visible to practically everyone (even to those who don’t balance their chequebooks on a regular basis .. and perhaps even to those who don’t even HAVE a chequebook).

Until that time, ownership of that brick and mortar (or as in most cases these days, cheap clapboard and aluminium siding) will continue to trump financial investment in the average person’s mind.

I know it doesn’t make sense and the numbers don’t add up but it is what it is. I have simply tried to explain this apparently irrational behaviour that is being practiced by 70% of the general public.

This is what you are really up against Garth. Good luck.

HHHW

So, don’t buy mutual funds. That’s a good start. — Garth

#91 Aussie Roy on 07.28.11 at 8:10 am

Aussie Update

The generations answer – Is property a good investment.

Psssst the Boomer owns a mortgage company. Good comments by others.

http://www.news.com.au/money/generations/is-property-a-good-investment/story-fn7ki9pl-1226101113109

Property price plunge shaves $33,000 off Perth’s median house price

http://www.watoday.com.au/business/property/property-price-plunge-shaves-33000-off-perths-median-house-price-20110727-1hzh6.html#ixzz1TOuD6YN4

Prices driven by debt and not incomes.

A massive hike in median house prices across the country in the past decade – up 147 per cent to $417,000 – has far exceeded the 50 per cent rise in average incomes since 2001.

The result led to a ballooning of the housing price-income ratio from a manageable 4.7 in 2001 to 7.3 this year – a level deemed “severely unaffordable”

But wait, prices wont fall they just wont go up for 10 years, so thats ok? – huh?.

http://www.news.com.au/money/property/australians-still-nurture-home-ownership-dream-despite-massive-hike-in-house-values/story-e6frfmd0-1226103146725#ixzz1TOuW2ZWY

House price and market activity data war, heats up.

http://www.prosper.org.au/2011/07/27/damn-lies-and-statistics/

#92 Sp on 07.28.11 at 8:12 am

68. I am going to throw up if I had to listen to James Turk for one more time. Sorry Bugs, your theory of money in terms of a commodity is simply wrong in modern banking. To make money in the current system, you have to live and play within the system. Not trying to bring down the system as wished by the Bugs. If the current monetary system collapsed, the first thing that we need, like someone who famously once said, are guns and ammos. Gold will probably help too to use as a piece of rock not for monetary exchanges but as a weapon. Know how to pitch?

#93 Mr. Lee on 07.28.11 at 8:16 am

Being part of the 1% er club makes me want to get out my Harley and ride…….enough of that.

Doom, Gloom, Optimism, Calgary Realestate Board Hyper Optimism. This all is irrelevant as no one can see into the future. However as Gerald Celente says, “current events form future trends.”

What we do know is that we live in a economic world of new realities. A world in which debts that were put off need to be paid back, and a world in which resources are becoming more scarce and more expensive. Let us hope that the wisdom and reasonable dispositions of previous generations starts to come back into fashion……….DO NOT SPEND WHAT YOU DO NOT HAVE.

Ahmen

#94 daystar on 07.28.11 at 8:21 am

I just pray to the goddess above they don’t represent society as a whole. Cuz then, we’re screwed. – Garth

Ow. Owy. Ow, ouch, umph, ow, ow, ouch, owy, ow… ;)

Lots of mercury in Tuna they say… hmm.. I see your point. Explains alot, actually and yup, I gotta agree with you Garth, now is not the time to buy stocks. Smart money says look for winners, but take 8 weeks off from the buy button. Like your speedo thingy, sounds pretty snazzy!! :D

#95 TurnerNation on 07.28.11 at 8:32 am

Big Oil wins again!! Always. Never bet against big oil, especially when the USA is/was run by two lifelong oil men (Bush, Cheney and cohorts). Have fun at the pumps today.

Exxon Mobil Profit Rises to Highest Level in Three Years on Oil-Price Gain
Carroll – Jul 28, 2011 8:06 AM ET .

Exxon Mobil Corp. (XOM) reported its biggest quarterly profit in almost three years as a demand- driven oil rally boosted prices.

Second-quarter profit rose to $10.68 billion, or $2.18 a share, from $7.56 billion, or $1.60, a year earlier, the Irving, Texas-based company said today in a Business Wire statement. Exxon had been expected to earn $2.32 a share, based on the average estimate of seven analysts in a Bloomberg survey.

Brent crude futures averaged $116.99 a barrel during the second quarter, a 47 percent increase from a year earlier, as economic expansion stoked energy demand and a civil war in Libya disrupted oil exports.

Chief Executive Officer Rex Tillerson has orchestrated $38 billion in acquisitions since June 2010 to amass natural-gas fields and the expertise to exploit them. Exxon plans to purchase more gas reserves and is assessing targets in more than a dozen gas-rich shale-rock formations worldwide, Jack Williams, president of Exxon’s XTO Energy unit, said in a July 20 interview.

Exxon has also expanded its oil holdings, most recently with the discovery last month of a Gulf of Mexico field that holds the equivalent of 700 million barrels of crude. The estimated size of the field, known as Hadrian, may increase as drilling continues 250 miles (400 kilometers) southwest of New Orleans, the company said in a June 8 statement.

#96 TurnerNation on 07.28.11 at 8:47 am

Investors Fiend proving once again he knows little about any asset class including housing. What does he post? I will find my own fiend/friend, thank you.

#97 bigrider on 07.28.11 at 8:52 am

Garth I can tell you some of my friends and aquaintances have bought more pre builts in Markham, Brampton ,newmarket to flip prior to occupancy.

So far they have been incredibly successful doing so.

The RE madness is stronger than ever.

So what? This will not change the outcome. — Garth

#98 bigrider on 07.28.11 at 8:59 am

One thing that is different about Canada and Canadians are it’s people.

I don’t believe there is any other place in the world where house ownership is the most holiest of the holy grail as it is here.

#99 infernalmachine on 07.28.11 at 9:08 am

@76 and you people-
First off, we don’t know if the “HR job” is a clerk position. I highly doubt it – likely he’s a manager or similar and no this isn’t more than you’d make in the private sector.

Second, maybe BC bud makes your govt nuts but there are no “receptionists” that make 100K. If you really believe that, then you are either ignorant or plain stupid. Most directors in govt (usually w authority over 50 or 100 people) make just under or just over 100K.

Before you go spouting off about govt workers, go do your research. Or learn to count.

As for real estate, I’ve given up. The new stuff here in toronna is overpriced, cheaply made, poorly laid out, and badly situated. If prices go back down maybe ill buy. If not, renter 4 life.

#100 Simon on 07.28.11 at 9:14 am

“So what to tell Sandy’s brother? Well, I guess we could start by pointing out that with closing costs his old condo cost $296,000 (and maybe more if he had an ED down payment). And after commission, he walked away with $337,000 (less if a mortgage penalty). That’s a value gain of $41,000 in four years, or 13% — barely over 3% annually. At a time when inflation is 3.4%, that hardly cuts it as an investment.”

Garth, why do you keep ignoring the cash value of 48 months of rent (net of property taxes and maintenance) ?

Asked and answered. If he had rented instead of owned his rent would have been about the same as property tax and condo/strata fees. So his mortgage payments are sheer additional expense. Adding them in, his four-year return would have been negative. — Garth

#101 brainsail on 07.28.11 at 9:29 am

#84 Gill Taylor on 07.28.11 at 6:57 am

“What does all this mean for office real estate?”

The higher US vacancy rates may be the result of a corporate trend to cut costs by having more employees work from home.

My wife works for a major corporation in Texas and now works from home four days a week and one day at the office for face to face meetings.

One office building now with half cubicles serves a working population that use to occupy three. The unused buildings are currently up for sale. We have heard rumors that other major corporations are implementing similar strategies.

In our small cul-de-sac of fifteen houses there are 25 adults of which 18 have jobs. 5 are retired and 2 don’t work. Out of the 18 that work, 7 work from home. 3 of the 7 are contract jobs and 4 are full time employees.

I don’t know of any MSM reports that can confirm our observations and maybe our upper income neighborhood is the exception and not the rule.

#102 Peakoilist on 07.28.11 at 9:47 am

speedo = speedometer, not something G wears to the beach
new Garthisms ….

#103 Daisy Mae on 07.28.11 at 9:52 am

Just Jack on 07.27.11 at 11:16 pm ”

“….So, they sell their home in the boonies and buy a home in the city, thinking that the mantra “location, location, location” will save them from a downturn. Unfortunately, by doing so they depressed the outlying areas and over inflated city prices. I’d bet the same is happening in Vancouver too.”

That ‘mantra’ won’t save them. Location is important but even in stable areas that have not experienced bidding wars and such, prices are dropping. West Kelowna RE is slow to dead. RE agents are walking around with long faces….

#104 kilby on 07.28.11 at 9:55 am

I’m ready to buy some ETF’s on my TD Waterhouse account and know very little about them. Any brilliant suggestions. Safety and income are important as I am 60 and need reliable income stream.

#105 timo on 07.28.11 at 9:58 am

now this is a tax-break for the rich…wow is this ship in trouble!

http://www.bloomberg.com/news/2011-07-28/dynasty-trusts-let-u-s-wealthy-duck-estate-gift-taxes-forever.html

#106 Utopia on 07.28.11 at 10:00 am

#42 Randis on 07.28.11 at 12:18 am

“Tonight, at a dinner event, the topic of RE was raised and ppl start praising how good of an investment it is and how others have already “made” so much holding onto their multiple 5% down condos. Everyone starts bragging and blah blah blah.

What happened next? I simply said all “gain” is illusional and is on paper only as long as they don’t sell and crystalize the profits, and once market normalize they will be wiped out, along with the so-called “equity” built. Sorry if any of you think I am off topic here …”
——————————

Too funny man. So you told them “all gain is an illusion”.

Your are like an economic Jedi Knight dispensing that kind of wisdom at the market top. Of course you are right but keep in mind most of those you were talking to never read sites like this.

No wonder you busted up the party.

If the group accepted your assertion, then everyone in the room was going to have to admit that they made a mistake. I assume you are renting. In essence, the one non-owner was telling all the property owners they were fools.

No way they could do that. The truth is a waste of time. Especially when it requires the listener to admit they made an uninformed decision.

Why would you expect a better reaction?

Next time, try to just engage them with some interesting R/E stories from battlezones like Vancouver and then let them come to their own conclusions. You read this site so you will be well armed.

The subject is just so touchy that it can only be approached indirectly. Don’t forget, a house is the biggest investment many make in their entire lives. So they are 100% wrapped up in it.

You may as well have been insulting them on their choice of girlfriends and wives. The effect would be the same.

#107 Daisy Mae on 07.28.11 at 10:00 am

Further to last. It’s abit of a vicious circle. Homeowners in the outlying areas can’t sell their McMansions — a number of them aren’t prepared to lower their prices — so they, in turn, can’t buy in the urban areas.

#108 EdmontonJim on 07.28.11 at 10:04 am

@36 tigerbaby

You are exactly right on that one. The global economy is much to large today for gold to be a suitable basis. Under the volume theory of money, an ounce of gold would be equivalent to either $6000 U.S. under full reserve banking (gold replaces the M2 volume), or about $600 under fractional reserve (gold replaces M0).

Under full reserve (gold=M2), that means a loaf of bread costs about 5 mg of gold! five milligrams!. Is gold practically divisible into 5 mg flakes? Really? That’s a pellet about the size of the ball in a ballpoint pen.

And if it’s a fractional reserve (gold=M0), how is that really any different from the current system? Plus it means gold is currently over-valued.

So gold-bugs, which is it? If gold is money is it the only money? Then you’ve got it for a deal; gold will go to $6000/oz. But if it’s just the basis for money then you’re getting scammed, it’s actually only worth $600. And if Silver is also money (why not?) then you’re doubly scammed and it’s really just a shiny rock.

#109 D Ho on 07.28.11 at 10:05 am

How can Canadians not be confident when everything they buy goes up and they sell and make money on it? Not only that, real estate has probably done better than most of their investments in terms of total profits.

SIGH

#110 BrianT on 07.28.11 at 10:07 am

#98Big-Absolute nonsense. The residential R/E mania was every bit as strong in the USA (until it wasn’t). Take away the ability to buy low money down (by having the taxpayer co-sign) and see how strong this love of residential R/E will be.

#111 kilby on 07.28.11 at 10:07 am

#29 Mark.

HR jobs are usually management both in private and public service jobs. Requires a degree. $75K is low end for this work. He likely is not a “clerk”. Also one would be hard pressed to find a Professional Engineer for $75k.

#112 bigrider on 07.28.11 at 10:10 am

#90 Garth says to Hornyhousewife “So don’t buy mutual funds-that’s a start”

Boy Garth, you really have it in for the mutual fund industry. Your comment infers that mutual funds do not make money…shame on you for inferring such a lie. I say that most ,if not all the house humpers in Canada would be well served placing their money in the likes of Sprott, Frontstreet and Dynamic fund families today, instead of 600 square foot condos in T.O or future getto subdivision townhomes and detached homes in the various suburbs.

Oh and by the way Garth, some mutual funds actually do outperform comparative benchmarks consistently over long periods of time..no accident and no strike against ETF’s as they also should have the lion’s share place in people’s portfolios.

#113 Daisy Mae on 07.28.11 at 10:11 am

Ex-Cowtown on 07.27.11 at 11:26 pm “Only 1% leave comments? I’m a 1%er! (If you don’t ride a motorbike you have no idea what I’m talking about). That’s OK.”

Well, I don’t know what a 1%er is…but two of my kids and their spouses ride bikes. And they all have a little bell attached near the kickstand. Apparently, it scares off the little gremlins trying to jump on the bike as they ride down the highway. The bell scares the gremlins away, they drop to the pavement, and
cause….potholes! So the fable goes. Garth, do YOU have a little bell attached to your Harley? LOL

#114 rental monkey on 07.28.11 at 10:24 am

Anybody else see “senior economist” being interviewed on CTV Canada AM this morning? I didn’t catch his name, but good lord,the young fella barely looked old enough to have a driver’s licence, let alone be a “senior economist”. Perhaps he is some financial guru that blasted through his educational years, and may or may not know his stuff but I’m thinking he still gets aked for ID when buying liquor. I didn’t hear much of the clip, but I did happen to notice which big bank employs him. The Green one. I understand that youth need jobs, but what experience would allow him to be labelled as a “senior” economist with one of our biggest banks? Kinda stumped. Doesn’t the term “senior” imply years and oodles of experience when applied to ~anything?

#115 Aussie Roy on 07.28.11 at 10:25 am

bigrider on 07.28.11 at 8:59 am

One thing that is different about Canada and Canadians are it’s people.

I don’t believe there is any other place in the world where house ownership is the most holiest of the holy grail as it is here.

Many countries think this way. Including here.

We have the great Australian dream.

Around 70 per cent of Australian households own or are purchasing their home. The rate of home ownership has remained remarkably stable at this level for over four decades according to data collected by the Australian Bureau of Statistics in its Census of Population and Housing and its Survey of Income and Housing.

http://www.aph.gov.au/library/pubs/rp/2008-09/09rp21.pdf

Housing stats.

http://www.abs.gov.au/AUSSTATS/[email protected]/2f762f95845417aeca25706c00834efa/3176be0eaef1bd1aca2570ec0000eadf!OpenDocument

Home ownership is a key cultural icon in Australia.

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

Australia: Home ownership – Many Australians will do almost anything to purchase a home…

http://scottbanks.com.au/2010/03/26/australia-home-ownership-many-australians-will-do-almost-anything-to-purchase-a-home/

Of course then there are the tax payer funded ponzi scheme investors.

Australia’s love affair with property continues into the investment arena with Reserve Bank of Australia estimations that Australians who owned a residential property that was not their primary residence (second homes and investment properties), from 16 per cent in 2002 to 20 per cent in 2006.

http://www.investment-property.com.au/property-investment-australia.htm

After participating in blogs all over the world, I can honestly say most places have “The Great (insert country) dream” or some such phrase when it comes to home ownership.

#116 Peakoilist on 07.28.11 at 10:34 am

#62 Mister Obvious on 07.28.11 at 1:38 am
That gives us some insite as to the real attraction here: (1) the daily picture, and… (2) the wit and wisdom of Garth Turner himself. In that order.
====================================
I’m not certain if Garth is getting wiser, but he’s definitely getting more witty the last few days. It’s better to have fun with the wackos, as he affectionately calls them/me/us.(after all, we are the 1%ers !)

#117 kilby on 07.28.11 at 10:36 am

#76. Bilbo Baggins.

Worked for the government for over 30 years and NO “receptionist” makes $100k. That would be a directors pay. Throwing out information like this just makes you look silly. The best way to take advantage of taxpayer’s money is to be a “contractor” for the government.

#118 EdmontonJim on 07.28.11 at 10:40 am

I have to correct myself in afew places.
First, I mistyped @#6 tigerbaby.
I meant to say the quantity theory of money
And I realise that it wouldn’t be the gold itself being divided, but the point remains that it wouldn’t be that useful.
As for the trustworthyness of gold, look up “coin sweating”.

#119 Basil Fawlty on 07.28.11 at 10:46 am

“Unless we adopt the historic Taco standard. — Garth”
In Taco Bell We Trust

#120 Randis on 07.28.11 at 10:55 am

Utopia @ 106

I guess you are right, but I didn’t even word it in a hard way. I put it in a nice soft way, more liking raising a question and see what their take is.

Anyhow, it was a gathering event among frds and I think they overreacted to a different voice in a casual conversation …

Well, doesn’t bother me anymore

#121 BrianT on 07.28.11 at 10:56 am

114Rental-That is a SALES position. The guy might be a very strong salesperson, which is the bottom line.

#122 Aussie Roy on 07.28.11 at 11:09 am

Aussie Update

“House prices have already fallen. And our bet is, even bigger falls are to come.

We’re not the only one to think so. Yesterday your editor met for lunch (we had veal ragu with penne pasta) with housing mega-bear Professor Steve Keen, editors of the Macrobusiness blog Leith van Onselen and David Llewellyn-Smith… plus a special guest.

The guest was a U.S. hedge fund manager.

He was specifically in Australia to meet both sides of the housing debate. His goal? To place big, big, big bets on an Aussie housing market crash”.

http://www.moneymorning.com.au/20110728/hedge-fund-bets-on-aussie-house-price-collapse.html

#123 The InvestorsFriend on 07.28.11 at 11:09 am

BLAME RISK MANAGEMENT FOR MUCH FINANCIAL EVIL

An abomination has been loose in the financial markets for at least 15 years. It caused the financial crisis, the ENRON debacle and the house price bubble.

It goes by names like Risk Management, Risk-adjusted assets, risk-adjusted returns and Value at Risk.

It holds the following abominable falsehoods to be true:

A residential mortgage loan on a bank balance sheet shall be deemed to be extremely low risk and require less bank shareholder capital than a loan to a the most profitable of corporations.

Government bonds held by a bank, pension fund or insurance company shall be deemed to have zero risk. (zero!)

A corporation (like ENRON) shall be allowed to make arcane calculations and then claim that they have very little value at risk.

This abomination rests on the clearly false notion that risk can be measured with precision.

This risk measurement abomination has led to bizzarre market results like extremely low interest rates applicable to government bonds issued by heavily indebted countries. The interest rates don’t even cover the inflation risk let alone the default risk.

This risk abomination has led to banks calculating that it is safe to lend $400k to a property virgin couple making 100k between them.

This risk measurement abomination is already in the process of crumbling away. More crumbling to come.

#124 ShowMeTheMath on 07.28.11 at 11:17 am

Garth, shouldn’t your calculation on how much the brother “came out ahead” include the money he saved by not renting over those four years?

Not that I’m saying he should buy a bigger place now, I would agree that you’re right, he shouldn’t. It just seems you are missing a few numbers in the analysis, and in the overall picture he did do better than the inflation rate. Am I misunderstanding something?

Yes. I responded to this point twice already. He paid about twice what rent would have been. — Garth

#125 GregW, Oakville on 07.28.11 at 11:18 am

Hi Garth, Thanks, I always appreciate your enlightened prospective with your common sense wisdom regarding current events. Of course the comment section is interesting, some just entertaining (Thanks all). And I just wanted to try giving that new comment gauge of yours a tiny nudge too.

#126 Standard Deviation on 07.28.11 at 11:20 am

Having been one of the 99% who do not comment I thought I would enter into the fray with a non specific comment. If the largest economy in the world has consumption comprising 70% of its GDP and realistically 20% of its consumers are without work; how can they grow their GDP or create jobs without massive investment or profound innovation and development? Given that there is a dearth of engineering, science and math graduates the probability doesn’t look so hot.
Whilst free market capitalism has worked best up till now I have my doubts that the existing economic model can provide the expected benefits going forward.
thanks for the opportunity Garth, always enjoy your loquaciousness. Let the cards fall where they may.

#127 Utopia on 07.28.11 at 12:08 pm

#28 nonplused wrote…..

“While I admit you get a lot of crap comments….., some of your responders seem fairly lucid and present some good arguments. It’s not like zerohedge.com where they get thousands and thousands of useless quips per day…..”
———————————

Exactly. Just how many times in a day can you read a zerohedge comment where they don’t say “bitchez in conjunction with an inane remark” What a waste of time.

The beauty of this site is that it is moderated, that there is a fluid discussion amongst the posters and that the host engages with his own point of view.

Where else do you get that?

Just look at any of the major news outlets and read some of the posts people leave. Half of them are outright crazy and out of control. At least here at Greaterfool some attempt is made at democracy of the local mob and there is a sense of community.

Like any social group, it tends to regulate itself around a community of reasonable thought and weed out the extremists, racists, hate panderers and dangerous minds that live in the real world.

Interestingly enough, many people read every single comment each day as well. Try that on a major media thread where there are 600 random posts and no sense of continuity at all. No connection from one day to the next. Just rants.

I like this format to be honest. The posts read like a party conversation, not seven random disconnected conversations with votes attached (that few care about anyway).

We don’t all agree but there is brilliance in so many posts. Guys like Lebowski (who drives me crazy because of his one-sided viewpoint) often makes excellent comments and has been doing so for ages.

I read all his posts.

There really is not another site that I know of to be honest that is as interesting as this one. Brings perspectives in from all over the world and keeps us tuned in to developing stories that the big media are not catching on too.

And how can that be a bad thing. Even some of the Gold-Huggers are starting to make sense and they honestly have made a pretty good case.

I guess I just really appreciate the energy that so many put into their remarks here. This is an addictive read.

#128 Mr. Plow on 07.28.11 at 12:24 pm

#42 Randis

You’re not off topic at all.

According to the intro of Garth’s post regarding the comment section, you seem to fit right in.

#129 Ladybug on 07.28.11 at 12:26 pm

Good Morning, Mr. Turner:

We heard you speak February, 2009 at a resort facility near Parksville, BC. Since then we have sold our lovely home on acreage, moved off the Island, and are now renting an executive log home (lakeview) in the Shuswap.

I’ve not only been following your blog, but also, obviously, heeding your advice.

I don’t want to comment on other posters’ comments, I just want to thank you for sharing your wisdom – it has contributed to us being in a far better position and according to our realtor, “just in the nick of time”.

I am sorry that there are some who are disrespectful to you, but you need to know that I am just one of the thousands who have heard your warning, taken it seriously, and have acted responsibly. Thank you so much for being kind enough to share your wisdom, and for being kind enough to “save” many of us with your knowledge.

God bless you for your crusading spirit.

Gratefully,
“Ladybug”

#130 Cookie Monster on 07.28.11 at 12:30 pm

#42 Randis on 07.28.11 at 12:18 am
——
Welcome to the club of economic misfits. To be knowledgeable about basic economics makes you an abnormal right wing nut job in many peoples eyes.

Canada and world is full of econimic halfwits, I argue with people all the time, with friends, family, strangers of vacation, everyone. No one agrees with hardly anything I say except for one friend who runs a kitchen and food service for hundreds of fossils in Hamilton.

Canada is a socialist nanny state and we are surrounded by idiots.

#131 Mr. Plow on 07.28.11 at 12:32 pm

#98 bigrider

I have a lot of family in the states, Michigan, California and Colorado.

Trust me, home ownership was a holy grail there too.

#132 Sleepless in Coquitlam on 07.28.11 at 12:32 pm

As you know Garth, I’ve taken your red pill and my house in greater YVR is on the market for a gazillion dollars more than I paid for it 25 years ago. I’m still working on my wife to take her red pill and the covert brainwashing is going well. But what I’m terrified about it having a larger sum of cash in my inexperienced hands – it’s almost like I am almost a prisoner set free, but I want to go back to my concrete cell of real estate where it’s familiar and comfortable, even though certain doom is there! At the very least, though, your blog is an entertaining start to my day!

#133 Abitibi Doug on 07.28.11 at 12:36 pm

Garth is most likely right, that the world won’t end next week. Some arrangement will be worked out at the eleventh hour. However, isn’t it amusing reading these doomsayer postings? That’s the second reason I come here, the main one being to learn about what’s going on in the world and predictions of what’s most likely to happen. As for the fear mongering, I look forward to some good buying opportunities it could present.

#134 Snowboid on 07.28.11 at 1:03 pm

76 Bilbo Bloggins…

Another post from someone in an alternate universe?

I can only speak from past experience, and the current salary of a BC Govt Director that had my years of experience – $ 104K.

Currently no receptionists, they were laid off in 2003. They were making about $ 30K.

In the area of IT, our contractors were making $ 3750 a week minimum in 2006 – you do the math.

If you want to really know why your taxes are so high, do a little research on outsourcing and privatization.

#135 Bottoms_Up on 07.28.11 at 1:05 pm

#117 kilby on 07.28.11 at 10:36 am
————————————–
Actually, a top-level administration assistant (‘AS’ group) in the federal government could make around $100,000:

http://www.tbs-sct.gc.ca/pubs_pol/hrpubs/coll_agre/pa/pa08-eng.asp#toc222021076

However, that person is likely very much accomplished, and working at a high level (such as in an ADM, deputy minister’s or minister’s office) with a lot of responsibility. Garth might have witnessed this.

#136 jess on 07.28.11 at 1:06 pm

hot money (FDI) flows –

Premier Wen Jiabao vowed to “enhance effective monitoring of cross-border capital flows”, according to a statement on the central government’s website on Tuesday.
===============

….the house in Cheyenne, Wyoming, 1209 North Orange Street, Wilmington, Delaware and what is going on at 9/22 Curran Street, New Zealand?

=
http://www.nakedcapitalism.com/2011/07/clueless-new-zealand-ministry-of-economic-development-provides-regulatory-cover-to-bogus-financial-companies.html#comments
=

http://www.reuters.com/article/2011/06/28/us-usa-shell-companies-idUSTRE75R20Z20110628 Senator Levin

#137 gladiator on 07.28.11 at 1:17 pm

Q: What is the definition of hyperinflation?
A: When the money-printing presses cannot print money fast enough for buying more money-printing presses.

#138 FormerVanCityOwner on 07.28.11 at 1:36 pm

Garth’s right about the calcs for HR dude. If he bought with 5% down, his mortgage is about $280K. Use 4% interest over 25 year am and that works out to $42K interest over 4 years or $875/month. Add in $400/month for maint. fees and $400/month for tax and this is $1675/month. Taking a quick look at Craigslist shows that rent in the area is about the same, $1600-$1700. So the renters and owners are ‘throwing away’ about the same amount of money monthly. The only return HR dude gets in this case is from the capital gains.

#139 disciple on 07.28.11 at 1:48 pm

#82…Brian with a T…in 55 words you managed to say absolutely nothing decipherable. Do you produce AM morning radio?

#140 .9999 Silver on 07.28.11 at 1:55 pm

Until you sell your property all your gains are an illusion with no “legal” backing…
All “property assessments” are a bald faced lie(comparable property’s are cherry picked and exclude low value’s and none sales). Check it out yourself…I did.
No one, not one “public official” nor so called “assessment authority” will supply you with a “LEGAL” piece of paper that “guarantee’s the value” the assessment value claim (as would any true expert).
the tax authorities will tax you on the perceived profit but will not back their claim up legally with any “Legal” financial documents.
Until you sell …none of your perceived cash value has legal standing.
Assessment increase’s are a way for governments to increase your property tax’s without increasing the “Mill Rate”(hiding their pay increase’s in the process).
I’ve been averaging a 24% increase yearly since 2007 in vancouver, about 168% to date. that’s core inflation.
the muni budgets are pigging out on these inflated budget’s . What was it in Van…30% upper level pay increase’s, 15% city workers…must be nice….to be so unaccountable and intitled.
Thats what my tax increase’s cover.
It’s a driver for the housing Ponsi racket… See my property is worth more….I have “Fictional Legal Paper” proving it(your assessment).
…Yah.. U made money.
I dare you to show me the documentation….that a bank will take at face value, using only the property as backing, its why they want more than that fake piece of paper for backing. (remember your assessment guarantee that you were taxed on).
yet the entire market accepts these validations toborrow money and create increased dept levels….a casino is more honest and transparent.
…as an after though my Real Estate agent tells me that 80-87% of all condo’s in van are spec property….that,s from a guy been doing this 27 years, mostly commercial. A buddy of his did the famous van helicopter ride. Yes it went well for him.
the real question with property is can you afford to lose what you paid for it… or at least cover a severe loss in market value should the value drop or interest rate’s rise to historical norm’s
Thoughts from downtown lowermethland
My property tax’s are now double my mortgage payment.
Rae

#141 Lead Paint on 07.28.11 at 1:56 pm

Okay, of the 1%, what percentage are postings by: smoking man, utopia, madvlad (or whatever his name is), The Investors Fiend , Ausie Roy, Kimi, BPOE?

Probably 50%? (when DA was here he made up 50% of the postings alone).

Of the remaining 50%, 49% of posts are aimed at getting Garth to change his mind on gold. That’s not gonna happen. Give up. Bugger off.

So the rest of us are the 1% of 1%!

#142 Junius on 07.28.11 at 1:58 pm

#130 Cookie Monster,

You said, “To be knowledgeable about basic economics makes you an abnormal right wing nut job in many peoples eyes.”

And yet it was largely right wing economic thinking that has got us into this mess. In particular, the deregulation of the past decades. Never mind the spendaholic President Bush who accelerated the debt crisis in the US.

You are the one blinded by ideology. The old paradigm of left and right have both shown themselves to be inadequate. Clinging to the “Right” still makes you wrong.

#143 Mr Magoo on 07.28.11 at 2:04 pm

This rent vs buy article has probably been posted here already, but if not:
http://ca.finance.yahoo.com/news/Rental-complex-canadianbiz-2184097582.html

#144 Cookie Monster on 07.28.11 at 2:04 pm

#68 Helicopter Ben on 07.28.11 at 1:57 am

James Turk explains why gold is money
GATA 2008James Turk.

Now there’s a household name. — Garth
————
So being a household name is required to make a persons argument creditable? Like OJ Simpson, Bernie Madoff, Enron, Worldcom, Bre-X, Ben Bernanke and Alan Greenspan?

Listen to what the man has to say, he even has charts to illustrate for all the picture book readers and TV enthusiasts.

Sounds like a gold shill to me. — Garth

#145 kilby on 07.28.11 at 2:09 pm

#135. Bottoms Up.

We have crossed wires, the posting I was referring to mentioned “receptionists” making $100k. Not top level administrative positions, big difference…….

#146 Cookie Monster on 07.28.11 at 2:47 pm

#144 Cookie Monster on 07.28.11 at 2:04 pm

#68 Helicopter Ben on 07.28.11 at 1:57 am

James Turk explains why gold is money
GATA 2008James Turk.

Now there’s a household name. — Garth
————
So being a household name is required to make a persons argument creditable? Like OJ Simpson, Bernie Madoff, Enron, Worldcom, Bre-X, Ben Bernanke and Alan Greenspan?

Listen to what the man has to say, he even has charts to illustrate for all the picture book readers and TV enthusiasts.

Sounds like a gold shill to me. — Garth
—–
That begs the question, who’s the shill?
Is a shill not a person paid to promote falsehoods and propaganda on the side of those who would benefit from such misinformation? Are anti-global-warming advocates and anti-smoking is bad advocates shills?

So James Turk is a shill for Goldcorp, Barrick Gold, I Am Gold, Yamana, Eldorado, Newmont, Tesako, New Gold, Ivanhoe etc…
The whole mining industry and 3000 years of history is all a sham being perpetrated by James Turk? The Shill?

Makes me wonder who the shill is.

A shill is a salesguy. Lighten up. — Garth

#147 Junius on 07.28.11 at 3:03 pm

Interesting piece on foreign buyers in the US market. Significant at 8%. Not that Florida is #1 and California #2.

http://www.creditsesame.com/blog/foreign-buyers-07212011/

Interesting that the largest group of “foreign” buyers is from North American at 31%. By definition, Canadians and Mexicans.

Good bet that Canadians represent the largest group of foreign buyers.

#148 Rex on 07.28.11 at 3:28 pm

Garth,

You are the leading underground NSN personality out there. With all that is going on, you continue to poke fun at anyone that dares suggest that we are on an unsustaiable financial path.

Yes or no answer to the following question please:

Do you think the US will ever be abel to repay it’s debt?

It never has to, nor will. All any country needs to do is service debt. Like you and your mortgage. By the way the possessive of ‘it’ is ‘its’. No apostrophe. — Garth

#149 bigrider on 07.28.11 at 3:57 pm

BrianT at #110 to bigrider.

Could not agree with you more.

Remember I was simply stating what the prevalent thinking is among my peer group who happen to be primarily the quasi Italian hybrid type you figured me out to be a few days ago..LOL.

#150 timo on 07.28.11 at 4:20 pm

http://oilprice.com/Energy/Oil-Prices/High-Oil-Prices-and-Recessions.html

good read on how oil price spikes can really put the breaks on growth , unless you extend easy credit and drop money from helicopters.

its going to be interesting to see as manufacturing dries up in Ontario and Quebec and the cost of living price increases pinch pocketbooks what people do.

I am positive they will be out buying houses with the expectation the price will always go up faster than wages in the area. lol:)

#151 Cookie Monster on 07.28.11 at 4:39 pm

A shill is a salesguy. Lighten up. — Garth
—–
From http://dictionary.reference.com/browse/shill

shill
   /ʃɪl/ Show Spelled [shil] Show IPA Slang.
noun
1. a person who poses as a customer in order to decoy others into participating, as at a gambling house, auction, confidence game, etc.

2. a person who publicizes or praises something or someone for reasons of self-interest, personal profit, or friendship or loyalty.

2. ‘Salesguy.’ Exactly what I said. — Garth

#152 Golden Stewie on 07.28.11 at 4:39 pm

#108 EdmontonJim

The whole point of a “gold standard” is simply to put a limit on the amount of money a country can create. No one seriously expects “flakes of gold” to be used.

What we have now is a free for all, the Governments can keep deficit spending (ie printing new currency) to whatever levels they want to keep the sheeple happy to keep themselves elected.

Or in the case of the US, keep spending trillions on its global empire to bomb the shiiiit out of anyone who disagrees with them. This has nothing to do with “democracy” or “peace keeping” its all about GOD. Gold, Oil and Drugs

The only reason they can do this is they managed to get the everyone to accept the paper money as the worlds reserve currency, which initially WAS backed by gold.

The US were legally obliged to settle their payments deficit in Gold and France, Spain were making them hand over so much of the shiney metal, and so much gold left the US that Nixon in 1971 basically had no choice except to say “get stuffed we are not giving you your gold”, which ironically was the last time anyone audited the vault.

Anyway dont worry about the Feds having no gold in the vault, Scotia Bank in Canada have also been selling more gold than they actually have, actual interviews with people who were in the vault.

All you paper gold holders would do well to listen to this.

There will never again be a gold standard. — Garth

#153 waiting on 07.28.11 at 4:47 pm

What is up with Regina. No where to live, bidding wars and rents skyrocketing. Condos are ridiculously high and nothing up for sale long.

#154 Golden Stewie on 07.28.11 at 4:53 pm

Sorry Garth, dont want to diverge from the Real Estate thread but I see the Real Estate issue as just another symptom of a financial system with very serious problems.

Its like having a lake where all the fish keep dying. After a while there is no point doing autopsies on the fish, there is obviously something wrong with the lake.

#155 David on 07.28.11 at 5:01 pm

That whole USA debt ceiling Republican melodrama seems all too scripted. It does represent a good chance for them to really erode Social Security, Veteran’s benefits and Medicare and Medicaid. It is all pretty sad and totally dishonest.
According to the popular press Uncle Sam will experience the secular financial equivalent of the rapture on or about 4 August 2011. Mark your calendars.

#156 Math is fun on 07.28.11 at 5:08 pm

New $300K condo in Vancouver…ok, ok, Surrey.
+ 12 HST = 36k
+ CMHC (don’t act surprised) = 9k
+ BC Land Transfer Tax & Closing = 5k
Total Cost = 350k

Down Payment 5% = 15k

The minute you sign the papers you are negative equity. Math if fun!

#157 bigrider on 07.28.11 at 5:36 pm

Well, almost 1 trillion dollars invested in mutual funds in Canada of which all of the precious metals funds combined total assets amount to much less than 15 billion or 1.5% of total.

Does not seem that there is a bubble in gold equities/bullion to me.

Oil at $140 was in a bubble. People were not lining up at refineries to buy it, or piling into energy stocks. That is no definition of a bubble. — Garth

#158 Form Man on 07.28.11 at 5:40 pm

#142 Junius

excellent post. It is a mystery to me why voters still presume ‘conservative’ equals good money management. There is absolutely no evidence of this with respect to the most famous examples, i.e. Reagan, Thatcher, both Bushes, Mulroney, Harper. In fact, if we had Harper as PM in the 1990’s, Canada would most surely be in much worse shape now. Blind allegiance to ‘trickle-down economics and ‘starve the beast’ ideology combined with message control and a drive to ‘polarize the electorate’ has crippled the U.S. Harper is hellbent on Canada following that same path. Anyone who thinks giving the Senate more power is a good idea has obviously not been following the current stalemate in the U.S. Let ideology always trump facts and reason. That is the Conservative way …….

#159 Cookie Monster on 07.28.11 at 5:49 pm

2. ‘Salesguy.’ Exactly what I said. — Garth
——
That’s very weak. I’ve never seen an add looking to hire new shillsman or team a team of shills or to call their team of sales people their ‘shills force’.

From http://dictionary.reference.com/browse/salesman

sales·man
   /ˈseɪlzmən/ Show Spelled[seylz-muhn] Show IPA
noun, plural -men.
a man who sells goods, services, etc.

Surely you have better things to worry about. — Garth

#160 R on 07.28.11 at 5:51 pm

You have to look past the game of political chicken being played in the US to the man behind the curtain; the fact that it’s Prime Time presidential election season, so of course the threats of armageddon are over the top.

Both sides are scrambling to see who comes across to the frightened blue haired AARPers, cowering in their homes with thoughts of having to eat cat food if the SS cheques stop coming, as the side who saved America.

Notice also the non stop rhetoric of ‘small business’. This of course is complete BS. None of the policies enacted by anyone on either side have been to help Main St.

It’s all the same old stuff. The end result will be the 11th hour compromise that basically upholds the status quo and kicks the can down the road.

The same old rules apply. Diversify and be nimble like a mountain goat.

#161 Harlee on 07.28.11 at 5:55 pm

waiting @ #153
Regina is the third fasted-growing city in Canada (Saskatoon is #1,Vancouver at #2). It had a strong economy in 2010 with the lowest jobless rate across Canada at 4.6 % (7,000 new jobs created). Rental vacancy rates are less than 1%.

Yes, but it’s still Regina. — Garth

#162 Cato on 07.28.11 at 5:57 pm

The Manulife survey illustrates why we are in this mess, I’d think you’ll find a bit of generational bias – boomers seem far too optimistic, younger generation far too pessimistic. In reality it should be reversed, its the boomers who should have the most to fear. The younger generation still has earning potential and time to change. Most of the younger generation who are over indebted still have time to walk away from their debts and start again.

This is always been about choice. Spending vs saving, bull vs bear, work vs leisure. Our financial lives are shaped by it. More than any point in history its going to be about making the correct choice.

Of course the game is rigged, don’t have to look very far to see evidence of it but its no reason not to play. Luckily we live in a capitalist society, the collective intelligence of the mob is still smarter then any group on wallstreet. I would say its the wallstreet old guard who should have most to fear, they are losing their political grip on the financial system and without it they simply can’t compete.

The world won’t end, its just changing. The western middle class has taken far too much for far too long and now it faces competition on a global scale for goods and resources. At the same time we are moving from an economy which rewarded those in finance to a world that rewards those who create and produce goods & services the world demands. Wallstreet has reason to be scared, the FIRE economy is dying. Entrepreneurs have reason for hope, the global economy is exploding in opportunities for those with the right motivation & work ethic.

The FIRE economy was an anomaly in the natural economic order of the world. It was ridiculous to think the west could build economies around a never ending cycle of debt. The concept of a western middle class is an equally failed experiment. We’re going back to the old order of an upper class and a lower class with very few fitting in the middle. I don’t like it but then again everyone lucky enough to be born into a free society had a choice. The middle class was built on an illusion of prosperity that was really just debt, without the debt cycle there can be no middle class.

The US is defaulting through monetization and has been for some time. The USD will remain on a downward trajectory. Its the price of living in a free society, a democracy cannot force austerity on an unwilling population where everyone has a vote. At some point the USD will lose its reserve status and we’ll be looking at a global reserve currency in its place. It might still be called the US dollar but contain mechanisms to prevent dilution to protect foreign US creditors (this mechanism might be gold). Until then the world is going to seek out whatever alternatives it can find as a store of value. A number of different assets will attract capital fleeing insane western gov’ts, markets will keep going up. It all ends in a bond crisis which will force austerity on the west and bring real change to western society.

#163 poco on 07.28.11 at 5:57 pm

114 rental monkey

Anybody else see “senior economist” being interviewed on CTV Canada AM this morning? I didn’t catch his name, but good lord,the young fella barely looked old enough to have a driver’s licence, let alone be a “senior economist”.
______________________________________________
I really feel old when i see these “youngins” called senior economists—this one was on BNN today–might be the same fellow you saw

http://watch.bnn.ca/#clip508478

after watching him i needed a “nap”

#164 David Mackintosh on 07.28.11 at 6:01 pm

Well for those of us who read you through RSS, you’ll rarely if ever see us in your live drool-o-meter. So just to compensate a bit I hit reload on this page a half dozen times — boosted the “on this page” counter from 65 to 72.

Frankly, Garth, I have no interest in what the great unwashed have to say. I know they are just as uninteresting as I assume they’d find me. The internet gives everyone a voice, and all it does is reveal that the average person can’t think, write, or hold the keyboard and himself at the same time.

Probably the vast majority of your readers see the cesspool of comments below your posts and think: “never wrestle with a pig. You’ll get dirty and the pig enjoys it.”

Enjoy your… uh… pen.

#165 Rex on 07.28.11 at 6:02 pm

In my earlier comment re:

Yes or no answer to the following question please:

Do you think the US will ever be abel to repay it’s debt?

Your Answer:
“It never has to, nor will. All any country needs to do is service debt. Like you and your mortgage.”

If I had a mortgage that was not being payed off but increased every year, at some point I would not be able to service that mortgage and would default. This is where the US is today, an ever increasing mortgage. It may not default this year or next but if it keeps increasing the debt load, one day it will happen.

It will never default. The US has the largest economy in the world, the leading edge technology and the planet’s reserve currency. Move along. — Garth

#166 Helicopter Ben on 07.28.11 at 6:03 pm

Heard a few interesting facts on podcast today…….Eric Sprott says there is only 1 million ounces of physical silver available for investment on a daily basis when 800 million is sold daily. of course that is mostly paper as that much doesnt exist to be sold on a day to day basis. he also said 0.75 % OF THE WORLD’S TOTAL FINANCIAL ASSETS IS INVESTED IN BULLION BY PEOPLE OTHER THEN CENTRAL BANKS. so all those who say we are in a bubble just dont understand how little is out there and how small amount of people actually own it. Silver is traded up to 100 to 1 as opposed to other commodities like corn that is traded maybe 4 -10 to 1 as financial assets are traded at many more multiples then commodities, aka Gold, silver, treasury bond, bills and notes. so for all those who say silver isnt a form of financial assets are wrong. of course silver is a commodity as well, silver is more of an investment but serves as money too where as gold is mostly money. SINCE 1980 THE UNTIED STATES HASNT PRODUCED ONE SINGLE QUARTER OF NET GROWTH, so even in the best of times the united states couldnt record a net profit on its balance sheets. so how on the world in the worst of times are they even going to just break even for now on forget about paying off even the interest of the debt. I heard it said you could spend a million dollars a day from the days of jesus and you still wouldnt of spent one trillion dollars at todays date, and how much do they really owe? 150 trillion is a conservative number forget about the quadrillion (1000 trillion) worth of bad derivatives they have on their books from bailing out the banks, but hey knowing the facts makes you a doomer i guess.

You take advice from this guy? — Garth

#167 Harlee on 07.28.11 at 6:10 pm

That last line from my post should be singular :Rental vacancy rate is less than 1%.
My source for the information comes from the Regina Leader-Post July 15,2011 article “Regina housing market to outperform:TD”

#168 Peakoilist on 07.28.11 at 6:22 pm

It never has to, nor will. All any country needs to do is service debt. Like you and your mortgage. By the way the possessive of ‘it’ is ‘its’. No apostrophe. — Garth
==================================
So most banks will just keep increasing my credit limit to infinity? Last time I checked I don’t think so, but I’m not the USA either. . Isn’t that the problem now that Uncle Sam is having trouble servicing its debt?
i need some help with this one..anyone? Utopia?!

Of course the US can service its debt. If it couldn’t, people would stop lining up to lend it money. — Garth

#169 Lead Paint on 07.28.11 at 6:30 pm

One more thing, no more references to your ‘speedo needle’, this is not a beach in Europe. Keep it abs and above, please!

#170 observer on 07.28.11 at 6:34 pm

@ Math is Fun – for the $300K brand new condo, the HST will be rebated as it is well below the threshold – (works out to be a rebate of 10 of the 12% HST)

CMHC is also well below 9K here – closer to 6K on a high ratio mortgage.

So actual cost on the brand new build is about

House: 300K
Post Rebate HST 6K
CMHC: 6K
Land transfer + Closing : 5K
Total: $317K give or take

#171 BrianT on 07.28.11 at 6:36 pm

#156Math-Actually, it is likely you will be using a RE agent to sell said condo-you should budget another 4.5-5% selling expenses off that equity total.

#172 TurnerNation on 07.28.11 at 6:46 pm

Look at the contempt our elected elite leaders have for us! Give this guy a harper senate seat down the road, he has the right vile smirk.

Toronto Mayor Ford:

http://www.thestar.com/news/article/1031143–rob-ford-avoids-ticket-for-talking-on-cellphone-and-driving

Ford himself put out enigmatic Twitter and Facebook posts on Tuesday, calling the incident a “misunderstanding,” and denying making the vulgar gesture. When asked about it in person by CTV Toronto, he responded with laughter.

Mason stands by her account: that when she and her daughter gave Ford a “thumbs down” on Friday night for talking on his cellphone while at the wheel, the mayor responded with the finger.

The law that prohibits driving while holding a handheld device came into effect on Oct. 26, 2009. The OPP has run numerous campaigns to raise awareness of the law, which also forbids texting or calling while stopped at traffic lights. While the fine for the offence is $155, if it results in reckless driving more serious charges could be laid.

#173 Junius on 07.28.11 at 6:48 pm

#154 Golden Stewie,

You said, “I see the Real Estate issue as just another symptom of a financial system with very serious problems.”

Amen.

This is precisely the point. Historically Real Estate has seen its booms and busts. It cycles like every other sector of the economy. However the past decade of cheap finance has driven it well out of its historical value.

The reasons behind it boom are the reasons why we have a financial (debt) crisis globally. It was not a normal cycle but an induced increase made by a greedy financial industry and the politicians they own.

#174 Maxamillion on 07.28.11 at 7:05 pm

#114 Rental Monkey

Only thing this proves is that kids can do the job. Go to the hospital and they have kids for nurses, talk to a specialist it’s an adult. Call 911 and the EMS kids show up.

#175 Peakoilist on 07.28.11 at 7:22 pm

It never has to, nor will. All any country needs to do is service debt. Like you and your mortgage. By the way the possessive of ‘it’ is ‘its’. No apostrophe. — Garth
==================================
So most banks will just keep increasing my credit limit to infinity? Last time I checked I don’t think so, but I’m not the USA either. . Isn’t that the problem now that Uncle Sam is having trouble servicing its debt?
i need some help with this one..anyone? Utopia?!

Of course the US can service its debt. If it couldn’t, people would stop lining up to lend it money. — Garth
===============================
thanks , I’ll ponder that over a beer.

#176 rental monkey on 07.28.11 at 7:35 pm

@ 163 Poco: Yes, that is the same guy I saw this morning on CTV. His voice sounds like it still going through the change and the anchor in this clip can’t stop smiling. Nothing funny about topic at hand so I wonder if she is thinking all Mary Kay Latourno. :) The footer this morning definitely labelled him as a senior economist. Not sure what it takes, but hey good on him if he knows his stuff.

#177 Devore on 07.28.11 at 7:35 pm

#156 Math is fun

It’s not negative equity, those are just expenses, making for a negative return.

It’s pretty easy to figure out whether you have made money on your real estate (after you sell it):

Take your purchase price, add in transaction costs:
– HST if applicable (subtract HST refund if available)
– mortgage insurance if applicable
– transfer taxes if applicable
– inspection, closing costs, lawyers

This is what it cost you to buy the place.

For the period you own, add carrying costs:
– mortgage interest
– property tax
– rental income taxes, less income tax deductions, if applicable
– any and all maintenance, renovations, repairs and improvements
– condo fee if applicable
– special assessments if applicable
– non-contents insurance (structure)

Now you sell. Take the sale price, subtract your full purchase price. From that, subtract your transaction costs:
– taxes if applicable
– realtor fee
– lawyers
– staging if applicable, also any repairs or improvements to make property more sellable

To that ADD income from the property, either rental income, or rent you did not have to pay (rental value), for the period you owned it.

You can now compare this value to the opportunity cost of your downpayment/initial outlay, plus the difference between rent and ongoing carrying costs (what it really costs you to own) and principal repayment (forced savings). And of course we don’t count your time because it’s free (sweat equity), unless it isn’t, and you could have used it to generate more income instead of dicking around with “home improvement”.

Too many people only look at the buy/sell price, and most are very eager to point out the increase in value from renovations and proper maintenance, but are not counting the costs to make them, or don’t count the costs of deferred maintenance (houses depreciate). Yes, you have to live somewhere, and that costs money. But owning can easily cost 2-3 or more times as much as renting, once all costs are accounted for.

I think also worth pointing out that the property you’d rent is not the same one as you would buy, seeing as the main point of renting is to save money. In today’s environment, a good rental can easily be cheaper AND nicer than what you can afford to buy.

#178 Devore on 07.28.11 at 7:40 pm

#159 Cookie Monster

Surely you know what a shill is without having to refer to the dictionary?

Why would you listen to or religiously follow what any one person says? Do you know his agenda and motivations? He’s just talking his book. Also see Warren Buffett, Bill Gross, George Soros, Eric Sprott, etc. Take anything they say with a gigantic grain of salt.

#179 Happy Dude on 07.28.11 at 7:46 pm

Garth, your whole premise is flawed because you, as usual, forget to add the fact that his 3% return was in addition to him not having to pay rent. That place would easily rent for $1500/month. If he had taken his money and instead invested in something else, he’d still have paid away $1500/month renting over the last four years, which would have demanded a much much much higher return on his investment– and he’d probably not have the disipline to save/invest in the same way a mortgage demands that you do.

Read the comments before yours. He paid a rent equivalent through taxes and fees alone. The mortgage payments were pure expense. The deal was a loser. — Garth

#180 Devore on 07.28.11 at 7:46 pm

#162 Cato

boomers seem far too optimistic, younger generation far too pessimistic. In reality it should be reversed, its the boomers who should have the most to fear.

Time is the most precious commodity. Boomers don’t have nearly enough of it, yougsters are wasting it.

At the same time we are moving from an economy which rewarded those in finance to a world that rewards those who create and produce goods & services the world demands.

Those who produce have always been rewarded. It’s just that for some recent time the FIRE economy has been rewarded even more. This is a relatively new development. I don’t know how long it will continue, but I think it will for many more years still. Like all middle-men, they thrive on the artificial complexity and opaqueness of the financial system, which is only getting more complex and opaque.

#181 mikethengineer on 07.28.11 at 7:52 pm

Garth et al:

Gold:

You can’t eat it, and in an extreme SHTF case, completely useless.

It costs money to store, and most people have very little of it, usually rings etc. I have not been convinced that gold is the way to go. Better off to have a property that is paid off. I still feel RE is better than gold.

Invest in some good camping gear, spend some time outdoors. Enjoy things while things are still good.

Earth quakes, floods, fires, etc…..having to leave your home on short notice is a very real possibility. Hope for the best, prepare for the worst. And make sure you have some camping gear.

I hope the good old USA does not go for crap….it could affect a lot of industry in Canada.

#182 Devore on 07.28.11 at 7:58 pm

#168 Peakoilist

So most banks will just keep increasing my credit limit to infinity? Last time I checked I don’t think so, but I’m not the USA either.

They would keep increasing your credit, if your income keeps growing. The US economy (ie tax base) is growing, with increasing population and economic output. Thus, they can service more debt. As long as they are able to service their debt, they will be able to roll it over, never having to repay it. One follows the other.

The recent explosion in sovereign debt tracks the drop in interest rates. Now that interest rates have for all practical purposes bottomed out, debt cannot grow as quickly, however we are seeing more currency devaluation and inflation, which is just as effective. Luckily for the US, they are able to very effectively export their inflation through reserve currency status.

Ironically, the more sovereign debt grows, the more difficult it is for investors to abandon. Where else would the trillions of dollars go into, if not bonds?

#183 stephenbryant on 07.28.11 at 8:24 pm

There will never again be a gold standard. — Garth

I wonder if the Rothschilds feel that way too? Have you ever commented on this group? I understand they are behind the new HKME.

#184 stephenbryant on 07.28.11 at 8:30 pm

#75 Jody “Wait until the Canadian dollar is worth $1.30 US”
If that day ever comes there will be very few manufacturing plants left in Canada. I’m sure US manufacturers are making plans right now to repatriate them back to the US or overseas at $1.06.

#185 Devore on 07.28.11 at 8:30 pm

#179 Happy Dude

and he’d probably not have the disipline to save/invest in the same way a mortgage demands that you do.

Setting up automatic deductions to a savings account takes no more effort or discipline than making a mortgage payment.

In exchange for having the privilege of “forced savings” through a mortgage, you get to pay the price of the house again in interest charges and property taxes. That’s a high price to pay for discipline, especially if the price gains on your house are not expected to exceed inflation over the next 20 years, what with the bubble bursting and whatnot, and you could well find yourself losing money or even underwater for a period of time.

#186 bigrider on 07.28.11 at 9:28 pm

#157 Garths reply to bigrider “Oil was at $140 a barrel people were not lining up at refineries …no definition of a bubble”

Garth you have never provided us your definition of a bubble. Could you please oblige us?

Irrational evaluation. Broad enough? — Garth

#187 BrianT on 07.28.11 at 9:36 pm

#166Helicopter-The way GDP is calculated, increases in debt are classified as economic “growth”. The USA had 30 yrs of wild credit/debt growth which was classified as economic “growth”. Now the debt cannot be grown at nearly the same pace, as the debt is too large in relation to the size of the economy. Thus new, more creative ways of calculating GDP (economic “growth”) will have to be devised.

#188 bigrider on 07.28.11 at 9:36 pm

#166 HelicopterBen Garth’s reply ” you take advice from this guy” referring to Eric Sprott.

Seriously Garth, you questioning the performance of any of Eric Sprott’s hedge funds or equity fund given it has outperformed benchmark over past 10 years by a whopping factor of 8 to 10 times approximately?? Seriously?? What because he was down in June and now, by the way he has made up already mid month in July if you take a look.

Eric’s macro themes/predictions have been so bang on over past 10 to 15 years you would think he really has a crystal ball. He predicted demise of US banks 10 years ago and many times higher, bought gold at $250 an ounce when no one would touch it and within months predicted tech wreck of 2000 as well as making the call for the worst bear market of our lifetimes back in 2000 which we have indeed endured( the lost decade)

Seriously, what you smoking in that bunker of yours?

#189 bigrider on 07.28.11 at 9:41 pm

Garth, earlier you said in one of your replies that the U.S does not have to pay off it’s debt, simply service it, yet you espouse the notion that the average person should get rid of debt as aggressively as possible.

Why the double standard? Why is it important for consumers to eliminate consumer, non investment debt, yet the U.S not have the same onus?

#190 bigrider on 07.28.11 at 9:43 pm

#186 Garths reply to Bigrider-“Irrational evaluation-broad enough”

Way to broad and insufficient

#191 TurnerNation on 07.28.11 at 10:03 pm

Debt vote delayed into night as GOP seeks support
7 minutes ago

An intense endgame at hand, House Republican leaders struggled late into the night Thursday to quell a revolt by conservatives and pass legislation to avert a threatened government default and slice federal spending by nearly $1 trillion.

#192 Cookie Monster on 07.28.11 at 11:19 pm

Hey what happened to my last post?

DELETED. I emailed you with the reason. — Garth

#193 nonplused on 07.28.11 at 11:39 pm

Be careful or I’ll raise the cover. — Garth
Touché.

#127 Utopia

Exactly. Garth should show the 1% more love, even if we are all crazy. Family is family, even if they have a Harley, a Hummer, a bunker, and a Speedo.

There will never again be a gold standard. — Garth
Um, again prophecy is not your strong point. But I tend to agree, gold is now too valuable (or costly, depending on how you look at it) to monetize. The problem is that the government cannot manipulate the cost of gold anymore, so a gold standard is not possible.

In the old days the government could set the price of gold at $20/ounce and silver at $1 per ounce because at that time that was less than they cost to mine. Not so today.

It will always be an asset though.

Here is an interesting quote I think many of you saw already:

“Gold is a lousy investment. But it’s great insurance.” – John Mauldin.

You take advice from this guy? — Garth
That’s a bit cheap, don’t you think? Sprott has a pretty good track record, even if he doesn’t drive a Hummer or wear Speedos. I think he and many of his investors might actually be richer than the Garth-man.

Of course the US can service its debt. If it couldn’t, people would stop lining up to lend it money. — Garth
The people lining up to lend the US money are in order:

The Federal Reserve (now the largest holder)
China
Japan
Public employee pension funds as a group

I’m not lining up to lend them any money at these miserable rates. And now that the Federal Reserve is buying all the debt issues, what you have is a government agency buying all the government debt. What’s that normally? (Starts with a “P”.)

Ok, hopefully signing of for real now. I need to go get some sun, now that we finally have some.

#194 nonplused on 07.28.11 at 11:44 pm

“More than the cost to mine”, I meant.

#195 Vishy on 07.29.11 at 12:40 am

Your logic is wrong Garth. 41,000 on 300,000 might be 13% but he never invested 300,000, he only invested 100,000 (max). Assuming he invested 100K he still made 41% on it. This is leverage.

Leverage has upside and downside, in a falling market with raising rates, leverage can be a killer.

There are still sane people who read your blog.

#196 BigAl (Original) on 07.29.11 at 3:54 am

#29Mark on 07.27.11 at 11:29 pm
A government HR clerk earning $75k? They don’t even pay engineers that in most positions. Ridiculous! No wonder this country is in so much trouble
==================================
Quit your lying and bending of the truth about government pay.

What the letter above actually says is “….He makes 75K/year in a government HR job”. NOwhere does it say he’s merely an HR clerk. This pay rate of $75K is more in line with the actual pay of HR managers or senior consultants in the federal government, which is far less than in the private sector.

With misleading, sophomoric analyses like yours, no wonder were CON-ing this country into third-world style government policies.

And your corporate sector is great isn’t it? Hiring right-out-of-university B.A. know-nothings with $60K/yr + HR clerk jobs just cuz youth-worship is the “in” thing right now in the corporate world. (Please note how I don’t include the small and medium sized businesses in this derision because I actually respect most of them).