Mistakes

I was reminded this week of why people fail. They don’t mean to, of course, and most think they’re doing everything possible not to. But they just can’t help it. In the genes.

Here are five flaws that make us horrible investors.

We believe headlines.
Big mistake. There’s no longer any really objective MSM left in the country. Journalists with condos and GICs accentuate the risks of equity investing, cast successful CEOs as latent criminals and foment a trust-nobody approach when it comes to personal finance. City page editors allow media releases from real estate boards to run verbatim with a byline on them. LePage and Re/Max handouts are published as news without research or a countervailing opinion. Market advances are on page 23. Market drops are front page. A declining, emaciated, desperate and dying medium is the last place to turn for informed opinion.

We sell things that decline.
Misinformed, worried people always make the same mistake. They see an asset lose value, and start to fret. If it loses more, they toss at night. A further decline, they panic and bail. They take a theoretical drubbing and turn it real, making paper into money. As on March 9th, 2009, when stock markets hit their bottom in the great financial crash.  That day came the greatest gush of selling, as small retail investors bailed out of stocks and mutual funds which would climb 55% in the next year. That’s how we knew it was the bottom.

We want things that rise.
Human nature. It is goes up, we want it. Just as we fear losing assets will hit zero, so we believe ascending ones will achieve eternal growth. It’s why we couldn’t get enough of Nortel, profitless dot-coms or dodgy Bre-X. Lately it’s why we’re horny for real estate and precious metals – why we make the classic boner of jumping in at the top of markets, when every shred of logic tells us they’ll decline. Like your Dutch ancestor said in 1619 looking at a bitchin’ tulip bulb – what’s to worry, Hans? It’s different this time.

We misinterpret risk.
To some people risk means missing opportunities. To most people it means the potential for loss. So risk aversion takes on Biblical status, even as millions walk directly into it. In our society, for example, buying preferred shares in the bank is considered riskier than giving the same bank your money, even when you’re penalized for doing so. Buying a house with 95% leverage is considered safe, even when a hike in rates or a drop in the market can wipe you out. In our fear, we’ve defined risk as losing money.  But the greatest risk, bar none, is running out of it. Too many long-lived women will learn this.

We fail to trust.
The ubiquity of financial news has created the feeling anyone can be fully informed. This is exactly what a lot of market professionals hope for. It’s how they score. They trade in fear and greed, evident to anyone who takes a tour of the thousands of sites pumping silver or apocalyptic newsletters. Everywhere we turn today, we’re being told there is but one bullet to protect you. It might be a SFH in Kits, a garage full of metal or a junior uranium stock going mythical. Complex times bring simple solutions. In finance, as in politics, it’s usually fatal.

Large parts of my day are spent trying to help people overcome the above. Now you know why I’m like this.

207 comments ↓

#1 sye59 on 09.06.11 at 10:10 pm

Another solid post Garth.

Everyone wants things that rise.

#2 Junius on 09.06.11 at 10:19 pm

We believe headlines

My father was a Real Estate Developer. He told me as long back as the 70s that one of the reasons that Real Estate always goes through boom and bust cycles is that everyone who owns a print press, tv or radio station and wants to be re-elected has a vested interest in Real Estate rising. Therefore it always over shoots – often wildly – before it corrects.

Of course, the current Re: bubble is not just any normal cycle. It was created and perpetuated by a coalition of fools from the banks, gov’t and Re industry with the MSM never shy about pumping it up. Meanwhile our media has never been more concentrated and never more desperate to sell their souls for a paid advertiser. All in all a recipe for disaster.

#3 Stoke on 09.06.11 at 10:20 pm

If only…only there was a way to make a pile of money fast I wouldn’t have to get up in the morning and go to my ‘not bad but not as good as not having to go job’.

Enjoying the blog, the message and often most of all the photos.

Good Night (not the first).

#4 Junius on 09.06.11 at 10:21 pm

BrianT (from previous post),

I have read your posts and I have read Paul Krugman as well. Disagree with him if you will but you have light years to go before you call him an idiot.

Let me know when you get nominated for your Nobel Prize.

#5 Joe the Plumber on 09.06.11 at 10:31 pm

Don’t educate too many people on the sheep mentality, because there are some us who silently capitalize on that. Like vampires of ignorance …

Buy low and sell high is king. Too bad I understood that late in my life.

#6 timo on 09.06.11 at 10:35 pm

http://finance.yahoo.com/news/Mich-governor-signs-48month-apf-2338176593.html?x=0

41,000 people to lose their cash assistance payments on Oct. 1 when the state’s new budget year begins. That includes 29,700 children, according to the Michigan Department of Human Services.

“We’re very, very concerned,” Jacobs said. “As the days go by, new people will be meeting the 48-month limit. … More will be falling off that cliff.”

more and more social program cuts to try and balance books only leads to more hoarding and a deeper recession. Ugly….

#7 Dark Man on 09.06.11 at 10:35 pm

Nothing makes sense, this is why I fear RE will continue to rise.

#8 HouseBuster on 09.06.11 at 10:40 pm

When someone at work mentions to me that they want to buy a run down house in the north of GTA for $750K because they KNOW it’s going to $1 million in 2 years tells me the top is in.

#9 Smoking Man on 09.06.11 at 10:46 pm

To wasted tonight to add to the dialog, weather is killing my back.

Garth said
Large parts of my day are spent trying to help people overcome the above. Now you know why I’m like this.

Love you man

Tommorow why I hate teachers

#10 JohnnyBravo on 09.06.11 at 10:46 pm

You can trust the media completely. Trust them to dutifully deliver the propaganda of those who pay their bills. Trust them to spin the truth. Trust them to get the facts wrong. Trust them to fabricate reality. You can even trust them to spy on you. I’m sure they are listening in on this comment as I write.

So maybe Global works for the realtors. And BNN bows to the banks and brokerages. Hey, we all have to work for someone. We all have to eat. Right now the financial press prefers the Warren buffet.

I take comfort in knowing that it’s always been this way. The “press” or “media” have always been propaganda or PR organs for various interests. However, somewhere along the line between William Randolph and Rupert we were sold the lie that journalism was objective. That way we wouldn’t ask too many questions. I hope today we know better. And rather than being sold a bill of goods by the media, we should simply ask ourselves, “What are they selling?”

#11 T.O. Bubble Boy on 09.06.11 at 10:47 pm

Hey look: apparently Flaherty writes interview responses for the Bank of Canada now:

http://www.business-standard.com/india/news/qa-tiff-macklem-sr-dy-governor-bankcanada/448311/

During the 2008 financial crisis, Canada stood out because of its ability to face the downturn. Why?

There are a number of reasons why Canada came through the crisis better than most advanced countries. Despite the fact that the US is our trading partner, we did not have the kind of housing bubble it did. And, we did not have a big sub-prime sector in Canada. We had a more regulated housing market. Our banks are also conservatively managed.

Seriously? I guess if you only look at the tense of the sentence, these statements are true. We *did not* have a housing bubble like the U.S. (but we *do* have one now, with home ownership passing the peak of the States), and we *did not* have a big sub-prime sector at the time (until about 2006, when CMHC started to explode with F’s 0/40 mortgage rules – fueling a debt binge like this country has never seen before).

#12 BrianT on 09.06.11 at 10:47 pm

#4Junius-Good thing you don’t play poker-that is exactly what I predicted you would say. Yes, Paul Krugman’s credentials are very impressive in a childish Wizard of Oz manner.

#13 The InvestorsFriend (Shawn Allen) on 09.06.11 at 10:56 pm

INVESTORS SOLD AT THE LOWS ON MARCH 9, 2009?

Yep they did, that is, some did. Other investors bought that day.

Every stock sold that day at the bottom was bought that day at the bottom.

I have not seen any research to suggest retail investors were selling to professional investors. But I don’t doubt it may have been mostly retail investors selling at the bottom.

Pension funds though were probably buying. They buy automatically as new money comes in. And when bonds rise and stocks fall they automatically sell bonds gradually and buy stocks to keep their asset allocation at the target level.

I bet some of the professionals did their share of selling at the bottom too.

#14 squidly77 on 09.06.11 at 11:03 pm

Since I have owned real estate nearly all my life I know what a ball and chain it can be, been there, done that. Gold and other metals do nothing for me, too many people want it and that’s a good a sign as I know that nows not the time to buy it. Never liked the stuff anyways. For now being 100% cash is comfortable and I am happy watching equities doing there own thing through September and October.

There’s some sweet buys out there, Suncor (SU on the NYSE) under $30, Canadian Natural (CNQ) under $35. But I see black clouds out there causing me caution.

You do not always need to have your money working for you, it deserves a vacation to.

#15 The InvestorsFriend (Shawn Allen) on 09.06.11 at 11:03 pm

MARCH 9, 2009 WAS A BOTTOM…

But very attractive stock market bottoms, unlike the female variety, may be hard to spot until after the fact.

It was not clear on March 9, 2008 that the very bottom had been reached.

But so what? Waiting for the absolute bottom in a stock market makes about as much sense as would refusing the wiles and avails of a beautiful model on the basis that a more beautiful model yet might approach you tomorrow.

In markets as in life take gifts when they are given to you.

That is, when a market is very attractive, go ahead and buy and don’t worry that it might get even more attractive next week.

Of course it does not hurt to keep some powder dry for next week either.

Will there be a market bottom this Fall? Quite likely yes, but the precise date will not be apparent until the bottom has passed.

#16 The InvestorsFriend (Shawn Allen) on 09.06.11 at 11:07 pm

BUY COMPANIES NOT SHARES

I own shares. I am a share holder.

But I don’t like the term share holder. It sounds like a very temporary thing. A share holder sounds like an outsider to a company. Investor relations will treat you that way to.

“Thank you for your interest in our company” they will say to me.

NO, I thank them for being part of the hired help at MY company.

I am an owner, not a mere “holder”.

If I own profitable company, why should I panic if its stock price goes down?

As Garth says, I don’t have to sell.

#17 Toon Town Boomer on 09.06.11 at 11:11 pm

I’ve been watching the housing market for some time now and for the life of me, I can’t believe what people are buying and paying for homes here in Saskatoon. I feel like I’m from another planet ( I just don’t get it). All I can say is, “beam me up Scotty these Toon Town people are nuts.”

#18 TaxHaven on 09.06.11 at 11:15 pm

“We want things that rise.”

The difference is that there’s a virtually endless supply of overpriced real estate, stocks, bonds and GICs. Not so much gold, though, which is why it will always perform better.

#19 Snowboid on 09.06.11 at 11:18 pm

Lent my copy of ‘The Road of Money’ to my BIL, apparently he didn’t like it too much (claims the dog tore it apart) – didn’t even get the remains back.

Had to wait forever to borrow a copy from the local library (main copy was listed as damaged – is this a trend?).

But have to take it back this week (bunch of holds), so despite being inherently cheap I broke down and ordered another copy.

I swear I won’t lend it out again, I need my daily Money Road affirmation.

#20 GOD on 09.06.11 at 11:19 pm

Smoking Man:

Here’s a preview as thou hast requested

http://www.youtube.com/watch?v=UVKsd8z6scw

BTW: Thous hast Nice Tie and moves

#21 Hoof-Hearted on 09.06.11 at 11:20 pm

Vlad…

Seen this ?

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

#22 Joe on 09.06.11 at 11:21 pm

BNN is doing a special on financial literacy this week, today’s episode of The Close about half an hour in was the first episode. The guest they talked to was really good. Granted he talked about teaching children from six months infancy about money and investing and I really didn’t get that at all, but he did have a lot of intelligent things to say, such as encouraging children from a young age to understand money and investing, not just frugality and saving but actually making money work for them so that they don’t have to get jobs and work for a paycheque, or at least are not solely dependent on it as a source of income. He talked about business school being a waste and that there should be four-year entrepreneur programs instead. I was quite inspired. I’m looking forward to these segments the rest of the week.

#23 Mike Rotch on 09.06.11 at 11:24 pm

RE #6 timo:

Michigan is in some kind of hurt these days. I recently had the “good fortune” to spend a weekend in Flint visiting family:

Wow!

Lack of sound tax base means entire subdivisions may be bulldozed so that the city does not have to service the areas.

Lovely large homes, on 1/2 an acre, within 10 to 20 minute drive of city centre listed for $110K ish. One owner confessing that if someone brought a clean offer of $70K he’d take it in a second!

Target store at 1045am on a Saturday – something like 20 people shopping! In GTA, you’d never find a parking spot within 400 yards of the entrance of a big box. Here, you could not find a checkout counter with a paying customer!

(Closer look reveals that a large chain grocery store immediately next door had recently shuttered it’s doors for good).

Unemployment rate reported at 12.5% (and climbing). Didn’t look, but guessing this does not include thousands that have just quit looking for work but are no longer on UI.

Only growth industry in the city seems to be evangelical churches…..lots of great big, brand new, shiny places of worship open for business. I don’t mock religion, but I hate the thought of the people who can least afford it being taken advantage of.

A church is the people who comprise its membership and their prayer leader, not the frigging building!

Sad. It’s never been a ‘nice’ city, but at one point in the not too distant past, it was a somewhat healthy working town.

Oh, and interesting about the welfare numbers in the link – 41000 people, apparently 29000 of them children.

FOR EVERY TWO ADULTS, THERE ARE ALMOST 6 CHILDREN!!!!

Damn!

If that number holds true for the entire welfare population, some level of gov’t needs to start funding some family planning services!!!

#24 Mike Rotch on 09.06.11 at 11:27 pm

Oops, I meant 5 children per pair of adults……still, somewhat incredible!

#25 Jon B on 09.06.11 at 11:27 pm

I’d like to add one more Garth; we fail to understand. How many people jump into an “investment” without taking the time to fully understand what they are investing in. This is a very real and common reason for failure. I know I committed this sin many years ago and learned an expensive lesson.

#26 Onemorething on 09.06.11 at 11:32 pm

Unless you are part of the Global Elite you wont know what is ever going on! You might get lucky and catch 15% before the bottom and 15% before the top.

Garth sets some good points to the masses, 0.00001% will take that advice.

The future of RE is Retirement Communities with high condo fees! Hamilton or Windsor look good for destinations.

#27 jess on 09.06.11 at 11:33 pm

complexity
failing to understand those “structured” loans
with rich exit clauses
============
French local authorities with Swiss franc loans risk toxic timebomb

…”70% of its €370m debt in structured loans. The town’s mayor, Maurice Vincent, said that his predecessor had agreed a €22m structured loan with Deutsche Bank. The fixed rate of 4.3% was due to become variable from April 2010, pegged to the Swiss franc’s exchange rate against sterling.

As the pound fell sharply in 2009, the mayor, also a professor of economics, feared the interest rate would reach 24%. He said that the exit clause carried a prohibitive €17m penalty…”(guardian uk)

#28 penpal on 09.06.11 at 11:37 pm

@ # 4 Junius

Ease up on Brian T re Paul Krugman.

On this one he is right an being kind (in my opinion) in calling Krugman merely an idiot.

Do some reading in the ‘responsible’ financial press and you will see that it is an opinion shared by many people whose opinions count more than yours ever would.

As to being nominated for a Nobel Prize, they gave Obama one and he had 3 wars going on simultaneously and in fact was increasing those conflicts when awarded the Nobel Peace Prize as I recall.

You know Junius, you are somewhat well informed, but your condescension smacks of a liberal-arts background bias at times. Let me guess, you have a law degree, but you don’t practice? Or are you an educator? Either way, I find you mildly full of shit at times, like now on the subject of Paul Krugman.

#29 Rich Renter on 09.06.11 at 11:41 pm

BOC Governer MC will leave rates as is tomorrow, you read it here first ok.

#30 Utopia on 09.06.11 at 11:44 pm

#6 timo told us..

http://finance.yahoo.com/news/Mich-governor-signs-48month-apf-2338176593.html?x=0

“41,000 people to lose their cash assistance payments on Oct. 1 when the state’s new budget year begins. That includes 29,700 children, according to the Michigan Department of Human Services”.
————————————

Timo. What Michigan is doing has been done before by other States and some Provinces too. In effect they are attempting to shift the burden of poverty onto other regions.

How this works is that by making qualifications for benefits stricter (even severe) during a period of high unemployment they can be certain that large numbers of those in poverty and without work will leave the State and move elsewhere.

Dump your problems on someone else’s front doorstep.

It is an effective short-term solution but it does not solve the underlying problem and in fact, it is pretty damn cynical when viewed strictly as a line item in the budget.

The savings are relatively small, the social impacts and damage can be severe. We should all be disgusted that the solution chosen came down to a choice between aid to the poorest versus road improvements. This was tried in the Depression too. Look what that led too. Millions cast homeless and lost sent wandering across the country for years.

They went by rail, by car and by foot and their camps were set upon by locals, thugs, law enforcement and even the army. Their meager belongings were often seized, tents burnt and jail time awaited those who resisted.

That is how this story ends. Tough choices in Michigan.

Out here in Saskatchewan, by the way, I am told that nobody new can qualify for any social benefit until they have lived here for three month minimum.

This is the kind of restriction that limits the needy from residing in the Province in the first place and pretty much eliminates everyone who does not already have friends or family here to tide them over. The idea is that if you are a burden in your home province then please just stay there.

Is that better? I don’t know but hear it is a common policy all across the country now. Maybe others know more about their own regions.

I appreciate Garth’s points today but still worry that where we are now headed is back to a time we really don’t want to revisit. I can ignore the news and the doom and the talking heads all day long but what conclusions do I really draw when I hear a State is cutting the most basic of social safety nets?

If they are not having a depression already, then what is it?

#31 Gord In Vancouver on 09.06.11 at 11:45 pm

Like your Dutch ancestor said in 1619 looking at a bitchin’ tulip bulb – what’s to worry, Hans? It’s different this time.
___________________________________

Garth – you rock!
Thanks for the great post!

#32 Soylent Green is People on 09.06.11 at 11:46 pm

I want that car… with the license plate, fine as it is.

repost from online G&M: Zaphod 12:27 AM on February 23, 2011
In 2014, which is just three years away, the federal government will negotiate the Healthcare for each province in Canada; and do you want Harper closing that deal?

Stephen Harper, In His Own Words:
Let’s Privatize our Health Care
2 min. cartoon
http://www.youtube.com/watch?v=bWAFuwz-15s
.
.

..

#33 Coldlazarus on 09.06.11 at 11:47 pm

Bingo!

The MSM: stenographers yes, intelligent reporting – not a chance

Stuff in the news- exaggerated as per Tuchman’s Law: (from about 50 years ago)
“The fact of being reported multiplies the apparent extent of any deplorable development by five- to tenfold (or any figure the reader would care to supply)

#34 Nostradamus Le Mad Vlad on 09.06.11 at 11:58 pm


Mistakes are the reason why we’re on this classroom of a planet, to make then learn from them and others’.

Unfortunately, it seems many cannot be bothered to learn, thus by a combination of different things, all happening at the same time has led people to become lazy, self-centred, arrogant (I know best) and obsessed with material tidbits, most of which won’t last beyond a decade.

“We believe headlines. Big mistake. We misinterpret risk.” — That’s why avoiding TV and newspapers has freed up an enormous part of my life.

The biggest risk in life is not taking one, staying in the crib for ever. Some life!
*
#151 Great Blog Garth on 09.06.11 at 9:29 pm — Thanks for the feedback!

#152 Hoof-Hearted on 09.06.11 at 9:52 pm — “Richmond has highest office vacancy rate in Metro Vancouver”

Can you say holy sheepshit, we’ve popped at the top? I never saw that coming!
*
Psssst! Wanna buy a house cheap? Fear Why is fear stalking the markets? What can anyone do about them? Nothing; All work and no rest. That’s what the workforce has become — human drones, like Data on Star Trek: TNG.

9:51 clip Islam prohibits their banks from charging interest, which is why TPTB, or elite despise them; 3:57 clip Why people don’t buy gold; Greek (James) Bonds, Switzerland loading up on chocolate, and Crossroads “If you come to a fork in the road, take it” (Yogi Berra).

Weather Xtremes Check on HAARP; China Interesting if there is anything here. What would the Axis of Evil (UN – US – NATO) do? Turkey, Egypt and a whole lotta others; Federal Europe Note the word ‘forced’ in the first para. Maybe that goes with Croatia’s ‘forced’ joining the the EU a few days ago, and Germany rejects EU, and this could be why van Rompuy wants to head the United States of Europe.

Corporatism Avoid if possible, or it may kill; Tricky Ricky Oops! Cut funding to the volunteer fire depts. at the wrong time. He may be running for prez.

#35 Junius on 09.07.11 at 12:10 am

#12 BrianT,

Congratulations! You can now have a career as an astrologist or psychic. Economist, well, not so much.

I think a Phd and economics chair at Princeton along with a noble prize is a bit more than “childish” when it comes to credentials.

We put down what we cannot understand. Pretty much sums it up.

Why don’t you put an argument forward on his positions instead of just running the man down? Or is that just too obvious a point to make?

#36 Junius on 09.07.11 at 12:12 am

#11 T.O. Bubble,

Do you think Dr. Flahertystein will ever say, “We didn’t have a housing bubble…..until I……..I created it……its Alive, ALIVE!!!! Broohahah!!!!

Just dreaming.

#37 Ghost of Tom Joad on 09.07.11 at 12:12 am

” BrianT (from previous post),

I have read your posts and I have read Paul Krugman as well. Disagree with him if you will but you have light years to go before you call him an idiot.

Let me know when you get nominated for your Nobel Prize.”

I agree with BrianT that Krugman is an idiot; I might add that I think Krugman is a POS.

I don’t know what it is about you Junius – you seem almost intelligent – but from many of your posts I see obvious mental deficiencies.

#38 jnaturally on 09.07.11 at 12:42 am

I can’t agree with the idea that PMs are anywhere near a top because of the fiscal policies of central bankers the world over. For example, the Swiss National Bank, which was considered a safe haven by investors, has decided to agressively devalue there currency vs the euro. The US is devaluing their dollars just as aggressively; however, the US is devaluing their dollar under the premise of stimulus.

Fundamentally or even technically how do you show that PMs are near the top? If you can present a strong argument I would cash in my chips, but I don’t want to miss out on another 5-10 years of substantial gains.

#39 Waterloo Resident on 09.07.11 at 1:04 am

Sorry I didn’t mention this yesterday, but for ANYONE thinking of buying a new car; if you hate to haggle over the price of a new car and you want a bargain-basement price on it WITHOUT HAGGLING, then go to this web site and you will get a bargain every time:

http://www.unhaggle.com/

#40 Waterloo Resident on 09.07.11 at 1:29 am

My idea of how to cure the unemployment crisis in America = get everyone back to work !! Simple !!

There are no jobs so how to do you get people jobs — thats where my plan works wonders: Obama wants to spend another $1 Trillion on QE3; won’t work, he tried it twice before and each time almost no new jobs created, so this time simply give the money DIRECTLY to the people, but in the form of ‘MAKE-WORK’ jobs.

Sounds nuts doesn’t it, but it worked in the 1930s and it will work today too.

The truth is that no jobs will be created until the unemployed are back to work and buying consumer products themselves, sort of like the “chicken or the egg” type of thing, which one needs to come first.

So lets say we need a new 4-lane bridge over a 100-foot river. We can do like we used to do and hire normal construction workers; 12 of them, plus all of their heavy equipment, or hire 400 unemployed people and give them simple hand tools to do the job. it will take 10 – 20 times longer to build that bridge but that doesn’t matter, what matters is that people will now have jobs and they will spend the money they earn back into the economy. That is what they did during the Depression and it worked, so we need to do something crazy like this again.

Building thousands of bridges this way in each state, and in every 50 States will totally eliminate the unemployment problem in 6 months or less. Its crazy sounding but it worked then so it will work now too.

#41 Thetruth on 09.07.11 at 1:39 am

#8 Housebuster

Come to Greater Vancouver and maybe that will change your perspective.

#42 Echo on 09.07.11 at 1:41 am

#9 Smoking Man
Have a long hot (i.e. bath) while drinking an old school authentic “toxic heat” Liang Cha then slowly consume a liter of room temperature water. Don’t let the bath water get cool, don’t stay in for longer than 40 minutes. Done. No more pain. Problem is that the next time you drink alcohol the inflammation will start all over again. How ’bout that.

As for who’s knockin’ on what door when they pass, I’d guess that kind people end up somewhere sweet and nasty people don’t. Nothing to do with religion because as we all know there are just as many awful people as there are lovely people praising all sorts of Gods. Don voree abowt id.

#43 milan on 09.07.11 at 2:21 am

Please, Garth… Who in the world is so horny for precious metals? Just the other day you mentioned how 0.8% of Canadians own it.

You. — Garth

#44 Betty Danin on 09.07.11 at 2:51 am

The reason why gic interest rates and government bond yields must be kept down is because preferred shares and other dividend paying stocks,corporate bonds must look more attractive. If gic’s and government bonds paid the same interest as preferred stocks,corporate bonds very little investors would take more risk and the banks,corporate bond issurers would be out of luck.

Care for some more foil? — Garth

#45 B on 09.07.11 at 4:03 am

“five flaws”

Yes sir, I’m guilty of having some of those. In today’s day and age, who do you trust? (yes, I’ll be talking to you Garth when I’m back in Canada about investing).

Right now, I’m risk adverse, but I can sleep at night, live a little longer (less market stress) and there is more to life than making investment money anyways.

#46 Aussie Roy on 09.07.11 at 4:25 am

We misinterpret risk. – Amen…

To some people risk means missing opportunities. To most people it means the potential for loss. So risk aversion takes on Biblical status, even as millions walk directly into it. In our society, for example, buying preferred shares in the bank is considered riskier than giving the same bank your money, even when you’re penalized for doing so. Buying a house with 95% leverage is considered safe.

Most people seem to be fooled into thinking there is no risk, so they do nothing to manage it. The wishful, delusional thinking surrounds us when it comes to house prices, we blog readers are exposed to it everyday, hi BPOE. It is amazing to think in the last few years we have witnessed many house price bubbles implode around the globe but in both our countries we think for some reason, “it’s different here”.

Of course the similarities between the known bubbled markets and our own are completely ignored, clearly these should not be ignored when it comes to a rational, complete risk assessment.

What are some of things all bubble markets have in common?. Large inflows of capital (debt), well above average level of market activity, delusional by participants that there is no risk, fear of missing out on a home, prices are high multiples of annual salary and rental yields are compressed well below their long term average..etc.

All ignored because, its different here.

Not being able to identify risk or simply ignoring it, is not risk management, more like wishful thinking.

Aussie Update

Grim news still dogs real estate

http://smh.domain.com.au/real-estate-news/grim-news-still-dogs-real-estate-20110906-1jv0e.html

#47 plain_janey on 09.07.11 at 4:48 am

“But the greatest risk, bar none, is running out of it. Too many long-lived women will learn this.”

Growing up, my parents were always trying to instil in me that as a woman, it’s important to understand finances and manage them wisely, because they had seen friends widowed who, having left financial affairs to their husbands most of their adult lives, were in total ignorance as to how to take care of themselves once alone. Sad and a bit scary, this is a good lesson to learn no matter what your age or marital status.

#48 Dorothy on 09.07.11 at 5:27 am

Garth says over and over that although it is human nature to sell a falling asset, that it is not the wisest thing to do. Yet he keeps advocating people sell their homes and rent instead, even though in most markets today homes are a falling asset.
I can understand Garth’s logic if you live in Toronto or Vancouver, because both those markets are in bubble territory and are set to fall. So it makes sense to cash out now while the market is still high.
But if selling your home involves potentially losing thousands, wouldn’t it be better to sit tight and wait for the market to turn? Even if it takes 10 to 15 years, if you don’t have to sell, wouldn’t it be wiser to wait it out?
I don’t understand Garth’s logic advising people to sell into a down market if they don’t HAVE to. What makes sense if you live in Toronto, does not necessarily make sense if you live elsewhere.

Rubbish. I have never advocated a one-size-fits-all strategy. Every market is different and in recent days I’ve advocated buying in some. — Garth

#49 Markey on 09.07.11 at 6:45 am

Lots of pumping on Moneyville yesterday: http://www.moneyville.ca/article/1049562–which-gta-homes-chinese-investors-are-buying and http://www.moneyville.ca/article/1047222–the-36-000-back-to-school-condo-question. Notice that in the second article they don’t acknowledge other living expenses such as condo fees, property taxes, utilities and food.

#50 Moneta on 09.07.11 at 7:15 am

Sounds nuts doesn’t it, but it worked in the 1930s and it will work today too.
———
From what I have read, the US never got out of their funk until WW2.

For the US to get back on its feet, we need the dust to settle on the real estate market. They need to fix the title problem and inventory needs to clear.

We’ll also need some scapegoats and changes in the banking system. But it does seem to be coming… It’s starting to look like some crooks will be squeezed.

The real big problem is wealth distribution. There are more than enough people in the US to fill those homes. The ones with the wealth just refuse to share.

Remember… the US became the superpower it is by making loans to Europe to help them rebuild after the war. Austerity would not have done the same.

#51 Ronaldo on 09.07.11 at 7:36 am

#40 – Waterloo Resident – re: building bridges. Works for the Chinese. Check this out. Work started on this bridge in 2008 and cost 2.3 billion. Heck we spent 1 billion for security for the G20 summit in Toronto not that long ago. Makes one wonder doesn’t it. Could have built a lot of bridges for that. Anyway,
here is the link.

http://www.smartplanet.com/blog/thinking-tech/video-china-unveils-worlds-longest-sea-bridge-but-is-it/7629

Yep, 1 billion. Hard to believe isn’t it?

http://www.theglobeandmail.com/news/world/g8-g20/news/g8g20-security-bill-to-approach-1-billion/article1580865/

#52 TurnerNation on 09.07.11 at 7:38 am

Somebody could create a used Porsche Price Deflation Index! (Cager edition.)

A good source is from local clubs with their enthusiast-maintained cars. Here’s one:

http://www.pcaucr.org/classifieds?page=show_ad&adid=10085&catid=1

Don’t want to sell the car I had been saving up for last 20 years :( But also don’t like debt…. Business has been slow and many unexpected house repairs this year.

Price revision from $54,900 – Price: $ 47900

#53 penpal on 09.07.11 at 7:56 am

@ # 30 Utopia

These tactics are sometimes used to shift the poor to a Federal government responsibility from a State funded one, depending on the circumstance.

Regardless of the technical rationale, it is a despicable treatment of the poor and vulnerable, especially when your country is spending circa 680 BILLION on a military that has presence in over 100 countries (48% of all monies spent worldwide on arms/defense/ military).

Never mind that the US is currently insolvent, it is more importantly morally bankrupt.

#54 Ronaldo on 09.07.11 at 8:12 am

#30 – Utopia – “Out here in Saskatchewan, by the way, I am told that nobody new can qualify for any social benefit until they have lived here for three month minimum.

This is the kind of restriction that limits the needy from residing in the Province in the first place and pretty much eliminates everyone who does not already have friends or family here to tide them over. The idea is that if you are a burden in your home province then please just stay there.”

Remember when Ralph Klein (Alberta premier) gave them bus tickets and told them to go home. Lots of them ended up in the sunny Okanagan living under bridges.

#55 detalumis on 09.07.11 at 8:14 am

#47 the days of the little woman in the house are gone, long gone. These women who left all the financial affairs to their husbands were not left poor, they were just coddled and remain childlike their entire liftime. This myth about senior poverty is just that – a myth.

Seniors have the lowest poverty rate of any age group in the country. The poorest senior with zero savings has about the same net income as a person making minimum wage and yet we don’t shed any tears for the army of service workers who live on that. In my community the only subsidized housing we do build is for seniors, we tell younger people say 45 and marginally employed to go live somewhere else, and the poor-poor-pitiful-me seniors get to live on the waterfront in between million dollars condos. So no I am not particularly worried about running out of money. I can easily live on the 1,000 a month I would have left after getting my cheap unit on the lake with cheap transit at the front door and staying alive for many long years via my cheap Ontario drugs – all stuff not available to the minimum wage worker.

#56 penpal on 09.07.11 at 8:17 am

@ # 35 Junius

Using your yardstick, I guess you think that Bernanke is a genius, having had tenure at as a Phd at Princeton I believe. You must positievly drool over Greenspan then! LOL

Your reverence for the opinions and ideas of highly educated academics colours your objectivity.

According to your post at #4, your father was a RE developer.

My guess is he was a pretty fine man with some real smarts borne of experience in his field if he was successful and, I’m guessing here, but he was probably not a Phd.

Look Junius, the reality is I’ve met a lot of ‘highly educated smart’ people who aren’t rich and a lot of rich people who aren’t ‘schooled smart’.

Ask Smoking Man – that was the whole point about the story of his son – street smarts (experience and gut instinct and hard work) got his son ahead and trumped academics. It worked for me as well in my life.

While I realize not everyone can make it without academic credentials, many do and do so well.

#57 penpal on 09.07.11 at 8:23 am

@ # 48 Dorothy

I believe Garth is also referring to assets dropping in price that have SOUND FUNDAMENTALS!

Residential housing in most of this country trades at multiples of income that are way above historical norms and is FUNDAMENTALLY OVERVALUED, save and except areas like Hamilton and Windsor which indeed Garth has noted.

Nice try.

#58 Mackie on 09.07.11 at 8:33 am

Smoking Man: Looking forward to your comments on teachers lol

#59 Helicopter Ben on 09.07.11 at 8:46 am

Squidly….wanting gold and owning it are two different things, and i dont even believe most people want it, nobody owns it on a large scale. cash and bonds is good to be in if you think deflation is coming, but if you think its going to stay the same or more inflation you are getting creamed. there’s charts every where showing you the price of oil or gold or stocks but these are charted against the U.S. dollar and if you were to see a chart of fiat money that wasnt charted at the baseline you wouldnt be holding your wealth in cash. seems to depreciate as fast as a vehicle these days thanks to central banks around the world

#60 george c on 09.07.11 at 8:53 am

My remax friend just told me TREB numbers for august have been delayed. Prices month to month have dropped again in gta. Year to year up and they will play with those numbers but month to month have shown a solid decrease. They are very afraid that the fall market will be very unimpressive.

#61 Hammer1 on 09.07.11 at 9:05 am

#40 Waterloo Resident on 09.07.11 at 1:29 am
so this time simply give the money DIRECTLY to the people, but in the form of ‘MAKE-WORK’ jobs……. Its crazy sounding but it worked then so it will work now too.
==================================
its totally crazy..government will never produce long lasting work. It has a very short shelf life….similar to that so popular federal program, “Cash for clunkers”. We all know how that ended.
It works as well as praying with a woman and praying for a woman, you know what I mean…

#62 Ronaldo on 09.07.11 at 9:07 am

#15 The Investors Friend – “MARCH 9, 2009 WAS A BOTTOM…

But very attractive stock market bottoms, unlike the female variety, may be hard to spot until after the fact.”

How true. March 9/09 was the bottom for the market as a whole, however, most of the big banks bottomed on Feb. 24/09. For example, RBC went from a high of $51.54 on Feb. 12/08 and hit bottom on Feb. 24/09 at $25.52.

By March 9/09 it had gained 11.5% and by April 9/09 (a month later) 55% to 39.58 and back to its high of Feb. 12/08 by July 31/09. That is how quickly things can change.

Yesterday RBC closed at 48.22. Could this be the low for RBC? It’s back to where it was on July 15/09. I don’t know, but I think I’m going to start buying some now, a bit at a time. It’s down from its year high of $60.49 and there is a potential 25% gain to get back to that point. Seems like a reasonable bet.

Who knows, maybe it will go back to $25.52 but I have some doubts about that. Anyway, lots of good bargains out there right now. Fear is raising its ugly head once again.

#63 jess on 09.07.11 at 9:11 am

Institutional supported thinkers ….”for the greater good”

Liberal arts –
Susan Reverby 2009 book, “Examining Tuskegee,” show that Mr. Cutler et al. used taxpayer dollars to pay syphilis-infected prostitutes to sleep with prisoners. When the infection rate proved insufficient, he had syphilis poured onto scrapes made on men’s penises, arms and faces, or sometimes had it injected directly by spinal puncture…”
http://www.post-gazette.com/pg/11163/1152920-109.stm

#64 Moneta on 09.07.11 at 9:13 am

Seniors have the lowest poverty rate of any age group in the country. The poorest senior with zero savings has about the same net income as a person making minimum wage and yet we don’t shed any tears for the army of service workers who live on that
—–
Throughout history, the elderly have always been poor if not ultra welathy or supported by family.

This will be a 2-3 decade blip in history and happened because with boomers we got 5 workers per retiree.

I doubt it will be so when that ratio drops to 3 or 2/1.

#65 jess on 09.07.11 at 9:17 am

Research Papers in Economics (RePEc)
Using its IDEAS database, RePEc provides links to over 700,000 full text articles. Most contributions are freely downloadable, but copyright remains with the author or copyright holder. It is among the largest internet repositories of academic material in the world.[

http://ideas.repec.org/top/top.person.all.html
Top 10% Authors, as of August 2011
http://ideas.repec.org/top/top.person.all.html

#66 Moneta on 09.07.11 at 9:17 am

Smoking Man: Looking forward to your comments on teachers lol
———-
Imagine if everyone stopped vaccinating their kids because everyone does.

#67 Moneta on 09.07.11 at 9:22 am

56penpal on 09.07.11 at 8:17 am
———
Everyone seems convinced that QE did not work.

In my mind, it worked quite well. Something tells me that GDP could be lower than 10 trillion if QE had not occured.

I don’t know if Bernanke is good or not. All I know is that he can’t tell us the truth so we can only real between the lines.

And just like it can take decades to understand why your own parents did some things, it will take the same amount of time to know what has been happening behind closed doors.

#68 Canned Goods and Buckshot on 09.07.11 at 9:23 am

Junius

Thanks for the link in the previous post’s comments regarding the GOP. I think we are inclined in Canada to dismiss figures like Bachman and Perry, but the US elected GW twice!

I attended a weekend BBQ where most guests were very religious conservatives. We have US style crazies in Canada too, and they inhabit the domain of our Conservative party. It made me realize that our conservative “brand” shares some of the same trajectory as the Republican party in the US.

#69 Canned Goods and Buckshot on 09.07.11 at 9:24 am

Garth,

What happened to cleaning up the site wrt tangential posts and ad hominem attacks?

What’s your beef? — Garth

#70 David B on 09.07.11 at 9:25 am

So whats your point?

Stop and think for a moment … just a few years ago the world’s smartest people who know everything about investments hired the best and brightest in the world and made the dumbest moves in investment history and almost overnight destroyed the world’s economy. This they coupled to the winds of war in not one unwinable front but two! ….. What were they thinking?

Now to say we who have gotten up each and every morning and have gone to work hopping our pay checks arrive on time raising children, dealing with family problems some how or another found time to live learn and educate ourselves in big time finance is a joke!

Hello? if the smartest people and brightest people on the face of the planet working every day and breathing finance 24/7 on Wall Street can not look after the stock markets and big time bankers the who the can? We now have more money on the planet than ever almost 7 Trillion people and bunch of politicians world wide who want rob from the poor and give to the multi rich who by the way have seen an average of 9.5% per year in their wealth as the middle class sinks into depression. To say we were not investment savory and did not protect our selves seems just a little unfair Mr. Turner. How could millions have protected themselves from those pink slips while still raising a family?

Perhaps the ode analogy of a penny saved is a penny saved is soundest form or personal financial security for the hard working middle class. Couple this with living within your means and enjoy life is far better than thinking you are smart enough to out fox the money foxes.

BTW ….. now they are talking about NGDP? OMG would they dare?

My point is to love with your heart and invest with your brain. They don’t always sync. — Garth

#71 shanks on 09.07.11 at 9:34 am

Hoof Hearted + Vlad …
Real ID Act and RFID chips is a serious business, look how quietly they have been introduced in our lives. Bank cards, credit cards, here in Montreal they are in our bus passes and the quebec government has expressed interest in having them in our drivers licenses.

Yes they are convenient, but you can read them from a distance with the appropriately powered reader. For instance, a cop would be able to read the RFID chip in your drivers licenses from 20 feet. know who you are, where you live, what you do, what car is registered in your name, God knows what else.

a very slippery slope indeed…

#72 Live Under Your Means on 09.07.11 at 9:35 am

#18 TaxHaven on 09.06.11 at 11:15 pm
“We want things that rise.”
………………

LOL

#73 Aussie Roy on 09.07.11 at 9:38 am

Aussie Update

Construction activity has fallen to its lowest level in almost two and a half years, largely due to a lack of new work and tender opportunities, a report shows.

The Australian Industry Group-Housing Industry Association’s performance of construction index (PCI) fell four index point to 32.1 points in August.

It was the construction industry’s 15th consecutive monthly fall. Readings below 50 indicate a contraction in activity.

http://www.theage.com.au/business/construction-activity-falls-sharply-20110907-1jwle.html#ixzz1XH091aBh

Report: House prices to slide further in 2012

As a result, activity in the housing market has cooled but signs of life remain. Home loans increased by a lower-than-expected 1 per cent in July, according to the Australian Bureau of Statistics. But the weaker pace of growth in the sector has the banks tipping flat or lower house prices for some time come.

Even the banks know its debt demand / growth which drives prices.

http://smh.domain.com.au/real-estate-news/report-house-prices-to-slide-further-in-2012-20110907-1jwsz.html?comments=13

#74 disciple on 09.07.11 at 9:53 am

#58 Mackie…as indeed also am I looking forward to Smoking Man’s comments on the teaching profession, probably has never ventured to try it himself, and yet will undoubtedly mock another institution of civilized progress tarnished incessantly by the likes of his kind, thereby failing to see the hypocrisy of his own words…

Should be interesting…disciple is watching and waiting.

#75 househornyhousewife on 09.07.11 at 9:56 am

Garth,

What about stupidity and greed as flaws ?

Yesterday I watched a show called “Property Brothers” on TV which features people paying supposed peanuts for a fixer upper which one brother (a real estate agent) closes the deal on and the other brother (a contractor) turns into the couple’s dream house.

This particular episode featured a couple with FOUR children. The husband is a school teacher and his wife is a stay at home mom. They supposedly had a budget of $700,000.00 for a new home(!). Neither could have been more than 35 years old so I doubt that their first house was fully paid for but heck, let’s say they had enough equity built up in it for the downpayment.

They ended up buying a fixer upper (her grandmother’s place) for $650,000.00 and funnelled in another $50,000.00 to fix up the kitchen, living and dining room (the basement and second floor remained as outdated and horrible at the end of the program as they had been at the start of the episode).

Throughout the program, the woman kept insisting that granite cutters come in and “fix” things that were not to her taste and the kitchen was fitted with the usual granite countertops and stainless steel appliances (at four times the price that it took me to fix up my own kitchen .. what the heck is going to happen when this currently popular trend becomes outdated ?).

Am I the only one that thinks that a school teacher and stay at home mom with four children cannot afford a $700,000.00 home ? What is going on here ? Perhaps they are paying teachers more than I thought but the guy has to rake in at least $60,000.00 per year of pre tax income just to make the mortgage payments every month. And that’s before property tax, house maintenance, utilities, food and clothing (for SIX people). Despite this obvious conundrum, the wife kept insisting on nothing but the best (like a supporting beam for a removed load bearing wall that was fit to hold up an apartment building much less a two story house, instead of what was required .. for more money of course).

What about money to put food on the table ? and clothes on their backs ? And a retirement nest egg is as far from these people’s minds as bankruptcy. These two were well educated people who knew how to use a calculator and through stupidity and greed they have funneled all of their future income into a house. With all due respect, the guy did keep mentioning how tight things would be if they chose the option to buy the grandmother’s house but HOLY SMOKES “tight” doesn’t even begin to cover it.

So I ask again, aren’t simple stupidity and greed also valid flaws in this ridiculous economy ? I just hope that my income taxes won’t be used in the future to bail these people and others like them out of the hole they are getting themselves into.

HHHW

#76 disciple on 09.07.11 at 10:00 am

The only thing predictable about life is the dark side. Purveyors of evil have very few options because they are trapped by their own minds. Distributors of truth have no such restrictions. Ye shall know the truth and it shall set you free…that’s also a veiled message for you, Young Old Fart, hiding your light in fear that you will be outcast by your evil associates. Grow a spine.

#77 Worried realtors on 09.07.11 at 10:04 am

#60

My remax friend just told me TREB numbers for august have been delayed. Prices month to month have dropped again in gta. Year to year up and they will play with those numbers but month to month have shown a solid decrease. They are very afraid that the fall market will be very unimpressive.
——————————————————————–

They know the housing ponzi is close to falling off a cliff. They know its a house of cards which is why realtors would NEVER buy today. They tell YOU its a good time to buy but if that was true why don’t they buy it and make money? Those who don’t have friends for realtors would never know how bad the RE market is right now and how worried they are of the bubble popping.

#78 BrianT on 09.07.11 at 10:13 am

#35Junius-You think Krugman’s resume is impressive? Larry Summers ran Harvard and Robert Rubin headed up Goldman and Citigroup. Bernie Madoff was the head of the NASDAQ. Look at the destruction those guys have left in their wake, the billions of dollars vaporized. If you cannot comprehend why Krugman is considered to be idiotic, then you have probably never read Krugman.

#79 Bond junkie on 09.07.11 at 10:15 am

Worth noting that TD spun off a bunch of CMHC insured HELOCs in the U.S mkt today in the form of covered bonds. Significant demand given the collateral. Details still forth coming but interesting that TD would sell off this exposure rather than keep it on balance sheet despite CMHC wrap.

#80 BrianT on 09.07.11 at 10:16 am

#77Worried-The top end is barely crawling along, which is why the average price is down. Right now, a totally different market from May 2011 re top end properties.

#81 timo on 09.07.11 at 10:17 am

http://www.huffingtonpost.com/janet-tavakoli/fraud-as-a-business-model_b_950806.html

“Until the Securities and Exchange Commission sued Goldman Sachs for fraud in April of 2010, it was easy to forget that we have a regulatory agency designed to protect the public from the pillaging of corporate America. Six months earlier, the SEC has arranged a settlement with JPMorgan that showed how rigged the system is. The banking giant agreed to pay a $25 million penalty and cancel $647 million in fees owed by Alabama’s Jefferson County as the result of a complicated derivatives deal that blew up in the county’s face. As part of the settlement, JPMorgan neither admitted nor denied wrongdoing–despite overwhelming evidence that it had engaged in plenty of wrongdoing. ”

http://www.bloomberg.com/news/2011-09-06/obama-said-to-plan-more-than-300-billion-for-jobs-to-boost-u-s-economy.html

“President Barack Obama plans to propose sparking job growth by injecting more than $300 billion into the economy next year, mostly through tax cuts, infrastructure spending and direct aid to state and local governments. ”

Oil and commodities to the moon Alice until of course people realize that it is not going to work. Europe will really slide with higher food and gas prices, depreciating r/e and stagnant wages.

Interesting to watch but it will just force more money chasing anything with a return.

#82 Mona on 09.07.11 at 10:22 am

I agree with this blog post, another mistake we end up making is when ivesting in a property. We fail to realise that it is essential to ensure the property as well whi9h happened to my friend. I have been through a similar situation when i was renting out, i didnt have contents insurance for tenants which is vital. I ended up losing out on a lot of money.

#83 disciple on 09.07.11 at 10:24 am

#75 HHHW…FYI – those shows use actors, amateurs at times, but very little of what is presented is real life or true. The news isn’t even objective, what makes you think a TV episode of any stripe would be. Even TVO’s Steve Paikin would not connect a dot if his life depended on it.

I wish I could get this message lodged between our collective ears: all media in Canada is controlled by only FOUR people. Got it? Get it? Good.

#84 BrianT on 09.07.11 at 10:25 am

#70David-You have been sadly misinformed by the MSM on this subject. These “best and brightest” are success conscious, which means looking out for themselves. In the financial sector, that often means taking wild risks with other people’s money. When the inevitable SHTF occurs, ignorance is always the first defence even though the club members continue to be very well paid indeed.

#85 Dontcallmeshirley on 09.07.11 at 10:29 am

Some advice for anyone holding individual equities: look into selling covered call options against your holdings.

Doing so could produce as much as an extra 2% yield in your pockets.

And ignore anyone telling you it’s too complicated.

Garth is right about your making money working for you. Covered calls makes it work even harder.

#86 Live Under Your Means on 09.07.11 at 10:33 am

#47 plain_janey on 09.07.11 at 4:48 am
“But the greatest risk, bar none, is running out of it. Too many long-lived women will learn this.”

Growing up, my parents were always trying to instil in me that as a woman, it’s important to understand finances and manage them wisely, because they had seen friends widowed who, having left financial affairs to their husbands most of their adult lives, were in total ignorance as to how to take care of themselves once alone. Sad and a bit scary, this is a good lesson to learn no matter what your age or marital status.
……………………….

Your parents taught you well. So true for mostly stay at home Mom’s in the 40’s & 50’s. My Mom and most of my friend’s Mothers who later worked outside of the home (I’m 64) managed the finances in their households.

In my 20’s & early 30’s I overspent. I consolidated my debt – maybe $1,500. and have never paid interest on anything since then. If I couldn’t pay off the full visa bill when it was due, I didn’t buy. Thankfully, my DH is of the same mind. Just wish we had better investment advice years ago. My DH likes to have more cash hanging around than I’d prefer. But, one must make compromises.

#87 disciple on 09.07.11 at 10:36 am

#77 Worried realtors…when I sold my last house earlier this year in the Spring, my realtor admitted that she had also just sold her house and started renting a “cozier” place. She said that she noticed more people were doing this…she’s originally from out East and not prone to lying for a living, that’s why I stuck with her for so many transactions. I feel guilty because I contributed to the bubble by flipping houses within the last decade, not realizing the damage I was doing. I hope one day the universe will forgive me. Perhaps that’s why I am now houseless…better now than later…

#88 Junius on 09.07.11 at 10:39 am

#56 penpal,

You said, “Using your yardstick, I guess you think that Bernanke is a genius, having had tenure at as a Phd at Princeton I believe. You must positievly drool over Greenspan then! LOL”

Classic approach of the uniformed. Create a straw man argument and attribute things to the other person that they don’t say or think. The sign of a mindless polemic.

My comment on Krugman was that the characterization of his credentials as “childish” was ridiculous. I never said he was genius. I am well aware of the criticisms of him by people like Mish Shedlock but they are the range of arguments and not dismissals like our friend BrianT.

As for your “real world” argument, I operate a successful business in the “Real World” in a leading edge industry. I understand the realities of the “Real World”a whole lot better than you may think.

#89 Junius on 09.07.11 at 10:41 am

#56 penpal,

BTW – I think Greenspan was a disaster. I posted this last week in a discussion on the followers of Ayn Rand and the other libertarians who pushed for de-regulation of the financial services market. But keep guessing.

#90 Echo on 09.07.11 at 10:45 am

#74 Disciple

Geez you’re full of yourself. lol
If you had a clue darlin’ you wouldn’t even consider the idea that Smoking Man would write a diatribe whereby he disparaged all teachers. He’s probably just going to talk about the truth of the state of the system over the years and the kinds of teachers that manage to become a part of that system and shouldn’t. (plenty) There will also likely be a mention of what is taught in public schools and how devoid of some fundamentals it is and to which purpose that serves others. The best part? He’s been teaching people here, out of the goodness of his heart, for ages. ; ) (and has probably done so most of his life).

He’s smarter, kinder, and more thoughtful/informed than you, obviously. You’re entitled to your opinion but so is he. BAZINGA!

Hush now, and get some grace. Look in the mirror at your glorious reflection and that tickety boo holy robe. I’m sure it’s there somewhere.

#91 Junius on 09.07.11 at 10:48 am

#68 Canned Goods and Buckshot,

I am glad you read the post. Scary stuff. Coming from a GOP insider of 30 years it really does pack a punch.

I thought his discussion of how the GOP uses better marketing positions like “Obamacare” and “Death tax” is so much more effective than the Democrats. Also the discussion of how the lower wage, white population as “low information voters” and how they are manipulated is fascinating.

Shows up a lot on this Blog as well. Note the part in the link about Paul Krugman…..but I digress. Here it is again:

http://www.truth-out.org/goodbye-all-reflections-gop-operative-who-left-cult/1314907779

#92 disciple on 09.07.11 at 10:54 am

Media wants to ferret out your unconscious anxieties so it can exacerbate them, so it can make you more emotionally unwell because anxious neurotic people make better consumers -August Bullock

I give you the full monty, while Smoking Man gives you tidbits, preprocessed for your amusing consumption, like baby food. It’s time to grow up, people.

#93 Ron on 09.07.11 at 11:00 am

And yet we rely on the professionals in government to inform us on how things are going so we can make good investment decisions.

How does the ECB raise their interest rate this year, only to see the economy tank again a few months later?

How do our leaders tell us there is growth and interest rates hikes for 2011, only to declare that we may see a rate cut next year?

If these people don’t have a clue whats happening one quarter to the next, how am I supposed to invest?

#94 disciple on 09.07.11 at 11:09 am

August 2011 TREB numbers:

416 905 Total
Detached 648491 531458 561379

#95 Steven Rowlandson on 09.07.11 at 11:18 am

The last estimate of the percentage of the population in the states that has precious metals is 0.8 percent.
That means that not one in a hundred has much if any and gold and silver . Therefore precious metals relative to the world economy and financial assets are still hyperdeflated and not in a bubble. What is in a bubble is the enmity and contempt financial professionals have for gold and silver and those who value such things.
Real estate, stocks and bonds are still in a bubble and Bre-X was not gold it was a stock with a lot of hype that pushed the stock price from 40 cents to 280 dollars before a stock split and the revelation of the truth that burst that particular stock bubble. Just another paper scam. Great if you bought low and sold near the top but devastating to those that did not and stayed in until it was too late. To have a bubble of any consequence you need overwhelming public participation and confidence that there will be no collapse in the price and that the price will continue to advance and that demand will be permanent. Also the public and the media will be talking about it all the time and pessimists will be treated like retards and will be a minority. Investment bubbles are a mass movement of the people investing their money in something.
0.8% of the public owning or investing in gold and silver is not a mass movement. People are not generally bragging about gold and silver investments and they are not lined up around the block hoping to buy or sell gold or silver. There is no bubble.
For the last 21 years its been the smart money getting in on the ground floor trying to keep the streets clear of an unwanted and relatively rare asset. That is the buy low side of the investment equation.

#96 disciple on 09.07.11 at 11:23 am

Ajax, Whitby, Oshawa, Caledon, King, Stouffville, Burlington all showing y/y declines in house prices.

I honestly used to think that house prices always go up.

#97 Smoking Man on 09.07.11 at 11:24 am

Any one catch the GTA Real Estate Numbers?

Why I Hate Teachers

Names have been changed to protect the guilty…

In grade 1. I had an amazing bat man hot wheel car, you moved the wheels and a fake flame came out the back I loved it.. That’s when I first meet my nemeses name Alan Duchbag, He took it off me and never gave it back.

Fast forward to Grade 8. Two days after laying a beating on Duchbag( I was finaly taller than him) we where in Class and Mr A. Hole asked who took his pen, and to bring it forward now. He was staring right at me. It wasn’t me. He walks over to my desk opened the little drawer and low and behold his pen is there, Duchbag laughing behind me as Mr. A Hole sends me flying off my chair with a solid back hand to the head. Down to the office I go. They call my dad, he comes in listens to there side of the story, then with one kick to the rear sends me flying across the room, says that’s cause I had to come here, turns to Mr. A Hole and says touch my son again and you get a few of those to the face. Up to that point my marks where amazing. Only time pops ever hit me.

I don’t know who put the fix in, Duchbag’s mother who was a school board trustee of Mr A. Hole who discovered the day after he hit me, no valves on any off his flat tires and a wee bit of sugar in his gas tank, either way I failed grade 8,

I was mobbed by all my teachers they stopped liking me. Did not know the meaning of the mobbing word but knew it was a happening. They sent me to a vocational high school where I basically got 100% in all my classes. At which point went to a regular collegiate for grade 10. The stigma and the poison from the events of grade 8 followed me every where in school, I was always treated like an outsider by the teachers. although I was always popular with my peers.

I lost all respect for them, saw through them realized they where just useless eaters who could not make it the real world where the strong and smart prosper. They are followers Not leaders.

Packed it in grade 12 Could have went to any university, I became a rivet bucker, never to step one foot into a school again till my kids went, fun nest time of my life verbally destroying then and knocking them off their high horse when ever I got called to the office.

And as for Duchbag gave him one more good beating when we where in our early 20’s, last I ever saw of him.

I loved that Bat Man Car

#98 Utopia on 09.07.11 at 11:28 am

#17 Toon Town Boomer

“I can’t believe what people are buying and paying for homes here in Saskatoon. I feel like I’m from another planet ( I just don’t get it). All I can say is, “beam me up Scotty these Toon Town people are nuts.”
——————————-

It is crazy isn’t it. This may in fact be the most delusional of all cities in Canada. At least in Vancouver there is some real fear breaking out. People there seem resigned to one day watching their equity evaporate as the bubble bursts.

Out here though you just cannot get anyone to listen to reason. They are far too confident in the infallibility of our local market. It is like talking to a bunch of brainwashed zombies when you suggest this is not sustainable, that price to income numbers are badly skewed.

Most days I don’t bother anymore. They will have to learn the hard way. They seem to always forget that Potash was selling for a mere 130 dollars a ton just five short years ago before rocketing past 900. Today it sells for 460 I think.

Boom-bust. Boom-bust. Boom-bust

“But wait” they exclaim. “The world is hungry. They need our Potash. Prices can only go up and up”!! To which I can only respond

“When did the world develop such an oversize appetite that could possibly explain a six-fold price increase in so few years?”….Is the worlds population really growing that fast? Are Asians suddenly just clouds of locusts in a feeding frenzy that demands such massive price increases and inputs?” (Lord, some people are such daft fools out here)

Potash was in a bubble. Just like house prices. Chart says so.

#99 Herb on 09.07.11 at 11:30 am

Junius,

that Truth-out link is terrifying! Delete “Republican”, insert the Canadian equivalent, add a few years and presto, we’re there. And there is no switch to stop this trainwreck.

The key to Krugman’s idiocy is that he is not on the Right side of the ideological spectrum. What other proof could some blog dogs possibly handle?

#100 Peakoilist on 09.07.11 at 11:38 am

Wow what a feisty crowd today..lovin’ it.
I think everybody’s in a post Labour Day funk…All the kids are back to school and are depressed !
Don’t worry , it will get better.

#101 WI BOOMER on 09.07.11 at 11:40 am

Hey Buddy-

Great Post. I NEEDED this assurance especially after seeing my stock Portfolio down $60 Grand in the past couple of months.

Someday, we will get out of this mess!

At the cusp of retirement, really didn’t wish to see 60 grand melt out of a balanced portfolio, but you takes your chances and ya pays yer dues!!

At least the shack & wheels are paid off.

Great Post for a nervous boomer

#102 disciple on 09.07.11 at 11:42 am

#90 Echo…He’s smarter, kinder, and more thoughtful/informed than you, obviously. You’re entitled to your opinion but so is he. BAZINGA!
————————————-
Agreed. I’ve learned quite a deal from Smokes. No robe here, I’m not religious, did you miss that part? There’s no reason to stomp on others just to get ahead. Fatal flaw in his and your worldview. The educational system is this way because of this flawed dog-eat-dog logic.

Nothing will change, unless you change. Your fear prevents you, you are weak-minded. And too serious.

#103 Young Old fart on 09.07.11 at 11:55 am

Garth, I understand that you want to help people out and that’s cool. I also see many people posting asking for various ideas to invest and I understand when you don’t answer. Nothing in life is free.

Now personally, I handle all my own money and don’t let it out of my control (post-Madoff) but what about this:

Why don’t you start a subscription style newsletter with your thoughts on what are good investments. Just by making it cost something would clear out most of the flakes. Personally, I would pay and would find different perspectives and ideas interesting…..

I do not answer questions about investing in specific assets for a simple and obvious reason – I don’t know who’s asking, their circumstances or the appropriateness of this asset for them. It has nothing to do with payment and everything to do with ethics. — Garth

#104 Junius on 09.07.11 at 12:08 pm

#78 BrianT,

I think you are missing the point here. Like you I have issues with Summers, Reich and a host of others including Geithner but we can’t argue with their resumes. I didn’t say their resumes made them smarter. My point is that you can’t compare a Larry Summers or Paul Krugman who actually have credentials with someone like a Michele Bachmann who has no ideas of her own.

If your point is that a good resume doesn’t make you right then you can agree. What I dismiss is the attempt to make trivialize them as well as their resumes.

Summers was a terrible choice by Obama, clearly. However he has recently had some intelligent articles are appears to be revising some of his previously held positions.

#105 jess on 09.07.11 at 12:13 pm

Privatize health, education, pensions.

The market model Chicago school free-market economist Milton Friedman blueprint

Student Movement Rocks Chile
Students campaign against a privatized educational system and demand education as a right. 80% of the people back what the students are saying.
http://www.youtube.com/watch?v=0z9UdQxThKo&feature=player_embedded

neo liberalism

private schools subsidized by state vouchers on a per student basis;
public schools transferred to the municipal level, and also funded by individual vouchers;
private schools paid for entirely by the clients.
================================

#106 Snowboid on 09.07.11 at 12:21 pm

August OMREB stats posted – listing

SFH sales (132):

Av $ 470,138 down 8.5% from peak in July 2010
Med $ 431,935 off 6.8%

Condo sales (63):

Av $ 243,307 down 13.7 % from last year (but up from last month)
Med $ 237,000 down 4.44%

Recreational property took a hit as well, looking at YTD
comparisons (there was only one sale in August):

Overall YTD sale prices down 70% from last year!

#107 Beach Girl on 09.07.11 at 12:23 pm

#87 Disciple

I feel guilty because I contributed to the bubble by flipping houses within the last decade, not realizing the damage I was doing. I hope one day the universe will forgive me.
________

Very strange individual. Bipolar? He admits to increasing his net value, then criticizes others for going forth and prospering. Now is that the Bible or Star Wars?

I like that idea of giving someone a fish, or teaching him/her fishing. But not very profitable. Send me a lobster, thanks, with drawn butter.

#108 Dorothy on 09.07.11 at 12:27 pm

With each passing day bringing more and more bad economic news, I’m becoming ever more convinced that house prices are soon going to be the least of our worries.
Loss of income is a far greater concern than loss of equity in a house. And if its true that we’re heading into another recession (assuming we ever truly climbed out of the last one) then job loss in ever greater numbers will be an inevitable result.
Assuming people could afford to pay their mortgage as long as they remained employed, a loss of equity was really just a paper loss (unless you actually sold). But if people lose their jobs and hence their ability to pay not only their mortgage but also all of their other bills, then our economy really is in big trouble.
This whole financial mess was caused by people in the financial industry who took too many risks with other peoples money in order to benefit themselves through higher commissions. Yet we have still to see any of these people, or the company’s they work for, being held accountable in any sort of concrete way. The US government is currently suing one firm for misleading people, but that’s the only instance I know of, and it’s not enough. Why have there been no criminal charges or arrests? These people brought the entire world to it’s economic knees, and yet nothing has been done to try to hold them accountable in any way. Why is that?

#109 disciple on 09.07.11 at 12:28 pm

The first governor of the State of Florida was Andrew Jackson, the greatest president ever. Jacksonville is named after him. The history books do not contain the reasons why he went after the banks, dodged assassination twice, and dedicated his life to service of the people. But my history book does. Do you want to know why the people of Canada are impoverished and struggling for hope? Look no further than the bankers’ puppets who speak to you every day, deflecting your attention to one another rather than on the real enemy. But alas, most do not want to know…

#110 penpal on 09.07.11 at 12:30 pm

@ 67 Moneta

With all due respect to you and your post, I cannot conclude anything other than Bernanke is either a charlatan, an incompetent academic or a paid for shill for the banks. I lean towards the latter.

In either case, he is hardly the man for the job. In case you missed it, he bought his current principal residence in Maryland in November 2004, a few scant months before the US housing market topped.

Yeah, he’s an f’ing genius! NOT!

#111 penpal on 09.07.11 at 12:46 pm

@ 104 Junius

Are you aware of the losses incurred by Larry Summers in the Harvard Endowment Fund. If I recall it was almost a 40% capital loss over several years.

A monkey (with no degree whatsoever) would have eclipsed that result.

What is your point? That those with illustrious degrees know more, do better? What?

They are charlatans and very dangerous exactly because people like you are in awe of their (questionable) academic records (achievements?).

Not the lowliest cretin could screw up in the grand fashion that these people have. They are indefensible, period.

#112 Junius on 09.07.11 at 12:59 pm

#108 Dorothy,

You said, “With each passing day bringing more and more bad economic news, I’m becoming ever more convinced that house prices are soon going to be the least of our worries.”

Agree, 100%. I think the point made on this Blog time and time again is that housing is always a by-product of the primary economy. Eventually it always follows and does not lead the economy.

In time it will sink in for many that the cheap debt period put the cart before the horse by stimulating housing in an attempt to bolster the economy. The problem is that fundamentals never caught up to match the prices. Meanwhile the debt remains.

The pumpers can’t see the forest for the trees.

#113 george c on 09.07.11 at 1:03 pm

GTA Another month over month decrease.
That is a $28000 drop in 4 months. Now we head into Fall Season and we will see if Bubble has burst.
If there is another drop in September. Then thats it we have reached Real Estate Hell………..Cross your fingers.

#114 Sean on 09.07.11 at 1:05 pm

Question…

“They take a theoretical drubbing and turn it real, making paper into money.”

If that applies to stocks, how does it not apply to houses. If you plan to live there for 10+ years down the road, won’t prices with inflation 10 years out be at least similar to what they are now at the minimum.

Try telling that to somebody in California or Florida. — Garth

#115 Junius on 09.07.11 at 1:07 pm

#99 Herb,

Glad you read that link. Scary stuff.

You said, “The key to Krugman’s idiocy is that he is not on the Right side of the ideological spectrum. What other proof could some blog dogs possibly handle?”

True enough. It is interesting how Krugman is such a lightening rod for the Tea Party types.

There is a reason we have free speech and it is not because everyone’s ideas are as good as everyone else’s. It is because we are all so frequently wrong that we need to have open debate about all ideas.

What concerns me the most about the Tea Party types is their religious zeal and firm belief that they are so right about everything. There is no room for nuance or shades of grey. Very scary.

#116 stealth on 09.07.11 at 1:15 pm

Garth, now that interest rates remain low and likely to stay there until well into 2012, what is the impact to house prices?

You can either answer me here or comment in your blog tonight whatever brings you the most pleasure.

I have commented. Little additional impact. And where did that ‘well into 2012’ come from? — Garth

#117 Utopia on 09.07.11 at 1:26 pm

The National Transitional Council (NTC) is now saying they have discovered Gadaffi’s whereabout. They have him surrounded and he will not escape after all. Good news too.

The last thing Africa (or the West) needs is a rogue dictator with 130 tonnes of Gold and mountains of cash to be plotting revenge on his enemies from within the protective boundaries of another state.

The sooner they capture him the better for everyone. He is a an unpredictable threat and a known sponsor of terrorism who needs to be taken out.

http://english.aljazeera.net/news/africa/2011/09/201197104730208737.html

#118 jess on 09.07.11 at 1:29 pm

contrast and compare

11-0229 In the Matter of Northern Securities Inc., Victor Philip Alboini, Douglas Michael Chornoboy and Frederick Earl Vance – Set Date
http://www.iiroc.ca/English/NewsRoom/Pages/IIROCNotices.aspx

http://finance.sympatico.ca/home/rim_shareholder_urges_it_to_consider_sale/df5b9f4d

#119 Victor on 09.07.11 at 1:36 pm

#8 HouseBuster on 09.06.11 at 10:40 pm

When someone at work mentions to me that they want to buy a run down house in the north of GTA for $750K because they KNOW it’s going to $1 million in 2 years tells me the top is in.

=======

Similar experience on my end. At a recent dinner party, a teacher friend of mine with marginal disposal income blurted out that “anyone buying pre-construction houses or condos today in the GTA was GUARANTEED to make a profit” from that purchase.

I kept quiet and nodded. Scary times.

#120 househornyhousewife on 09.07.11 at 1:44 pm

#83 Disciple

You’re absolutely right .. that episode of a school teacher and his stay at home wife with 4 kids buying a home they couldn’t possibly afford was definitely a purely fictitious unicorn that couldn’t possibly exist in our reality. Uh-huh, yup ! No one like that could possibly exist either here in Canada or in the U.S.

Just because the media is controlled by certain people, it doesn’t mean that it has nothing to tell us. It simply means that the real message is not what it appears to be.

The fact that a program can portray such an occurrence (ie. a family of 6 with a modest income becoming indebted forever for a house they cannot possibly afford) as a happy and even fortuitous event rather than a disastrous one, sends out a clear message which I found to be disgusting. Whether it is real or not is quite irrelevant and you completely missed my point.

And by the way, ANY medium, be it written, filmed, taped, performed, painted, sculpted or interpreted in dance, has a source. Most intelligent people take this into consideration when they are receiving the message. All media is biased: journals, history books, newspapers, advertisements, food labelling and even the bible (since there are many versions written by different sources). And yes, occasionally some types of media are monopolized by certain people. That’s our society for you. Everyone’s got an agenda.

#121 timo on 09.07.11 at 1:53 pm

http://www.theglobeandmail.com/report-on-business/economy/growth/canada-falls-from-competitiveness-top-10/article2156400/

“Businesses continue to underperform in using our peoples’ skills and knowledge to generate new or improved products, processes and services. And Canadian businesses do not appear to be adapting adequately to globalization or building effective global value chains as quickly as their international competitors.”

Do you mean a high dollar combined with high wages somehow hurt exports? Please, say it isn’t so!

No worries, I am sure Ontario will weather the storm and push r/e prices up at rates greater than wages. We all know that real estate is regional and Canada is special after-all.

#122 Utopia on 09.07.11 at 2:08 pm

#114 Sean

“If that applies to stocks, how does it not apply to houses. If you plan to live there for 10+ years down the road, won’t prices with inflation 10 years out be at least similar to what they are now at the minimum?”
—————————–
That is exactly the point Sean. CPI and headline inflation numbers in the US had absolutely zero impact on housing prices there.

In other words, once the bubble started to deflate there was little that could be done to stop the cycle from working its way through to the end. This has been an extremely deflationary period in the US where assets are concerned and our turn is coming.

Do not count on consumer staples inflation to hold up house values. That is a very big mistake to make. As you have seen, even massive monetary intervention could not reverse the house price slide in America. It has been epic.

We are not different here.

#123 Smoking Man on 09.07.11 at 2:09 pm

#113 george c on 09.07.11 at 1:03 pm

Don’t get to excited just yet george aug – sept has always been the low month of the year in GTA real estate

Now if an Aug price is below and last year Aug price you got something. With Carney all but saying no rate hike, left room to drop the rate…..

Probability if a crash is low. But for my kids and there buddies Hope we get one………..

#124 Junius on 09.07.11 at 2:17 pm

#111 penpal,

You said, “Not the lowliest cretin could screw up in the grand fashion that these people have.”

That is really your point and that is what I disagree with. I never said having a degree or 3 like Summers or Krugman would make them richer or correct all the time. i have never said that I am in awe of credentials or academia. I am skeptical of everyone.

However the fact that they and other academics make mistakes does not mean that “cretins” (your word) and the uninformed are better at making decisions. This is the sort of thinking that really gets us into trouble.

The world is a complex place. Human beings are highly fallible beings. Mistakes are made all the time. This is partly why we have free speech and (allegedly) a free press. The other part is our hope that the best ideas will rise to the top.

However we need to attack the ideas and not the people. Paul Krugman is not an idiot and neither is Larry Summer. Allan Greenspan was not an idiot but he made some huge mistakes that we are now paying for. This is the way of things.

The notion that cretins in your Tea Party can do a better job is not just a bad idea but an ignorant idea as well. Didn’t the US already have 8 years under George W. Bush to prove that?

#125 888realtor on 09.07.11 at 2:24 pm

Our leaders, by all means, are trying to avoid deflationary scenario. Deflation would significantly drag the entire economy down. It means bankruptcies, falling consumer confidence, high rate of unemployment. Deflation will negatively impact practically all sides of political and economical life. It will sharply drop standard of living. Our governors are not prepared and don’t know how to deal with such situation, that’s why they are madly pumping money into the economy trying to deliver them straight to households. But it’s turned out that there are not so many practical channels through which they can bring liquidity to consumers. In fact there is only one that proved to be working – mortgage loans. They need that channel to be working smoothly and as long as it would be possible. That’s why they facilitate all those RE pumping shows in media.
What is left for us – only wait until those inflationary processes would be replaced be deflationary ones by itself. It will never happen by will of our governors. The prime rate will stay low, they will never presume to increase it and it is sad as it only postpones the outcome of the crisis, not solving anything. Too many people become “wealthy” riding on that high tide of liquidity – our elite would never bring them down – it would be too dangerous for the elite itself.

#126 GregW, Oakville on 09.07.11 at 2:28 pm

Hi Garth, I enjoyed the pic of “BLOND” licence plate. ;)
And thanks for your insightful words.

#127 anjing bau on 09.07.11 at 2:43 pm

lets take the caption below and place it in the context of someone buying Nortel, or maybe RIM, or maybe TRE?

Misinformed, worried people always make the same mistake. They see an asset lose value, and start to fret. If it loses more, they toss at night. A further decline, they panic and bail. They take a theoretical drubbing and turn it real, making paper into money.

The best defence against this type of price behaviour is to predetermine the amount of capital you are willing to lose on one trade. Be disciplined and take your small loss . Sound companies that are under selling pressure will eventually reach a support level. Once that is established you can enter another long trade and be able to manage the risk level more comfortably.

support levels can be horizontal lines in sideways markets or they can be gently sloping trend lines in trending markets.

PS if your portfolio keeps you awake at night your health will be the real loser.

#128 Peakoilist on 09.07.11 at 2:52 pm

#92 disciple on 09.07.11 at 10:54 am
Right on brother. If our species is going to live on, we have to grow up. I would totally grow up if everyone else would…so hurry up all of you !! Evolution will take care of that (or not), so many species have died off on this planet,since the beginning of time, it isn’t funny. Are we immune to that? Me thinks not..

#129 penpal on 09.07.11 at 2:53 pm

@ # 120 hhhw

I absolutely hate your moniker but absolutely love this post of yours. You nailed it.

In all things presented to you in life maintain perspective and ALWAYS CONSIDER THE SOURCE!

#130 jwkimba on 09.07.11 at 2:56 pm

#60 TREB results are out. Sales up, listings up, avg price way ,way up (from last year, no mention of last month).

Here we go , go, go, go on an adventure!

#131 penpal on 09.07.11 at 2:58 pm

@ # 119 Victor

Ask yourself a question – who is left to buy?
No one knows the day or the exact time of the turn in this RE market, but believe that it will come in the fullness of time and only be evident in hindsight. Your broke teacher’s desperate hope should cement that concept for you.

#132 tjmikey on 09.07.11 at 2:59 pm

#2 Junius

Great post….BUT….I’m not so sure about the end game for real estate in Canada.

More and more I’m starting to think that the Feds are realizing that RE is really all we have to base the economy on. The USA is going to see to it that we head back to our status as a supplier of feed stock with zero or next to zero mfg.

The Canuck buck at par or close to it will seal the deal….it won’t be much longer for what’s left of our exports to the USA.

All other exports are feed stock. We grow, dig for and cut down stuff.

What is left….I’ll tell you what’s left…..prime at zero, mortgages at close to zero, wind up the RE machine again, spread all of the risk out to the taxpayer via CMHC and let the banks lend at will.

It seems to be the only industry we have.

#133 anjing bau on 09.07.11 at 3:01 pm

With this caption are you saying you knew the bottom was in one year after the March lows? The reason I ask is I am trying to determine if you believe that time in the market is better than timing the market.

As on March 9th, 2009, when stock markets hit their bottom in the great financial crash. That day came the greatest gush of selling, as small retail investors bailed out of stocks and mutual funds which would climb 55% in the next year. That’s how we knew it was the bottom.

#134 Peakoilist on 09.07.11 at 3:08 pm

#102 disciple on 09.07.11 at 11:42 am
No robe here, I’m not religious, did you miss that part? ======================================
I missed it. I’m glad you’re not religulous…You’re definitely more cool now, in a new agey way. Always enjoy your posts except when you argue about peak oil.

#135 penpal on 09.07.11 at 3:09 pm

@ 115 Junius

Krugman and his ilk are Keynesians.

Keynesism has failed in the past, is failing currently and will ultimately fail.

The Tea Party has many shortcomings no doubt, but don’t let those idiocies detract from the facts regarding Keynesian economics.

There are no “shades” of FAILURE!
Failure is failure.

Btw, it is a disservice to Keynes and his contribution to modern economic thought to actually call the crap policies coming out of the US, the EU, etc. Keynesian. He was all for government spending to avert recessions, he did not advocate the government displacing the private sector in the economy.

#136 Mr A.Hole and Duchbag on 09.07.11 at 3:10 pm

Smoking Man.

Good to hear from you !
We sold our Bre-X and Nortel at the peak !

Not sure what to do re: all the gold we bought at $ 30 /ounce

Hope all is well.

PS Heard from Ms Dickhead lately ?

#137 Peakoilist on 09.07.11 at 3:23 pm

#97 Smoking Man on 09.07.11 at 11:24 am
I was waiting for my LOL moment for the day..well, it wasn’t knee slappingly funny, but funny in a weird way. Anyway, it sounds like Grade 2 to 7 was pretty good, so why so jaded ? I don’t even think it was the teachers really. It was just that bully that stole your HotWheel…maybe that’s why you’re a bully now.
….Hmmmmm

#138 Junius on 09.07.11 at 3:24 pm

#135 penpal,

And here you go again speaking in absolutes.

Minsky was a Keynesian but he went further then Keynes on the impact of debt and the internal contradictions of capitalism. He looks like he got things pretty much correct. I also like Australian economist Steve Keen who attacks the neo-classical economists many of who follow Keynes. So what?

Isn’t this all just an acknowledgement that these are very complicated issues that don’t easily hold to simple ideas.

This is your problem. You want to call all these people idiots so you can bring the playing field down to your level. Or are you about to propose a theory instead of just critiquing from the sidelines?

#139 Junius on 09.07.11 at 3:27 pm

#132 tjmikey,

You said, “It seems to be the only industry we have.”

Then we are screwed. You can’t export Real Estate unless you call selling it to foreigners as an export industry. It is not a primary industry but a by product of the core economy. Like restaurants and retail. If that is all we have then we are in big trouble.

#140 Ultraumatic on 09.07.11 at 3:33 pm

#50 Moneta The real big problem is wealth distribution. There are more than enough people in the US to fill those homes. The ones with the wealth just refuse to share.

Really interesting/scary graphic in the NY Times about the effects of increased disparity in wealth:
https://www.nytimes.com/imagepages/2011/09/04/opinion/04reich-graphic.html

#141 Devore on 09.07.11 at 3:34 pm

#93 Ron

That is a pickle, isn’t it. We have people in charge of the economy, whose daily decisions and arbitrary flailing about are sending markets every which way, and they have no clue what they’re doing. They may very well be the smartest guys in the room (arguable), but even the smartest of the smart are not able to predict or direct a global or even national economy. It’s far too complex a system, most of which is not within their domain of control anyways.

As a result, investors have to be extremely defensive and nimble, and spend more time watching the politicians than poring over quarterly reports, trying to divine the next sector or asset class to get whacked as a result of some knee-jerk, politically-motivated, voodoo-economics justified reaction.

#142 penpal on 09.07.11 at 3:35 pm

@ # 124 Junius

Talk about assumptions brother.

No where, at no time, have I EVER, in word or print, ever supported nor mentioned the Tea Party with the exception of today’s posts where you referenced them.

My comments to you re the lowliest cretin doing a better job stems from the general humility of such persons who would likely admit that forming policy was way beyond their capabilities.

They would do nothing and that is less costly and damaging in the long run than using some silly academic model / thesis utilizing highly questionable assumptions about the real economic world IN WHICH THEY HAVE NEVER PARTICIPATED.

The clowns you mention like Summers, Krugman et al have the gall and ego to THINK that they can in fact control or direct such a complex economic system as the USA has. Absolute hubris and for that transgression alone, they and their academic claptrap deserve to be disregared, not lauded.

As you seem to be incapable of reponding to my comments without relying on fabrications such as “your Tea Party”, please refrain from embarrassing yourself further.

This topic is no doubt boring others and taking up bandwidth better used in the discussion of the primary topics on this website.

My sincere apologies to all and sundry on this blog for selfishly pursuing this topic with one of your ‘favourite sons’.

Junius, you are free to wallow in your ignorance on this subject on your own. Your type professes a love for freedom of speech, but forgets to respect its sanctity.

#143 Cookie Monster on 09.07.11 at 3:52 pm

#28 penpal on 09.06.11 at 11:37 pm
IMO, I think he’s a shade communist. Says he’s a small business owner but maybe he caters to government spending.

#30 Utopia on 09.06.11 at 11:44 pm
Poverty is the problem of the impoverished and the conditions created by government that helped to put them there.
The USA declared war on poverty and poverty won.
The USA declared war on drugs and drugs won.
The USA declared war on terror and terror won.

The US is bankrupting itself fighting so called terror that was mainly blow-back brought on by their past foreign policies, idiot bureaucrats is their problem, government is the problem. Free trade and business builds friendships, bureaucrats invoke wars.

#144 Davey Boy on 09.07.11 at 3:52 pm

Re: Saskatchewan,

Correct me if I’m wrong, but it wasn’t that many years ago that the government of Saskatchewan was selling residential land for $1 to lure people into moving there, the only catch was you had to build and reside for 3 years. Even then there wasn’t a huge influx of people. Now herd mentality makes it the “second best place on earth”, I think not.

Just go outside on any street corner and look up and watch all the sheep follow suite…lol.

#145 brainsail on 09.07.11 at 4:16 pm

It is a sad day for NHL fans…

http://www.cnn.com/2011/SPORT/09/07/nhl.plane.crash/index.html?hpt=hp_t1

#146 Cookie Monster on 09.07.11 at 4:21 pm

One of Peter Schiff’s funniest segments regarding Paul Krugman’s preparation for war against an alien invasion. Too funny. The guy truly is insane.

http://www.youtube.com/watch?v=fyW-o-Pr92M&feature=youtube_gdata

#147 betamax on 09.07.11 at 4:38 pm

#90 Echo: “If you had a clue darlin’ you wouldn’t even consider the idea that Smoking Man would write a diatribe whereby he disparaged all teachers.”

#97 Smoking Man: “I lost all respect for them, saw through them realized they where just useless eaters who could not make it the real world where the strong and smart prosper. They are followers Not leaders.”

Well, so much for that.

#90 Echo: “He’s been teaching people here, out of the goodness of his heart, for ages. ; ) (and has probably done so most of his life). He’s smarter, kinder, and more thoughtful/informed than you”

Yeesh. Get a room. With a mini-bar.

#148 Peakoilist on 09.07.11 at 4:49 pm

#144 Davey Boy on 09.07.11 at 3:52 pm
I think Hamilton will soon be the 2nd best place on earth after Garth’s article on Sunday..thanks again Garth !

#149 BrianT on 09.07.11 at 4:54 pm

#138Junius-Here is an actual economist, Peter Schiff doing an entertaining turn explaining why Paul Krugman should win the Nobel Prize For Stupidity http://www.youtube.com/watch?v=3zohXLomHnQ&feature=related

#150 Nostradamus Le Mad Vlad on 09.07.11 at 5:01 pm

#21 Hoof-Hearted and #71 shanks — Yep. Curious that since the inside job (9-11), all these laws and rules, police state in the US, DHS and TSA have been brought into effect and, subsequently, the economy has taken a bath (in dirty water).

Is there a connection there? I venture to say that there is, but wadda I know? I am nothing more than a nutbarred meathead, Canada Grade A sirloin!

#23 Mike Rotch — Looks as if Soros’ and O’bomba’s plan to ship US citizens off to permanent war, let illegals come across the border from Mexico and take whatever menial jobs they can, is working to perfection.

So O’bomba can be re-elected next year, since he’s such a marvelous job of continuing dubya’s legacy!

#32 Soylent Green is People — “Stephen Harper, In His Own Words: Let’s Privatize our Health Care”

What else can be expected from a liar? His interest is not Canada or Canadians, it is to serve himself and screw everyone else. Recall “You won’t even recognize Canada by the time I’ve finished with it”? We’re seeing it first hand. Good post.

#50 Moneta — “. . . the US never got out of their funk until WW2.”

Which is precisely the reason why WW2 was started, give the masses something to do, get the country up and running again and let the banxters run the economy. There was no need for Hiroshima and Nagasaki.

#83 disciple — “. . . all media in Canada is controlled by only FOUR people.”

In the western world, it was six individuals who controlled 94% of the m$m (may / may not have changed), which is why they are pushing to have controls on the ‘net — they can’t stand freedom of speech and thought.

#97 Smoking Man — Good post. There are always two sides to each story — one of the two strongest and most positive influences on my life was a teacher when when I was eight. Haven’t seen him since I was 11, but I’ve never forgotten him.

On the other hand, I started my apprenticeship a week before my 16th birthday. Just knowing the very basics of life is more than adequate.

#136 Mr A.Hole and Duchbag — “We sold our Bre-X and Nortel at the peak !”

Nice and dreamy! Sell Bre-X at $275 / share, Nortel at $120 / share (thereabouts), and live the life of Riley for good!

#151 Peakoilist on 09.07.11 at 5:01 pm

#140 Ultraumatic on 09.07.11 at 3:33 pm
You might find the Olduvai theory interesting. It seems to correlate closely to the graphs that you provided about wealth inequality beginning in 1979, which, according to olduvai theory is the year that world energy production began its inexorable decline.
( remember that these figures are per capita figures, because energy production has increased, but so has world population)..therein lies the rub !

http://www.oilcrisis.com/duncan/olduvai2000.htm

#152 tjmikey on 09.07.11 at 5:10 pm

#132 tjmikey,

You said, “It seems to be the only industry we have.”

Then we are screwed. You can’t export Real Estate unless you call selling it to foreigners as an export industry. It is not a primary industry but a by product of the core economy. Like restaurants and retail. If that is all we have then we are in big trouble.

–Exactly….if you look at the core economy of Canada you will realise that we are heading back into the dark ages of exporting raw goods and importing finished product, as mentioned, the Canuck buck at par or better will kill of most finished product mfg in just a few more years. Then what do we have……housing.

The fed is going to once again make up the rules as they go along to ensure that housing keeps going, the banks keep on raking it in at no risk on the burden of the taxpayer….why? Because as far as large direct and indirect no resource based employment is concerned construction may well be all we have.

#153 Mr. Plow on 09.07.11 at 5:20 pm

#97 Smoking Man

I had a similar experience. The difference though was when I was in grade 11 I handed in another teacher’s work (I admit I went into his class, grabbed it from his desk and copied verbatim) to a teacher that I suspected didn’t like me and wanted to see me fail. I wanted to test him to see if he would objectively grade me on my work or on me.

I received a grade of 57%

I then came to an important life realization. I may dislike the person in power, and that person may be a little person who goes home to sit in his Mom’s basement and troll real estate websites, but he/she is the one with the power, and as long as I am not, I will lose every time.

You can apply that experience to anything, teachers, cops, government, bosses, relationships etc…

It was a good lesson some go their whole life without learning. I was lucky to learn it at 16, and I owe a lot to that teacher for being such an ass, otherwise I may never have figured it out.

#154 jess on 09.07.11 at 5:22 pm

http://www.thestar.com/business/article/1048961–olive-how-a-good-bank-lost-its-bearings

unwinding complexity
collateralized debt obligations “There was a long silence,” Wilmers recalls, “until someone said, ‘Bob, there are 486,000 mortgages in this thing. It would take years to sort them out.’”

#155 timo on 09.07.11 at 5:30 pm

http://www.youtube.com/watch?v=akVL7QY0S8A

The Coming Collapse of the Middle Class by Elizabeth Warren. Very interesting lecture on what we are going thru.

#156 BrianT on 09.07.11 at 5:31 pm

#146Cookie-Jeez man you must be psychic or just quicker than me.

#157 City Slicker on 09.07.11 at 5:36 pm

What is the difference between 416 and 905 in GTA?
Looks like the final numbers inproved from mid August. But still well below the 700K range the other months. For 416 anyway.

#158 Cookie Monster on 09.07.11 at 5:37 pm

#141 Devore on 09.07.11 at 3:34 pm

#93 Ron

That is a pickle, isn’t it. We have people in charge of the economy, whose daily decisions and arbitrary flailing about are sending markets every which way, and they have no clue what they’re doing. They may very well be the smartest guys in the room (arguable),
—–
Smart, wise people, don’t go into politics (Garth’s smart and now he’s wise too). Politics is for the opportunistic, ignoramus utopian dreamers who want to change the world to help the poor and make a better nation/world, but what they don’t understand is redistribution of wealth is in and of itself immoral, their thieving means will never attain any good ends. These political peoples only means of activity is to direct the theft of wealth from some groups in order to redistribute to other groups is fatally flawed from the get go.

Government should be so strictly limited that it does not matter who runs it, the job is the same. No grand plans. No involvement in the economy. Individuals are best at choosing what they want and how they want it.

#159 b on 09.07.11 at 5:43 pm

So, after more than a year of Garth raving like a high school girl with pom-poms that interest rates were gonna rise which would be the dearth of the housing market, guess what..

Mark Carney signals long pause on rate hikes:

http://www.theglobeandmail.com/report-on-business/economy/interest-rates/mark-carney-signals-long-pause-on-rate-hikes/article2156284/

Garth, are you still buying into the stock market on the dips over the last month? Are you enjoying the sawtooth downward trend and all the losses made from it?

Meanwhile global paper is being destroyed, just this past week the Swiss Franc was deliberately dumped about 10% versus what you say is not a currency at all, gold.

You keep naysaying gold for years while the price of gold continues for years to leave your investment approach in the dust.

Low interest rates are not good news, since they signal an unexpectedly weak economy – which is, in fact, worse long-term news for housing. BTW, how do you like the double top on gold? Hope you’re covered. — Garth

#160 Live Under Your Means on 09.07.11 at 5:51 pm

#142 penpal on 09.07.11 at 3:35 pm

Had you been in charge of the Fed, how would you clean up the mess in the US?

#161 BPOE on 09.07.11 at 5:53 pm

225% return in 10 years. Going much much higher folks

http://www.bclocalnews.com/richmond_southdelta/richmondreview/news/129123043.html

#162 martin on 09.07.11 at 5:56 pm

with these news today as the rates are staying the same or can be even lower, real estate has only one way to still, up. so we wont see a crash probably for two years. im quite happy because i will be reading garth and learn more for these years.

#163 Utopia on 09.07.11 at 6:15 pm

Maybe I spoke toon soon. Anyone else notice the head and shoulders pattern in Gold that formed since August. Here is the chart. Opinion Smoking Man?

http://finviz.com/futures_charts.ashx?t=GC

#164 Smoking Man on 09.07.11 at 6:23 pm

#147 betamax on 09.07.11 at 4:38 pm

You’re right their are some good Teachers

My friend Good Dennis Rancourt.
http://activistteacher.blogspot.com/

A tenure professor of physics was fired from University of Ottawa because he gave all his students A’s in their final term, wanted then not to kiss his ass worry about obedience but to actually learn something, if your focuses is on grades your not learning. Plus way make it easy for the employer who will inslave them.

Not to mention he never bought into the BS of man made global warming, you know that topic that every teacher in north America is shoving down on little kids. Looking to climatize the little brats into forking big bucks of tax when they grow up and be happy about it. Just last week the atom smasher in CERN proved it’s solar ionization that controls temperature on earth.

How many University students actually end up doing what they study for? How many remember what they where taught 3 years later. 50k 75k for nothing, just a certificate that proves you went for obidance training

The fact that you lost respect for me, I will wear that as a badge of honor.

And Batamax VHS was always better………….

#165 penpal on 09.07.11 at 6:31 pm

@ # 138 Junius

So… first you misinterpret my posts, if in fact you read them at all, fabricate where necessary to lend support to your argument and now you not only propose that I have a problem, but that you know what that problem is.
How so very omniscient of you. LOL

I don’t want to call anyone an idiot, but where someone displays idiotic behaviour, I am willing to call them on it, especially when someone is defending such idiocy.

Junius, I suppose it is an ego thing with you, but I have in no way disparaged you in my postings today, yet you feel a need to try and diminish my input by disparaging me.

You see, I let your own writing here today evidence the paucity of your intellectual integrity.

And so… I bid you a good day sir, I prefer to take the high road here and will not engage you further. What is that they say about the inability of a person to engage in lively debate without ad hominem attack?
Oh yeah, they are not worth debating.

#166 Westernman on 09.07.11 at 6:41 pm

#59 – Disciple –
Wrong,wrong,wrong, the reason Canadians are impoverished and struggling for hope is because by and large they are a bunch of lazy, ignorant, low- IQ, socialists who are convinced the government should shower them with wealth and happiness. They enjoy things like drinking large amounts of booze, watching inane sporting contests on T.V., hanging out at golf courses and blameing Americans for their lack of sucess. THAT is why Canadians are impoverished and struggling for hope. Just thought I would clear that up for you…a little dab of reality and truth will go a long way.

#167 penpal on 09.07.11 at 6:43 pm

@ # 159 Live Under Your Means

That is a very ambiguous question.

At what point in this now debacle would I be intervening? In what capacity? Now? Pre QE 2? Pre QE 1? And with who in power and what role do I get to play? Fed Chairman? US President? Head of the New York Fed? Treasury Secretary?

Answer the above and I’ll give you a full answer.
Otherwise you are not being genuine.

It’s like asking someone to build you a house, but giving no indication as to its structure or use, budget etc.

#168 Smoking Man on 09.07.11 at 6:47 pm

#153 Mr. Plow on 09.07.11 at 5:20 pm

In all due respect how can that be the same,
I went flying across the room, I witness people I respected and trusted lie to my father about me. Mr A.Hole was a psycho he was actually later arrested for nearly killing his wife.

And you think we share the same experience. Not even close brother but I do appreciate your sharing.

You said

“It was a good lesson some go their whole life without learning. I was lucky to learn it at 16”

They broke you man.!!!!!!!!!!!!!!!!!!!!!!!!!

In Canada all read is we are not productive bla bla bla……..What is the biggest crime in school, Plagiarizing you know read something copy it add in some of your own stuff. That’s to me is called productivity. Yet do it get caught, you would be better off being Jesus on 1st Easter than endure what’s coming from you.

The whole exercise is designed to re enforce in you mush brain is you da slave me da master.

I am a part time programmer, I have thousands of archived code snippets. Now when I build something I can try and do it from memory, might take me 5 hours, I go to the archives, can find what I’m looking for in 15 minutes. I go to Google put in the right key word I have my code in 30 seconds. But in reality by going to Google I am Plagiarizing. The exact thing the Man don’t want you to do.

I have so much to teach you guys……..

#169 Mr A. on 09.07.11 at 6:52 pm

Smoking Man

We feel really bad about what happened in the past.

I mean sure….maybe deserved it, even if he was in a wheelchair,3 broken limbs , needed a multi -organ transplant, his dog died, and Newfoundland joined Confederation.

However let make amends …….. everyone pass the hat and lets buy Smoking Man this for Christmas

http://www.collectiondx.com/toy_review/hot_wheels_elite_1966_tv_series_batmobile

PS….doesn’t that flame in/out the back have pornographic connotations?

#170 Helicopter Ben on 09.07.11 at 6:56 pm

#117 Utopia on 09.07.11 at 1:26 pm
The National Transitional Council (NTC) is now saying they have discovered Gadaffi’s whereabout. They have him surrounded and he will not escape after all. Good news too.

The last thing Africa (or the West) needs is a rogue dictator with 130 tonnes of Gold and mountains of cash to be plotting revenge on his enemies from within the protective boundaries of another state. …………………….You honestly think gadaffi is a threat and a terrorist? on the run with 130 tons of gold lol. i cant believe people believe this , they are there to steal their gold , oil and control the aqueducts , they are killing people to steal their natural resources. gaddafi wanted to nationalize the countries oil, go on a gold standard and allowed woman to go to university which is rare in that region, all these things were good for the people. is he the nicest man around? no not likely but what ruler in any 3rd world country is. also libya was one of the few countries in the world that didnt have a rothschild central bank. of course no news network will tell you this, the truth is hidden in this day an age, the masses have no clue and like to ridicule others that think differently. ive been to a few of these so called axis of evil countries, believe me its way more dangerous going to a bad neighborhood in los angeles . most people will never step foot in the middle east or africa, get all their news from tv and its sad. you know they will be cheering when we go to the next oil rich country to spread democracy and kill those evil people, makes me sick.

#171 Smoking Man on 09.07.11 at 6:59 pm

163 Utopia on 09.07.11 at 6:15 pm

It’s almost a batman……….I can hear the falls……

#172 penpal on 09.07.11 at 7:03 pm

@ # 160 Live Under Your Means

Sorry I directed my reply to posting # 159 in error.

If you don’t give me the parameters, I cannot give you a meaningful reply.

However, if your question is assuming that I had been running the Federal reserve Bank of the US for any length of time, the crisis of today simply wouldn’t exist as i would have never made credit as cheap as it was made by either Greenspan nor Bernanke.

Cheap money sends the wrong signal to the marketplace that capital is easy to create and that is not the case .

If you have tried to amass any of consequence, you know that it is a precious commodity indeed and not to be squandered.

This, by the way, is a lesson that many, many Canadians are about to learn, and soon!

#173 Smoking Man on 09.07.11 at 7:03 pm

#137 Peakoilist on 09.07.11 at 3:23 pm

I’m not bully just have strong opinions.

#174 Junius on 09.07.11 at 7:03 pm

#149 BrianT,

I like Schiff. He is a refreshing voice and quite a contrarian. However I don’t always agree with him either.

Which is kind of the point here? However neither you or your Pal Pen seem to get that.

Unlike him I will keep it short and end this here.

#175 betamax on 09.07.11 at 7:06 pm

#164 Smoking Man: “if your focuses is on grades your not learning”

Surely there is some correlation.

“The fact that you lost respect for me, I will wear that as a badge of honor.”

I have no more nor less respect for you than before. Echo was the one making silly assumptions.

“And Batamax VHS was always better………….”

Actually VHS was technically inferior but slightly cheaper, which made all the difference to the masses. Yet another triumph of cheap crap over quality.

#176 Hoof- Hearted on 09.07.11 at 7:12 pm

Greece Govt Bond 1Year Yield ..( 96 % ??????)

http://www.bloomberg.com/apps/quote?ticker=GGGB1YR:IND

#177 Junius on 09.07.11 at 7:17 pm

#158 Cookie Monster,

You said, “Government should be so strictly limited that it does not matter who runs it, the job is the same. No grand plans. No involvement in the economy. Individuals are best at choosing what they want and how they want it.”

Before I go through the usual arguments of why this is unfettered “free market” fantasy cannot possibly work can you please give us one example of where this has ever worked? Just one. In human history. I mean apart from at a Libertarian Fantasy Weekend event.

Free markets are always corrupted by the more powerful. Always. That is the history.

#178 timo on 09.07.11 at 7:20 pm

http://www.youtube.com/watch?v=qOP2V_np2c0&feature=related

RSA Animate – Crisis of Capitalism

man I wish I could draw that fast… :)

#179 Junius on 09.07.11 at 7:24 pm

#143 Cookie Monster,

You said, “Free trade and business builds friendships, bureaucrats invoke wars.”

Haliburton? BlackWater? What about the rest of the Military Industrial Complex in the US?

Look up the Carlyle Group, who they are and who do they invest in. Look at how many former US Defence Secretaries sit on their board.

How completely naive.

#180 Nostradamus Le Mad Vlad on 09.07.11 at 7:38 pm


Europe Banktatorship from Germany? and 5:13 clip Germany must quit the Eurozone. If they do, then the dominoes start falling, no? 1:37 clip Giuliani says Wall St. bonuses are wonderful (gimme gimme).

Saturn in all its glory; 12:23 clip Alternative media rocks, m%m sux! FEMA Working for the elite? Guess this is the price of secession, and 1:55 clip Open borders? Why let Texas burn? O’bomba Guaranteed re-election due to all the illegals flooding in; Hell, The Toilet and the WH What do they all have in common? Anyone can use them; Housing and Drugs Both solid members of the establishment; Fukushima Just in case the planet runs outta crisis’.

CC “We’re not gonna let a little thing like four harsh winters in a row and CERN’s proof that the sun controls climate get in the way of such a fabulous money-making scheme, ya drongo!” wrh.com; Islamophobia by Harper Now he shows his true loyalties and colors; Al Gore and Aliens Comparisons between Gore and Harper are quite reasonable; Turkey and Egypt sign contracts; Gun Control Is this the reason why the super congress was created?

#181 ballingsford on 09.07.11 at 8:14 pm

Another great post Garth! Who the hell is buying all the stocks today after the small sell-off yesterday? Are the Governments playing the markets to ease the anxiety? As Flaherty said something like this a while ago ‘We don’t want Canadians to panic’.

Is intervention happening to help make us all feel better?

Yes, intervention by buyers who see value. — Garth

#182 Timing is Everything on 09.07.11 at 8:25 pm

#17 Toon Town Boomer

That’s what I said when I moved from Regina to Victoria in 1988.

#183 Junius on 09.07.11 at 8:31 pm

#172 penpal,

You said, If “I had been running the Federal reserve Bank of the US for any length of time, the crisis of today simply wouldn’t exist as i would have never made credit as cheap as it was made by either Greenspan nor Bernanke.”

Sure. Because your a genius. Hindsight is 20/20 isn’t it?

If you were Greenspan you would have had Dick Cheney breathing down your neck to keep the economy humming because Georgy boy wanted to go to war and cut taxes for his friends.

#184 T.O. Bubble Boy on 09.07.11 at 8:33 pm

@ #94 disciple:

August 2011 TREB numbers:
416 || 905 || Total
$648,491 || $531,458 || $561,379

To look at this a bit deeper:

May 2010: Average “416” Detached SFH = $690,464
Aug 2010: Average “416” Detached SFH = $588,867

May 2011: Average “416” Detached SFH = $774,046
Aug 2011: Average “416” Detached SFH = $648,491

So, last year, average price fell about 15% from May to August, and this year that drop was about 16.5% (= $25k more of a drop).

If you actually believe that “average price” applies evenly to all homes in all months, this would mean that a detached house bought in May 2010 would have declined over $40k by August 2011, despite every month in that period seeing year-over-year average price increases… puts a bit of perspective on all of those press releases.

#185 Yuus bin Haad on 09.07.11 at 8:35 pm

Garth: I’m holding my silver while until Russell’s on TV selling his. Oh Yeah!

#186 Smoking Man on 09.07.11 at 8:39 pm

#169 Mr A

That was it

NICE THANKS

http://www.collectiondx.com/toy_review/hot_wheels_elite_1966_tv_series_batmobile

#187 ballingsford on 09.07.11 at 8:42 pm

ballingsford on 09.07.11 at 8:14 pm

Another great post Garth! Who the hell is buying all the stocks today after the small sell-off yesterday? Are the Governments playing the markets to ease the anxiety? As Flaherty said something like this a while ago ‘We don’t want Canadians to panic’.

Is intervention happening to help make us all feel better?
*************
Yes, intervention by buyers who see value. — Garth
********************

Why not let them crash for a few more months and then snap them up. Seems like it’s more of a psychological game that’s being played now. Then again, I believe in Jekyll Island even though you think Conspiracy Theorists are metal heads.

http://www.jekyllislandhistory.com/federalreserve.shtml

#188 Killer Chicken or Imploding Boomer? on 09.07.11 at 8:47 pm

97 Smokin – havent read past your comment – but did it have a little blade that flipped down in the front and little
plastic missiles that shot out the launcher in the back?

#189 anjing bau on 09.07.11 at 9:04 pm

Yes, intervention by buyers who see value. — Garth

Which brings us to the bottom up approach to market analysis and the perils of the value trap. Stocks can get a lot cheaper and still have the intrinsic value your stock screens indicate.

#190 penpal on 09.07.11 at 9:06 pm

@ 179 Junius (yet again)

Dude, you are just looking very foolish.

Reread your post.

Those companies and Carlyle are staffed and directed by guess who – ex bureaucrats ! Cookie’s point exactly!

Give it up pal, you are so turned around by tonite’s postings that you are now making other people’s cases for them. LOL!

Don’t bother with me anymore, I’m just scrolling past your silliness now. If I thought you’d be able to follow instructions, I’d tell you to grow up.

#191 ballingsford on 09.07.11 at 9:08 pm

When you get to this link, scroll down and read the story if you are into reading about Jekyll Island and the Federal Reserve. You must scroll down to see the story once you get to the site.

http://www.bigeye.com/griffin.htm

Anyway, we are all puppets and it probably doesn’t matter.

#192 Cookie Monster on 09.07.11 at 9:25 pm

#177 Junius on 09.07.11 at 7:17 pm

#158 Cookie Monster,

You said, “Government should be so strictly limited that it does not matter who runs it, the job is the same. No grand plans. No involvement in the economy. Individuals are best at choosing what they want and how they want it.”

Before I go through the usual arguments of why this is unfettered “free market” fantasy cannot possibly work can you please give us one example of where this has ever worked? Just one. In human history. I mean apart from at a Libertarian Fantasy Weekend event.

Free markets are always corrupted by the more powerful. Always. That is the history.
——
Ah, the (now) USA from 1700-1913.

#179 Junius on 09.07.11 at 7:24 pm

#143 Cookie Monster,

You said, “Free trade and business builds friendships, bureaucrats invoke wars.”

Haliburton? BlackWater? What about the rest of the Military Industrial Complex in the US?

Look up the Carlyle Group, who they are and who do they invest in. Look at how many former US Defence Secretaries sit on their board.

How completely naive.
——-
Your examples are not free markets, they are exactly what I’m against, corporations in bed with government. The moral onus is on government to not engage in such corruption. Businesses will take whatever favours government will give, it’s governments responsibility to be ethical. That’s why I say, government must be strictly limited in size and scope. Government must not mingle with business favoritism, it’s immoral.

Gees Junuis, and to think that I was actually feeling a tad sorry for you earlier today.

I contend we’re all compassionate, well meaning, good people, world wide. When I’m raving against government it’s because I see how they undermine what is good and proper. You need to give a little more credit where credit is due and quit your high and mightiness.

#193 April on 09.07.11 at 9:30 pm

Martin #162
Home prices are already unsustainable in most parts of Canada so who do you think is going to be buying these homes you think will continue upwards in price………..

#194 An Cat Dubh on 09.07.11 at 9:34 pm

Still lots of places for sale in Penticton, especially condos. I remember talking to someone who said prices will only drop about 10%. This is a guy who was a contractor who had to give up his house building business in Armstrong due to the economy.
Helicopter Ben I am worried about Uganda.
They are going to be drilling for oil next year. Oil is the main ingredient in weapons of mass destruction don’t you know. ;).

#195 TurnerNation on 09.07.11 at 9:35 pm

Diciple says four people run Canada.
Doubt him? What is Harper slavishly imposing the Queen onto us these days: Royal air force, and now insisting upon her portrait displayed in embassies.

Are we free or not?

And with harper’s xenophobic “islam” speech today I think we are in danger of a false flag attack to prove his point. The 1930s called, they want their rant back.

Tinfoil? “We know he has WMD”…

#196 anjing bau on 09.07.11 at 9:36 pm

Yes, intervention by buyers who see value. — Garth

the bottom up approach to stock selection via value based screens doesn’t account for human behaviour. Value stocks can get a lot cheaper if supply is stonger than demand.

go ahead pull this post as well

#197 Timing is Everything on 09.07.11 at 9:40 pm

#97 Smoking Man – Pretty slick SM. I counted 25 ‘Smoking Mans’ tonight. (Not counting mine.) Take a bow.

Garth, I’m surprised you let ‘The Teacher Story’ through the gate.

Hey SM, Just 4 U – Floyd’s best

Dogs, Pigs (Three Different Ones), Sheep – ‘Animals’…

http://tinyurl.com/au2qdh

http://www.youtube.com/watch?v=ft7QMuliH2M

http://tinyurl.com/2rnluo

BTW, check out Roger’s solo stuff…Too good! Especially
‘Amused to Death’

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

p.s. How’d [sic] that doc appointment go?

#198 Utopia on 09.07.11 at 10:09 pm

#171 Smoking Man to 163 Utopia

“It’s almost a batman……….I can hear the falls……”
————————————–
Almost exactly my thoughts. Garth caught it too. Weird timing that. Confirmation appreciated. I have been ignoring Gold for months. Said just yesterday that I might mend my ways. So then I took a closer look this afternoon and…YIKES. This is no time to be getting invested there especially as the USD is rallying so hard.

So lets spot the short. It looks like a cakewalk.

#199 Echo on 09.07.11 at 10:18 pm

#147 Betamax:

Yes, I was way off there. I thought perhaps he was going to talk about the quality of teachers today and the lacking curriculum. In that context I wouldn’t expect him to say that there are none that are exceptional. I couldn’t have known it would be about a Hotwheel, some bad experiences, and an exaggerated view of the whole profession as plain nasty. lol

As for your other comment, funny! Still, it doesn’t change the fact that he is continuously trying to enlighten you about the A game in business. If you’re missing it, that’s ok! : ) Try to look past the booze though, you may learn something.

#200 Cookie Monster on 09.07.11 at 10:49 pm

PS. Brian T, great minds think alike, timing is irrelevant.

#201 stealth on 09.07.11 at 10:59 pm

*******************************************
“#116 stealth on 09.07.11 at 1:15 pm

Garth, now that interest rates remain low and likely to stay there until well into 2012, what is the impact to house prices?

You can either answer me here or comment in your blog tonight whatever brings you the most pleasure.

I have commented. Little additional impact. And where did that ‘well into 2012′ come from? — Garth”
******************************************

Point taken on “well into 2010” comment. No evidence of that yet, and thanks for commenting.

#202 penpal on 09.08.11 at 12:53 am

@ # 183 Junius (or is that juvenile)

What are you 4 years old or just not in control of your ego? Either way your inability to counter my comments with anything approaching a credible retort and to just let it go bespeaks an immaturity that I have no interest in engaging. Grow up little boy.

Many, many people KNEW that Greenspan’s low rates would distort the economy and acted accordingly.

I did and bought RE for redevelopment in 2002, but avoided the US market although I spent a lot of time there. Get a clue, just because I favoured a different policy did not make me miss the opportunities afforded by Greenspan’s poor policy choices.

I actually pity anyone that has to deal with you on a regular basis.

#203 neo on 09.08.11 at 6:40 am

Two points.

It is the raising of margin calls by the CME and Shanghai exchange that are artificially attempting to suppress the price of Gold. So looking at “double tops” is a mute point because those things have to occur without the market intervention. Garth and everyone else should know that and Garth especially should know at this point to stop trying to call a top in Gold

Second, Garth shouldn’t have been focusing on interest rate hikes bringing down real estate. His focus should have been more on the economy itself. At the end of the day even if we get these rates for the next 2 years. Does anyone think we are not going into recession for the next 2 years? A recession is actually exponentially worse than a rate hike of a 0.25%.

#204 disciple on 09.08.11 at 8:43 am

#166 Westernman…nice job. You’re definitely from Alberta…Thanks for clarifying that for me. That describes every single country on earth, though. (Yes, they have internet and plenty of booze in the remotest Burmese villages too). Why don’t you leave the dark side for a moment and join me on the path to enlightenment? It is fear that prevents you. Fear of discovering the greatest unknown: who and what you really are…

#205 disciple on 09.08.11 at 8:55 am

What will I be studying today? Well, there is the bunch of new google snippets that may boost some of my businesses, but more interesting on my agenda today is Richard Hoaglund’s claim that the Caucasian race is actually from the planet Mars. I’ve heard similar things before regarding the “Aryan” so-called tribe. Supposed to be involved in some ancient war with the Reptilians, I dunno. You really have to dig deeper to come to any kind of reluctant conclusions. But you can rest assured I am not afraid to go there and when I find out some semblance of the truth if there is any, you will be the first to find out…I know you’re all on the edge of your seat on this one…:) Perhaps Nostradamus already provided a link on this one?

#206 jess on 09.08.11 at 11:10 am

cookie

Exclusive or inclusive ?
You said that WE are,” ALL compassionate and well meaning good people worldwide.” So humans within government are not good nor proper or smart ?

You also said, “You need to give a little more credit where credit is due and quit your high and mightiness.”

I would rather believe the Queen’s ink which is witnessed by all rather than a robo signer anyday.

#207 Utopia on 09.08.11 at 12:19 pm

#203 neo mentioned….

“It is the raising of margin calls by the CME and Shanghai exchange that are artificially attempting to suppress the price of Gold”.
—————————
Not exactly Neo. The raising of margin calls is an expression of acknowledgment that Gold could be ready for a large pullback based on recent US dollar strength. They are merely signaling to market participants to reduce their level of leverage.

In any event, there is growing concern that the very vocal message of the Gold camp is itself beginning to impact on public confidence in the system at large.

While some of their arguments may be valid, the damage that is being caused is actually impacting on sentiment. People all over the world are responding by retrenching as the shrillness of the fear trade infects the thinking of the masses.

Any effort to contain Gold prices therefore could potentially head off that brigade and remove some ammo from their cart.

If the Gold camp cannot point to rising prices as proof that they are “right” then their argument diminishes and some opportunity still exists to instill confidence in the future. Confidence is what we need.

You may not like my argument here but we cannot succeed where economic expansion and growth are concerned if too much fear pervades the minds of he general public.

The Gold camp spreads fear. That is why that market needs to be targeted if only for the opportunity this affords to head-off the growing negativity that now permeates much of the media and blogospere.