Everyone’s doing it

Bob is 30. “I live in the buy-a-house-you-can’t-afford-because-one-day-it-will-make-you-rich generation,” he says. But he doesn’t have one, so Bob’s a social pariah. Especially in Winnipeg. “In this town, that’s a real problem.”

He’s got a job, a pension, decent income, liquid investments and no debt. Of course, all of that doesn’t matter, once you hit the locker room.

“At my workplace fellow employees have purchased second and third homes as rental properties and the news quickly spread over to my gym where it seems the iron heads have also found their road to riches, buying real state. At least a few times a month a member of my inner circle said they are approached by other friends who need a small investment to buy their first rental property, because they say it’s the only true way to get rich.  I had one fellow coworker who was just approved for a loan with zero down.”

And then there’s the shame of trying to keep up with everybody on FB…

“While monitoring (creeping) Facebook news casts, I noticed nearly every single person I know has purchased their dream home within the last couple years. My brother who attends University is on my back because for some reason his broke classmates are buying houses and I keep saying they are overpriced.  In the past year I learned to keep my mouth shut about housing because nearly everybody around me is a home owner who viciously defends home ownership. From the workplace, to University, to social gatherings, it seems there is only one crowd in town. Those who own real estate, want real estate, or sell restate. The bubble is here.”

For the record, the average detached home price in Winterpeg is $258,275, which is up 3% from last summer. Says the local real estate cartel spokesguy: “It’s got to make you think, ‘Where can I place my money that’s a safer haven?’ Certainly the Winnipeg market has been very steady and solid for a number of years. We’ve never seen these big swings the stock markets have seen or some other real estate markets in Canada have seen.”

It’s a seductive argument, especially in those regional Canadian cities where the unholy alliance of media and the housing industry mean only one voice is heard. And, actually, at 3.5 times the average household income of $74,980, real estate is way more affordable than in the GTA or Riotville.

Four years ago the average detached Peg house was selling for $217,000 – which means an 18% increase since, or about 4.5% annually. But 10% of the 18% came in the last 12 months, pretty much corresponding with the binge of house lust in other major centres.

Now, Winnipeg looks decidedly unbubbly compared to other places in this country where idiots routinely hand over four to six times that amount for comparable SFHs. And this is why I choose it to compare to the rest of the world.

A new report by London-based real estate firm Knight Frank finds that housing prices in 23 of 50 countries are falling while overall the value of a home rose a scant 0.1% in the last three months and just 1.7% in the last year. The conclusion: “This weak performance shows the extent to which many of the world’s economies are struggling in the wake of the 2008-09 global crisis. Lending, for most developed economies, remains constrained, confidence is low and households’ disposable incomes are waning.”

The fastest-growing market was Hong Kong (up 26.5% in a year). The worst was Ireland (negative 12%). The US was 45th on the list (negative 6%) and Canada was 18th (prices up 4.1%).

What does this mean for Bob?

It means he’s right. Outside of Asia, Israel (where they’re rioting over house prices) and those frolicking degenerates in France, Canada’s housing market is wildly out of step with what’s happening across the world when it comes to real estate. The only reason seems to be our appetite for debt. Bob’s no-money-down, buy-a-rental buddies exemplify the level of risk people are willing to walk into when credit is cheap and plentiful.

All it takes for an otherwise rational prairie dude to expose himself to 100% market risk is the Winnipeg real estate board saying local prices have never swung like those on the stock market. Never mind that equity investors are prevented by law from buying assets without any money and, should conditions change, they can always get their cash back in 15 minutes. In contrast, should interest rates rock, or housing start to lose altitude, there’s nothing more illiquid than a rental house full of pissy tenants. In January. In Manitoba.

So, Bob, if you can’t stand the social ridicule and owning’s cheaper than renting, go ahead. But be warned, the very attitude surrounding you – the one which praises recklessness, turning it into wisdom – guarantees a correction. Your equity will swirl downward, along with the jocks’ manly prowess.

Or you could move. A hockey team is the kiss of death.


#1 bsallergy on 09.01.11 at 10:44 pm

I live in bubblicious Winnipeg and have been wondering where all the people with six figure incomes are coming from to buy the ugly muckmansions in the nether reaches of town. Hell some people are apparently so rich they can buy houses for a million or more on Wellington Crescent (for those who don’t know that street is full of some palatial mansions) as tear downs and then build some hideous faux Fontainebleau. None of this makes any sense, never did, never will although it does remind of the 70’s.

Anyone remember Dr Morton Schulman and his anyone can be a millionaire or how to profit from inflation? How about that other real estate flimflam artist Nelson Skalbania? All this has happened before and will happen again and again and again. Shelter is a necessity, a house, even a modest one is a real luxury.

#2 Just a tech on 09.01.11 at 10:44 pm

Nice to see that there are other people like that out there. It takes alot of mental strength to deal with that BS. Keep up the good fight!

#3 Axehead on 09.01.11 at 10:44 pm

Well, at least Bob doesn’t have the grandest kiss of death to deal with…the Toronto Maple Laughs.

#4 Young Old fart on 09.01.11 at 10:51 pm


The explorers got to to there and said: “WTF did all these bugs come from???” and stopped….

#5 C on 09.01.11 at 10:56 pm

As a 35 year old renter I can vouch that we are outsiders. It’s just a waiting game now that rates are as low as they will go, ownership rates have crested over 70%, and Canadian’s personal debt levels are off they charts. The coming result is inescapable.

#6 Min in Mission on 09.01.11 at 11:01 pm

bsallergy – “Shelter is a necessity, a house, even a modest one is a real luxury.”

This has been noted many times in the past weeks/years. Unfortunately, many people can read but not understand, or, they think that this “doesn’t apply to me”

However, “Awesome Lady” and I have a modest, older house. It is our home, and, we do feel fortunate to have it.

#7 poco on 09.01.11 at 11:04 pm

#153-Investors Friend—from last post

The latest Case-Shiller home price index released this week sows home prices were up (albeit marginally) in June in every sinle one of the 20 Cities they cover.

Fact is, house prices were up in June. Likelyhood is, the bottom is in.

Sorry to all the real doomers and nutbars on this Site, but the financial world will not end.

Smart snow birds that spend four months of the year down South have surely bought a place by now. If not, Buy now, it is the opportunity of a lifetime, me thinks.

I would NOT buy a house in the U.S. for investment purposes, too much hassel. For that case buy a public company that will rise with the house price recovery.

But snow birds should seriously consider buying.

Remember the rule is buy low. If you don’t recognise that U.S. house prices are LOW today then you can’t be helped.

housing in the USA is drastically lower, but you better listen to what Shiller had to say today—–it’s still 50/50 whether it goes up or tanks some more

then check out some figures on foreclosers——


#8 squidly77 on 09.01.11 at 11:05 pm

I’m sticking to my claim that Alberta will be the epicentre of Canadas housing bust, Edmonton is down 20% and Calgary is down 15%, Albertas small towns are getting decimated U.S. style. Alberta has double the national average for mortgage delinquencies.

All this is going on while the rest of Canada is seeing prices shoot up. Alberta is Canadas Canary in the coal mine.

#9 Patz on 09.01.11 at 11:05 pm

The middle class has been on the pointy end of the screw for about 30 years. We have entered unknown territory in the gap between rich and poor and as GT says it’s gonna widen more. It is true that most people don’t do sensible things with their money. And it is true that Garth is trying to help people be more rational in their own self interest. Meanwhile it is the rich, really the elite (because you can be rich without being in the elite), who are benefiting and who’ve manipulated the system over the last few decades to make obscene amounts of money while the poor schmucks in the middle who’ve been dazzled by the shiny toys drown in debt.

If you’ve read Manufacturing Consent by Noam Chomsky you will understand better how it is the majority buy into a system that screws them. If you haven’t you probably don’t.

I don’t care if Garth cares or not (na, na, na, na, na, neen), I read his blog because he makes a lot of sense if you understand where he’s coming from. Ronald Reagan promised “morning in America” and his policies brought the dark that much closer, sooner. Garth thinks we’ll have another dawning. I don’t.

I wish Garth was right.

#10 Smoking Man on 09.01.11 at 11:12 pm

What is Money Hum? That’s today lesson grass hoppers.

For money is just a piece of paper that has value only if you agree it has value, that little piece of a tree, or plastic as is coming is only valuable if in your belief system says it’s valuable. You see other tax farm slaves do anything for it why would you not believe it has value.

You could be the richest man in the world, if all the people in the world withheld labour from you, my friend are dirt poor. That’s why people who have lots of it go out of their way to train young people that labour unions are bad, and with hold paper to media and schools if they indorse that concept.

Yet when unions where strong, a 20 year old could get married, have kids, wife could stay at home, and you could easily by a house. Money is just a labour credit. We trade labour credits, would it not be nice to own a central bank and print out paper so the tax farm slaves will do anything for you.

As the population has been dummied down via the memorize regurgitate obedience training industrial education complex. Those with lots of it need not worry about the primitive mob coming for their heads. As the ones who have had their deductive reasoning skills ripped from their soles “The schooled” get into positions of power, the ones with the most can sleep easy. zzzzzzzzzzzzzzzzzzzzzzzzzzzzz

Personally I give it no value hence I’m not afraid to risk it, I’m not afraid to extend my middle finger to the ones with the most, actually gets me respect. Most rich people live in fear.

I get money easily by being smarter than most, lucky for me I never got schooled.

To me It’s just petrol for a gambler. A tool to manipulate and get ladies of the night, few weeks ago 4 of them at once, ok it was 3 . And the tax farm slaves are so willing to sell there soul for a bit of worthless tree DNA

And if you ever think of money having any real value you will never have lots of it……….I don’t care how many books you read, or how many certificates you have on displayed in your tax farm slave cube.

And why do you want it so bad, to show off, get a hotter wife paa-lease, big house so you can have all your friends with smaller ones, or basement dwellers secretly hate you…….You know what I’m talking about don’t you bubble heads, hate your friend with garnet don’t you.

Money is just a tool for smart people to get dumb people do shit for them. If you ever give it any value what so ever and you can’t ever play the big game with a clear head.

Thank god my palls at the golf club and the yacht club don’t know I’m giving you tax farm slaves a real education.

#11 squidly77 on 09.01.11 at 11:21 pm

Albertas mortgage delinquency rates are rivaling Florida’s, sadly it gets no MSM attention, I wonder why, LOL.

#12 Utopia on 09.01.11 at 11:41 pm

Excellent points today.

What is missing in Canada today is perspective. We are too insular. We don’t recognize danger because we have become too focussed on our own narrow beachhead of land along the 49th parallel.

We keep hearing how strong our banks are, about how high we rank on the United Nations quality of life index, about how rich we are with commodity wealth. Fools!

Meanwhile, all around us, misery swirls. Reality too

Property prices are in decline in half of the countries listed in that report. Some are complete basket cases, (even local ones like the good old USA) and still, we feel immunity when we should really be checking our Depends for soft warm spots.

This is truly a fools paradise.

Today I talked to a gal in Langham, Saskatchewan. She and her husband bought a home there three years back for 89,000 and she told me proudly that it is now valued at over 220,000.

I did not even bother to do the math. Those are prairie style bubble price changes. And do not even think of telling me that a house price appreciation of 120,000 dollars from such a low starting point after three short years is normal.

Even David Rosenberg got this one wrong when he suggested that Canada’s real estate price growth was really only “frothy” in a couple of cities. This is closer to an national illness than a bubble now.

You should have seen the look of pride on that ladies face when she openly related her (so-called) net worth. So much pride. So much vapour. As if she had actually done something herself to achieve it. Like having a baby.

She did not.

Everyones house went up in value together. No effort at all and no smarts required. Just like sleeping on a rail line. The outcome was guaranteed.

Time to wake up to what the rest of the world is experiencing.

#13 Kevin in Winnipeg on 09.01.11 at 11:41 pm

An interesting question is what does a buyer get in other cities at their average price?

In Winnipeg, $260,000 buys 800 to 900 square feet of poorly insulated 2 X 4 walls and a leaky basement. Add to that the knob & tube wiring, galvanized pipes and asbestos. Really, no one seems to care.

By comparison, Manitoba Public Insurance requires that before any used vehicle is insured, no matter the price, it must have a $40 government safety inspection performed. A house requires nothing.

#14 Utopia on 09.01.11 at 11:47 pm

#10 Smoking Man

Maybe it is the lack of nicotine in my brain but you are really starting to get on my nerves buddy. Call everyone a bubble-head again and you are getting a blast as far as I am concerned.

You are wrong half the time by the way. Poker that pal.

#15 Utopia on 09.02.11 at 12:02 am

#7 poco on 09.01.11 at 11:04 pm

The latest Case-Shiller home price index released this week shows home prices were up (albeit marginally) in June in every single one of the 20 Cities they cover. Sorry to all the real doomer’s and nutbar’s on this Site, but the financial world will not end.

The financial world may not end but we still have a wicked market sell-off that lies dead ahead. It will be a great buying opportunity if you survive it. That event is surely not going to be “real estate positive” though.

Get ready. Buckle up. It is coming sooner than you think.

#16 Nostradamus Le Mad Vlad on 09.02.11 at 12:31 am

What About Bob? Well, he can check on this link — Brand New Homes DIY, reasonably priced.

“Says the local real estate cartel spokesguy: “It’s got to make you think, ‘Where can I place my money that’s a safer haven?’ ” — Gotta say, if I had any amount north of $500K, it would go straight into a 50-50 mix of fixed – liquid assets, then rent. Owning is something I don’t need at my greatly advanced age, don’t want the expenses of ownership. It becomes another unnecessary toy.
#10 Smoking Man — Excellent post! Money is handy, but just a tool, as you say.
Things must be getting pretty bad for this; Benny’s global games; Economic Miracle North Dakota is in remarkably good fiscal shape. Did they opt out of the union? US Govt. doubles layoffs; When Debt Turns Cancerous When it reaches 80-100% of GDP; Exxon Mobil Remember the Exxon Valdez? Now they’re up in the Arctic. Apparently, Russia said Nyet to BP, because they’ve got the lion’s share of Libyan oil. Obama Mebbe this is why the US is staying in Libya, and this probably contributed to BP getting tossed out of the Arctic.

8:23 clip Reminds me of Frank Zappa’s “Bobby Brown Goes Down”, except the west is taking Bobby’s place; 2:03 clip US military pensions in doubt, and probably Cdn. ones too; Central Falls bankruptcy, Lawsuits galore and Spontaneous recessions; 7:35 clip Wanton spending from dubya and O’bomba.

Retaliatory Action? If correct, this may happen because the west has pushed China and Russia out of Libya altogether; 7:35 clip Gadaafi’s son with English voice-over; Michigan Brand new dictatorship; Cover Up Fukushima coming here; Roswell Russian consp. theories — make more sense than the lying propaganda going on today; Mexican volcano blows top.

Softly Softly Famine weakens, then bombing to finish us off, and Starvation Further to prior link.

#17 Metro Van Observer on 09.02.11 at 12:35 am

What a telling story tonight Garth. How times have changed or should I say reversed. Real estate in this country, especially Van and TO is what dot com stocks were in the late 90’s…pure speculation and mass hysteria. However, equities remain unloved as people remain frightened of REAL companies with real EARNINGS with a deep reach in emerging markets (i.e. blue chip multinationals) trading at dirt cheap metrics, in an historical context.

Like the Peg, everyone out here in Riotville talks real estate 24/7, like they did about their tech stocks back in the day. This reassures me that backing up the truck these days on blue chip equities paying juicy dividends is exactly the right call.

It is just a matter of time now as to when the RE bubble deflates back to historical norms and everyone gets the reality check they need.

#18 Junius on 09.02.11 at 12:39 am

I have found that the ads on Sports Talk Radio here in Vancouver are a good barometer of things. This Spring the ads were all about manly HELOCs with lines like, “we will lend you money even your mommy won’t”. This summer the lines changed to softer, “let your house lend a hand”.

The latest are all about buying Real Estate. Except not in Canada. The latest is a barrage of ads on how to buy and profit from US Real Estate. The ads rather bluntly talk up the value of US RE over Canadian. Interesting.

Meanwhile a new campaign has been launched to sell the unsellable condos at the Owelympic village. You get a kayak, BBQ and other lifestyle items in the deal.

I sincerely wish them luck because we are all on the hook for this one. However – IMO – they should consider giving people who visit the sales office a strong bong hit from some BC bud because I think that is what it is going to take to move these puppies in this economy.

#19 Aussie Roy on 09.02.11 at 12:40 am

Aussie Update

House prices never fall, its different here in Australia, there is NO bubble – OK.

Now for the news.

Home prices are expected to fall further during the spring selling season as vendors are forced to cut the asking price while buyers hesitate to step into a falling property market, say experts.


So nice for Domain (the RE industries msm machine) to advertise the doco “Real Estate 4 Ransom”.

Pity about the back handed comments by the writter. Nearly as sad as the fools who have left comments. Want to gauge the level of delusion still present in a market which has been falling for 12 months, check the comments section of this article. I didnt know whether to laugh or cry.


#20 Winnipeger on 09.02.11 at 12:47 am

I’ve been reading this blog for about 4 years and I am a believer that housing prices are set to fall in Canada.


I own a home in Winnipeg that I bought about two years ago at less then 2x household income with 20% downpayment. A modest 1100 sqft 3 bedroom 2 bathroom build in the 1956 in a nice quiet area.

I never though of my home as an investment or expected to make money when I sold in the future. But I can tell you that I pay about $1000 monthly for mortgage and property tax. A comparable property would rent for about $1500 monthly. This gives me the chance to save money at a faster rate then I would have if I was renting.

Plus I don’t have to be a social pariah.

Two years later houses are more expensive but still affordable. The only thing that will drop housing prices are higher rates or a long lasting recession.

Bob, I agree that the market will drop but that could take a long time. If buying a house will make you happy, go buy a house you can afford.

Once prices drop and all the once desperate home buyers will become desperate sellers. Buy your dream home when the market is right. For now just get yourself a shelter.

#21 NWO on 09.02.11 at 12:48 am

How does 70% of canadian’s like their new land lord.

Yes its call the big five banks. And they now own you.
When they cannot sell any more mortgages, then they will have to make money another way.

Yes that will be increasing the mortgage rates slowly. It will be like turning the screws on your nipple clips!!!!

#22 Patz on 09.02.11 at 12:48 am

You are a hoot, Smoking Man. You should write a book of your thoughts. I’ll even give you a title, how about: Ekanomics Fer Hillbillys? It has a ring.

#23 Barkley on 09.02.11 at 1:08 am

What’s going to be the impetus for rates to rise? F and C might want to raise rates to stop the insanity, but … they can’t. (At least, not right now.) Inquiring minds want to know.

#24 george on 09.02.11 at 1:12 am

CMHC, Risky Borrowing, and the Wiki rewrite


#25 604genX on 09.02.11 at 1:39 am

Once you get over all those smug comments from real estate owners (aka sub-prime borrowers carried by CMHC), listen to what else they say and do. It typically includes fixing roof, working on garden, managing tenants (they pretend this isn’t a problem….but we all know otherwise), re-renting. Plus my favourite: nothing else. Have you ever noticed how new owners no longer go out to restaurants? Shows? Or practically anything entertaining that costs mulla.

Such is life in Canada. The reason they all talk about their house is because they aint got nothin’ else and aint doin’ much else.

The solution: rent a great place for cheap, enjoy life, wait for the crash party.

#26 Aussie Roy on 09.02.11 at 1:47 am

Smoking Man on 09.01.11 at 11:12 pm

You could be the richest man in the world, if all the people in the world withheld labour from you.

Now there is a plan, I’m going to suggest a nation wide strike every worker to withold their labour so their employers or is that so everyone can get rich.

So if you owned a large company and your employees went on strike (witheld their labour) then some how this is going to make the owner rich, come on, are you serious?. What are you smoking there?.

I would rather have everyone give me their labour free of charge, then I’d be sure to make some money, not withold their labour, wait a minute I think that is called slavery, so scrub that idea. Or maybe its called taxation.

Productive capitalism is all about making money from others labour isn’t it?. I think even the Chinese have cottoned on to this little gem of knowledge.

This grass hopper isn’t convinced, that if all labour was witheld from you, you would some how get rich but I’m all ears and you are never too old to learn.

Can’t wait to plead with my employees to withold their labour, wonder why I’ve never thought of this?.

#27 Aussie Roy on 09.02.11 at 1:52 am

Productive capitalism is all about making money from others labour isn’t it?. I think even the Chinese have cottoned on to this little gem of knowledge.

Just so its clear the above is not a reflection on race but a comment that even in a central planned economy they realise the importance of making money from others labour.

#28 debtified on 09.02.11 at 2:16 am

My name is Bob.

#29 Ravishing Rick on 09.02.11 at 2:21 am

Riot review in vancouver get this: the vancouver police department paid huge overtime to their head office staff responsible for conducting the review… Why the hell would their head office executive staff be paid hourly? Is that much tax revenue generated off of fatty vancouver real estate. Vancouver real estate correction= forced austerity

#30 SafetyBear on 09.02.11 at 2:28 am

Property goes up and down. Alas, the Arseholes you have to put up at the top tend to be arseholes at the bottom too.

#31 Thetruth on 09.02.11 at 2:50 am

So, a bunch of Gazillionaire teen immigrants from China living in Richmond asked their parents for cars. They got Lamborghinis, Ferraris, you name it.


Then they got together at rush hour, blocked a major freeway so they could race their two dozen cars or so. And to top it off, they were fingering police and onlookers when their cars were seized after the fact. No concern for the public nor the laws of Canada.

Like I said before, these are values we’re importing. In India and China, families/people with money are well respected irrespective of how that money was obtained.

The divide between the rich and poor will become a canyon. What will also happen in your lifetimes in Canada is that the rich will have more rights than the poor and will have no concern for the less well off.

#32 waterloo Resident on 09.02.11 at 3:31 am

Lets see; there are two ways that things can go from here, one of them ‘UP’, the other ‘DOWN’.

– If prices rise, if that $258,275 house becomes a $500,000 house in 2 years then the people who buy with nothing down will suddenly become quite rich and they can sell and live their ‘dream’ life in their retirement years, so that is a wonderful thing.

– If prices fall and people owe more then their house is worth, NO PROBLEM, all they do is just declare personal bankruptcy, pay a few thousand to a bankruptcy trustee and lose EVERYTHING they own. But that’s okay since everything they owned was bought on credit the past few years.

So what I can see is that buying a home today is a WIN-WIN situation, there is NO downside to it since you can easily get out of it simply by declaring bankruptcy.

Am I right or am I right?

#33 Jwb on 09.02.11 at 3:40 am

Things are very different in hawaii where renters are considered the smart ones now that homes in some areas are down 40% from the peak and still falling.

#34 waterloo Resident on 09.02.11 at 3:44 am


Here’s one comment from that web page:

(“What a bunch of crock. The truth is in a note a Scotia Bank employee sent to an investor.
The banks have lent out too much money and CHMC is not insuring any more line of credit.
Line of credit now must be eaten by the banks. GUESS WHAT? There customers dont have enough money to take on anymore debt. Personal debt is too high and the banks know that Sh it will hit the fan. Whoever has a big mortgage better SELL FAST. Your Home will be worth 30-40% less in 12 months.”)

Frankly I sort of doubt that.
We’ve been saying that for the past few years but each year home just keep going up and up no matter what.

Here’s proof:


(“Canadian home resale prices rose in June, their seventh consecutive monthly rise and the biggest jump since August 2009, according to a report on Wednesday.”)

#35 plain_janey on 09.02.11 at 4:42 am

I currently live in the UK and you won’t hear anywhere near as much of the “buy now” mantra that you do in Canada, the first couple of paragraphs in this article say it all really:


A work colleague of mine needs to sell their house here, they’ve had it listed for over a month with no viewings and they don’t want to drop the price further as it’s already in negative equity. But Canada’s different, right? I mean, they’ve only had one riot so far and that was just about hockey.

#36 blase on 09.02.11 at 4:58 am

Bill Gable, what are your friends jobs and what part of canada?

#37 Aussie Roy on 09.02.11 at 5:16 am

Global Housing Market at Weakest Point Since 2009

Based on a new report by London-based real estate firm Knight Frank, worldwide mainstream house prices marginally avoided falling into negative territory with prices rising on average by 0.1% in the three months to June 2011 and by 1.7% over a 12-month period.

This weak performance shows the extent to which many of the world’s economies are struggling in the wake of the 2008-09 global crisis. Lending, for most developed economies, remains constrained, confidence is low and households’ disposable incomes are waning.

Canada is 13 (still positive), Australia 32.

I wonder how they say POP, in Hong Kong.

Interesting list of countries from 30 to 50. How about those Russians, did they copy the US model?.

Yeah its a global debt bubble.


#38 timo on 09.02.11 at 5:31 am


it is ugly out there so be careful.

#39 woodchuck on 09.02.11 at 6:20 am


I live in Lloydminster and we haven’t seen much for a correction here yet.

Young people are still borrowing their brains out…it’s astounding the amount of debt these kids are carrying.
One hiccup in the price of oil and we’ll see a major turn in prices as well.

Last weekend wifey and I were visiting Canmore and saw a sign for condo open houses and decided for curiosity sake to take a look. If condos are the canary in the coal mine then the canary is dead…prices are down 30 percent and falling.

The train wreck is just getting started.

#40 Aussie Roy on 09.02.11 at 6:23 am

Aussie Update

HOBART’S real estate slump has hit new lows with the number of sales and property prices both tumbling.

Property market analyst RP Data’s latest market snapshot, released yesterday, shows a continuing low demand for property, despite Hobart being the most affordable of the nation’s capitals.

The number of sales for the month of June is estimated to have been 32 per cent below the five-year average.

The Hobart market was the slowest of the capital cities, followed by Brisbane, at 31 per cent below average, and Perth 23 per cent down.

Meanwhile, Hobart has bucked a national trend, with the cost of renting a house dropping 2.6 per cent, or about $9 a week.


Has anyone seen that naughty “shortage of houses” it seems to have just vanished. I wonder where it went?.

#41 BrianT on 09.02.11 at 6:52 am

#7Poco-Residential housing simply cannot bottom when supply greatly exceeds demand. The USA has a huge oversupply of residential housing, or undersupply of buyers. This situation cannot be fixed quickly under any scenario-the “bottom” in USA RE isn’t a one day event-it could persist for many years (once it is actually reached).

#42 bigrider on 09.02.11 at 7:08 am

The only reason why Canda is widely out of step with what is happening to the rest of the world when it comes to housing prices is..wait for this… because I live here.

It is so, so that my friends and associates can continue to say I “told you so” when it comes to the merits of investing in housing over financial assets.

The frustration over this overwhelms me somedays

#43 Stinky the Fish on 09.02.11 at 7:32 am

WPG strongly relies on the FIRE industry. There are TONS of construction projections, a new stadium, Human Rights Museum, RE, Disraeli Bridge, etc. After those are finished, unemployment will finally normalize to where they’re supposed to be.

The only thing that’s going to JET are those house prices. Down 30% sticker price – not as bad as Vancouver but still a significant amount of cash for any young couple.

Thanks for mentioning the WPG market, Garth. I am renting here in WPG monitoring day-by-day, saving every penny… waiting to swoop down and snatch up one of those cheap houses like a vulture

#44 T.O. Bubble Boy on 09.02.11 at 7:37 am

For those who don’t believe the Banks control the Government’s (and BOC’s) economic policies, now it looks like they’ll be the only ones in charge of raising rates:
(So, what is Mark Carney’s job for the next 1-2 years then?)

But TD isn’t worried, since it has the smartest borrowers:
(wasn’t that Enron documentary called “The Smartest Guys in the Room”?)

#45 Onemorething on 09.02.11 at 7:39 am

#31 the truth, yup and what side of the canyon do you wish to live on?

This only goes to show how badly things have gone and without a correction how bad things are gonna go!

Dont worry when the China Property bubble bursts all the money will head back home and those Lambos will be sitting at the airport like in Dubia.

#46 Moneta on 09.02.11 at 8:05 am

Capitalism is the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone.” —John Maynard Keynes

#47 bigrider on 09.02.11 at 8:31 am

From your comments yesterday Garth.

The real problem is that the perception that the stock market is ‘risky’ and ‘rigged’ and that piles of bricks are ‘safe’ is so deeply imbedded in the psyche of people that they themselves don’t know how sub conciously influenced they are .

There is an entire under 35 crowd that has never lived through a real estate crash. No way in hell you are going to be able to spare these people from their fate.

#48 Ret on 09.02.11 at 8:41 am

#16 Brand new (small) homes.

The IKEA store in Burlington ON. has a mock up of a small home featuring their products. It can’t be bigger than 350 sf. but it is totally livable as long as you aren’t doing dinner parties for more than 6-7 people.

For the empty nestor wife and I, or our daughter just starting out, it would be ideal. Compact, efficient and independent living with no condo fees or noisy neighbours.

The lot would need to be at least 2000sf. to park at least one Hummer, a couple of Harley’s and a Conestoga wagon sized grill.

Here is one of a number of You Tube videos about these homes. Not professional quality camera work but you get the ikea.


#49 T.O. Bubble Boy on 09.02.11 at 8:44 am

U.S. created exactly *ZERO* jobs in August:

Got Bonds? Got Gold/Silver?

#50 disciple on 09.02.11 at 8:45 am

#20 Winnipeger…I understand your reasoning that $1000 monthly is better than $1500 monthly, but the problem is that you cannot just look at the monthly payment. You are ignoring everything else, to your own detriment.

Look at this: for every 1% increase in your mortgage rate, your payment will go up 8-9%. Therefore, if rates go back to normal, say, 10%, you’re looking at a mushrooming of your payments. Not to mention you will have a debt hanging over your head like a suspended guillotine, and we haven’t even touched upon the maintenance costs, local tax office, utilities as parasites, and oh yeah, don’t forget about the free-fall in prices that is imminent…buddy, sell at the top of the market and buy back your dream home when the dust settles. It’s not as difficult as you think. Yes, your home is just shelter, but that is exactly the reason why you shouldn’t hang on to it like a teddy bear. Main thing is get out of debt, especially to the banksters, instead become the bank and create your own wealth, everyone will benefit…

You also said “the only thing that will drop housing prices”…common mistake, as there are several black swans that could torpedo prices. It’s all psychology, group-think. Don’t fool yourself…

#51 disciple on 09.02.11 at 8:50 am

Aussie Roy…you seem to have misunderstood the smoking man…he is writing somewhat out of character and showing some compassion…withdrawing labour is the solution for revolution. That would change everything overnight, but everyone is too mind-controlled to realize this…due to their free education.

I personally know several people who are Wal-mart employees whose only job is to investigate and stifle any threat of the creation of a union within the ranks. Think about it. That’s their job. That’s what they do all day. Sick, eh?

#52 D from London, ON on 09.02.11 at 8:58 am

#10 Smoking Man

_”Money is just a tool for smart people to get dumb people do shit for them.”_

Karl Marx said it in many more words in 1867, but we still have the same system he described 144 years ago – “In producing capital (money) rather than commodities (goods and services), the workers continually reproduce the economic conditions by which they labour.”

While I agree that there is a lot of truth in this idea, I call bullshit on you being at the Golf Club or Yacht Club. More like the Union Hall or the editorial offices of The People’s Voice.

But keep up the good work, maybe someone will take it in and face the wall of denial we (including me) struggle so hard to maintain. :-)

#53 terces on 09.02.11 at 9:04 am

Bob I believe real estate is overvalued by a long shot in a lot of places, but If I could buy the average home in Calgary for $258,000 I would do it in a heart beat. You might think you can keep your money safe and make it grow while you are waiting, but then again maybe your money will shrink if you place it in stocks and bonds. In the meantime you are paying rent – lots of it. I will continue to wait in Calgary, because prices are way higher. We are so dependant on energy and gas has already bust, and one day oil will take a ride down too and then I will get back in. I hope it is soon, because waiting for this correction is like watching paint dry – and the years tick by – and it sucks.

There is a reason that a lot of us have stopped talking about the impending real estate collapse – we are starting to sound stupid.

#54 cool on 09.02.11 at 9:06 am

houses in Red deer are not selling at all,,,,not at all.

Even a townhouse at 254k is not selling for 4 months
A semi at 339 reduced to 330k after 3 months.

Both of these in a nicer area of the town.

#55 Pat on 09.02.11 at 9:06 am

@ #13 Kevin in Winnipeg:

Good point. I’ve had the same thought about Halifax. One has to look not only at the prices at which houses are selling but also at their condition – buyers have become very indiscriminate, imho.

#56 Live Under Your Means on 09.02.11 at 9:32 am

This may have already been posted.

Analysts warn of mortgage rate hikes


#57 jess on 09.02.11 at 9:32 am

130 Ultraumatic

what is the headline: “It’ll make your head explode!
“Price Formation in Financialized Commodity Markets: The Role of Information.”

For Release: March 30, 2000 —-BankruptcyOn December 17, 2007

This is the first suit brought by the federal government that combines allegations of consumer protection and fair lending violations by the same lender.

The lawsuit, alleged that Delta — a national subprime mortgage lender — violated consumer protection and fair lending laws by approving and funding loans without regard to the borrower’s ability to repay:
– higher mortgage broker fees
– paying kickbacks and unearned fees to brokers to induce them to refer loan applicants to Delta.

In 2006, DFC originated $4.0 billion of loans; in 2005 it originated $3.8 billion.[1] A substantial amount of these loans were obtained through telemarketing.[1](wiki)

BankruptcyOn December 17, 2007, DFC and its operating subsidiaries
Delta Funding Corporation,
Renaissance Mortgage Acceptance Corporation Renaissance REIT Investment Corporation, filed voluntary petitions for relief under Chapter 11 of the U.S. Bankruptcy Code with the United States Bankruptcy Court for the District of Delaware.[2] On December 20, 2007 DFC announced that it would be delisted from NASDAQ by December 28, 2007.[3]
Washington, D.C. 20549
…”Our use of Insured AVMs in lieu of appraisals could increase our losses.

We use Insured AVMs in lieu of appraisals for certain mortgage loan originations (totaling approximately 12% and 11% of our total loan production in 2006 and 2005, respectively). An Insured AVM is the coupling of a third-party valuation estimate and insurance on that value. The third-party AVM providers have created computer programs that use relevant real estate information, such as sales prices, property characteristics and demographics, to calculate a value for a specific property. Public records are the primary data source for an AVM, and the quality of the values that they generate varies depending upon the data they use and their design. AVMs are complex programs incorporating a variety of forecasting techniques, including linear regression, expert systems, neural networks, artificial intelligence and other methodologies. The different methodologies, algorithms and variables used by the third-party AVM providers may vary greatly and affect their reliability and accuracy.

One of the weaknesses in using an AVM to value a property is the lack of a physical exterior or interior inspection of the property. To mitigate some of this inherent weakness, we require a property condition report to be completed for each AVM considered for use. A property condition report is a limited physical external inspection of the property. There can be no assurance, however, that these property inspections will uncover all potential issues with a property that a full appraisal might.

At the closing of the loan, we purchase insurance that insures the value of the property. In the event the borrower defaults upon their loan, resulting in the liquidation of the property, the insurance company may have to pay a portion of any losses incurred by the securitization trust. There can be no assurance, however, that the securitization trust will be able to collect any insurance in the event of a loss, which would affect the interest income we earn from such trust.”

US v Delta Funding Corporation.
http://www.justice.gov/crt/about/hce/documents/deltasettle.htm-55k- Cached
Settlement Agreement is not to be construed as an admission by Delta of the validity of the claims asserted against it.

US v Delta Funding Corporation.
http://www.justice.gov/crt/about/hce/documents/deltasettle.htm-55k- Cached
The parties have also agreed that there should be no evidentiary hearing, trial or other adjudication on the merits, and that entry of this Settlement Agreement is not to be construed as an admission by Delta of the validity of the claims asserted against it.

#58 Live Under Your Means on 09.02.11 at 9:44 am

#48 Ret on 09.02.11 at 8:41 am in response to
#16 Brand new (small) homes.

Love it. Less to clean.

#59 timo on 09.02.11 at 9:46 am



don’t worry , high unemployment will keep the party going.

#60 Lana on 09.02.11 at 9:46 am

In reply to #50 who wrote “Look at this: for every 1% increase in your mortgage rate, your payment will go up 8-9%. Therefore, if rates go back to normal, say, 10%, you’re looking at a mushrooming of your payments.”

If you rent from someone who has a mortgage they are trying to pay off, wouldn’t they have to raise the rent if their rates go up, or other house-maintenance costs rise (heat/hydro, etc)? What control would the renter have?

#61 BrianT on 09.02.11 at 9:54 am

#44TO-Enron was a poster boy for accounting fraud just like Barry Bonds is a poster boy for roid usage but at this point Enron type accounting fraud is widespread throughout the global financial system. Ultimately someone (the schmuck taxpayers) are going to be left holding the empty bag.

#62 disciple on 09.02.11 at 10:07 am

#57 jess…great article, thanks.

My understanding is that the banks loaned out non-existent money to homeowners who may or may not have been able to service the monthly payments. Then the banks bought insurance on those mortgages. Those insurance bets were securitized and sold to mutual fund managers, the housing market collapsed and on the hook were the insurance companies and/or the mutual fund companies – who were bailed out by taxpayers. So, in the end, the banks gained it all, while the people lost it all. And the theft continues to this day, with homeowners struggling to hang on to their homes even as they are underwater, because they have no better choice. For some, even jingle mail is not better.

The situation is EXACTLY the same here, only we have the benefit of seeing it play out and getting off the sinking ship. Again, it is the taxpayer who will be on the hook and the theft of wealth will occur as banks foreclose and gain houses for which they put up NO MONEY in the first place.

Tell me, who is so blind that they cannot see this?

#63 JohnnyBravo on 09.02.11 at 10:08 am

#27 Aussie Roy on 09.02.11 at 1:52 am

“Productive capitalism is all about making money from others labour isn’t it? […] even in a central planned economy they realise the importance of making money from others labour.”

Making a profit (surplus) off of the labour of others is not unique to capitalism. Throughout the history of mankind, under various political and socio-economic systems, it has always been this way, e.g. slavery (one of mankind’s oldest institutions), feudalism (paternalistic system of mutual obligations).

Capitalism does not seek to exploit labour/people per se. It is about efficiently applying energy to a productive process. The capitalist does not care if this energy is applied via man or machine. It’s simply about maximizing productivity

Finance capitalism (ala Goldman Sachs et al) is a corruption of capitalism. Finance capitalists have been able to aggregate a great deal of wealth to themselves without paying for the energy required to generate the wealth. In fact, using leverage, fraud, and government policies they have been able to accumulate today wealth that would be generated by future energy output/work.

Wanna know why the average person will be poorer tomorrow? Because governments and finance capitalists have already stolen much of the people’s wealth––wealth that hasn’t even been created yet.

#64 JSS on 09.02.11 at 10:22 am

There is lots of money in Winnipeg.
But the money is tied up within several mega rich families with big holdings.

I have gone down Wellington Crescent in Winnipeg. Nice 10,000 sf homes.

#65 Junius on 09.02.11 at 10:25 am

#31 thetruth,

You said, “What will also happen in your lifetimes in Canada is that the rich will have more rights than the poor and will have no concern for the less well off.”

Hasn’t it always been so? This has been the case throughout history.

What you are talking about is a group of immigrants who don’t just have contempt for the poor of this country but the rules of the country as well. This is why they are so dangerous.

#66 JohnnyBravo on 09.02.11 at 10:30 am

#60 Lana on 09.02.11 at 9:46 am

“What control would the renter have?”

Government rent controls and/or market forces trump the owner’s carrying costs.

#67 Live Under Your Means on 09.02.11 at 10:36 am

Re my previous post, had not read Nostie’s link. Less cleaning indeed !!.

Just talked to my neighbour who is still at their cottage. I bought her a little Bissell 3 in 1 vac – weighs about 4+ lbs and is great for hardwood floors, etc., instead of hauling around a heavy vac. I love it. Neighbours who will be visiting them this weekend will take it to her. We had talked about it last weekend.

Lorna is not what you’d call neat – an understatement. She hates cleaning. Has a maid come in once a week and is considering hiring a local at the cottage to come in a couple of times during the season. All of her many friends accept her as she is. She has such a generous heart and loves people and entertaining. Her husband had a stroke several years back & she waits on him hand and foot. She’s a retired psych nurse supervisor but works 3 days a week here – cause she likes it. She’s worked in California & N. Carolina for 3 mo stints during our winters since retirement. She doesn’t do it for the $$$. Last year, due to cutbacks, there were no jobs. They always rented a 2 bed apt. so friends/family could visit. We were invited several times but scheduling never worked out.

#68 Rich Renter on 09.02.11 at 10:40 am

Squidly could you post the links to back up your claims?

#69 jess on 09.02.11 at 10:42 am

60 Lana

… my thought was how many are claiming the borders CASH as income ?

#70 Rich Renter on 09.02.11 at 10:42 am

The Irish are paying for their real estate orgy now,

Coming soon to Canada!!

#71 poco on 09.02.11 at 10:48 am

#15 Utopia
#41 BrianT

please note: this is Investor Friends’ quote -not mine–I was responding to his post from yesterday—(#153) my response to his posting is at the bottom of the page regarding the latest Schiller video and foreclosure numbers

Utopia–you said
“Get ready. Buckle up. It is coming sooner than you think”

what … you obviously don’t retain some of the information that is posted by me or you just skip my posts—I don’t care–I have been posting about the downturn in the tri cities (BC) for approx.16 months now–so it’s coming is a really dumb statement to make to me!!!

#72 disciple on 09.02.11 at 10:52 am

#65 Junius…immigrants are dangerous? Huh? It is pity that I feel for you…I am not an immigrant, yet I have contempt for some of the laws in my own country. I only follow laws that I know to be moral and true, the rest of ’em, you can stuff ’em back up where you got ’em.

#73 T.O. Bubble Boy on 09.02.11 at 10:57 am

@ #60 Lana

What control would the renter have?

ummm…. how about the maximum rent increase laws?

#74 smoking man on 09.02.11 at 10:59 am

@ D from london.
I’m actuly a homeless bum blogging from the iternet cafe. Lmao
Yesterday when I call the turn on the tse agin down to the minute was laughed at by a few. On my way to windsor casino how the markets doing grass hoppers

#75 mousey on 09.02.11 at 11:01 am

Re: Junius
Love the idea of adding a “bong” to the lifestyle gifts now being offered with unit sales at the former Olympic Village. I pictured Rennie with his $5,000 hipster Prada glasses and Gucci Van sneakers smiling vacuously into the camera, with smoke billowing out of every orafice. The caption under the ad picture would read, “Bingo, Bongo, Buy a Condo”. Made me laugh.

Re: Row Houses on 33rd and Cambie
Two of the three Cowie row houses have now sold. The one in the middle is listed buy Prudential, and no sold sign yet. Any Van West watchers know what these finally sold for? Also, have any of the Alma row houses sold yet? I drove buy and googled them and holy smokes these are small, with very minimal outdoor space.

West Side Watch: still very few listings, about 15 under $1.2 million and these are mostly on busy streets or just horrid little bungalows.

White Rock: I been watching Crescent Beach/Ocean Park for some time. I haven’t noticed the re-listings at several hundred thousands of dollars more – although prices are at a premium in this area. Why is Ham money going there anyway? It is not a metropolitan city and it doesn’t have a strong Asian base community. I’m not quite seeing the draw here.

Smoking Man: In your honour, I am withdrawing all household labour. Instead I will go to a car show, sit on my keester and guzzle a few litres of wine with my friends.

#76 Pr on 09.02.11 at 11:01 am

Hey Canadians! I sell bridges, You want one!

#77 Lana on 09.02.11 at 11:20 am

#66 JohnnyBravo
“Government rent controls and/or market forces trump the owner’s carrying costs.”

Good point and I was thinking that I was typing, but if a homeowner who rents out is losing on the investment, couldn’t they sell it, and then the new landlord can raise the rent?

BTW, totally agree on your #63 comment!

#78 Peakoilist on 09.02.11 at 11:22 am

#167 disciple on 09.02.11 at 8:59 am
#154 Peakoilist…don’t worry about Peak Oil. Other exciting new technologies will soon reduce the need for gasoline or plastics. There are several shining beacons of hope, many emerging out of true science…
thanks for that fluffy explanation..kind of similar to how all the RE pumpers are still managing to hoodwink unsuspecting victims..”RE will go up forever”. I mean really pull your head out of your back side. You are just as scared of losing all of your wealth that you boldly stated that you have, that you can come up with all kinds of creative ways that we are going to get out of this mess.
Btw , all of your arguments are always backed of by no data or examples or authors or scientists, zilch, zero evidence…just cute little anecdotes about how our real “rulers” are going to save us. Get real D. You can’t de-bunk Peak Oil dude. and by the way, those Rulers that you’re always spewing about are just as scared as you..that’s why they are hoarding all of their wealth..to keep it for themselves..why not? We are all doin’ it.
First of all, do tell what all of the exciting new technologies are that are going to replace the enormous power of petroleum..the world will never be powered by alternative energies..get used to it. What you are not getting is that all of those amazing techologies, need oil to be produced!! Windmills and silicon cells and batteries..NEED OIL to be produced..wake up !!
And because the world has waited so long to get on this..IT is too late..even if there was some miracle substance..there isn’t the time now…World capital is shrinking and those “Rulers” know it.
All of the Peak oil authors, experts and scientists all write, talk and complain about the naysayers like you D.
The Queens of Denial. Oh..”they” will come up with something…Won’t they? they always do..Technology will save us..It always has..and it will again.. I could just see you back in the day listening to M Hubbert telling the oil company execs that The good ol USA, would hit Peak Oil by 1970..they all laughed at him.But D , he was right. However, it wasn’t believed until years later when the hard data came in and we entered our 1st energy crisis.
Well, we are in one now. Your clue D, is wildly fluctuating oil prices and inflation. The higher ups are scared and all know about Peak oil in depth. They will try to create or buy ways to solve it.. It won’t matter D.
So , disciple, just keep hoarding and protecting your assets. all of our “rulers” are doing it..you should too and this is why you’re on this site..for now to increase your wealth..but soon just to hang on to it !!! Like the big corps and banks are doing as we speak. Get used to less and more expensive power..next brownouts and then blackouts..Get used to smaller self sufficient communities..get used to growing your own food. get used to producing something of value that people actually need. you certainly won’t have as much time to search the skies for UFOs.
If you’re going to come back at me and say that I’m scared..You are wrong..in my mind, I’m prepared..I won’t be surprised..Just like you won’t be surprised when home prices melt year after year..Are we going to be happy about that? Most will not..but some will be smug and say “I told ya it was coming, but did you listen? Btw , everything that I have stated is backed up by very reliable data that is available in depth everywhere(even now the US military and the IEA)..If you care you will search.If not, just be in denial and help us continue down this path.

#79 Lana on 09.02.11 at 11:26 am

69 jess
“… my thought was how many are claiming the borders CASH as income ?”

Good point. I didn’t last year, and neither did our boarder claim on his tax-form. Probably illegal. Maybe there is a difference between a boarder and a renter? I will ask my financial advisor. He knew we had a boarder last year, and he does our tax return because it has been complicated the past few years, with my husband getting laid off, severance pay, EI, retirement income, investments, etc. The best $40.00 I spent all year!

However, my husband is now complaining about having a boarder around all the time, so gave him his notice. Sigh. I say, “no pain, no gain”.

I guess it is time to open that can of Tuna (but he doesn’t like Tuna either).

#80 Lucky Duckie on 09.02.11 at 11:50 am

Responding to #35: Plain Jainy, yes, Canada IS different. Canada is basically now just a bunch quasi neuvo riche punks, but only on paper. Absolutely NONE of it is real and nobody here recognizes the end of it all is so very near. Canada was late to this little real estate party like we always are to all parties. Canada will be the last to leave, like that one annoying guest who just doesnt take the hint that the party is over and everyone else has moved on. You see, we are different because we NEVER learn from others’ mistakes. This makes it inexcusable for our behavior. My American friends find us to be a delusional laughing stock – not some economic beacon of light. Did you know that? We are NOT viewed as being the smart ones. We are just too unaware and self absorbed to recognize we are next. I dont like being viewed this way, but can you blame them? We are looked upon as being rude, naive, tasteless, tacky, and annoying as all hell. One friend referred to us as being “cute, unaware, misinformed, and gullible.” Damn that hurt, but damn did I ever agree. It is embarrassing going down there now because I know what they are thinking and I know they are right. At least they’ve demonstrated the courtesy of keeping their thoughts to themselves. I asked them and that was the general consesus. We get even just a fraction of wealth (fake wealth at that and everyone in the world seems to understand it is fake,but us), and we turn into complete assholes. Really we have become complete prideful fools, completely unaware everyone else is poking fun at our stupidity. I can’t blame them. We walk around with our noses high as if our end isn’t here. One thing I’ve learned in my life is the last one to leave a party is always the one who regrets it the most the next morning. Oh, Canada, what’s our excuse?

#81 Peakoilist on 09.02.11 at 12:02 pm

This just in: GS is betting on a huge collapse of the financial system. They recently released a 54 page report outlining what they expect to happen and how they can make enormous sums by betting against European currencies, etc. The Wall St. Journal managed to get a copy of it. So if the biggest financial institution in America is betting on this happening(eerily similar to betting in 2007-08 that housing would collapse), are the movers and shakers on this site going to bite too? (smoking man, the gifted investor)
The higher ups are totally freaked out about all of this, but are damned certain that they’re gonna make money.


#82 Markey on 09.02.11 at 12:36 pm

#19 Aussie Roy – interesting link from your link about the housing documentary: http://www.differenthere.com/2011/08/on-internet-nobody-knows-youre-dog-or.html

#83 EdmontonJim on 09.02.11 at 12:39 pm

Lessons in human nature.

As a child were you ever asked “If so-and-so jumped off a bridge would you?”? We mumbled “no dad”, but the truth is, we probably would have. We probably still would.

Peer pressure is one of the most powerful psychological forces known to man, and it affects us in ways we never even realise. It’s the basis of pretty much all human culture.

We are rational herd animals. We can always think for ourselves, but if an emotion takes a critical number of people in a room, there is an almost overwhelming urge to go along, even if we know its stupid, dangerous or immoral.

Then there are people who have the power to exert large amounts of peer pressure all by themselves. When they say ‘Everyone is doing it’ – we beleive them for some reason. Some use this power for good (Don’t jump off that bridge!), but most use it for their own ends.

Just remember this: Everyone (including you and me) is a sheep. You can’t stop being a sheep, but you can choose which ass to follow, and hope that that ass is following another ass who is following someone who knows where the hell they are going and it’s not the slaughter house.

#84 Devore on 09.02.11 at 12:42 pm

#63 JohnnyBravo

It’s not that capitalism was corrupted, it’s that it was inevitable.

All our economic -isms have one thing in common: they all rely on perfect people. Socialism, capitalism, communism, anarchy, libertarianism, they all only work when people behave perfectly. The only -isms that take the path of least resistance and don’t assume perfect people are totalitarianism, fascism, corporatism. They assume, indeed, require, people to be quite flawed, and to act accordingly for their own benefit to the detriment of others.

Thus, all idealistic -isms eventually devolve into their “corrupted” forms.

#85 jess on 09.02.11 at 12:44 pm

vulture verse 1: chapter 9
Repossession’s terrible toll


in some countries strike while in others
Mexican gangs threaten school teachers

In the city of Acapulco, at least four teachers have turned up missing for refusing to pay gangs half of their salaries.
Last Modified: 02 Sep 2011 11:58

#86 Snowboid on 09.02.11 at 12:44 pm

Victoria RE update:

August SFH

Average – $655,576 Median – $556,000

Up from July, but still well below the peak price from 2010 of:

Average – $711,392 Median – $674,000

Of course that isn’t mentioned in the report but they do say “The increase in sales reflects ongoing stability in the market.”

Okanagan RE update:

August: nada, nothing – no report yet (must mean good news?)

MSM did report last week that a large vineyard in the Naramata area sold to offshore investors (ML China) and another winery has a 15 yr contract to sell 1/3 of their total production to China.

I think the HAM is coming our way!!

Phoenix RE update:

Although there are likely dips yet, investors (many from Canada) are buying multiple properties for rentals. They are purchasing properties around $100K that are being rented for about $ 1000-1100 a month. Friends of our Alberta relatives have bought seven homes their so far this year. They don’t seem too worried about the tax implications (they setup a company to buy them).

SFH prices are up about 10% since January in our area, a small community of around five thousand homes. Listings at 1.33% of total (5 MOI), short sales at .05% and foreclosures .15% ot totals. Of course not reflected in these stats are the number taken off the market or that are part of ‘shadow inventory’.

The same area 6 month averages are:

3 Bed. 2.5Bath, 1749 Sqft, Built 1991, Price $195,700, Per Sqft $112

#87 EdmontonJim on 09.02.11 at 12:46 pm

Ah, and the people at the front of the herd (ie, not following anyone) are all either geniuses or insane, and it’s often very difficult to tell them apart. (They all seem to have beards…)

#88 Jon in Cowtown on 09.02.11 at 12:50 pm

As with Bob, I too find myself censoring what I say about real estate around family, friends and colleagues. When I used to expound I’d either get the deer in the headlight look or there goes whacko Jon again. Their paradigm that RE is a great investment is just too hard to break and to be fair that has been the paradigm in living memory. Now I just throw out a low key cautionary note or two and see whether they pick-up on it. No point in scaring the crap out of some poor person (pun intended) buried under a $400K mortgage. He/she is too busy justifying his/her stupidity to themselves.

As an aside while double checking the spelling of “mortgage” I was struck by the “mort” part, i.e.: death in french. So I thought I’d look it up:

Mortgage: In the word mortgage, the mort- is from the Latin word mori (via old french mort) for death and -gage is from the sense of that word meaning a pledge to forfeit something of value if a debt is not repaid. So mortgage is literally a death pledge.


The root meaning of the word mortgage is ‘death grip’. Upon closer examination we find that mortgage is made up from two words: ‘mort’ and ’gage’. Mort comes from the Latin word mortuus from which we get ‘mortuary, mortal, death’. Gage means ‘hold or grip’. Therefore, mortgage is a death grip.

We rest our case!

#89 Devore on 09.02.11 at 12:52 pm

#60 Lana

If you rent from someone who has a mortgage they are trying to pay off, wouldn’t they have to raise the rent if their rates go up, or other house-maintenance costs rise (heat/hydro, etc)? What control would the renter have?

What control? All control.

1. Rent controls. Enough said.
2. Market forces. If RE owners and investors become stressed, more rental inventory will come on market. Currently empty or underutilized properties will become rentable. This increases supply, while demand remains the roughly the same.
3. Affordability. It drives house prices as much as it does rents. Except for buyers, they can borrow money very cheaply and leverage heavily, which has driven ownership costs to historic highs, in nominal and real (as percentage of income) terms. Rent is a cash business. No one borrows money to pay rent. Thus, while owners can ask as much rent as they want, renters can only pay as much as they can afford, regardless of what interest rates are.

Rents are determined by income, prices are determined by credit. Which is why a bubble is easy to spot, even if the people inside are blind to it (it’s different here/this time): prices diverge from investment fundamentals. If you can’t make money on something, it’s overpriced, and its price is driven by ability to finance and carry, not by its value as an investment.

#90 Utopia on 09.02.11 at 12:56 pm

I lost a post yesterday.

First time ever I think. It got the deep-six and was vapourized because I made the mistake of supporting the opinions expressed on a competitors blog-site.

I can accept that.

I do not know the whole story behind the conflict that might exist between this site and that one. Everything is not known to me so I will respect the call Garth made.

As in politics though, it pays to see past personal agendas and past conflicts and to try to appreciate that sometimes the opposition has good ideas and has done its homework.

I was impressed with the effort of “the unmentioned person” and thought the work was really well done. It did not matter to me that the opposition wrote it because its conclusions were so clear and well thought out.

I might be a one-sided Conservative but there is no question I have always had a tremendous respect for many who represented the other parties. The Liberals in particular and their efforts to eliminate he deficits in the 90’s always impressed me and I have met many of them over the years.

So let my post vanish Garth but understand that I know good work when I see it and I don’t mind saying so in respect of the writer and in a non-partisan way even if he/she is an ass.

The house rests.

#91 BrianT on 09.02.11 at 12:57 pm

#81Peak-Reality check time-1.Goldman Sachs would not even be operating without the billions of dollars of taxpayer capital gifted. 2. The firm has proven to be a very poor source of investment advice-in fact, that firm has been caught betting huge sums AGAINST their client advice. So the bottom line is you should be taking everything they say, or anyone connected with them or anyone who used to work for them, with a very large grain of salt.

#92 BrianT on 09.02.11 at 1:01 pm

#83Edmon-You are a sheep because you are convinced you are a sheep. You have chosen that path.

#93 SCalgary on 09.02.11 at 1:01 pm

#11 Squidly77

Can you please post the link for delinquency rate? I am curious to see details. Thanks.

#94 Junius on 09.02.11 at 1:03 pm

#72 disciple,

I am not referring to all immigrants. My reference is to what I term mercenary immigrants who come through investment programs as opposed to the traditional avenues.

I have expatiated on this before on this Blog. I am not against immigration from any other country, religion or race. However I had significant experience with immigration investment programs in the 90s and developed the strong belief that people who buy their way into the country are different. In my experience, they arrived with the attitude that they wrote a cheque so they owed this country nothing – including respect.

#95 JohnnyBravo on 09.02.11 at 1:04 pm

#77 Lana on 09.02.11 at 11:20 am

Under a rent-controlled market, such as Ontario, if the landlord thinks the rents are too low (e.g. below market) he/she could apply for a rent price adjustment. Whether they get what they are asking for is another matter.

#96 Devore on 09.02.11 at 1:08 pm

#77 Lana

Good point and I was thinking that I was typing, but if a homeowner who rents out is losing on the investment, couldn’t they sell it, and then the new landlord can raise the rent?

Yes, and no. To what extent, depends on where you are. In many (most?) provinces, if you have a lease, it doesn’t matter if the property changes hands. Rent controls spell out when and by how much a landlord can raise rent. In most cases, an owner cannot kick out a renter to sell their property. They can sell it, but the renter stays. An owner can end a tenancy, under certain conditions, like if he is going to live there, or perform major renovations which require a vacant place.

This is why many people, including Garth, will stay away from residential real estate; tenants have a lot of rights. Easier money to be made elsewhere.

#97 Cato on 09.02.11 at 1:28 pm

Bob, plan to get a new circle of friends. Misery loves company and when folks hit a financial brick wall they tend to look suspiciously on anyone not in the same boat. Especially in a bible thumping town like the ‘peg, you’ll probably be accused of making a pact with the antichrist.

Every cloud has a silver lining, misery for some means opportunity for others. Pull a Gordon Gecko, put your specker friends & family on notice and tell them you’ll be a buyer of any non-real estate asset when the time comes. In my case I lost a few uber religious distant american cousins but gained a few sweet california taco stands oozing cashflow, thats a good trade in my books.

Its my opinion people are responsible for living with consequences of their own actions. This crisis isn’t a global banking conspiracy, its just the end result of collective greed & stupidity on a global scale. There will be no easy fix but like other times throughout history some will benefit while others wallow in the misery of their own making. Life goes on.

#98 Victor on 09.02.11 at 1:32 pm

Housing Makes All the Difference
By Dr. Sherry Cooper

The depth of the U.S. recession and the weakness of the recovery are the consequence of the housing depression. Housing is the lynchpin of household wealth. Housing, the most interest-sensitive sector, is also the key transmission mechanism of monetary policy. In every other ….

Interesting comments from BMO’s best and brightest.

Next time use a link. — Garth

#99 Junius on 09.02.11 at 1:32 pm

#63 JohnnyBravo,

You said, “Finance capitalism (ala Goldman Sachs et al) is a corruption of capitalism. Finance capitalists have been able to aggregate a great deal of wealth to themselves without paying for the energy required to generate the wealth.”

This is exactly correct. The financial services industry has become a great vampire squid that is sucking the life out of our economy. 80% of the trades on Wall Street are now being made mathematical algorithms that are designed to recognize trends instead of invest in companies that create value.

#84 Devore,

I don’t understand your point. I agree that all of the “isms” try to create a perfect theory of humanity and often treat humans as entirely rational. This is where they fail.

I tend to see both capitalism and democracy as (to paraphrase Churchill) the worst systems one could imagine except for all the others. The point is that they are messy and imperfect but so is human nature.

I believe that the collapse of socialism in the early 1990s created a sense that the ideological battle was over and capitalism had won. This lead to the belief that what we needed was “more capitalism” meaning less regulation, fewer constraints and less of anything that resembled socialism. Unfortunately this was absolutely the wrong approach.

Capitalism only works if it has strong restraints against anti-competitive practices, inequity of wealth and concentrations of power. The causes of the current economic situation are the proof.

#100 Junius on 09.02.11 at 1:41 pm

I realized that I have made the claim a few times that mathematical algorithms are making the majority of trades on the stock market without backing it up.

Here is a great video from Kevin Slavin on this issue in a TED talk. Really fascinating and scary:


#101 JohnnyBravo on 09.02.11 at 1:45 pm

#84 Devore on 09.02.11 at 12:42 pm

“Thus, all idealistic -isms eventually devolve into their ‘corrupted’ forms.”

One can make this case. Humans are flawed; therefore human institutions will also be flawed, by definition.

I think the problem stems from an imbalance of power. Whenever one group becomes disproportionately more powerful than others, they have a (natural?) tendency to try to aggregate wealth, power and control unto themselves.

We can never eliminate human greed, fear, lust for power, etc. And I don’t think we should try. But we can keep them under systemic control with the appropriate checks and balances (legal, social, moral, etc). This was the idea behind the tripartite structure of the American government (Executive, Legislative, Judiciary), each branch checking the actions of the other two under a separation of powers. Not working quite as intended right now, I know. Jefferson, where are you?

This basic idea also applies to issues like racism, BTW.

Capitalism is flawed, to be sure. But what concerns me right now is that people are conflating corrupt finance capitalism with the type of mixed economy capitalism that, for example, helped make America the greatest, most advanced, most powerful country on Earth.

But I reject the notion that people acting in their self-interest is inherently bad, if that’s what you meant. If there is a proper balance of powers, self interest could in fact be very beneficial for society.

This is why I have said the current crisis is not really an economic problem. The US has vast stores of wealth in all its forms. The problem is political. The people have allowed a small minority of “money masters” to take control of government and rig the system for their own gain, to the detriment of society as a whole.

#102 disciple on 09.02.11 at 1:50 pm

#84…Devore, interesting thought on human behaviour. I had to read your comments a few times to fully absorb your meaning and after considerable reflection (ten minutes) I must say that I disagree. Here’s why:

You are taking the vantage point of an oligarch and saying that humans will give in to their flawed nature. I say, yes, but that doesn’t mean that a fair system of distribution of wealth is not possible. The only solution is for everything to be free. If you remove the myth of scarcity, you overcome fear and everything else falls into place…as Lennon (very dangerous man to your real rulers) said, “no need for greed or hunger”. Just remove these from the equation. Most people just assume that these are necessary. They are not. Change your mind.

#103 poco on 09.02.11 at 1:51 pm

#79 Lana
However, my husband is now complaining about having a boarder around all the time, so gave him his notice. Sigh. I say, “no pain, no gain”.

Lana–why don’t you ask your husband if he would mind having a female border around—watch his reaction when you ask–maybe it was having a male around that was the problem–just a thought

#104 Junius on 09.02.11 at 2:02 pm

#101 johnnybravo,

You said, “Capitalism is flawed, to be sure. But what concerns me right now is that people are conflating corrupt finance capitalism with the type of mixed economy capitalism that, for example, helped make America the greatest, most advanced, most powerful country on Earth.”

I agree with that and the rest of your post. You are spot on. In particular your diagnosis that the problem is that the system has been highjacked by a small group of people with the use of money. This is the political problem in the United States and elsewhere.

#105 disciple on 09.02.11 at 2:09 pm

#78 Peakoilist…that was a very fair response to my fluffy post. In all sincerity I appreciate you taking the time to write that. And yes, I do think that you are scared, but it’s not your fault, you’ve been conditioned this way, classic mind control, you’re not even aware of it. It’s a program that’s been in place in our educational system and in our corporate media since the 40’s. Remember the Cold War? Acid rain? Hole in the ozone? Endangered species? You said it best, “Technology will save us, always has, always will.” Need is the mother of invention. Didn’t you have a grandmother to tell you these things? Well maybe not, it doesn’t matter.

I’m not hoarding anything. If you’ve read any of my other posts, I advocate against hoarding, the exact opposite is necessary, actually, investing in production of goods and services and technologies is the driving force of change in our world. Your paper, plastic or metal is not money. Crude is though. By burning it in engines, we are literally burning money. Pretty stupid. The next generation will see to it that this insanity stops. The hydrogen economy awaits us, and it will be possible through solar. And solar is based on silicon. All four elements I have mentioned are infinitely abundant in our part of the universe.

Instead of living in fear of the imminent collapse of our present system (with which I agree with you) get to work on developing these new technologies. I am. Just like a true scientist would. Start today. The glass is half full. I can bring an ocean of water for you to drink, but I can’t make you drink it. You must act.

#106 disciple on 09.02.11 at 2:14 pm

Vaccination is not immunization. Save your children from Big Pharma. You can begin by reading this primer on how peanut allergies are caused by vaccines:


#107 Cookie Monster on 09.02.11 at 2:26 pm

#99 Junius on 09.02.11 at 1:32 pm
Capitalism only works if it has strong restraints against anti-competitive practices, inequity of wealth and concentrations of power. The causes of the current economic situation are the proof.
It’s funny how you always give me a hard time about Capitalism and Ayn Rand etc.. but then you turn around and say a lot of correct things and then finish it off with a huge error. I think you’re on the right path and just need to do a little more reading to clean up your edges.

Capitalism only works when FREEDOM and property rights are maintained, otherwise it’s not capitalism but fascism, econimic fascism is where the owners own the property and take on all the risks but do not fully control of the means and/or distribution of the production and/or reinvestment of the wealth created by their success such as through high taxation. Fascism is sucking wealth from the successful for redistribution by the politicians to their public projects or friends in business. Potash was pure fascism, government control over private property, not the resource in the ground but the capital of the organization.

Property rights means the right to buy, control and dispose of property, anything less is an abdication of property rights and property rights are an extension of individual rights, meaning the right to survive since you would die if the government took everything you owned and produced daily.

#108 Lana on 09.02.11 at 2:29 pm

#103 Poco — a female boarder would be my preference too–maybe someone on shift work. I’ll suggest it. Maybe that was the problem–two bulls in the same pen was probably a bad idea. Then again, two women in the same kitchen? Hmmm….

It may be that I’m out all day at work, so I don’t notice the extra person around as much. It may not have been a “man” thing…just a person who needs his “SPACE”.

We were getting $500.00 a month! We should have invested it. Oh well… thanks for the advice.

#109 Junius on 09.02.11 at 2:34 pm

Gloomy way to start your weekend. Sorry. Mish Shedlock ways the global economy is already in recession and lists his reasons:


#110 Junius on 09.02.11 at 2:39 pm

#107 Cookie Monster,

Once again you are taking an extreme libertarian position that deals in absolutes. That is what I reject.

#111 Moneta on 09.02.11 at 2:42 pm

Bob, plan to get a new circle of friends. Misery loves company and when folks hit a financial brick wall they tend to look suspiciously on anyone not in the same boat. Especially in a bible thumping town like the ‘peg, you’ll probably be accused of making a pact with the antichrist.
And don’t expect to jump ship when the market tanks because they won’t necessarily remember you were right but that you were a sourpuss.

#112 Utopia on 09.02.11 at 2:47 pm

#71 poco on 09.02.11 at 10:48 am

I am aware of your posts. Don’t ever worry about that. I read almost every comment here each day and have therefore have taken the time to look into the thinking of all of the regular posters. I was referring to the stock markets though and if you follow my commentary you will know that I believe a huge US dollar rally lies ahead of us. That suggests trouble unfortunately as the dollar should be headed lower based on what is now happening down there. Stimulus, E’s and liquidity intervention tell me a depreciation is imminent but risk tells me that the dollar will rally instead. If the US dollar does surge it can only mean we are in deep water and we had better watch our own house more closely.

#113 Moneta on 09.02.11 at 2:53 pm

But we can keep them under systemic control with the appropriate checks and balances (legal, social, moral, etc). This was the idea behind the tripartite structure of the American government (Executive, Legislative, Judiciary), each branch checking the actions of the other two under a separation of powers. Not working quite as intended right now, I know. Jefferson, where are you?
I used to think that but not anymore.

We will always try to create this utopic paradise because we humans think we can control everything and we don’t have a chpice. But there are have always been cycles and always will be. The pendulum always swings too far.

And it is now my opinion that stability guarantees future instability because it makes us feel secure and pushes us to take more risks than we should.

#114 disciple on 09.02.11 at 3:01 pm

Reflecting back on my crazy life, I feel that I have worked hard to accumulate what little I have. I remember scraping graffiti and gum off commercial buildings and overnight to boot, just to make ends meet in my early 20’s supporting my family between jobs, which also were pretty sparse as the manufacturing sector was bled to death by our traitor politicians. That was a time when I didn’t understand what money actually is. I was a slave to the bank via my death-pledge (mort-gage). Having a house of my own was all that mattered, and maybe a couple more to rent out, you know…a while after, I acquired a critical illness and death whispered softly on the back of my neck. In turn of phrase, I turned around and looked death right in the eyes, and it was at that moment, I became…disciple.
Was it an NDE? No, no dark tunnel with a light at the end of it, nothing like that, perhaps I just matured, I dunno. But definitely, I shed the mortal coil of my thought prison, and began the ascent into the distortion I find myself in now, where all is illusion (according to Bohm’s quantum theory of locality vs. reality), and yet, potentially comprehensible. I welcome you to my world.

#115 maxx on 09.02.11 at 3:03 pm

#7 poco on 09.01.11 at 11:04 pm

“…..bottom is in.”

I think not, poco. Check the job stats lately? The financial and real estate markets are birds of different feathers and neither give command performances.

#116 timo on 09.02.11 at 3:06 pm


It’s time to stop debating whether or not the US or Europe is headed into recession. The facts show the entire global economy is in recession.

damn opinions!

#117 timo on 09.02.11 at 3:11 pm

#93 SCalgary on 09.02.11 at 1:01 pm

Can you please post the link for delinquency rate? I am curious to see details. Thanks.


#118 maxx on 09.02.11 at 3:19 pm

Hey blog dawgs, one for the long weekend!

Einstein dies and goes to heaven. First person he sees, he asks, “Excuse me? What’s your IQ”
The person replies, 280. Einstien says, great! We can talk about astrophysics!
2nd person he runs into, he asks the same question, what’s your IQ?
The person replies, 150. Great! says Einstein, we can talk about events of the day!
3rd person he sees he once again asks their IQ. This time the person says 45!
Einstein says, Great! Where do you think the real estate market is headed?”

#119 Desi on 09.02.11 at 3:31 pm

This house was listed for $799000 and now after two price drops listed at $729000. Almost the same house on the same street was sold $530,000 in 2009. Would it ever go back to $530,000 range?




#120 jess on 09.02.11 at 3:36 pm

100 Junius

that has had me in “knots” for sometime ;)

The role of information flows is crucial for price developments in commodity derivatives markets.
Traditionally, the so-called efficient market hypothesis (EMH) is assumed to hold in financial markets,
including in commodity derivatives markets and especially in futures markets, which are the focus of
this study. The EMH postulates that all publicly available information is immediately reflected in prices.
In its strong form, the EMH contends that even private information – available only to individual market
participants – is reflected in the price through the effects of the transactions of the persons in possession
of the information. If the EMH were to apply, commodity price developments would reflect nothing but information on fundamentals.1
However, this study shows that the EMH does not apply to the present commodity futures markets. Market participants also make trading decisions based on factors that are totally unrelated to the respective commodity, such as portfolio considerations, or they may be following a trend. Therefore, it is difficult for other agents in the market to discern whether or not their transactions are based on information about fundamentals, which in any case is sometimes difficult to obtain and not always reliable. Trading decisions are thus taken in an environment of considerable uncertainty. In such a situation, it is rational to follow other participants’ trading decisions. A wide range of motivations leads traders to engage in this so-called “intentional herding”
on a perfectly rational basis, the most important one being imitation in situations where traders believe that
they can glean market information by observing the behaviour of other agents.
In an environment of herd behaviour there are limits to arbitrage. Acting against the majority, even if justified
by fundamentals, may result in large losses, often of borrowed money. It may therefore be rational for marketparticipants to ignore their own information and follow the trend. This is what many financial players do by default, basing their trading decisions purely on the behaviour of price series (algorithmic trading), which
can lead to a commodity price bubble.

Price Formation in Financialized
Commodity Markets:
The Role of Information
Study prepared by the secretariat of the
United Nations Conference on Trade and Development

#121 Devore on 09.02.11 at 3:40 pm

#99 Junius

This lead to the belief that what we needed was “more capitalism” meaning less regulation, fewer constraints and less of anything that resembled socialism. Unfortunately this was absolutely the wrong approach.

My take on that is that both are the wrong approach, they merely differ in the nature of their wrongness.

The “less regulation more capitalism” approach devolves into abuse of market participants by monopolistic unchecked players.

The “more regulation less capitalism” approach devolves into abuse of market participants by monopolistic unchecked regulators. This is what we have today. Regulators are people too, which is to say they are not perfect, and the cozy, revolving door relationship between industry and regulators favours politically-connected industry players. (Or, the regulators flat out abdicate responsibility, while maintaining their lawful monopoly, which is another scenario we see today.) To wish otherwise is to assume imperfect and corruptible people will become perfect and incorruptible.

Both processes are slow, but both are inexorable.

So pick your poison.

As in any conflict, whether it’s a war, Garth vs other blogs, or economy, the vast majority of people just want to be left alone and get on with their life with as little interference, and as much control/self-determination and autonomy as possible. But none of the -isms are able to remove conflict, so it is a matter of how they deal with it. And I don’t believe there is a right answer.

#122 Aussie Roy on 09.02.11 at 4:02 pm

JohnnyBravo on 09.02.11 at 1:45 pm #84 Devore on 09.02.11 at 12:42 pm

“Thus, all idealistic -isms eventually devolve into their ‘corrupted’ forms.”

One can make this case. Humans are flawed; therefore human institutions will also be flawed, by definition.

Flawed sure, I rather prefer emotionally influenced, sometimes rational sometimes not so much.

So yeah, humans are emotional, this emotion translates into market behavior, behavior at times is logical but also at times illogical. Of course this also means that a markets price discovery can also be flawed, as its being highly influenced by emotion.

So if we expand a little on this, human influence, you soon realise that in any market the current price is not automatically the same as other more robust historical price (value) drivers ( for housing – wages and rental yield long term averages). These more robust value indications are underlying value, calculate this value then compare to current price. The bigger the difference the higher the emotion influence on price. Hi BPOE…

Yes debt drives prices, but isn’t taking on any level of debt a financial and an emotional decision?

So much for current neo classical economics theory which wrongly teaches all market participants make perfectly ration decisions all the time, the so called theory of market equilibrium.

Price isn’t value they are two different things. Prices influenced heavily by emotion will also suffer should the underlying emotion of the particpants change. Don’t know about anyone else but I’m sure emotions change from time time.

#123 young & foolish on 09.02.11 at 4:06 pm

Sure, rental housing can be profitable (in a properly financed situation, the tenants cover all the costs, including mortgage), but it assumes management on the part of the owner (no pain, no gain). For sure, not for everyone since it is highly illiquid and is most effective as a long term holding.

I suppose a lot of people do it because they don’t trust equities. And investing in shelter is investing locally.

#124 EdmontonJim on 09.02.11 at 4:23 pm

#92 BrianT

I was a sheep long before I knew I was a sheep (even a black sheep is a sheep).

If you are convinced you are not a sheep either:
1. You think you are smarter than everyone else.
2. You have no culture and no friends, or
3. You have never observed sheep or human behavior and the analogy was lost on you

Being compared to a sheep is not a bad thing (as any Christian knows). I’d rather be a sheep than a sucker.

#125 Smoking Man on 09.02.11 at 4:23 pm

Look how absest I have become with this silly blog
Rather the taking down Radco in the poker room Drinking alone in my room at ceasers got the benocs and watching the boats go by.

Had to also cheq my P & L re tading accounts….

NICE !!!!!!!!!!!!!!!!!!!!!!!

Have a great week end, and if you are in windsor drop by the poker room, look for bruce willis’s twin and say hey smoking man

#126 Peakoilist on 09.02.11 at 4:27 pm

#102 disciple on 09.02.11 at 1:50 pm & #105 disciple on 09.02.11 at 2:09 pm
You and I are totally on the same page with your 1st posting, humans could live for 100’s of more years in comfort if this approach was taken..However, as long as this dog eat dog capitalism is dominant, it won’t happen.
On your second post, I didn’t say ,“Technology will save us, always has, always will.” I was stating that that is your belief. I wish what you say would be true. I just don’t think the next generation will have the opportunity. Hydrogen is a fallacy of peak oil disbelievers. It needs energy to be produced, therefore it is an energy sink, like all the other solutions.. Fusion, could be an answer, but we are so far away from that it isn’t even funny.
I would love to drink that ocean of water, but it’s a little salty my friend.
Have a good weekend, we’re off to Lake Erie.

#127 gman on 09.02.11 at 4:32 pm

I have a thought as to why the average price of houses keeps going up. If you dig deeper, you will see that the sales are happening typically in the better part of cities (W.Van, Richmond, Oak Bay, etc.) but the fringe neighbourhoods are seeing listing s rise and stay on the market longer. We can all agree tat if the number of sales goes down, and the ones that are selling are in the nicest neighbourhood, it is no wonder the average price of a house in a whole regio can rise. Average price of a house is a very bad metric (like the DOW JONES). Garth can explain that to those who dont get what that means.

#128 Ultraumatic on 09.02.11 at 4:38 pm

The parties have also agreed that there should be no evidentiary hearing, trial or other adjudication on the merits, and that entry of this Settlement Agreement is not to be construed as an admission by Delta of the validity of the claims asserted against it.

Thanks for the article, jess. This…sounds about right, really. Yay lowered expectations!

#129 Mr. Lahey, Trailer Park Supervisor on 09.02.11 at 4:39 pm

To #1 bsallergy. Morton Shulman was a medical doctor, chief coroner for Ontario, MP and one very sharp investor until he got parkinson’s disease and wasted a lot of money on the drug Drepynol, trying to stave off his parkinsons affliction. His advice was spot on in the 70s and fortunes were made by those who invested in real estate and commodities. I personally know millionaires in Toronto (yes Randy and I get out of Sunnyvale occasionally) who own multiple rental properties, commercial properties, industrial units. One last note on Morton Shulman. He made millions as a client of Al Friedberg, owner of Friedberg Mercantile and one of the best traders in the world. Friedberg’s quarterly reports are excellent for an understanding of financial conditions globally.


“Randy, I hear gunshots. Cyrus is back in town.”

#130 chris on 09.02.11 at 4:53 pm

What Garth is missing is that Vancouver does not give a rats ass about economic fundamentals and such, this is a international jewel attracting bilionaires who could not give a sh&t if it costs 20 times local incomes, never mind 11 times.
Try an average hose price in Van of 2.5 million in a year form now.
Poor,poor canadians!!!

#131 Burnt Norton on 09.02.11 at 4:58 pm

#100 Junius on 09.02.11 at 1:41 pm

Great TED link – thanks!

Next stop, Kurzweil’s singularity (hopefully not as portrayed by Arnie in The Terminator).

Light cones and quantum entanglement?? It’s all a bit Zen isn’t it? Oh well, time for a beer on the patio…


#106 disciple on 09.02.11 at 2:14 pm

Anti-vaccination propaganda = child neglect advocacy. Give it up.

#132 The InvestorsFriend on 09.02.11 at 5:00 pm


Number 11 squidly77 claimed without backout that Alberta delinquencies were comparable to Florida.

Number 117 timo provided backup from Albertabubbleblog (do they sound like a neutral source?)

But oops Alberte Bubble Blog compared Alberta 90 day delinquencies to U.S. FORECLOSURE levels.

Alberta 90 day delinquencies are just 0.79%. About twice the national average but FAR lower than U.S. levels which for 30 day delinquents are a little over 10% (i.e more than ten times higher albeit that is for 30 day figures).

But, you knew at a glance that idiotic claims that Alerta delinquencies were at Florida levels was obviously false, right?

Here is the Canadian figures: (90 day delinquents)


Here are the U.S. figures: (30 day delinquents)


You’re Welcome! (Sorry to spoil your party doomers)

#133 Cookie Monster on 09.02.11 at 5:02 pm

#121 Devore on 09.02.11 at 3:40 pm
The “less regulation more capitalism” approach devolves into abuse of market participants by monopolistic unchecked players.
No overpriced monopoly can endure without government sanction or protection. In a free market a monopoly can only exist if a business provides an outstanding product at a great price such than no one else can compete with them, hence the monopoly is not really a problem. We need competition to get the best products at the best price, not for the sake of competition. In a free market, no player is ever left unchecked, they are checked everyday by the market itself, they are either patronized or they are not.

#134 Victor on 09.02.11 at 5:08 pm

#98 Victor on 09.02.11 at 1:32 pm

Housing Makes All the Difference
By Dr. Sherry Cooper

The depth of the U.S. recession and the weakness of the recovery are the consequence of the housing depression. Housing is the lynchpin of household wealth. Housing, the most interest-sensitive sector, is also the key transmission mechanism of monetary policy. In every other ….

Interesting comments from BMO’s best and brightest.

Next time use a link. — Garth

Couldn’t Garth. No link. It was posted on BMO’s secure login website for clients, so had to cut and paste.

#135 JohnnyBravo on 09.02.11 at 5:15 pm

#122 Aussie Roy on 09.02.11 at 4:02 pm

Behavioural Finance, the field of study which combines human emotion with other market forces, has been gaining ground over the EMH, from what I’ve seen.

#113 Moneta on 09.02.11 at 2:53 pm

We all know Utopia doesn’t exist (except as a commenter on this blog ;). As Lord Acton said, “Power corrupts […etc].” That’s why I said the key is balance. And that’s why the Founding Fathers created the three branches of government–you just can’t trust anyone! Give ’em an inch…

#107 Cookie Monster on 09.02.11 at 2:26 pm

“Property rights means the right to buy, control and dispose of property […]”

It all stems from the enclosure movement in England. Check it out. It’s why this blog exists.

#136 No Fun Vancouver on 09.02.11 at 5:15 pm

Ha! What a joke, Vancouver blaming the riots on renters and suburbanites! Talk of banning alcohol throughout the city during hockey games! and more surveillance. Best Place on Earth now Best Place on Meth!

#137 viewwest on 09.02.11 at 5:17 pm

Hi Garth,
A question regarding yesterday’s post…
After Japan began aging, we saw a real estate bubble AND equity markets decline for going on 2 decades. With North American boomers hitting retirement age (Canada poised to have a worse ratio of retired:youth vs America) can you share your insights for predicting that North American equity markets will rise while housing prices decline? If you have covered this in a previous post, can you please let me know the date? Thanks very much!

By the way, “new price” stickers have started appearing on the for sale signs in my lovely Vancouver neighbourhood this week. The local media is already in full campaign mode to blame it on the uncertainty of the HST transition.

#138 timo on 09.02.11 at 5:18 pm


The banks have an impossible task. Having bailed them out once, governments, not least our own, have a similarly impossible task. On the one hand, they have become the spenders of last resort, given that the private sector has gone into full-blown deleveraging mode. But on the other hand, they have also twigged that as and when markets lose confidence in their ongoing ability to borrow from the bond markets, the jig is up. So the government has to steer a very precarious path between being emergency spender of last resort and maintaining a commitment to austerity without plunging the economy into a depression. To paraphrase from the original Irish “joke”, if you‟re planning to travel to recovery, you wouldn‟t want to start from here.

#139 Nostradamus Le Mad Vlad on 09.02.11 at 5:30 pm

#29 Ravishing Rick — “Vancouver real estate correction= forced austerity”

Interesting point re: forced austerity. That is a definite way to stop people from living way beyond their means. It also means they have put themselves in the poorhouse for the rest of their lives, making themselves slaves to their masters.

#34 waterloo Resident — “Canada-banks-face-storm”
— and —
#44 T.O. Bubble Boy — “borrowing-canadians-give-banks-a-boost”
— and —
#56 Live Under Your Means — “analysts-warn-of-mortgage-rate-hikes”

A classic case of doublespeak from various sources.

#48 Ret — Thanks for the link. The homes are better suited to empty nesters or singletons, but the property tax and maintenance problems still surface.

On the whole, I would rather rent.

#51 disciple — “…withdrawing labour is the solution for revolution. That would change everything overnight, but everyone is too mind-controlled to realize this…due to their free education.”

Well put. Removing labor (the work force) places everyone on a level playing field, kills profits, taxes and govts. so a new system, sans money, can be brought in.

Star Trek: TNG inadvertently showed how people can live together reasonably well, in a confined space. Good post.

#85 jess — Good post. A retired friend ended up retiring to a small place just outside Acapulco. After 45 years of Quebec winters, plus a decade or so here, he said he had had enough cold weather and white stuff. Every six months, flies to Dallas or Houston for a couple of days, then goes back. No more Canada for him!

#113 Moneta — “. . . that stability guarantees future instability because it makes us feel secure and pushes us to take more risks than we should.”

Well said. Presently, the west is quite unstable (volatile) as it is time we were shaken out of our comfort zones, e.g. buying big houses with lots of self-imposed debt restrictions, while more and more line up at food banks, as they have next to nothing.

#114 disciple — “Was it an NDE? I shed the mortal coil of my thought prison . . .”

As everyone will prove to themselves, it is simply a continuation of life when we shed our clay temples (physical bodies), so there really is no such thing as a NDE — we move back into the other worlds, inner planes or other side, whatever you like to call it. I’ve been doing it, on and off, for about five decades.

#118 maxx — Thanks for the laugh!

#140 Aussie Roy on 09.02.11 at 5:38 pm

Aussie Update

I’m sure many here remember atleast some of the links I’ve posted by the MSM pumping the great Aussie house shortage con.

How quickly things change.

Demolishing a housing deficit

by Michael Matusik

Australia’s population growth has slowed by close to 150,000 in just two years, with a 100,000 drop in the actual growth rate over the last twelve months. As a result, the underlying demand for new housing has dropped from 180,000 starts per annum to around 125,000. While dwelling starts are declining, we are now building too much stock.

Unless new housing starts decline in earnest or population growth accelerates, Victoria, South Australia, Tasmania and the Northern Territory face an oversupply. Perth and Canberra are better positioned, with Queensland currently at equilibrium and New South Wales undersupplied.

Free subscription required

Not mentioned here is the main supply/ demand driver, stock on market versus willing buyers in market.
Supply is growing as buyers retreat, future prices appear to also be a risk to the downside with mortgage demand and pre approvals at 10 year lows.

#141 BPOE on 09.02.11 at 5:45 pm

Will have NO EFFECT on BPOE. Homes being snapped up. New kids on the block drive $400k cars. They don’t need a functioning economy only a place to buy homes and cars
109 Junius on 09.02.11 at 2:34 pm
Gloomy way to start your weekend. Sorry. Mish Shedlock ways the global economy is already in recession and lists his reasons:

#142 jess on 09.02.11 at 5:49 pm


stroll tax on freelance love servants


A private insurance or saving for retirement was never an issue – “for us girls on the street not done.” And the money melt away one abzustottern in the fingers, debts were.

#143 poco on 09.02.11 at 6:08 pm

# 115 MAXX
that was not my “revelation”(the US housing market has bottomed)—- please read post at the bottom of post #7–that is mine—then read post #71 where i explained the confusion some are having
and then read yesterdays post (#153)by Investors friend

hope that clears it up for those concerned

#144 Aussie Roy on 09.02.11 at 6:17 pm

jess on 09.02.11 at 3:36 pm 100 Junius

that has had me in “knots” for sometime ;)

The role of information flows is crucial for price developments in commodity derivatives markets.
Traditionally, the so-called efficient market hypothesis (EMH) is assumed to hold in financial markets,
including in commodity derivatives markets and especially in futures markets, which are the focus of
this study.

Well said I would point out that many, mainly large physical accumulators of grains have never used EMH (I never used it in my career). As EMH theory directly conflicts with one of the most widely used methods of price risk management (in the grains industry) called basis trading or basis hedging. In short if you basis trade then you know EMH is well, crap.

Beniot Mandelbrot blew EMF out of the water in the 60s when he studied the US cotton market and came up with the concept of basis measurement. Using this same basic method both Mandelbrot and his student Nicholas Taleb have been able to identify many overtly positive basis events (bubbles if you like) in stock indices, commodities and other assets. Sure you can never tell when these events will reverse but its very handy knowing what “basis state” a market or asset is currently in.

Oh whats basis measurement?, without raving on, its the measurement between current price and underlying value, or, as simple as the underlying difference in prices for the same commodity/asset in different locations, or, even at different stages in a commodities processing or, price differences in transport/storage locations, sounds familiar hey. Yep its price versus value measurement.

#145 Junius on 09.02.11 at 6:21 pm

#141 BPOE,

You said, “They don’t need a functioning economy only a place to buy homes and cars.”

Can you please give some up what you are smoking to Rennie’s sales team at the Olympic Village?

#146 Junius on 09.02.11 at 6:32 pm

#121 Devore,

You said, “The “less regulation more capitalism” approach devolves into abuse of market participants by monopolistic unchecked players. The “more regulation less capitalism” approach devolves into abuse of market participants by monopolistic unchecked regulators.”

Essentially I agree. It is very much the “Goldilocks” reality of it neither being too hot or too cold. I think this is the way of things.

It is a bit like sailing a ship. You never travel in a totally straight line but constantly course correct and adjust for variations on the way. It is the belief in rational perfection or a pure scientific approach to governing human affairs that leads to totalitarianism whether on the right or the left.

#147 Junius on 09.02.11 at 6:45 pm

#133 Cookie Monster,

I partially agree with you. Certainly monopolies need a form of government protection. They usually just buy this by supporting politicians who protect their monopoly or give them contracts – ie Haliburton. This is the what has happened in the US in many industries from financial services to military to pharma to energy to food.

The problem with so-called “free” markets is that they are abused by the market leaders because anti-competive practices are cheaper, more certain and easier than innovation and working hard. It is simply part of human nature. Look at how badly patent law is abused these days.

What we really want are competitive markets that ensure efficiency and spur innovation. These are the primary concerns. However “free” and “competitive” are quite different.

The problem with the notion of “free” markets is that it assumes that all the participants have perfect or equal knowledge of the facts. This is known as the asymmetrical information problem. The consumer never has perfect information which is why we need EPAs and Consumer Protection legislation. It is also why we need securities and corporate laws to be enforced.

#148 squidly77 on 09.02.11 at 7:05 pm

132 The InvestorsFriend

When you are 90+ days late 9 times out of 10 the bank will begin foreclosure proceedings. You see only what you want to see.

#149 squidly77 on 09.02.11 at 7:12 pm

I would further claim that Albertas foreclosure rate is much higher than the delinquency rate as the CBA report rolls from month to month and has been in the 0.8% range for quite sometime now.

#150 vyw on 09.02.11 at 7:15 pm

Friday, September 2, 2011

VANCOUVER, BC – August marked the third consecutive month that home sale activity in Greater Vancouver was below the 10-year average for the month. In contrast, home listing activity in the region has exceeded the 10-year norm every month since the beginning of the year.

The Real Estate Board of Greater Vancouver (REBGV) reports that residential property sales of detached, attached and apartment properties on the region’s Multiple Listing Service® (MLS®) reached 2,378 in August. This total represents an eight per cent increase compared to the 2,202 sales in August 2010, but also ranks as the third lowest total for August in the last 10 years.


August 2011 report:

#151 ballingsford on 09.02.11 at 7:25 pm

Friend at work bought a house that he thought he’d fix it up a bit to suit his family. He still hasn’t moved in because of neighbors complaining about the mess of the yard from construction, errors from the architectural drawings and approvals from the city needed for changes, and other things, and hassles with the city.

He moved into a rental while this was going on and the landlord wouldn’t fix anything.

To make a long story short, he settled with the landlord for terminating the lease early and bought another house a few days ago while the renovated house gets completed and then he plans on selling it (might take another few months to complete it if he’s lucky).

Bought for about $450 grand, reno’s around $200 grand, real estate guy at the time said he’d be able to sell it for $900 grand when all is said and done (a year ago). Pointed him to this site a long time ago, but he still still says real estate doesn’t go down. I’ve shut my mouth since then and just smile and nod my head.

There are lots of homes for sale around here these days and none are moving and not many are reducing their prices.

I think he’s gonna take a bit of a hit on this.

#152 Utopia on 09.02.11 at 7:57 pm

#98 Victor wrote….

“Interesting comments from BMO’s best and brightest.
Next time use a link. — Garth”

Hi Victor, I am not a BMO customer so I cannot access the article. Can you cut and paste the whole thing? I would like to see it.

Sorry, anything over 400 words dies a gruesome death. — Garth

#153 jess on 09.02.11 at 7:58 pm

north dakota bank is the “printer”

steers the dollars in state revenues into productive investment within the state giving public and private sector state an enormous advantage over other state, municipal and local governments, plus businesses, who have to compete for loans with all of the other non-federal government entities.


“Financially, 2010 was our strongest year ever. Profits increased by nearly $4 million to $61.9 million during our seventh consecutive year of record profits. Earnings were fueled by a strong and growing deposit base, brought about by a surging energy and agricultural economy. We ended the year with the highest capital level in our history at just over $325 million. The Bank returned a healthy 19 percent ROE, which represents the state’s return on its investment.

As the only state-owned bank in the nation, our mission to be a catalyst for progress in North Dakota is well defined. Together with our partners across the state, we contribute to a thriving state economy and ignite success for the people of North Dakota…”
Eric Hardmeyer, President


#154 Aussie Roy on 09.02.11 at 8:10 pm

Bit off topic here Garth but thought it may be useful to some to show an example of how real physical grain accumulators manage risk or make a local market from a non physical overseas market.

Wanting to stick with a Canadian / Australian theme lets use Canola.

As an Aussie grain accumulator I need to be able to offer an Australian grower a price in AUD, with no physical buyers in sight, how do I create a local market using an overseas futures market to limit my overall price risk?.

Lets keep the math simple so figures quoted are for reference only. The old WCE (now ICE) offer a forward futures Canola contract (the same month as my local grower will harvest and deliver) at $300 CAD pmt. Not too hard to convert that to AUD (Let say AUD CAD is $0.50).

Before moving on let me point out as I’m buying physical in AUD and would be selling futures in CAD (to maintain a fully hedged position – neither long or short) I have a currency risk which will need to be managed.

So I calculate the local price as follows.

1 mt @ $300 CAD to AUD at .50 = $600 AUD

Now here is the important bit as a seasoned trader of Canola I know that during different times of the year prices for Canola in Canada and Australia will vary by as much as $50 (a 50 point basis range). This simply means there will be times when Aussie Canola is cheaper than Canadian canola and times where it will be more expensive.

So my price to the local grower as above will be $600 AUD less what negative basis (the price I’m willing to pay below the current Canadian price). Let use -25AUD as a target to “go long the basis”.

My grower accepts $575. My trades will be.

Buy 1mt physical at $575AUD
Sell 1mt futures contract at $300CAD
Sell $300 CAD/AUD (to remove currency risk)

It should be pretty easy to see that now whether Canola prices or AUD/CAD move or down, what one part of the trade losses another (or others) will make it up. All I have at risk is the basis risk not overall price risk.

So a few months down the track the CAD canola price is $250 the AUD/CAD is 0.5. However due to strong Aussie harvest demand my basis has gone from -25 to +10.

So the current AUD price is $250CAD at .5 = $500 +10 = $510.

Now I purchased this Canola at $575 AUD so I’ve done my $$$, right, well no so fast we need to unwind our hedges, how much have they lost or made?.

Buy 1mt physical at $575AUD / Sell at $510 = -$65AUD
Sell 1mt futures contract at $300CAD / Buy at $250 = $50CAD
Sell $300 CAD/AUD (to remove currency risk) / No Change nothing gained nothing lost.

Convert the $50CAD profit back to AUD at .5 = $100AUD

So even though I went long and overall prices fell, I managed my risk made a market and made $100-$65= $35AUD on my 1mt.

Or simply put I bought at -25 basis sold at +10 basis a 35 basis point profit.

This principal works with any commodity/currency set.

For the gold bugs out there how many didnt hedge their CAD/USD currency risk when they purchased gold and now regret it. Identify risk then manage it, good risk management doesnt alway cost, many times it can remove risk and pay you a profit.

#155 rosie on 09.02.11 at 8:13 pm

So tell me. How does one make money in a depression.

#156 Nostradamus Le Mad Vlad on 09.02.11 at 8:25 pm

The pic at the top, esp. the added lines remind me of Tweeter And The Monkeyman, by The Traveling Wilburys. I’ve never seen a Monkeyman before, so this is the closest I can get!
The Stupidest Fact in all economics; GS Presents The World Is Ending So Let’s All Profit (incl. China and other participants); 23% Real unemployment rate, complete with chart; Rant The last act of etc., etc.; Psycopaths Here’s one of the reasons why the west is (eventually) screwed; Plunge US bank stocks + lawsuits; Richer and Richer Politics and economics do mix, and the 50 Richest members of Congress, ‘tho now there is a Super Congress, so all of these can be eliminated; Disciple — This is what O’bomba has done today; 1:49 clip BoA gets 4Closed on.

BoA Contingency plans in case it goes under; Ireland plus other links; Robo Signers “The suspect documents should create legal trouble for the mortgage companies and banks that created them. The homeowners are paying the price for the bankers’ crimes!” wrh.com;

Silencers Michigan’s AG says it’s fine to use silencers. Look for a major increase in guns / ammo sales, as the WH tries to remove them; 3:24 clip Relations souring between Turkey and Israel; Syria EU – IMF – US interference again; Gadaafi and African Union; China and Iran “One has to wonder what the Chinese leadership may know – or intuit – about a potential attack against Iran, possibly triggered by a US/NATO attack against Syria, with which Syria has a mutual defense pact.” wrh.com. Another point is that, with China separated from Iran and with both Russia and China out of Libya, they would be free to take on NATO – US and up the stakes in WW3.

16:40 clip “Al-Qaeda as a CIA asset; Algerians are afraid they are next; All the media was against Gaddafi; Will NATO go in hot pursuit into Algeria? Most Arab countries are tribal”; 7.1 ‘quake Aleutian Islands; The Star that should not exist, so this is where all the politicos and banxters are going!

#157 Utopia on 09.02.11 at 9:21 pm

“Sorry, anything over 400 words dies a gruesome death”. — Garth

Well, I am not changing banks to read it. The lead-in just sounded so juicy though. It just did not sound like the usual bank talk so my radar went on alert. That is why I am intrigued.

#158 Patz on 09.02.11 at 9:26 pm

Feeling cranky so gonna say it. All you guys arguing about capitalism, the good, bad and fugly is pointless. Peakoilist you should stop using that nom de blog, you don’t understand its implications.

We are already on the down curve of net energy return. Energy drives economies; less energy, less economic activity of whatever kind. Sad but true.

As the world’s population now aims for 7 billion we are well past the point of sustainability no matter what we do. Find a way to make a super energy source out of water–tough–too late.

Here’s a Zen exercise for you: find a population growth chart from say 1500 to the present. Stare at it until you get it!

#159 Bob on 09.02.11 at 9:57 pm

Thanks for posting my story Garth!

I love it when people comment on the “average” house prices in Winnipeg. What most people don’t realize is the property in the North and West End are located in one of the poorest and most violent areas in Canada. Just a simple drive around with google maps speaks for itself. Its the thousands upon thousands of houses in these areas which drag down Winnipeg average….




#160 Utopia on 09.02.11 at 10:11 pm

#155 rosie asked….

“So tell me. How does one make money in a depression”?

Very simple Rosie. Sell people what they need and sell it cheaper than the competition. Bottle it with the language of fantasy and positive feelings like any good advertiser would if you want repeat customers.

The economy does not die in a depression or recession.

There are just fewer slices of the pie to share around. If you want your share of the pie you need to hustle to get it. Activity still continues and not much changes in tastes and preferences for products.

What really changes is the market share.

For example, new car sales will decline while used car sales increase. New construction takes a dive but the repair and renovation business usually improves.

One of the business’s that has done very well in the US during its housing crisis is storage. This was due to all the foreclosure activity. People did not want to lose their possessions. They could not afford the mortgage but a storage locker was still within reach.

Another area that has done well is security services, the alarm business and locksmiths. Everyone worries more about personal security as recessions create widespread unemployment and the idle population grows.

You will have to think of your own niche. What do you do better and cheaper than a local established business or service provider?

That is all there is to it. Think competitively and strategically. Target your new customers. Plan on winning but be prepared….the competition will respond and could drown you out if they have deeper pockets.

You win by minimizing your fixed costs and staying nimble and engaged.