Ben

Let’s back up for a few minutes. The world’s getting complicated. Let me explain a few things in simple terms, which is wholly suitable for a guy who owns a Harley and a Hummer. After all, I measure success in rim size and decibels.

The big news on Friday, which might impact your RRSP, your TFSA and eventually your mortgage rate, will come out of a place called Jackson Hole. That’s in Wyoming, which is the least populated place in the US and whose state fish is the Cutthroat Trout. So where better for central bankers from around the world to gather?

The rock star performance will be given by Ben Bernanke, who is to America what Mark Carney is to Canada, but with facial hair – the universal sign of intellectual achievement and raw male magnetism. Everyone is waiting to see if he will use some of his awesome power to stimulate the economy, which currently sucks – over 9% unemployment and a whipped housing market.

Since the financial crisis of 2009, he’s done it twice. Called ‘quantitative easing’ (QE)  it involved printing a mess of money which was then used to buy back government bonds already sold to banks. That pumped those banks with billions, injected liquidity into the system, and was supposed to trickle down into loans and mortgages.

Instead, it mostly goosed stock markets since all that stimulus (plus low interest rates) helped companies make more money. So, investors loved it. But all the QE ran out a couple of months ago, and the economy still sucks. In fact now the US (and almost everyone) has more debt than they did before.

So will Bernanke use his Jackson Hole speech to announce QE3? If he does, then your equity mutual funds are about to romp. If he doesn’t, you’ll wish you had bonds.

Why would he commit more billions to a program with dubious results? Because the US is teetering on the verge of recession as it readies for a crucial year of political turmoil. If it looks like the Tea Party nutjobs will seriously challenge Obama in 2012, promising austerity measures, a spending attack and protectionism, then Canada is going to be whacked. Not that Bernanke cares about us, but he’s a student of the Great Depression. And it was nutjob policies then that turned a miserable time into an epic screw-up.

Why would he not do this? Because it costs hugely, and the US is already wallowing in debt. Because the results are nebulous. Because inflation there is almost 2%, so he doesn’t need to worry about deflation – even though house prices continue to collapse. And because he’s already promised to freeze interest rates at rock-bottom levels for the next two years – which is a huge amount of stimulus on its own.

The odds I put on QE3 are about 6-4 against. (By the way, that’s what happened.) This means stock markets will probably roil because too many people speculated that Ben the Beard would diddle once again. But I doubt if the disappointment will be long-lived. The last thing the Fed (the US central bank, which Bernanke runs) will do is stand back and let the economy shrink further – especially with that presidential contest looming.

So what does this mean to us, you and your house?

Not much, actually. (And to think you just read 550 words to get here.) The world is unfolding pretty much as I’ve been telling you to expect. No more QE means the US stumbles along at near-zero growth for months and months to come. Ditto for Canada, since our biggest customer is languid. Our economy will slow as well, exports will drop, jobs will be scarce and real estate will take the punch. It’s already happening, of course, as you know.

As stock markets stabilize on a parade of good corporate earnings, bonds will fall in price and yields rise. Mortgage rates will continue to edge higher here, even as they sit at 50-year lows in the US. The Bank of Canada may not be raising rates as soon as anticipated, but they’ll still be going up here prior to the Fed moving. And it wouldn’t surprise me to see Ottawa again tighten lending rules in its March budget, perhaps this time doing the right thing and eliminating the 5% down payment CMHC allows for mortgage insurance.

The greatest threat the US faces, as Bernanke well knows, is a population afraid to borrow and buy. Without consumption there will be no middle class. But in Canada the threat is a people addicted to debt, who’ve consumed beyond their means, saved squat and now embody risk.

So, to summarize, there’s no solution. You’re utterly on your own. Man up.

I’m going for a ride.

152 comments ↓

#1 Ladybug on 08.25.11 at 10:20 pm

Oh well . . . at least we had the good sense to take your advice and sell when we found a Greater Fool. Our rental is an executive log home overlooking the lake. The landlady probably puts out more in repairs than our rent covers. We’re looking good – thanks to you!

#2 Joe on 08.25.11 at 10:21 pm

“nd it wouldn’t surprise me to see Ottawa again tighten lending rules in its March budget, perhaps this time doing the right thing and eliminating the 5% down payment CMHC allows for mortgage insurance.”

With the average downpayment being about 7%, this would really change the effective demand for housing by tweens and specs!!

#3 HouseBuster on 08.25.11 at 10:22 pm

Canadians are dumb!

#4 realinvestor on 08.25.11 at 10:23 pm

IF QE3 goes through wouldn’t this stimulate consumer confidence?
The government spending would be used as part of GDP and we will call it an “Action Plan”

#5 DnG on 08.25.11 at 10:23 pm

Firrrrrrssssssstttt

#6 T.O. Bubble Boy on 08.25.11 at 10:25 pm

The Government should do the right thing and start to ramp down CMHC – not just put 10% down payment rules in place.

Why not cap the maximum mortgage amount? Is the mandate of the CMHC to back $1M mortgages to allow some over-leveraged joker place a giant bet on Hot Asian Money in Vancouver? Why don’t they just give out loans at the Casino?

That’s it! Change the name to “CMLSC”: Canadian Mortgage and Loan Shark Corporation.

Too bad for us taxpayers, unlike real loan sharks, when things go bad on these loans Flaherty breaks our kneecaps and let’s the banks watch.

#7 dd on 08.25.11 at 10:26 pm

“So will Bernanke use his Jackson Hole speech to announce QE3? …If he doesn’t, you’ll wish you had bonds”

Most of it was annouced in early August. How else can the Fed keep the 2 and 5 year rates so low. They have buy bonds (to print money) to create fake demand and lower rates..

#8 Peakoilist on 08.25.11 at 10:28 pm

No way, the BB will stimulate, that’s what he does best.

#9 East Van on 08.25.11 at 10:31 pm

The real problem is the wealth gap. The rich are too rich, and the rest of us are being left so far behind (real wages stagnant since the 70s) that we have to rely on credit just to get by.

Unionize and force governments to tax the rich!

#10 Life ain't so bad on 08.25.11 at 10:31 pm

Big Ben has run out of options. Sometimes he an all the politicians seem dumfounded about this mess. Trying to resolve a debt crisis with more debt seems like an oxy-moron. Until they purge the system of all the bad debt, this problem will linger for years.

#11 Thoughts on 08.25.11 at 10:32 pm

The dust bowl also played an enormous part in the reputation the thirties has. I almost think the Dust Bowl had a greater impact over the long term.

#12 Off the river on 08.25.11 at 10:35 pm

In summation: Grow a beard; become sexier and smarter and hold on to whatever cash you have. It’s going to be a bumpy ride.

Still think there’s money to be made in currency and PM’s.

Maybe the new beard will give me the authority over me frugal wife to buy…

#13 Blue on 08.25.11 at 10:36 pm

Brill and provocative as usual.

(we don’t need a damn blog we need a bookie, lol)

#14 The Oracle of Obama on 08.25.11 at 10:39 pm

“Hullo Becky, I was wondering if you could tell Amerika that while uh, bathing the idea came to me.”
“OK uncle Buffy. but you know I…well you know, the baby.”
“Not to worry my little sqawk box, we can short it and it can go with the bathwater.”
“OK. Bye bye uncle Buffy, luv ya.”

#15 Smoking Man on 08.25.11 at 10:40 pm

History is history, I think bearded one , more so I hope you are right regarding Canadian Re.Me not sold just yet, For my kids and the fact that due to Stockholm syndrome coming on here regularly I unloaded 4 investment properties this year, down to my house which I will never sell. Way cheaper than rent.

Europe is so f-d which makes me wonder why the oracle of Omaha pledged 5 billion for Bank of America……few nights ago I said short the US banks, wow they surged, good thing I’m a procrastinator. But when Euro trash caves, BOC will be worth 5 cents…Put options kids…..Putting up 2 million just before the other bearded one talks
Anyway I warned the gold bugs on here hopefully they listened………….

God I’m good
If im’ right that can turn into 100 mil, wrong, I still have 8

#16 Dark Man on 08.25.11 at 10:43 pm

Canada was supposed to be screwed if Obama was elected too. Heard it all before.

Why? — Garth

#17 Bcc on 08.25.11 at 10:45 pm

There’s a video floating around the Internet, showing Greenspan saying US won’t default because they can keep printing…

And this blog entry explain QE1&2 are about printing money to buy back bonds (and inject money into the economy). that makes me wonder, why US has to issue bonds at the first hand, why not just print whatever Thayer want? Is that a moral issue? Anyone can explain?

Currency devaluation and inflation, to name two reasons. — Garth

#18 Cristian on 08.25.11 at 10:48 pm

“the States is”…?
I are confused…

‘United States’ is singular. — Garth

#19 Mr. Lee on 08.25.11 at 10:48 pm

You said it very well, ” You’re utterly on your own.” This is the new normal…..bon voyage greater fools.

#20 Jsan on 08.25.11 at 10:49 pm

Ben and his Quantatative Printing is pissing off so many people I will hate to see the reaction if he decides to do it again.

What Putin thinks of Bens money printing.

http://www.newsmania.com/vladimir-putin-attacks-federal-reserve-money-printing-press-us-acting-like-hooligans-1800/

http://www.reuters.com/article/2011/08/01/us-russia-putin-usa-idUSTRE77052R20110801

What Brazil thinks of Ben and his money printing.

http://blogs.wsj.com/economics/2011/02/15/brazil-finance-chief-renews-attack-on-fed/

What Texas Governor and presidential hopeful Rick perry thinks about Ben and his money printing.

http://www.guardian.co.uk/world/2011/aug/16/rick-perry-ben-bernanke-treasonous

These are the vocal ones. Almost every leader in every nation that is seeing food and commodity inflation skyrocketing in their countries more than likely have no love for Ben and his Quantitative Easing.

So will it happen again? Who knows but there could be a backlash if it does in my opinion.

#21 Robby on 08.25.11 at 10:52 pm

#11Thoughts on 08.25.11 at 10:32 pm
“The dust bowl also played an enormous part in the reputation the thirties has. I almost think the Dust Bowl had a greater impact over the long term.”

There is a drought across all the lower U.S. now. Parts of Texas has not seen rain since October. I have read that there is not much water for irrigation and billions of dollars in lost revenue.

#22 Helicopter Ben on 08.25.11 at 10:57 pm

I think they have to do QE3 in one shape or another, how else are they going to pay their bill’s?. once a republic, then a democracy now a fascist country where the rich collude with the politicians they will do what they need to to stay in power and keep the rich well rich. with such a large military and high unemployment in a nation that no longer produces much other then exporting their debts and war profiting i really dont see how this will end well. the only thing printing money produces is inflation and speculation. Regulated Interest rates isnt a free market. I am betting against america .

Do you have any idea what ‘fascist’ means? — Garth

#23 P F Murphy on 08.25.11 at 10:58 pm

Each QE does less but impoverishes the American taxpayer more. I would be astounded if he does QE3, BUT I’ve been astounded before. On one of your other points, can there be a middle class with 53% and 92% income commitment to mortgage payments. Should we be regarding this loss of consumption money as a cause of prolonging our economic stumble and trumpeting “renting” as patriotic? 68% own houses but who knows what percent own high-priced, outstanding-mortgaged houses and are unable to participant in any other market, even the “Let’s get a pizza!” one? A drop in the housing prices means they can’t recoup their money while they still owe just as much as they used to. There’s no consumption for them. These high priced houses lock money away from circulating through the economy, relegating it to being “from banks” and “back to banks”.

#24 Jsan on 08.25.11 at 10:59 pm

ZeroHedge just posted this. (see below)

It’s interesting because it seems to be a reflection of the frustration with Ben Bernanke and the Federal Reserve policies. Sort of the common mans reaction which coincides with my previous post showing the reaction of more public figures and their outrage at the Feds Quantitative Easing policy and the global ramifications resulting from it.

http://www.zerohedge.com/news/guest-post-federal-reserve-policy-mixed-extreme-weather-has-put-world-fast-track-revolution-and

.

#25 Snowboid on 08.25.11 at 11:09 pm

The long abandoned ‘Conservatory’ project in Kelowna has been ‘kick-started’ – but no longer as a high-end luxury condo complex, but Phase 1 will be 110 rental units.

The original plan included several high-rise towers, and a massive atrium with palms and other tropical plants.

No word yet how much of that will be done. Completion of the first tower is set for the spring of 2012, adding to the multiple condo projects that are now dedicated (or a majority of) rentals.

#26 Helicopter Ben on 08.25.11 at 11:11 pm

“Do you have any idea what ‘fascist’ means?” — Garth

“Fascism should more appropriately be called Corporatism because it is a merger of state and corporate power. ”
-Benito Mussolini

That’s what he wanted to believe. It does not make it so. — Garth

#27 BigAl (Original) on 08.25.11 at 11:12 pm

“The greatest threat the US faces, as Bernanke well knows, is a population afraid to borrow and buy.”
===================================

I’ve heard and read numerous stories that the U.S. housing crash, caused a downgrading of personal credit ratings of many many people (and many business owners), and then on top of that, banks have tightened their own lending standards – basically credit is still frozen.

And what about saving and buying instead of borrowing and buying? I think the banks, Ben, and the gov’t really are scared of the decreased debt load of Americans and increased savings rates.

#28 bystander on 08.25.11 at 11:12 pm

Historian Niall Ferguson drops light on the future of USA

1. EMPIRES ON THE EDGE OF CHAOS
excerpt
http://www.youtube.com/watch?v=rPBp3e6t7Ik

Full version:
http://fora.tv/2010/07/28/Niall_Ferguson_Empires_on_the_Edge_of_Chaos

And more from Naill Ferguson:
THE ASCENT OF MONEY

Episode 6 is the most relevant to the recent events:
http://www.youtube.com/watch?v=Ce97arJNKio&NR=1

I would recommend to watch the whole movie.

P.S.
It pays to learn from history.

It pays to read the book, not watch the movie. — Garth

#29 Kevin on 08.25.11 at 11:15 pm

“And it wouldn’t surprise me to see Ottawa again tighten lending rules in its March budget, perhaps this time doing the right thing and eliminating the 5% down payment CMHC allows for mortgage insurance.”

Getting rid of the cash back, 0 down and free down payment mortgages would be a start.

Putting back the price ceiling of the amount that is insured should also be a no brainer.( that was taken away in 2003)

For investment properties, buyers need 20% down, but if a buyer just wants a second home ( just don’t say “investment property”) they only need 5% down.
Make every 2nd property 20% down.

I really wonder what the reason for the “tightening of the mortgage rules” in the past of couples was supposed to do.
Was it to curb prices, curb sales or curb credit growth?
Because looking at prices and credit growth compared to income, the “tightening of mortgage rules” has had no bite.

#30 Debtfree on 08.25.11 at 11:21 pm

@ betamax .
anyone who read the link with the history would not write such a retort as you did . The distance across the seymour narrows is just a little farther across than the fraser river is wide under the port man bridge . There had been a prelimary plan that would see the railway cross the Rockies by the Yellowhead Pass and reach the BC coast at Bute Inlet. It would cross Sonora and Quadra Islands and reach Vancouver Island by a bridge across Seymour Narrows. They knew it could be done 137 years ago . See the reason it is posed as imposable is because this super bridge is always touted as the only option and that’s the great lie . It would be even cheaper and easier than it would have been 137 years ago because most of the road is already in place up the sunshine coast. And the beach head on vanisle would be campbell river .

#31 Gord In Vancouver on 08.25.11 at 11:26 pm

The Bank of Canada may not be raising rates as soon as anticipated, but they’ll still be going up here prior to the Fed moving. And it wouldn’t surprise me to see Ottawa again tighten lending rules in its March budget, perhaps this time doing the right thing and eliminating the 5% down payment CMHC allows for mortgage insurance.
__________________________________

Hopefully, they’ll shorten the longest amortization period too.

#32 Scalgary on 08.25.11 at 11:27 pm

I feel like armed and took position…great post Garth

Thanks.

#33 Ozy - Game Over on 08.25.11 at 11:32 pm

americans – toasted
canadians – on the grill now

enjoy the taste
juicy indeed

#34 Freedom 85 on 08.25.11 at 11:35 pm

I’m not really a betting man, but if I had to bet on the message from the Fed tomorrow at Jackson Hole, Bernanke will become somewhat opaque tomorrow and confuse the majority by not really giving anyone what they want. The strategy behind this keeps the markets up and will keep a carrot in front of the nose of the market enabling those who participate to dream of good things to come so they don’t sell. At the same time, the message will keep hope alive so as to distract from the misery currently underneath the surface of the market.

Classic Fed action. Greenspan probably wrote the speech…….

#35 Onthesidelines on 08.25.11 at 11:36 pm

” The greatest threat the US faces, as Bernanke well knows, is a population afraid to borrow and buy. Without consumption there will be no middle class. But in Canada the threat is a people addicted to debt, who’ve consumed beyond their means, saved squat and now embody risk.”

As usual you got it backasswards. Should have written… without the Middle Class there will be no consumerism. And, I might add, it’s not that people are addicted to debt but, rather, that in the absence of the real wealth that the middle class used to enjoy, debt remained the only means to continue to maintain the facade of still being middle class in the face of growing economic inequality.

This is not about morality, this is about letting unrestrained capitalism destroy the very fabric of the engine which drives economies world wide.

#36 Timing is Everything on 08.25.11 at 11:38 pm

So, to summarize, there’s no solution. – Garth

That’s because there’s no problem. Or conversely, there’s so many problems, there’s no ‘solution’ (FUBAR).

Either way, you’re still own your own.

Remember, it’s never too late to make a better decision.

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

#37 squidly77 on 08.25.11 at 11:44 pm

Jackson holed ? To be or not to be.

#38 All is knowledge on 08.25.11 at 11:48 pm

Buy the stock market on Monday and sell on Friday…this is the time proven way to make money in the market.

#39 bystander on 08.25.11 at 11:49 pm

“It pays to read the book, not watch the movie. — Garth”

Garth, I must admit I’m unemployed, so no money for books just yet :) btw a brief walk through the calgary public library online catalogue returned eight titles by Garth Turner. Six out of eight copies of ‘Money Road’ has been checked out. That’s pretty good. I am putting it on my list.

#40 City Slicker on 08.25.11 at 11:49 pm

Of course they will do Q3, they have no choice, or they go straight into recession, then depression right after. Only Way out is collapse and start all over. But they’ll keep kicking the can down the road, as they always say these days. Gold is inching its way back up tonight as I write, they already know Q3 is coming.
Garth you also forgot to mention the monster hurricane heading towards the east coast. I think it could be category 4, which is almost total anihilation!
They’ll need the money, you watch.

#41 Jsan on 08.26.11 at 12:08 am

There are many very simple ways to bring Canadian housing prices back into line without touching interest rates.

What the government should do is tell the banks that any mortgage loan greater than 3 or 3.5X household earnings will result in both the government and the mortgage lender splitting the risk on the entire mortgage amount. This would basically stop all lending at anything above 3.5x household income in it’s tracks in my opinion. The banks are not stupid! It would also take the government off the hook if the market started to dive and put some of the blame on the banks for now not being so open to 4x, 5x , 6x or even greater mortgages to household income that they seemed so willing to do when they held zero risk.

They should also immediately stop all CMHC insured loans on anything other than a principal residence. It’s ludicrous that the Canadian tax payer should be insuring the housing casino. The CMHC was once a good idea, put in place to help with home ownership but has unfortunately morphed into a government organization to help fund flippers and speculators.

#42 Nostradamus Le Mad Vlad on 08.26.11 at 12:08 am


Ben and Jerry’s make great ice cream, but they’re not the same as Tom and Jerry.

Of note, Jackson Hole is somewhat close to Yellowstone. Time for the super-volcano to exercise, stretch then go ballistic? That would undoubtedly liven up proceedings!

“I measure success in rim size and decibels. So where better for central bankers from around the world to gather?” — HH — Harley Hummer or Howard Hughes!

“. . . stock markets stabilize . . . bonds will fall . . .” — Good time to buy in, get a balanced portfolio and increase income flow.
*
#160 maxx — Against the beetle? Could be Led Zeppelin, The Who, Pink Floyd — U choose ’em, Garth will play ’em!

#165 jess — I might as well be useful at something!
*
Propaganda? The markets may soar or crash. Then again, they may sleep; Obama Doing his masters’ work; JPM buying out BoA? Anything is possible these days, and this would be a very good reason and time to buy; The Elite The UK and India.

China Getting big in vehicle production; Grumbling – Mumbling Coal plant shutdowns, electricity and natural gas prices skyrocket; New Tax Deal between the UK and Switzerland; Schwab suing and US Fed Further to Garth’s post; Rare Earths China tightening its grip.

Katrina and Irene — two storms of the century within a decade (1:32 clip); Fukushima Cesium = 168 Hiroshima’s, and Japan PM quits; ‘Quakes increasing? Yep; China Supports Palestinian UN statehood bid.
*
Chaos 1:34 clip — Planetary alignment Sept. 25, 2011. Stay footloose and fancy-free!

#43 Robert Dudek on 08.26.11 at 12:27 am

Do you have any idea what ‘fascist’ means? — Garth

It means the merger of corporate and state power.

Hardly. — Garth

#44 realityguy on 08.26.11 at 12:36 am

BCC-

There’s a video floating around the Internet, showing Greenspan saying US won’t default because they can keep printing…

And this blog entry explain QE1&2 are about printing money to buy back bonds (and inject money into the economy). that makes me wonder, why US has to issue bonds at the first hand, why not just print whatever Thayer want? Is that a moral issue? Anyone can explain?
=================

Why do you think gold has gone up so much against the US dollar. Actually the price of gold hasn’t changed, its the printing of the US dollar which increases the value of gold.

EG let say US treasuries had 1 trillion dollars and the price of gold is 100 dollars/oz. If the US prints another trillion therefore it will take you 200 dollars to buy the same oz of gold. This will go the same with the price of food and everything else. Eventually 100 usd might only get you a bag of chips.

BTW – QE1 and QE2 did nothing for jobs its just built bigger government, and help Obama’s buddies get richer. Until money runs out. QE3 will do the same until the system collapses under the USA feet.

The world is looking at debasing itself from the US currency. It will happen, and it will be like a turning on a switch. China, Russia and India has mumbled plans to do so. They do not want to be held hostage to the US dollar. Once they figure the US is all used up like a Crack Whore, then they will walk away.

BTW

#45 not 1st on 08.26.11 at 12:46 am

Geez Garth, whatever happened to your faith in the U.S.A and never bet against the yanks.

Here’s the rub. You cite demographics as a prime reason real estate in Canada is toast. The same applied to the U.S.A. 10,000 baby boomers turn 65 every day for approximately 17 years. Bernake can give all the stimulus and loans to banks that he wants, this group will never go back into debt if they can avoid it and they won’t be buying mindless consumer goods. The american economy and stock market have peaked.

Of course not. — Garth

#46 Devore on 08.26.11 at 1:04 am

#17 Bcc

that makes me wonder, why US has to issue bonds at the first hand, why not just print whatever Thayer want? Is that a moral issue? Anyone can explain?

It’s really arbitrary. There’s no good reason to do it either way.

The issue of money creation really lends itself to conspiracy theorists. Governments could create their own money, and do it for free, at no interest. They could pay interest to themselves, as a form of taxation to remove slush from the economy. But instead all governments borrow from banks. This leads to conspiracies about banks enslaving humanity in a web of debt where they eventually end up owning everything.

In reality, any interest paid to central banks by their governments is returned back to the treasury. At least that is the case in US and Canada.

But can you imagine the kind of world we’d have if politicians could just create any amount of money whenever they felt like it?

#47 The InvestorsFriend (Shawn Allen) on 08.26.11 at 1:10 am

TOO RICH!!

Number 9 EastVan said:

“The rich are too rich”

But the Duchess of Windsor (a thin divorcee who married a King) famously said “You can never be to rich, and you can never be too thin”

I’m with the Duchess, especially on the can’t be too rich bit…

‘course she meant YOU can’t be too rich, it’s fine when we ourselves are too rich, it’s just other people being rich that bothers most of us.

#48 Jody on 08.26.11 at 1:12 am

DELETED

#49 Drew on 08.26.11 at 1:20 am

Watching the #REINBC tweets tonight, I threw up in my mouth a little bit.
For example: “@reincanada: Is there concern that first time home buyers won’t be able to buy homes in Vancouver? #REINBC” “@reincanada: Answer: no, entry level buyers are buying out of Vancouver core. Coming up with down payment is the challenge #REINBC” “@ChrisBiasutti: Balance sheet of Canadians are very strong. @Dr. Novin #reinbc”
I guess you can read some level of fear into it but seriously, these people live on another planet!

#50 betamax on 08.26.11 at 1:32 am

#30 Debtfree: “And the beach head [sic] on vanisle would be campbell river.”

LOL. Good luck with that, and the other side.

#51 Metro Van Observer on 08.26.11 at 1:58 am

“So, to summarize, there’s no solution. You’re utterly on your own. Man up.” – Garth

Garth is right. Educating oneself about the financial world and investment vehicles and their various associated risk levels is more important than ever.

This blog and the often insightful comments here allow one to enhance their financial literacy each day.

Unfortunately the volatility in the markets (esp. with computerized trading making things alot worse than ever) will make it difficult for many people to make financial progress in the years ahead it seems.

Obviously a balanced and diversified approach as Garth suggests will be crucial. I, despite the current volatility, see tremendous long term value in some multinational blue chip companies based in the US but with large exposure to emerging markets. Many are trading at multiples well below long term averages. Trying to ignore the ‘noise’ and MSM scare articles can make it tough to buy though.

But as Warren B says, “in the short term the stock market is a voting machine, in the long term it is a weighing machine”. His bet on BAC implies, I believe, his faith in a US\global economic recovery, however far out.

#52 March of the Pigs on 08.26.11 at 2:11 am

I figure it took Bush 8 years to screw it up it’ll take another 8 to fix it. Next time all the redneck hillbillies need to elect someone who actually has the credentials to run a country.

#53 Aussie Roy on 08.26.11 at 2:14 am

Aussie Update

Latest national auction clearance rates – OH DEAR !!.

http://www.myrp.com.au//showNews.do?id=492

Perth’s ailing property market is causing home owners to maintain a firm grip on their properties, waiting on average two years longer to sell than they did five years ago, sales data shows.

This means they have lost money holding their properties as prices have fallen 6% in last 2 years.

http://www.watoday.com.au/business/property/perth-home-owners-clinging-to-their-properties-amid-sluggish-market-20110825-1jbnu.html#ixzz1W72jZltP

Negative gearing, all ok until price appreciation stops.

http://tunswblog.blogspot.com/2011/08/negative-gearing-is-not-your-friend.html

#54 Gord In Vancouver on 08.26.11 at 2:17 am

Another Global (Vancouver) RE Pumpathon (again…without an author)

http://www.vancouversun.com/business/Editorial+dream+impossible+dream+home+ownership/5309122/story.html

#55 Tony on 08.26.11 at 4:08 am

Maybe Bernanke should just tell everyone how the fed has been juicing stocks for the past 17 years. More to the point if they stop doing it the markets will drop an unprecedented 80 percent over the next five years.

#56 Van MD on 08.26.11 at 4:20 am

[BCREA predicts metro Vancouver price in 2012 to drop 3.5%; demand to decline in coming years]

“B.C.’s home sales, property values to slow as job growth ebbs: BCREA”
AUGUST 25, 2011 1:02 PM
“Following a decade where unit sales broke all records, consumer demand for the next few years will be relatively moderate,” Muir said in releasing the report.

A positive note, however, is that weaker global economic growth and uncertainty in world financial markets are signals that interest rates, including mortgage rates, will remain low and “help underpin housing demand.”

Muir expects Metro Vancouver’s average price to slip 3.5 per cent in 2012 to $742,000. However, that will be a decline off 2011, which Muir predicts will end with the average price having shot up 14 per cent to $769,000.

http://www.vancouversun.com/business/home+sales+property+values+slow+growth+ebbs+BCREA/5307420/story.html#ixzz1W5ZNmtiF

#57 Lou on 08.26.11 at 4:29 am

Garth,
Using a not too broad interpretation of the word, could Harper be classified as a fascist?
Lou

#58 David B on 08.26.11 at 6:46 am

So …. Pay down debt. spend within your means and save wisely …. Has that been good practice since the days of Julius Caesar or what?

#59 Fool on 08.26.11 at 6:52 am

DELETED

#60 Moneta on 08.26.11 at 7:00 am

I figure it took Bush 8 years to screw it up it’ll take another 8 to fix it. Next time all the redneck hillbillies need to elect someone who actually has the credentials to run a country.
————
I guess you don’t clean up messes.

In my experience, it can take a few seconds to make a mess and hours, days, weeks or months to fix them.

I can send my kids over for a few hours if you don’t believe me.

#61 BrianT on 08.26.11 at 7:21 am

#46Devore-If you are going to use the term “conspiracy theory” it would be useful if you defined it, because in 2011 it is as vague a term as “God”. Usually it means any fact not rubber stamped by the MSM, others define it more narrowly, usually attributing bad intent. The reality is that very few wealthy and powerful humans live alone in the woods interacting with no one. Most billionaires have a contact list far exceeding yours, and almost all their contacts share a common view of how the world should be run. You can call that a conspiracy theory, but if you observe a bunch of sailboats moving in the same direction that is not a conspiracy theory, that is just the way the wind blows.

#62 bigrider on 08.26.11 at 7:24 am

Could modern portfolio theory be dead? Seems to me a diversified portfolio simply delivers market results, which , in the past ten years or so, have been poor.

Seems big bets in individual sectors are the only chance an investor has at ‘winning’ or ‘losing’

Did you just make that up? — Garth

#63 allister on 08.26.11 at 7:31 am

“The Bank of Canada may not be raising rates as soon as anticipated, but they’ll still be going up here prior to the Fed moving”

RBC raises var rate mortgages – This is nothing new because CBs are usually behind the curve. Too late and three bricks short. Carney is the biggest procasinator I’ve ever seen. He’s waiting for Ben to tell him what he should do.

#64 Q on 08.26.11 at 7:45 am

Barnanke, who used to be a one trick pony, now has another trick thanks to Congress and the ass#@les at treasury. I’ll bet that he and BHO annouce another debt ridden round of mismanaged stimulus programs, now that they have permission to indebt Americas great-great- grandchildren. He’ll give the “friends of government” contractors about 8 months to steal whatever they can…..then introduce QE3 to appease his Wall street buddies, while promising not to go to QE4…which he WILL implement about 6-8 months later, as he will be back to one trick…a bad one. Unfortunately, this will all but finish off what’s left of the “middle class” and hurt Canadian exports, as the stimulus deal will be sticktly “buy American”. As for Canada, we will be told that all is fine (while the statisticians fiddle with figures to get the result that Flaherty wants), but that the recovery may take a bit longer and a balanced budget may arrive a year later than thought. Come March, the budget will contain the usual tax increases (“all but government must tighten our belts”) and some sort of misguided and poorly thought out, revamp of CMHC policy….which will inevitably create further problems. Think I’ll wait a bit to get back into the housing market….

#65 timo on 08.26.11 at 7:49 am

http://www.rentadrone.org/cnn-live-stream-usa-feed/

wtf??!!

now they are showing a storm surge from Irene that can flood parts of NY city proper and a possibility of 4 days without power. Wow I did not a category 1 storm could bring that high a storm surge.

#66 eddy on 08.26.11 at 8:08 am

Battle for the California Desert: Why is the Government Driving Folks off Their Land?

http://www.youtube.com/watch?v=yw3RiMdS7sE

#67 maxx on 08.26.11 at 8:21 am

“The greatest threat the US faces, as Bernanke well knows, is a population afraid to borrow and buy.”

Right on the money Garth. I would however, enlarge that membership beyond the US.

Increasingly, people of all ages I speak with tell me they constantly look for ways to save money. They share stories of money-saving tips that don’t compromise quality of life. It is so simple to learn to avoid falling for the spending mentality and once the habit becomes ingrained, life becomes simpler, saving easier and your bank balance swells.

Young people, Gen-Xers, the elderly- many more are “getting” the money-saving way of life. Think of all the garbage we all bought in the past that had some kind of defect, didn’t perform as expected or had additional costs. Avoiding all of that time and money-wasting junk removes a major chunk of needless stress and wasted time.

Last weekend, a friend who was re-designing her home had established a budget. When it came to furniture and decoration, I suggested she simply play musical chairs with the same things she had and keep her money, a healthy 5-figures. She was ecstatic with the results.

Borrowing and spending has gotten so out of hand, it often leaves absolutely no wiggle room for life events, forward planning (ie: retirement, illness) and compensation for future non-existent or reduced social programs. Our economy simply continues to deteriorate.

My wallet remains resolutely closed until central banks raise rates to normal levels. When they do, I, and many others will be more than happy to do our patriotic bit for the economy.

#68 Oasis on 08.26.11 at 8:41 am

what’s likely to happen, is Bernanke will finally admit his plan of collapsing the dollar hasn’t been happening at a fast enough pace, and that he’s now going to print $1.5 trillion for the next decade to fund the deficits, so that Obama and the next president won’t have to worry where the money will come from. lol

#69 vinco9999 on 08.26.11 at 8:42 am

“Not that Bernanke cares about us, but he’s a student of the Great Depression. And it was nutjob policies then that turned a miserable time into an epic screw-up.”

In FDR’s first term he was only able to blow $15 billion only to have unemployment *higher* four years later. Unfortunately, 1930s economists simply did not possess our superior mental faculties. They f-ed things up to the tune of billions. Now, we can royally screw taxpayers to the tune of trillions.

“The country now reached a greater crisis than in 1933. The public debt, which was $22 billion when Roosevelt took office and was a heritage of World War I, now was $37 billion. Taxes had been more than doubled by Roosevelt. By April 1938 unemployment reached several thousand more than when Roosevelt was elected in 1932. This was not Hoover’s Depression but Roosevelt’s Depression.” (source: http://nobsopus.blogspot.com/2009/06/franklin-delano-roosevelt.html)

My reference was to the heroic attempts of protectionist right-wingers to turn a recession into a depression. They did a great job, and are ready to repeat. — Garth

#70 Beach Girl on 08.26.11 at 9:02 am

I find as I get older (I don’t feel older) that I need to consume less. I really do not need the latest gadjet. I eat sparingly, exercise for free, with the Jack Russell. Great investment. As the baby boomers age, they will probably require less things. I think this is the natural progression of things. Of course, this will be bad for retailers. Who actually has money out there? Baby Boomers.

I get nervous when my two offspring tell me they love me. I clutch that purse a bit closer to my chest. I will be eating premium cat food at the end. Actually, I am not broke in any shape or form. But I feel I have worked hard all my life, been self-employed for 25 years. That is harder than going to work, I think.

Again, who has the money in this country? Is it the Gen-X Y or whatever comes after. I see a lot of these people, no one looks overly employed to me.

#71 neo on 08.26.11 at 9:10 am

Raise your hand if you think that The Fed/Government will blame the upcoming weak 3rd Quarter GDP on Hurricane Irene?

Also, why do we pay so much attention to nominal GDP when REAL GDP is negative so far this year. Actually per capita Real GDP in Canada since 2007 is -2 and in the U.S. is -4. This constant window dressing and massaging of the numbers that has been going on is just hiding the rot that is going on.

I wonder what/who Flaherty and Carney are going to blame for the recession that is going to be confirmed once our Q3 is negative since it is all but certain Q2 GDP will be announced neagtive on the 31st of August.

That rotting smell by the way is the middle class in both countries and no amount of Government Axe spray is going to remove it.

#72 jess on 08.26.11 at 9:20 am

game of texas hold em?

Thursday, August 11, 2011
Der Spiegel:
“According to German investigators have a new disk with information about thousands of alleged tax evaders. It is apparently data about German clients of a large Swiss bank, the newspaper reported, citing official circles.

The purchase had been so far successfully kept secret, it said. It was a very large data set. Also, the bank apparently knows nothing yet of data loss. The evaluation by German investigators is already advanced. Prosecutors and tax investigators several states are preparing a search and seizure. .

http://www.spiegel.de/wirtschaft/soziales/0,1518,779579,00.html

#73 househornyhousewife on 08.26.11 at 9:21 am

Garth,

That is the cutest photo ever !

You can bet that I am no economist, however, it seems to me that trying to encourage consumers to go into more debt in order to stimulate the economy is no longer the way to go forward.

Most consumers have hit their debt ceilings and some have even gone beyond, thanks to unscrupulous lenders (and the irresponsible buying behaviour of the consumers themselves since many should know better). No matter how much lower interest rates go (even to 0%), people simply cannot borrow any more money even if they wanted to.

I think that the only way to restore confidence in the average consumer is to make it easier to pay off their debts and thereby begin to leave more money in people’s pockets .. their own money as opposed to borrowed money. Once people begin to reduce their debt and have more money in the piggy bank (did I mention how cute the picture is .. oops, but I digress), perhaps they will begin to spend and the economy will begin to move again. Sure interest rates are low and this will help, of course. But how about going after tighter controls for lending (as you have mentioned may happen with the CMHC in the near future, FINALLY), and putting a cap on credit card interest rates ? How about educating the public about how to better handle their finances and what constitutes responsible vs. irresponsible debt ? and a host of other things that I am sure can get people to restore their finances into better health.

I personally see no difference between the US and ourselves except that US consumers have realized they are maxed out and Canadians continue to fool themselves, being propped up by a variety of things such as the CMHC and ridiculous real estate predictions. Our two economies are so inextricably linked together that we have no choice but to go where the US does.

I am very confused as to why policy makers continue to flog a dead horse. It is obvious that what worked in the past is not working today so why not try something else ? Something more honest. Admit there is a serious debt problem (on all levels) and put policies in place to pay it off. This means curbing spending and reducing the debt. It also means budgeting wisely and setting long term payment goals. Sure it will mean a very slow and painful recovery but that’s what happens after a crash .. you have to take it easy and allow the bones to heal before you can begin to walk again.

HHHW

#74 a prairie dawg on 08.26.11 at 9:47 am

“You’re utterly on your own. Man up.”

That’s what I figured, but I still sleep pretty well.

Bonds 50%
Equities 25%
Real Estate 25%

#75 JG on 08.26.11 at 9:48 am

At some point all ‘borrowing’ has to be paid back. Doesn’t QEx just delay the inevitable? And until when? how will a delay somehow make the problem easier to solve?

#76 maxx on 08.26.11 at 9:55 am

#23 P F Murphy on 08.25.11 at 10:58 pm

Great post. Especially “….even the “Let’s get a pizza!” one?”

#77 dd on 08.26.11 at 9:58 am

“Note, however, Quantitative Easing II (“QE2”) did not come out of Jackson Hole in 2010. It was actually at this meeting where the Federal Reserve Chairman Bernanke denied that QE2 was going to be implemented. QE2 was a “tool” at the Fed’s disposal, the Chairman remarked, but not necessary at this time.

Three months later, Chairman Bernanke reversed course: QE2 began on November 3. The programme had a simple objective: the Fed would purchase US government debt in order to drive down interest rates on US Treasury bills, which would in turn inspire investors to a) pull their money out of said low-return US T-bills and b) put all of that money into riskier but higher-yielding markets”
Author: Gabriel M. Mueller

#78 JohnnyBravo on 08.26.11 at 10:03 am

Is anyone else bothered by the fact that the only thing driving the markets right now is the expectation of more funny money?

Apparently, the economy in the US––which, as was reaffirmed this morning by the revised 1.0% Q1 GDP print––is basically dead (or worse if you factor out the effect of this funny money on GDP).

This monetary stimulus game has been going on now for about FOUR years (it began in the late summer/fall of ’07 when the Fed starting lowering the Fed Funds Rate after the onset of the credit crisis, as brought to light by the collapse of two Bear Stearns hedge funds).

The US economy may not technically be in recession right now (two consecutive quarters of negative GDP), but
when the economy sucks for four years,
when no amount of monetary or fiscal stimulus works,
when real unemployment is approaching 20% by some measures,
when 45 million people (out of about 300 million) can’t feed themselves,
when something like half of all homes are in negative equity,
when one of the largest companies in America is the one that makes neat little devices for playing Angry Birds,
when government sanctioned accounting fraud becomes necessary to save the system,
when the banks start eating each other to save their asses…
I could go on. But while this may not technically be a recession, does the technical definition really matter under these circumstances?

The US economy is moribund. Plain and simple.

And yet, the markets are widely expected to rally if the Chairsatan drops the slightest hint of more funny money to come. It’s a sick, surreal joke. If I could, I would ask Mr. Alighieri which circle of Hell we are currently in.

As for the Fed’s so-called management of the economy? They would drop the economy like a hot stone if it served their purpose, like Volcker did between ’79 and ’81. From what I can see, the Fed’s priorities are the banking system and the US dollar. They would readily cause a sharp economic decline if that’s what it took to save both. However, 2011 is not like 1980.

Today, the Fed and the US Gov want a weak US dollar, but they are being careful not to walk the dollar right over a cliff as they shepherd it downhill. They will likely go as far as their creditors will let them. We saw a totally panicked Geithner reassuring the world that the US will not default, because that would kill the dollar. No, they would readily kill their own people instead.

Yes, the US economy is moribund. If China stumbles, and the funny money tap is turned off, it’s all over for stocks. Or, we could be heading straight into another liquidity crisis in the banking system, if we are not already there, and relive 2008, or worse.

And yet, while people swoon and beat their chests over US debt, the fact is the US has enough real wealth in land, gold, energy and other resources to easily wipe away the debt like a gentle rain on a windshield. Obviously this is not the issue. In fact, according to some, the US national debt is not only good, it’s necessary. No debt. No money. No economy.

I think what we are seeing today is the unmasking of our grotesque monetary and financial systems. This unmasking is bringing to light all its ugly flaws, frauds and weaknesses. The reveal occurred when the growth in US consumer debt hit the wall in 2006 or 2007. Our system and our economy depend on ever expanding consumer debt. Since that ended, the monetary and fiscal fiat masters have been trying to compensate by pumping debt into the banking and government sectors. But so far, it’s been a stalemate at best.

The markets are currently being driven by record corporate profits. Where do you nuts crawl in from? — Garth

#79 dave in Victoria on 08.26.11 at 10:05 am

Do you have any idea what ‘fascist’ means? — Garth

In general it seems that nobody does. Recalling Pol Sci 101 three major elements are:

1. A collusion or blurring of lines between corporations and government.
2. An intense xenophobia.
3. A totalitarian regime.

A strong case could be made for #1 in BooSA, the other two depend on how many Dos Equis one has consumed.

#80 Fascism? on 08.26.11 at 10:05 am

from wikipedia “Fascists believe that a nation requires strong leadership, singular collective identity, and the will and ability to commit violence and wage war in order to keep the nation strong.[5] Fascist governments forbid and suppress opposition to the state.[6]

Fascism promotes violence and war as actions that create national regeneration, spirit and vitality.[7] It views conflict as a fact of life that is responsible for all human progress.[8] It exalts militarism as providing positive transformation in society, in providing spiritual renovation, education, instilling of a will to dominate in people’s character, and creating national comradeship through military service.[9] Fascists commonly utilize paramilitary organizations for violent attacks on opponents, or to overthrow a political system”.

Sounds a lot like the US to me.

The US is a democracy. Don’t be a ideo-weenie. — Garth

#81 Rich Renter on 08.26.11 at 10:05 am

Why does CMHC exist if 70% of Canadians are home owners anyway? If i was J, i would abolish the CMHC entirely,

#82 maxx on 08.26.11 at 10:12 am

#34 Freedom 85 on 08.25.11 at 11:35 pm

Agreed. The fed is consistently opaque…..always something to manipulate……

Markets and banks are protected at taxpayer’s expense , economies are not reliable nor inspiring of trust, our leaders fawn over the finance industry, however, our collective heads and gut instincts are giving us very clear signals.

#83 Moneta on 08.26.11 at 10:15 am

Most billionaires have a contact list far exceeding yours, and almost all their contacts share a common view of how the world should be run. You can call that a conspiracy theory, but if you observe a bunch of sailboats moving in the same direction that is not a conspiracy theory, that is just the way the wind blows.
——–
Agreed. But what can save us is the fact that many of them are so power hungry and full of hubris that they keep on stabbing eachother in the back, unable to truly work together and move as one cohesive group.

#84 timo on 08.26.11 at 10:17 am

good call garth,

I thought that little ben might fire the printers. It seems to me that devaluation of the currency and a commodity bubble developing outweigh the drop in stock prices.

Unfortunately with horrible growth prospects and consumer sentiment in the gutter they will have to inflate sooner or later.

Still calling for oil to $70ish,commodity bubble bursting and 10k DOW. That in my mind would give the consumer breathing room to start spending but debt will be with us for years.

#85 Daisy Mae on 08.26.11 at 10:32 am

Robert Dudek on 08.26.11 at 12:27 am Do you have any idea what ‘fascist’ means? — Garth

It means the merger of corporate and state power.

Hardly. — Garth

***************************************

MERRIAM-WEBSTER:
“Dictatorship that exalts nation and race.”

#86 timo on 08.26.11 at 10:44 am

http://www.businessinsider.com/debt-is-a-problem-but-private-debt-is-an-even-bigger-problem-2011-8

It is very difficult to inflate out of our present situation since banks will only lend to the best credits and the best credits don’t want to take on more debt—this is called a “liquidity trap” and stifles the “velocity of money.”

#87 JohnnyBravo on 08.26.11 at 10:54 am

“The markets are currently being driven by record corporate profits. Where do you nuts crawl in from? — Garth”

While I don’t disagree, I can provide historical evidence that earnings don’t drive stock prices. But let’s look at recent history. The S&P 500 is down about 15% since the May peak, while corporations were reporting “record” profits. And today, the markets initially dived on news of no QE, just as most expected. The bounce was also predictable.

BTW: I don’t appreciate being called a “nut”, even if I wasn’t one of your clients, it would still be uncalled for.

Your post was worth of a Skippy award. — Garth

#88 young & foolish on 08.26.11 at 10:55 am

My friends and I …. we just love this blog …

Talked to my landlord again yesterday, and I asked him why he does not sell now that prices are still high (we live in the GTA). He said that there is nothing out there which could match his income (cash flow) from the rental properties. Of course, he has owned them for many years. I suggested prices will go down. He said that he is not a speculator, but an investor/business owner who offers a “service” for a fee. Real old school.

Indeed, renting rules!

#89 God on 08.26.11 at 11:02 am

The US is a democracy. Don’t be a ideo-weenie. — Garth

wrong, the USA is a republic.

#90 NAGA on 08.26.11 at 11:19 am

Garth – this is my second post to your blog. As always I enjoy your postings.

I wanted to share my observations about your selective use (manipulations) of RE stats.

I note the following July TREB report stats:

Avg price for July – $459K; June $475K; May $485K; Jan $425; and all of 2010 – $431K. Also comparing July 2010 – $418K.

While I am convinced that RE in most markets in Canada has peaked – I am not as convinced about a pending meltdown, but if we get one I am ready to re-enter the market for my investment portion of my RE portfolio sine I have significantly reduced the number of rental properties that I had in it.

Please if you are going to accuse others of manipulating data man up when you do it….or shave your facial hair.

Moving on to options for better investments I have not yet seen your musings about the broader deflationary forces potentially contributing to the current sad state of the western (and Japan) economies – mostly due to aging demographics. Generally speaking these economies have to deal with a significant retirement wave over the next foreseeable future. The value that pensions funds have to withdraw from the Market (both equities and bonds) will surely have negative impact on individual’s portfolio performance. Combined with less spending by these retired types – especially given the losses of their investments (all equities, bonds and RE) – either already realized or as you forecast for RE in Canada – not sure that a inflationary scenario is at all realistic.

In my earlier post I asked which scenario you predict:

1. Inflationary;
2. Deflationary – recession to depression;
3. Stagflation.

I note that you have a tendency to swing on these three – which is reasonable given the major moving parts and complexity of markets and economies.

My prediction for western economies and Japan:

1. Little or no real GDP growth and associated wage gains;
2. Continuation of low interest rate environment;
3. For Canada no Re crash and no price increase in real terms.

This has different implications for the various segments of population. For those starting out and lucky enough to get a job – if you believe in RE – get used to the idea that you will have to buy and rent parts of your home to carry the costs – or buy with other family members and also forget lifestyle for a few years while you pay down the mortgage. If you do not believe in RE understand the risks that 25 years hence you may have to live with the fact that while you may have no debts – you may also have no equity as markets will be very choppy going forward and your only friends will be mutual funds and ETF managers and brokers selling these products.

We are living through a period that is recalibrating expectations – from lifestyle, government social programs, and work. Some call it deleveraging of both personal and government balance sheets. This will lead to also political reform for western democracies.

There are a number of countries that will weather this era better than others and Canada will be one of them.

Formula for personal survival is to stay positive, smile – it will go a long way towards staying healthy and keeping family and friends close…..but yea we are on our own and always have been when it comes to making investment or any other major “decisions” in life.

I do not manipulate numbers, and the ones used two days ago came directly from TREB. As for my thoughts on the deflationary impact of demographics, please reference my current book. The impact will be opposite to your conclusion, which seems one-dimensional. — Garth

#91 neo on 08.26.11 at 11:26 am

The markets are currently being driven by record corporate profits. Where do you nuts crawl in from? — Garth

____________________________________________

Ok. What corporate profit news caused the Dow to go from -200 to +100 in like a 45 minute span this morning?

The expectation of more profits thanks to Uncle Ben. — Garth

#92 45north on 08.26.11 at 11:33 am

BrianT: Most billionaires have a contact list far exceeding yours, and almost all their contacts share a common view of how the world should be run. You can call that a conspiracy theory, but if you observe a bunch of sailboats moving in the same direction that is not a conspiracy theory, that is just the way the wind blows.

pretty funny

#93 Smell The Coffee on 08.26.11 at 11:40 am

Inflate to infinity, and beyond!

Buzz “Light Yob” Bernake!

#94 squidly77 on 08.26.11 at 11:44 am

87 JohnnyBravo

http://mob1900.globat.com/temp/blogpics2/village.jpg

#95 Eddie on 08.26.11 at 11:45 am

“I measure success in rim size and decibels” Hahaha, classic.

You’ve got 22 G’s in your TFSA!? What’s a TFSA? Well, check out my 22″ DUBS… homie.

#96 bigrider on 08.26.11 at 12:12 pm

#62-Garth to Bigrider ” did you just make that up”

Obviously not, but just saying that a diversified financial portfolio would have made very little money and more than likely, lost money ,over past ten years.

Only way to have made any serious returns in financial assets would have been to make huge directional bets (gold for instance)

There does not seem to be any end in sight for the long term secular bear market we are still in.

On an optimistic note, when it does end many years from now, the upside will dwarf the reults of eighties and nineties IMO.

Two words: active management. — Garth

#97 Mister Obvious on 08.26.11 at 12:20 pm

#70 Beach Girl

“I get nervous when my two offspring tell me they love me. I clutch that purse a bit closer to my chest.”

I must salute your brutal honesty.

#98 neo on 08.26.11 at 12:31 pm

The markets are currently being driven by record corporate profits. Where do you nuts crawl in from? — Garth

____________________________________________

Ok. What corporate profit news caused the Dow to go from -200 to +100 in like a 45 minute span this morning?

The expectation of more profits thanks to Uncle Ben. — Garth

____________________________________________

So you are saying the expectation of furthur QE in some form after the September 21st meeting will mean greater profits when its very existence is predicated on weak economic data/recession leading up to the announcement? How Orwellian.

You can’t print your way to prosperity Garth.

Bottom line, the very conditions that would necessitate further monetary policy also impact those corporate profits you speak of. Which means Uncle Ben is replacing a real recovery with a fake one and the effects will wear off and not last as long as each reckless attempt is made to QE infinity.

The correct answer for the 300 point move in 45 minutes was the High Frequency Algo traders aka The Machines. The human traders and investors like yourself haven’t influenced things for awhile. Guess it will be put to the test when they get back from vacation in September.

#99 WesternCanadian on 08.26.11 at 12:44 pm

http://www.calgaryherald.com/business/Alberta+earnings+Canadian+provinces/5305589/story.html

No earning growth hey Garth?? I guess if you consider 5% increase in Calgary median earnings from June 2010 to today as no earnings growth.

Still going to argue that Calgary is overpriced? All the numbers say Calgary is one of the MOST affordable cities when it comes to housing and now we see that incomes have risen 5% year over year.

I guess you can just keep igoring the data points that conflict with your points of view.

Say, why don’t you separate? Then the trip to Vancouver would be shorter. — Garth

#100 timo on 08.26.11 at 12:45 pm

http://www.msnbc.msn.com/id/44267325/ns/business-stocks_and_economy/#.TlfMMqjcz9q

Nevada led all states with foreclosure sales, accounting for 65 percent of all home sales, RealtyTrac said.

Elvis has left the building.

corporate profits to the moon, house prices around the world in the tank and government saddled with debt = free markets. ;-)

#101 Jody on 08.26.11 at 12:45 pm

Ron Paul schools Bernanke, and Bernanke is a traitor, a scum bag puppet of the private owners of the federal reserve.

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

http://www.youtube.com/watch?v=2NJnL10vZ1Y

In 2012 look for yet another twit from Texas (Perry) to win the Repub nomination, and that stupid cow from Alaska SarDuh Palin will be his VP. Just wait, coming in 2012, US nutheads declare war on the word.

Surely you can express yourself without sounding like a high school dropout. Or are you? — Garth

#102 boomorbust on 08.26.11 at 1:26 pm

Garth actually said “fascist” not “fascism”.

Don’t be afraid to use OED on-line. It maybe the only on that is a real dictionary….

http://oxforddictionaries.com/definition/fascist?region=us

#103 Nemesis on 08.26.11 at 1:34 pm

“Do you have any idea what ‘fascist’ means?” — Hon. GT

Well, GT – in the spirit of things that make you go, “Hmmm?” – it used to look like this…

http://tinyurl.com/3dqxwg9

However, today’s audiences require a slightly more ‘nuanced’ approach; accordingly,…

http://tinyurl.com/3of7xhy

#104 Snowboid on 08.26.11 at 1:42 pm

#99 WesternCanadian on 08.26.11 at 12:44 pm…

The article talks about Alberta as a whole, not just Calgary – and using averages without including medians can easily skew the results. Of course, excluding farm income (as they do across Canada) leads one to believe the overall situation isn’t as rosy as the owners of Stats Canada would like us to believe.

Not sure if Calgary is really that affordable, unless you are talking about the modest home I was raised in – now listed at over $2.4 million!?

#105 Look behind the curtain on 08.26.11 at 2:07 pm

Also from Wiki:

“Fascist economics supports the existence of private property, the existence of a state-directed market economy and the use of the profit motive.[22] Fascists opposed laissez-faire economic policy[23] in favor of economic planning.”

Which is the US in a nutshell. A pseudo capitalist country that has been co-opted by a banking cartel. They plan centrally for their benefit. This should be obvious unless you have your head buried in the sand. Yes the US is indeed a fascist state posing as a democracy. The first poster was correct.

Give it up. You are wrong. — Garth

#106 JohnnyBravo on 08.26.11 at 2:18 pm

#94 squidly77 on 08.26.11 at 11:44 am

A link to your personal home page?

#107 bill on 08.26.11 at 2:21 pm

betamax .

it is feasible for a bridge to vancouver island in at least three spots ….

Dr Pat Mcgeer has long championed such a link.
it would not be the longest such bridge/tunnel or the deepest.

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

#108 dd on 08.26.11 at 2:27 pm

#99WesternCanadian

…Still going to argue that Calgary is overpriced…

Ya. Calgary is still 25-30% overpriced by all measurements. It is a joke here.

#109 Reasonfirst on 08.26.11 at 2:28 pm

Like it or not – BC’s HST is dead

#110 foolsrushin on 08.26.11 at 2:29 pm

The markets are currently being driven by record corporate profits. Where do you nuts crawl in from? — Garth
Yes and they are not sales are growth driven. They are generated by government handouts to corporations and cost cutting. We’ll see how long it lasts.
Man you have one bad case of small man’s syndrome where you feel you have to slam everyone if they disagree/challenge you. Post this or not, I’ve had enough of your blog. So if you do post it here’s one more chance to make another pathetic last rights comment
By the way, gold has and will continue to move higher regardless. Yes there will be healthy setbacks but this has along way to run yet. The world has had enough of the US and their fiat garbage and pushey ways and together they will take the US to task.

What handouts did Apple receive? And I’m sorry about your gold… — Garth

#111 EdmontonJim on 08.26.11 at 2:36 pm

Simple solution to boost the economy, slash the debt, save the environment, and commit political suicide in 1 fell swoop.

1. – Eliminate all income tax on incomes less than 5x the median. Tax all incomes above that at 95%
2. – Impose a pigovian ‘Damage Tax’ on all products (except basic food items) proportional to their total carbon footprint to replace income tax.
3. – Give a set ‘prebate’ to all individuals equal to the amount of Damage Tax that would be paid by someone at the poverty line.
4. – Redefine Social Insurace to mean ‘Society Insurance’, and apply premiums to companies based on the risk that their activities pose to society or common property. Risky activities could be measured by everything from unsafe working practices, unhealthy products, environmental impact, disgruntled employees or even just angry neighbours.

Item 1 would make it popular
Item 2 would fund research and development
Item 3 would make it progressive
Item 4 would pay for pretty much all government spending, would punish companies that hurt people, and reward companies that help people. The insurance fund would be backed by the treasury, which would never run a surplus or deficit. It simply creates or destroys enough money to balance out every year. Inflation would be controlled by raising or lowering premiums.

There, problem fixed. Where’s my Order of Canada medal?

#112 Daisy Mae on 08.26.11 at 3:11 pm

The HST is dead in British Columbia
VICTORIA – British Columbians have voted to dump the HST.

The tax has been killed with 54.73 per cent of voters turning it down.

More than 1.6 million people sent their HST referendum ballots back to Elections BC during the almost-eight-week voting period that ended earlier this month.

That represents just over half the number of people who were eligible to vote and amounts to almost as many British Columbians who voted in the last provincial election.

The turnout for the referendum is considered particularly remarkable given that ballots were mailed in during the summer and with a postal strike getting in the way.

#113 Junius on 08.26.11 at 3:29 pm

#57 Lou,

You asked, “Using a not too broad interpretation of the word, could Harper be classified as a fascist?”

This definition of corporatism comes from Mussolini who said, “Fascism should rightly be called Corporatism, as it is the merger of corporate and government power.”

The world has not been closer to fascism (by this definition) then at anytime since WWII. This was the fascism that Orwell warned about in 1984 which he wrote in 1948.

I believe it is much worse in the US where the amount of money in politics has ruined the system. There is a big difference between checks and balances and “Cheques and Balances”. In every industry starting with the Financial services sector but including the Military, Health Care, Food, Energy, etc. the system is being turned into an oligarchy run by a few corporations.

While it is not as bad in Canada it is pretty bad. More than 80% of our broadcasting industry is controlled by 3 companies – Bell, Shaw and Rogers. Throw in Quebecor’s control in Quebec and that makes 4. Pretty scary if you ask me.

Screw Mussolini. This debate is over. — Garth

#114 MarcFromOttawa on 08.26.11 at 3:32 pm

The US is a democracy. Don’t be a ideo-weenie. — Garth

http://www.dailypaul.com/1958/constitutional-republic-vs-democracy

Ron Paul is a nut. — Garth

#115 timo on 08.26.11 at 3:38 pm

http://radar.weather.gov/ridge/radar.php?rid=mhx&product=N0R&overlay=11101111&loop=no

earthquakes and now a call for 10 inches of rain over new york. Sorry if off topic but from other pictures I have seen this is one ugly storm.

#116 Junius on 08.26.11 at 3:39 pm

Garth,

You said, “Give it up. You are wrong. — Garth”

While I agree that the US is not yet a fascist state I also believe it is headed down that path if it does not do something to correct itself. Two very significant Supreme Court decisions of the past few years demonstrate to me how much things have changed.

In Citizens United the Supreme court essentially opened the floodgates to corporate money into politics by striking down political finance regulation. In Janus, corporations were essentially given free speech rights equal to those of people. I would say that combined these 2 decisions have sped up the process.

Meanwhile nothing is being done to regulate the financial services industry that got us into this mess. Dodd-Frank has been gutted. The AGs are about to roll-over on the Mortgage Fraud issue. Sad.

The US needs a couple of Roosevelts starting with the one who carried the big stick.

#117 Timing is Everything on 08.26.11 at 3:46 pm

#112 Daisy Mae

Well, ‘democracy’ does still work, kinda. What a waste of time and money though. The Harper gov bribes the BC Campbell gov ($1.6Billion) to force HST on BC citizens. Then the BC Campbell gov bribes the citizens of BC with a future ‘promise’ to cut the new HST by 2%, after the fact. Of course, the HST taxes a whole bunch of stuff that never was taxed before the HST was implemented. I say the people of BC should keep the original bribe of $1.6Billion.

Why was the referendum not done before all this crapola? Oh ya, they both KNEW it would never fly in BC.

Make that a triple sno-cone, sir.

#118 bigrider on 08.26.11 at 3:49 pm

#96 Garth to Bigrider- “two words active management”.

Perhaps ,no issues with what you are saying at all Garth, but active management only as good as the portfolio managers abilty to do so. It is a bit of an art.

I will give you two more words- “market timing”. Also difficult to do.

In any event, it has been slim pickings (crumbs off the table more like) in the financial markets over past ten years , while dumb house humpers have made out like bandits.

And yes, I will openly admit, it erks me to no end.

#119 Bill Gable on 08.26.11 at 3:54 pm

Sarah Daniels and her Brother are slated for a new House Porn show “Urban Suburban”.

I cannot wait, oh boy!

Sarah’s extensive Real estate background is highlighted by a lot of years as a TRAFFIC REPORTER.

I have American friends – who are watching Canada and just shaking their heads.

One pal in Florida said he is running the numbers and he’s coming up with the same pair of snake eye’s as Mr. Turner’s forecasting.

You better reef the mainsail NOW, and I mean NOW.

Head for a sheltered cove, prefer Leeward.

Read Mr. Turner’s books and pay attention – this is going to be a Japan like era, and a lot of spendies are going to freak when they realize what a jam we are in.

#120 LS on 08.26.11 at 4:31 pm

While I can believe that voters, voted the hst out, I am so disappointed at what a collassal waste of time and energy and how badly the whole thing was managed. The end result is terrible.

Most ironic, Bill VanderZalm introduced property transfer tax, the tax on the purchase of real estate in BC. Likely one of the biggest cash cow gov’t grabs in the legacy of the BC government.

Should be interesting when real estate tanks… where they will tax us to make up lost revenue? A fairer tax like the hst is not an option so it’ll have to be some hidden tax on something else.

Oh well, as G&M said this morning, a book could be written on how NOT to handle an introduction of a new tax based on the liberal government’s handling of the HST.

#121 Coho on 08.26.11 at 4:33 pm

Most billionaires have a contact list far exceeding yours, and almost all their contacts share a common view of how the world should be run. You can call that a conspiracy theory, but if you observe a bunch of sailboats moving in the same direction that is not a conspiracy theory, that is just the way the wind blows.
——–
Agreed. But what can save us is the fact that many of them are so power hungry and full of hubris that they keep on stabbing eachother in the back, unable to truly work together and move as one cohesive group.

The power hungry and hubris are evil traits. It is always the problem of evil that has caused so much inequity, pain, suffering and death. Rather than saving us, these opposing factions (the rabbit hole goes deep) have been behind the recent 2 world wars and they are ramping up for a devastating 3rd. War has been sold to us as the good guys versus the bad guys, but it has been about one hidden evil group versus another and manipulating powerful people to do their bidding. It has always been about world domination dressed in democracy and humanitarian causes. The result: People suffer and die for false causes but we continue to flag wave. NATO has become the world bully, and Canada among others is one of its henchmen.

#122 Cato on 08.26.11 at 4:34 pm

Bernanke will eventually act but current political impasse is a unneeded distraction that needs to be dealt with first.

Lucky for Ben the tea party is already showing signs of imploding from within so it’ll probably be a problem that solves itself. Many members have their hands deep in uncle Sam’s pockets, so their political mantra is puzzling. Its a juvenile mindset, they want to see spending cut for others but rail against anyone talking about cutting programs important to them. They want gov’t to micromanage their neighbours lives but bristle at any state involvement in their own. These aren’t the future leaders of America, its simply a fickle mob set to turn on itself.

The next round of stimulus needs to be epic in size & will require global co-ordination on part of the Fed. Its going to take time to arrive at global consensus, markets got ahead of themselves thinking Fed could throw the switch on a whim. But thats not to say its not coming.

This is just the way it has to be. We simply can’t have a world advocated by the likes of Ron Paul with this level of debt. We can’t expect debt generated under one economic model to be honored in a new economic model by future generations. It would kill economic opportunity for next generation and spark a depression.

Only way out is to deal with debt by inflating the currency used to repay it. Good news is the Fed will continue to protect those deemed critical to economic recovery. The investor class, the wealth & job creators will always be the primary concern of the central banks and will emerge stronger than before. The middle class is about to be cut loose. The middle class has coasted for far too long on back of cheap chinese labour. Either the western middle class learns to become productive again or will lose the standard of living its become accustomed to.

This crisis has been about individual choice. Spending vs saving, borrowing vs investing are all choices made by individuals. Some made the right choice, most made the wrong choice and everyone deserves to face consequences of decisions they’ve made.

#123 NAGA on 08.26.11 at 5:09 pm

I do not manipulate numbers, and the ones used two days ago came directly from TREB. As for my thoughts on the deflationary impact of demographics, please reference my current book. The impact will be opposite to your conclusion, which seems one-dimensional. — Garth

From my perspective you have manipulated by selecting published numbers that fit and support your prediction of a RE correction.

The use of a smaller set of data such as only the SFH for Toronto which is also a smaller geographical area than TREB is what I meant by “manipulation.

Fair comment about one dimensional conclusion re demographics – but all I was trying to point out is that the demographics will have a significant negative drag on the investments markets including RE…..so for those of us that have paid off the mortgage on our principle residence it is a very risky proposition that you are promoting to refinance and gamble with the Equity and Bond Markets….life without a mortgage does not require a lot of cash flow even though I fully expect that the maintenance costs of the utilities and property tax portion will increase faster than GDP, Wages and facial hair…..my personal experience is that most retail investors are not sophisticated enough to keep up with the discipline required to properly diversify and rotate their portfolios – relying on advisors as retail investors is also risky unless you are dealing with significant (7digit) portfolios.

For retired renters that have not had the discipline to save – which is most of them – they need to get ready to accept reduced Govt pensions and other assistance – and start collecting food coupons because after they finish paying the rent there will not be much left for the life’s bare essentials never mind lifestyle.

Perhaps for your next book you should write about human behavior (the 95% of the renters) which have no discipline to invest and expect to be taken care through social and other govt programs – I am sure you must be getting bored with economics and RE – try social science…..

You are a fear-biter. It’s ugly. — Garth

#124 maximum mortgage on 08.26.11 at 5:11 pm

I have borrowed the maximum dollars that I can to buy RE. At the lowest rates I have ever seen.
My payments and taxes take almost all my disposable income. I don’t eat out, drive a 10 yr old van and don’t even consider upgrading with granite and hardwood.
All my local businesses see me as a customer, but I would miss super before I misses a payment. All the money I take home each month adds NOTHING to economic recovery, it all goes to pay Garth’s bank dividends.

And that is the state of the US non-recovery.

#125 O.R. on 08.26.11 at 5:11 pm

Trust them, they know what they are saying! Everything is fine, keep buying:

http://www.talkcondo.com/blog/how-hot-is-the-toronto-condo-market-infographic

The higher the climb…

#126 Oasis on 08.26.11 at 5:11 pm

say bye bye to the USD. by christmas it will be trading in the mid-60’s on the USDX (a new all time low for the index). commodities will skyrocket, especially food commodities, and energy prices will rebound strongly. gold of course, will be making new all time highs again.

thanks big Ben ….

#127 O.R. on 08.26.11 at 5:11 pm

http://www.talkcondo.com/blog/how-hot-is-the-toronto-condo-market-infographic

The longer the climb…

#128 maximum mortgage on 08.26.11 at 5:12 pm

Sorry, supper has 2 p. My bad.

#129 Helicopter Ben on 08.26.11 at 5:13 pm

I am not 100% certain what the states is today, but i do know what its not, Republic, Democracy or even a capitalistic country any more, corrupt from the very top down to its core. i do not wish the states bad ill i would rather see it do well as we are tied to the hip with them. what worries me is the powers to be behind all this mess, if you think these bad economic times , housing collapse and wealth transfer all just happened accidently i think you are a bit naive . society is being re-engineered

Tin foil. — Garth

#130 Helicopter Ben on 08.26.11 at 5:23 pm

Tin foil. — Garth
Ha Ha i ve been called worse, I hope your right and i am wrong, I realize this is a real estate blog so i wont go super tin foil on you to argue my point. time will tell.

#131 penpal on 08.26.11 at 5:37 pm

# 53 Aussie Roy

Thanks for your relentless update of the Oz RE market.

I believe it is an important ‘template’ of the fate to befall Canada for obvious commodity -linkages and the general gullibility of the populace.

It sounds like you are as sick of your RE bubble as some of us up here are.

Thanks again for your efforts!

#132 Moneta on 08.26.11 at 5:40 pm

Perhaps for your next book you should write about human behavior (the 95% of the renters) which have no discipline to invest and expect to be taken care through social and other govt programs

Wow!

I’d be willing to bet there are renters who choose to rent for all kinds of reasons AND actually save.

I’d be also willing to bet that many renters rent and don’t save, not because they have no discipline but because they are being paid peanuts and can barely make ends meet.

Did you know that the vast majority of household bankruptcies in the US are due to divorce and sickness?

I will never understand what predisposes individuals to kick those who are already at rock bottom.

#133 Ultraumatic on 08.26.11 at 5:55 pm

#9 East Van on 08.25.11 at 10:31 pm
Unionize and force governments to tax the rich!
#105 Look behind the curtain on 08.26.11 at 2:07 pm
Which is the US in a nutshell. A pseudo capitalist country that has been co-opted by a banking cartel. They plan centrally for their benefit. This should be obvious unless you have your head buried in the sand.

Careful, EastVan, this isn’t a social justice blog! Oh and Lookbtc, you should know that Garth never buries his head in the sand. He prefers to stick his head up his ass–he loves the prostate massage.

#134 Publius Enigma on 08.26.11 at 6:13 pm

Ron Paul is a nut. — Garth

The man does have a few sensible ideas, Garth, to give credit.

The problem is that most of his ideas are bat-shit loco insane.

#135 Nostradamus Le Mad Vlad on 08.26.11 at 6:13 pm


Male Sensitivity Training

The room was full of pregnant women with their partners. The class was in full swing. The instructor was teaching the women how to breathe and was telling the men how to give the necessary help and assurance to their partners at this stage of the pregnancy.

She said, “Ladies, remember that exercise is good for you. Walking is especially beneficial. It strengthens the pelvic muscles and will make delivery that much easier. Just pace yourself, make plenty of stops and try to stay on a soft surface like grass or a path.”

She looked at the men in the room, “Gentlemen, remember — you’re in this together. It wouldn’t hurt you to go walking with her. In fact, that shared experience would be good for you both.”

The room suddenly got very quiet as the men absorbed this information.

After a few moments, a man named Rod at the back of the room slowly raised his hand.

“Yes,” said the Instructor.

“I was just wondering, would it be all right if she carries a golf bag while we walk?”

This kind of sensitivity just can’t be taught.
*
It’s hard waking up at the crack of nap time, on a different plane of existence and in a time zone which is reality somewhere else. Does this mean I don’t exist? Who is typing this, impersonating me? Imitation is the sincerest form of flattening, so I’ll let it pass.
*
Interesting to note that a day or two ago, Christy Clark was saying “. . . the govt. has other options if the HST is defeated”, so the politicos already knew that the issue was over and done with.

What say she will introduce a new 10% PST, complete with all the other added goodies that Gordon Campbell threw in before he quit? To be a politician now, Lying and Cheating 101 must be taken and passed first.

Then anyone can be a politico.

#136 T.O. Bubble Boy on 08.26.11 at 6:20 pm

So, without BC’s HST revenues, and with the housing market starting to turn, can we officially cancel Flaherty’s projections of a balanced budget by 2014-2015?

(which he was still trumpeting just last Friday:
http://www.bloomberg.com/news/2011-08-19/carney-and-flaherty-still-see-canada-growth-after-stall-in-second-quarter.html)

That might even surpass his record for “worst economic prediction” that he set in 2008 by forecasting that there would be no recession in Canada.

#137 arctodus on 08.26.11 at 6:40 pm

BANNED

#138 BrianT on 08.26.11 at 7:00 pm

Here is a RE listing eye opener for anyone from TO or Vancouver-$855000 CAN for 3600 sq ft in Bel Air. That neighbourhood is home to many with net worths exceeding 100 million dollars. If you pick up a detached home in TO for 855 I can guarantee you it will not be on a street someone with 100 million would live on http://www.realtor.com/realestateandhomes-detail/1110-North-Beverly-Glen-Boulevard_Bel-Air_CA_90077_M10336-35132

#139 TurnerNation on 08.26.11 at 7:04 pm

Explanation for Van house prices??

B.C. has one of the highest rates of prescription painkiller use in the country, according to new a new study led by Simon Fraser University.

The study looked at retail pharmacies across Canada, and found there’s been a 50-per-cent hike over the past decade in the number of prescriptions filled for powerful painkillers called opioids.

The classification includes drugs such as codeine, oxycodone, morphine, dilaudid and methadone.

“I am very worried about it because it needs a lot of attention,” said SFU health sciences professor Benedikt Fischer, who headed up the study research team. “This is — after alcohol and tobacco — our third biggest drug problem in this country so we’ve got to act.”

http://www.cbc.ca/news/canada/british-columbia/story/2011/08/25/bc-opioid-abuse-study.html

#140 Devore on 08.26.11 at 7:19 pm

#61 BrianT

It sounds like you know exactly what I meant by “conspiracy theory”. I do not believe in them. Like you note, people associate with others who are like them, think like them, have common goals, and act to reach them. I do not believe there is an “evil plan” (ie, tinfoil hat conspiracy theory) behind this, just common self-interest. When you and your friends do something to further your common interests, that is a conspiracy to an outside observer, but not a very noteworthy one, because you have little effect outside your group. Because these people are powerful, economically, politically, socially, their self-interested actions exert more influence than your self-interested actions.

#141 Devore on 08.26.11 at 7:21 pm

Damnit, Garth, if we pass around a hat, will you buy us a ‘preview’ button?

[…] Because these people are powerful, economically, politically, socially, their self-interested actions exert more influence than your self-interested actions, so when things are “going their way”, it looks like there is a master plan behind it, when in fact there just isn’t.

#142 Hammer1 on 08.26.11 at 7:25 pm

Garth, why do you really care if folks are talking about
corporatism- fascism in the US system? Do you need to squash dissent from your opinion?

can you prove that it doesn’t exist, other than saying, “because I said so”. I mean what is your purpose for posting that blog, and then not liking the kind of reaction that you get? Why not just stick to RE discussion? If you keep on writing that kind of material,then you have to expect some hard core discussion. People here are not stupid and do a lot of research away from the MSM.
Are we supposed to just believe everything the Government and media spoonfeeds us?

This is a pointless debate. Take it elsewhere. This blog is about helping people survive, not dissecting nomenclature and railing at things none of us can change. — Garth

#143 JO on 08.26.11 at 7:33 pm

Ben will go down as our worst chairman ever – ironic how this “elite” academic is a specialist in the depression or so he claims. Oh the irony dear readers. Mother nature will ensure he and the Fed end up in the rightful place in the sad history of central banking. A central bank will likely exist, but be completely different than what it looks like now.

Most of their actions have merely helped Wall Street and the senior execs at the global large corps.

Ben Bernank – The laughing stock of central bankers who 12-18 mts from now will wish he never took the job.

What a debacle. Farce. Unfortunately, financial history shows that is exactly the way it should end.

JO

#144 Snowboid on 08.26.11 at 7:33 pm

#127 Helicopter Ben on 08.26.11 at 5:13 pm…

“…society is being re-engineered”

The contents of an email I sent August 7, 2009 to then Premier Gordon Campbell. I didn’t receive a response, I guess my accolades weren’t appreciated…

Honorable Gordon Campbell
Premier, Province of BC

Dear Sir,

My theory about implementing the GST would make you the most brilliant statesman in Canadian history. I believe that your intention is to purposely reduce consumerism in the province.

It only makes sense that most of us will compensate for increased prices by consuming less. As the hundreds or thousands of small and medium size businesses go under, we will consume even less.

In fact, as thousands of people move out of BC, our environment will become more pristine. We’ve pretty well axed our plans for a small service-oriented business, so this also saves the consumption we would have needed to start-up.

The majority of BC residents will no longer be distracted by extravagant non-essential purchases such as homes, cars, electronics, eating out, travelling – there are hundreds of other examples.

Instead we can focus on what is important – food (non-taxable of course), basic shelter, heat, power – and still leave the ever important 10-20% of our income for medical needs that BC Medical doesn’t cover.

Transit will expand to fill the gap when people abandon their cars. Urban sprawl will stop as we move into the city cores, where we can walk or cycle most everywhere needed. Of course there will be such a glut of real estate, prices will be low for purchases and rents – and there may even be room for the homeless.

We have travelled quite a bit in Europe in past, and I think your vision is to make us more like them. It would be wonderful to cycle most everywhere without once seeing a car.

I was such a visionary, now I’m just senile!

#145 Snowboid on 08.26.11 at 7:35 pm

My last post was pasted from the email, now I know why I didn’t get a response – I meant to say “HST” not “GST”!!

#146 Nostradamus Le Mad Vlad on 08.26.11 at 7:53 pm


Just wondering: Is Irene a scapegoat for the simple fact that US – NATO haven’t captured Gadaafi yet and, like Iraq, they are completely destroying another country because they are not of the same faith as westeners? NATO – US has also looted Libya’s PMs and is doing the same with their oil and water.
*
0:58 clip “Alan Greenspan, former Chairman of the U.S. Federal Reserve, admits he intentionally confused Congress in hearings, and gleefully brags about it on 60 Minutes.” — Just like all politicos now; Bounce Back Gold and silver; Map Food riots around the world (scroll down for map). Other kinds of riots under different headings.

1:56:25 film The Secret Of Oz. Some of you have seen it before (banxters, like politicos); 1:10 clip Anonymous announces their plans for Wall St.; US Budget Deficit to hit new high, yet there is no QE3 (so far); JPM 4closes on the US Treasury, with other links; As Bernanke speaks, working people become extinct; Billions Money may go to pay down deficit instead of homeowners; 40 Years “It is not the consumers who are to blame, but the costs of the wars and banker bailouts! Stop blaming the commons for the crimes of the lords!” wrh.com; Spoils of War The west may lose their grip on power sooner than expected. What comes around, goes around; Final Warning Silver shield. Something to do with JPM, etc.

Irene’s eye is breaking up; 1:00:28 film The Great GW Swindle (The Full Monty), and 2:46 clip Case closed: Climategate was manufactured; Lee Harvey Oswald was CIA (declassified), so someone else pulled the trigger; Supernova Closest in 25 years. Does it tie in with planetary alignments on Sept. 25? Colorado ‘quake Different kind of aftershock; Suspended Gun rights gone since a state of emergency was declared in NCa. Wonder if HAARP has anything to do with this? 9:17 clip The reason Dick Cheney hasn’t been indicted for war crimes yet; Obama is far more violent than dubya (countless wars), and not as stupid either.

Fourteen conspiracy theories that are now true. The m$m lies continually; Low Profile This is what TPTB want while they continually disrupt TROTW; Libya’s seized assets (illegally) exceed their annual GDP, so maybe that is why the world bank is standing by to bail them out, when they didn’t need it before; War? “One has to wonder, with the battle for Tripoli having been so horrendously botched, and Ghadaffi still alive and (understandably and angrily) adamant that he is going no where, what NATO’s next move will be.” wrh.com. ‘Owzaboud packing up and moving out (NATO)? They are a bunch of murderous butchers, that’s all; BBC WTC 7, Climategate and Wind Farm technology all have one thing in common — Auntie Beeb conveniently forgets the facts; 2024 Year the US troops can leave Af’stan; US – Pakistan To say that relations are deteriorating is an understatement.

#147 Timing is Everything on 08.26.11 at 8:34 pm

Well, that didn’t take long.

‘Ottawa says it respects B.C.’s HST decision but wants its money back’

http://tinyurl.com/3uwzzo6

Cascadia, anyone?

http://en.wikipedia.org/wiki/Cascadia_%28independence_movement%29

#148 Cabot Lodge brylcreem & trenchcoat on 08.26.11 at 10:13 pm

Say we get History Channel on this blog…

The U.S. climbed out of the last depression by selling arms first to the Brits and then the Soviets. FDR’s great arsenal of democracy could profit without setting a toe in the war in Europe or so he thought. Then came Pearl Harbor….

#149 Moneta on 08.26.11 at 10:39 pm

record corporate profits….are they susatainable ? That
———–
http://research.stlouisfed.org/publications/net/20110801/netpub.pdf

page 21.

Sure looks like corporate profits are about to roll over. However, over the last couple of decades, it has usually taken a few quarters for equity markets to catch the signal.

#150 45north on 08.26.11 at 10:44 pm

Coho: these opposing factions (hunger for power and hubris) have been behind the recent 2 world wars. It has always been about world domination dressed in democracy and humanitarian causes.

it hasn’t actually

“War is a biological necessity; it is the carrying out among humankind of the natural law upon which all the laws of Nature rest, the law of the struggle for existence. Germany must choose world power or downfall.”

from the book Germany and the Next War by General Von Bernhardi, 1910 as reported by Barabara Tuchman in her book the Guns of August

no mention of democracy and humanitarian causes

#151 45north on 08.26.11 at 11:31 pm

Cabot Lodge: FDR’s great arsenal of democracy could profit without setting a toe in the war in Europe or so he thought.

In his book: Keeping the British Isles Afloat, Thomas Parrish describes Franklin D. Roosevelts thinking immediately before America’s entry into the Second World War. In the book Roosevelt’s assessment of Adolph Hitler is entirely opposite that of Neville Chamberland Prime Minister of Great Britain who thought that he could appease Hitler by giving up Czechoslovakia. Roosevelt sought to give Great Britain every resource possible in order to oppose Hitler and Nazism. Roosevelt sends Harry Hopkins to Great Britain in order to assess the British and especially Winston Churchill. After a chilling visit to Scotland Harry was asked to comment on his attitude: He replied “wherever thou dwellest there I shall dwell and wherever thou goest there I shall go”

#152 mythbuster on 08.27.11 at 9:18 pm

“Not that Bernanke cares about us, but he’s a student of the Great Depression. And it was nutjob policies then that turned a miserable time into an epic screw-up.”
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Garth: As you know opinions differ on what made the Great Depression ‘great’, and what really ended it.

It’s your blog, and of course you decide what position to take. But if what has been done todate did not solve the problem, isn’t it time to question your premise that ‘nutjobs’ would ruin the economy?

The worst course of action now would be to choke off government spending, unless you really like what you know about the 1930s. — Garth