Dear Garth

In my last pitiful post I mentioned that most of the people who come to this site never leave a comment. With an army of blog cutthroats, fact police and omniscient doomers ready to eviscerate the unsuspecting, not sure I blame them. You need rubber boots, a helmet and personal intimate protection just to click on the damn link.

This may be why lots of others choose to email me instead ([email protected]). Good choice. I’m happy to get the feedback, pick up the intell on various markets and have the chance of responding to people who are not called ‘Cookie Monster’ or ‘HouseHornyHousewife.’

Of course, scads of notes to me go unanswered since I just don’t seem to have enough time. But they’re all illuminating. As we head serenely into a Canadian long weekend and an American crisis, I thought I’d share a few.

Great website.  Just had my first experience with a real estate agent in Vancouver. I live in South Korea but am on vacation for 2 months to visit family. My brother thinks I should move back to Vancouver so is encouraging me to check out some homes. We happen to pass by an open house in a 3 floor townhouse. We checked it out – pretty nice but it’s a total of 4 floors – including the downstairs which just leads to a nice indoor parking lot. This is in North Vancouver btw. Inside we found out that you have to be 55 or older to live in these townhomes, which is bizarre considering the steep steps. The place was about 1700 sq ft, and going for $767,000. Being 41, I couldn’t buy even if I wanted to but had an interesting chat with the agent there. Of course, her mantra was that it’s a great time to buy and prices weren’t going to crash. She did admit that the condo market is softening and one could get away with a low ball offer. In the course of our conversation she mentioned some interesting numbers: 7% of the people buying were Asian and 78% of the houses put on the market were not selling.

What floored me in our discussion was when I asked her the real reason behind the RE price increases in Vancouver. Her reason: “Everyone wants to live here.” I then brought up the low interest rate factor, mentioning the 0 down 40 year mrtges, which turned to 5 – 35, then 5-30 etc. She told me that was ridiculous and that there never was 0 down 40 year mrtges. I thought I was in the twilight zone. I told her that was fact but she refused to believe it. So according to her , and most real estate discussions I’ve seen in the main stream media, low interest rates never come into the housing boom equation. I’m leaving Vancouver. – John B.

Good idea, John. Hard to know what’s more disgusting – agents as devoid of knowledge as they are of experience or ethics, or a 1,700 square foot TH in an ugly burb on the wrong side of the bridge for $767,000. Come back from Korea next summer. Both will be gone.

Garth: I think you should add this to your Calgary POS file: “All offers subject to Court Approval.”

I watch this market like a hawk..this property has had a bizarre listing history.

Jun 17 2009 — 2.95M
Aug 9 2009 — 3.55M
Aug 11 2009 — 4.55M
Aug 24 2009 — 3.45M
Aug 25 2009 — 2.95M
Dec 31 2009 — 2.79M
Mar 09 2010 — 2.39M
Feb 11 2011 — 2.35M
Jul 26 2011 — 1.85M Power of Sale

Predictions?

Sure. I predict a lot of CREB yahoos will be eating their white Stetsons over the next few seasons, as train wrecks like this one pile up in those ‘demand’ neighbourhoods like Aspen Woods that sane people want nothing to do with. But what excellent porn! “Gleaming hardwood and travertine floors, soaring ceilings, gourmet granite kitchen with breakfast bar and nook.   Generous mudroom with plenty of built ins and laundry area.  Upstairs features 3 bedrooms each with its own ensuite, master bedroom completed by spa like ensuite (body sprayers, steam shower, his and hers sinks) with has huge walk in closets with built ins and even a lookout to the backyard.  Basement is fully finished with media room, games room with wet bar and 2 more bedrooms.” But then this. “Property sold on an ‘as is’ basis with no warranties or representations on behalf of the seller or its agents.” Ooops.

Hi Garth: My friend told me about your blog 2 months ago and I have been reading it daily ever since.  Now I found myself having a tough time deciding what I should do…

I am in my early 30’s and I am starting a new career. I own a 4 bedroom, 2 bathroom house within a 10 minute walk from downtown Victoria. I paid $440,000 four years ago with $45,000 down and have subsequently put about $30,000 into renovations. I have a $360,000 mortgage and I am on a variable rate of 2.65% with 36 years left on the mortgage so I pay ~ $1445/month including property taxes. I have the house rented for $2100/month (plus 2/3 hydro) and I live alone in a very comfortable detached 2 bedroom suite at the back of the property.

As it stands, the rental income pays for my mortgage, property taxes, house insurance, utilities and puts a little money aside for repairs. As I have lived in the suite for free I am able to save about $1750/month and now have an investment portfolio that is around $60,000. I would like to live in the suite for a couple more years while I settle into my career.

If I sell my house I figure I could get $525,000 if I was lucky, and taking everything into consideration (outstanding mortgage, down payment, renovations, realtors fees, blood, sweat and tears, etc) I am guessing I would have about $40,000 in my pocket. I know interest rates will increase and property values will drop however, I am unsure if I should “get out while I can” because I feel I am in a bit of a unique situation due to my rental/living situation; Victoria’s low vacancy rates; it’s high rental costs; and, students always looking for a place to live.

Do you think Victoria’s property values will drop more than 10%? Do you think an increase in mortgage rates could increase the number of house rentals which will subsequently lower rental prices? Do you think I should just “ride it out” and hold onto this property as an investment?

I am willing to take your advice and change to a 5 year fixed mortgage but if you think I don’t have anything special and it’s time to sell, I will sell now and moor a boat in the inner harbor! I am having a tough time getting unbiased advice as my real estate agent and mortgage broker seem to have skewed opinions. — Steven

Of course prices in Victoria will fall 10%. At least. The place is grossly overvalued, and the local economy continues to wilt. Prices up-island are already heading into the dumpster as listings soar and sales melt. Without all those greater fools from Mississauga and Edmonton, Victoria’s cooked. And they’re staying put. In any case, you’re a smart boy and I like this arrangement. You can weather lots. Stay the course, and stay out of that harbour. Floaties.

Hi Garth, I would like your opinion as your a very intelligent person, who can give me an objective opinion, which I need. My friend Jami-Lee, wants me to buy a small house. She’ll move in with me. I am supposed to put her name on the house and she,’ l pay all the bills. The problem is she isn’t my girlfriend she’s a playgirl with lots of guy friends and I wonder if there will be problems when I get a girlfriend or if I am just being cynical and that this makes sense. Drop me a line soon. John Sturdy

OK, I know what you are thinking. Jami-Lee? Playgirl? Mr. Sturdy?

But, no, I didn’t make this up. Honest. I’m not that good.

156 comments ↓

#1 dd on 07.28.11 at 9:45 pm

7% of the van market is being bought by Asians (from Asia). Sounds realistic. But you have never guessed it from all the TV “news.” So when the locals start to choke at the prices / higher interest rates … look out.

Futhermore, upisland (from Victoria) there is a lot of property being bought onto the maket. Cheaper prices.

#2 simkev on 07.28.11 at 9:46 pm

I am amazed …I am first!

#3 JoeTheBruce on 07.28.11 at 9:50 pm

Playgirls will cost you more money than buying a house at the top of this bubble and riding it all the way to the bottom. Fun is fun, but being financially tied to a ‘playgirl’ is just plain moronic.

#4 westcanguy on 07.28.11 at 9:50 pm

Last!
Mr Sturdy, you should put her name on the house. It will be fine, honest…I really can’t see a problem here.
You’re the type of person who truly deserves what you get.

#5 Mr. Lee on 07.28.11 at 9:56 pm

Your last blog title, “Extremism” fits the moniker of today’s Canada well. Over indebted, under liquid, and over influenced by material things. The problem is that however this personal debt issue pans out for the populace, a new normal (whatever that is) will have to take shape.
There was a time, not too long ago, where a person or family would work its way up to material things as that family’s income and savings grew. Now we have the magic banking system that issues debt with little to no hassle. Savings are a thing of the past and god forbid we save our money for the items we want to purchase. In Calgary I see a lot of this attitude. Live for the day, because the property is right around the corner. Hell, our outgoing Premier spoke of preparing for the next boom just last week. Yet people buy it without question and then wonder why it falls apart when it does…….where has all the reason gone?

#6 Jody on 07.28.11 at 10:02 pm

So, the world is about to end, aside from guns and ammo what does one stock up on? Cigs? Booze? What kind of booze? Vodka? Rye? Rum? Whiskey? Beer? Wine? What would be the drink of choice as one surveys the nuclear wasteland for potential threats? And what about food? I’m thinking chocolate and coffee, maybe bacon, canned bacon, now this stuff is great, what a gold mine

Canned bacon: http://baconcanned.com/

I’d still like to buy some land, build a greenhouse heated by geothermal that can withstand the Canadian winter and pllant chocolate and coffee trees, what a great idea. Or citrus fruits, I forsee scurvey coming back with a vengence.

Ron Paul, a politician intent on leaving us alone, wow, what a concept, to bad most elected ninnies don’t get it.

http://www.realclearpolitics.com/video/2011/07/28/ron_paul_default_is_coming.html

#7 encanto on 07.28.11 at 10:02 pm

I have been reading your blog for a couple of years. it gets better as it gets funnier. You’re a wealth of valuable information and put it out in such an entertaining manner,it is a pleasure to read.

When I first joined I was nervous to keep reading it without leaving a comment. I imagined this small colony of 100 or so people and thought I was appearing as a voyeur by not commenting. Once I realized the huge numbers of people reading this column I was glad to be hidden in the shadows so to speak. Many of the comments are very sophisticated and intelligent and I have felt it better to sit back and learn than write unworthy comments.

Thank you for all the hard work and help you have offered over the years.

Lynne Fay

#8 Math Teacher on 07.28.11 at 10:13 pm

Garth Turner’s formula of the percentage of one’s net worth a home should represent

#9 Lisa on 07.28.11 at 10:15 pm

Those who don’t leave a comment…the silent majority? Boring. The comments are what make this blog great!

#10 Bottoms_Up on 07.28.11 at 10:16 pm

Ok, let’s talk ethics.

Heard from a friend today that his real estate agent strongly discouraged him from including the condition of selling his current house before purchasing the ‘move-up’ home. Fact is he needs the equity in his current house in order to make the purchase work, so if he didn’t include the condition and was having a hard time selling his first place well he’d be up $hits creek without a paddle (he’d likely get sued because he wouldn’t be able to pull through with buying the move-up home).

What is it with some of these agents? That behaviour is just sickening to me.

#11 kilby on 07.28.11 at 10:19 pm

You sure hit the nail on the head with the comment about up Island properties, same houses for sale this year as last and in the last month the prices have started dropping substantially, lots of listings…….maybe next year. It’s like everybody is just noticing now.

#12 Bottoms_Up on 07.28.11 at 10:19 pm

#7 encanto on 07.28.11 at 10:02 pm
—————————————-
Everyone has something to offer and truthfully I learn a lot from anecdotal stories. Although I do appreciate referenced materials such as the Vanier Institute of the family (on current state of family financial affairs in Canada):

http://www.vifamily.ca/node/783

#13 CoB on 07.28.11 at 10:27 pm

An ex-coworker of mine could be Mr. Sturdy. He just bought a 500K condo at 3rd and Burrard (40 years old, no insuite laundry!)for a girl that he likes but is not dating. They are now room mates in a two bedroom condo. Oh, I should mention that she is on a visiting visa from the UK and ‘pays a bit of rent when she’s not off in Whistler at Crankworks’. We may have a winner for the Greatest Fool of all.

#14 not 1st on 07.28.11 at 10:27 pm

Garth, you keep preaching the greater fools are the ones jumping into real estate right now.

Sorry man, there is one group of greater fools or greatest fools out there you missed, the ones who buy U.S. treasuries and hold U.S. greenbacks.

#15 Stevie Why ?? on 07.28.11 at 10:28 pm

John B … if you think the realtor had no answers imagine MY surprise when I asked simlar questions of the newly appointed Manager of the local Credit Union. Median mortgage rate over the last 20 years ? No answer … hmmmm … How would a 3 % increase in interest rates effect YOUR mortgages … No answer …. hmmmm … well a partial answer ” THEY better have factored that in “…… dream on Ms. Credit Union Manager ….. the Peter Principle is alive and well ..

#16 timo on 07.28.11 at 10:30 pm

#7 encanto,

Garth requires a tribute be paid by all who post and new posters must address him as “all knowing”. I am stuck on work release and this my prison for the next 4.5 months. It is worse than a tazer backfire in a swimming pool.

http://www.youtube.com/watch?v=xi45c87LJgI

#17 Montrealer on 07.28.11 at 10:43 pm

I always only read your replies in the comments (the ones that I find when doing ctrl-f and entering “— Garth”). that’s the only way to weed out the useless replies and see what you have to say.

I have noticed that your english pet peeve is people not differenciating its and it’s :)

#18 mid-Ontario on 07.28.11 at 10:48 pm

#13 CoB
Unbelievable!
Stories like that leave me shaking my head.

This weekend, Garth will once again address the debacle in Washington. Great theatre. Isn’t life more interesting when the reps are not all on the take under the guise of politics.

The roosters are coming home to roost as will be the case with RE.

As for here in mid-Ontario, just as the song goes “signs, signs, everywhere signs…” It has begun.

#19 tigerbaby on 07.28.11 at 10:54 pm

I don’t think anyone should compare themselves to the USA when it comes to credit, one reason would be that USA does not have a limited lifespan physically, thus there is no limit to their future income.

#20 siddelly on 07.28.11 at 10:56 pm

#7 encanto

Way to go Lynne!!
Next time Garth comes to town on the speaking tour make sure to attend, its an educational and well done presentation in a nice Ballroom setting.

Fall book tour perhaps?

#21 Lead Paint on 07.28.11 at 11:00 pm

Hey, Cookie Monster has feelings too you know. And they are valuable because they are based on gold, not some lousy fiat emotions. In fact his are increasing in value daily while ours are inflating in to nothingness.

#22 Cookie Monster on 07.28.11 at 11:01 pm

Math teacher,
P% = 90% – Age as %
Obviously all units must be as percent.

#23 cazzobaby on 07.28.11 at 11:02 pm

I had a Jami -Lee and all she wanted was me. A house was not important to her just me.

#24 Snowboid on 07.28.11 at 11:10 pm

Victoria Early Thirties…

Wow, 36 years left on the mortgage!

But you seem to have a reasonably good financial situation and it makes sense to stay in your detached suite and rent your home.

I would want to pay down the principal as quickly as you can – you don’t want to be retiring with a mortgage.

Oh yeah, don’t try and moor your boat in the inner harbour, the float planes (and the floaties) will drive you crazy!! If you were planning on mooring at Fishermans Wharf or West Bay be prepared to pay
$ 500-600 a month (40-45 ft boat w/30 amp power) for the privilege!

#25 HouseBuster on 07.28.11 at 11:16 pm

Predictions?
————
895K

#26 Kurt on 07.28.11 at 11:16 pm

Mr. Sturdy:

Do NOT do this. I’ve never seen such a concentration of red flags in one paragraph. *Rent* to this woman if you like, but do NOT put her name on the title.

Good Luck, and don’t take any wooden nickels.

#27 HouseBuster on 07.28.11 at 11:21 pm

Checking prices in the GTA and Vancouver and honestly, prices are absurdly high. It is ridiculous. Once again I will ask… Do people not know what it takes to get a net worth of $1 million? … and then they take on these obscenely huge mortages??? idiots!

#28 Devore on 07.28.11 at 11:21 pm

#189 bigrider

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?

Are you gonna live forever? Can you increase your income at will? Are your assets greater than your debt? Governments and individuals play by the same rules, but they’re not equal players.

#29 vatoDETH on 07.28.11 at 11:28 pm

John Sturdy…. this is not your girlfriend…. this is a legally binding agreement, where you don’t even get half. At least in the legally binding contract of marriage, you get half!

You’re acting like a chump. If this girl is attractive and you’re a man with blood running through your veins, then you’re setting yourself up for disappointment. Grow some balls and brains.

You’re a glutton for punishment??? Move on with your life and leave this tramp in the dust. Use your brain!

#30 Mr. Lahey on 07.28.11 at 11:42 pm

Mr. Sturdy, Randy and Ricky are towering intellectuals compared to you. What was it that P. T. Barnum said? Randy, the shithawks are circling the Sturdy household…

#31 Utopia on 07.28.11 at 11:48 pm

#7 encanto on 07.28.11 at 10:02 pm

“I have been reading your blog for a couple of years. it gets better as it gets funnier. You’re a wealth of valuable information and put it out in such an entertaining manner, it is a pleasure to read”.
———————————
Terrific post Lynn. A breath of fresh air. Stick around and add more of your thoughts. This really is a great site. I am already taken though (sorry). My online sweetie is Kimi of course but I still worry daily that she might really be a short, fat, bald Korean man who’s real name is Kimchi.

Who the hell knows in the online world.

It is all a mystery to me. But the minute she suggests we can sweet tomatoes with spicy hot peppers….then it is SO OVER.

(this is still a dating site, right?)

#32 Smoking Man on 07.28.11 at 11:54 pm

Going to Vegas on Friday, one burbin on scotch and one beer. Just booked it 2 min ago

Hell x that by 10 or 20

Kids taking the note book just so I can spew my crazy stuff on here. I’m hocked….. its going to be good.

Hooker and bozze capital of the world. Ya baby

Just 1 % post here garth…….people are such lossers

bhk bak bak

write somthing you wimp tax farm slaves.

#33 Stevie Why ?? on 07.28.11 at 11:54 pm

Montrealer ….the biggest pet peeve should be those that can’t differentiate between “loose and lose”….Mrs. Somethingorother…..( the best English teacher ever ) where are you now ? Ahhhhh yes ….. Playing your harp and reading Garth and his blogg. God Bless You.

#34 Utopia on 07.29.11 at 12:02 am

#11 kilby on 07.28.11 at 10:19 pm

“You sure hit the nail on the head with the comment about up Island properties, same houses for sale this year as last and in the last month the prices have started dropping substantially”
———————————

Nanaimo is going to get smashed. No jobs. Welfare economy. Island dwellers. Overpriced homes backed more by attitude than real value and pot-heads galore. Yeah…it is different there. The whole world wants to live in Nanaimo (sarc). Lucky them, they have a ferry terminal and a grow-op economy.

Good grief.

#35 Unforgettable on 07.29.11 at 12:07 am

Chocolate sales have peaked and together with RE will crumble. You’ve been warned.

#36 Aussie Roy on 07.29.11 at 12:09 am

Aussie Update

Rates must go up and they will

http://www.heraldsun.com.au/business/terry-mccranns-column/rates-must-go-up-and-they-will/story-e6frfig6-1226103001236

Talking about Central banks

So, just what should the price of money be in the Australian economy?

Any ideas? No?

That’s okay – we don’t think Reserve Bank boss, Glenn Stevens does either.

http://www.dailyreckoning.com.au/calling-central-bankers-to-account/2011/07/28/

My favourite a must watch to all those who still think deposits create loans. Suggest you watch from around 4 mins in a couple of times so it sinks in. Its not rocket science loans create deposits, don’t they?. It’s kinda funny that some still cling to the theory that deposits create loans after this has been disproved for more than 50 years.

Don’t take my word for, Its over to Alan Holmes vice president of NY FED (1969).

“In the REAL world, banks extend credit creating deposits in the process and look for reserves later”.

http://www.debtdeflation.com/blogs/2011/07/21/finance-as-the-humpty-dumpty-of-academia/

#37 Dad on 07.29.11 at 12:24 am

Son.

Guess what son.

Cohabitation with playgirl and having her name on the house and splitting the bills creates an economic interconnection that could result in YOU PAYING ALIMONY TO HER IF SHE MOVES OUT. Sex is not a prerequisite of a common-law marriage.

LISTEN TO YOUR FATHER.

#38 Kitchener1 on 07.29.11 at 12:35 am

If anyone is in the markets, better have your stop losses in place and have your broker on speed dial or your TD waterhouse account opened locked and loaded and ready to hit the trigger (keyboard) at moments notice.

Some very serious support levels look to be breached unless the US has a debt deal asap.

Careful about buying the dip this time, unless your in the particular trade or stock or index for the longer term– 6 months out at least.

Im taking the opposing view on CAN $$, if the US downgrades, people will sell out of NA and out of Canadian dollars, you might see a huge pent up rush of buying in the short term– capital inflows have to go somewhere, but in the longterm, our largest trading partner being downgraded does not bode well for our economy as soon as the smart money gets over the crisis and figures it out, they will sell hard and fast.

If you daytraders cant afford to lose it, then dont play, things will be turbulant– dont get emotional.

#39 Corban on 07.29.11 at 12:54 am

Finally started reading the book. Thanks for the autograph!

#40 Corban on 07.29.11 at 12:59 am

Oh, and if I read that last email right, John, put ONLY her name on the house. When you’re done, enjoy the carnage you’ve left in your wake buddy!

#41 Mr. Reality on 07.29.11 at 1:17 am

The kool- aid is turning out to give quite a hang over.

Next up is more bad China news and we got kool-aid poisoning……Then we have something called a global recession.

Mr. R.

Short the TSX

#42 Amarillo on 07.29.11 at 1:18 am

Mr Sturdy does the hurdy-gurdy.

#43 Van MD on 07.29.11 at 1:36 am

Chinese buyers are not preventing the Australian housing price crash that has begun:

http://youtu.be/oE20DWnsEpo

Aired – Fri 22nd of July 2011 on Channel 7 in Australia.
Favorite quotes :-
“I don’t think anyone saw it coming”
“We thought da market is going up”

#44 Harlee on 07.29.11 at 1:42 am

The nerdy Mr. Sturdy…..And Garth claims he didn’t make this up? LMAO !

#45 obert on 07.29.11 at 2:01 am

Picture:
BIOFuel!! Can afford the mortgage, but cannot afford gas?? The end is near.

#46 marc on 07.29.11 at 2:35 am

Dear Garth,

You and your readers will surely be pleased to know that I’ve just signed a 1 year lease for an 800sqft apartment in downtown toronto for $1650/mth inclusive. That’s right, boomers, I am throwing my money away for yet another year.

I decided to do this after being “Gazumped” two weeks ago — that’s right, not only did I get screwed by a couple of “Realtors” but I learned a new word in the process.

Why would I have made an offer on a downtown Toronto condo at peak prices? It seemed like a good idea at the time. I’m a 32-year-old academic at the university, likely to stick around for a long time. I slave away to make ~100K, and I was prepared to let go of a 150K downpayment. The bank was gracious enough to allow me to become indebted to the tune of 400K more. The market in downtown TO is so tight that after 120 days search, I only found 2 or 3 decent places, all went over asking in bidding wars which I refused to participate in.

I’m a numbers and statistics guy, and I found contradictory reports from all the banks as well as the government. TD Bank predicts -11.7% over two years for the toronto housing prices, but that is contingent on interest rate increases and so my affordability would remain the same after two years. Bank of Canada is useless for guiding my decision, and the other banks make annoyingly vague pronouncements. Knowledgeable people seem to think that TO is going gangbusters, and I have no hard evidence or economic data to contradict their claims.

Meanwhile, my investments are wallowing in US stocks (great gains until you look at the CAD-US exchange rate) and CAD bond funds… in short, tanking. I should have listened to my dad 10 years ago who told me to buy gold… Don’t worry, if I had, I’d sell it now.

Also, what I found is that rentals in downtown Toronto are *extremely* difficult to obtain. I couldn’t find anything decent (for 2) for under 2350/mth, and the place I am going to rent was provided to me by the university at a major discount. But I’m getting kicked out after 12 months.

If you have any tips on specific trustworthy forecasts, let me know. In the meantime I’ll just sit in the corner and wait for the end of times.

#47 Victoria's secret on 07.29.11 at 2:53 am

Victoria guy has positive cash flow on an affordable house.
Why would he even consider selling?
Don’t get talked into something rash based on the nutballs around here.

#48 Andrew on 07.29.11 at 2:54 am

“So, the world is about to end, aside from guns and ammo what does one stock up on?”

Gold, food, and water are obvious choices, but I suspect that food is currently in a speculative bubble right now. Just look at the the lardbags that compose 55% of people walking down the street these days. These foodbugs have foolishly stored useless bags of fat in their bellies, between their elbows and shoulders, in their buttocks, thighs and even their feet. Just wait until the price of food comes crashing down. These greater fools will be crying in their double-gravy poutine as the value of their investment evaporates.

One thing I don’t hear people recommending is preparing for massive internet outages. That’s why I’m stocking up on pornography. Lots and lots of pornography.

#49 victoriagettingcheaper on 07.29.11 at 3:08 am

We are renting a water front condo in Victoria. We really like this area.

More and more listings come to the market. They are not selling and the price is going down.

The one I am renting for a little bit over $2000/month was asking in the 700K range last year. This year similar unit is listed for 549K and not selling (the one we were in has about 50K renovation upgrade).

There is another unit in the same building for sale. We are thinking of making a low ball offer. Listed for mid 600K, thought to offer 550K.

But after some analysis, we think even 550k is too high. Still cheaper to rent.

We think the listing price for the unit will be 550K or lower next year…maybe in the 480K range.

We will see…

The agent still talked about how Victoria was unique. Everyone wants to move here. The limited land with all the water surrounding it.

Any guess of what price range it would be in next year?

#50 SmarterThanYouLook on 07.29.11 at 3:25 am

#7 encanto

“Many of the comments are very sophisticated and intelligent and I have felt it better to sit back and learn than write unworthy comments.”

Don’t worry. Posters only sound intelligent. They aren’t. They use big, but nonsensical words. Harvard Business Review this aint. I mean, read all the failed predictions. Dozens of posts of them!

#51 Bilbo Bloggins on 07.29.11 at 4:33 am

I got some flack yesterday for posting that a “receptionist” in the public sector made over $100k.
Just realize she must have retired as she is not showing up in the 2009/2010 salaries.
Anyway, her official title was never “receptionist” but she is the person answering the phone calls and at the desk when you first walk into the office. I go to her when I need to book a meeting room or a projector.
What would you call that?
Keep in mind, I haven’t contracted with this crown corporation in years.
This is the last time I will mention it as I still have people that I respect working there.
Anyway, it’s a small crown corporation and if you take a look at the salaries (over 75K is published), you will realize that more than 75% of their employees make the cut.
What other company do you know of where this is possible?

#52 timo on 07.29.11 at 5:18 am

http://www.ffwdweekly.com/article/news-views/news/the-economy-is-great-7842/
———————————
Very good read.

According to the Bank of Canada, the average price of a house in Canada is now 4.5 times the average disposable income. Our debt-to-income ratio is 147 per cent, meaning for every dollar earned, Canadian households owe $1.47. The Certified General Accountants Association of Canada says Canadian households currently owe $1.5 trillion.

“Canadians are now as indebted (relative to their income) as the Americans and the British,” Bank of Canada governor Mark Carney told an audience in Vancouver recently.

We are not different, special or smarter. We are just last in the bubble of economies who used cheap credit to keep asset prices inflated because we got rid of an important tax base ,’manufacturing sector’ in the name of lower prices.
————————————————

http://www.debtdeflation.com/blogs/2009/01/11/bernanke-an-expert-on-the-great-depression/

another good read

“(1) Debt liquidation leads to distress selling and to

(2) Contraction of deposit currency, as bank loans are paid off, and to a slowing down of velocity of circulation. This contraction of deposits and of their velocity, precipitated by distress selling, causes

(3) A fall in the level of prices, in other words, a swelling of the dollar. Assuming, as above stated, that this fall of prices is not interfered with by reflation or otherwise, there must be

(4) A still greater fall in the net worths of business, precipitating bankruptcies and

(5) A like fall in profits, which in a “capitalistic,” that is, a private-profit society, leads the concerns which are running at a loss to make

(6) A reduction in output, in trade and in employment of labor. These losses, bankruptcies, and unemployment, lead to

(7) Pessimism and loss of confidence, which in turn lead to

(8) Hoarding and slowing down still more the velocity of circulation. The above eight changes cause

(9) Complicated disturbances in the rates of interest, in particular, a fall in the nominal, or money, rates and a rise in the real, or commodity, rates of interest.” (Econometrica, 1933, Volume 1, p. 342)
————–

you do realize that ‘austerity’ means selling your valuables to the pawnshop to pay the bills.

lol:)

#53 PALI on 07.29.11 at 5:39 am

Hi Garth,

Been reading your blog for a while a real insight into the housing market. For some one that’s about to move from the UK to Canada its confirmed for me to rent for couple of years and wait and also sterling exchange rate vs loonie is poor!!! China slowdown will have a affect on the loonie????

#54 Phil S on 07.29.11 at 5:39 am

Rather than the obsession with buying an (expensive) fixed residence, why not consider the option of a mobile “residence”, either a spacious caravan, or better still a large autonomous RV? With the present (and acc. to “some websites”, possible future) climatic instabilities, there must be a degree of significant utility in being able to quickly move your “home” out of harm’s way.

After all, as stated on this site ad nauseam, “Home” is not necessarily a concrete or fibreboard box, but may be whatever the “homeowner” finds most suitable for their present (and predicted future) needs.

Just a thought, but one that might be worth considering, especially if flexibility becomes a critical element in a future where jobs may not be so easy to come by.

#55 Aussie Roy on 07.29.11 at 6:13 am

Aussie Update

WOW – I’m speechless. Have the banks come to their senses or is it a case of, should they blow up they can say well its the governments fault allowing negative gearing?. MMM, I wonder.

ONE of the nation’s most senior bankers has taken aim at the negative gearing used by millions of investment property owners, claiming the tax break was leading to an unhealthy focus on housing as a means to get rich, while pushing property prices to unaffordable levels.

http://www.smh.com.au/business/negative-gearing-unhealthy-says-anz-boss-20110602-1fiz8.html#ixzz1TUFsdfZ4

House prices post sixth straight monthly fall

http://www.theage.com.au/business/house-prices-post-sixth-straight-monthly-fall-20110729-1i35g.html

Now for some comic relief courtesy of the RE industry.

Seven reasons why Australian property won’t crash
or
Seven different ways of saying it’s different here.

http://www.propertyobserver.com.au/residential/is-the-australian-property-market-headed-for-a-major-correction/2011061450486

#56 HappyPlace54 on 07.29.11 at 6:32 am

“Everyone” wants to live in Vancouver? I discounted moving thee 20 years ago when it was actually afforadable because of the louse weather. I don’t see that anything has changed there.

#57 Aussie Roy on 07.29.11 at 7:30 am

Aussie Update

Had to share the latest TV ad by assured home loans directed at budding property infestors.

Just in case you miss the tiny writting on the bottom of the ad while the blonde is in picture, here is the deal.

It’s a ripper…

House and land package $287,250

Mortgage of $295,000 @ 7% (Interest only?)

Deposit, not required just use the equity in your home.

Rental return $277pw.

Who said the delusional in Australia is over, let alone >100% mortgages.

Don’t miss out ! – On what I wonder?.

http://www.youtube.com/watch?v=ItZ8vxHYnVY&feature=player_embedded#at=10

Garth what do you think, I was thinking I should rush out and sign up for 2 – LOL.

#58 SquareNinja on 07.29.11 at 7:32 am

#37 – Dad

So true, so true.

Mr. Sturdy sounds like a total nerd who will never get any… so I suggest he adopt from the BC SPCA.

#59 MO on 07.29.11 at 7:35 am

How to buy a house for $16.
http://www.planbeconomics.com/2011/07/21/how-to-buy-a-house-for-16/

…do these laws apply in Canada? I sure hope so ‘cuz I’d make a great squatter when Vancouverites start abandoning their homes.

#60 CDN Real Estate Bubble on 07.29.11 at 7:40 am

LAST!!!!!!

#61 bill c on 07.29.11 at 7:44 am

My associate put an offer on a home in toronto last week.
The property was reduced and 3 offers were placed. Ihe offer was at 520K. It was listed for 560K. Other offers were better and he lost out and wouldn’t budge. 559K got it.
He got a call back as both offers failed because of financing. It seemed both offers were with 50K down and both failed approval.

#62 mississaugaboy on 07.29.11 at 8:57 am

#51 Bilbo Bloggins:

I work for a large Crown Corp and I am almost certain we have a higher percentage of people who make more than $75k per year. So I think those who didn’t believe it just don’t know.

Hell our Directors alone make $250k or over, Manager make over $130k and our VPs $500k.

Hell I was even making over $50k as a co-op student.

#63 HouseBuster on 07.29.11 at 9:13 am

I’m starting a 2x Inverse Canadian Home Price Index ETF… Anyone interested in buying?

#64 timo on 07.29.11 at 9:31 am

http://finance.yahoo.com/news/Economy-growing-at-slowest-apf-1144260413.html?x=0&sec=topStories&pos=main&asset=&ccode=

“The government also revised data going back to 2003. The data show the recession was even worse than previously thought. The economy shrank 5.1 percent during the recession, which lasted from December 2007 through June 2009, compared to the earlier estimate of 4.1 percent. Both figures represent the worst downturn since World War II.

“The depth of the recession is now clearly so much deeper,” Gault said.”

if you bought a house down south you are about to lose your shirt.

#65 Peakoilist on 07.29.11 at 9:40 am

John B. should probably wait longer than next summer to come and look for RE..let’s give it 3-4 years John.
come next year if you want to rent some great digs at bargain prices. Let the melt begin.

#66 Math Teacher on 07.29.11 at 9:49 am

@Cookie Monster

@Math teacher,
P% = 90% – Age as %
Obviously all units must be as percent.

Yes, it must be, but according to Garth it’s in years, as per quote: “Remember my rule – take 90, deduct your age and that’s the percentage of your net worth a home should represent.”

#67 The American on 07.29.11 at 9:55 am

At #59: MO, if there are not squater laws in Canada, I’d seriously urge your local government to get involved. These laws DO work, but the likelihood of it working out for most people who want to partake is incredibly low. The laws exist to encourage people not to abandoned their properties and RE tax obligations. If a property is identified where someone isn’t living in the physical property, maintaining it, and not paying the RE taxes, then go ahead and move in. This varies from state to state. If you can live in the given property for a minimum specified amount of time as set forth by the law, without being evicted by the current owner (who would never know if the property is truly abandoned), then you now own the property. Typically, you have to able to do this anywhere from as little as 5 years, up to 10 years, depending on state. This helps to protect local and state revenue streams.

#68 kilby on 07.29.11 at 10:05 am

#51 Bilbo:

30 years of public service, retired now with $1,049 per month pension. Of all my friends including my wife who work in the private sector…..ALL made more money than me. Some have no pensions but the wages are all so much more and there are incentives, bonuses, profit sharing (including people that contract to the provincial and municipal governments)

#69 RenterBoy on 07.29.11 at 10:12 am

I am curious about the “sold as is with no warranties” that I am seeing more and more on mls listings… I am under the impression that this clause would have no legal ground, at least in Quebec where I live. Is this correct ? Why is there a proliferation of such clauses ?

#70 Nemesis on 07.29.11 at 10:13 am

Well, as it happens, Mr. Bernanke is hosting a ‘special’ luncheon for the PrimaryDealers in NewYork today. Who could have known, eh?

#71 Peakoilist on 07.29.11 at 10:14 am

#6 Jody on 07.28.11 at 10:02 pm
Ron Paul, a politician intent on leaving us alone, wow, what a concept, to bad most elected ninnies don’t get it.
======================================
I agree with you. There’s something that I like about that guy, who’s willing to say things that others just won’t say.(there’s another guy who WE all know that is similar, in that respect)
When he speaks, it just sounds reasonable.It goes against the grain of all the other politicians, who just keep spewing the same garbage. they just want to keep business as usual going despite it being unsustainable.
Maybe its tough medicine to take..many won’t get the raises that they were expecting..but they still might be working..or getting the same cheque. oh well
but what is the alternative?
Yesterday, Garth argued that the US will just keep borrowing forever and growing to keep being able to service those debts. Maybe , just maybe that time of growth is slipping away (like Japan’s experience)
Maybe there has been no growth for awhile now…only the growth of financial instruments in the economy and the shadow banking system, that gives the illusion of growth. Perhaps that is why the system is growing more complex by the day and the debts are growing at an exponential rate not seen ever.
Garth, I think it would be OK to have an intelligent conversation about how deeply the US is TRULY in trouble, and still maintain a program to help folks to invest wisely and take advantage of all that will still be out there. If we just say that the US will just rise forever(like Real estate), because it always has, doesn’t mean that it is so.

Please keep being that guy that still goes against the crowd.

It’s obvious there are waves and wind ahead. This blog has continuously forecast that, since people (and governments) have borrowed irresponsibly against their collective futures. But extremism is not a wise position to adopt. The US will not crumble and collapse. If it did, the global economy would fail and Canada would be in a depression akin to that of the 1930s. No amount of gold, silver or real estate would help you then, which is why I’ve always stressed liquidity and the active management of financial assets. As some of them fall in value, others will soar. Balance will save you, protect wealth, and allow growth even during dire times. But those, I do not expect. Instead, I anticipate the next few days will be ones of mounting anxiety and a growing investment opportunity. America could stumble. It will not fall. Buy weakness and sell strength. — Garth

#72 Nuke It on 07.29.11 at 10:16 am

Just checked mls listings in toronto. a simple 300-400k downtown toronto lists over 500 units (crashes system). this is way over the top compared to 6 months ago.

#73 timo on 07.29.11 at 10:26 am

http://www.creditwritedowns.com/2011/07/disastrous-gdp-numbers-make-double-dip-scare-real.html

stock market rally? 6 emails in 20 minutes and all are pulling out. this is going to be interesting…..

#74 disbelieving on 07.29.11 at 10:33 am

Well, missassaugaboy and bilbo, I work for a publicly-traded multinational and there may be a handful of people who work there who make under $100,000 (at least in the North American offices!) but certainly not more than a handful so seems to me those crown corps are paying competitive rates.

I grant that minimum wage in Ontario is ~30% of $75,000 annually, so I guess you could fire all those crown employees and replace them with ex burger-flippers thereby saving lots of money for the public purse but I suspect we might not be pleased with the results.

I mean, why would we expect public employees to make middle class wages anyway? We’re perfectly okay with our public services having no skills, extremely high turnover, and no employee loyalty, right?

#75 BrianT on 07.29.11 at 10:35 am

#71-I have no idea how anyone could imagine that if Canada fell into a deep depression, “no amount of gold and silver could help you then”. I can only surmise this was meant to be funny.

Deadly serious. Nobody will care about rocks when they need to buy food and make payments on shelter. This is a giant delusion. Invest in what people always need. Nobody needs gold. — Garth

#76 arctodus on 07.29.11 at 10:38 am

It’s obvious there are waves and wind ahead. This blog has continuously forecast that, since people (and governments) have borrowed irresponsibly against their collective futures. But extremism is not a wise position to adopt. The US will not crumble and collapse. If it did, the global economy would fail and Canada would be in a depression akin to that of the 1930s. No amount of gold, silver or real estate would help you then, which is why I’ve always stressed liquidity and the active management of financial assets. As some of them fall in value, others will soar. Balance will save you, protect wealth, and allow growth even during dire times. But those, I do not expect. Instead, I anticipate the next few days will be ones of mounting anxiety and a growing investment opportunity. America could stumble. It will not fall. Buy weakness and sell strength. — Garth

What the world is in right now will ultimately make the 1930s seem like a joyous night on the town.

You are correct about one thing though Garth…gold/silver/real estate will not protect us as this thing moves out of it’s “financial stages” and in to it’s “sociological” stages.

World Made by Hand….and a lot fewer hands at that…

#77 The InvestorsFriend on 07.29.11 at 10:47 am

IT’S ILLOGICAL JIM.

They are investors Jim, but not as we know them.

On fears that the U.S. will default, the institutional bond market is bidding the price of 10-year U.S. bonds up!

This is supposed to be the smart money the bond market.

Stupid is as Stupid Does.

U.S. 10-year bond yield is down to 2.86%. It was 2.96% yesterday. This means bond prices are up, more intitutions buying them. And it ain’t just the Fed. The Fed may not be buying at all. They ended most of their buying in June.

Illogical Jim, Illogical.

#78 Golden Stu on 07.29.11 at 10:56 am

Mr Sturdy,

The fact she even suggested you put her name on title under those condition should cause you to run a mile. Are you mad?

Actually better idea, tell her to buy it and you will pay the bills she will think you are a hero and you can get your jollies then run a mile when the house prices collapse.

#79 kilby on 07.29.11 at 11:00 am

Typical salaried position for professional in government employ..Not receptionist! Pretty typical.

BC Public Service – Job Opportunities
Search our Careers Submit Resume Career Center Logout

FO 21R – Revenue Analyst
Requisition #: 5391
Department: Labour,Citizens’ Serv&Open Gov
Ministry Branch / Division: Service BC, Regional Operations
Posting Close Date: 2011-08-10
Location: Victoria –
Job Type: Temporary Assignment (TA)
Temporary End Date: 2012-02-29
Category: Finance
Job Profile: Revenue_Analyst_June_11.docx
Job Summary:

Revenue Analyst
Salary $51,290.00 – $58,511.52 annually

#80 Mackie on 07.29.11 at 11:04 am

Like i said last week, the time to sell SOME gold and silver is approaching, but it’s not quite here yet. Maybe early next week, maybe even later today.

#81 Smell The Coffee on 07.29.11 at 11:23 am

‘Nobody needs gold?’ Says the Garth.

Well you can’t eat it, you can’t get interest on it, it frustratingly keeps moving alarmingly up and then and down in price, and just won’t stay stable.

It makes a great doorstop, except everytime I use it that way some avaricious Nimrod tries to steal it.

It is functionally worthless to everybody… except central banks, and Indian Brides, and my failing teeth who are the only ones that keep hoarding it?

What do they know that we don’t?

#82 Golden Stu on 07.29.11 at 11:25 am

“Junius….It was not a normal cycle but an induced increase made by a greedy financial industry and the politicians they own.”

agreed..

When I was in my 20’s learning about the world it crossed my mind “if every country has a national debt, who has all the money?” It was a rhetorical question that took me until mid 30’s to work out. Once you realise how the banks work and all money IS debt its now clear what is going on.

The current housing problem was obvious and will likely be a far greater danger than people realise.

We, in effect, already have a gold standard back again. Many people (and some countries) are voting with their feet and all currencies are dropping against gold.

#83 disciple on 07.29.11 at 11:37 am

#77…Illogical maybe, but a somewhat rational bet based on the events unfolding in Washington. Defaulting on US Treasuries will be the option of absolute last resort by Congress because obviously they can’t upset their gangster friends. Cuts will come from elsewhere, snip, snip, snip to unfunded liabilities. The great wealth transfer is almost complete. Then there will be war. Rinse, repeat. Know your history.

Yesterday, I had pondered a possible explanation for the current global human condition. Perhaps, mankind had collectively agreed aeons ago to strip itself of its advanced technologies due to a lack of ethical/spiritual advancement to match the technological one, thereby averting future self-annihilation and continuation of the human family to the present day.

This seems to be the common thread among the earliest tales of our forebears, and why we have suffered some sort of collective amnesia regarding basic scientific concepts such as the shape of the earth and the fact that it is expanding! Clues of advanced astronomical knowledge is found in ancient Norse tales hidden behind “Hamlet” of the Spear-Shakers (written by Bacon).

But I surmise that there were some among us that broke the agreement and kept some of the advanced knowledge to themselves – the secret societies, making ignorance a bliss but now a curse. Seems reasonable, right?

#84 mid-Ontario on 07.29.11 at 11:40 am

#75 Brian T
” ‘I have no idea how anyone could imagine that if Canada fell into a deep depression, “no amount of gold and silver could help you then”.
I can only surmise this was meant to be funny.”
———————————————————-
Deadly serious. Nobody will care about rocks when they need to buy food and make payments on shelter. This is a giant delusion. Invest in what people always need. Nobody needs gold. — Garth
——————————————————-

Brian T. This is Garth’s dry wit. He knows that you could take a brick and buy the whole grocery store.

On the other hand, he also knows that “bullion lickers” never want to use their gold for anything.

That is the basis for his comment.

#85 Mr. Plow on 07.29.11 at 11:47 am

Steven…

Renting out a place should be for long term not the short term. If you are able to adjust the rental amount without going into negative cash flow, and you have enough $$ to go a few months without renting it, i.e., you can take your time finding a good tenant.

Then DON’T sell it.

Who cares if the market drops. If you are in it for the long term, it doesn’t matter what it is worth now, it matters what it is worth when it is time to sell. And if you stay the course, and manage your property properly you will likely have a paid off asset that you have put little into yourself.

Mr Sturdy…

Tell your fuck friend that she can live in your place as much as you want, but since she is just a fuck friend you can’t put her on title as you aren’t prepared to commit financial suicide because of your arrangement. If you need her in order to make this purchase, don’t make the purchase.

#86 disciple on 07.29.11 at 11:52 am

From where does gold derive its value?

Well, the earliest writings known to man are symbols etched onto clay tablets that were found in modern-day Iraq. Among the many things they state, is that humans were created by the Annunaki as a slave race to mine gold in South Africa. Of course, it’s not that simple…and this is just a starting point that most have not yet reached…but…

Gold is a unique element. It forms complex molecules with just about anything, including really weird setups with water, acids and halogens, it is the only common element that shields UV radiation in space (used on NASA helmets), and has been shown to have healing properties in the body. It’s used in DNA guns, and if I remember correctly, interacts directly with your DNA in vivo. And of course, it very, very, slow to corrode. But its an extremely weak metal. It is also a good catalyst candidate for possible cold fusion technology.

Therefore, one can draw the conclusion that the value of gold is derived from some kind of secret technology in which it is employed that very few of us are aware of. Silver and the rare earth metals have more industrial uses. So what is the conventional fascination with the yellow metal? I don’t see it. Mind games.

#87 Chaos on 07.29.11 at 12:23 pm

Oh my lord…

The media seizes on the 14 trillion dollar amount and is blinded by the theatre of political democracy in action in the United States.

This is just the puppet show.

The real problem for the United States is their unfunded liabilities for aging boomers, such as social security, medicaid, medicare and the drug program, the troubled assets program, fanny mae and freddy mac.

If these unreported liabilities are added to the balance sheet, the U.S. debt is conservatively in excess of 60 trillion dollars, or somewhere between 100-140% of GDP depending on the amount reported.

Technically the Americans are already broke, without any relief in sight and a massive cohort of boomers beginning to reach the magic age of entitlement to all of the social programs.

The future is here and it doesn’t look good.

The corporations can read the between the lines and have been abandoning ship for many years finding greener pastures elsewhere.

Apparently the American illuminati no longer care about their country, they only care about themselves and their friends or the special interest that they represent.

We are not so very different in Canada. The same demographics apply. The same types of unfunded social programs are in place. The same troubled bank assets have been rescued by the govt. and our rendition of sub-prime loan liabilities are rampant and held by the people of Canada in the form of CMHC.

And yet we presume to lecture the Americans on fiscal policy and admonish them to more like us. Puhlease.

Talk about being caught between a grizzly and her cubs.

Wake up and smell the bear poop.

#88 Brad in Cowtown on 07.29.11 at 12:24 pm

“Invest in what people always need. Nobody needs gold. — Garth ”

Absolutely true. Nobody really “needs” gold.
And yet it continues to trade at an all time high. Making new highs actually. People seem to want it Garth. Takes time for that sort of “want” to dissipate especially when it isn’t even mainstream yet. The remarkable thing that gold bears just don’t understand… most people still own very little, if any, precious metals. You folks make it sound like too many people own PMs and are overweight, so there must be selling pressure around the corner.

If that doesn’t resonate with you, well, how about “never underestimate the predictability of stupidity.” e.g. people don’t “need” cigarettes either, Garth, and yet Altria has made its shareholders a lot of money over the years.
Or, to put it another way, how about this for your next book:
Invest in what people think they need. Not just what they do need…

#89 Devore on 07.29.11 at 12:32 pm

#69 RenterBoy

Legal standing should depend on the contract language. If contract is as-is, and you accept it, why would it have no legal standing?

As-is would be commonly seen on “tear downs” (which are expected to be demolished upon purchase, ie land value), construction-in-progress (owner run out of money to finish) and bank sales (banks have a set amount of money they need to get and don’t care how you feel that the toilet is missing, you’re already getting a deal).

#90 Basil Fawlty on 07.29.11 at 12:33 pm

I am still looking for an answer to the question; how do you solve a debt problem with more debt? It seems like this is the 800 pound gorilla living in the basement that no one wants to confront. I guess most everyone thinks that if we just continue to feed it, eventually it will go away. What is the outcome of trying to solve a debt problem with more debt? Well it seems obvious that this will result in more debt, when we can’t even pay off the debt we have now.
The level of denial is off the scale on this issue, which may be at least partially due to the fact that the total outstanding debt and government obligations are so high that it just numbs the mind. If we were honest with ourselves it would become clear that to pay off the current debt would require a level of economic growth that would consume the resources of three planets. This at a time when resource constraints are the reality on this planet.
We will soon be left with two choices, default or debase. In the meantime, we remain in denial and expect to borrow our way back to prosperity. Doing the same thing over and over, while expecting different results, is the definition of insanity.

“The things that pass for knowledge I can’t understand”
Steely Dan, Reeling in the Years

#91 Devore on 07.29.11 at 12:44 pm

#71 Peakoilist

I agree with you. There’s something that I like about that guy, who’s willing to say things that others just won’t say.

Another US politician I like(ed) is Jesse Ventura. The amount of common sense in that guy’s pinkie outstrips all of congress put together.

Sadly, no one in Canada willing to say what everyone’s thinking and what needs to be said.

#92 Snowboid on 07.29.11 at 12:46 pm

62 mississaugaboy…

In reference to Bilbo Bloggins:

Don’t lump the main Public Service with Crown Corporations or Political (OIC) Appointees to Boards and Agencies.

I agree there are exhorbitant salaries at some of these agencies.

The reasoning from the political level is they want these groups to operate like the private sector and that is why these need the higher levels of compensation.

Current BC politicians are now feigning surprise at the high salaries (e.g. David Hahn, BC Ferry Corp CEO at $ 1 million), when they were the ones who started the process after 2001.

The Director salary you mention is what the BC Govt pays Deputy Ministers.

Managers at $ 130K, not possible in BC Govt – that’s maybe a Exec. Directors top salary.

The highest range of Senior Technical staff (R30) is $ 67K to $76K (plus a 9.9% bonus) so say a maximum of $ 83K a year.

That is less than half what was paid contractors ($100 an hour) doing the same work.

As mentioned before, if I hadn’t retired I would be making about $ 104K after 38 years of service.

I could only dream of a $ 250K salary!!!

#93 disciple on 07.29.11 at 12:47 pm

People also wanted collector cabbage patch kids and Tiger Woods memorabilia, as an “investment”.

Buy into whatever you have a passion for, but be prepared to lose big time if it comes to that. Don’t gamble with milk money.

#94 disciple on 07.29.11 at 12:51 pm

There’s a guy on Craigslist selling his penny collection. His selling point is “in case they eliminate the one cent coin”. I gotta ask, “Well, then, why are you selling, my friend?” And why at twice the value of the total coin face value?

The same will happen with gold and silver.

#95 mackie on 07.29.11 at 12:53 pm

Brad…cowtown: you hit the nail on the head. Investing, whether it’s RE, equities etc is as much about buying what people think they need as it is about what they really need. People are willing to cut their grocery bill and food consumption (what they need) before selling their mcMansion (what they want). Why are high-end retailers doing so well? -Coach, LuLu, even Apple at the expense of Walmart, Dell etc. Because people mix up what they want and need.
So, if you WANT another reason to invest, you NEED to buy gold. Or, is it if you NEED another reason to invest, you’ll WANT to buy gold. Who Knows?

#96 gumshoe on 07.29.11 at 1:07 pm

Blow ’em up says BOA. The bulldozer cure for excess inventory

http://business.financialpost.com/2011/07/27/how-bank-of-america-is-handling-its-foreclosure-glut/

#97 Utopia on 07.29.11 at 1:24 pm

#6 Jody on 07.28.11 at 10:02 pm

“So, the world is about to end, aside from guns and ammo what does one stock up on? Cigs? Booze? What kind of booze?”
————————–

You know, that is actually a pretty good question.

Plenty has been written on the topic too. Most of it revolves around having enough consumption goods on hand to weather the storm. Cans of meat, sacks of flour and rice, first-aid kits and other emergency supplies.

I do not wholly agree though.

What you really need to stock-up on is knowledge and the tools required to produce for your own needs. So instead of just having hundreds of cans of fruits and vegetables what you actually need is a mountain of canning jars, rings, lids, sugar, and all the related equipment.

The food is out there. Do you know how to preserve it though?

Other items cannot be produced at home. Energy is important if you are totally reliant on electricity and gas. Few seem to have working fireplaces anymore or even wood burning stoves. Those were always handy because anybody who could swing an axe would always have cooked meals and a warm house.

As an emergency item I would go with the BBQ sized propane cylinders. Minimum of six. They keep forever, are portable and are a terrific form of stored energy. Pack a lot of BTU’s too.

When it comes to booze….what you really need is equipment and the skills to make your own. It is not practical for most people to keep all the carboys, fruit presses and necessary bottles etcetera on hand (but I do, just in case).

Anyway, it is a good hobby. There is nothing wrong with being prepared. I don’t expect the end of the world but understanding how to make and process your own food is pretty basic essential stuff in my books.

It starts with seeds. Lots of them. Plenty of manual garden tools and the basic equipment for processing them. You need sugar, salt and vinegar….we used to make our own vinegar too. How weird is that. It is not so hard though and its a handy skill to have.

Probably the best thing to do if you are too busy is to have the books on hand so you can figure it out on the fly. It is fine to have a store room stocked with plenty of toilet paper and other consumables….

But what do you do when they run out?

#98 Live Under Your Means on 07.29.11 at 1:29 pm

#56 HappyPlace54 on 07.29.11 at 6:32 am
“Everyone” wants to live in Vancouver? I discounted moving thee 20 years ago when it was actually afforadable because of the louse weather. I don’t see that anything has changed there.

…………….

In ’75 I visited 3 friends in BC – 2 in VCR and 1 in Naramata, thinking I might move to BC due to the political situation in PQ. Decided against it and moved to the East Coast in ’76 instead. Weather is somewhat similar. My parents planned on moving east once Mom retired in ’77. She grew up here tho we had lived most of our lives in PQ. Was worried whether I could afford airfare, on the spur of the moment, from VCR, due to my father’s health. My father only lived to enjoy 4 years here, but he loved sitting on the lawn chair overlooking the ocean during the summer. Of their 6 children, 5 moved back to the East Coast. It’s not for everyone, but for I and my husband (whom I met in Mtl. 25+ yrs later), and 4 siblings, it has worked out. Life is a big surprise.

#99 CoreyMC on 07.29.11 at 1:30 pm

#11 kilby on 07.28.11 at 10:19 pm

“You sure hit the nail on the head with the comment about up Island properties, same houses for sale this year as last and in the last month the prices have started dropping substantially”
———————————

Nanaimo is going to get smashed. No jobs. Welfare economy. Island dwellers. Overpriced homes backed more by attitude than real value and pot-heads galore. Yeah…it is different there. The whole world wants to live in Nanaimo (sarc). Lucky them, they have a ferry terminal and a grow-op economy.

Good grief.
——————

Moved from Calgary to the Island at the end of last year…renting now ofcourse! I see what you mean about the Island folk. Way overvalued RE, and no one here has any money, jobs suck, smoking pot with no ambitions. If the rest of Canada was like this place we would be considered a loser country.

#100 Devore on 07.29.11 at 1:38 pm

#88 Brad in Cowtown

And yet it continues to trade at an all time high. Making new highs actually. People seem to want it Garth. Takes time for that sort of “want” to dissipate especially when it isn’t even mainstream yet. The remarkable thing that gold bears just don’t understand… most people still own very little, if any, precious metals.

So what make you think the people who do not own gold will be persuaded to want to own it, to believe they need it? What if the only thing that happens is the present, highly speculative, highly leveraged demand simply disappears, and gold never goes “mainstream”?

#101 Live Under Your Means on 07.29.11 at 1:42 pm

Hubby is leaving Monday for a week on a bike tour. Travelling to the Gaspe with a buddy and then to a BMW rally in N.B. for a few days. Hope the weather here is not humid so I might get out in the garden and a chap that I have hired in the past can help me do the heavy work.

#102 confused and a little crazed on 07.29.11 at 1:52 pm

For once I agree with this nre US policy…it might come to pass and hopefully Canada will follow , like we always do. We are late . but we do get there

http://finance.yahoo.com/news/Return-of-20-Home-Down-tsmf-506551024.html?x=0&sec=topStories&pos=7&asset=&ccode=

#103 NFN_NLN on 07.29.11 at 2:05 pm

Time at last to sell silver – Eric Janszen

April 29, 2011, iTulip

“The pigs get fat the hogs get slaughtered.”

Today I sold all of my remaining silver. Note the title: there is no question mark or other qualifying attributes to the assertion.

I bought silver for $4.25 in 2001 when the price averaged $4.36 for the year. At the time an ounce of gold cost 63 ounces of silver.

Today an ounce of silver traded for $48.50, at 11.4 times the price I paid.

Five reasons why I sold today, after waiting 10 years:

Reason #1: The Gold/Silver ratio today hit 32, near the all time low of 27 in 1978.

#104 Bilbo Bloggins on 07.29.11 at 2:12 pm

Let’s be clear. I’m not against Crown Corporations or the public sector. There are industries where it doesn’t make sense for private companies to be involved (eg very capital intensive infrastructure and public works).
And there are people in the public sector who deserve high wages.
My issue is probably more with big unions than govt.
When I see someone getting paid a certain amount, I ask myself if this person quit today and took their skill set to a private company, what would his/her salary be.
The problem in public sector is that often the answer is it would be way lower.
There is also this aura of invincibility in the public sector where it is damn near impossible to get fired.
We need more performance-based compensation in the public sector.
Anyway, no matter, some form of austerity is coming whether we like it or not.

#105 City Slicker on 07.29.11 at 2:24 pm

Once gold surpasses $1764 it will go to the mystical $12,000/oz.
That sounds way better than investing in a stupid house.

#106 HouseBuster on 07.29.11 at 2:29 pm

Mark this date on your calendar. July 29th, 2011.

The official end of the Canadian Housing market lunacy.

The housing market is about to take a nosedive. Sell those $1million shacks while you still can!

#107 Cookie Monster on 07.29.11 at 2:30 pm

Deadly serious. Nobody will care about rocks when they need to buy food and make payments on shelter. This is a giant delusion. Invest in what people always need. Nobody needs gold. — Garth
———-
When an ounce of Au is worth $5k, paying ones mortgage is easy. The problem is money will be worthless. So if you want to buy (trade) money for goods and services, you need to use money that vendors will accept. If you don’t use money you will be left with bartering goods and services for goods and services, good luck finding someone who wants to trade you what they have for what you’ve got. THIS IS THE FUNCTION OF MONEY, TO FACILITATE TRADE, as well as a store of value. Gold is universally recognized and will be accepted so long as the vendor knows it can be useful to him in the future to obtain what he needs. And it always will be, money.

#108 Two-thirds on 07.29.11 at 2:31 pm

Garth,

Have you considered closing down the comments section?

If you dislike the comments so much, why not can it?

Or, if it is individual posters you dislike, the easiest thing would be to block them.

You sound almost as if you’re a hostage to this pagan blog, but you have all the power and hold all the keys.

Or perhaps you have developed a case of Stockholm syndrome?

I love you. — Garth

#109 timo on 07.29.11 at 2:32 pm

http://research.stlouisfed.org/fred2/series/MULT

http://www.crossingwallstreet.com/archives/2011/07/the-8-12-year-tips-yield-is-negative.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+Crossingwallstreet+%28Crossing+Wall+Street%29

(8) Hoarding and slowing down still more the velocity of circulation. The above eight changes cause………what does this cause?????????

they put $14 trillion into an economy that is not fixed and now is hourding.

#110 steve on 07.29.11 at 2:45 pm

Thank you for your input Garth, it is most appreciated. Now I can breath a little easier and stop looking at yachts on Craigslist!

Steve

#111 An Cat Dubh on 07.29.11 at 2:50 pm

John Sturdy, DO NOT have Jamie-Lee’s name on the house title anywhere and do not even let her live with you. She sounds like the type that will file a false abuse claim against you, which means you will be tossed out of your place and have a record, (which can be removed with some effort) and you will still be paying for the place while she lives for free. Which sounds like her long range plan.

#112 Kevin on 07.29.11 at 3:16 pm

Sorry, I can’t resist correcting a few misrepresentations by Disciple.

Gold is a unique element.

Yeah. EVERY element is unique. That’s why they each get their own box on the periodic table.

it is the only common element that shields UV radiation in space (used on NASA helmets),

Gold is neither “common” nor the only element that shields UV radiation. Lead is far more common, and a far better insulator of radiation.

Gold is used in helmets (and windows in fancy buildings) because it is the only metal that can be rolled so thin that it becomes transparent (while still providing the aforementioned insulation).

[Gold] has been shown to have healing properties in the body.

Silver (specifically, silver nitrate) is far, far more widely used as a healing tool than gold. It stimulates tissue growth. I know. I’ve had the unpleasant experience of being on the receiving end of some silver nitrate sticks (stings like a bugger).

#113 Peakoilist on 07.29.11 at 3:23 pm

#83 disciple on 07.29.11 at 11:37 am
I was right with ya in the first couple of paragraphs…but then you HAD to go to this place..

“his seems to be the common thread among the earliest tales of our forebears, and why we have suffered some sort of collective amnesia regarding basic scientific concepts such as the shape of the earth and the fact that it is expanding! ”

Pleezzz don’t call that science..unless you have some serious scientific papers to share with us all..and don’t give us that cute little video either..anyone can make a video.
Other than that, keep on enlightening us..some of that sh*t is really cool. We can all use some more spirituality in these troubled times. thanks dude.

#114 brainsail on 07.29.11 at 3:37 pm

“The U.S. Is Not Drowning In Debt”

“What neither side seems to recognize — or at least acknowledge — is that what matters about the debt isn’t the dollar amount per se, but how much it costs us to service it. And by that measure, the debt isn’t nearly as big a problem as it’s being made out to be.”

“…the amount the U.S. government pays to service its debt is, relative to the size of the economy, less than it was paying throughout the boom years of the 1980s and 1990s and for most of the last decade.”

http://moneyland.time.com/2011/07/15/the-u-s-is-not-drowning-in-debt/?hpt=hp_t2

#115 Kevin on 07.29.11 at 3:40 pm

@Snowboid:

” I hadn’t retired I would be making about $ 104K after 38 years of service”

But you did retire, because of that sweet, sweet defined-benefit pension that your $100/hour contractor can only dream of.

Apples to apples, please.

#116 Peakoilist on 07.29.11 at 3:44 pm

#91 Devore on 07.29.11 at 12:44 pm
Yeah, i really respect Jesse too..love how he’s not afraid to ask the really tough questions and play detective.

Thank you very much for your response to my question the other evening. It made it more clear for me. I’m not totally sure if the US can keep expanding and growing, due to peak energy. They certainly have no shortage of land and people who will innovate, if they have the opportunity. I think Canada will excel because even though we are past peak with conventional oil, we still have a boatload of heavy oil just waiting to drive our nation. (must keep the EROI in good territory, maybe with some improvements in technology).

#117 Bottoms_Up on 07.29.11 at 3:58 pm

#31 Utopia
….she might really be a short, fat, bald Korean man who’s real name is Kimchi.
———————————————-
By far the funniest thing I’ve read in a long, long time. rotflmfao

#118 Basil Fawlty on 07.29.11 at 4:03 pm

If one looks at financial investments held worldwide, not including central banks, gold makes ou .75% of total holdings.
People say you don’t need gold, however this begs the question; why are the central banks, Chinese and Indians purchasing so much of it, if no one needs gold? They are obviously stocking up on gold for a reason and since one knows they are not stupid, one may want to follow their lead. They are not stocking up on shares , term deposits, ETFs or any other financial assets, other than some cash. Why?

#119 Derek R on 07.29.11 at 4:05 pm

#96 gumshoe on 07.29.11 at 1:07 pm wrote
Blow ‘em up says BOA. The bulldozer cure for excess inventory

Don’t be fooled. It’s got nothing to do with “excess inventory” and everything to do with “keeping prices high”. If the bank gave them away (which would be cheaper than bulldozing) they’d get takers.

The real reason for the BoA destroying these houses is to limit supply so as to try to keep up the prices of the houses they haven’t bulldozed. Oh, yes, and to ensure that the BoA doesn’t have to spend money on property taxes.

#120 betamax on 07.29.11 at 4:05 pm

Dear Garth, a nice man from Nigeria needs to launder hundreds of thousands of dollars and has contacted me by email, seeking my help. My friend Candi-Lee (that’s her stripper name) thinks I should help him and use my share of the money to buy a yacht — which I should put in her name on the off-chance that one day she might get drunk enough to have drunken sex with me. She gets drunk quite often, so I like those odds. She has no money, but she does have a gold tooth, and she told me that gold teeth were once considered money and therefore will be again one day. Can’t argue with that logic.

My question is not about the Nigerian offer — that’s obviously a sure thing. My question is do you think yacht prices will ever go down? My yacht saleswoman says yacht prices have nowhere to go but up and I should buy now or be priced out forever. And if I need help, I can always rent out the stern cabin to the Nigerian fellow, whenever he shows up.

#121 Peakoilist on 07.29.11 at 4:07 pm

#97 Utopia on 07.29.11 at 1:24 pm
Thank you for the reminder about all the things that I still have to do..what a list ! I have none of that stuff together. We only have until next Tuesday. I thought we were going to have fun this weekend. Crap ! I have a foggy memory of how my mom would can pickles and beets. We’re f**ked !
Oh wait, where do you live again..somewhere near Saskatoon?
I can see it now..a commune of Garth’s followers on the prairies..Oh wait ! Garth’s bunker is just about a half hour drive from here..

#122 Lucy on 07.29.11 at 4:13 pm

#97 – Utopia

Love your posts! The last six months I’ve been building a library, the information available to people constantly amazes me.

#123 Peakoilist on 07.29.11 at 4:17 pm

#117 Bottoms_Up on 07.29.11 at 3:58 pm

rotflmfao…just asking what the first 4 letters stand for?
That really cracked me up too. thanks

#124 Imstupid on 07.29.11 at 4:22 pm

#69 Math teacher

You got to be kidding me. You teach our kids. You know the formula Garth uses is short for the entire procedure to actualt cone up with a dumb down version people like you and cookie monster can understand.

If you like I can create the total formula so it would be a correct mathematical equation.

You must start backwards. And work to present date.
1. Start with total earning potential in life time, including interest etc.
2. Deduct income needed during retirement until death.
3. Deduct all expenses incurred in a life time until retirement, including food,clothing, prostitutes etc.
4. The number left over is the amount you have for shelter. Within that number you must factor in keep up and subtract sale price at point you move into nursing home.
Now how can you project numbers representing variables that you cannot ?

I can’t believe people question things based on the stupidest reasons.

If you like I can explain Garths reasoning behind 4x income for you too.

I’m going to change my name.

#125 Live Under Your Means on 07.29.11 at 4:29 pm

#74 disbelieving on 07.29.11 at 10:33 am

I mean, why would we expect public employees to make middle class wages anyway? We’re perfectly okay with our public services having no skills, extremely high turnover, and no employee loyalty, right?

……………

Not sure I read the above right – sarcasm?. Hubby works for a school board as a Tech Supervisor. Earns about $60K. He got about 1.5% raise. He requires a car and his gas allowance is way lower than school board members. He is now the Tech. Spvr. of the 2 largest schools in our Municipality and all their feeder schools. Has written all kinds of pgms for his servers to automate & decrease tech’s time. He does this mostly on his own time. Last 2 yrs. when my hubby had to replace a Spvr on vac., a tech wrote emails to my hubby’s bosses that he wanted to work under my hubby. So 2 years later they have changed my husband’s territory. Hubby wants to encourage all his techs to learn and be able to take over when he retires. Unfortunately, lot’s of supervisors protect their territory. Hubby shares lots of his programs with a young, smart lady that he’s worked with for years. So many of the tech supervisors do not. Sad. Hubby is trying to encourage naming standards, etc. When he took over his new territory, previous f’n guy screwed him up.

#126 Timing is Everything on 07.29.11 at 4:36 pm

#108 Two-thirds

I’m just guessing on this…but I’m thinkin’ Garth gets just as much entertainment value as we do, maybe more.
It hurts so good.

http://www.youtube.com/watch?v=4dOsbsuhYGQ

#127 45north on 07.29.11 at 4:46 pm

betamax: My friend Candi-Lee ( her stripper name) thinks I should use my share of the money to buy a yacht

pretty funny

let’s see what the world looks like next week

#128 shane on 07.29.11 at 4:52 pm

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
Garth, Are you trying to be funny or serious??

Shane

#129 Michelle on 07.29.11 at 4:59 pm

@ #120 Betamax

I think that you are making a very good investment with the yacht because in 2012 when the North Atlantic current starts slowing down and reversing, you’ll want to head South on your yacht to escape the coming ice age.

Just remember that the magnetic poles of the planet will have flipped, so when your read your compass, North will actually be South.

Good luck!

#130 poco on 07.29.11 at 5:18 pm

just a couple of new additions to the growing number of foreclosures in the tri cities area–lots of them out there

http://www.realtor.ca/propertyDetails.aspx?propertyId=10964940&PidKey=1186663956

http://www.realtor.ca/propertyDetails.aspx?propertyId=10860393&PidKey=33419753

______________________________________________
an excerpt from the below link……
“As well, the market is softer in more affordable areas like Maple Ridge, Port Moody and Coquitlam, which have lost some market share over the past year. Median price growth is relatively subdued here – Coquitlam’s median price fell both last autumn and over the winter.”

—- note the article doesn’t say how much the median price is down in these areas–if they did it would scare the crap out of homeowners who don’t have a clue what’s going on—talk about a glut of listings coming on !!

http://www.vancouversun.com/business/real-estate/Housing+bubble+fears+over+inflated/5158554/story.html

#131 Robert Dudek on 07.29.11 at 5:19 pm

What kind of booze? Vodka? Rye? Rum? Whiskey? Beer? Wine? What would be the drink of choice as one surveys the nuclear wasteland for potential threats?

I would think you’d want to diversify your portfolio.

#132 David Jensen on 07.29.11 at 5:20 pm

Garth,
Most major Canadian cities, like the Loony Left Coast, Toronto, and the cities in economic decline are in trouble.
Edmonton will be one of the few exceptions. Alberta is on the cusp of another boom a lot longer than 2003 to 2007, and that, coupled with interest rates THAT ARE NEVER GOING UP, will be enough to prevent house prices from falling significantly.
About those interest rates…next move will be a BOC rate CUT, not a hike.
I’ve been calling anyone expecting big moves up in interest rates nuts for a while. Today’s GDP numbers north and south of the border guarantee Mr. Carney is on hold.
As for buying vs. renting, here in Edmonton, at these low rates, you can own for a lot less than renting, including property taxes.
In Victoria, I know a lot of people that are renting places for $2500 that are “worth” $1million or more, with $6000 a year property tax bills.
Yikes, not every city is created equal.

You’re to late. We’ve already heard that it’s different in Regina, Saskatoon, Red Deer, Oakville, Lunenburg and all of Manitoba. — Garth

#133 Math Teacher on 07.29.11 at 5:24 pm

#124 Imstupid

Stupid,

I’ve explained the obvious inconsistency in Mr. Turner’s equation (it is dimensionnally inconsistent). However, I’ve never discussed how he came up with it. Surely it may be questioned, but then we’ll have to question each and every one equation used by the so-called financial experts that tell people what to do with their money, – all of those equations have no more sence that Mr. Turner’s formula.

Why are you so angry, by the way?

Dimensionally inconsistent. This is a brilliant explanation for my career. — Garth

#134 Cookie Monster on 07.29.11 at 5:24 pm

Gold is used in helmets (and windows in fancy buildings) because it is the only metal that can be rolled so thin that it becomes transparent (while still providing the aforementioned insulation).
—–
Thin coating application of gold on glass is done by sputtering magnetron.

#135 Snowboid on 07.29.11 at 5:34 pm

115 Kevin…

I agree the pension is good, even with the clawbacks announced for April 2012.

The pension was one of the reasons I took a 30% pay cut (plus lost a living allowance) to move from the private sector.

Soon after I moved to government all the promised ‘perks’ except the pension disappeared. I guess if I stayed in the private sector that 30% invested would resulted in a similar pension.

Should Public Servants feel guilty? The majority shouldn’t because they know the blathering of outsiders means nothing. I used to take the flak too personally, but realized there are some broken records you can’t fix.

A contractor making $ 195K a year could surely dream of setting some money aside for an equally sweet, sweet pension?

Enough of my ranting…

#136 Robert Dudek on 07.29.11 at 5:42 pm

one reason would be that USA does not have a limited lifespan physically, thus there is no limit to their future income.

Yes it does. I’m pretty sure when the sun goes nova, the US will not be around.

#137 Junius on 07.29.11 at 5:44 pm

#82 Golden Stu,

Good post.

The point I have been trying to make is that our system is broken at a very fundamental level. The rise and control of the system by the banksters is one part of it but right now the most important part.

The old paradigms of right and left, conservative and liberal are inadequate to explain and to solve the current situation. People scream “free markets” when we haven’t had free markets for decades.

First of all, we need to get control of the money controlling our political system. Political contributions and lobbyists have taken control of our political system. It is bad in Canada but horrible in the US as the past few weeks (months? years? decades?) can attest. Just look at the gap right now between what the American population wants – no cuts to Medicare and Social Security with taxes increases to rich and corporations – and look at what both parties are offering them.

Secondly, we need to break up the big banks and bring in a more secure banking system that divides the traditional lending portion from the investment portion of the institution. Banking needs to be made boring again. Screw the bankers if they aren’t happy. The produce NOTHING of VALUE in this society. If they want to be gamblers they can go to the casino with their own money.

Finally, we need to re-examine our fundamental approach to economics. Our neoclassical view of economic behaviour does not account for either the role of human emotions and behaviour or for the myth that “free” markets are the same as competitive markets.

We need better rules to make business compete and avoid monopolistic, corrupt and short-sighted corporations from dominating our economy. The engine of growth and innovation is entrepreneurship. It has been stifled more by so called “free market” initiatives then by anything the last many decades.

Right now we are living in a zombie like trance expecting banks and large corporations to loan money or hire people to stimulate the economy. Forget it. Not going to happen. Ever.

Time for a new approach.

#138 need a mortgage on 07.29.11 at 6:12 pm

#85 Mr. Plow on 07.29.11 at 11:47 am

there is NO need for foul language on this public forum!

#139 Robert Dudek on 07.29.11 at 6:23 pm

“Everyone” wants to live in Vancouver? I discounted moving thee 20 years ago when it was actually afforadable because of the louse weather. I don’t see that anything has changed there.

Vancouver has the best climate in Canada, Canadians don’t want to move to the zoo known as the US and they are too parochial to move to any other part of the world (obviously generalizing here).

#140 Behavioral Finance on 07.29.11 at 6:34 pm

Basil Fawlty

Central banks are not in the business of buying investment vehicles. They usually will hold gold or other foreign currencies. Foreign wealth funds on the other hand will make investments shares and other financial instruments.

If we ever have a crisis that Gold Bugs are predicting you will have to start climbing Mount Everest since the food supply chain that currently exists will come to a scratching halt. No food = Complete Chaos.

#141 Victor on 07.29.11 at 6:50 pm

Republican bill passes, opening path to debt deal

WASHINGTON (Reuters) – The House of Representatives approved a Republican plan to cut the budget deficit on Friday that is doomed to defeat in the Senate but which could pave the way for a bipartisan compromise to avert a U.S. debt default.

With time running short ahead of a Tuesday deadline, Republicans pushed their deficit-cutting plan through by a vote of 218-to-210 after the leadership reworked the bill to win over anti-tax conservatives in their ranks.

http://ca.news.yahoo.com/vote-delayed-debt-bill-default-date-looms-010308473.html

#142 GregW, Oakville on 07.29.11 at 6:50 pm

Hi Garth, re: the economy and new home builds, for what it might be worth.

I talked with an electrical union executive member who is also an electrical contractor this afternoon, regarding electrical apprenticeship and train courses and there value, if any to myself.

While speaking to him he mentioned that in the Hamilton area new home building really slowed down in May of this year. He said the Canadian economy still isn’t doing very well.

And on his own, he mentioned the USA det ceiling issue and hope they get it sorted out by Monday or thing could get really bad here.

#143 Helicopter Ben on 07.29.11 at 7:16 pm

Bob Chapman interview…. Gold , Conspiracy, Debt ceiling .. all of Garth’s favorite subject. http://www.youtube.com/watch?v=Rp8trufEbsU

#144 jess on 07.29.11 at 7:48 pm

Reinhard and Rogoff – 90% debt to GDP is the paper our central banker made reference to in in one of his speeches. However, there are economists who have good points against this. Also, you gold bugs might want to read this as well.

http://neweconomicperspectives.blogspot.com/
================================
Hyman Minsky’s most famous book Stabilizing an Unstable Economy.

Central to Minsky’s view of how financial meltdowns occur is his Financial Instability Hypothesis (FIH) — what has come to be known as ‘an investment theory of the business cycle and a financial theory of investment’.
=
Background

Profits: The Views of Jerome Levy and Michal Kalecki

S Jay Levy (Jerome Levy Economics Institute)
Abstract

Profits are the incentive for production and therefore employment in almost all of the world’s economies; they also may represent exploitation of workers and consumers. Jerome Levy, using a complex process, derived the profits identity during the years 1908–1914. Michal Kalecki, taking advantage of the development of national accounting, derived it in the 1930s. Levy viewed the equation as a tool for developing policies that would enable capitalist economies to achieve high rates of employment. Recent American experience gives weight to his views. Kalecki’s insights from the identity strengthened his belief that unemployment was inescapable under capitalism. He would find empirical support in Europe’s high unemployment rates during the past two decades.

http://ideas.repec.org/p/wpa/wuwpma/0004056.html

http://www.frbsf.org/news/speeches/2009/0416.html

By Janet L. Yellen, President and CEO, Federal Reserve Bank of San Francisco
Minsky Meltdown: Lessons for Central Bankers
Levy-Kalecki formula—independently developed by New York physicist-entrepreneur Jerome Levy in 1914 and Polish economist Michal Kalecki in 1935 and then unified by American economist Hyman Minsky in the 1960s—is helping to better elucidate the relationship among debt, savings, and profits .Although Levy believed in the merits of capitalism, he hardly viewed it as a God-bestowed blessing. He wrote:
The working class is the original and fundamental economic class. . . . The function of the investing
class is to serve the members of the working class by insuring them against loss and by providing
them with desired goods. (Levy 1943)(1)
Levy continued:
“. . . the justification for the existence of the investing class is the service it renders the working
class, measured in terms of wages and desired goods. The contrary is not true. The working class
does not exist to serve the investing class. The working class has the right to insure itself through
organizations composed of its members or through government, thereby eliminating the investing
class.” (Levy 1943)

#145 timo on 07.29.11 at 8:22 pm

#132,

So the Bank of Canada warning Canadians now and back late last year means nothing to your “i am an island, all is well” vision of things.

http://www.cbc.ca/news/business/story/2010/12/09/bank-of-canada-global-shock-warning.html

go look up what happens to oil and commodities in a boom/bust cycle.

#146 TurnerNation on 07.29.11 at 8:38 pm

NDP will destroy the economy!!!!!??

Nova Scotia records $569.1 million surplus
Thursday, July 28, 2011
By Canadian Press

Source: The Canadian Press

Nova Scotia has recorded a surplus of $569.1 million for the past fiscal year, up more than $100 million it projected during its spring budget.

The province’s Department of Finance says an economy that performed better than expected and controlled spending account for the boost.

The government initially forecast a deficit of $222.1 million for the 2010-2011 fiscal year during its budget last year, and projected a $447.2 million surplus in April.

Finance Minister Graham Steele says the figures show that the NDP government is rebuilding the province’s finances.

But Conservative Leader Jamie Baillie says the increased surplus is a result of taxes that are too high.

Total expenses were $9.3 billion, a decrease of $171.5 million from the previous year.

#147 Bottoms_Up on 07.29.11 at 8:44 pm

#128 shane on 07.29.11 at 4:52 pm
—————————————-
Garth’s being serious. There are many people who pay to build their own home and when it comes time to sell they must sell for less than they paid.

#148 Bottoms_Up on 07.29.11 at 8:47 pm

#123 Peakoilist on 07.29.11 at 4:17 pm
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‘Rolling On The Floor’ LMFAO…hahaha, I’m still laughing at it.

#149 Bottoms_Up on 07.29.11 at 8:51 pm

#113 Peakoilist on 07.29.11 at 3:23 pm
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Disciple has shown us he is definitely not a scientist (although he is pretty good at questioning things which rings of scientism) and for sure not a microbiologist…I’d be curious as to what his profession/academic background is.

#150 TurnerNation on 07.29.11 at 9:00 pm

They control us with Energy. Food, hydro, gas, our time (wasted by the media), all are used for control purposes.

Back to the stones ages they are taking us: meat, once per week; candles, cooking over a fire/grill. Walking, biking, not cars. Meanwhile, WW3 must go – no expenses spared.

British Gas is increasing its gas prices by 18% and electricity prices by 16% on 18 August, the energy giant today revealed. The move will see the average annual fuel bill rise by £190 for millions of customers.

British Gas’ announcement comes just one month after Scottish Power revealed plans to hike its gas and electricity prices 19% and 10% respectively from 1 August this year.

http://citywire.co.uk/money/british-gas-hikes-gas-prices-18/a506959

#151 a prairie dawg on 07.29.11 at 9:11 pm

I watch this market like a hawk..this property has had a bizarre listing history.

Jun 17 2009 — 2.95M
Aug 9 2009 — 3.55M
Aug 11 2009 — 4.55M
Aug 24 2009 — 3.45M
Aug 25 2009 — 2.95M
Dec 31 2009 — 2.79M
Mar 09 2010 — 2.39M
Feb 11 2011 — 2.35M
Jul 26 2011 — 1.85M Power of Sale

Predictions?

– – –

Yup, I have one. Someone should be investigated for money laundering.

Who in their right mind buys a house on Aug 11 and sells it for a one million dollar loss, 13 days later on Aug 24th?

Then, who buys it on Aug 24th and takes a $500,000 loss the very next day on Aug 25th?

Must be HAM doing laundry…

#152 Math Teacher on 07.29.11 at 9:40 pm

Dimensionally inconsistent. This is a brilliant explanation for my career. — Garth

Right on! Keep up the good work!

#153 a prairie dawg on 07.29.11 at 9:58 pm

Maybe I should have connected the dots…

If I were in China, or in Canada trying to launder millions of questionable dollars, I’d either transfer the money from the Caymans or Switzerland or whatever obscure bank account I had it hidden in, over to the nice Canadian realtor promoting this property. What bank should I send the money to? Oh thank you. Transfer money. Sell to next HAM holder trying to legitimize his cash, rinse, repeat. When you run out of HAM, sell it for a loss to a real buyer. Done. Over. Now you have a cheque issued from a Canadian bank. It’s real Canadian money issued from a Canadian bank.

And it smells like a spring rain shower in Canada. Mmm… fresh laundry.

#154 Killer Chicken or Imploding Boomer? on 07.29.11 at 10:00 pm

101 LUYM – So hubby (who is very hard working apparently) goes on a bike tour and you invite the “yard
boy” over to do the “heavy lifting”?

Oh my………

#155 Bottoms_Up on 07.30.11 at 12:18 am

#151 a prairie dawg on 07.29.11 at 9:11 pm
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those are listing prices, not selling prices, correct?

Therefore no wash-rinsing-repeating of HAM?

#156 a prairie dawg on 07.30.11 at 2:35 am

OK, it was the ‘listing’ history. I stand corrected.

Never mind…