This won’t end well

My neighbour’s a self-employed contractor who works hard and doesn’t mind tackling the Bunker’s 140-year-old, stone-walled, dank basement and its wildlife. My wife calls it The Dungeon.  Often, though, it was more like a petting zoo. But not any more. Dave fixed it.

He told me today he’s building a spec house in the city. Ambitious and risky, I said. “Yeah,” Dave replied in his laconic way, “I read your book. But I’m counting on interest rates to stay, or go down – it’s the only thing that’s keeping guys like me alive.”

He’s right, of course. Were it not for an ocean of borrowed money, we’d be like the Americans right now. Millions on food stamps. A third in negative equity. A quarter jobless. Critics would be clamouring for our leaders to do what Obama did Thursday night – come up with an emergency jobs plan, tax cuts and bags of money.

The big difference between Canadians and Americans seems to boil down to one thing: we like debt, they don’t. At least, not any more. The US savings rate has jumped at the same time housing’s crashed. Canadian families now owe more per household than ones down south, and we continue to gobble up loans and mortgages at a record pace. So far this year, personal debt is  up a stunning ten per cent. With incomes flatlined, how else to explain soaring car sales and a jump of 20% in Toronto and 8% in Vancouver in house deals?

This is also the national Achilles heel. It has the potential to destroy us. Maybe it already is.

The latest survey from the Canadian Payroll Association is a shocker. Six in ten people would be in financial crisis if they missed one paycheque. Four in ten say they’re delaying plans to retire – can’t afford it. Five in ten save less than 5% of that they earn. Four in ten have given up trying to save anything.

Most people figure they’ll need $750,000 to retire on, but the odds of more than a relative handful of us making it are slim to none.

This is the portrait of a society heading for social and financial failure. But at the same time, a stunning 70% of Canadian families own real estate. Obviously to get a house, they borrowed so much that servicing the debt is destroying their ability to save. They’ve opted to put almost all of their eggs in a single basket, massively elevating their risks. It’s one reason Mark Carney didn’t raise interest rates this week. As my neighbour says, a rate high would finish him off. If his customers stopped borrowing from the future, the present would wither and die.

It’s hard to overstate the gravity of this situation, to understand those who come on this site arguing house prices are reasonable, or fathom what’s happening in the brains of people taking cheap loans to possess precious homes. When 57% of the country’s workers would be screwed if they missed one pay, where will tomorrow’s real estate buyers come from?

We have lost our way. Arlene’s note to me last night shows how.

“Eight years ago my husband (now 58) and myself (now 57) lost all our assets. We have managed to recoup somewhat.  We have saved $100,000, have no debt and run a small business. For the last year we have lived with our daughter and pay no rent.

“Many times we have been tempted to buy a house.  As of late, a mortgage broker is waving a 2.9% rate carrot and my husband is thinking we should buy a house. He is really fed up with not having his own space.  We live east of Toronto where home prices are definitely not as high as the 416 but I still think they are overpriced.

“The cash we have is sitting in a savings account earning only 2% interest – which really disturbs me.  I am feeling very unsettled by all this. Do you have some words of wisdom for two befuddled folks?”

Self-employed means no pension. Having but $100,000 when almost sixty years of age means failure, and the certainty of running out of money. Keeping funds in a bank account shows fear or ignorance. And lusting for a home you will never pay off, merely because money’s cheap, underscores the danger in our midst. If this couple buys, they’ll have nothing but a house grabbed at the top, and debt taken at the bottom. Stick in a fork. They’re done.

This will not end well, collectively. It need not be the case for you.


#1 Tim on 09.08.11 at 9:35 pm

that’s an original post…admit it, you were wrong about housing tanking…three years on and it still holding up

Actually housing will still tank. It’ll just cream more people in the process. — Garth

#2 Spaz Mogen on 09.08.11 at 9:42 pm

“Most people figure they’ll need $750,000 to retire on, but the odds of more than a relative handful of us making it are slim to none.”

If you pause and read between those lines, you will see the future: a Canada with no real middle class. We will be like The Yanks: have’s and have not’s. The Baby Boomers are collectively screwed.

Freedom 55 was just a marketing dream that many will find out turned into a nightmare somewhere along the way.

#3 shanks on 09.08.11 at 9:43 pm

lol cream make the money!!!

Garth, how is one to survive if Canada goes through the same thing that the states is now? underwater morgages, high unemployment, higher underemployment, massive debt and no growth at all?

#4 Peakoilist on 09.08.11 at 9:45 pm

You didn’t tell us how Dave fixed it..we’re curious

#5 Smoking Man on 09.08.11 at 9:48 pm

Logic, Stats, Fundamentals, Debt all point to a big crash in Real Estate, however it’s not going to happen in the GTA.

This is why……….

The tax farm slaves are stupid. Look at what happened in the polls, Dalton with that add has got Hudak against the ropes.

If Dalton was Pinocchio his nose would have orbited the earth three times by now. Yet the tax farm slaves bought his add hook line and sinker. Ah the art of lying, In his case he does not even hide it.

I take the go train into town a few days a week, those free papers, 3 pages of news, ½ a page on business, 20 pages of celebrity worship. Thanks to the education industrial complex the slaves have been totally dummy down, ready to be exploited. On word from Peter Mansbridge saying RE is good, the slaves will run each other over to buy, even though most live pay chq to pay chq.

Sorry bubble heads……….

#6 T.O. Bubble Boy on 09.08.11 at 9:50 pm

57-58, maybe a couple of years of retirement savings in the bank, feeling disturbed/unsettled, and still they say “Many times we have been tempted to buy a house”!!!

If you’re disturbed about having only $100,000, why is there any desire whatsoever to be completely broke?

#7 jed on 09.08.11 at 9:53 pm

Tim #1
What’s with these people so set on a specific date? Must be the same types taking Nostradamus literally. Who can predict an exact date? On Vancouver Island housing is already tanking; rates don’t seem to be the bubble popper here but it is happening, just more slowly and less dramatically than a 9/11 instant action.

#8 vyw on 09.08.11 at 9:59 pm

Housing has fallen in many local CDN markets already. Those markets – Calgary, Kelowna, etc – will not inflate.
I think we’re in the final phase of the bubble – it needs a final phase of delirious buying by speculators, realtors, greater fools, etc.

Arlene should look at co-op housing (pay 30% of salary) or seniors social housing as an option and keep her money in a TFSA and savings. There is an option for seniors retiring without a paid-off home. OAS/GIC/CPP offer a safety net. And her $100,000 is a cushion.

#9 blase on 09.08.11 at 10:00 pm


I’ve been re-reading Money Road and really focusing on the Tax avoidance Chapter, and on investing. You’ve been posting a lot about the upcoming housing crash, rates etc. but how about more talk about the options available to investors through lowering their tax bills and using TSFA’s, RRSP’s and RESP’s. I think the more you can explain in a simplified way how wealth and income can be achieved without buying a house, the easier it will be for people to look at other options.

Just a quick for example: My mom has a $400,000 house; she’s 63, and has $120,000 equity in the place. Would she be wise to take out a HELOC, buy preferred shares and stuff the dividends in her TFSA, while lowering her tax bill? Or what other simple choice could she make other than selling in Calgary, which she won’t be doing for at least another year or two (will re-marry in a year or two).

#10 Hoof - Hearted on 09.08.11 at 10:02 pm


#11 Cory on 09.08.11 at 10:05 pm

People who claim house prices are “reasonable” are victims of price conditioning. Live it long enough, it becomes real. Gas prices are prime example. Juice gas prices high (1.15) as soon as oil rises. Oil drops substantially, gas prices fall back a nickel and we all feel relief and the process repeats with each time gas prices ending up higher.

#12 Tre on 09.08.11 at 10:06 pm

I can’t believe some people still have faith in the kool-aid. I guess it’s like a kid and hot stove, they must get burned before they learn.

#13 April on 09.08.11 at 10:07 pm

Tim #1 – Garth was not wrong about housing tanking three yrs ago…. don’t you know or choose to forget what happened at the beginning of 2009 when we were well into a serious housing price decline….. Are you a realtor? or someone who is afraid of seeing his assets decline in value……

#14 Garth's Housekeeper on 09.08.11 at 10:07 pm

My neighbour’s a self-employed contractor who works hard and doesn’t mind tackling the Bunker’s 140-year-old, stone-walled, dank basement and its wildlife. My wife calls it The Dungeon. Often, though, it was more like a petting zoo. But not any more. Dave fixed it.


What are all these chain thingy’s and animal restraint /discipline devices all over the dungeon floor ?

I don’t do windows, thankfully none down here , only light down here is from the burning candles at the altar.

Remember Cash only ….No cheques ( or investment advice, ……I know everything ).

#15 timo on 09.08.11 at 10:10 pm

Perfect words Garth,

“The Goldilocks period of high growth and low inflation seems to have gone and the government is grappling with just where to strike the balance between jobs and prices,”

Good luck Canada competing with a high dollar and high wages when your exporting. The world economy is stalling and it will be a dog eat dog world.

#16 martin on 09.08.11 at 10:14 pm

just saw the news:

57% of canadians living paycheck to paycheck
68% of canadians age 18-34 living paycheck to paycheck.
the above will be in trouble if their check delays for just a week.

This is called REAL LEVERAGE where we living at.

Garth you are a hell of an economist.

#17 Dorothy on 09.08.11 at 10:15 pm

Real Estate, like stocks, and the economy in general, goes up and down in predictable cycles. So, having been on an up cycle for such a long time, it’s as sure as night follows day that it is now headed for a down cycle. The current economic situation merely ensures that the down cycle happens sooner rather than later.
The fact that the market appears to be still doing well in certain areas such as Toronto and Vancouver, does not alter the fact that in the rest of Canada prices have been falling for a while now, and probably still have a way to go before they reach bottom.
However, I don’t believe we’re going to see the same kind of decimation of the market that we’ve witnessed in the States, even though there are some on this blog who are hoping that we do. This is just the inevitable, predictable down cycle that happens every so many years. It happened in the 80’s and again in the 90’s, and it’s happening again now. But what goes down will inevitably come up again in a few years, so providing you remember to “buy low and sell high” as opposed to “buy high and sell low” you should come out of this thing just fine. Don’t panic, and don’t be pushed into turning a paper loss into a real loss by all the doom and gloomers.
This difficult time will eventually pass. Just keep your head and you’ll be OK.

#18 Kilby on 09.08.11 at 10:21 pm

#192 Junius (Sept 8th)
Good idea, tomorrow I will see if i can do a comparison from same time last year…

#19 Special-K on 09.08.11 at 10:23 pm

Why all the focus on retirement? The two most dangerous years of your life are the year you are born… and the year you retire. Find a career(s) you are passionate about and enjoy, and stay productive, you’ll live a longer and richer life.
Don’t fall for the deferred-life plan.

#20 kenji on 09.08.11 at 10:29 pm

Look 2009 housing prices dropped, but by how much and how long before it popped right back up? Where are we now?

How can we be compared to the US real estate market? Unlike US aggressive measures to loan money we here can’t get a mortgage over a the phone through an infomercial. If you can’t afford a mortgage, no one gets sweet incentives to lie cheat and steal to make it fit/affordable.

Garth you asked who’s going to buy our houses tomorrow? Well were people not living pay cheque to pay cheque in 1999? Who’s buying between then and now?

Look at Manhattan or other parts of NYC and LA and are they that bad off from before?

There is only one real city in Canada with employment growth, GTA. If people can’t afford Toronto then they need to make more money or move out to the suburbs.

#21 george c on 09.08.11 at 10:35 pm

Garth you never really talk about the problem. Canada is the largest country of personal debt and I dont think you really understand what this means. Ireland went through this and it is only a matter of time that the ticking time bomb in canada explodes. Forget interest rates. We are about to crash in personal debt that will make the us crisis look like romper room. Garth I realy dont think you understand the problem canadians have got into. This will effect everything including you.

Did you not read what I just wrote? I understand. Crystal. — Garth

#22 Devore on 09.08.11 at 10:41 pm

#9 blase

Garth has done so on several occasions. But more is always welcome :)

Basic idea, assuming you can contribute money meaningfully to all three:
TFSA: high growth stuff, no taxes on withdraws or gains.
RRSP: stuff taxed at income rate, such as bonds and other income instruments. When you withdraw money, you’re taxed at your marginal rate, so filling up with tax-advantaged investments is a waste.
Non-registered: tax advantaged investments here, such as dividend payers and moderate capital growth.

The RRSP contribution room is plenty for almost everyone (when most can’t even save a penny), the tax refund is tempting juicy for those who are broke, but it shouldn’t be your main focus. First, max out the TFSA.

#23 xindai shan on 09.08.11 at 10:49 pm

While Garth is “THE” Canadian personal finance guru, here is another perspective on the debt problems Canadians have buried themselves in. This article is very well written.

Why 30 Year Olds Are Screwed.

#24 Mr. Lahey, Trailer Park Supervisor on 09.08.11 at 10:49 pm

Captain Garth, you state Americans don’t like debt while Canadians do. It is not that Americans suddenly have woken up to the dangers of personal debt, on the contrary, they are denied access to debt. The banks have shut the taps off for the average consumer. If Americans could borrow they certainly would, especially with non recourse mortgages. Pawn shops are doing brisk business in the US of A. As for Smoking Man, you seem to tarnish everyone on this blog with the same brush, as if we are all bubble heads waiting for a real estate crash to get into the market. You may want to rethink that one. “Randy, get the car, Ricky just hijacked Rita MacNeil’s touring bus and is forcing her to harvest his weed field”.

#25 vyw on 09.08.11 at 10:53 pm

Baseline retirement budget assuming the mortgage is paid off:

property taxes/water $3600
insurance $1000
hydro $1800
cable/phone/internet $1400
food $1800
house maintenance $1200
local transportation $1200
total $12,000

add $3,000 – $5,000
for vacation, clothing, new computer, subscriptions, etc.

so $15,000 – $18,000 a year for a senior with a mortgage-free house

many seniors today live this way on their monthly CPP/OAS/GIS and use a HELOC if necessary

some might rent out a room or basement suite (though this reduces GIS).

so DIE BROKE – but pay off the mortgage first.

a $750,000 RRSP would yield about $60,000 a year -based on a drawdown of 8% (not counting investment gains).

I don’t call that living. $4/day for food? Who buys the beer? — Garth

#26 Snowboid on 09.08.11 at 11:05 pm

#8 vyw on 09.08.11 at 9:59 pm…

Well said and good advice.

#27 nonplused on 09.08.11 at 11:11 pm

President Zero Hope’s plan will not work, just like all their other plans did not work. Governments generally do not produce, they simply reallocate. Any jobs created, and if the last program is any indication we are talking about efficiencies of 1 job per million dollars spent at best, will be taken from the future when the bills come due.

That strange and inexplicable driver, human wants and needs and the interaction we undertake to achieve them, causes economic activity. For example, if I want a new truck, I got to go get a job and get money to pay for it. But then the government comes along and takes 50% of my salary, effectively doubling the amount of hours I have to work to get my truck. Suddenly I don’t want a truck so bad and quit working so hard. But the government has already spent the 50% they planned to tax (steal) from me on unemployment benefits, so they have to borrow more. Pretty soon we are all living on pogee surfing free porn on the internet and nobody buys any trucks. It’s all simple really.

The equation is simple. Bigger government = smaller economic activity. Memorize it boomers! It’s a simple equation, and we are living through a real time experiment that will once again prove it true.

Europe is in the late stages. In places like Greece, the government is so large a part of the economy that the rest of the economy can no longer support it and thus it is dying. The wasp larvae is now big enough that it will eat the rest of the spider. Unfortunately in this case, when the hapless spider dies, so will the wasp, since governments cannot metamorphosis into anything useful or productive.

Michele Bachmann will be the next POTUS. Sara Paulin on steroids but without the charm or marksmanship. She will hear Dog tell her to push the button as the apocalypse has arrived, but of course Dog can’t never get anything done without help from humans, and PS he needs more money.

This is what scares me th most about the USA. At least in the Soviet Union, the guys in charge of the button new that if they pressed it, it was lights out for humanity. Many people in the US see it as Dog’s will that there be a nuclear war. Oh well, I guess Dog only promised not to use a flood next time he wiped everyone out, so we can’t fault him. And this time we have to press the button, so we double can’t fault him.

#28 Snowboid on 09.08.11 at 11:11 pm

#17 Dorothy on 09.08.11 at 10:15 pm…

Seriously, do you real think Canada is immune to what has happened down south, and the rest of the world?

As Garth has said, the pain is only going to be more intense, the more it is delayed.

I don’t wish financial duress on anyone, but holding excessive (or even moderate) debt in RE at this time is like playing the rather stacked odds at any Vegas casino.

You do know the casinos always win, don’t you?

#29 Bobby on 09.08.11 at 11:13 pm

I spoke to a realtor today here in Victoria while out walking the dog. Shared the usual pleasantries and I asked how business was.
Said it was quite slow, people seem to be looking but not many buying.

#30 Shy Blawg Dawg on 09.08.11 at 11:14 pm

The debt load carried by Canadians and our friends to the south is a ‘contagion’ – it is widespread and it manifested quickly. However, the masses do not see the associated slow moving time bomb coming. The good thing is more institutions are publicly acknowledging the problem in their own way. I think I will ask the owner of a $800k waterfront shack listed on my street if he would like a renter, if he is in dire straights I might be seen as a lifeline! Of course, I might be seen as a vulture …

#31 Abitibi Doug on 09.08.11 at 11:16 pm

Six in ten people would be in financial crisis if they missed one paycheque you say? That’s counterintuitive if anything ever was. It’s easy to see how that could happen in a poor third world country, but in a rich and prosperous country like Canada that just went through an incredible economic boom and with low interest rates? How is that possible?

#32 disciple on 09.08.11 at 11:17 pm

It is very sobering to realize that as we are surrounded by all of our gadgets, outlets of entertainment, palaces of granite, hardwood, and SS, we are becoming poorer and poorer every passing day. Eventually, it will become clear to the majority that it is their houses that must be liquidated. When that happens, if not already begun, watch out below…

#33 disciple on 09.08.11 at 11:19 pm

#25 vyw…I hope you didn’t mean $1800 a YEAR on food. My family spends $300 a WEEK on food (6 of us and we love seafood).

#34 SCalgary on 09.08.11 at 11:22 pm

By keeping interest rate at the rock bottom, Carney made it as a non-factor for housing crash.

Looks too scary…

Great post again Garth…


#35 disciple on 09.08.11 at 11:23 pm

$1200 a month on food or about 25 G’s a year. This is just an estimate of course and includes dinners out once or twice a week, but did you notice the rise in price of eggs lately? Inflation is getting a little hyper I’d say…

#36 disciple on 09.08.11 at 11:23 pm

Sorry, I meant about 15 G’s a year…please forgive…

#37 Calgaryillusion on 09.08.11 at 11:35 pm

Great post tonight Garth – you’re a true voice of rationality in a sea of delusion.

#38 April on 09.08.11 at 11:35 pm

George c-$21 – where have you been? Of course Garth understands.

#39 oneworld on 09.08.11 at 11:35 pm

To dispute the claims that real estate always goes up, one only needs to do some independent research on what happened to real estate prices in Japan starting with late 80’s to present. During much of this period the rates in Japan were lower than even today’s ’emergency’ rates in Canada..

#40 Nostradamus Le Mad Vlad on 09.08.11 at 11:37 pm

“This won’t end well, we like debt, they don’t. This is also the national Achilles heel.” — Hurts like hell when the AH is banged, and that is a harbinger of what is coming to a city near us.

“This is the portrait of a society heading for social and financial failure. It’s hard to overstate the gravity of this situation . . .” — Charles Dickens comes to mind with this sentence, and the preceding lines, as those who are content and comfortable — here — will ride the storm out, but for those mentioned in the post, it will be the complete opposite.

The gravity of this situation will be seen by how many middle- and old-age people are living on the streets, just as the US and what the ‘authorities’ can or will do for them, probably nothing.
BoC Read between the lines — they are finally admitting we’re headed downhill; UK Unemployment Top five cities and figures; Hmmm. Maybe something, maybe hyperbole. China deliberately trying to crash the US$? Mitt Romney’s plan Remember Herbert Hoover? The Economic Collapse is, undoubtedly, a sensationalist title but in this case, the heading in the story is a little more important as it clearly shows US jobs going elsewhere; Hayward and Rothschild, but the second name was omitted.

Smoking Man — Seen this site? BPOE, take note — This one’s 4 U! Origami Money as an art form; The End of the Road? Mebbe; Germany Curious to see why so many EU countries want Germany to do this and that. Don’t they have enough work to do running their own countries? Welfare Michigan brings in new four year law. After that, zip; Gold – Silver stuff happening; Oct. 17 Greece moneyless, German Bonds at record low, Japan New action, or flogging a dead horse and Is Bernanke that daft?

Fukushima TEPCO is hiding something; Head Honchos in VA don’t seem to have a clue; Libya incl. Quadaafi’s speech; SuperNova! Not as exciting as the BossaNova, but quite good; Rick Perry More of the same; Lies YayaCanada counters a few.
Music! 5:17 clip Stevie Winwood live in Japan, ‘Hearts On Fire’.

#41 Carp on 09.08.11 at 11:43 pm

#25 vyw: $35 per week for food? That 5 bucks a day? Do all seniors buy KD for all meals? What happens when you need to fix the roof?

#42 Tim on 09.08.11 at 11:44 pm

RE#7 Jed
Date? We apparently lag the US by about two years, yet it has been five years since housing tanked in the US and we’ve only had a mild correction here, despite the world wide gloom and doom…
You still can’t find a decent house for under half a million in Victoria, a city where there are few jobs, so I don’t think it is tanking, maybe correcting mildly but still way overvalued

#43 TaxHaven on 09.08.11 at 11:44 pm

Never mind debt: the bigger, longer-term picture is worse.

Small-town downtowns in Canada are a procession of insurance agencies, real estate, bank, pawnshop, cheque-cashing place, second-hand store, “for lease”, vacant lots, liquor stores, social service agencies, government offices and struggling small businesses.

The only ones who have any real money are those few unionized resource-sector workers and an army of government employees…

#44 Utopia on 09.08.11 at 11:44 pm

#190 penpal on 09.08.11 to # 84 Detalumis wrote….

“With all due respect for your self -discipline… I would run from anyone who denied themselves that much in the prime of their life, certainly not scoop them up. Perhaps it worked for you, but forgoing that many things in life…. at that time in your life seems kinda tragic for me given that we are talking about a house here.

My sentiments exactly.
Glad someone actually said it out loud Penpal.

I really do hope you felt it worth it in retrospect.

#45 604genX on 09.08.11 at 11:54 pm

Early indications in Vanhatten of people rushing to the exit doors. Listings are really starting to take off – about 50% higher than average for September. Stay tuned. This might get uglier than a Canucks late-season hockey loss.

#46 Cabot Lodge brylcreem & trenchcoat on 09.08.11 at 11:59 pm

For the last year we have lived with our daughter and pay no rent.

Yeppa paying for the boomers…

#47 2deep on 09.08.11 at 11:59 pm

So we are thinking of buying in Saskatoon……

We are in a townhouse just outside the city and our mortgage is less than what we could rent rent for. For a variety of reasons we want to get back into the city asap (particularly because if the market comes down we will be stuck where we are for a lot longer than we are okay with).

We want to buy a bungalow in the city ($325K) where we can have/put a suite in the basement. Here are the things we are considering:
– With renters in the basement our overall monthly expenditure will be lower than right now (more money into savings).
– It would cost us 25-50% more to rent the equivalent in the city than our net monthly mortgage cost.
– If we stay where we are a market adjustment will put us under water and prevent us from moving.
– We are okay with having renters in the basement (we’ve done it before).
– Downside would be exposing ourselves to a greater loss looking at potential market adjustments from a percentage basis (we plan to live in it for a long time anyways so does that really matter anyways at that price point).

Thoughts, advice??….

#48 Trailer Park Boys on 09.08.11 at 11:59 pm

Most people figure they’ll need $750,000 to retire on, but the odds of more than a relative handful of us making it are slim to none.

Solution is not rocket appliances.

Gov’t should simply borrow more money , it knows how to do it…and create more lottery jackpots, maybe 3:1 odds.

#49 Timing is Everything on 09.09.11 at 12:03 am

I don’t call that living. $4/day for food? — Garth


Damn Interesting…(Off topic…or is it?)

‘[I]t is questionable whether a description such as “evil”—which is not uncommon in both the popular and scientific literature—can really be applied to individuals incapable of understanding what it means.’

This won’t end well.

#50 The InvestorsFriend (Shawn Allen) on 09.09.11 at 12:05 am


Yes, a big group of Canadians owe an Ocean of debt.

But interestingly, for the most part it is borrowed from other Canadians.

In some cases we put RRSP money in a Bank in a GIC and then effectively borrow back our own money at a higher rate.

In other cases the younger people are borrowing the savings of the older boomers.

None of us are average. Half owe more than average. half owe less than average. Many owe nothing.

Record low interest rates suggest we are awash in savings. Tons of money available to lend must be part of the reason rates are so low.

#51 Utopia on 09.09.11 at 12:07 am

Some fantastic posts, links, observations and personal anecdotes in the last weeks…..Devore, Timo, Smoking Man, Disciple, HHHF, Junius, Aussie Roy and even that angry Beach Girl. So many others I can hardly do justice in listing all but I enjoy most of your posts each day. It is why I love this site so much. My head is filled up every time I come here. Better than a good meal at an awesome restaurant…..I am always happy, full and well-fed when I leave.

Buuuurrrrp (oops sorry). My head just exploded!

#52 Davey Boy on 09.09.11 at 12:09 am

I think people today lack basic discipline, it’s the now generation. Fortunately I wasn’t like that growing up. Not highly educated but had good work ethics and set goals which included living well within my means and doing maximum RRSP since the age of 19. From todays blog I guess I fortunate to be in the top percentile that will be OK. But, and that’s a big BUT, you likely won’t get there if you need the latest gadget, eat out regularly at the “in” places, or try to keep pace with the “Jones”. I’m afraid as long as people try to “fill in the hole” with all the fluff and trappings the herd will keep plunging off the cliff. That’s why I tend to feel sorry for animals, they don’t get to choose there lot in life to a great extent and don’t know any better. As humans what’s our excuse

#53 fiendish Thingy on 09.09.11 at 12:24 am

#25 vyw

You can live in Canada (BC lower mainland) on $15-18k a year (with a paid off house)? Woo Hoo! ;-)
(is that figure for a couple or per person?)

I’ll make that much from my California govt. pension next year when I turn 55, and should have enough from the sale of my home last year to pay cash for a home in the lower mainland once the bubble pops and the melt is underway…

Still, I think I’ll keep looking for a full time job in BC to cover the rent until I vultch, and so I can eat at the White Spot once in a while…(although once we move ourselves and our money up to BC, perhaps a portfolio of preferred’s, ETF’s etc. will cover the rent until it’s time to buy?)

#54 Killer Chicken or Imploding Boomer? on 09.09.11 at 12:30 am

Smokin’ Man – I’m pretty sure this was mine

#55 debtified on 09.09.11 at 12:31 am

Garth, as far as I am concerned the “this will not end well” is a foregone conclusion. It’s just a matter of when. There really is no two ways about it. Just like gravity: What goes up must come down. Fundamental trumps all else. The world will make sense again.

Now, having said that, I wonder if you could write more about feel-good stories that people share with you. I am sure you get some of those also. I’d like to hear successes that people have achieved through insights they’ve learned from you. What specific practical actions they have taken to improve their financial well beings.

It would be nice to focus on the positive sometimes. I would really appreciate it. Thank you in advance.

#56 Jon B on 09.09.11 at 12:36 am

My prediction for the 30 somethings out there: retirement will become a lifestyle status symbol within the next 20 years. Only the very wealthy will actually retire, everyone else will be working to pay off their debts until they expire. Next to getting a tattoo, signing up for debilitating debt with a 30 year am while funding a live-beyond-your-means lifestyle with credit cards is the ultimate expression of short term thinking. Clearly we do love debt and piling more on doesn’t seem to bother many people in this country.

#57 Mister Obvious on 09.09.11 at 12:36 am

#19 Special-K

The two most dangerous years of your life are the year you are born… and the year you retire.

Utter nonsense, I’d say. Well, possibly the year you are born but certainly not the year you retire. That’s a myth perpetuated by indentured wage slaves who have been stripped of imagination.

I retired four years ago and haven’t regretted it for a second. I was ready and prepared. During my last few years of employment I began a gradual process of NOT identifying myself with my job. I never did, really. I was a dilligent, hard working person who paid his own way but I never let my working life consume me.

When the big day came I hit the ground running and never looked back. All my retired friends and I are busier than ever and aren’t sure how we made the time for nine to five.

If you can’t find useful, engaging things to do beyond the end of your working career then the system really has come to own you. And it always will, I suppose.

#58 NorthOf45 on 09.09.11 at 12:37 am

#25 vyw

$1,800/yr for food?!? What do you guys eat? Tree bark? There must be a lot of missing cats in your neighbourhood, no?


#59 Killer Chicken or Imploding Boomer? on 09.09.11 at 12:41 am

2 Spaz “The Baby Boomers are collectively screwed.”

Not the ones with $750K+

#60 NorthOf45 on 09.09.11 at 12:44 am

Landlord’s son called last week. Asked if we could make out September’s rent cheque to him personally, and he’d do us a favour and come pick it up. Sorry, I told him, we gave your dad post dated cheques up till November.

Inter-family generational attempted larceny. Troubling times indeed.

#61 The Phantom on 09.09.11 at 12:51 am

Gotta love it!

Garth you unequivocally state, “I don’t call that living. $4/day for food? Who buys the beer?”

Very impotant point however at LEAST as salient is the other unanswered question “Where’s the budget for gange?”

the Phantom

#62 Utopia on 09.09.11 at 1:05 am

#185 OttawaMike on 09.08.11 to Utopia…..

“You are right on about Africa. IBM for one along with other blue chippers are focusing their growth there”.

Many Thanks Mike. I agree. All the big players are suddenly there. It was not always that way though and in just the last few years a tremendous amount of attention is suddenly being given to Africa.

It is as if corporate America suddenly woke up and realized that literally hundreds of millions of fresh consumers (who had previously been all but ignored) were engaging in the world economy directly.

They are hungry and they want to participate.

That they could be the impetus for the next global growth phase and were perhaps the very best bet going forward as most of our traditional markets were fully mature already was but a bonus.

So I wrote about my firsthand experiences living there and sent off a copy to a friend. It was just for fun at first, but also to offer an honest first-hand account of Ethiopia and to offer others an alternative view of life in that land.

It got published and was linked all over the globe to my complete amazement. All Africa picked up on it and so did most of the European news services. I was stunned. It was just a little story and only a personal account.

The article came immediately to the attention of Meles Zenawi himself (Ethiopia’s leader) as it was one of the first to paint a positive picture of his county for an international business audience.

I never got paid a penny for it. It never even occurred to me to ask. I am just an opinionist as you know…a mere blogger. But the story was huge and as a result of my commentary the Ethiopian government built a paved road into the Danakil Depression to the new Potash mines that were being developed there. Who might have known there was so much interest in the region?

I put it up once before on this site before. This is the second time. Hope you enjoy my personal account from the Horn of Africa.

#63 Why Garth? on 09.09.11 at 1:29 am

Why does Mark carney terrorize my financial well being? What is a person who has money and understands the housing bubble do? I mean I’ve waited 4 years for this housing ponzito stop like it did in the US. People are maxed out but they will borrow until the banks say NO! The US has now allowed the freemarkets to do it thing and correct a bubble while the fascist conservatives continue to back stop the banks who back stops the credit ponzi. WTF? WHy do I have to put my life on hold because of fascist conservative. I hate Canada it’s the worst country in the world. Work and save for what? I hope Canada goes down the tubes and I will leave this country to roit for it’s sins. It might be time to leave Canada for a better life. Fascist conservative should be locked up for their financial crimes against Canada.

#64 Utopia on 09.09.11 at 1:45 am

Just for Disciple… (who has come to love Ethiopian music) I will again post this link to an incredible concert in Addis Ababba led by Beyonce and backed by the regions famous Teddy Afro.

Just take 3 minutes out of your life and watch this short video to gain an understanding of the incredible energy that is sweeping North Africa today.

You will not regret the time you spent. I Swear.

#65 Coho on 09.09.11 at 2:11 am

The people in the letter bounced back and now have a small business that seems to be profitable. What’s wrong with that? They’ve given themselves jobs and can hopefully work as long as they want or need.

But, it’s always that damn house. The programming affects all age groups it seems. They must be stirring house lust dust into the water. It mixes well with fluoride, maybe. “Let’s hold hands, pinch our noses and jump into the debt pool feet first, honey.”

Everyone has a reason to jump into 500K debt. New baby on the way, kids need more room, ego is taking a beating because friends are laughing at us, it’s a retirement plan, it’s the Queen’s birthday, my mother in law will finally like me….

But wanting to start paying off a mortgage when the kids are grown and you’re pushing 60? Why? It’s over, guys. Rent a place you like, keep running your business, save a little each year and enjoy what you can when you can.

Not wanting to be too dramatic, but just because Fukushima has been buried by Libya, Syria, the royal wedding and other celeb news distractions, radiation is still being spewed out. Many of us in North America, particularly the west coasters, may be running out of time before we (and the government) run out of money.

#66 Smell The Coffee on 09.09.11 at 2:44 am

Lets review. Gone broke once. Almost 60 years old now.

Clawed out of the debt-pit, on broken nails, raw knees, and sweated brow to save a 100 large.

Now, get tempted to buy at the very foamy top of the real estate circus, ignoring tht the rest of the world is in a flow blown brick-and-mortar depression.

Determined on emotion alone to be in a particle-board prison … until they put you in a pine one. Freedom 95.

Sounds like a good plan to me.

Very Canadian,

Go for it.

#67 Aussie Roy on 09.09.11 at 5:34 am

Ausssie Update

Brisbane’s southside has recorded a larger slump in house prices than any other region in all state capital cities, new analysis shows.

Prices in the city’s inner southeast tumbled 8.1 per cent in the three months to June, according to figures released by RP Data yesterday.

Auction Results per Individual State – Sep 4, 2011

The unemployment rate rose in August to 5.3 per cent, up from 5.1 per cent a month earlier, pushing the jobless rate to a 10-month high, according to new figures released today.

BONDS issued by Australian banks and big business have crashed to the lowest level since the collapse of Lehman Brothers as volatile European credit markets have kept many at bay.

Amidst the mostly good news in yesterday’s national accounts figures, there was one potentially worrying chart – the history of quarterly GDP movements plotted against the trend figure for hours worked.

Working from the perspective that the economy is driven by aggregate demand, and that aggregate demand is GDP plus the change in debt, I therefore expected the crisis to begin when the rate of growth of debt slowed down substantially.

Late last year, the research and brokerage firm CLSA commissioned me to write a report on the Australian housing market. CLSA was founded 25 years ago by journalists who were dissatisfied with the quality of existing journalism in finance–which then, like today, is often more public relations than investigative journalism.

Paid subscribers to Debtwatch – ($2USD per yr).

#68 I'm stupid on 09.09.11 at 6:08 am

The true problem lies with perception. People are not afraid of debt because they don’t really perceive it in real terms. It’s like loaning a friend money, you give it to them. Now they owe you, chances are that they “will forget” to give it back and you have to almost beg to get it back. It’s the same reason casinos use chips instead of real money, you don’t perceive it as money only chips. Credit cards, debit and store cards use the same principle, buy eliminating the ingrained paper value of money and substituting it with alternatives it gets people spending more than they can afford. You can walk into a car dealership and drive off with a car without a penny, you feel like you got something for nothing but the debt remains.

The solution is simple stop using alternative methods of payment and I can guarantee you that you will stop buying things you don’t need or can’t afford.

#69 blase on 09.09.11 at 7:10 am

Coho: The people in the letter bounced back and now have a small business that seems to be profitable. What’s wrong with that? They’ve given themselves jobs and can hopefully work as long as they want or need.

But, it’s always that damn house. The programming affects all age groups it seems…

But wanting to start paying off a mortgage when the kids are grown and you’re pushing 60? Why? It’s over, guys. Rent a place you like, keep running your business, save a little each year and enjoy what you can when you can.


Excellent post Coho. Reminds me of my grandparents who never bought a house, always rented. They always had a 2 year or new Gran Marquis, travelled, nice apartment with yard, and when my grandmother was the last to pass away, she had $40,000 in her bank account. They only thing they didn’t have was ownership of a big house, but they weren’t the house types, they liked other things in life better than being rooted to a home year round.

I think a lot of people are going to be be reassessing what matters in life, if they aren’t already with a mountain of bills hanging over their heads like a guillotine.

#70 JessicaJ on 09.09.11 at 7:11 am

Thanks Garth! Enjoy hearing it like it is and with some humour too! Miss comments from “The American” – are you taking an extended vacation?

#71 Keeping the Faith on 09.09.11 at 7:21 am

#17 Dorothy:
“… But what goes down will inevitably come up again in a few years”
What will bring housing prices back up in a few years? Hope? It hasn’t worked in the US.

Wonderful post again Garth, the end is nigh, eh.

#72 Victor on 09.09.11 at 7:30 am

Job growth slips by 5,500 as unemployment rate edges up to 7.3 per cent

Friday September 9, 2011, By The Canadian Press

OTTAWA – Statistics Canada says the country lost jobs for the first time in five months as the unemployment rate also edged up one tenth of a point to 7.3 per cent in August.

The loss of jobs was small at 5,500, but it makes the second straight month that job creation was virtually flat in Canada.

That was also below the economists’ consensus, who had expected a modest 21,500 pick-up.

The good news was that there was a modest gain in full-time employment of 25,700, with part-time work declining by 31,200.

#73 Ron on 09.09.11 at 7:43 am

Coming to my 2nd year of renting in downtown Toronto. Total cost…..$28,800.

I know holding out on buying RE is the right thing to do, but man is it hard throwing this money away.

What will it take for this bubble to burst?

So, throw your money away on mortgage interest and property tax. We’re not stopping you. — Garth

#74 penpal on 09.09.11 at 7:43 am

@ #31 Abitibi Doug

Things are not what they seem.

You don’t really believe that all this apparent wealth has been conjured up by anything other than low rates and almost non-existant lending standards, do you?

The 3 series BMWs , C series Mercedes and Audi A3 /4/5 series are leased. The recently purchased houses are highly leveraged, the older ones equity gutted by HELOCS and refinancings. Caution thrown to the wind as average people buy $ 250.00 jeans and $ 5.00 lattes.
C’mon now, you didn’t really believe that there were that many “wealthy” people now, did you?


Just don’t be deluded into joining in this debt-fest.

#75 penpal on 09.09.11 at 7:45 am

@ # 32 Disciple


#76 penpal on 09.09.11 at 7:58 am

@ # 47 2Deep

“Thoughts, advice??”

Yeah, simply don’t do it.


Ask yourself why do you really feel compelled to buy.

At this time.

After a huge run-up in prices predicated solely on low interest rates and almost non-existant lending standards.

Do you not currently have a roof over your head?

#77 T.O. Bubble Boy on 09.09.11 at 8:00 am

Here’s a new spin on bubble theories:
The Arrogance Cycle

#78 Mr.Lee on 09.09.11 at 8:14 am

Cental Banks, in the past, were seen as safty valves for the economy. Using interest rates to stimulate and cool the economy when needed. This function of these banks now seems to be defunct.

It now does not matter whether Carney or Bernanke raise interates because inflationary pressures on staples like food and fuel will do what interest rates are not doing.

As for Canadians and the debt they hold, all debts must be re-paid…………and the last time I looked, non of us qualified for a bail out.

#79 penpal on 09.09.11 at 8:17 am

@ # 66 Smell The Coffee

Cold, hard and to the point.

A realistic and concise appraisal of the situation in context.

Very good post, IMHO.

#80 kenji on 09.09.11 at 8:34 am

Well to all of you who did save and stayed debt/mortgage free for the past few years. Congrats! As your dollar is worth less now. Unfortunately majority of the population is borrowing a lot of debt and the government does not want to run into a situation where ultimately everyone can not afford their mortgages anymore. So who are they going to save or prevent? Similar idea of “too big to fail” and who’s going to pay for it?

I as a “greater fool”? took advantage of the market at its lows in 2009 and split my savings into two by purchasing two properties in the “416”. One with my name and the other with my siblings. Sold both of them this year in the summer bringing in 50%+ return “tax free”.

This is why Garth was wrong, you can not control or predict the variables of MACRO economics. This why Garth predicted wrongly.

Interest rates will go up and real estate will take an impact, but when? Will you continue to rent and make payments to 0 equity if it never goes up? or even worst if interest rates go down?

Two mortgaged houses and no savings? Yes, you are a genius. — Garth

#81 Ret on 09.09.11 at 8:35 am

“I don’t think that RE sill drop here like it did in the US.” Oh, really?

Yeah, the Yanks didn’t think so either. They placed huge RE wagers that the their house prices would never drop. Dumb a$$ Americans. What were they thinking?

Not to say that RE will crash, but the truth is that no one really knows. Random, black swan events that are beyond our control, could start to unravel our way of life in a very short period of time. $— happens folks, and often to some really nice people. Sometimes to millions of people.

But it won’t happen to us because we are Canadians and we have the Great Canadian social safety net.

“Blah, blah, blah,” or is it really “bah, bah, bah?”

Party on Canada!

#82 Kaganovich on 09.09.11 at 8:49 am

#50 Investor’s Friend

The upcoming bout of debt deflation is going to be painful for most in Canada. Here is a counterpoint to Walras’s law and I think it describes reality more accurately:“a-much-more-nebulous-conception”/

I have been following Keen’s work for about four years now and he is a very sharp fellow IMO.

#83 cliffard on 09.09.11 at 9:00 am

Few weeks ago scarboro rib fest bought a wick bubble gun used it it worked no hst on it bubbles are fun and very very silly but bubbles are also very very unpredictable and I also noticed they all burst and that was not as much fun if I needed a group of random people to take hamburger hill I would take them from the scarboro rib fest before I would take them from a group of economists or politicians. Even if things get bad like depresion bad if there was still a scarboro rib fest those people would still be there and it would sill be fun peace out

#84 BrianT on 09.09.11 at 9:13 am

#27-Bachmann doesn’t have the money to become President (last time I checked). Obama, Perry and Romney all have big money support, which is the bottom line in a faux election scenario.

#85 Waterloo Resident on 09.09.11 at 9:32 am

#21 ‘George C’ said; (“Canada is the largest country of personal debt ……… Ireland went through this and it is only a matter of time that the ticking time bomb in canada explodes. Forget interest rates.”)

= I have a feeling he’s right, even if interest rates stay at EMERGENCY-lows forever, our economy cannot keep up such high levels of debt when the rest of the world is slowing down and our exports will similarly slow down. AND, if somehow the rest of the world picks up then interest rates will pick up too, and if that happens then our interest rates will go up and then an even BIGGER crash here in Canada. Either way, we are screwed. Lets just enjoy these final days of economic happiness here in Canada while they last, sort of like the last few days of summer before the winter storms come along.

#43; ‘TaxHaven’ said; (“The only ones who have any real money are those few unionized resource-sector workers and an army of government employees…”)

= Exactly, that is why I’m now trying SO HARD to try to get me one of those government jobs, they are the ONLY way to survive these days !!

I read so many articles about how young workers today can only find NO-PAY internship jobs, or part-time minimum wage jobs, and this now seems to be the ‘NORM’, so where are all these young people going to get the money to buy those $Milliion dollar Toronto Homes in 5 to 10 years from now?

#56 ‘Joh B’ said: (“My prediction ….. Only the very wealthy will actually retire, everyone else will be working to pay off their debts until they expire.” )

= No, that is so far from the truth that its laughable. The truth is that people who owe so much debt will simply declare personal bankruptcy and have their debts wiped away 100%, that is what 80% of the people who are underwater in their mortgages are doing in America, so the same will be true of Canada too, we simply declare personal bankruptcy and walk away from all of our crushing debt. Why is it that this idea is so HARD for Canadians to get into their thick skull?

#86 timo on 09.09.11 at 9:41 am

“THE real reason for America’s Great Regression was political. As income and wealth became more concentrated in fewer hands, American politics reverted to what Marriner S. Eccles, a former chairman of the Federal Reserve, described in the 1920s, when people “with great economic power had an undue influence in making the rules of the economic game.” With hefty campaign contributions and platoons of lobbyists and public relations spinners, America’s executive class has gained lower tax rates while resisting reforms that would spread the gains from growth.”

happy happy joy joy.

Welcome to the great contraction 1970-early 80’s style. Inflation will not decrease your debt burden because wages are going to stagnate.

#87 kenji on 09.09.11 at 9:44 am

Garth – It is not that I don’t save. The idea is to save an invest correct? I am a “fool” In 2009 I held properties worth 90% more then I could purchase with 10% down. Although I could not cover the full mortgage through rent I was able sell both properties in “416” this summer. More then happy to be on the other side of a bidding war and I made the appreciation on the full value of the two properties with only putting out 10% for each. Remember tax free income through primary residence.

I simply took the opportunity I saw rather then sitting around and waiting for some bubble to burst in an unpredictable time frame. Especially when the economy is unstable and the only thing the government can encourage is more spending.

Again. I am a “fool”

Oh btw how how is Canada real estate different from US? Unlike down south I can’t purchase pre construction properties and just walk away with no liabilities if the property value decreases. We have much less aggressive loaning structures.

#88 vyw on 09.09.11 at 9:59 am

re #25
I was offering a baseline budget of $12,000 for a single senior with a discretionary budget of $3000 to $5000.
Check out the CPP/OAS/GIS tables and you will find that seniors receive a base amount of about $14,000 and if you check with relatives or friends or neighbours, you will stumble across someone living in their mortgage-free homes (that they bought in the 1970’s for $25,000), retired and not working and doing just fine.

As for $1800 for food. Well this is a baseline. You can use the discretionary budget for beer, seafood and other items.

Many single people live on $150 a month for food. Check out – one of the bloggers spent less than $100 for food for a month.

A baseline groceries list for a week?
eggs + bread $5
fresh veg $5
fresh fruit $5
fresh meat (chicken, fish) $8
coffee and tea (one week) $1
potatoes, rice, pasta $5
cooking oil $1
your choice $5

try it, you’ll have food left over at the end of the week.

In other news, employment fell by 5500 last month with a big drop in construction jobs. The contraction is here. But this time private household debt and housing prices is higher.

This is not a poverty blog. Your budget is absurd. — Garth

#89 not 1st on 09.09.11 at 10:02 am

Just spouting debt stats between countries is meaningless. You need to look at the nature of the personal debt before jumping to conclusions. Yes, on a per capita basis you might find Canada ahead of the U.S, but if you dig deeper you will probably find that Canadians were more diligent with their debt purchases, buying RRSPs, homes, businesses etc. In the U.S., people think nothing of going into debt for stupid consumer items like clothing or jewelry.

Yeah, stupid Americans. Prudent Canadians. Good argument. I’m convinced. — Garth

#90 gladiator on 09.09.11 at 10:12 am

A Friday offtopic: taking on debt is like peeing in your pants on a freezing day – at first it feels nice and warm, but then…

#91 timo on 09.09.11 at 10:13 am

The unemployment rate rose in the month to 7.3 percent from 7.2 percent, Statistics Canada said on Friday.

Net job losses totaled 5,500, far worse than the median market forecast of a gain of 25,000 and matching only the most bearish estimate in a Reuters survey of 23 analysts.

someone is in the hospital, are we are getting a cold? No worries, homeowner’s can take out home equity loans to spur on demand.

#92 Peakoilist on 09.09.11 at 10:28 am

#11 Cory on 09.08.11 at 10:05 pm
that is totally my frustration as well. I’m not really sure what BIG OIL is doing , but you’re right about price conditioning. Is inflation at play now? If Oil goes to US $110. again, what will the pump price be? $1.50 or more now? I’ve been thinking lately that the oil corps know that the price of oil is NOT going to go above US $90, for awhile , but they got used to charging the $1.25 to $1.30, and want to hold onto that pricing. The public is powerless to do anything about it, apparantly. The truth of the matter is that it is draining our economy, along with the maintenance of homes too large for the average family. that will change as peal oil’s effects continue to eat away at Suburbia. Peak Oil is here folks, the only saving grace for the Canadian economy so far has been the fact that billions of barrels of very expensive oil is sitting in muck in Alberta, just like a giant insurance policy that may not ever be fully collected. The Americans kinda want it but don’t like the messiness of it.

#93 Peakoilist on 09.09.11 at 10:39 am

#90 gladiator on 09.09.11 at 10:12 am
yeah that’s right , and then this can happen….it’s at the 3:30 min point..

#94 Utopia on 09.09.11 at 10:50 am

This is terrific. The USD just hit 77 and I have finally been vindicated in my position. For much of the summer as you will recall I have been saying that the dollar would stage a rally.

My timing is terrible as usual and I was only off by a few months (a bit too long to make a profit without having taken a long position) but was I ever right.

The dollar doomer’s and gold-huggers here who spent all their time telling us that the buck was going straight into the toilet and would soon flush the US economy down the sewer can now officially back off and never call me an idiot again (yeah, that means you Oasis!) because I was right and you were wrong.

I hit my target. Now I have increased it and 82 is within range. Maybe I am getting to be a bit like Smoking Man but why am I always right about these things? That’s not even the booze talking, still a bit too early for that.

Puts me in a good mood. Maybe I will have a beer anyway.

#95 Kilby on 09.09.11 at 11:02 am

Completed sales, August 2010 compared to August 2011.
Couldn’t get total listings from last Sept to compare to this year but found these figures interesting. These are August 2010 and August 2011.

Parksville, 2010 36 2011 40 (city)
Qualicum, 2010 21 2011 27 (city)
Comox, 2010 33 2011 28 (city)
Nanaimo, 2010 156 2011 182 (city and area)
Courtenay, 2010 19 2011 20 (city)

Kelowna, 2010 32 2011 32 (N&S)
Penticton 2010 45 2011 61 (city and area)
Smrlnd, 2010 17 2011 32

So completed sales are generally up a little from last year which may be a result of falling prices? Considering the number of current listings (Penticton 836) these aren’t big numbers.

#96 Ron on 09.09.11 at 11:15 am


But this is ok after the bubble bursts?

Is there no time good enough for you to own realestate?

#97 Utopia on 09.09.11 at 11:20 am

#17 Dorothy said…

“However, I don’t believe we’re going to see the same kind of decimation of the market that we’ve witnessed in the States………This is just the inevitable, predictable down cycle that happens every so many years”.

Not even close Dorothy.

This is a generational correction. The kind that only comes along after decades of malinvestment and misallocated wealth. It typically follows on the heels of a bursting of a major credit bubble (like ours) and takes many, many years before a correction is fully resolved.

Rheinhart and Rogoff, historical economists have done a lot of very good work in this area and the outlook is not so rosy as their conclusions have been substantially confirmed in the US. You must read them.

My biggest worry is that we may actually see a more severe correction in Canada as our own leveraging of debt was actually more pronounced.

This is NOT a garden variety correction we are headed into and the feeble warnings that many of us here on this blog elicit to all to avoid debt should really be taken much more seriously.

How about this: I really, really really mean it when I say you should harvest gains in real estate, shun debt, save for a rainy day and get prepared to invest for once in a lifetime opportunities. The kind that have not been seen since the depths of the Great Depression itself.

And that is the best part. So many who come here and complain seem to just not understand that a windfall of opportunity is coming for those who saw the light (and stepped out of the way).

Play your cards right at this juncture and you will set up your family for an inheritance to really brag about in the coming decades.

No, I am not kidding. It will be huge.

#98 Ronaldo on 09.09.11 at 11:21 am

#13 – April

“Tim #1 – Garth was not wrong about housing tanking three yrs ago…. don’t you know or choose to forget what happened at the beginning of 2009 when we were well into a serious housing price decline….. Are you a realtor? or someone who is afraid of seeing his assets decline in value……”

People have very short memories April, so here is a reminder of what happened and which caused the housing mania.

By the peak of the Tech Bubble at end of 2000, the average price of a Vancouver home hit a high of 295,977. BOC rate ended the year at 6.00% and CMHC 5 yr closed was 7.81% . The average home price had gained 20.71% from an average price of $245,000 in 1992. (8 years).

2001 – BOC rate 5.75 Jan – 2.50 Dec House $285,900
2002 – BOC rate 3.00 May – 2.25 Dec House $301,000
2003 – BOC rate 3.00 Jan – 3.50 Apr House $329,500
2004 – BOC rate 2.25 Apr – 2.75 Dec House $374,300
2005 – BOC rate 2.75 Jan – 3.50 Dec House 445,800
2006 – BOC rate 4.50 Jan – 3.75 Jul
2007 – BOC rate 4.50 Jan – 4.75 Jul
2008 – BOC rate 4.25 Jan – 1.75 Dec
2009 – BOC rate 1.25 Jan – .50 April

We know that housing pretty much peaked in spring of 2007 and started its decline, at least in Alberta anyway, where the huge jump in prices was from 2005 to 2006 peaking in spring of 2007 and remaining quite flat IMO. Not so in Vancouver and other parts of the country.

Then in fall of 2008 the financial world turned upside down and housing sales grinded to a halt and the correction was in progress.

This came to an end with the BOC dropping the rates to .50 in January of 2009 and creating the fuel for the current housing Bubble. It’s all interest rate driven. Nothing more.

IMHO, the banks have been totally irresponsible in their lending practices (prime minus 1.5 and 2% prior to 09) and our dear gov’t officials did not do enough soon enough to prevent what is going to be mass carnage when things start to un-wind. And they will. And now they are blaming the citizens of the country for the debt levels that they have gotten themselves into. All with their help. Shame on the whole bunch of them.

#99 Ron on 09.09.11 at 11:42 am

Thats what I thought.

#100 Dorothy on 09.09.11 at 11:43 am

#28 Snowboid
“ Seriously, do you real think Canada is immune to what has happened down south, and the rest of the world?
As Garth has said, the pain is only going to be more intense, the more it is delayed.
I don’t wish financial duress on anyone, but holding excessive (or even moderate) debt in RE at this time is like playing the rather stacked odds at any Vegas casino.
You do know the casinos always win, don’t you? “

Of course Canada is not immune to what is happening in the rest of the world, but I never said it was. What I DID say is that real estate always goes in cycles and that while this particular down cycle may be deeper and last longer due to the current worldwide financial situation, it will eventually correct and start to go up again. Because it always does, eventually.
Yes, it may take a decade, but anyone who does not HAVE to sell now would be wise to wait it out rather than panic and sell into a down market, thereby turning a theoretical loss into a real one.
It really boils down to whether you view your home as an investment or as a roof over your head. If it’s the former then, as with all investments, you should buy low and sell high. So if you bought your real estate at the top of the market and need to cash out now, I agree you’re effectively screwed. But if you view your house as a home that you enjoy, negotiated a fair price for, and don’t need to move right now, then you should ride this particular storm out because, like all previous such storms, it will eventually pass.

#101 Peakoilist on 09.09.11 at 11:44 am

Was the title of this blog “This won’t end well #911”?, sorry just a little play on numbers.

#102 Utopia on 09.09.11 at 11:46 am

#47 2deep said……

“So we are thinking of buying in Saskatoon…thoughts, advice?”
Sure. How about this: Saskatoon has seen the largest percentage price increases of any major city in Canada. The average home here now costs 375,000 dollars and is still rising. That is just 70k less than the average priced home in the GTA.

Do you love it here THAT much?

Price to rent ratios have NEVER been this extreme here over the past century and keep in mind that this is still essentially a commodity based economy.

That means a bust is always in the offing. Cannot be avoided. The cards are stacked against you if you buy here now and I will quietly suggest it is going to be the single biggest mistake you ever made.

But that is just my opinion. Nobody cares to listen to it despite all the evidence that this market is gone insane.

So go ahead. Be brave. Buy like a trooper. In a few years you can write back and tell us all how that worked out for you.

#103 vreaa on 09.09.11 at 11:56 am

Canucks Hockey Player Expresses RE Market Hope
“We finally bought in the Vancouver market and hope it keeps going up”

#104 BrianT on 09.09.11 at 12:06 pm

#92Peak-re your insurance policy for the Canadian economy, I wouldn’t go borrowing against it. Canada will continue to increase its population through immigration. Oil imports from the Middle East will continue to increase until quite possibly Canada becomes a net IMPORTER of oil. Ontario doesn’t get its oil from Alberta, and Ontario gets the majority of the immigrants.

#105 BrianT on 09.09.11 at 12:10 pm

#88Vy-Your food budget might be more accurate than people think-many old people barely have the appetite to eat much food at all-this is why the food supplements like Boost shakes are promoted. I don’t think I have even met one person over the age of 75 who ate like a horse-most pick at their food like pigeons.

#106 BrianT on 09.09.11 at 12:13 pm

#85Water-You might be comfortable declaring personal bankruptcy but most Canadians are not-they will suffer greatly before choosing this logical option.

#107 Ronaldo on 09.09.11 at 12:18 pm

#43 Tax Haven – are you talking about Nanaimo?

#108 BrianT on 09.09.11 at 12:20 pm

#69Blase-IMHO most women want to be “rooted” as you put it-they want to be rooted more than they want to be happy. Analysis of these scenarios while pretending that there are not major differences between the sexes on this one is total B/S.

#109 Devore on 09.09.11 at 12:31 pm

#50 The InvestorsFriend

None of us are average. Half owe more than average. half owe less than average. Many owe nothing.

Since you are such a stickler for details, this is not true, unless by “average” you mean “median”.

#110 jwkimba on 09.09.11 at 12:41 pm

#20, How can we be compared to the US real estate market? Unlike US aggressive measures to loan money we here can’t get a mortgage over a the phone through an infomercial. If you can’t afford a mortgage, no one gets sweet incentives to lie cheat and steal to make it fit/affordable.

LOL. yeah, never happened here. We’re all good.

#111 Dorothy on 09.09.11 at 12:41 pm

#71 Keeping the Faith
“… But what goes down will inevitably come up again in a few years”
What will bring housing prices back up in a few years? Hope? It hasn’t worked in the US.
Wonderful post again Garth, the end is nigh, eh.


A rise in Consumer Confidence, combined with the desire of many to own their own home, is what will, eventually, cause prices to rise again. It might be a decade from now, and I doubt they’ll ever rise to the dizzying heights we’ve all recently witnessed, but rise again they will. Just as they always have after previous real estate market downturns. This time will be no different. The world is not going to come to an end.
All I hear from young people all around me is that they are watching and waiting to see how far prices fall before they jump into the market. And as soon as they jump, prices will stabilize and then begin to rise again.
Even on this blog, there are many who say they are going to rent until they think the market has hit bottom, at which time they plan to buy. And once people start buying again, the bottom will have been reached and the ascent begun. It’s simple economics.

#112 Rich Renter on 09.09.11 at 12:44 pm

Garth if you were the finance minister would you amend the mortage rules or do feel this one will take care of itself?

#113 Utopia on 09.09.11 at 12:47 pm

Sorry. Forgo to give a link earlier…..

From July 2010. A New York Times article on Reinhart and Rogoff discussing their book “This time is Different” which attempts to encapsulate the history of economics through a fact finding mission on hundreds of busts across the ages. Well worth reading. Instead of being led astray by random thoughts posted by thousands of lunatics on the web and being confused by misplaced anecdotes and trivialities why not just read some of the historical record for yourself and come to better conclusions?

Start with a review. Then follow the rabbit down the hole.

#114 Davey Boy on 09.09.11 at 12:56 pm

Vreaa #103

So what if a professional hockey player making 23 million over 5 years purchases a home in Vancouver. The value of housing could go to zero, for him no big deal, for the other “greater fools” it spells disaster

I think all it illustrates is that, given his means, he can make many silly purchases and still

#115 Carpe-Diem on 09.09.11 at 1:00 pm

Do some of you forget “who” came across the numbers to retire on…(drum roll)…the Banks = bank fees = large profits. Oh, what am I going to do if I don’t have a million for retirement – oh sh*t, no golf for me!

Are we a society that can’t live on basic means, geez, get a pair of sneakers and enjoy a walk – WTF is wrong with people in here who act like they are entitled to yearly vacations, hired help, new vehicles every 3 years….blah blah blah.

Maybe the bloggers here are all well to do – so figure what is coming down the pipe – thousands upon thousands without any savings living on the street because they never saved ? … think again – our government will tax those with savings to support those who don’t – plain and simple.

#116 Peakoilist on 09.09.11 at 1:03 pm

#96 Ron on 09.09.11 at 11:15 am
Ron, Ronny boy…you’re not paying attention to what GT has been saying Forevvverrrr. Don’t make RE more tha 40% of your asset classes. He’s not saying to NOT own RE..I think we have to move you to the front of the class..:)

#117 Beach Girl on 09.09.11 at 1:12 pm

I don’t call that living. $4/day for food? — Garth


Who was that nutbar Chinese politician who suggested that? Not being racial, he was Chinese. In the 80’s. Was it Tousbichi or something? Loser. Nice telling starving people how to fill their bellies. And he was chunky, hard to do that on some Asian physiques. He was eating more than tuna, he was a tuna.

Also I hate David Suzuki, I think he is certifiable. Met him at a ROM Dinner and Discussion. Never met anyone so sure of his own self-importance. I know, no one thinks I actually go out, but I do.

That wonderful environmentalist owns several homes, has a larger footprint ecologically than me. But I am sure mine is bigger, footprint that is.

#51 And whoever said I was angry. I am not. Do you understand that. Have a nice weekend.

I also enjoy being here. I am trying to educate myself. But it is a slow process some days. And that is not on my account.

#118 Nemesis on 09.09.11 at 1:12 pm

For Nostradamus… the week’s most significant event in the ‘won’t end well either’ genre (from a FortuneTeller’s perspective, Nostra – this one is, like, totally ‘off the ominous scale’).

[AlJazeera] – Erdogan: Turkish navy to protect Gaza aid

#119 BrianT on 09.09.11 at 1:18 pm

#94Utop-Yeah that US dollar rally against gold has been really impressive. Congrats.

#120 Snowboid on 09.09.11 at 1:24 pm

#100 Dorothy on 09.09.11 at 11:43 am

No doubt real estate goes in cycles, but there is a big difference between past valleys and peaks – they were relatively small.

One year ago I thought the RE market in Canada wouldn’t end up as bad as the US, but C&F have created an environment that may make it more like a trip to the bottom of the Grand Canyon.

You say it may take a decade. I think it will be closer to twenty years – based on the extended pornfest created by the low interest.

Although we did own investment RE in past, we only sold our primary residence in April of this year. We lost about $100K based on what we could have sold for in Jan 2010, but we still came out well ahead of the game.

If you view your home “as a home that you enjoy” and you are comfortable with its’ value going down 30-40% (depending on the city you are in) then you are correct in saying you should ride out the storm.

But we will rent up here until we believe prices have hit the bottom, that is only common sense!

I’m pretty sure the former owner of the home we purchased down south thought she could ride out the storm, but ended up selling for 56% less than its’ peak value in March of 2006!! It will not likely be back to that peak value until 2021 or later!

As long as you realize the storm brewing in Canada may be Category 5, you can make it.

Otherwise you would be wise to take your equity while you can and stop treating RE like is it something more than just a roof over your head.

#121 Nemesis on 09.09.11 at 1:28 pm


You neglected to mention his yacht. TwinTurboDiesels, I believe. ;)

#122 disciple on 09.09.11 at 1:39 pm

#64 Utopia…that was awesome, lifted my spirits, quite a unique sound…thanks a million, brother. Been meaning to mention that I had posted a link on the disappearance of the bees I think a day or so before you posted a link to that article you wrote on the same topic…the coincidence was unearthly…I read it while camped out in Algonquin, had a bit of trouble with the wasps out there, very timely.

#94 Utopia…I had always suspected you and Smokes were the same person…

#123 Utopia on 09.09.11 at 1:40 pm

#119 BrianT

No big surprise with you. So predictable. You missed the point again (as usual). I just get so tired of listening to all you dollar doomer’s telling me the Greenback is headed the way of the Dodo, that it will crash and burn in a hyperinflationary fireball.

Total nonsense.

Gold relativity is not even the issue here so stop diverting the focus and minimizing my case. What matters is that you doomer’s have been proven wrong again and again but still remain unrepentant even when the record is clearly against you.

The least you could have done was give me credit for having predicted 77 with accuracy instead of being such a sore loser and just adding another sideways insult.

So where is the hyperinflation Brian? Hmm?


#124 Devore on 09.09.11 at 1:42 pm

#68 I’m stupid

It’s the same reason casinos use chips instead of real money, you don’t perceive it as money only chips. Credit cards, debit and store cards use the same principle, buy eliminating the ingrained paper value of money and substituting it with alternatives it gets people spending more than they can afford.

Dissociation from reality is a big part, but also, these days, the amounts are important too.

Once you add more zeros, whether it’s millions, billions or trillions, it really doesn’t matter. The numbers are so large at this point, they are meaningless. People will go to great lengths and make a lot of noise to save a buck, but a billion is rounding error.

We’re at this point with house prices. The prices are meaningless, just numbers. That’s why such a big focus on the monthly payment and not total amount, because it is a manageable number, that people can visualize (vs their paycheck).

#125 disciple on 09.09.11 at 1:46 pm

#115 Carpe Diem…well said. That’s why I try not to declare income nor gifts I give out, unless I am forced to by the end of a gun. The less the taxman knows, the better. I have given away my fortune two times already only to gain it back. It is better to give than to receive. The taxman takes your money right out of your paycheck without even asking, and you continue to let him. I asked earlier what your criminal income taxes go to pay for…nobody has an answer yet?

#126 Randis on 09.09.11 at 1:46 pm

I hope some ppl who post on this blog realize that because of illiquiditiy and low valuation frequency, price correction of RE tends to take long to come into effect. Look at the price stagnation over the 90s for a reference.

Anyhow, oppose as you wish, but Garth is right all along. Its something so fundamental its like common sense that RE will correct. I guess common sense is lacking in a lot of peope in these days.

#127 Peakoilist on 09.09.11 at 1:51 pm

#104 BrianT on 09.09.11 at 12:06 pm
That is a complete fabrication not founded in fact.
Opec suppliers are currently stagnant in their production volumes and will not have the capacity to deliver to all of the hungry consumers. They will be trying to save their extra production so their citizens can drive everywhere and for power generation. (Saudi burns oil to produce electricity)
Chindia will demand 5 mbd in the next 3-4 years.
World oil production of conventional crude has dropped 1 mbd since 2008. Crunch time is coming. Will the West reduce its demand by an equal amount. Well, we’ll see. But if more immigrants will make the difference as you are saying, that very thing will increase our demand. So, your argument is very shaky.
Only, severely reducing our demand and efficiency will help. Will conservation be delivered in time? Probably not. Maxed out consumers are in no mood to buy 50k electric cars and Hybrids en masse. Maybe, try all of us switching to walkable communities and bikes. Won’t happen in time. The trappings of Suburbia are firmly in place and soon folks won’t be able to just get up and move instantly( because of negative equity)…and where to if they could?
Sorry, Brian, you mean well and are wishing for a good outcome. However, if you just examine the facts and use some critical thinking you will realize that your way of life will change. (if you need more data, I can supply mountains of it)

#128 Dorothy on 09.09.11 at 1:52 pm

#120 Snoboid

I wouldn’t call the real estate crash in the 1980’s a small one. I can remember people in Edmonton offering their SF detached homes in a straight exchange for a condo with a smaller mortgage. They’d do just about ANYTHING to get out of having to renew their big mortgages at extremely high interest rates. Trust me when I say that the difference between the valley and the peak in that particular down cycle was anything but small!

#129 timo on 09.09.11 at 1:56 pm

Tons of people are chattering about the possibility of a Greek default today, with Germany ready to bail out its banks if that happens

Rumours are overflowing my email today.

This is going to be an very bumpy ride.
Hopefully they can keep the car on the road because it is a long way down.

#130 Dorothy on 09.09.11 at 1:56 pm

#97 Utopia
This is a generational correction. The kind that only comes along after decades of malinvestment and misallocated wealth. It typically follows on the heels of a bursting of a major credit bubble (like ours) and takes many, many years before a correction is fully resolved.
Rheinhart and Rogoff, historical economists have done a lot of very good work in this area and the outlook is not so rosy as their conclusions have been substantially confirmed in the US. You must read them.


For every “expert” with one view, there is another with an opposing view. Case in point:
The bottom line is that nobody really knows what’s going to happen next. We can only do as much research as possible, draw our own conclusions, and hope to God we’re right.

#131 young & foolish on 09.09.11 at 2:01 pm

Coming to my 2nd year of renting in downtown Toronto. Total cost…..$28,800.

I know holding out on buying RE is the right thing to do, but man is it hard throwing this money away.

What will it take for this bubble to burst?

So, throw your money away on mortgage interest and property tax. We’re not stopping you. — Garth

EXACTLY … either way you HAVE to pay to live somewhere. If you believe house prices will go up, then put your equity down on property and shackle yourself to a ball of debt. If you think the market is at the top, then invest your equity elsewhere and pay rent. Ha! … if only people were more rational.

#132 Devore on 09.09.11 at 2:05 pm

#71 Keeping the Faith

What will bring housing prices back up in a few years? Hope? It hasn’t worked in the US.

And I hate to bring up Japan, but I’m gonna bring up Japan. Low-zero interest rates for two decades, massive “quantitative easing” and banking interventions, strong manufacturing and financial sectors, an export economy, and they’ve seen two decades of declining real estate prices.

Do things bounce back? In real terms, maybe never. How much for a tulip bulb these days? Now, real estate is no tulip bulb, but to say “it will bounce back in a few years” gives a false sense of confidence.

#133 Snowboid on 09.09.11 at 2:09 pm

#88 vyw on 09.09.11 at 9:59 am…

Okay, so the blogger spent less than $ 100 for food in one month.

If I follow her strategy of not including the costs of food already in the ‘pantry’ and not including eating out – I’m sure I can get under $ 100!!!

Did you also catch her RE experience? How about spending $ 10,000 the first three months not including her mortgage payment!! That’s going to put a dent in the grocery budget!

I didn’t realize what a wealth of information Moneyville is, thanks for the post!

#134 jess on 09.09.11 at 2:29 pm


Thankyou, for your response to my question. Have you read the report. If good is the majority worldwide, than why would the good allow such a thing as greed, conflicts of interest, and wrongdoing?

investigation,Senate Investigations Subcommittee Releases
Levin-Coburn Report On the Financial Crisis
WASHINGTON – Concluding a two-year bipartisan investigation, Senator Carl Levin, D-Mich., and Senator Tom Coburn M.D., R-Okla., Chairman and Ranking Republican on the Senate Permanent Subcommittee on Investigations, today released a 635-page final report on their inquiry into key causes of the financial crisis. The report catalogs conflicts of interest, heedless risk-taking and failures of federal oversight that helped push the country into the deepest recession since the Great Depression

It recounts how Washington Mutual aggressively issued and sold high-risk mortgages to Wall Street, Fannie Mae, and Freddie Mac, even as its executives predicted a housing bubble that would burst, and offers new detail about how its regulator deferred to the bank’s management.

New documents show how Goldman used net short positions to benefit from the downturn in the mortgage market, and designed, marketed, and sold CDOs in ways that created conflicts of interest with the firm’s clients and at times led to the bank’s profiting from the same products that caused substantial losses for its clients. Other new information provides additional detail about how credit rating agencies rushed to rate new mortgage-backed securities and collect lucrative rating fees before issuing mass ratings downgrades that shocked the financial markets and triggered a collapse in the value of mortgage related securities. Over 120 new documents provide insights into how Deutsche Bank contributed to the mortgage mess.
“Our investigation found a financial snake pit rife with greed, conflicts of interest, and wrongdoing,” said Levin.

Running the CDO Machine:
Case Study of Deutsche Bank. . . . . . . . . . . . . . . . . . . . pages 330 -371
gemstone7 lippmann

#135 Oky-boy on 09.09.11 at 2:35 pm

Hey Garth

maybe I’m one of those kiddies from Ontario with no economics background (one that’s useful anyway) but a lot of your posts are starting to sound the same.

All you seem to talk about is the impending doom (not that I’m denying this will ever occur mind you, I think it’s only a matter of time before those interest rates wreck us poor people)

Perhaps a bit of advice on how to whether the coming storm instead of saying. “Those interest rates could go up TOMORROW!! Don’t buy houses!!” in every post.

maybe I’m too young and naive to read between the lines…

What kind of free advice are you looking for? Spelling? — Garth

#136 vyw on 09.09.11 at 2:37 pm

#105 and #128
thanks for your comments
I’m not trying to impose a food budget here.
The main point is that seniors today collect around $15,000 a year in OAS/GIC if they have no other income and around $18,000 if they have CPP of around $500 a month.

And a budget of $12,000 baseline and $3,000-$5,000 works for most seniors living today. This is perhaps one of the reasons that many stay in their mortgage-free Toronto homes instead of cashing out for $600 – $800K. Because they can. If they’re short on cash, they can use their HELOC or rent out a room or basement suite.

Now if they have $750K in RRSPs or an indexed pension, well then all the better.

#137 Smoking Man on 09.09.11 at 2:41 pm

Bye Bye Greece

Get the dracma machine going

#138 Smoking Man on 09.09.11 at 2:45 pm

Short everything NOW Greece is going bye bye this week end

#139 Ron on 09.09.11 at 2:46 pm

#116 Peakoilist

I hear you, I’ve been also saying the same thing since 2007 (maybe too early). Never the less, one has to wonder if this reasoning is wrong after all. I mean, how long do bubbles last?

#130 young & foolish

Thanks for your reassurance.

It’s tough to do all the right things in life only to end up renting, ie, good education, land a good job, etc. No offense to anyone who likes renting.

Just feel it wasn’t supposed to end up like this…..American dream and all.

#140 maxx on 09.09.11 at 2:46 pm

#50 The InvestorsFriend (Shawn Allen)

The entire universe knows that banks lend out waaaay more money than they take in on deposit.

#141 Cookie Monster on 09.09.11 at 2:48 pm

Garth, why did you delete my post with link to the Ron Paul debate? Ron Paul is gaining strong in the GOP race, despite the media’s attempts to marginalize him. Do you have to marginalize him too? The man has integrity and has stood by his principles for forty years.

The man is a former practicing medical doctor who delivered thousands of babies. It’s funny how the moderator when asking about Obamacare they never asked RP any questions, the only MD in the race and they didn’t ask for his input. Unbelievable.

People really should see this and listen to what RP says in the short time he gets to say it. A win by RP would be the best thing for everyone economically speaking, globally.

This is not a Ron Paul web site. Like you, he’s a nut. — Garth

#142 Snowboid on 09.09.11 at 2:54 pm

#128 Dorothy on 09.09.11 at 1:52 pm…

I remember it well, had to work a second job to help pay the 18% interest on the mortgage.

Unfortunately, compared to what is coming our way in the near future, it was small. There are no easy fixes in our current economy, no one will be trading their Condos for SFHs!

#143 Smoking Man on 09.09.11 at 2:55 pm

Beach Girl Right on with assesment of Suzuki.

#144 ss on 09.09.11 at 2:57 pm

Dr. David Graeber, professor of anthropology at Goldsmiths College, University of London on his book – Debt: The First 5000 years. How the concepts of debt and credit have defined human history and what this means for our current credit crisis and the future of our economy.!

#145 maxx on 09.09.11 at 2:58 pm

#57 Mister Obvious on 09.09.11 at 12:36 am

Couldn’t have put it better…I savor every single sip of coffee in the morning, slowly, watching the sunrise, then reading the paper and chatting with my beloved. Time, the ultimate luxury, is your own. Now THAT’S what I call having made it in life. Keeping in touch with friends, planning trips together- it’s my dream come true. I have always had a deep dislike of debt and a deeper distrust of the temporary “benefits” that it supposedly brings. I’ll take the time any day. Cheers!

#146 jess on 09.09.11 at 2:59 pm

privacy protect who?

The list, published on General Secretariat for Information, will soon include individuals once clearance from the Hellenic Data Protection authority is granted.

Read more:

Greece released a list of 6,000 companies owing a total of more than 30 billion euros ($41.8 billion) in backtaxes and will release individuals’ names after completing procedures to override data protection laws.
How I learned to avoid the taxman in the British Virgin Islands
Trevor Cole
Published Thursday, Jan. 27, 2011 5:57PM EST
Last updated Thursday, Feb. 24, 2011 6:40AM EST

#147 Smoking Man on 09.09.11 at 3:06 pm

Top German of Euro Central Bank just quit……

Got to get some popcorn to watch all the fun this week end

#148 Mr Buyer on 09.09.11 at 3:07 pm

Can I ever come home? My youngest barely speaks any English and his Japanese is just starting. His older brother is losing his English to his exponentially increasing command of Japanese while their older sister still has a reasonable command of English. What ever you say about Japan’s economy, I can buy a huge pack of 3 chicken breasts for like 6 bucks and a quart of milk for like a buck 40 or something like that. Dinner out for 5 for as low as 15 bucks (I am not kidding, there is a chain noodle restaurant that is caffeteria style) and there is no tipping anywhere and you can drink only water at any restaraunt with no one giving you the hairy eyeball. There are so many people here and the culture is so different but I am starting to wonder about settling in for another decade or 2. If I do that my kids will not grow up beside the river like I did. It is a shame. A huge, rich rich country like Canada with everyone on their knees and a dark future ahead. I never imagined I would be gone so long and perhaps much longer if this craziness does not abate in short order. My great country, perhaps the richest in the world in real terms but everyone a week away from ruin. How can people tolerate this…We have cash but I have 20 years of child rearing ahead of me. How am I going to pull that off in a contracting economy? I am going to bed, I am simply too tired and more than a little discouraged by all this nonsense. I may have to keep my biz here and just forget about going home except for holidays. How can Canada be more expensive than Japan in so many ways…

#149 Cookie Monster on 09.09.11 at 3:11 pm

This is not a Ron Paul web site. Like you, he’s a nut. — Garth
No it’s not and I appreciate that, but this site is political economy related and since Canada’s political tyranny is no less than the USAs, I thought it was relevant.

Why are people who want small government nuts? What evidence do you have the government provides the best solutions to the population at the best prices? When I look at government I see a lot of corruption, waste, bureaucracy, and endless boondoggles with no accountability. Am I just dreaming, please wake me up!

#150 OttawaMike on 09.09.11 at 3:12 pm

#117 Beach Girl on 09.09.11 at 1:12 pm
Hey Beach Girl,
I’m assuming you are a west coaster or Toronto Beaches.
How is your love life lately?
I like the cut of your jib and would date you. Of course I would also need to see pictures first.

Typical biker. – Garth

#151 mississaugaboy on 09.09.11 at 3:15 pm

Housing Starts

#152 Utopia on 09.09.11 at 3:23 pm

#137 Smoking Man on 09.09.11 at 2:45 pm

“Short everything NOW Greece is going bye bye this week end”

Don’t you love market cycles…..
Down day Friday, up on Monday.
Down day Friday, up on Monday.
Down day Friday (oops…Greece is hitting the fan).

What few are prepared for is that Monday may fall and not come back up for awhile. The buying opportunity of a lifetime is coming for those with the guts to get invested again at the bottom.

Remember I said..It would be fast and sudden. Few would be prepared (no, I am not talking about the Rapture…..yet)

Getting off track a bit. Oh yeah…Good post man.

#153 Peakoilist on 09.09.11 at 3:49 pm

#138 Ron on 09.09.11 at 2:46 pm
Yeah, I know what you mean..surely that bubble got another good blast of air..but now I’m covering my ears waiting for the inevitable burst.

#154 Utopia on 09.09.11 at 3:55 pm

To BrianT

Do you think there might be just a little short covering in Gold coming up soon? Like Monday maybe. Don’t you love those twin peaks buddy. They are telling you something important.

Charts don’t lie Brie. You don’t need my help anymore.

Read the “Folly of a Gold Standard”.

#155 Condo Sucker on 09.09.11 at 4:02 pm

#85 Waterloo Resident

You keep bringing up this idea about how Canadians will simply opt en masse to file for bankruptcy and walk away from their debts once the bubble pops.

Do you not realize that when filing for bankruptcy it will show on a person’s credit report for 7 full years? So such a person will never be lent any money for that time, aside from B-Type lenders who charge 25% interest on personal loans.

Or if that person tries to apply to a position in finance or banking (because it’s the field where their experience is in) that they will never be hired by such institution due to that bankruptcy on their credit record?

Stop trying to make it sound like bankruptcy is an easy way out and people will simply choose that route rather than try to dig themselves out. I personally have faith that most Canadians are not that dumb.

#156 Timing is Everything on 09.09.11 at 4:14 pm

Well, this should shake up RE on the left coast…

#157 Cato on 09.09.11 at 4:18 pm

This is just the culmination of poor choice made at the individual level which collectively spawned an unmitigated financial disaster. Its going to wipe out many in the middle class, there is no avoiding it now. The beggar thy neighbour response to the crisis by most western gov’ts just exacerbated the problem. The US in particular has wasted critical resources & time attempting to reflate the credit bubble instead of putting those resources towards saving the real, productive economy. Canada meanwhile remains blissfully ignorant of the tidal wave of change heading our way. This isn’t some global banking conspiracy or new world order, its just plain stupidity of the herd who felt entitled to borrow far more then ever could be repaid. Their collective stupidity is dragging the rest of us down.

Provided the central banks remain unfettered by extremism on the right & left of the political spectrum world monetary policy will always be able to counteract deflation, its the one tool in the fed arsenal that actually works. We won’t see a repeat of the great depression. We also won’t see a hyper inflationary event. What the central banks can’t control are the undesirable side effects of intervention, like cost of living increases. The end result will be the best of times for some, and worst of times for others.

Its all a matter of ones perspective. I work in a hyper-competative industry where 6 figure jobs can go unfilled for years. Within my small sphere the world looks to be in great shape. Others who are chronically unemployed will likely take a different view and feel the world is coming to an end. The truth is somewhere in the middle, but this time around there will be no middle ground. There will be the have’s on one side and have not’s on the other and precious few sitting in the middle.

#158 BrianT on 09.09.11 at 4:31 pm

#127Peak-I can only assume your reading comprehension skills are lacking. You either didn’t read the post or you didn’t understand it.

#159 Timing is Everything on 09.09.11 at 4:35 pm

Just sayin’…

‘Some investigators have even speculated that “successful psychopaths”—those who attain prominent positions in society—may be over represented in certain occupations, such as politics, business and entertainment.’

Speaking of Peter Mckay…

#160 2deep on 09.09.11 at 4:44 pm


So you are saying that if you were in my shoes you would walk away from what you paid into CMHC, payout the mortgage penalty and star renting at a higher monthly cost just to avoid the potential downturn?

If I look three years out the added expenditure will pretty much equal out the loss in equity (given a 17% market downturn) so either way it may not matter.

#161 allister on 09.09.11 at 4:53 pm

I just got home from a 1500km trek through southern Ontario, but outside the golden horseshoe this week.

My observation found motels with high vacancy, restaurants where I was catered to very well because the places were empty, and the most visible amount of activity are the road crews burning up the last of the infrastructure money on concrete curbs.

I don’t think things are doing well outside T.O.s influence area. McGinty has neglected the outer province. Manufacturing has died and left town in those areas.

#162 Cookie Monster on 09.09.11 at 5:02 pm

I owned a house once for three years, 1999-2002, good times, bad times, financially very expensive for a small business owner with irregular revenues, a massive black hole money pit, there’s that gravity analogy again, funny that!
Anyway, the lesson is, listen up bubble heads, Gravity is to the universe what gold is to economics, fundamental. You can fool yourself and you can fool the public but you can not break the laws of the universe and you can not break the laws of economics. When one group gains another group loses, and all in all, we all lose a little. The maelstrom has set upon us all.

#163 Abitibi Doug on 09.09.11 at 5:21 pm

@#74, penpal:
To explain my thoughts I’ll use a comparison. In my travels I saw a radio base station in Gatineau Park, Quebec powered by a wind mill and solar panels. How does it run on a night with no wind? Simple, it draws energy stored in batteries when the wind mill or solar panels produce more power than it requires to run. Now back to finances. Canada actually did go through an economic boom, where employers were hiring people and, although not consistent with my observations, there were supposedly labour shortages in some industries. Why didn’t the people making all this money, like the radio base station, use it, along with rock bottom interest rates, to pay down their debts and get themselves financially stable and able to deal with contingencies? Does that idea make sense to anyone?

@#23 by xindai shan:
Interesting article you posted. It’s consistent with my observations. Last year I worked with a guy 27 years old (I am 50) who just couldn’t understand why I manage my finances the way I do. For example, I drive an older car, and among items I fished out of the garbage include a desk, window air conditioner, bicycle, and boombox stereo, all in good order. I also bought a TV, in good working order, at a yard sale for $5. Now I am unemployed, but rather than worried I have enjoyed it. If anyone noticed my absence (I won’t be offended if anyone says they didn’t) I just came back from a 4 week vacation in the Atlantic provinces, including 2 1/2 weeks in Newfoundland and Labrador and enjoyed it very much. I’m not up at night worrying about my finances even though I am at present still unemployed. Because we old fogies grew up in a time of a lot less wealth than now (at least I did) we learned how to manage our finances more sensibly. Those younger people who think they know it all and refuse to learn anything from us older folks will have no one to blame but themselves if they get into financial trouble due to reckless management of their finances.

#164 Nostradamus Le Mad Vlad on 09.09.11 at 5:39 pm

#118 Nemesis — Plus Egypt as well, as they are mighty pissed at the way Netanyahu has been treating the Gazans.

With the infighting going on in Wall St., the (western) house of cards is crumbling now. Russia and China may well have deliberately stepped back from Iran, so as to let the west run out of troops and energy first, then they will step back in and clean up whatever is left.

#155 Timing is Everything — Thanks. I needed a slap in the face to shake the cobwebs outta my head! SAF, nyet?
Whaddya think of the show so far? Rubbish! Then prepare to die, white trash!

It is well established that in soccer, a penalty kick is awarded if there is a blatant infraction in the penalty area, and usually, the penalty taker is successful 75% of the time.

In the case of the following player, not only did he trip over himself while in said process, he was cautioned by the ref for time wasting. How Not To Take A Penalty — 0:23 clip.

Egypt and Greece. A lot of Greek pensioners are going back to living off the land, growing their own food, etc. Dow was down a bundle.

As said previously, when the time was right the rug would be pulled out from under our feet, and all heaven would break wind. What has not been taken into account is the cycle change — that will take care of itself, no matter what anyone says or does.

5:45 clip Lola. It really is a mixed-up, mumbled up, jumbled up world out there. Full of confusion, yet we are fortunate to have Garth’s blog to joke or vent.

#165 I'm stupid on 09.09.11 at 5:44 pm

124 Devore

Yup. Exactly.

#166 Cookie Monster on 09.09.11 at 5:45 pm

#127 Peakoilist on 09.09.11 at 1:51 pm

You’re totally right about the peak oil problem / sereous economic impact, but electric cars are not going to cost $50k, more like $25k or less over time. I bet within 25 years we’ll look back at today and say DAMN, look how stupid we were using oil to move around in cars.

Burning oil for auto transportation is like burning kerosene for light, primitive.

Once we start getting the manic urbanites into electric cars it will free up oil for other applications that still require it’s energy advantages until we can displace those too. It can and will be done. There is hope!

#167 vreaa on 09.09.11 at 5:53 pm

Complex Pressures On ‘A Simple Man’
“My rant about the Asian mentality toward housing. My getting married and having children is, to my parents, the sum total of my goal for existence. I can’t move out of Vancouver even if I want to.”

#168 Timing is Everything on 09.09.11 at 5:54 pm

#146 Smoking Man

Popcorn AND sno-cones.

Deutsche Marks anyone?

‘Before the switch to the euro, the [Deutsche] mark was considered a major international reserve currency, second only to the United States dollar.’ – wiki

#169 Cookie Monster on 09.09.11 at 6:01 pm

#133 jess on 09.09.11 at 2:29 pm
Jess, that’s very complicated to explain but I don’t put the root of all the bad results at the foot of whether or not people are by nature good or bad. The economic malaise is the result of an out of control complex economic system. The current broken man made monetary political bureaucratic system of central banking, central government, big governement and government interventionism in the economy is full of bad regulation and to source of error. The system is rotten.

This is why free market proponents advocate tamper resistant sound money backed by gold, as little regulation as possible by recognition that the first thing to get traded in a government regulated system is usually the regulators themselves, the term is Captured.

If big government and more regulations was the solution to our problems then I think we should be living in a utopia by now. Government is the problem, too many looters. The only votes that should count are the votes people make everyday when the spend their money.

#170 Devore on 09.09.11 at 6:01 pm

#162 Abitibi Doug

Because we old fogies grew up in a time of a lot less wealth than now (at least I did) we learned how to manage our finances more sensibly.

I don’t think it was a time of less wealth, in fact it was probably a time of MORE wealth, as you had greater purchasing power. Today we have the APPEARANCE of more wealth, because we are borrowing it from the future, to CONSUME today but PRODUCE (maybe) later. Is wealth that has not been produced yet really wealth, or is it just smoke and mirrors at the expense of future generations?

#171 Beach Girl on 09.09.11 at 6:09 pm

# 149 Ottawa Mike

Although there are lonely moments in my life. I do not think you could fill them. I appreciate your concern, but Ottawa is just a few more miles from HELL.

Now, I own property in the big GTA (beaches), but also Wasaga properties (beaches). Living large. But I also am flattered.

#172 Darryl on 09.09.11 at 6:12 pm

137 smoking guy

Short everything NOW Greece is going bye bye this week end

If you’re right on this i’ll start drinking to your standards dude.

If you are wrong I will anyways..

#173 Cookie Monster on 09.09.11 at 6:12 pm

#133 jess on 09.09.11 at 2:29 pm
Also, goodness of care for mankind must start with the recognition by all men that economics is first and foremost about survival and then prosperity and a rising standard of living of mankind. Countries who have in the past abandoned economic realities, like North Korea, Russia, East Germany have paid huge costs through suffering. Free markets are as natural as procreation. Yes we need each other and need to work together voluntarily, key word. Freedom and integrity are the foundations of success.

Gold is the anchor that maintains integrity in money and mans dealings with other men globally. We must get back to it. Good people must understand this principle and fight for it. It’s a moral issue first and foremost.

Gold is a metal. Morals are human. You’ve flipped. — Garth

#174 Junius on 09.09.11 at 6:20 pm

#148 Cookie Monster,

You asked, “Why are people who want small government nuts?”

It is because it doesn’t work. It is an appealing argument but not realistic at least in the manner argued by the Tea Party types.

Big and small are obviously relative terms and would have different meanings to different. No government means anarchy. Too much government is the worst part of socialism.

What we really should be demanding is effective government that just does what government is best at. Too long a topic for this Blog.

The so-called small government movement or tea party in the US is a total manipulation of people like the Koch brothers. It is a huge con job. It also is why the US has turned into a plutocracy right now.

The attack on everything to do with the government has been one of the contributing factors to the current situation in the US. In particular, the gutting of the banking regulations, lack of funds for the SEC and other enforcement groups in every industry from the environment to food to energy.

The cornerstone of the US government used to balance of power and a competitive economy. The small government movement has eroded all of this and is now threatening to destroy what is left. All to the detriment of most of its members – the exception being the stinking rich.

#175 anjing bau on 09.09.11 at 6:20 pm

the broader markets traded down on heavier volume today but still not enough volume to blow out the recent lows. No swing points were broken either. The pattern I see setting up on a daily and weekly chart is that of a flag…….

its drawn here for you


My view is that the market has lower prices in store over the next 6 weeks its the pathway that it takes that is still playing out. if your prone to buying value ( perceived or otherwise) – like le proprietor – you may want to think about scaling into the position. 1/3 & 1/3 & 1/3…that way if the market doesn’t reach lower lows you have part of the position on and your ready to buy into a market that has increasing momentum.

#176 Steven Rowlandson on 09.09.11 at 6:47 pm

Extreme real estate prices , market pay rates with little or no pay raises and possibly no pensions and low savings rates. This will not end well! Absolutely right it won’t end well! Something has to go way up or something has to collapse!

#177 Peakoilist on 09.09.11 at 7:37 pm

# 157 BrianT on 09.09.11 at 4:31 pm
then tell me what I got wrong

#178 wetcoaster on 09.09.11 at 7:52 pm

I think “Richman” just got a few thousand new listings today.

#179 Nostradamus Le Mad Vlad on 09.09.11 at 8:00 pm

Just wondering. Did the power black-out in SoCal last night and today’s quake off Vancouver Island have anything in common, other than they are both on the SAF?
US Oligarchy Causes poverty and false wars; The Decline Of The American Empire, and there are numerous reasons for it; As said earlier, Greek pensioners now living off the land and bartering; BoA More job losses?

Hey Timing Is Everything You’re right! It wasn’t just me falling outta bed!Headline goes back to what I mentioned earlier. The US can’t afford war, so something will change and War Fraud; Joke Of The Ages Tony Blair; 2:05 clip Funeral of the man murdered in north London, which sparked the riots. Just like the MEast, one man was the lead; Online Identity Backdoor approach; Homeland Security or what Cdns. can expect Canada to look like shortly (a police state).

#180 Killer Chicken or Imploding Boomer? on 09.09.11 at 8:37 pm

139 Maxx. We’ve blog beat this subject to death. Find me a bank or CU balance sheet that proves your case. And I bet you’ll take a cheque.

168 Mad Vlad – not the SAF, try the Nootka Fault!

#181 Junius on 09.09.11 at 8:53 pm

#168 Cookie Monster,

You said, “If big government and more regulations was the solution to our problems then I think we should be living in a utopia by now.”

Wrong. They did away with the important regulations and did not enforce the ones we have. You have it all backwards.

#182 45north on 09.09.11 at 9:06 pm

allister: the most visible activity is the activity of the road crews burning up the last of the infrastructure money on concrete curbs.

The highway 11 by-pass around Sundridge Ontario is a sight to see! Kilometer after kilometer of major construction. A swath of forest has been felled, hills have been cut through and valleys filled in. My father who was born on a farm there would not believe it.

The wealth of future generations has been pledged to pay for this.

#183 Utopia on 09.09.11 at 9:58 pm

“This is the portrait of a society heading for social and financial failure. But at the same time, a stunning 70% of Canadian families own real estate. Obviously to get a house, they borrowed so much that servicing the debt is destroying their ability to save” ~~Garth

Or have babies.

It is the inverse of the baby boom that is now underway. I have mentioned this a few times before. We are in more trouble than we know. After having spoken to a number of friends this week the consensus is that children are simply out of the question.

Too much debt. Too little income. Excessive selfishness.

The gals want them. Debt beckons though. So house horny means empty nests and all the reasons for getting married, engaged and buying a home in the first place have been ruined by onerous debt obligations. This self defeating credit bubble has ruined an entire generation of family creation. Like I said……

The banks ate our babies.

#184 disciple on 09.09.11 at 10:11 pm

Cookie Monster actually said that there is hope through technology? Maybe I’m rubbing off on him a little? And two of the peak oil proponents on this blog are infighting with much ado about nothing. It’s like a comic book…

“Progress is always too late” – Alfredo in Cinema Paradiso

#185 disciple on 09.09.11 at 10:16 pm

271 Smoking Guns – 9/11

#186 BrianT on 09.09.11 at 10:18 pm

#173Junius-You are not aware of any of the facts on this subject. Barack Obama is the chosen guy for Wall Street-check out how much money has been pledged for his re-election bid.

#187 disciple on 09.09.11 at 10:24 pm

VMA’s occult agenda: it’s never been about the music…

#188 jess on 09.09.11 at 10:28 pm

#117 Beach Girl

#117 Beach Girl on 09.09.11 at 1:12 pm
your earlier mention nudged my memory regarding this Japanese Canadian lawyer, David Tsubouchi, a sansei, was born in Toronto in 1951

3rd generation – Sansei -The generation of people born in North America, Latin America, Australia, or any country outside of Japan to at least one Nisei parent.
What is Nikkei?
(TSXV:BYM) seeks out and develops opportunities in the horse racing industry

. …hum my associated brain wonders… magna, horses ,harris, relationships are so interesting

ps… btw i love “the nature of things”
i find it very thought provoking


cookie …
It has been explained and therefore, not complicated. Read the EVIDENCE.

You said,'”The only votes that should count are the votes people make everyday when the spend their money.”

So then how does one “vote” or “count” if one has no money to spend.
I see now, just as you keep repeating the same thing over and over and over and over again , I get it if i tap my shoes together three times and i will be in utopia.

#189 disciple on 09.09.11 at 10:30 pm

Obama has always used hidden hypnosis techniques in his speeches:

I hope that was a joke. — Garth

#190 allister on 09.10.11 at 9:07 am

#181 45north on 09.09.11 at 9:06 pm

I saw that. if a private company had proposed such a massive environmental disaster they never would have got past the MOE. But governemnet lives by their own rules.

Almost every road I travelled had major resconstruction and I cant fathon how many bridges are being reconstructed. After its all done the cement heads will be unemployed and we’ll get higher taxes to pay for it all, which will just accelerate the loss in private business.

Anyway, you will be able to do 120 all the way to NorthBay if you have a reason to go there and if you can afford the gas.