Fears

Geneesh came here four years ago. “Since then, all we have done is work and save,” he says. He’s 33 now, wife a year younger, kid due by Christmas. They’ve done great, pulling in over $150,000 a year, no debt and $90,000 saved. Smart guy. Reads the blog. Asks for advice.

“We live in downtown T.O. rent 1 bedroom condo for 1,850 a month. Our lease expires end of October, we have to move into a 2 bedroom condo/house as our parents will be over for 6 months to help with the kid.

“So, should we rent something decent, or buy something like this?  I have been following this property for past 5 months, 2 price reductions so far started at 479,000, reduced to 459,000, and now 439,000.I think we can get this for somewhere between 400 – 415. That will cost us about $2,400 a month, including $1,000 for monthly fees and taxes.

“Having done all this math – I am still scared at the thought of buying, cuz this will mean after 20% down and the other expenses I will be left with a 320 K mortgage and a 0 bank balance.Which I have never seen so far in my life. Fears of recession, downturn, housing collapse etc. – it’s very frustrating. Help?”

Well, Ganeesh, you picked a fine day to ask. Stock markets launched off tall buildings, traders palmed themselves and the bad news kept on coming like a BF under a restraining order. Big broker Morgan Stanley suggested Europe and the US are almost in recession. This was supported by the Philly Fed (don’t bother asking) report showing US manufacturing has sunk to 2009 levels. Ditto for the housing market. Home sales plunged to the lowest point this year and prices still cascade lower.

It simply means the economic recovery has stalled. Recession could replace growth. And this happens after governments have slashed interest rates, spent trillions on stimulus and bailed out entire industries. The consequences are clear, if the economies of America and Europe flatline. We’re next.

So equities tanked again after last week’s recovery, which is de rigueur. More interestingly, so many investors stampeded into US bonds that prices spiked and yields plunged. Incredibly, the return on a 10-year Treasury fell below 2% for the first time since… ever. Bonds finished the day yielding 2.06%, which is 0.01% above the previous record set in the dark days of December, 2008.

What does this tell us?

That bond investors have factored in a US recovery which takes years, not months. They’re willing to accept a return of less than inflation – negative numbers – just to be safe. This has some people saying stock markets could establish new lows in the next few weeks, setting the stage for a big rally once stuff gets too cheap to resist. Others think equities could fall to levels reached in 2009. From there, the road back up would be even more startling.

And still others, most of them living in the dumpster behind this blog, think the world’s ending, the US is insolvent and markets are headed for zero.

But, Ganeesh, this much is clear: Canadians are in for an economic surprise. Years of snail growth in America, combined with our higher dollar and lousy commodity prices suggest a bout of deflation, or close to it. Fewer jobs, lower wages, reduced prices and tumbling real estate values are the real world consequences. This means that old condo on the T.O. waterfront could be in the 300s in a few months. If you bought it at 410, you could lose half your hard-earned equity in a few months – one hell of a price to pay for a second bedroom.

This wretched little blog has tried to point out the fundamental risks to residential real estate in no fewer than 825 posts. That’s 660,000 words, or ten full-length books. Gotta be some perverse, twisted, pathetic record. And yet I still get emails like yours.

Of course you should not buy a condo just because you’re having a baby and expect visitors. Rent one. Hell, you’d be better off staying where you are and leasing a second condo for the inlaws for a year down the hall. That would soak up about the same as closing costs on a new place plus the additional monthly payment to move.

Remember, your wife on mat leave will drop your income. The kid will raise your expenses. Day care in a year or two will kill ya. The economy’s wobbling. You have no debt and lots of liquidity – why trade that for a mama mortgage, higher living costs and real estate nobody may want?

This is not the time to buy, no matter what mortgage rates are. Protect that financial wealth, and keep saving. Get some bonds in case deflation takes. Invest in assets that pay you to own them. Avoid tax by collecting dividends. Milk your TFSAs. If markets do tank, then stuff them with emerging market, health care, energy, large-cap and financial ETFs. The last thing you need is an illiquid, aging concrete box hanging around your family’s financial neck. Your kid deserves better.

Finally, Ganeesh, some bank-employed economists and desperate realtors will tell you this is precisely the time to jump housing. Compared to gyrating stocks, they’ll insist, real estate’s a sea of calm, and rates are low.

Don’t listen. They’re preying. You did not come to this great and favoured land to fail.

 

181 comments ↓

#1 No comments? on 08.18.11 at 10:25 pm

1

#2 Diffrent on 08.18.11 at 10:29 pm

“825 posts”

Congrats Garth. You’re indefatigable. Keep on keepin’ the flame alive.

#3 first on 08.18.11 at 10:30 pm

first

#4 jess on 08.18.11 at 10:32 pm

OUTRAGE

shackles servitude

The system offers many athletes the chance to bring honor to their families and country through competition. But some of these athletes find that the Olympic rings become shackles that bind them for years in indentured servitude to a government that frequently neglects their scholastic education and ignores their injuries while taking a sizable cut of their earnings, all in the name of national pride.

240,000 retired athletes suffer from injuries, poverty and unemployment.

One of those is Zhang Shangwu, 28, a former gymnastics champion who was discovered last month begging on a Beijing street. Selected at age 5 by the Hebei provincial government, Zhang won two gold medals before he injured his Achilles’ tendon during practice in 2002. He was forced by his coach to continue training. Sports officials then denied his request to study academic subjects and finally parted ways with him in 2005 with a pension of 38,000 renminbi, or $4,750, he said. “It was barely enough for food and the clothes on my back,” he told The Beijing News. Unskilled and unable to work because of his injury, he sold his medals for the equivalent of $13 and then was caught stealing. After being released from prison, he turned to panhandling.

The ensuing publicity of Zhang’s plight fueled outrage …
new york times

#5 vyw on 08.18.11 at 10:33 pm

Should never buy a condo IMHO (high fees, special assessments, crazy Board members), just rent them instead.

On craigslist, there are many 2bdroom condos for rent at less than $1850 a month.

#6 ken on 08.18.11 at 10:35 pm

Great advise, interesting times ahead.

#7 busman7 on 08.18.11 at 10:35 pm

Don’t see the reasoning in buying bonds when inflation is higher than the interest. Better off just burying the cash in the backyard, that at least keeps it under the taxman’s radar!

Quality Canadian corporate bonds pay over 4%; preferreds 5% or better; high-yield Canadian corporates much more. — Garth

#8 Steven Rowlandson on 08.18.11 at 10:35 pm

With real estate it is a long way down before fair market value is possible. It may take a little while and most realtors, banks and home owners won’t enjoy it.

#9 R on 08.18.11 at 10:40 pm

I think I’ll know the tide has turned when I finally see a bus shelter or billboard somewhere in Mississauga without a realtor’s face plastered on it.

Free Staging! Your home sold in 30 days or I’ll buy it!

#10 not 1st on 08.18.11 at 10:48 pm

You only saved $90k after tax dollars in 3 years? My house gained $400k in tax free capital gains in the same time. See what standing on the sidelines gets you.

Your house gains nothing until you crystallize it. — Garth

#11 Van MD on 08.18.11 at 10:50 pm

Bank of Canada released Review today, suggesting Ottawa to increase down payment requirement.

(note: LTV ratio of 80% = DP of 20%; LTV ratio of 95% = DP of 5%; to lower LTV ratio = to increase DP)

“They consider the impact when the public authorities respond to a credit boom by lowering the regulatory maximum LTV ratio below its long-run setting of 80 per cent. The extent of the countercyclical response of the LTV ratio is determined by a regulatory rule that links the change in the LTV ratio to the level of mortgage credit relative to its long-run value. Housing booms and busts are often attributed, at least in part, to an easing of mortgage-underwriting conditions. We now turn to the case in which lenders themselves supply more credit and consider how the outcome might differ if the LTV ratio was lowered in response.”

(source: http://www.theeconomicanalyst.com/content/bank-canada-review-released-flaherty-now-under-pressure-adjust-down-payment-rules)
(Actual BoC Review PDF is linked to in the article)

#12 William Tucker on 08.18.11 at 10:50 pm

After reading this I have only one question. How does an immigrant who came here only four years ago make 150.000 a year and have 90 000 in the bank? There are people who have lived here there whole lives and don’t have that. This story is missing something and it wreaks.

Maybe this is an immigrant who can spell. — Garth

#13 Pat @ YVR on 08.18.11 at 10:50 pm

Here’s some inside info about the house of cards that is the real estate market in Vancouver – and the extent to which some greedy individuals will go to make money.

There is a group of about 10 investors who is actively manipulating prices in markets where they own houses. Their strategy is to purchase a home in a target neighbourhood at a price well over the asking price. What this does is raise the current market value of the other homes in the area. Then viola – they turn around and sell their homes at inflated prices.

#14 Snowboid on 08.18.11 at 10:50 pm

#5 vyw…

Agree entirely, unless the price is right. We are watching ‘re-listed’ condos in the Okanagan come down $20-40K a pop now.

So far the one we are renting the neighbours are good, strata fees okay (under $ 300) and the strata council seems sane.

But they will still have to drop at least 40% in value before we will buy.

Two here have dropped 10% since we moved in three months ago, so we will see…

#15 Adviser on 08.18.11 at 10:56 pm

The problem with Garth’s advice is that common people are afraid of investing and are prone to becoming a bank salesman’s dessert. Folks tend to assume real estate is a safer bet when stock markets gyrate by 5% daily, on every second day it seems.

Creating a balanced, well hedged portfolio requires capital, knowledge, trust and integrity as well as discipline and a set of iron balls. Distributing your funds over several mutual funds with 3% MER’s, deferred sales charges and frequent trading penalties does not constitute a balanced portfolio.

Most don’t have it, can’t swallow large swings and prefer to sleep well at night.

My personal opinion, let the markets play it out until the smoke clears up as there is an abundance of conflicting evidence pointing both ways. Stay liquid and keep an open eye for opportunities.

Cheers and be patient friends,

#16 Goldenfox on 08.18.11 at 10:59 pm

On the same day that Sherry Cooper of BMO goes on air to reassure Canadians that, unlike banks in the US and Europe, Canadian banks are well-prepared for the potential counter-party risk……………………………………………………………………………….Boy do I feel reassured when they drag out this old banking hack to pontificate to the sheeple…………………………remember when our dollar was 63c, she wanted us to join up with the $US or when the nasdaq was 5000, she said it was a good buy. Why doesnt anybody call her on this and cant the MSM find anybody credible to comment on the economy?

#17 not 1st on 08.18.11 at 11:00 pm

Are canadian banks as solvent as they say they are? The world is starting to wonder:

http://www.zerohedge.com/news/next-domino-fall-canada

This has been posted here a dozen times. Pay attention. — Garth

#18 Maya on 08.18.11 at 11:01 pm

True, I looked through mls and saw a big bunch of price changes (reductions) in van area. Most of them have been on market for few months. Just wait to see, if the HAM stops coming, the RE market will definitely dry up. For the local working class, we’d better be prepared for the worst (job cut or income cut).

#19 WI Boomer on 08.18.11 at 11:01 pm

Ganeesh-

listen to the Garth-Meister, his advice is first rate. Usually I agree with Garth, but not everytime, as he seems to be too in favor of Bank Preferreds. I’ve seen what nutso US Bankers can do, no expectation Canadian Bankers have a firmer grip of reality. Otherwise, we are close in our opines.
Good luck with the new babe enroute, they’re cute until they grow an attitude by their teenage years, by then too late to leave them on someone’s front stoop.

#20 BC Bring Cash on 08.18.11 at 11:07 pm

More stimulus or no more stimulus. I think Neil Reynolds of the Globe and Mail has it right. Stimulus does not work. Just delays the inevitable pain and suffering and makes it so much worse.
http://www.theglobeandmail.com/report-on-business/commentary/neil-reynolds/the-signs-are-clear-no-more-stimulus/article2131409/

#21 Min in Mission on 08.18.11 at 11:11 pm

Excellent post today. IMHO, which like the markets, is worth less today than yesterday, the events described in today’s post (flatlining, stalled recovery, asset deflation) are all going to happen. I expect us to experience “Japan’s lost decade.” Except in French and English.

Great suggestion about the relatives. Just lease another. Cheaper in the long run.

#22 Devore on 08.18.11 at 11:12 pm

Pardon me for asking, but what’s so great about this $1850 1 bedroom condo? $1850 should be getting you into a 2 bedroom.

#23 USA A-OK on 08.18.11 at 11:16 pm

The leading indicators are dropping all over the place. Today, the Philly Fed came in at -30something. And the ECRI index has been declining for months: http://www.planbeconomics.com/2011/08/17/chart-ecri-leading-index-declining-since-spring-2011/

But Canadians buying gold as a safety net need to know what they’re getting into: http://www.planbeconomics.com/2011/08/04/canadians-beware-if-you-own-gold/

Tread carefully.

#24 T.O. Bubble Boy on 08.18.11 at 11:21 pm

Who on earth would consider buying a condo with maintenance fees of $743.51 per month???

Was this built by Lanterra (the glass-crashing developer) or something?

#25 SM on 08.18.11 at 11:21 pm

Ganeesh – my husband and I have been in a similar position. I wrote Garth a few years ago for advice (while expecting our first child) on when we could expect to enter the crazed housing market. While it has been hard to ignore the constant pressure from family to buy a house (as if life only begins when you have a mortgage), we have followed Garth’s advice to continue renting. We recently moved, with the birth of my second child, into a brand new 2 bed + den, just down the street from your condo of interest, and are paying several hundred less than your estimated costs in rent.

You can & will find a nice home for your family at a reasonable rate. We are personally trying to get our investments in order to make them more active (as per Garth’s suggestions). But I can assure you that at a time in our lives that is already filled with sleepless nights, worrying about debt and paying for our daughters’ education is not keeping us up. Knowing that we have that covered is my idea of luxury.

#26 truth_hurts on 08.18.11 at 11:26 pm

DELETED

#27 NFN_NLN on 08.18.11 at 11:33 pm

“Get some bonds in case deflation takes.”

You did say a couple posts back that if you bought bonds now is the time to harvest the gains. I bought a long time ago and sold after the recent stock blip… with a nice profit. Was I suppose to hold on to those?!!??!

#28 P F Murphy on 08.18.11 at 11:48 pm

Of course, with the baby bedded down in the other apartment with the parents at least occasionally, you will get the rest you need to continue being an upwardly mobile employee and you might find something else to do to fill your late nights. Money well spent?

#29 Smoking Man on 08.18.11 at 11:53 pm

Kids so sorry for not posting wisdom on a reg basis, hanging out in margarita ville for the last few days, ya I got a problem.

Why are we so obsest with money and cerlebiry worship…

had a nother drunken heart to heart with dumb ass son who wants to joing the army.

This is what I said.

Son admit to yourself you are a losser, usless slob….get comfortable with it….. once you do that, focus on what you love to do….noone will expect any different, the pressure is off, you are at the bottom…..who cares…..set in your mind that you will never make money…you will always be a losser. do what you love to do, get good at it become the best.

Then money if that is important to you, if you are weak and that definds you it will will fall from the sky…

Know most of you think I am insane, your right.. but I am brilliant, too bad everyone does not have a dad like me..

#30 debtified on 08.18.11 at 11:59 pm

After four years of reading your blog, Garth, he still asks you whether right now is a good time to buy a $400K+ condo? And you called him “smart” on the first paragraph? You must be a saint with a patience like that.

By the way, didn’t you start this blog in 2008?

Anyway, you didn’t answer my question yesterday but the market gave me the answer I was looking for today. I think, until the market calms down a little bit, it’s prudent for the retail investor to preserve capital and stay on the sidelines for now. As I have said before, just like the real estate market, the equity market is also due for a correction. The latter seems to be correcting first.

I still can’t believe you actually never said, categorically (just like how you warn people about the impending real estate correction), that we should stay away from the equity market right now until it has undergone its own correction. You could have saved all of us ~10% of losses (so far). You know that, just like real estate, this equity market is not governed by fundamentals. Rather, it is sentiments and the overwhelming sentiment right now is calling for a downturn. On the same token, it is the reversal of current bullish sentiments on real estate market that will make your predictions come to fruition.

Just for the record, before you bash me for sounding like a doomer, I am actually not one of those who think it’s the end of the world. I also don’t think the US is going to go belly up in my lifetime. And I wish the gold nuts leaving condescending comments on this blog would just shut up and enjoy their gains before the gold bubble bursts.

I am very optimistic about the future of the world. We just have to go through the pain of debt deleveraging, which is inevitable. Decades of over consumption fueled by easy money has brought us here. That’s the past. Lesson learned (I hope). Let’s get on with the process of “withdrawal” so we can finally look forward to a better future.

I thank you for your public service by hosting this blog. I have learned a lot from you and from some of the people here. Take care.

#31 John on 08.18.11 at 11:59 pm

#12 William Tucker on 08.18.11 at 10:50 pm
After reading this I have only one question. How does an immigrant who came here only four years ago make 150.000 a year and have 90 000 in the bank? There are people who have lived here there whole lives and don’t have that. This story is missing something and it wreaks.

– try and make it with one car, cut down on morning latte’s, pack your own lunch and rent a decent place. You could save an additional 20K a year easily. Been there, doing that.

#32 Jon B on 08.19.11 at 12:12 am

I like learning of immigrant success stories. Truly some of the hardest working people around. It would be a shame for him to get caught up in the fog of over priced real estate.

#33 Hoof-Hearted on 08.19.11 at 12:13 am

Condo: (Definition)

A piece of sh*te , usually built with wood or concrete, used as a means to generate cash flow in quasi- perpetuity for the given Local Gov’t( ie DCC’s, permits and property taxes) in whose jurisdiction the condo exists therein.

The goal of a condo is
—-to enrich developers
—-impoverish fee simple owners aka strata $laves
—-allow the Local Gov’t to achieve pagan/ druid brownie points as to conservation of greenspace, quality of life , economic and otherwise,be damned

#34 Nostradamus Le Mad Vlad on 08.19.11 at 12:26 am


Ganeesh already knows it’s way cheaper to rent, but don’t fear! There’s a link further down entitled “Bovine Excrometer Alert!” — that will all help us to sleep like bugs in rabid rugs!

“We’re next. What does this tell us? Canadians are in for an economic surprise.” — More like britting shicks; it may be a lot closer than anyone realizes, and when sheeple do recognize the reality that’s hit them, they will be toppling quicker than pins in a crowded bowling ball alley.

Ganeesh and family should stay where they are and (as you say) rent a second one for the extended family while staying liquid. Easier to handle mentally.
*
#179 TurnerNation on 08.18.11 at 7:22 pm — “The largest transfer of wealth from the public to private sector is about to begin.”

There it is, keywords being “transfer of wealth” — the second half of 2011 is when TSHTF, wars across the MEast and rioters in the streets.

And the looneybins we elected are running this show — we’re just along for the ride, getting shafted every which way!

#199 Nemesis on 08.18.11 at 9:52 pm — Thanks for the update. I don’t bother watching TV anymore (except for soccer), but I appreciate the feedback. Yes, I do recall our conversation!

#16 Goldenfox — “. . . remember when our dollar was 63c, she wanted us to join up with the $US or when the nasdaq was 5000, she said it was a good buy. Why doesnt anybody call her on this . . .” — Excellent questions, Goldenfox.

Unfortunately, no one has the guts to do this, which is a shame, as they would be proven correct, whereas Ms. Cooper would be a fly-by-night huckster continually spinning her pointless drivel.
*
Winners! Best food restaurant names. Dickheads is not one of them.
*
Swiss Franc Talk about inflation! Protectionism Shutting up shop? Chavez Interesting POV. Could be he knows the US$ is getting slaughtered (see link for Putin), and wants to keep Venezuela’s economy steady; Stagflation in bonds, PMs? Economic Myths Fact and fiction separated; Greece, Satisfaction and Anxiety Attack; And Off we leap the ZIRP cliff.

Bovine Excrometer Alert! GW causes aliens to invade earth using the WH(!) Stay tuned; Two weeks of rain falls in 30 minutes. GW? Probably; China, radiation and other goodies; Hiroshima to Fukushima The job is almost complete; 3:03 clip “An Apache Helicopter fired on innocent civilians celebrating the defeat of the rebels, they were in a central square of Zawia.”; Putin Maybe the reason he is ‘ignoring’ the storm is because he has other things to look out for, such as war, but here is China’s soon-to-be top gun.

Libya Never under-estimate a country’s people to fight); California For a broke state, they sure are letting a ton of immigrants in; New Approach Be good if it works on all abusive fans; Obama Great reason for a FF. Did wonders for dubya when 9-11 happened.

#35 Kilby on 08.19.11 at 12:28 am

#12 William Tucker.

Maybe Ganeesh is a doctor that spent 8 years in school. We need doctors. What did you invest in your education?
Your post does “wreak” of redneckism…(Is that a word?) Maybe it could be.

#36 TOC on 08.19.11 at 12:30 am

More food for thought
http://www.zerohedge.com/news/next-domino-fall-canada

#37 AB Bust on 08.19.11 at 12:39 am

Atleast the Americans were getting into houseporn blind. what’s our excuse?

#38 debtified on 08.19.11 at 12:47 am

I misread the sentence: “Geneesh came here four years ago.”. I thought “here” meant the blog. Now I know it meant Canada. Please ignore the first two paragraphs of my earlier comment above. I apologize.

#39 NorthOf49 on 08.19.11 at 12:48 am

Ha, nice pic! Hamilton – corner of Upper James St & Mohawk Rd. Sign targets all the folks coming out of the No Frills. With the vaporization of steel jobs in this town, I wonder how many fall prey to these quick buck artists. You want to know how tough things are in Hamilton? See that Canadian Tire in the background of the photo? Not so many years ago a shoplifter ran out the front doors with an armfull of merchandise. The intrepid CT sales staff chased him down the street and through backyards till they caught him. Exhausted as he was and with the CT guys pinning him down for the cops, the poor bugger died. Be forewarned, don’t ever mess with Crappy Tire in this town. Try the Home Depot instead, their steel-toed boot slow em down.

#40 Jane on 08.19.11 at 12:49 am

No debt and liquidity = choice, and choice means freedom

Ganeesh, get the unit down the hall. You and your new family will appreciate the privacy at all hours of the night, and your parents will get some sleep and be so much more use to you and your wife!

Garth, good post. Thanks.

#41 poco on 08.19.11 at 12:49 am

Snowboid–from post 202

That was fast, on July 22 you said:

“I love the sound of renters money in my piggy bank”

Was that a sarcastic remark? I originally took it to be serious
______________________________________________

you will quickly notice that DA talks in circles–never giving a yes or no answer to any question put to him–always on the “fence”

from all his posts in the past–(and i do believe he holds the record for 1 day–23posts) i do not ever recall him saying that he owned rental property—– i also noticed the above remark on July 22
DA claims to be a realtor–i have my doubts—i threw many questions regarding RE his way in the past and all went unanswered — he tends to forget what he has posted in previous blogs and has been chastised by many of the bloggers for it

here’s his response to bigrider–you try to decipher it

——As much gut instinct as anything else. So there is no “elaboration” I can offer which might compel you to follow. What I can say is I do believe so to the point that I am personally contemplating getting back into that game from which I withdrew some three years ago in anticipation of what happened shortly there-after, all-be-it not nearly to the degree we all thought it might. It’s been three long years. If it was going to happen to the degree we thought it would have happened so by now. There may be another that lies in wait but we’ll deal with that different beast then. What are you going to do; hide in a dark basement the rest of your life to avoid… “life”?

I’m willing to bet that the will to survive and make a better place for themselves will outlast and overcome any setback the economy throws at people. Beyond that if and when they fail nothing else will matter any way.

#42 Ghost of Tom Joad on 08.19.11 at 12:56 am

Max Keiser: Fourth Reich (Aug 18, 2011) New Europe Eco-Order
http://www.youtube.com/watch?v=plLWTa-zlQM

Gold going parabolic -> $1842

“DID SOMEBODY MAKE AN ANNOUNCEMENT TODAY THAT THE WORLD IS CLOSING DOWN? IF YOU STILL HAVE STOCKS, GET OUT NOW! Put the proceeds into silver and gold, and take everything you’ve ever learned about “diversification,” by which the experts all mean “buying different stocks” and throw it out in the carport and beat it to death with your ball peen hammer. ”
http://silver-and-gold-prices.goldprice.org/

#43 ruraldude on 08.19.11 at 12:57 am

Why is George Soros selling gold and buying farmland?

http://www.thetruthseeker.co.uk/?p=32236
Discuss

#44 Bill Grable on 08.19.11 at 12:58 am

Ganesh. Think Obi Wan Turner has it right…”rent, Ganesh, rent”.
Yoda would say, “happier and wealthier you will be”.
You bust your fanny to save the Semolians…don’t blow it.

#45 Nemesis on 08.19.11 at 12:58 am

…”… That’s 660,000 words, or ten full-length books.”… Hon. GT

SmartyPants.

#46 Helicopter Ben on 08.19.11 at 1:02 am

PBS Video: Land of the Free, Home of the Poor http://video.pbs.org/video/2096164335

#47 tkid on 08.19.11 at 1:02 am

Dedicated to all the Doomers

#48 Cookie Monster on 08.19.11 at 1:04 am

Bank of Canada injects funds to keep rate on target

Aug 11 (Reuters) – The Bank of Canada has injected hundreds of millions of dollars into the market, for the first time since December, to lower the overnight interest rate toward the central bank’s 1 percent target and improve liquidity.

The bank injected C$305 million ($308 million) on Wednesday and C$375 million on Thursday, its website showed.
http://uk.reuters.com/article/2011/08/11/canada-economy-bankofcanada-idUSN1E77A1CR20110811

More inflation in the pipe, pump, pump, pump…

#49 Mrs Loquacious on 08.19.11 at 1:05 am

Our family is also growing (as of January 2012) and like Ganeesh, our humble abode is not quite large enough to accommodate a baby, baby furniture and accessories, and some longer-term visitors (aka my parents). However, putting our hard-earned $ into a property that is probably going to drop in value is simply not an option, so we’re looking to rent a larger place at a comparable rent in a comparable location.

There are many desperate owners who would be more than happy to rent to a professional couple who can help them with their mortgage payments, particularly stable young families with regular incomes. I look at it as a win-win; the owners have reliable long-term renters who can help them (in part) with their crazy mortgage payments, and we don’t worry about property taxes, decreased home values, condo fees, landscaping, interest payments or repairs. And best of all, we are able to save about $40K/year, which really helps us sleep well at night!

#50 Cookie Monster on 08.19.11 at 1:08 am

Bank of Canada injects C$665 mln to lower rates
REUTERS — 1:42 PM ET 08/18/11

* Uses SPRAs for only third time since December

* Other two times were last week

OTTAWA, Aug 18 (Reuters) – For only the third time this year, the Bank of Canada injected funds into the market on Thursday, to lower the overnight interest rate toward the central bank’s 1 percent target and improve liquidity.

It injected C$665 million ($672 million) via special purchase and resale agreements, or SPRAs, buying securities with the agreement to sell them back the next business day.

“These are standard midday operations to reinforce the target for the overnight rate,” spokesman Jeremy Harrison said.

The bank also injected overnight funds last Wednesday and Thursday, for C$305 million and C$375 million respectively. [ID:nN1E77A1E6]

https://news.fidelity.com/news/news.jhtml?articleid=201108181341RTRSNEWSCOMBINED_N1E77H17U_1&IMG=N&cat=default&ccsource=rss-default

Question is why and do they actually sell them all back? Makes one wonder.

#51 Hoof-Hearted on 08.19.11 at 1:13 am

Yeah..kind suspected this would happen.

BAIL OUT BANK DEMOLISHES NEW MODEL HOMES- HOUSING MARKET COLLAPSE

http://www.youtube.com/watch?v=4Ilayp2ykts

VICTORVILLE MODEL HOMES DEMOLISHED – SHOCKING VIDEO

http://www.youtube.com/watch?v…..g&NR=1

#52 Priced_out on 08.19.11 at 1:18 am

#12 William Tucker asked
“How does an immigrant who came here only four years ago make 150.000 a year and have 90 000 in the bank? There are people who have lived here there whole lives and don’t have that. This story is missing something and it wreaks.”

Sir William
For your kind information this country has run by immigrants now, if you look at the housing boom, it has only happened when immigation doors were opened for foreigners so the wobbling economy could be stabilized.
I am one of the foreigners who has been in this country for little less than 2 yrs. We are big savers and so far we have saved close to 70,000. Renting a 3 bedroom in Mississauga for 1550 + util.
Only reason is we know how to live within our means and natives are gorging on debts thinking they are born to spend, all thing remains constant 10 yrs down the road it will make a difference… I am sure.
So my advice to you if you have been a failure in your life despite of the fact that you were born in this land of opportunities, I wish you have learned some skill during this time rather than being a BIG SPENDER

#53 dd on 08.19.11 at 1:31 am

…It simply means the economic recovery has stalled. …if the economies of America and Europe flatline. We’re next…
””””””””””””””””””””””””””””””””””””””””””””””’
You just said last month that Canada will not head towards a recession. ‘The world will muddle through but no recession.’ Too funny.

#54 dd on 08.19.11 at 1:34 am

#7busman7

…Don’t see the reasoning in buying bonds when inflation is higher than the interest. Better off just burying the cash in the backyard…

Wow. You will have nothing left in a couple of years.

#55 Calgary on 08.19.11 at 1:37 am

Renting and loving it….majority investments in cash so a dropping stock market is interesting not scary. Decisions, decisions…

My bet is deflation for a few years…

#56 April on 08.19.11 at 1:41 am

Junius, always like your posts. I’m interested to know where one can buy a house for 50K…. not in Canada … well maybe if it’s in a very remote area?

#57 shanks on 08.19.11 at 1:49 am

garth, by dumpster, do you mean your comments section? lololol….

Ganeesh, take it from the i, garth is absolutely right. Why would you trade positive cash for a heap of debt and more monthly costs? youll be waiting a long time before you will ever crystalize it into profits. Give it another 3 or 5 years, save another 90k, and GET A PLACE WITH A YARD!!!

1

#58 Hashnugs Inthebong on 08.19.11 at 2:02 am

The maintence fees should be enough the rent the inlaws a 1 bedroom?

#59 DML on 08.19.11 at 2:41 am

Here’s a long term chart on 10 year yield,a 30 year bull
market…

http://ca.finance.yahoo.com/q/bc?s=%5ETNX&t=my&l=on&z=l&q=l&c=

#60 Jas Girn on 08.19.11 at 2:59 am

Garth, you are the man! I love your blog, though I do not agree with everything. But still, you are the man! Keep up the great work.

#61 Tony on 08.19.11 at 3:05 am

You forgot to tell him when housing falls in price rent decreases follow making renting the smartest thing he could do.

#62 Harlee on 08.19.11 at 3:07 am

#24 T.O. Bubble Boy
I saw a national news broadcast that said that Lanterra is going to replace the glass that has been breaking with laminated glass. It is still possible to break,but not explode like the old glass. My question is why aren’t they finding a way so that the window glass doesn’t fall in the first place? I live in a 43 year old 3 story apartment building and the windows really should have been replaced by now.However, after living in the building for over 13 years I have yet to hear of any of the windows popping out. They just don’t build buildings like they used to…..

#63 TOC on 08.19.11 at 3:21 am

….and got one more to add to the other one….

http://www.greatponzi.com/articles/20090915-big5banks.html

#64 Immigrant on 08.19.11 at 4:21 am

to William Tucker:

Work hard, drink less beer and watch less Toronto Leafs.

I work 60h per week and take 7w vacation. I earned $218k last year alone.

#65 scared in vancouver on 08.19.11 at 4:46 am

Hi Garth

We held back and used the cash for some financial assets. We had bought some ETF’s and preferreds, and was able to put some more money today in other portfolios. Thanks to you we’re making our money do the work for us. Keep up the Excellent blog.

#66 Onemorething on 08.19.11 at 5:25 am

Get used to this hyphenated word!

DEBT-DEFLATION

#67 Rob now in Nova Scotia on 08.19.11 at 5:27 am

I know this isn’t a PM blog but have you seen the price of G–D lately? Now that’s growth and that’s what Ganeesh should be buying with his savings.

#68 Seven Stars and Orion on 08.19.11 at 6:37 am

#12
Thanks G.T., I love the burn of coffee in my nostrils in the morning….

#69 Chris no longer in England on 08.19.11 at 6:51 am

#12 William Tucker:

I too am an immigrant, with over $300,000 in savings. You seem to equate immigrants with lowly, menial jobs at the bottom of the chain. Many of us are professionals, came in on skilled worker visas, arrived with money to spare, and have continued to hang on to it.

But back to housing: prices where I live have dropped and the kind of place I want has become affordable; but the advice Garth constantly gives – why buy a place when you can rent it for less – has worked out for us. For more than a year I watched a few big country properties with acreage (overpriced) languishing unsold in my area. One in particular stubbornly refused to sell and so the owners decided to rent it instead. Guess who is moving in next month and paying only $200 more in rent than we already pay on a much smaller place?

Bingo.

#70 Jody on 08.19.11 at 7:07 am

#12 Mr. *ucker,

“After reading this I have only one question. How does an immigrant who came here only four years ago make 150.000 a year and have 90 000 in the bank? There are people who have lived here there whole lives and don’t have that. This story is missing something and it wreaks.

Maybe this is an immigrant who can spell. — Garth”

Because Geneesh and his wife more than likely have several jobs between the two of them, he is more than likely an engineer with more brains than a dozen Canadian born engineers. I doubt they piss their money down the toilet by drinking Molson’s, buying a 90 inch TV to watch football on, and a vibrating sofa to massage his 1000 pound arse.

Mr. Geneesh, don’t buy yet, like Garth Turner said, you’ll more than likely lose your downpayment by the time September rolls around. Markets are going to keep going down, until the US pulls it’s head out of it’s ass, this will take months and in that time who knows, there just might be a crash. If we are all still around this time next year not only will I be needing to buy a dozen books from Mr. Turner, I’ll also by some real estate because it will be more than 50% off it’s current price. Canada’s gonna get nailed like an 18 year old midwest blonde recently arrived in LA.

#71 T.O. Bubble Boy on 08.19.11 at 7:12 am

Here’s a good comparison — the Chinese Government trying to control the housing bubble is like a child playing whack-a-mole:

http://blogs.wsj.com/chinarealtime/2011/08/19/whack-a-mole-imf-not-impressed-with-china-bubble-management/

… as opposed to Canada, where F trying to contain the housing bubble is like a kid staring at the whack-a-mole machine and wondering where to stick a Conservative Party of Canada logo on it (while telling everyone how prudent we’ve been because the whack-a-mole machine looks balanced).

#72 Moneta on 08.19.11 at 7:36 am

You only saved $90k after tax dollars in 3 years? My house gained $400k in tax free capital gains in the same time. See what standing on the sidelines gets you.

Your house gains nothing until you crystallize it. — Garth
——————-
It’s amazing. Anybody who manages to save 90K should be admired. It’s really hard for the average Joe to do this considering the social pressure and temptations. Our society is made so we can easily part with our money.

And then these people with great amazing discipline get dumped on by free loaders.

What a world!

#73 Onemorething on 08.19.11 at 7:40 am

Good Article on Swissy NosLMV

I bought more at .80! Temp softness only. I look for par to EURO!

#74 yorel on 08.19.11 at 7:49 am

To all those who think they have to upscale their living quarters so their parents can move in to “help” with the new baby: look after your own kids like everybody else used to.

#75 Ex-Cowtown on 08.19.11 at 7:57 am

After reading this I have only one question. How does an immigrant who came here only four years ago make 150.000 a year and have 90 000 in the bank? There are people who have lived here there whole lives and don’t have that. This story is missing something and it wreaks.

Maybe this is an immigrant who can spell. — Garth

+++++++++++++++++++++++++++++++++

I know several. They have technical training that is in high demand, they work their butts off like our grandparents and parents did and they say “No” to jet skis, new cars on payments, and even God forbid… their kids.

#76 Kevin on 08.19.11 at 8:03 am

Garth wrote: “Quality Canadian corporate bonds pay over 4%; preferreds 5% or better;”

Garth, I think I’ve asked you this before but didn’t get an answer: How does one buy “preferred” shares of a bank? My TDWaterhouse TFSA currently holds $12,000 in a high interest savings account. Say I want to move that to preferreds in TD shares. What’s the symbol? How can I tell whether I’m buying “preferreds” or just the regular shares? Any chance of a short primer on this stuff?

The [email protected] does not sell preferreds. — Garth

#77 Shane on 08.19.11 at 8:11 am

Garth, Are you serious condo prices could go down that fast in a few months?

Shane

#78 daystar on 08.19.11 at 8:12 am

#29 Smoking Man on 08.18.11 at 11:53 pm

You be careful now, bud. Negative reinforced “you can’t do it” to provoke the “yes I can” response only works on the rebels, credibility helps and lastly, “losers are not defined by success or failure, but by one’s ability to learn from their mistakes.” In other words, don’t make the same mistakes twice (that one’s worked well for me).

By the by, how’s your rehab comin’ along? :) Its ok, higher powers still love ya (potentially :)

#79 South of 49 on 08.19.11 at 8:28 am

Spelling error alert:

Paragraph 7 –

“And still others, most of them living in the dumpster behind this blog, think the word’s ending, the US is insolvent and markets are headed for zero.”

I assume that you meant to type “….think the WORLD’S ending” and not “…think the WORD’S ending”.

#80 Guitar God on 08.19.11 at 8:31 am

Hey Garth, something fishy’s going on. This site doesn’t come up on a google search anymore. Could the cartel be paying off google to block you? You are a dangerous man.

#81 bubu on 08.19.11 at 8:33 am

#12 William Tucker, somehow I find your comment offensive…what is wrong with an immigrant to make those money? We came 6 years ago and guess what… $300k saved excluding the pensions we contribute with the companies for about the same income… This is because of our long year of universities, hard work, careful spending and because we don’t waste money on things… and yes, we rent, because we know the value of the money and we don’t want to spend them on over evaluated houses. Nothing is missing from the story my friend… Immigrants can be educated people if you didn’t know yet.

#82 TurnerNation on 08.19.11 at 8:35 am

Wow…giving up 90k in savings for ONE extra bedroom in an older model condo building with staggering maintainence fees?

Why not RENT a three bedroom house or townhouse for 2000/mo or less and keep the 90k. I’ve seen many in the GTA like this.

Lesson here is, condos are for renting not buying, unless you happen to catch the curve on specking – btw we are behind the spec curve now. And no, old buildings with almost 4-figure maint. fees and late 80’s kitchen styles are not considered specking material.

This bloated old hog of a condo building should topple into the Lake if we are lucky.

#83 JeffinPickering on 08.19.11 at 8:40 am

Please repeat this mantra a hundred times a day, and with every single blog entry:

“Your house gains nothing until you crystallize it. — Garth”

I feel like I am having the same conversation with people around me on a regular basis who spew about how much they have “made” on their houses over the past X years, a la ‘I bought for 300K and now it is worth 600k’.

The (usually uwelcome) response from me is always a simple one: “Is there a sold sign on your front lawn? No? So, your house has actually made you nothing. In fact, it’s cost you a ton to own and maintain, even if you do sell it today”.

Don’t get me wrong; we have a house. However, we understand that a)houses that you live in are money pits from an investment perspective; and b)equity is an illusion, and in no way, shape or form a measure of “wealth”.

#84 TurnerNation on 08.19.11 at 8:45 am

I made my last post after reading only the first few paragraphs…I was so outraged :)

I see the next paragraphs echo my sentiments…

“…This means that old condo on the T.O. waterfront could be in the 300s in a few months. If you bought it at 410, you could lose half your hard-earned equity in a few months – one hell of a price to pay for a second bedroom.”

#85 Utopia on 08.19.11 at 8:47 am

#12 William Tucker

“After reading this I have only one question. How does an immigrant who came here only four years ago make 150,000 a year and have 90,000 in the bank? There are people who have lived here there whole lives and don’t have that. This story is missing something and it wreaks”.
———————————-

William, our country has been in the business of attracting highly educated people with specialized skills for a long time now.

As you know, our immigration program is one of the biggest in the world on a per capita basis. Few other countries accept as many newcomers. Many of those arriving do come with knowledge and capabilities that enable them to quickly climb the income ladder.

I will give you an example. I know a guy from East Africa who is now applying for citizenship. He was attracted here due to his world leading research into Canola crops and was making more income in his first month here than many of the people I know.

Should I resent him because he is African, an immigrant, from a poor country or because his education and training are much better than my own?

We need more people like him. They are contributing to better outcomes for our country and improving on products we export abroad.

#86 Another Albertan on 08.19.11 at 9:02 am

Cookie Monster –

Here is a Bloomberg article in which you might be interested. The Bank of Canada is performing a CPI “targettting” experiment with help from the economics department at McGill.

http://www.bloomberg.com/news/2010-12-06/fed-avoiding-deflation-may-depend-on-canadian-experiments-in-cpi-targeting.html

Everyone else’s mileage may vary.

#87 Utopia on 08.19.11 at 9:04 am

#56 April on 08.19.11 at 1:41 am

“Junius, always like your posts. I’m interested to know where one can buy a house for 50K…. not in Canada … well maybe if it’s in a very remote area?”
——————————————-
You won’t want to go to this place…..but far, far away from the maddening crowds and traffic congestion in the land of big agriculture and oil is the lovely province of Saskatchewan.

It is the land of milk and honey to my mind.

You can still buy houses there for less than 50,000. Small towns of course. Hell, the other day I told you all someone was trying to give me one for nothing. A free house. Totally livable too. Even includes appliances.

The guy is just sick of paying the taxes on it every year and leaving it empty. His options were to tear it down or give it to another. See, houses can drop to zero in some places. And they do.

I decided I would use it for a second garden because the yard is big and I like the tool shed. The house comes as a bonus. I might just store junk there because I don’t actually need another place to live.

And it is place to put my beehive.

#88 Utopia on 08.19.11 at 9:13 am

#53 dd

You just said last month that Canada will not head towards a recession. ‘The world will muddle through but no recession.
——————————————
Learn to read dd. He said no “Depression”. It is a word starting with a “D”. Garth has never stated we will have no recession as far back as I can recall.

#89 PEI Red on 08.19.11 at 9:19 am

Geneesh, having been a condo dweller myself, I wouldn’t buy that property if it was listed at $220k for a mulititude of reasons. (The condo fees are through the roof! Yikes!) Step away from the kool-aid and rent…I did it and am much better financially now. You’ve been smart up until now – be smart again.

#90 Moneta on 08.19.11 at 9:42 am

The (usually uwelcome) response from me is always a simple one: “Is there a sold sign on your front lawn? No? So, your house has actually made you nothing. In fact, it’s cost you a ton to own and maintain, even if you do sell it today”.
——
And it’s not just maintaining it, it’s also the cost of the lifestyle that goes with the wealth effect.

Rule of thumb… If you want to know how easy it was for someone to make their money and just how hard they had to work for it, just look at how easy it is for them to spend it. Easy come, easy go.

Equally important: the opportunity cost of owning. Having $300K of equity in your home is $300,000 that is not throwing off interest, dividend or capital gain income. The home ownership burden must include this. — Garth

#91 MasterBootLicker on 08.19.11 at 9:44 am

#16 Goldenfox — “. . . remember when our dollar was 63c, she wanted us to join up with the $US or when the nasdaq was 5000, she said it was a good buy. Why doesnt anybody call her on this…

Think you know the answer to this already. The Media is not there to inform us, it is completely controlled and used to spin a comfy false reality for the sheep to cuddle up to. Whenever is needed they trot out these paid off hacks and frame them as “experts”. But the average person worships authority and has no long term memory so it works every time, no matter how pathetic their track record is. They are on T.V so they must be right is the average persons logic. Just take all the top callers in our favourite shiny metal, and now look.

Media outlets are not controlled. Most are just lazy, cheap and unprofessional. — Garth

#92 EdmontonJim on 08.19.11 at 10:06 am

#12 William Tucker

Four out of nine of the engineers at my firm are immigrants, including my boss. All of them are smarter and more hardworking than I am. They deserve to be compensated fairly for that.

The American Dream is that of upward mobility – that it is posible for anyone to attain power and wealth through hard work and perseverance. The Canadian Dream is different. The promise of Canada is that no matter your birthplace, language, skin color, gender, intelligence, or religion – you can be a part of a greater community built on fairness and mutual respect. The two things we least tolerate are pretention and exploitation. Being born here doesn’t give you the right to exploit newcomers.

Get with it dude.

#93 NotAGreaterFool on 08.19.11 at 10:08 am

Interesting read: http://www.theglobeandmail.com/globe-investor/investment-ideas/streetwise/canadas-banks-next-dominos-to-fall/article2134871/

#94 Peakoilist on 08.19.11 at 10:20 am

Geneesh is so whipped it isn’t funny. He reads this blog, knows the correct answer, but is still so insecure that he has to ask us again.
He is afraid to buy, but is even more terrified not to buy. This is due to the influence of his wife and the in-laws, who will be moving in..poor dude, so weak. why do parents have to move in anyway? wth? Is child raising so much harder these days that two parents can’t handle it?, and to have to go into huge debt just to physically and mentally survive, knowing full well the risk of it all. This is insanity to say the least.
Geneesh and the little wifey…suck it UP !!

#95 Andrew Toronto on 08.19.11 at 10:21 am

Garth is this another means to keep this bubble going.. look at what’s being discussed now and rumour has it F and C will be advising Harper on this today.. Thoughts…on how this will affect housing here,

Recent international discussions have begun to examine the merits of adjusting mortgage market rules over time. For example, country authorities could change the maximum LTV ratio in acountercyclical fashion, lowering it during housing booms and raising it when house prices are depressed. One outcome of this type of policy is an increase in the resilience of the financial system since it requires borrowers to have a larger equity stake in their property during booms, thus reducing the potential losses to financial intermediaries during the bust phase when income and house prices fall. In addition, the lower LTV ratio (higher down payment) would act against the boom in the first place by reducing the extent to which borrowers could extract equity from their homes or take on more leverage to buy a bigger home.

#96 vreaa on 08.19.11 at 10:26 am

Request To Readers From A Producer Of ‘The Early Edition’ On CBC Radio 1, Vancouver

http://wp.me/pcq1o-2Om

#97 dd on 08.19.11 at 10:35 am

#88Utopia on 08.19.11 at 9:13 am

Learn to read dd. He said no “Depression”. It is a word starting with a “D”. Garth has never stated we will have no recession as far back as I can recall.
””””””””””””””””””””””””””””””””””””””””””””””’
Well if you have two are more recessions back to back it probably is just one depression. Take away the government stimulus and it would be.

The only depression today is wafting over from you. — Garth

#98 BrianT on 08.19.11 at 10:35 am

You gotta laugh at this unbelieveable B/S-didn’t they used to read entrails or something? It is like they used to go to the witch doctor or medicine man asking when will it rain-as if Sandra has the faintest clue what the US economy will look like years from now-what a joke http://finance.yahoo.com/news/Feds-Pianalto-years-to-lower-rb-3147092057.html?x=0&sec=topStories&pos=main&asset=&ccode=

#99 BrianT on 08.19.11 at 10:38 am

#91Master-The media is a business-expecting the media to inform the public or even tell the truth is like expecting McDonalds to provide optimum nutrition.

#100 BrianT on 08.19.11 at 10:42 am

#90Moneta-Very good point-if you have 3 mill in liquid investments you could live like a bum if that is your preference-no one will care. OTOH if you have a paid for 3 mill house, it is practically impossible to live like a pauper-a relatively high level of spending is societally mandated.

#101 Mr. Plow on 08.19.11 at 10:48 am

Devore, Rich Renter and Junius from yesterday…

Thanks for the discussion, sorry I wasn’t able to get back too busy.

You are all correct that I made certain assumptions, but then your arguments also are laced with certain assumptions. Let’s just say that it can pay to be a renter if you are disciplined enough to save the difference and rent while it is cheaper to rent, and own while it is cheaper to own.

But then I also think it is fair to say that if an owner is disciplined and pays off his or her property does not “move up” everytime the market goes up, nor moves when the market goes down (i.e., panics) that there can be some real benefits to owning over the long term.

The key in both scenarios seems to be fiscal discipline.

#102 brainsail on 08.19.11 at 10:52 am

Is this article something to be concerned about?

“Canada’s banks: Next dominos to fall?”

http://m.theglobeandmail.com/globe-investor/investment-ideas/streetwise/canadas-banks-next-dominos-to-fall/article2134871/?service=mobile

http://www.zerohedge.com/news/next-domino-fall-canada

#103 maxx on 08.19.11 at 10:56 am

#9 R on 08.18.11 at 10:40 pm

“I think I’ll know the tide has turned when I finally see a bus shelter or billboard somewhere in Mississauga without a realtor’s face plastered on it.”

Hopefully sooner than later. I have no problem with people earning a legal living, however I despise the mantle of unbridled arrogance that this industry has adopted over the past decade or so. It is as though they are the ONLY and final authority on RE values, to the point where they behave as though they OWN the actual RE. They have, up until now, succeeded in intimidating most buyers into overpaying through naked manipulation of perspective through MSM as well as the dynamics of acquisition. Happily, many are waking up and realizing that RE is NOT the only path to fiscal nirvana- in fact it is a huge drain for many, and a less than stellar ROI for many more.
Truly a matter of not “looking” before you leap, but thinking before doing so.

#104 Sandpiper on 08.19.11 at 11:06 am

Truly amazing, people will write asking for “free” advise on a blog that holds a strong opinion on ownership (run like hell from it). The opinions are so one sided, understandablely, but not necessarly 100% accurate either. Of course the housing market will fall – just like everything else. The million dollar question of is when.

Too me, its like asking for medical advise regarding a “weird bump” on a blog that talks about medical issues…come on, open up your wallet you cheap turd and hire a financial advisor. No disrespect to G, but everyone has different goals, timelines and reasonings. What really were you expecting G to say – I can only shake my head in disbelief.

And $1850 a month for a shoe box in Toronto, you can own a home outside of the city – with room to breath and on a 50ft SFH for a lot less then that – PLUS – interest rates that have never been so low.

Again, it comes down to timing, personal beliefs and what your vision of future financial goals are –

#105 Iconoclast on 08.19.11 at 11:12 am

#11 Van MD Re: Bank of Canada released Review today, suggesting Ottawa to increase down payment requirement.

Yep, here it comes… This will put serious downward pressure on prices at the margins.

This is prudent & necessary, but probably too late.

Too bad for anyone who bought recently.

#106 JohnnyBravo on 08.19.11 at 11:12 am

The purpose of “the media” (or “the press” as it used to be called) is typically to promote someone’s financial interests or sociopolitical agenda. In short, it is mostly, if not entirely, little more than PR. It is any wonder that many Italians informally refer to the news as ‘propaganda.’

This is nothing new. It has always been this way. Get over it.

Whenever you read/see/hear news/articles/reports, you should always ask yourself, “What are they selling?” It could be products, services, political ideologies, social engineering, fear (lots of fear) whatever.

Just one particularly egregious example:

A couple years back Maclean’s magazine published an extensive special report on private health care in Canada. Immediately, it was apparent to me that the entire report was not a piece of journalism, but a well-crafted, privately-funded public relations piece from a PR firm that was hired by an association of private health care providers.

One could even easily discern the tiered pricing structure the PR firm used to sell space in the report to the various participating firms. The report was designed to promote private health care services at the expense of public health care.

I wrote Maclean’s a letter excoriating them for presenting a blatantly biased PR hit piece as an objective work of journalism–especially on such an important and sensitive topic that affects all Canadians.

I’m not trying to pick on Maclean’s. Just be aware of what the “media” actually is and does. It is not some monolithic, centrally controlled info source. It simply puts out the PR of its owners, government, and the highest bidders.

Never just blindly accept what they tell you. And please use your own minds. One of the reasons the US is in the position it’s in right now is because most Americans have forgotten how to use theirs.

#107 Tony on 08.19.11 at 11:23 am

#32 Jon B on 08.19.11 at 12:12 am

The exception to the rule is quite rare. First you have to draw the line between a foreigner and an immigrant. Foreigners are people from first class cities like like Paris and Switzerland. It’s a given these people are hard working. Immigrants on the other hand are third world vagabonds whose only interest is to suck as much out of a country while giving back as least as possible.

#108 timo on 08.19.11 at 11:24 am

http://www.economonitor.com/blog/2011/08/g7-expansion-not-even-close-canadas-in-a-league-of-its-own/?utm_source=rss&utm_medium=rss&utm_campaign=g7-expansion-not-even-close-canadas-in-a-league-of-its-own

Canada’s recovery can be best described as this :)
http://www.youtube.com/watch?v=j8Bc7eRTdWY&feature=fvwp&NR=1

#109 J:LG on 08.19.11 at 11:37 am

Keep up the good work Garth. Great advice. I’ve bought BMO shares just a couple weeks ago and have seen them shed $5/share to regaining the $5/share. The markets are all over the place right now, but the dividends they look to pay will more then make up for the rollercoaster ride. Next investment will be a swath of preferred’s with a different Canadian bank.

#110 squidly77 on 08.19.11 at 11:44 am

Your posted property–$743.51/mo condo fees + what, $200/mo property taxes + possible assessments + cost of mortgage.

You would have to be completely out of your mind to purchase that landless box in the sky. No seriously, anyone buying a place like that needs their head examined.

#111 Snowboid on 08.19.11 at 12:04 pm

#41 poco…

I’m trying to figure DA out myself, if he/she is truly a RE agent things must be pretty tough right now in the Okanagan so I will cut him/her some slack.

#112 Snowboid on 08.19.11 at 12:05 pm

#87 Utopia…

I spent almost a year in Saskatchewan after college, but it was many, many moons ago.

I don’t recall the milk and honey – but do remember the flooding, giant mosquitoes, and the human hibernation in winter.

On the positive side, we often got off work to fill sandbags, the big bugs helped my hunting skills, and the roads were deserted and easy to drive in winter (unless the wind was blowing).

Okay, I’m kidding – I had fun there, just wouldn’t move there even for a free house.

#113 timo on 08.19.11 at 12:05 pm

http://www.businessinsider.com/moodys-analyst-conflicts-corruption-and-greed-2011-8

Ratings Agency Rotten To Core With Conflicts, Corruption, And Greed

good read on a honest market ;)

#114 Totalchaos on 08.19.11 at 12:19 pm

#107 Tony

So, what you are saying is that a foreigner is white European and an immigrant is “of colour”? wow. All these years I have been getting to know people when in fact all I needed to do was look at their skin tone to decide on their character.

#115 Bill Grable on 08.19.11 at 12:26 pm

Media outlets are controlled by undereducated, and yes, cheap and lazy folks. Newsrooms are gutted.
Today a station in San Antonio is using, seriously, a robotic avatar as a deejay/newsie. ( More job losses coming in media).
The bottom line, do your own research with folks like Mr. Turner, and forget trad media.

Here in BC – Global may as well call itself Global/Max.

#116 Tripp on 08.19.11 at 12:37 pm

#12 William Tucker

William, for some reason you are disconnected with the realities of the work market in Canada. I have some anecdotal examples with people I know well.

Ex 1: Mongolian couple, Phd and degree, one public servant, one in research.

Ex 2: Romanian couple, accountant and entrepreneur. She started 7 years ago by flipping burgers (seriously), now CGA. He runs a small but succesful business.

Ex 3: Russian-ukrainian couple, both engineers, construction and hi-tech.

Ex 4: Hondurian-romanian couple, both PhD in Europe, left for US because he got a job at World Bank.

Ex 5: Another Eastern European couple, both in hi-tech, he is part of the middle management at RIM.

All of the above studied and worked hard, most of them completed their studies in Europe, some in Canada and US.

The big difference is that getting a Masters or Doctorate in Europe is waaaaay more affordable than in North America. One of the persons above studied at Sorbonne for nearly nothing. Europen education is mostly based on merit and not on the size of one’s account.

Canadian education is a business and charges the students accordingly. In my opinion, yet another bubble waiting to burst.

Ex 3:

#117 Devore on 08.19.11 at 12:44 pm

#72 Moneta

It’s amazing. Anybody who manages to save 90K should be admired. It’s really hard for the average Joe to do this considering the social pressure and temptations. Our society is made so we can easily part with our money.

Certainly, anyone able to save “just” $10k a year should be commended, and also, anyone able to save $10k a year knows exactly how much money $400k, or even $90k is. It’s A LOT of money. Which makes current RE prices all the more irrational.

Trivial and cheap access to other people’s money has caused people to lose perspective. This is real money that you will need to earn in the future, using real time and real labour, at the cost of future consumption and savings.

This is very much like in the US where teaser mortgages were commonly accepted; no one expected to repay the loan at “normal” interest rates, because by then the house would either be sold for a huge profit and loan repaid, or the mortgage would be refinanced taking into account the dramatically higher equity. We know how that ended. The loan was just busywork; a token you passed around for the right to live in a palace. The size of it had as much meaning as the numbers printed on monopoly money.

#118 Devore on 08.19.11 at 12:59 pm

#76 Kevin

Kevin, you need to convert your TFSA account to a brokerage account. All major Canadian banks offer this. You can also open a brokerage account at a discount broker, and have it flagged as a registered TFSA account, but be sure the transfer is done properly, otherwise you’re at risk of overcontributing. If you simply withdraw the money from the TD TFSA savings account and immediately transfer to the new TFSA brokerage account, that is considered a contribution, and counts against your limit. Read and understand the TFSA rules.

From within the brokerage account you can trade equities, bonds, preferreds, funds, etc. However, it sounds like you are wholly inexperienced and have no clue what you’re doing. If you insist on doing it yourself, you’ll do it by lots and lots of reading and research, and through the school of hard knocks. The very first lesson will be that the “hot stock tip” isn’t so hot.

#119 maxx on 08.19.11 at 12:59 pm

#71 T.O. Bubble Boy on 08.19.11 at 7:12 am

“whack-a-mole”…..LOLROFL………..couldn’t be more a-propos!

#120 Devore on 08.19.11 at 1:09 pm

#82 TurnerNation

Wow…giving up 90k in savings for ONE extra bedroom in an older model condo building with staggering maintainence fees?

Those maintenance fees are criminal, sadly they are still probably insufficient to provide for all the future maintenance that is and will be required.

Back in the days when builders built apartments, those buildings were build solid and built to last, because the buyers and operators would not accept any less. It was their money on the line. These days developers just want to unload them as quickly as possible to the fools who believe they are good investments. And maybe in the first few years they are, but the buildings quickly become uncool and untrendy money sinkholes, with resale value dropping against newly built comparables.

It is a rare condo that represents timeless quality, but even their days are numbered too with each passing year.

#121 gladiator on 08.19.11 at 1:19 pm

Being an immigrant, and not from Paris or Switzerland, thank you Garth for agreeing with Tony in post 107 that immigrants are “third world vagabonds whose only interest is to suck as much out of a country while giving back as least as possible”. You didn’t delete that, meaning you didn’t find it offensive.
While I agree that a percentage of immigrants have these purposes in mind when coming to Canada, I can assure you that the vast majority are very hard-working individuals who came here for a better life and bust their arses to get ahead.
I will enjoy my 110+k income here, pay my fair share of taxes, volunteer by helping “white Canadian” schoolkids learn math/fractions and enjoy my life, regardless of what local Canadians say.
“Don’t laugh at people who have an accent – it means they speak another language”. (don’t remember who said that)

#122 Ronaldo on 08.19.11 at 1:38 pm

#13 – [email protected] – The exact same thing was happening in the early 70’s and we know what happened to real estate in 74 don’t we? Same will happen again. This game is close to its end.

#123 Ronaldo on 08.19.11 at 1:44 pm

#16 Goldenfox – Sherry is probably scared stiff that her bank shares are going to tank as they did back in Feb of 2009.

#124 EdmontonJim on 08.19.11 at 1:49 pm

#160 Imstupid from yesterday.

It was only a quick calculation, and I think you missed the point. This calculation was meant as a snapshot of the situation today. I cannot predict the future of GDP, population, inflation, or anything else.

There was one big assumption that I made, that I guess I should clarify. I assumed that overall consumption is always equal to overall production. This isn’t necessarily true, but I think it gives a good approximation for the average.

With this assumption, a number of the factors you identified don’t matter, because it all has to balance out at the end. The $3.1 million figure represents the average standard of living that we have today.

The whole thing works because we trade our production around, and across time. Under the modern system, people borrow against and invest in their own futures, and the government does it for you as well. In theory this allows people to smoothe out their own production and consumption to maintain a constant standard of living throughout their life. This is the basis of modern finance, and makes my calculation relevant.

The point of all this, is that future and past production don’t matter, only the present (and near future). The point of my calculation was to show that on average, we produce a certain amount, and we consume about the same amount. Most of that consumption is taken up by necessities. Only a limited amount is our choice.

But the real point is this – Per capita GDP is a good measure of average wealth, but an increase in wealth is only real if it is an increase in the quality of life. If the cost of a house rises, it is doesn’t increase wealth because the quality of life hasn’t changed, and even if you sell you still need a place to live. In fact it has decreased the quality of life for everyone because it diverts production from other goods and services.

What constitutes an increase in quality of life is different for everyone. Some things are productive for society (most investments & savings, charity, nice cars, good food, health, education – even retirement). Other things are static (gold bars, old houses, artwork you never look at, speculation). And other things are downright destructive (anything that creates violence, exploitation, destruction of property, theft, fraud, or disease).

So look at where you are putting the majority of your discresionary ‘wealth’. If its the first category – good for you. If it’s the second – you are a greater fool and are being scammed and/or planning on scamming someone else. And if it’s the third – shame on you.

#125 Alex on 08.19.11 at 2:15 pm

Goldenfox on 08.18.11 at 10:59 pm
On the same day that Sherry Cooper of BMO goes on air to reassure Canadians that, unlike banks in the US and Europe, Canadian banks are well-prepared for the potential counter-party risk……………………………………………………………………………….Boy do I feel reassured when they drag out this old banking hack to pontificate to the sheeple…………………………remember when our dollar was 63c, she wanted us to join up with the $US or when the nasdaq was 5000, she said it was a good buy. Why doesnt anybody call her on this and cant the MSM find anybody credible to comment on the economy?

I remember in 2002 when our dollar was 63c US Garth also predicted that CAD will lose more and inevitably join the strong USD and called those Canadians who had USD accounts geniuses. This of course did not happen and our dollar became 1.05 US.
Garth, did you get these ideas from Sherry Cooper?

You must be thinking of another Garth. I have never believed currency union would happen, and still do not. There will be no Amero. — Garth

#126 JRL on 08.19.11 at 2:25 pm

First Mate: ‘Giant Iceberg on the horizon, Captain!’
Captain Harpo: ‘Full speed ahead!’

Mark Blarney said No New Recession in Canada so it must be true! – I saw it on TV! Of course I treat this joker with all the credibility of a used car salesman at the ‘Lemons R Us’ lot.

No new recession – I agree, because we never got out of the last one. If you farm out enough jobs to 3rd world slave labour, eventually you undermine your own market. Heard this one before? Yes, crazy man Ross Perot predicted all of it. Ron Paul is getting the same treatment for daring to criticize the war-based economy.

Government pork projects, “trillions on ‘stimulus’ slashed interest rates, bailing out entire industries” – all financed by more taxpayer debt cannot fix the structural problems in our finance sector only delay the inevitable correction, because the money system is a snake eating its own tail.
Should be some fun.

#127 bigrider on 08.19.11 at 2:39 pm

Any chance we can get BNN off the air? Maybe get 680 news to stop with 10minute market update intervals?

Or, alternatively , anyway we can get red and green neon sign technology planted in everyone’s front doorstep that constantly evaluates people’s respective property value every G-Damn second of the day between 9:30am and 4P:M?

#128 Linda Pearson on 08.19.11 at 2:40 pm

#107Tony on 08.19.11 at 11:23 am

The depth of your ignorance and bigotry leaves me breathless, though, luckily, not so badly that I can’t and won’t use my last gasps to send you the blast you so richly deserve.

Just when I was enjoying reading the many negative and refreshing posts from others in response to Tucker’s blatant prejuidice, along you come with a contribution right out of 1950s Alabama or Mississippi.

Now I’m out of breath but I hope other posters will tell you what you need/must hear.

I took that as being 100% sarcasm, which is why I let the comment stand. Surely that is how it was intended, making a strong anti-discrimination point. — Garth

#129 jess on 08.19.11 at 2:49 pm

Insurance companies and low rates
===================
Why did insurance companies guarantee high returns to policyholders?

competition – public /private
substantial overinvestment among Japanese insurers, with asset growth far exceeding nominal GDP growth in the 1980s.

Boom products of the 1980’s expanded their liability side such as lump-sum payment endowment insurance, with a five-year interest rate of 8.8%, as well as “variable rate insurance” which was popular among consumers favouring high-risk, high-return investments.

Composition side of their asset portfolios 60% of their assets were in loans to industry. insurers redirected their investment toward financial assets such as stocks and bonds, which exposed them to huge losses after the bubble burst. The Tokyo stock price index alone declined by 60% between
December 1989 and July 1992.
_______________________
1 These institutions (with the year of bankruptcy) were:
Nissan Mutual Life Insurance Company (1997),
TohoMutual Life Insurance Company (1999),
Daihyaku Mutual Life Insurance Company (2000),
Taisho LifeInsurance Company (2000),
Chiyoda Mutual Life Insurance Company (2000),
Kyoei Life Insurance Company(2000) and
Tokyo Life Insurance Company (2001).
Another insurer, Yamato Life Insurance Company, failed in 2008 because of large losses on subprime mortgage-related investments.”
===========
Fixed income strategies of insurance companies and pension funds
CGFS Publications No 44
July 2011
Mark Carney
Chairman, Committee on the Global Financial System
Governor, Bank of Canada
http://www.bis.org/publ/cgfs44.pdf

#130 new_era on 08.19.11 at 2:52 pm

The proverty Effect.

Almost 0% interest rates, QE1, 2 and mabey 3. No jobs not government money and less taxes collected.

the feds ran out of Photon torpedo’s and now are firing all cylinders on FARTS. That is the difference between 2008 and now.

The US will now have to own up to their debts. Record numbers people lining up for several jobs.

Carney is now saying Canada can weather this coming recession like 2008. CMHC is saying people our getting out of stocks and Housing would be a good investment.

Too much BS enticing the dump-A$$ canadians. In the coming storm “CASH is King”. We are going to get hit, for those who save and have cash in hand and no debt, they will be laughing through this. For those with huge debt, nothing but stress, good luck trying to weather the storm.

When the storm subsides , there will be huge opportunities to buy things from the cash strapped losers. Also when the markets bottom out and flatlines there will be deals on greater cash rich companies who will be feasting on the smaller companies.

This is a repeat of the 80’s.

#131 MasterBootLicker on 08.19.11 at 2:53 pm

Headlines from the Globe And Mail website.
“Carney Sees No Recession”
“Flaherty confident deficit-fighting plan can weather economic storm”

Anyone else beginning to feel like the frog in the pot of water with the heat slowly being turned up ?
Links.
http://www.theglobeandmail.com/report-on-business/economy/carney-sees-no-recession/article2134976/

http://www.theglobeandmail.com/news/politics/flaherty-confident-deficit-fighting-plan-can-weather-economic-storm/article2134897/

#132 Smoking Man on 08.19.11 at 2:58 pm

McGill The Montreal university has been charging $29,500 for its MBA program — drawing the government’s ire.

http://www.cbc.ca/news/canada/montreal/story/2011/08/19/mcgill-tuition-agreement.html

WHAT
I bet they don’t have a chapter in the text book that shows you how to scop the customer list of the company you are working for……..

Thats business…………….

#133 LAST on 08.19.11 at 3:08 pm

In case anyone wonders saving money is hard hard work. My advice pay yourself first, otherwise there is no money left over regardless of income, always pay yourself first. In wish I had learned that one earlier

#134 Cautious on 08.19.11 at 3:19 pm

Moneta #90 – Agreed, and “easy come easy go” applies not only to those that made money easily, but also to those who have never been able to build a bank account. If a person isn’t aware of the effort required to save say $20k, s/he likely isn’t aware of the effort required to repay $20k. Read: 25 year old property virgins taking on a $400k mortgage (as well as those acting as such).

Kevin #76 – TD has several issues of preferred shares outstanding, with tickers from TD.PR.A through TD.PR.Y. Make sure you do your homework before investing, and continue to do so once you are invested.

#135 disciple on 08.19.11 at 3:36 pm

There are many out there that need to understand this but I fear it will not be grasped, I will post anyway:

Anyone working as an employee is in a contract of voluntary servitude – direction and time control by, and obedience and loyalty to, the employer. Until we get our heads around this key to the lock that holds our chains of slavery around our necks and ankles, we will continue to attempt to swim with that 100 lb ball chained to our leg.

Thus, ALL ‘income’ resulting from the owned human slave’s mental and/or physical labor belongs to the slave owner. That which is left with or granted to the slave for his own use and maintenance is called a ‘benefit’. In Canada, the ‘return of income’ [the phrase itself tells the story] is called a T1 ‘tax and benefits package’. The T1 is an accounting by the slave of his fruits of labor that belongs to the slave owner, and the prescribed ‘benefits’ that he may keep or have back from withholding. Thus, all income tax cases against the people’, in reality, result from fraud, illegal concealment and theft by the accused slave of the slave owner’s ‘property’.

I am NOT saying you ARE a slave. I just point out to you that Government, and its employees, judges and officers SEE you as a SLAVE. See sections 35, 46 and 78 of the “Bills of Exchange Act of Canada” regarding eligibility for use of the provisions of that Act. GOOGLE it. A bill can only be paid with money, and there is no money in Canada or the USA since the early 1930s. All that is left is some form of a ‘promissory note’. In Canada, Parliament even converted the Canadian currency to pure Monopoly Game money by declaring that Canadian currency is no longer a promissory note nor bill of exchange. (Section 25(6) of the Bank of Canada Act).
Now, if you get a mortgage from a bank, instead of the bank lending you the money (credit value created by your signed promissory note) you created by your signature, as they did prior to the late 1970s, they use it as payment for Canadian Bank Notes, or computer values of it, which is just property since Section 25(6) was added. They create it out of nothing if they put a number in a computer, or pay for the printing of the paper notes, and not the value printed on the currency note. You still create the money value for your mortgage by your bill of exchange – the promissory note.

#136 BrianT on 08.19.11 at 3:41 pm

This is classic-the grifter barely makes eye contact with Perry then he moves on-he is like a TO politico meeting the money guy in the parking lot at 4 a.m. http://www.zerohedge.com/news/bank-americas-dead-drop-rick-perry-we-will-help-you-out#comments

#137 Cautious on 08.19.11 at 3:44 pm

Jody #70 – Why do you feel so compelled to bash our home grown engineers? How do you substantiate such an ignorant comment?

#114 Totalchaos – You seriously let yourself be goaded by #107 Tony, who commented that “Foreigners are people from first class CITIES like like Paris and Switzerland”? BTW, Paris is one of the most multicultural cities on the continent.

#138 BrianT on 08.19.11 at 3:48 pm

#123Edmonton-NO-per capita GDP is a measure of spending, not wealth. It overstates wealth during periods of increased debt (like the last 30 yrs). Don’t expect to hear this from any MSM economist. Re this subject, look at the list of the countries with the highest per capita GDP and you will notice that a great many are in serious financial straits.

#139 poco on 08.19.11 at 3:55 pm

#130 MasterBootLicker

Headlines from the Globe And Mail website.
“Carney Sees No Recession”
“Flaherty confident deficit-fighting plan can weather economic storm”
Anyone else beginning to feel like the frog in the pot of water with the heat slowly being turned up ?
Links.
http://www.theglobeandmail.com/report-on-business/economy/carney-sees-no-recession/article2134976/

http://www.theglobeandmail.com/news/politics/flaherty-confident-deficit-fighting-plan-can-weather-economic-storm/article2134897/
______________________________________________
I wonder if we will be hearing these these words from the big F in a few months

http://www.youtube.com/watch?v=vkk_OR6Dqt8

#140 Geoff on 08.19.11 at 4:00 pm

Garth, what are your thoughts on something like the ETF ZWB (covered call banks with good yield) at these levels?

#141 Macrath on 08.19.11 at 4:15 pm

#76 Kevin

Here is a preferred share primer from Scotia. I like the claymore ETF – CPD

http://www.ritceyteam.com/pdf/guide_to_preferred_shares.pdf

#142 April on 08.19.11 at 4:15 pm

as long as the government continues to say Canada can weather the storm and housing is a good investment how is this not going to prolong home buying. Since too many still believe what’s spoon fed on tv these gullible people will continue to purchase homes even if they can’t afford them. Also anyone who thinks they’re getting a bargain when the seller lowers the price by 7$/10% in this inflated market is being taken.

#143 Blacksheep on 08.19.11 at 4:17 pm

Jody # 70,

“Canada’s gonna get nailed like an 18 year old midwest blonde recently arrived in LA.”

THAT…is a great line.

take care
Blacksheep

#144 McLovin on 08.19.11 at 4:27 pm

1082 – Number of Condo’s for sale in Kelowna (Source MLS)

106,700 – Population of Kelowna

98.6 – Number of people per condo for sale

2667 – Number of residental properties (incl condos) for sale

40 – Number of people per property for sale

#145 Devil's Advocate on 08.19.11 at 4:28 pm

#111Snowboid on 08.19.11 at 12:04 pm
#41 poco…

I’m trying to figure DA out myself, if he/she is truly a RE agent things must be pretty tough right now in the Okanagan so I will cut him/her some slack.

Seriously, don’t worry about me I am doing just fine thank you very much.

Oh and Poco, while it is none of your business, yes I do rather like the sound of renters money in my piggy bank. Far prefer residential revenue properties over commercial as it’s easier to find a tenant. I am a slumlord and proud of it. My renters have pets which generally respect the property more than the owners so why would I provide anything more than a kennel for the both? Both seem quite happy to have found a place that will accept both.

BTW sold property to crystalize the gain in great part because of the advice of columns like this which lectured the market was going to tank, both rental and resale, which it never did. Wish I hadn’t as after the capital gain it is proving hard to buy equivalent back. Those properties I dumped are easily still worth every cent that I sold them for before the financial sh** hit the fan and as far as rents – well here they have only gone UP from what I see.

Anyway… just passing through

#146 Linda Pearson on 08.19.11 at 4:37 pm

I took that as being 100% sarcasm, which is why I let the comment stand. Surely that is how it was intended, making a strong anti-discrimination point. — Garth

You think so? Usually my sarcasm-meter is pretty finely calibrated but maybe it’s out of whack today. If so, I owe Tony an apology – but somehow I doubt it.

#147 jess on 08.19.11 at 5:18 pm

After reading Michael Hudson opinion of the rating agencies…,you may want to chew on some steel.
http://www.nakedcapitalism.com/2011/08/michael-hudson-the-case-against-the-credit-ratings-agencies.html#comments

========================
Bernie Saunders leaks info….

The growing controversy over the leaking of trading documents naming 219 investors in oil futures positions during the 2008 oil price spike http://www.citizen.org/pressroom/pressroomredirect.cfm?ID=3402
=============
sigma x and the dark pools

#148 Imstupid on 08.19.11 at 5:26 pm

An interesteting fact about immigrants. They are usually the ones who spur innovation. I read an article on this. The main reason for this is that with them they bring a different prospective, they are not molded here and only conform after years of living here. Also so many came from countries that neglected rights and held them back that once they get the rights and freedoms we all take for granted they thrive.

#149 maxx on 08.19.11 at 5:26 pm

#117 Devore on 08.19.11 at 12:44 pm

Excellent post (and segue) to Moneta’s insightful comment.

I’ve always thought that what the average person earns (and more importantly, manages to save) represents serious toil and when taken lightly usually results in deep regret. Whenever I spend, I always ask myself how much time I worked for it and how much profit is likely landing in someone else’s pockets. Wonderful bucket of water!

#150 arctodus on 08.19.11 at 6:12 pm

http://www.huffingtonpost.ca/2011/08/19/canadian-banks-illusion_n_931327.html

Is everyone really sure we cannot suffer the same fate as the USA?
Quick reminder…Canada suffered far more than the US did in the last great depression….

But us self entitled oh so bright Canucks could never have that befall us could we?

World Made by Hand ……will be harder in winter time Canada (may the warming event go from bloody fast to warp drive)

#151 bill on 08.19.11 at 6:36 pm

ganeesh
”you’d be better off staying where you are and leasing a second condo for the inlaws for a year down the hall. ”

sounds like some good advice from Garth if you ask me…
bit more privacy as well.

#152 dd on 08.19.11 at 6:45 pm

#97dd

…The only depression today is wafting over from you. — Garth…

Sugar coat it all you want. The real numbers are slowely coming to the forefront and are finally being reported.

#153 EdmontonJim on 08.19.11 at 6:55 pm

#138 BrianT

I understand that, and It’s what I’m trying to get across; GDP is a measure of spending, spending indicates at least an expectation of wealth. People and governments don’t spend on something unless they think it is, or at least might become, wealth.

The incongruity comes from afew sources:
1. Production fails to keep up with consumption.
2. Wealth is fraudulently accounted for
3. Production (spending) is wasted because people change their minds.
4. Exports and Imports don’t balance,
5. Capital gains or losses on fixed assets

The first four alone can get a country into trouble, but the fact that they can cause real problems is one of the biggest flaws in the capitalist system. It means that risks were not properly evaluated, and wealth is being lost. Whether it is lost because cars are sitting on a lot collecting dust, or because someone didn’t pay their tab, it’s all the same.

But the fifth one is what I was trying to speak out against. A capital gain on a fixed asset doesn’t produce any new wealth, but it’s still counted in GDP, people still count it as ‘wealth’, and people are borrowing against it. People need to understand that when fixed assets appreciate or depreciate – wealth is lost, not gained. Thus a rising housing market is bad, and a falling housing market is bad – it gets you coming and going.

#154 poco on 08.19.11 at 7:08 pm

#145 Devil’s Advocate

Oh and Poco, while it is none of your business, yes I do rather like the sound of renters money in my piggy bank.

Does it make any noise when you shake it ??????

______________________________________________

Anyway… just passing through

take care !!!!!!!!!—next time you pass through—ya ya we know you’re here everyday “chomping at the bit” to post something—- maybe you can fill us in on a little point i may have missed—-did you ever get “you know who” to dress up in that combat outfit????

#155 Nemesis on 08.19.11 at 7:23 pm

…”Media outlets are not controlled. Most are just lazy, cheap and unprofessional.” — Hon. GT

Well, yes & no. Especially, “yes” as regards cheap. As to ‘control’ – well, there are ‘subtle’ [and, occasionally, not so sublte] forms of pressure that often relate to ultimate ownership in the ‘vertical chain’, GT, et al.

However, prior to ‘wising up’ and ‘migrating’ editors/markets and ultimately mediums… I can say this… In the late 80’s I once had a ‘horrific’ argument with the ‘SeniorPhotoEditor’ (initials P.B.) of the MapleLeafRepublic’s nominal NewsWeekly of ‘record’ for expensing a $4 lunch (even after completing a 10 hour ‘stakeout’ on short notice and magnanimously billing for only a 1/2 day).

Unfortunately, for those few DieHardTroopers who persist… it has only gotten worse. And that includes broadcast as well as print (whether ENG or feature).

And TheMoney still wonders why/where the readers/viewers have gone.

#156 Live Under Your Means on 08.19.11 at 7:23 pm

I took that as being 100% sarcasm, which is why I let the comment stand. Surely that is how it was intended, making a strong anti-discrimination point. — Garth

……………….

We need a sarcasm font. My first reaction was what the hell is the difference between a foreigner and an immigrant. My husband is both. Other than the native Indians, we Canadians are all foreigners and immigrants. Started to type a comment but deleted it & thought I’d check out comments in reply to his.

Garth, IMHO, there are so many bigoted people now in NA that, unless a reader is familiar with Tony’s views, many blog dogs would not take his comments as sarcastic.

#157 vreaa on 08.19.11 at 7:47 pm

No significant renter stigma in Vancouver?

See post and UPDATE:
http://wp.me/pcq1o-2Om

#158 Utopia on 08.19.11 at 7:55 pm

#112 Snowboid to #87 Utopia said….

“….. the roads were deserted and easy to drive in winter (unless the wind was blowing). Okay, I’m kidding – I had fun there [Saskatchewan], just wouldn’t move there even for a free house.
———————————–

Exactly. And that is why those of us who choose to live small town and in the country have it made in spades. There is no competition and so it will remain cheap.

Most people in this country do not want to live out here. They are inconvenienced by the cold, the isolation and the lack of festivals and urban entertainment.

But you all miss out on the lifestyle perks. Lots of us have good yard-dogs, horses, barn mousers or backyard chickens and fresh eggs daily. Neighbors might share in a side of beef, sell you a pig cheap, bring you fresh fish in winter or duck on the day of the shoot and think nothing of it.

It is normal.

The days are long with no mountains in the way and big gardens are pretty common, even a habit. Almost all the older ladies still can food and preserves. It is really much better here for a healthy lifestyle and for raising children.

Guaranteed. I swear it.

And anyway, most people I know don’t even have mortgages. We are aghast at what you city-slickers are paying for mortgages. When we hear you say your mortgage or rent is two, three and four thousand dollars per month(!), we just shake our heads in disbelief.

Not that people here are better with money. They are not. Most spend it as soon as they get it just like everywhere else. At least they spend it on things for themselves though. Not just on debt and mortgages and credit cards and lines of credit to banks.

“Love this Blog” will surely back me up here. So will others from this neck of the woods. Some of you folks really pay stupid amounts for shelter (no personal offense intended, I know the reality you all face).

But out here, it seems everyone still has cash.

There are good jobs. People commute come rain or shine to where the work is and it is not unusual for folks to travel a hundred kilometers daily to their jobs. Even in winter.

Incomes are good. Even above average compared to the rest of the country. Houses are dirt cheap, relatively speaking, and a very nice place can be had for 50 to 70 thousand. Even now.

But the people here, being just like everyone else, blow their money on goods. Like Quads and horses and cabins on the lake. They drive new vehicles, often pay in cash and spend the winters traveling abroad if they are seasonal.

Is that really a bad lifestyle? A reason to stay in Toronto?

Is that better than living near so-called “culture”. In places where you can’t shoot deer or hear Coyotes at night? Where you never see massive seasonal bird migrations first-hand and instead suffer under the glare of streetlights that obliterate the stars year-round while the smog of traffic congestion is destroying your ability to breathe naturally?

One day a lot of you will wake up and wonder if it was all worth it. When you are underwater on your debts and trapped in the sick overpopulated cities you cherish so much, you might finally question why you stayed while others equal to you lived so cheap, saved and prospered.

Cash in your pocket is better than a mortgage any day.

#159 Silver on 08.19.11 at 7:55 pm

Road trip, 3110.9 k. 6 days 23 inlaws included…
Van, Valemont, Edmonton, Calgary, Pincher Creek, Frank Slide, Osoyuse, Vancouver.The Reality, and For Sale signs almost match the Pine Beatle kill ratio for some reason.
The more signs, the more “Beatle Kill”
The Number Three Highway looked particularly bad…..
Greenwood Pine Beatly kill in every yard….take your pick.
On a serious note… eye opening and bloody scarry guys
aug 13th to 18 th.
Buisnesses are dead….house’s are dead, and its empty
in the small towns.
Only thing running seams to be the Government tax supported infrastructure jobs….no tax base there to cover them so where is this money going to come from……?

Rae
Methcouver

#160 Nostradamus Le Mad Vlad on 08.19.11 at 7:56 pm


Good Communication Skills

After being married for 60 years, I took a careful look at my wife one day and said,

“Sixty years ago we had a cheap house, a junk car, slept on a sofa bed and watched a 10-inch black and white TV, but I got to sleep every night with a hot 18-year-old girl.

“Now, I have a $500,000 home, a $35,000 car, a nice big bed with a large screen TV, and I’m sleeping with a 79-year-old woman.

“It seems to me that you’re not holding up your side of things.”

My wife is a very reasonable woman. She told me to go out and find a hot 18-year-old girl and she would make sure that I would once again be living in a cheap house, driving a junk car, sleeping on a sofa bed and watching a 10-inch black and white TV.

Aren’t older women great? They really know how to solve an old guy’s problems. So, Everybody boogie!
*
Good posts today. Are the markets still alive?
*
Debt / Deficits The military are right with this, and Syria Goes with the prior link; Pensions At least Canada has some rules in place for banks; Reassurance “We’ll sign over Las Vegas to you, okay?” — Official White Horse Souse – wrh.com.

Moody’s Apparently, they’re not all they’re cracked up to be; Protests against 4closures in Pasadena bank; Job Fair Very well attended, and Coincidentally . . .; US Fed Is the Fed treasonous? Child Poverty in the USA.

6.8 ‘quake in Japan; Should be interesting, now that Mubarak is gone; Biotech War And the winners are — lawyers; Monsanto again Putting farmers out of work.

Surprise! US troops staying in Iraq (wonder why?); NAU – SPP Obama is guaranteeing himself plenty of new votes next year.

#161 Q on 08.19.11 at 8:07 pm

Why the US credit rating was downgraded…

• U.S. Tax revenue: $2,170,000,000,000

• Fed budget: $3,820,000,000,000

• New debt: $ 1,650,000,000,000

• National debt: $14,271,000,000,000

• Recent budget cut: $ 38,500,000,000

Let’s remove 8 zeros and pretend it’s a household budget:

• Annual family income: $21,700

• Money the family will spend this year: $38,200

• New debt on the credit card: $16,500

• Outstanding balance on the credit card: $142,710

• Total budget cuts: $385

ANY QUESTIONS???????????????????????

None, because families cannot create revenue. Governments can. This is simplistic nonsense. — Garth

#162 CANADA'S GERMAN MONEY on 08.19.11 at 8:36 pm

To Disciple:

Not only that, but most of our money is made by a PRIVATE German company:

Giesecke & Devrient

They also manufactured Zimbabwe’s currency.

Food for thought ;)

You still need help, no matter how many aliases you use on this blog. — Garth

#163 Watching the Liberal Party die is so good on 08.19.11 at 8:57 pm

The following is an example of how arrogant civil servants have become when it comes to personal finance and how absolutley juicy it is to see this couple screw themselves so royally.

http://www.financialpost.com/personal-finance/family/Clutch+condos+threatens+pensioned+retirement/5257250/story.html

#164 Buford Wilson on 08.19.11 at 9:19 pm

Garth if there is a double dip in the US, do you think Jim Flaherty will be able to skillfully keep Canada out of it? As he did in the last crisis in 2008?

He did? — Garth

#165 timo on 08.19.11 at 9:22 pm

http://www.youtube.com/watch?v=jG4JemfAvlo

BBC Newsnight 4 Aug 2011

great talk on the world problems.

#166 Harlee on 08.19.11 at 9:27 pm

#158 Utopia
Well Utopia,you know I like what you wrote.As far as I’m concerned the prairie lifestyle is really the freedom that the big city urban people are always wishing for. What I appreciate about it, is that if you live in a Saskatchewan city then the country and wide-open space is only minutes away. If you live in the country then the city with it’s festivals (Saskatoon has at least one every week in the summer),university,hospitals etc. is fairly close-by. Best of both worlds is the way I see it.As for mountains….they only get in the way of the scenery.

#167 Utopia on 08.19.11 at 9:29 pm

#127 bigrider wrote…

“Any chance we can get BNN off the air?”
——————————————–
If only. Those guys just blow with the daily wind. Panic of the moment news. X happens then BNN say Why (Y,Y,Y?). Simple enough formula.

Boring. I won’t watch it aymore.

#168 shanks on 08.19.11 at 9:40 pm

na that last dude is right, BoC doesnt print our money any more, they outsource it to that german company, who did also print zimbabwe’s hyper inflated currency (great business for them right? you need how many gazillion dollars printed?)

and #135 disciple on 08.19.11 at 3:36 pm was a great post. pretty accurate, if i get a chance i will add the rest of the reality of this situation later.

#169 Utopia on 08.19.11 at 9:44 pm

#111 Snowboid said to #41 poco…

“I’m trying to figure DA out myself, if he/she is truly a RE agent things must be pretty tough right now in the Okanagan so I will cut him/her some slack”.
————————————————
Yes. Give Devil a little slack.

He is an old timer here on the site. Irritating as hell to some but always informative, argumentative and interesting. He is intelligent and difficult in the same breathe.

I often wondered why some were so obnoxious towards him when he wrote in here because his comments often rang true and were sincere.

D.A. is a valued poster in my mind.

#170 CANADA'S GERMAN MONEY PART II on 08.19.11 at 9:44 pm

Garth,

It is a fact that while the Bank of Canada obviously issues the currency, it outsources the job (in part) to BA International Inc., which prints our money.

Since October 1999, BA International Inc. has been a subsidiary of Germany’s Giesecke & Devrient.

It says so on the front page of their own website:

http://www.babanknote.com/

Furthermore, I only ever use one alias:

Food for thought, buddy :)

Who cares? — Garth

#171 Devore on 08.19.11 at 9:55 pm

#157 vreaa

Good stuff vreaa. I too am of the opinion any “renter stigma” is self-inflicted. People, owners and renters alike, are always questioning your decision to rent, when you have the capability to buy, but that is about the extent of it.

#172 CANADA'S GERMAN MONEY PART III on 08.19.11 at 10:10 pm

Garth,

Lots of people care!

People who love their country care–this is why many governments keep currency outsourcing hidden and secretive.

For example, when India announced last year that it was going to outsource currency to a foreign company…many were outraged (as well they should be)…such as India’s Parliamentary Committee on Public Undertakings (COPU).

COPU was worried that in outsourcing money production to a foreign, private body “there was always a risk of unauthorised printing of excess currency which would have been unaccounted money”.

There is also the issue of undermining economic sovereignty, as COPU also pointed out.

But I guess you don’t care about such things, nor do you think anybody should?

Food for thought :)

#173 Utopia on 08.19.11 at 10:17 pm

#93 NotAGreaterFool wrote….

“Interesting read…”
———————————–

Thanks, but that was not an interesting read.

Boyd Erman is just another of the lame noodles who do not understand Canadian banks strengths and who gives in weakly to negative opinion offered by others.

He is a member of that sad group of journalist’s that only quickly scan the “so-called” convincing words of unknown bloggers and is completely sold on the notion without making any real effort to understand the banking system or offer any real original analysis himself.

Go back and read the Zero Hedge article for yourself. Try it. Then read the Globe and Mails assessment according to Boyd Erman.

Did I actually say “LOSER!!!!!” out loud. (Sorry)

See what I mean? That guy is a hack, an intern, a lazy copycat writer and he offers no perspective nor anything of value to really enhance a story nor convince readers of the position he takes. He expands on nothing. Only repeats.

The Globe should cut him loose.

#174 Snowboid on 08.19.11 at 10:19 pm

#145 Devil’s Advocate…

“…and as far as rents – well here they have only gone UP from what I see…”

Okay I was going to cut you some slack until you came up with this witty remark – who are you kidding?

So, as another poster has stated, you are an old-timer, maybe I need to wait a few years before I can understand your humour!

#175 Live Under Your Means on 08.19.11 at 10:42 pm

#160 Nostradamus Le Mad Vlad on 08.19.11 at 7:56 pm

Good Communication Skills

After being married for 60 years, I took a careful look at my wife one day and said,

“Sixty years ago we had a cheap house, a junk car, slept on a sofa bed and watched a 10-inch black and white TV, but I got to sleep every night with a hot 18-year-old girl.

“Now, I have a $500,000 home, a $35,000 car, a nice big bed with a large screen TV, and I’m sleeping with a 79-year-old woman.

“It seems to me that you’re not holding up your side of things.”

My wife is a very reasonable woman. She told me to go out and find a hot 18-year-old girl and she would make sure that I would once again be living in a cheap house, driving a junk car, sleeping on a sofa bed and watching a 10-inch black and white TV.

Aren’t older women great? They really know how to solve an old guy’s problems.

……………..

Hilarious. I’m 9 yrs older than my husband. When he’ s PO’d with me, I tell him to go find a younger woman and divorce me. End of discussion.

#176 Snowboid on 08.19.11 at 10:46 pm

#158 Utopia…

Yes, I am a city slicker through and through – but spent my share of time on relatives’ farms and ranches over the years.

We don’t have a garden anymore, but there is a wonderful farmers’ market here where we can get all the farm-fresh products we want.

We also make our own preserves – and maintain a healthy lifestyle. Heck, we make just abour everything ourselves (the list is extensive I can assure you).

Mortgage? We haven’t had one since 2005, no debts. We pay around $ 1300 a month for rent – 1800 sq ft luxury condo (park view) within a 10 minute walk of the beach and downtown.

Income? No complaints, it will go down about $ 20K a year if/when we use our home sale proceeds to buy another place – but that still leaves $ 70K from pension and other investments.

Deer are shot here all the time (in the orchards) and although we don’t hear the coyotes anymore as when we did with our last home in the Okanagan, we see them in our yard down south all the time (they like the bunnies).

I do agree that cash in the pocket is good. We also live cheap, save and prosper (now I sound like Spock)!

I also agree you have a good lifestyle in rural Sask as our relatives do in rural Alta – but so do we!

#177 Snowboid on 08.19.11 at 10:48 pm

#160 Nostradamus Le Mad Vlad…

You are funny! And old enough to be my Dad – you have gained my total respect!!

#178 Killer Chicken or Imploding Boomer? on 08.20.11 at 2:02 am

153 Jim

“A capital gain on a fixed asset doesn’t produce any new
wealth, but it’s still counted in GDP”.

No it’s not. The cost of producing the asset is counted in the year it is produced. If the same asset costs more (or less) to produce the next year, that value increases or
decreases the GDP. The increase (or decrease) in the value of the asset which already exists is irrelevant.

#179 Q on 08.20.11 at 7:40 am

None, because families cannot create revenue. Governments can. This is simplistic nonsense. — Garth

Garth, I think you spent too much time in Ottawa. Governments don’t “create anything” but debt and bureaucratic backlog, they merely squeeze revenue from those productive members of our society that do actually create value, in order to squander it wastefully and without accountability.

Sure, like on health care, education and emergency services. — Garth

#180 Q on 08.20.11 at 7:56 am

good retort…and they’re all just so well managed aren’t they…. and by the way Garth, I thought we were talking about “producing” revenue…not merely spending it …my kids can do that!

#181 GreaterFool on 08.20.11 at 12:02 pm

Nice picture of Upper James and Mohawk in Hamilton!