Yuri and his wife own a townhouse in a suburb so far north of Toronto he keeps his snow tires on all year. “We bought for $425K four years ago and now it’s worth $520K, but house is too small. Bigger one costs $685K and all we have is $20K saved. You said in your last blog that everyone should sell now, or lose their money. So should we sell and rent and wait?”

Meanwhile in Vancouver, Jeff has had his house on the market now for about a month. It’s basically a tear-down, and so far a handful of Asian potential buyers have tromped through. “So,” he asks me, “do you think I should drop the price?” He’s asking $2.3 million.

Two people who will never meet, two markets vastly different, two economic worlds, one anxiety. In recent years, houses became commodities, then financial plans, and now they’re futures contracts. Seems like the entire middle class has decided to roll the dice, stuff all of its net worth in one asset, and put it on black. Those who are awakening to this are worried.

My theme in recent days has been the gathering storm I wish more families could see. Too many made the fateful decision to buy beyond their means, fill in the missing money with debt, and now have virtually all of their net worth in a single asset. In this regard they differ dramatically from others (fewer of them, almost always better off) who have diversified their investments to include an array of financial securities. These people have trusts, bonds, stocks, funds, preferreds, commodities and cash. Real estate equity is a minority of their net worth. Soon we’ll know who made the best choice.

Did you notice the stock market reaction to Obama’s pass-this-jobs-bill-now speech?

It fell. Not because of Greece (same old lecherous default talk), but because the Republican-dominated Congress, where the Tea Party nutjobs are in control, would rather see Obama destroyed than people put back to work. This means they’ll delay or defeat the legislation and launch the prez into an election year looking like an economic weenie. Then Americans can elect a hang-em-high, small government politician who likes protectionism and thinks climate change is commie talk.

In fact, there’s a growing movement afoot of people who are rooting for economic collapse so out of its ashes can emerge a democracy based on self-help, natural law, more freedom, fewer rules, lower taxes, property rights, survivalism and real money. Yes, gold. In fact, you can read their ravings on this very blog. So just imagine what it’s like in Florida. (And have you checked out that housing market lately?)

This all matters a lot in Canada. And to real estate.

We have three strikes against us already. The dollar’s so high it’s crippled our ability to remain a strong exporting country and wiped out the tourism sector. Second, commodity prices are falling as global growth cools, and this is the current source of our economic prosperity. Third, we’ve got a population so hooked on debt that any cheap recession, downturn or extended malaise in the States becomes an immediate crisis. House values fall. People squirm and sell. Suddenly, Kits feels a lot like Vegas.

So who needs a growing political movement in our biggest trading partner which is promoting lower government spending, less stimulus, fewer trading pacts, more protectionism and solving the deficit problem through austerity, not higher taxes? Certainly not a Boomer with the bulk of her worth in her McMansion, a young couple living in a condo with 5% equity, or a 45-year-old struggling to juggle kids and a monster mama mortgage in Etobicoke.

Yuri doesn’t have it exactly right. I’m not telling everybody to sell. Crazy talk.

Just think about bailing if real estate’s now more important to you than your dog.


#1 Ayn Rand on 09.09.11 at 10:12 pm

Garth, thank you for your humanity. And your whitty blogs…..best intellegence out there. And you’re hot to boot.

I am now fulfilled. — Garth

#2 T.O. Bubble Boy on 09.09.11 at 10:14 pm

The Wealthy Barber agrees… even though he apparently “understands” 5% down and 30-yr amortizations, he questions “why young people are insistent on buying the most expensive home their lenders will let them buy.”


#3 Smoking Man on 09.09.11 at 10:30 pm

Garth I’m disappointed, my post earlier today that you did allow threw the door would have had my fans and foes on the floor laughing their guts out. You starting to feel up staged, crossed my mind.

If fact it did happen today, (Shy D. wink.) But no it was crushed. I wanted to prove a point, on my blog I had a time stamped post ready to go that would have predicted the reaction from the fans. They would have said Smoking Man I pissed my self laughing.

Then I would have had a lecture on how easy it was to control the masses, using the right words hence re enforcing my position on how easily it is to control people and why it’s not that easy to have a real estate crash in Canada.

But no, your fans missed out on an important lesson, I thought you where a rebel, I thought you had cahonas. Ya I know I’m nuts but man, but I add great value to your pathetic blog (as you put it) show so faith in me brother. Not sure if this one will even get through. But I’m your biggest fan…………..

When I want to know about your little fireman I’ll ask. Which will be never. — Garth

#4 Utopia on 09.09.11 at 10:30 pm

“So who needs a growing political movement in our biggest trading partner which is promoting lower government spending……not higher taxes? Certainly not a Boomer ……or a 45-year-old struggling to juggle kids and a monster mama mortgage in Etobicoke”.

And certainly not the tens of thousands of Toronto home owners who have just fallen into negative equity over the past few months. Oh no, not them. But that is a taboo subject, is it not? Let’s just ignore it and maybe the problem will go away. The big smoke thinks it is immune, believes in its power to repel economic fundamentals. Godless Toronto, of course, is the center of our feeble universe (even here at Greaterfool). Only the West and the Island are really falling in our small closed reality.

Surprise. The bubble burst. As scheduled.

#5 wetcoaster on 09.09.11 at 10:30 pm

I used to know a Tea Bagger, but had to cut him loose. Was a nice guy, though overly religous, but wanted to see the whole shmozzle crash and burn like he felt we all deserved though he knew it was all the governments fault. He had all his guns, gold and cash stashed in his house so in his warped mind he was prepared for the big one back in 2008. The more the market recovered, the more pissed he got, the less we talked, God’s plan was not unfolding as he had prayed for and preached to his flock. I then realized he was a much scarier dude than I first thought. Major market correction sure, but complete armegeddon of the US financial system from scratch is completely psycho.

If the Tea Baggers get into power, there will be more than Asians piling over the border. It will be Starwhackers on roids.

#6 Stevenson on 09.09.11 at 10:34 pm

Garth – So the question still remains. It seems so certain that the Canadian real estate market is going to fail so should we sell now if we currently own? In the scenario where the appreciation has covered all the costs involved.

What percentage of net worth should be put towards real estate at the moment?

Even better if we are so confident about the real estate value being lower then the present why not invest on it? Or in another way why not “short” the market or how do we short the market?

#7 Joe on 09.09.11 at 10:36 pm

Garth, I’m wondering who it is specifically calling out for protectionism… I watched the GOP debate the other night and the few who spoke about trade agreements sounded like they were for free trade.


#8 Junius on 09.09.11 at 10:42 pm

BrianT (from previous Blog),

I am well aware of the facts on this matter. Wall Street supports both parties. Everyone has been paid off. The amount of corporate money in US politics is destroying the country.

However if you think the Republicans or the Tea baggers are any less under the influence of Wall Street and corporate America you are naive.

#9 Utopia on 09.09.11 at 10:44 pm

The disconnect in the reasoning that supply might overwhelm demand has been supplied by the simple fact that property prices dropped more quickly than vendors had time to react.

If you are “under water” it is pointless to list unless you have a cheque ready to cover the difference for your lender. Most indebted couples don’t.

Listings will therefore likely fall in the GTA as home prices have declined so rapidly. Thousands are no longer in a position to cover the difference.

Can’t afford to get out. Trapped like rats in a concrete city. They will attempt to weather the storm exactly like millions of Americans did right up until the foreclosures began.

Retrenchment is in store for Toronto instead and most will take cover to weather the storm…opting for continuing with their current payment regime over clearing the debt burden altogether. Bad choice.

They will learn. Too bad though. And much too late.

#10 LH on 09.09.11 at 10:46 pm


In Aramaic, “debt” “sin”, sometimes translated in English as “trespasses”.

The bank is not going to forgive us our “trespasses”, so it is now high time to prepay all personal debt and mortgages to the extent possible! With 5-year govt bonds now almost 1.25%, prepaying an old 5-year fixed mortgage of 3.75% is like generating 2.50% of GUARANTEED, RISK-FREE and TAX-FREE (for all those not deducting mortgage interest) ALPHA. In my industry you (overpay) professionals 1% running if not more for this kind of excess return.

PS: Just sent the bank another cheque for $35,000.
Risk-free return to me of 3%+ Good luck to BMO for finding another zero-risk (loan to value was <10%) investment (aka debt slave) paying nearly as much.

#11 Peter B on 09.09.11 at 10:48 pm

I agree with Garth. No way will Obama’s new stimulus program be approved in Congress or the Senate.

The Republicans want a double dip recession so they can elect whoever they run (I’m guessing he’ll either be a Mormon or a Texan) as President.

#12 Big Al New on 09.09.11 at 10:50 pm

How do you reconcile being in a stock market that moves more on rumor than fundamentals. Something big is in the works and my spider senses are telling me it’s going to be sooner rather than later. It just feels like the lead up to Lehman but bigger. Call me crazy but I’m getting a bad vibe about shits and fans.

#13 Snowboid on 09.09.11 at 10:53 pm

#2 T.O. Bubble Boy on 09.09.11 at 10:14 pm…

Methinks the barber of wealth has copied the script from Prof. Turner.

He certainly changed his tonsorial advice from many, many years ago that we lost more money on than anything any other investments – mutual fuddle-duddles.

It is a good thing he read ‘Money Road’ in time to correct the error of his ways!

#14 Guy_in_Regina on 09.09.11 at 10:54 pm

Yeah, that’s the ticket…. spend your way out of structural debt, eh.

#15 a prairie dawg on 09.09.11 at 10:54 pm

I’d easily get rid of the house before my dog. No question. Dogs are better people than people.

#16 nonplused on 09.09.11 at 10:54 pm

I’m not sure you can blame today’s market move on the fact that there is a Republican congress. We’ve had one for a while. We also knew the jobs speach was coming, so that’s probably not it either. It’s just what markets do. They go up for a while, then they go down for a while.

Either way the government can’t create jobs with more legislation and spending. It never worked before or we’d all be making $150,000 a year. It’s all just more “bezel” for whoever gets the money.

#17 JRH on 09.09.11 at 10:55 pm

I think Smoking man has lost it.

#18 Devore on 09.09.11 at 11:02 pm

#5 Joe

Of course they don’t exist, but it’s much easier to stereotype people and make fun of them, than deal with facts.

BTW, the jobs bill will pass. Why wouldn’t it. I’m calling it right now. There’s already going to be another debt ceiling showdown next year in time for elections.

#19 Cookie Monster on 09.09.11 at 11:04 pm

In fact, there’s a growing movement afoot of people who are rooting for economic collapse so out of its ashes can emerge a democracy based on self-help, natural law, more freedom, fewer rules, lower taxes, property rights, survivalism and real money. Yes, gold. In fact, you can read their ravings on this very blog.
Yeah, that Nostradamous Le Mad Vlad’s a real bugger.
Seriously, you can cut the crap now, now you’re twisting the truth 180 degrees, the damage has already been done, the government’s bloated like a dead hippo (great expression). Sure there may be some nutters in the tea party but the principles of Mr. Ron Paul are not nuts at all. You know the world is in dire straights when being rational and honest gets you classified as a nutjob.

#20 Peter B on 09.09.11 at 11:06 pm

One more thing to worry about the betting site In Trade odds of a country dropping the Euro before New Years Eve 2014 is 75%.


#21 Onemorething on 09.09.11 at 11:12 pm

I’ve already made contact with the owners of the 3 properties I wish to own in the next 3-5 years. They know when to find me with the SH*T hits!

#22 Onemorething on 09.09.11 at 11:14 pm

One in AUS, one in CAN and one in BALI.

I’ll rent my primary residence!

#23 Andrew on 09.09.11 at 11:14 pm

With 80% of my portfolio in gold mining stocks, I’m up about 12% compared to a month ago. Bonds are for people who are scared but clueless.

As opposed to just clueless? — Garth

#24 Waterloo Resident on 09.09.11 at 11:20 pm

#3 ; Smoking Man; ( “pathetic blog” ???)
= What????
This blog is not pathetic, or at least I don’t think it is. No, I find it entertaining and fun. Thanks Garth for lots of laughs !

I disagree with Garth, I think that Obama’s new stimulus program WILL be approved in Congress or the Senate. But I don’t think that it will make much difference in the unemployment level. For example, look at how Obama’s credit for buying homes didn’t do much for house prices, as soon as it ended home prices continued to fall, so I think that this support of jobs will also not work very well. (Just my guess, I could be wrong.)

#25 Kenji on 09.09.11 at 11:27 pm

Why does everyone think Canadian real estate will end up like the US? We have a totally different mortgage system and real estate structure.

There is constant demand for Toronto and for people who can’t afford it, there is always the suburbs. Perhaps that is why the real estate around the 416 is inflating too.

If you look at places with high demand like Manhattan, New York. Are they really in that bad of a position since the worst of times?

If the house value drops are people going to jump and start mass selling? Where are they going to move to if they are underwater already?

If you didn’t by 2 years ago… you made a mistake. What position are you going to be in 2 years? Where will you be 2 years from now? Maybe still waiting for a bubble to burst from 2 years ago?

#26 vyw on 09.09.11 at 11:32 pm

Yuri should sell and rent and and Jeff if he believes (as I do) of another leg up in Vancouver, should list in mid-Jan 2012, about a week before the lunar new year.

Also tax increases are like austerity measures -> they are contractionary.

We haven’t left the recession of 2008. And now we have a private debt bubble, made-in-Canada housing bubble, and commodities price bubble.

#27 nonplused on 09.09.11 at 11:33 pm

“This is not a Ron Paul web site. Like you, he’s a nut. — Garth” (Yesterday on #141)

Everyone is a nut, Garth. Trouble is we can only see in others the nutty we don’t have ourselves.

I agree with you that this is not a Ron Paul website, you can remove posts at your discretion of course. But as a general comment I find it fascinating that the media will help promote Michele Bachmann and not even mention Ron Paul when they effectively tied in the Iowa straw poll. The coverage was sort of correct, Michele B in first, so and so a distant second, and then a distant third. But the real results were Michele and Ron tied for first, so and so in third, and then a forth. But to be fair, they did show the numbers in the info box, they just couldn’t bring themselves to say his name. Whether R.P. is a dangerous man or not, nobody should believe a damn thing they hear on TV.

Ron Paul is an idealist, and suffers from having an ideology, one of the most debilitating metal disorders out there. One of his major points is that he wants to stop the foreign wars, close most foreign bases, and bring the troops home. This alone makes him unelectable, but I still think he should get fair media coverage. But either way the men in the black cars will get him soon enough if he keeps causing trouble. He will never be the POTUS.

#28 Tim on 09.09.11 at 11:38 pm

“Kits feels like Vegas” Lol…A tear down going for 2.3 million in Kits…hmmm even if that drops in half that’s still way higher than Vegas, or most American cities for that matter. The fact that someone could get even half the asking price for a tear down shows that despite Garth’s doomer predictions, real estate is still very resilient here

#29 Smoking Man on 09.09.11 at 11:41 pm

#17 JRH on 09.09.11 at 10:55 pm

Never had it to begin with

#30 Tim on 09.09.11 at 11:45 pm

Real estate has probably increased over 100 percent in Vancouver over the last 8 or so years. Even if it fell 50 percent, which is a much greater drop than almost any city in America, then people who bought in early 2000 would still be ahead. What is the likelihood of it falling anywhere near 50 percent, given the truckloads of wealthy foreigners continually moving in

#31 Smoking Man on 09.09.11 at 11:51 pm

Going to do some stuff on 911 tommorow after by blood test at the doc….shits not looking good. smoking man risk calcs going the wrong way..

Depending on the outcome will influance my post.

But bubble heads, truthers, gate keepers you know i have have the answers. Question is will gartho let it threw the door.

I’m going to talk about yamaca heads and towle heads, female cercumsition (did I spell that right) and why sacrifice of 3000 was worth it.

#32 Nostradamus Le Mad Vlad on 09.09.11 at 11:52 pm

“Oops. So should we sell and rent and wait? He’s asking $2.3 million.” — This blog is fast becoming a barf-fest, it’s so funny at times.

The above people are adults. Each adult has a small percentage of realistic common sense, but how many actually use it? It was given to us, free of charge and we can use it (or lose it) any which way we want, but a home is simply shelter. Remember Gimme Shelter?

If only greed would go away to another star system. From another site: “One of the pearls of wisdom Thoreau left us with was ‘…simplify’.”

“We have three strikes against us already. Suddenly, Kits feels a lot like Vegas.” — The three strikes are the C – P – C , but Kits sure doesn’t look like Vegas, ‘tho and not sure which is nicer.
Halt! If the largest economies in the world do a collective bellyflop, will that be a good time to say “This ain’t gonna end well”? Germany not playing nice with Greece, but would Greece exit help the Euro? Last night, Mish said Oct. 17 is when Greece is outta money and now, Germany is preparing to bail banks out; Fake Yet another 9-11 story which links a fairytale (ObL) with reality (present fiscal stuff). ObL was receiving treatment in a US hospital prior to 9-11.

Trouble in heaven? Everyone else is scrapping, so let’s have a FOOD FIGHT! 4:59 clip Rand Paul calls for a non-confidence vote in Geithner; The Little Guy is gonna get hammered, then swept away; Hmmm. “Coincident with this hitting the wires there was a massive flow of money into the Japanese Yen – and out of the Euro.”; Ideas There are none with politicos — they’re too busy stuffing their pockets.

Now the false rhetoric starts up, right on cue. The MEast (except for Iran) is all but finished, so the US has to go elsewhere, and Truth Hurts “Ever since the Twin Towers fell, the United States has been at war.” Link in; CIA and NYT Nice cover-up job; O’bomba has morphed into Dick Cheney II, and New Plan designed to save his own job; Al Gore and the CC he refuses to hear. HAARP Guess someone has too much time on their hands (or a get-even prank), and they’re playing around with things they shouldn’t.
#179 Killer Chicken or Imploding Boomer? — Holy moly, another one! We’ll be tiptoeing round the tulips before long!

#19 Cookie Monster — “Yeah, that Nostradamous Le Mad Vlad’s a real bugger. You know the world is in dire straights when being rational and honest gets you classified as a nutjob.”

I’ve been called worse and, godddammit, I LUV IT! Thanks for the compliment!

#33 Smoking Man on 09.09.11 at 11:59 pm

Oh and garth fireman is broken but he aint little, angle of attack is what it is all about. I could tell some stories

#34 westopia on 09.10.11 at 12:09 am

Jeeze Garth. It must have been a slow week for dirt on Real Estate for you to be picking a fight with those who want honest government, valuable money and sound fiscal policy. And on a Friday too! Gold bugs and Ron Paul supporters, you`ve got two days – fire away…

#35 From Mississauga with Love on 09.10.11 at 12:09 am

to all of those who are now claiming the Torontonians are in negative equity, I say relax. This is the normal summer downturn. Houses were down 8% this time last year if not more and you know where they are today.
You know I am all for dropping house prices, but let’s not get too excited.
As someone else said on this blog some time back, we’ll know that housing is crashing when prices go down in the Spring. That’s the bottom line.

#36 JohnnyBravo on 09.10.11 at 12:23 am

“[…]a democracy based on self-help, natural law, more freedom, fewer rules, lower taxes, property rights, survivalism and real money.”


Aside from survivalism and (perhaps) natural law, what the hell is wrong with that? Just think of the opposite: total reliance on others; less freedom; more rules (like we don’t have enough); higher taxes (same); no property rights; and debt fiat funny money.

No one should hope for economic collapse. But our economy is based on a “buy-now-pay later” paradigm. With a debt money system that requires perpetual growth in money/debt, is it any wonder we reached a point where we collectively took on too much debt after a sustained period in which not enough wealth could be generated to collateralize that debt money? To say nothing of the rampant financial fraud that almost became the new normal.

Barring some amazing economic growth (which just ain’t happening right now), we need some kind of cleansing to clear the excess debt and get back into balance. Just like when the stock market runs up too fast and then “corrects” to fair value. This cleansing will not come for free, and it may indeed be painful. But the bill must be paid somehow. The question is: how, and who will pay it? Do you prefer a quick deflationary outcome where creditors take the biggest hit via defaults? Or would you prefer very high inflation where the wealth is covertly confiscated from our money and we can pretend asset values are growing? Wanna turn Japanese, perhaps?

And while house values have gone out of whack recently, the fact that most people bought homes beyond their means is the historical norm, not a recent aberration. That’s what amortized mortgages are for. And most of those people put most of their net worth into their homes. Again, the norm. While it may not have always been the most savvy financial move, generations of Canadians did exactly that without the fear that buying a home was a risky financial decision. The fact that many people treat their homes today like some kind of tradable security or futures contract is a symptom of the larger problem, not the problem itself.

But maybe it is all the people’s fault. Those stupid, illiterate, dirty masses who just can’t seem to cooperate. In his latest speech Bernanke basically blamed the American people for the sad economy. He said they are not spending enough. Maybe if he didn’t confiscate their wealth to feed a corrupt, moribund banking system, the people would have some money to spend.

#37 Smell The Coffee on 09.10.11 at 12:24 am

Once the debt bomb blows… there won’t be any bank credit, anywhere in Snowistan.

Real estate will lock up.

Banks won’t lend … they won’t trust each other because of their blown balance sheets, let alone trust their customer’s ability to pay back on a loan that is negative equity by 30 or 40%.

Hell they already hate us now just because we use them. You will pay .5 to 1.5% just to park money in a deflation savings account for the privilege of depositing funds. You can’t make bank payroll on zero interest rates. Savers are screwed. Pensioners are screwed. Young unemployed families are screwed. MP pensions will be fine however , no default there. Whew.

Everyone is under water in a bust.

There will not be a real estate market. Only a liquidation market.

Try getting a loan for a condo in Athens today.

Closing conditions: 50% down, 4% per month (or 45% per annum) , and a solid job (outside the euro zone) … then you’ve got a loan, but only for three years. and need a balloon payment, and back to default at round two.

The same deal is coming here soon.

Canada, as is typical, is late to the debt party. We had a late boom, a late deflation and a late awakening.

Were always late. Go back to bed, everything’s fine.

#38 Betty Danin on 09.10.11 at 12:24 am

In 2000 I remember that you that you said there were 5 million millionaires in the U.S. In Canada there were 500,000 millionaires in the year 2000. Garth what happened to all these millionaires today?

#39 Onthesidelines on 09.10.11 at 12:52 am

Hang on bitches.

#40 Daystar on 09.10.11 at 1:15 am

#16nonplused on 09.09.11 at 10:54 pm

I agree. Investors are spooked out there and I can’t blame them. There’s open talk of Greece being ousted from the Euro and this shouldn’t come as a big surprise really, but questions remain. What of Italy and other recessed nations potentially to follow? PIGGS have to be weighing on investors minds, as does the fear of a U.S. recession ’cause we all know what markets do with a recession at hand… they sell off and the logic in the investors mind is simple. If Europe slides into recession and the U.S. slides into recession and Japan, well, they are already in recession, what happens to commodity laden Canada?

I should note that there is also the market narrative to consider as well. Media sold the prior market rebound as being due to the feds strongly considering another round of QE, or QE3 and the talk has now shifted to whether or not its necessary. With near zero interest rate policy since 08′, is it necessary? A large chunk of large cap corps have done well in this climate. If QE3 isn’t necessary, will the market react with a selloff if the feds suggest low rate are enough? Smart money says a selloff will be short and extreme if so more than any other reason I can think of, because this is how the media played it. “Market forces”, if one can define the term, considers everything and media has forced the market to tunnel vision its potential down to a “we get QE3 and it will all be ok, or we don’t get QE3 and it won’t be ok”. Obviously there is far more to consider but there isn’t alot of positive headlines right now so its not hard to see market selloffs not surprise in this climate.

On the real estate side, this link is worth watching:


#41 wtf????? on 09.10.11 at 1:21 am

so, the loons on the liberal left think that by driving down the dollar we will ‘save’ tourism? Sure lets stick to developing a world class prostitution industrsy and have our kids pulling rickshaws…..that’s an economy.

This as opposed to the thousands of businesses who are using the strength of the dollar to buy new machinery and expand their factories to create more skilled high paid jobs.

Yup, when the screwed up dipwads in the Trudeau camp dessimated the industrial sector of the country so to raise the standards of the workers in Mexico and China they all had a round of big raises for themselves….but all the Canadians who don’t suck the fat out of the public trough benefit from the high dollar.

The Liberal dipshits also think that high taxes are good for the economy…notice that the only people who benefit from the high tax policy is the civil servants with their succulkent perks and juicy pensions…..the rest of us get screwede by the waste. For example…..teachers take 100% of the budget leaving zero for the kids….hospitals and cancer reasearch money all gets scammed away by the u nions….nothing goes to the sick and needy.

We don’t need anymore Liberals making stupid comments about an economy they care nothing about.

Not when we have you to do it. — Garth

#42 saanichtonian on 09.10.11 at 1:26 am


“I asked earlier what your criminal income taxes go to pay for…nobody has an answer yet?”

Answer = interest and interest on interest

Let me know when the solution discussion starts.

#43 westcanguy on 09.10.11 at 1:27 am


I’m a little surprised that you polarize the tea baggers as wackos. I’m thinking some people could think the same about the current gov’t. Look at how much they have spent and borrowed and what has it got them?

Are the baggers a little out there? Sure, to some extent but they’ve had enough. The America they have now isn’t the same they grew up in. No one is fixing the problems or providing leadership. Power and greed is more important than country.

I suppose I sympathize with them somewhat. It’s obvious that you don’t believe in protectionism and in theory, I don’t either but I think it has to be considered.
Western democracy has gone too far with free trade, greed at all costs and all the while, consumers hell bent on consuming were oblivious to what was going on. They just wanted more of everything at a cheaper price. People now are understanding…or at least I hope they understand that this behaviour has cost them jobs, prosperity and a comfortable future.

I have never believed in a jobless recovery and never will. The only way people will consume is if they are working…or they haven’t maxed out their credit cards.
The only way to recover is to put people back at work…so what is wrong with punishing companies who conduct their business overseas and sell products and services to North America? You want a mfg’ing plant in Asia? Great but all products and services you provide in America are subject to substantial tariffs. Don’t want to pay those tariffs? Build your plant in America and hire Americans. Same could be said for call centres, etc.. and the tariffs go away.Maybe even get a tax break for doing so. All that cheap crap from Asia? Slap tariffs on them. China will protest but so what? If it wasn’t for those fat lazy Americans, they wouldn’t have the economy they enjoy now,either.

Do I want our economies to crash and burn? No but I think eventually when the can can’t be kicked down the road anymore, it will happen and I think it’s coming sooner than later. It will cause a lot of hurt and pain for many but I do think that has to happen.
We’ve all heard the old cliches…You have to pay to play…No such thing as a free lunch…..and my personal favorite….Gas, grass or ass, nobody rides for free.
There is more truth than humor to that.

Western society went way too far and screwed up big time. In my 16 years in wholesale finance and 15 years in retail management and manufacturing, I haven’t seen anyone able spend their way out of debt.
The economic model and policies we’ve had from 1939- 2005 no longer apply. The world, at least the western world, changed significantly back then. Another significant change is happening again. It has to get real ugly before it gets pretty again. For anyone who doesn’t understand what that means….fast for 10 days and see what comes out of your body. Doesn’t matter if it’s your body, business, relationships…anything unhealthy sooner or later has to purge the crap before it gets better. It’s how it works…and we’ve played for a real long time and its time to square up…..unless you’re a gov’t employee with a defined pension.

#44 Blobby on 09.10.11 at 1:33 am

80% in gold?!?!

Holy crap!!! Are you insane or stupid?

#45 Mister Obvious on 09.10.11 at 1:37 am

Many here ask how to ‘short the housing market’. Here’s my step by step instructions:

1) Find someone (or several people) to transfer ownership of their non-mortgaged house(s) to you with the agreement that you will pay them back with a house of better utility in 5 years time. Let’s say with one more bedroom, bathroom and some trendy countertops. The former owners will have to rent for a while but it will be worth it. (Important note: The agreement must state that the repaid house will be ‘of increased utility’ not ‘of increased value’.)

2) Sell the house(s) at the top of the market, take the proceeds and invest everything in solid dividend yielding investments. Or, you could just put it all in the Orange Guy’s shorts if you want. No matter.

3) Wait patiently for the inevitable RE crash. It should be along in a few days, months or years at most.

4) At the very bottom of the market, go shopping at fire sale prices for the house(s) of you need to pay back the house(s) you ‘borrowed’.

When the process is complete you should have a nice chunk of surplus cash left over and all the folks who ‘lent’ you their homes will have moved up to nicer digs, risk free. Win-win, eh? Thanks, Glad to be of help.

PS: Here’s a simpler, alternate way to short the real estate market: Sell immediately for whatever you can and get the hell out.

#46 Betty Danin on 09.10.11 at 2:02 am

T0 #23 Andrew: I have been buying long term provincial bonds since 1994 and have bonds that I paid $97 per bond and are now worth $150.77 today which still pays a 9.75% coupon until 2024. I have government strip bonds that I paid in 1992 wait let me check my statements $10.36 each and now is worth $50.31 and in 2021 when it matures is worth $100 dollars. Even recently many bond strategists in 2010 were saying don’t buy long term bonds. I bought in January 2010 $865,000 4.90%, 5.00% provincial long term bonds for $101.03, $102.10 per bond and now are their market value is $118.22, $119.44 respectively. I’ve been buying 1 ounce silver maple leaf coins starting at $4.00 each since 1998. Every year I bought 3,000 ounces per year for the first 8 years and than 500 ounces per year in the last 5 years as it got more expensive because I could not buy as much. I never bought stocks except 6% of my portfolio in mining and gold stocks 45 different companies to be exact in 4 different countries. Mutual funds are for inexperienced investors who pay excessive MERS 2%-3% per year. The only real estate I own is my main residence worth about $422,500 and I have about $85,345 in short term cashable GIC’S and laddered GIC’s 3 to 5 years and $20,128 in a Ally savings account 2.0%. I also bought some foreign bonds in 2006, 2007 India, Brazil, Australia 10 year terms 8.55%,13.45%,5.89% yields to maturity respectively. I never bought European bonds since the high cost of the Euro to the C$ ,I guess it was women intuition. Finally I did buy some Canadian long term bonds in 1997 with a 6.00% coupon for $102.25 and are now worth about $137.64 per bond $275,280. I have been retired since 2008 and have no complaints except interest rates are now low in Canada but I guess I could buy some more foreign government bonds and keep some cash when better investment opportunities come along. My annual income is about $103,000 per year and the only RRSP’s I had was $145,000 which I lived on from 1992 to 1995 during the last major recession. It is all gone now thank God because I will not have any future RRIF mandatory withdraws of $32,000 a year if all the interest was compounded until I turned 71. So Only a small portion of my overall portfolio is in real estate about 18% at most. It was 39 years of hard work and saving and investing using my women intuition and common sense. If I don’t understand an investment and I don’t get paid while holding on to it, it will be a small portion of my total portfolio.Andrew#23 Do not think you can get 12% every year until you retire that is a dreamland and not reality. Garth, my income tax assessment for 2010 on my $103,000 annual income was stated $16,580 in total income taxes paid. I cut my tax bill by 45% using tax planning which I will not reveal.Canadian Bank preferred shares receiving the dividend tax credit is not much more effective but will move more down with risky stock markets. I paid an effective overall tax rate of 16.09% not bad.

#47 timo on 09.10.11 at 2:12 am


“Echo-boomers entering age cohorts with higher household formation rates will help keep annual household formation above 200,000 for the decade to come, but the number of new households created thereafter will steadily decline”


“For the moment Greece goes down the spotlight will shift to the next weakest nations, Ireland and Portugal and then the bigger fish Spain and Greece. Their interest rates will immediately lurch higher and threaten a similar slide into disaster that we see today in Greece with default risk topping 90 per cent on Friday.”


“Metro Phoenix’s median home price appears to have dipped again with the rise in foreclosures. Tom Ruff, analyst with the Information Market, said an early tally put the region’s median at $113,000, lower than the $115,000 it has hovered around for most of this year.”

#48 Cookie Monster on 09.10.11 at 2:17 am

I know this ain’t a Ron Paul blog but may I give Mr. Schiff some kudos for his recent writings and at splash of RP for good measure?

Caution, the following material contains common sense, smart language and explicit gold content. Reader discretion is strongly advised.

Utopia, this one’s for you.

This one’s for everyone, because you wouldn’t believe it if it wasn’t real.

This one’s for Garth, because I can still hope, can’t I?

#49 Cookie Monster on 09.10.11 at 2:19 am

Argg, that last link should have been,

#50 Taking stock on 09.10.11 at 2:40 am

Does anyone else agree that the stock market is being manipulated by professional day traders? We are sitting ducks as our pensions trickle away.

Even being diversified is of little help. You can run but you can’t hide your money if you are locked into the system. To get out means paying off the gov’t first.

#51 timo on 09.10.11 at 3:57 am


“The date May 21, 2003, should be remembered as a historic landmark. On this day Aladdin Greenspan let the genie out of the bottle. The genie is now at large, entirely on its own, roaming around the world, visiting disaster upon the economies wherever it may go: a depression possibly worse than that in the 1930’s. Aladdin hasn’t got a clue how to put it back in the bottle because, if he tried, the genie would threaten to plunge the world into another bottomless pit: that of hyperinflation. Aladdin sowed the wind to let the world reap the whirlwind.”


A bubble that broke the world – 1932 by Garet Garrett

if you have time to read the first couple of chapters you should be able to relate to what we are experiencing now. History repeats it is just a matter of time.

#52 george c on 09.10.11 at 4:10 am

Tea Party nut jobs? I have no idea what that comment means. Whats alternative be like Ontario. Have govt. control beer, wine, health, highest tax burden place on earth. I dont think so. If I had it my way Ontario would separate from Canada. It is absolutely useless that we are part of a 3 level govt. where duplication of services is everywhere. Get rid of the Federal govt and my wages will automatically go up 25%. We are in for some times of Change Mr. Turner. Canada is not exempt from a revolt. We have a Conservative govt that doesnt know if they are right wing or left. You blog about your little bubble but you have no understanding
of how the new generations will soon change the world like never seen before.

#53 Conflicted Pumper on 09.10.11 at 4:22 am

Did you notice the stock market reaction to Obama’s pass-this-jobs-bill-now speech?

It fell. Not because of Greece (same old lecherous default talk), but because the Republican-dominated Congress, where the Tea Party nutjobs are in control, would rather see Obama destroyed than people put back to work.

Yeah, that’s why the market fell. It couldn’t possibly be because the latest plan is a spin on the same print-and-spend plan that’s been tried and has failed more than once in the past couple of years.

#54 Aussie Roy on 09.10.11 at 5:09 am

Aussie Update

Is delusion in your genes?.
Maybe, it might even come from your kids.

Who said you could no longer buy with nothing down.

A growing number of parents are using their own homes as security so their children don’t have to stump up a deposit.

Others are buying with friends and family, renting out a room or buying an investment property to make a start.


TWO playgrounds of the rich and famous top the list of suburbs for cashed-up bargain hunters seeking prestige properties at vastly reduced prices.

The average price reduction in Point Piper during the past year was 21 per cent while at Palm Beach it was 20 per cent.

Examples of Point Piper ”bargains” include the $18 million sale of Elstree by the businessman Ben Tilley and his wife, Tiffany, who paid $22 million three years ago; and the $18.5 million sale of a Wolseley Road waterfront. In November 2008 price expectations had been about $25 million.


THREE multimillionaire developers are being pursued for their family homes in a $13 million lawsuit lodged in the Queensland Supreme Court this week.

Equititrust’s claim, lodged on Wednesday, alleges four Meridien companies and their three directors failed to fully repay a $10 million loan made in 2008.


“No problems, just a blip, house prices are just about to skyrocket – LOL”.

#55 BrianT on 09.10.11 at 6:18 am

#8Junius-True, but you do not have to be Albert Einstein to realize why Paul is so hated and feared by the MSM. The scheme is so all pervasive at this point that only those that follow the script closely are allowed in. The problem for the USA is that the script written doesn’t have a happy ending for 90% of the population.

#56 House on 09.10.11 at 7:11 am

Why are we still talking about FIAT GOLD. FIAT GOLD only works because of the same hysteria that is playing out in the “got to have a house crowd”. If we are going to use Gold as a standard, then we must once again set a peg. This peg must be reasonable so that all citizens can exist in the system. None of this $ 10,000 an oz. crap. I therefore suggest that the peg be set with reasonable inflation from the 1976 value at $50 per oz.

As to the we can’t prosper because our dollar is a cent more than the US dollar rubric. it was less than 10 years ago that the US dollar was $1.58 and they were still doing better than Canada. Our problem is we have the LAZIEST business leaders in the world. All they want to do is sit back and compare their salaries, for doing nothing, to other CEO’s in Canada and the rest of the world. The word WORK seems to be a foriegn concept to them.

#57 Mythbuster on 09.10.11 at 7:43 am

Garth: “… the Republican-dominated Congress, where the Tea Party nutjobs are in control, would rather see Obama destroyed than people put back to work. ”
(a) You never substantiated your negative view of the Tea Party
(b) If you hold Conservatives in disdain – why did you run as a Conservative?
(c) Why do you believe in Leftist madness? That is, repeating Obama’s failed policies?!

Conservatives do not put ideology ahead of social welfare. Those who do are called extremists. — Garth

#58 BrianT on 09.10.11 at 7:51 am

#47Timo-All these countries are broke. The grifters that lent them huge sums of shareholder money should have been aware of the insanity, but could care less as their personal renumeration increased. Now the search is on for which taxpayer group to gouge next to keep the floodwaters at bay. The potential problem is that a higher % of the public is aware of the scale of the fraud right now than in e.g. 2008. They are also aware that the biggest fraudsters are untouchables and this obviously is becoming a political issue.

#59 Mythbuster on 09.10.11 at 7:56 am

Garth: “… climate change is commie talk.”
North America, especially Canada were covered with rock hard ice eons ago. A warming process revealed the land and Canada was made possible.

The question to the hordes believing in ‘man-made’ global warming is this:

Who said the global warming process that ended the ice-age and made Canada possible, stopped?!

Even if man-made warming is a contributing factor, it would pale as a warming factor compared to the natural global warming that brought the ice age to an end, and probably continues to this day and into the future.

I anticipate some emotionally-appealing wise Alec answer from you, but that would avoid answering the question. I’m looking for you to substantiate your views!

Nice to hear from the Flat Earth lobby. — Garth

#60 BrianT on 09.10.11 at 8:02 am

#43West-The term “Protectionism” is absolute total unadulterated B/S. The economic models that claim taxes on imported goods are inefficient also assume that taxation itself is unnecessary-no government services at all are required by the population. That is ridiculous. If you agree that some services are required, the question is who should pay for these required services? These absurd terms-“Free” trade, Protectionism. Tariffs, etc. are all designed to confuse the sheep. Taxes on imported goods bad, taxes on schmuck sheep good. Taxes on imported goods bad, taxes on schmuck sheep good. Continually repeated like a mantra by the MSM.

#61 Euro Girl on 09.10.11 at 8:07 am

I read with dismay that Trichet won´t raise interest rates. I am scared. Goodbay beautifull Europe…Any thoughts, Garth?

#62 Renter-X on 09.10.11 at 8:13 am

Garth, I’m a big fan, but am mystified by your characterizing the Tea Party as nutjobs rooting for economic collapse. It seems to me that the Tea Party (really just average, concerned citizens) are the responsible, rational adults in the room. It’s Obama and the Democrats who are the nutjobs – mental cases who can’t stop spending, most of which is wasted and/or payoffs to unions and other special interest groups. They can’t even admit that out-of-control spending is a problem, and viciously attack the Tea Party and anyone who tries to institute rational policies.

You seem to think that the latest Obama speech is a thoughtful, intelligent plan that would actually work to bring down unemployment. Please advise what makes you think that – I see it as just more wasted spending that doesn’t include anything that would really work: reduced spending, lowered taxes for individuals and corporations, reduced regulations, opening up energy exploration, etc. These policies would bring a huge boom, not austerity, and are the only real hope of getting out of the deficit/debt mess.

You think that higher taxes are needed to solve the deficit. Really, you think the Democrats would diligently apply these funds to reducing the debt/deficit and not just waste it on more spending? Besides, I believe it’s been established that higher taxes reduce government revenues, not increase them – it’s lowering taxes that increase revenues. In fact, Obama was asked about this while campaigning in 2008 and he didn’t dispute it – he said he still supported higher taxes because of “fairness”.

Here are some articles on the recent “jobs” speech:



Lastly, protectionism – what are you talking about? Maybe I missed it, but I thought the Tea Party and Republicans are the ones for trade; it’s the Democrats who are protectionist. Here’s an example – a few years ago Bush pushed for free trade with Columbia, but the plan was shot down by the Democrats under union pressure. If I missed something on this please let us know.

Other than that Garth, love your work!

The politics of austerity at this juncture would guaranty a deflationary debacle, seriously screwing hundreds of millions of people. You should start caring about that. — Garth

#63 dd on 09.10.11 at 8:20 am

…In fact, there’s a growing movement afoot of people who are rooting for economic collapse…

Funny, studying the facts doesn’t prevent this train from slamming into a mountain. But enjoy the ride and don’t look out the forward window.

#64 Truth seeker on 09.10.11 at 8:29 am


A 50 % decrease after a 100% increase puts you at the same price.

#65 Bottoms_Up on 09.10.11 at 8:35 am

#25 Kenji on 09.09.11 at 11:27 pm
I have a cousin (in his 20’s) who lives in New York city and his rent for an 800 sqft apt is $3600/mo.

If that’s what rent is, imagine what it costs to buy?

Put all the cities in Canada together and you would not have one NYC. — Garth

#66 Utopia on 09.10.11 at 8:54 am

#31 From Mississauga with Love

“To all of those who are now claiming the Torontonians are in negative equity, I say relax. This is the normal summer downturn”

Nope. Not normal and not recoverable. The market is not that flexible and there are very few reasons to propel prices back up.

A fresh burst of new demand against a backdrop of limited supply and an interest rate cut could theoretically do it but I won’t hold my breathe on that.

RE markets don’t function like stocks. These are slow lumbering illiquid investments that do not change course quickly. The new course is down, not up.

Double digit declines in such a short time span are a big red flag. The message has obviously gotten through that pricey R/E is a hazard to your well being. It is why I think that more tinkering with CMHC processes could cause more damage than good right now.

Perhaps enough pressure has been applied to our housing markets already which is what is suggested by such a rapid price correction.

#67 Peakoilist on 09.10.11 at 8:55 am

Don’t worry , there are certainly a juicy assortment of silly, terrifying and head scratching gaffes coming out of the republican debates ( and more to come), that will bury the GOP. the democrats will have a hayday with it all come
attack ad season..should be entertaining.

#68 T.O. Bubble Boy on 09.10.11 at 8:56 am

Hey there #41 wtf?????

This as opposed to the thousands of businesses who are using the strength of the dollar to buy new machinery and expand their factories to create more skilled high paid jobs.

Really? *Thousands* of manufacturing businesses?

The former head of the Bank of Canada (David Dodge) has the opposite view… and I’m pretty sure he understands the Canadian economy just a little better than you:


A more intractable problem is the country’s waning manufacturing base in Ontario. The underpinnings of the province’s core industrial sector have been eroding for decades. Plants here can’t compete with the lower wage markets of the Southern U.S. states and emerging countries. Compounding matters, long-term investment in more efficient plants and equipment has been anemic. The deterioration was masked for years by the competitive advantage of a depressed loonie and overheated demand in the United States, particularly in the past decade.

#69 penpal on 09.10.11 at 9:11 am

@ # 25 Kenji

I’d like to know what you base your opinion of future housing price action on.

I think one needs to use historical comparison, facts, and the insight of many years of successful investing experiences – in other words, REALITY, not hope or fear.

I think it is CURIOUS that people, often with little experience, investment acumen and not in possession of the facts, post opinions based on nothing more than their FEELINGS, HOPES AND FEARS.

I find it absolutely ALARMING that people, often with a lot of experience, investment acumen and totally aware of the facts post opinions on nothing more than their FEELINGS, HOPES AND FEARS.

#70 Peakoilist on 09.10.11 at 9:16 am

#36 JohnnyBravo on 09.10.11 at 12:23 am

You’re right . Maybe a good cleansing is required. Nature doesn’t give a rat’s ass about our comfort. I read an article recently about hyperinflationary events that suddenly appear out of nowhere..the root cause is always excessive quatitative easing. Anyway, the opinion of that author is that it would be painful but much shorter lived than a long term deflationary event.
He pegged it at 3 years or so. It would burn up a lot of cash and assets. I really didn’t understand all of the concepts and I wish I still had the link. It was scary and yet it made sense too.. I do believe nature is at work, and will always shake down anything and everything that humans can make. Wealth and money are fake, humans are real but make foolish decisions. Collectively we are all riding the same bus, that may be heading for that ravine. Or not, maybe it will just work itself out slowly and painlessly. What do you think?

#71 penpal on 09.10.11 at 9:17 am

@ # 25 Kenji cont’d

What I find truly amazing is that housing “bears” in Canada must PROVE their case with fact, historical precedent, etc. and often do, but the housing bulls merely pass their opinion , largely based on platitudes and hope.

Funny that.

#72 T.O. Bubble Boy on 09.10.11 at 9:20 am

@ #50 Taking stock

Does anyone else agree that the stock market is being manipulated by professional day traders? We are sitting ducks as our pensions trickle away.

Attention Human Trader, you are no longer needed

Influenced, not manipulated. Big difference. — Garth

#73 One Flew Over the Cuckoos Nest on 09.10.11 at 9:27 am

Garth, it is time to bring Smokin Man to the looney bin. His rants are entering into the realm of madness and psychosis. The straight jacket and rubber room are ready.

#74 An Cat Dubh on 09.10.11 at 9:35 am

Sounds to me like some people holding real estate are getting desparate in selling or buying. As for Tea Party “nutjobs”, you should read about Obama’s past. He is associated with communist 60s radical Bill Ayers, who is tied to Jimmy Jones (another radical) who is now one of Obama’s Czars. Not to mention no one remembers Obama at Columbia University and the phony birth certificate. Both parties are following the Bilderberger’s agenda. Welcome to the USSA.

A social activist marxist-leninist commie peacenik in the 60s? Hell, that described me. And look at the mess I grew up to be. — Garth

#75 penpal on 09.10.11 at 9:37 am

@ # 37 Smell The Coffee

“Try to getting a loan for a condo in Athens today.”

Good observation.

This is a fear that I have for the Canadian RE market and for anyone who has less than the historical 20 to 25% equity one should have upon ENTERING the housing market.

Houses deflated nationwide by 25% during the Great Depression of the “Dirty 30’s” and I believe that is partly where this 20 to 25% concept originated.

The US market has now deflated over 34% nationwide since its late 2005 peak and in many places it is near illiquid due to a paucity of equity by “homeowners”, who in reality, now own nothing.

While I think your view might be a bit extreme, it is based (realistically IMHO) on the recent precedent of the great “freeze-up” of 2008.

Odd how everyone forgets that little episode that shaved up to 20% off of some asking prices in order to get a deal done.

Should funding become hard to get, as it was then in 2008, would it not be reasonable to expect to see a similar, if not worse outcome in the very least (especially given that prices are even more detached from fundamentals)?

#76 T.O. Bubble Boy on 09.10.11 at 9:43 am

Here is what all Vancouver offices *should* look like, given the amount of Hot Asian Money flowing in:


#77 penpal on 09.10.11 at 9:47 am

@ # 39 Onthesidelines

“Hang on bitches.”

Garth, if u don’t know it the word “bitches” appears on literally every comment thread on Zerohedge.

This person is probably a fan of that great blog (as am I), but do you think you could nip this vulgar reference in the bud.

I’m not the sensitive type, but I find it pretty offensive and not really in the spirit of this blog. Zerohedge is a great web resource, but even I get disgusted by the vulgarity of its posters and so often stop reading it in disgust.

Message received. I spend far too much as it is cleaning out lazy and disrespectful language from posts. In future I will just delete. – Garth

#78 cliffard on 09.10.11 at 9:50 am

Garth is soooo right and the doomers are complete wackjobs pure wackadoodles what we soooo don’t need now to emerge is a democracy based on self help,natural law,more freedom,fewer rules,lower taxes,property tax rights,survivalism and real money.

#79 Daystar on 09.10.11 at 9:54 am

#50Taking stock on 09.10.11 at 2:40 am

Holding cash, fixed income and bonds is a part of being diversified, is it not? As for the markets, buy low, sell high, works every time.

#46Betty Danin on 09.10.11 at 2:02 am

I appreciate your sharing with us your experiences in the bond markets. Thanks for that, Betty!

#80 The American on 09.10.11 at 9:56 am

Calm down, everybody. The tea party idiots are for mere comical relief, and the media and general population know it. It keeps it interesting and actually gets people involved in the political process. Simply put, it sells papers and increases ratings. Sure, showing a few teabaggers here and there captures a few of the audience and brings them out of the closet as teabaggers themselves (which isn’t necessarily a bad thing, because now we know which neighbor of our to be watching closely when the shit hits the fan). As of today, the front runner nutjob, Michelle Bachman, has less than 4% of the GOP support. No way in hell will a teabagger ever make office. Not that the alternatives in the GOP, Rick Perry or Mitt Romney, are much better. Rick scares the ever living shit outta me. He’s three times worse than W. ever was. The following are only a few of the NICE websites dedicated to her stupid antics… Believe me, there are FAR, FAR, FAR worse sites dedicated to here with FAR worse verbiage.


#81 Junius on 09.10.11 at 10:23 am

#55 BrianT,

You said, “The problem for the USA is that the script written doesn’t have a happy ending for 90% of the population.”

On that we can certainly agree. The number may even be less than 5%. Of course, the lower that number gets the more unstable society becomes.

The recent “let them buy cake” pronouncements from the Fed have a very historical ring to them.

#82 Tea Bagger on 09.10.11 at 10:24 am

Let’s leave Obama out of it for a second.
Do you think any company is going to hire an unneeded employee because of a 3-4% tax savings on social security?
Our “leaders” have already sucked the excess cash out of the SS fund and blew it while replacing it with 2% bonds that they now have to buy back with borrowed money. This tax savings for new employees will hurt the SS system even more while taken only by employers that needed the additional new employee anyway.
The bureaucracy to invest the needed infrastructure repair and replacement will take about 2 years to put together and will not result in jobs right away.
Paid for? We’ll see.
Another round of unintended consequences coming like the “cash for clunkers” deal.

#83 Junius on 09.10.11 at 10:29 am

#80 The American,

I hope you are right. However I have never seen in my lifetime US politics slip to such a low position.

You have a Democratic party that has no idea what direction to go and what they believe in with a President who ran on “Change” and brought more of the same.

You have a Republic party this appears beholden to a toxic combination of the super rich, religious fanatics along with the Tea bagger nut jobs.

Meanwhile money has so corrupted the system that everyone is on the take or at least so badly compromised they can’t think straight.

Not very inspiring at the moment.

#84 Dr. WAYNE on 09.10.11 at 10:30 am

I am convinced some of the nutjobs, as you call them, that are running the US Congress are big fans posting on your blog.

#85 The American on 09.10.11 at 10:32 am

Seriously? Those were pretty funny links.

#86 Ronaldo on 09.10.11 at 10:37 am

#75 – Penpal “Should funding become hard to get, as it was then in 2008, would it not be reasonable to expect to see a similar, if not worse outcome in the very least (especially given that prices are even more detached from fundamentals)?” Absolutely.

#87 Devil's Advocate on 09.10.11 at 10:37 am

Go back in the archives and read my comments on this blog from some two plus years ago. I believe you will then come to realize that I am not so much a real estate pumper as I am often accused of being, although my tune of late has most certainly changed.

It would not surprise me to find good evidence that my business had foregone as much as $1,000,000 in additional revenue – maybe more – due to my past bearish outlook on real estate. My fears – those I then shared with many of this sites followers – never did come to fruition. Does that mean they never will? Certainly it does not. Risk is ever present in all aspects of life. But what is clear is that protecting yourself from life’s risks by hiding under a rock, in a bunker or simply observing life rather than participating in it is the surest way to ruin.

With no risk there is no reward. It’s just that simple.

And as far as this real estate bubble goes… as long as people are willing to pay the price then that is what it is worth. It’s not what the seller asks which establishes value it is what the seller asks that the buyer is willing to pay which establishes value. Just because you believe the price should be lower does not mean that it is worth less for indeed the mere fact that the seller would not sell it to you for that he/she has bought it themselves for something more, but still probably less than their asking price, as they incur the real opportunity cost of not having sold it to you. They are then, in-as-much, a ready willing and able buyer who bought and paid for their own goods thus establishing market value – all-be-it somewhat unknown what that value is but clearly more than you were willing to pay and something less than they were asking. That will remain so until such time as they become more motivated to sell for a lesser price. Until then that is what the property is worth – to them.

There are no deals in real estate. In my relatively long career I could count on one hand with more than half the fingers left over the “real deals” I have seen to the benefit of either buyer or seller. Real estate sells for what it is worth. EVERYBODY it seems is looking for that “real deal” in real estate. It’s like a chicken coup full of hungry chickens you throw a handful of seeds to. They get plucked up in short order until those last few are fought over.

Will real estate values in those bubbly areas plummet anytime soon? Considering all the “doom and gloom” economic news over the past three years and that those areas have continued to buck the trend for all of those three years, I’m inclined to think not. Add to that that at every economic peak I have lived through and there have been a few, my thoughts then were this cannot continue… but it did. Sure it pulled back a bit for a time – almost as were it taking a short breather in preparation for the next leg up.

A colleague recently returned from a business trip to the U.S. and, yet again, confirmed – as I have heard so many times “Yes there are areas which have been hard hit by falling prices. But almost right next door, it seemed, there are areas which continue to enjoy high demand and sustained pricing. Not unlike back home in Canada.” So too is it true here. We certainly are no different – no different at all. Nor are they any different from us – no different at all.

P.S. I am going to try to restrain my posts to a couple a week – tops. Bringing you contrarian points of view I think you should ponder. With Garth’s permission of course? DA

#88 Junius on 09.10.11 at 10:42 am

#25 Kenji,

You asked, “Why does everyone think Canadian real estate will end up like the US? We have a totally different mortgage system and real estate structure.”

Sigh. Don’t you pumpers ever do any of your own work? Penpal in #71 was right.

First of all, we do not have a “totally” different mortgage system. Yes we don’t have robo signing and all of that but we still have had a long period where mortgages were easy to come by and the banks were relatively risk free in doing so. They have Fannie and Freddie while we have the CMHC.

Secondly, the fundamental issue is the same. People have taken on too much debt at a time of ultra low interest rates. Prices were not bid up on salary increases or other positive economic changes that would sustain them. It is all built on wealth and speculation.

It is different in each country. Ireland is different than the UK which is different than Spain and the US, etc. However in the end the result is pretty much the same. Prices go down, debt remains, lives are changed.

#89 Junius on 09.10.11 at 10:55 am

#30 Tim,

You asked, “What is the likelihood of it falling anywhere near 50 percent, given the truckloads of wealthy foreigners continually moving in..”.

Another guy who needs others to do his homework?

On the first question let’s do the math. Historically the average home price in Vancouver ranges between 3-4 times the average income. With the average income being in the $70,000 range that should put homes in the $210,000 to $280,000 range. In fairness, since it pushes to the upper range let’s use $300,000.

Clearly this is well below 50% of the current prices which are more than $800,000. So they can fall by more than half to return to historic fundamentals.

What other factors are involved? Well, clearly interest rates are a big part of what keeps these numbers up. They remain low but not forever. Meanwhile are we seeing wages going up? Nope. Are we seeing lots of jobs in the marketplace? Nope. However we are seeing all kinds of costs from basic staples to energy to higher taxes eroding our ability to afford things.

Like Miami, Phoenix, Vegas and other places that thought they were invincible Vancouver is surely going to see a massive drop in prices.

As for those “truckloads” of foreigners that is the wild card isn’t it? However one has to wonder why anyone would keep paying inflated prices in Vancouver when the rest of the world has falling prices? Our government has already moved once to limit the number of coming under immigrant investment programs. So I wouldn’t expect your foreigners to keep prices up.

#90 vreaa on 09.10.11 at 10:58 am

Vancouver RE ‘Jumps The Shark’?
Candidate Moments


The envelope, please…

#91 Ex-Cowtown on 09.10.11 at 11:09 am

Nice to hear from the Flat Earth lobby. — Garth


I’m disappointed Garth. I guess you don’t keep up on your readings on the goings on at the CERN Large Hardon Particle Collider? It seems that experiments done by the scientists there have thrown the whole Man Made Global Warming (MMGW) thing so far into question that it’s likely fatal this time. They have found that cloud formation is essentially controlled by the Sun’s cycles.

So now given the news that an experiment has just blown a massive hole in the foundations of their eco-religion the MMGW guys are forced to re-invent the narrative YET AGAIN (for about the fifth time) to keep alive their collective hallucination. The latest paper now takes the silly position that now clouds aren’t important to global temperatures and MMGW is still real. Huh????

So, GT, let’s use some common sense: Is a cloudy day warmer or cooler than a sunny day?. Seems to me that if a backyard experiment shows that clouds do matter, it’s pretty likely that the MMGW guys finally pulled a Fonzie and jumped the shark. Their conclusions make no sense, they are just an example of an increasingly desperate group of people grasping at ever shrinking straws.

Now, for the record, as an earth scientist, I can state absolutely that global warming is real… but so is global cooling, and climate change is real and has been so since the beginning of time on this planet. Heck I’ll even state that people may have some effect in a very small way. But despite the efforts of thousands of MMGW funded scientists, there is no real experimental evidence that shows that CO2 is anything more than a virginal skinny found-in in the sweaty humping brothel of climate change.

So, am I the Flat Earther, when I base my opinions on science, or are Al Gore, Daryl Hannah, David Suzuki, or Elizabeth May all of whom wander around constantly spewing inaccurate and provable false information?

Just because the planet may or may not be warming doesn’t mean that people are responsible and it surely doesn’t mean that we should pi$$ away trillion$ solving a problem which took one huge leap backwards into the Magic Kingdom.

Sorry Garth, that Man Made Global Warming dawg cain’t hunt no mo’.

#92 Junius on 09.10.11 at 11:09 am

#68 T.O. Bubble Boy,

Great link with the article from David Dodge. It is so refreshing to hear from someone who is such a clear thinker and tells it like it is.

I have seen a number of articles from Asia recently, Singapore and Hong Kong to be precise, where the authors were talking about how Western politicians appeared to be incapable of telling the truth to the population about the current economic conditions. They talk about how they are just delaying the inevitable.

In this respect Dodge’s comment about all 3 political parties in Ontario lying is spot on. I also think this is part of the appeal of people like Ron Paul in the US and why he should not be underestimated. It was also a big part of what got Obama elected, the notion that he would do what was needed even if it brought hardship.

Eventually some leaders will rise once the “extend and pretend” phase we are in wears off. However we badly need them now.

#93 Timing is Everything on 09.10.11 at 11:13 am

We have three strikes against us already. – Garth

What ever happened to ‘three strikes you’re out’…Oh ya, the rules just changed…again.


#42 saanichtonian

‘interest and interest on interest’

Hence, taxes and taxes on taxes. This can’t end well.

Remember, there is no optimal solution. There never was and there never will be. But there are solutions, we just don’t know what they are yet. Heuristic solutions.

#94 maxx on 09.10.11 at 11:13 am

#16 nonplused on 09.09.11 at 10:54 pm

Bullseye. The “bezel” will disappear faster than dry ice on a hot July day. Corporate balance sheets will continue to reflect strident “rightsizing” efforts without interruption. This “good news! and new hope” political project will produce zero to a handful of very short-term jobs.

#95 JohnnyBravo on 09.10.11 at 11:15 am

#70 Peakoilist on 09.10.11 at 9:16 am

(please pardon the long post)

It’s tough to predict how it will be resolved. One can make the case that the entire crisis is being either engineered, or at least exploited by the so-called “globalists” and others. For example, remember the debt ceiling debate? What an imbroglio! Well, the US is very close to once again breaching the ceiling, yet you hear barely a peep about it. Or how about Europe? The oligarchs are fighting tooth-and nail to not only hold it together, but consolidate the union into a political entity, or at least a fiscal one (that may suffice, as I think political union is damn near impossible). You hear more and more about a Euro bond, and fiscal union. Meanwhile, you have Germany, for all its complaining, in the catbird seat and ready to assume greater control than Hitler did, and without a single shot being fired.

I point to these two examples, just to show that this is much more than an economic problem. And I follow some very smart, well-respected individuals who assert the goal is global governance under a one-world currency. David Rockefeller himself bluntly admitted in print that that is in fact his goal. When you realize that our economy runs on money, not wealth, one can easily imagine how money can be manipulated by central authorities in order to control the economy and confiscate people’s wealth. It’s a very old game.

The Fed, for all its talk about employment, is not there for the people. Their job is to protect the banking system. The reason they manage inflation is not so prices don’t rise too fast. It’s because inflation is the source of bank profits and much government revenue.

But let’s put all that aside for now. Up ’till now, it looks like we are taking a “Japanese” style route (“money printing” to offset deflation resulting in a grinding stagnation). We are arguably in a balance sheet recession (too much debt). If the markets were allowed to function freely, we likely would have already had a massive deflationary collapse in order to restore balance. However, this would have also destroyed the banking system, or at least its biggest banks. The Fed would not allow this. But as a result, there is an astronomical amount of “money” in the system, pumped in to offset the deflation in the real economy, particularly in housing. In short, the banks lost too much of their collateral, so the Fed pumped in money and changed the rules of accounting to allow the banks to pretend it never happened.

But now that we have all this excess money just sitting there (in reserves both in banking and large corporations) it could be we are kind of stuck, sitting on a potential bomb that we want to go off very slowly rather than detonate all at once. If the economy doesn’t grow fast enough, we could simply get stagflation. But if the economy suddenly picks up, the Fed may have to dampen growth to prevent runaway inflation and a bond market collapse. In the meantime, they want to devalue the US dollar without triggering an outright collapse. So, as I see it, it’s all very delicate at the moment, balanced on a knife’s edge. Then there’s the Euro banks. Oy!

Another major consideration is growing global competition for natural resources, but I won’t go there now.

#96 Timing is Everything on 09.10.11 at 11:18 am

#42 saanichtonian

Hey #42…


#97 Jody on 09.10.11 at 11:19 am

“Obama’s pass-this-jobs-bill”

Governments don’t create jobs by giving tax dollars to the corporations that bribed them.

Lots of jobs would be created in the US if the governments minded their own bloody business and stopped regulating the hell out of small and medium sized businesses.

You want an example of how governments kill jobs? Look at the recent federal raids by the FBI on Gibson Guitars. Why did they raid Gibson? Because Gibson had used “illegal,” wood to make their guitars. Yea. You heard that right, illegal wood. These stupid muppets wonder why companies up and leave. The united nations (an organization that should be shot into space) has agenda 21, google it and read it, you may want to beat the hell out of the people who support it.

Anyways, according to agenda 21, laws in one country apply in another. In the case of Gibson guitars the law is that wood cut in India/Madagascar needs to be worked in India/Madagascar. The wood Gibson’s got was from India and Madagascar but it was shipped to the US where Gibson’s worked it into their guitars, as a comany should be able to. Well, because of agenda 21 the FBI had to raid Gibson’s and take their “illegal,” wood away. It’s not like we have other problems in the world right. F***ing idiots. Anyways, read and listen to what the feds told the CEO of Gibson Guitars below. If Obama and the idiot tea baggers want to create jobs they need to learn to butt out of peoples live, but that ain’t gonna happen anytime soon is it? We have to many retards who think government can create real jobs.




#98 Ronaldo on 09.10.11 at 11:25 am

#30 Tim – “Real estate has probably increased over 100 percent in Vancouver over the last 8 or so years”

Try 300%.

#99 Bob Copeland on 09.10.11 at 11:25 am

OK, I’m censored. Just between you and me here’s an article that explains pretty well what the tea party wants to undo. There’s no right wing group wanting to destroy the little guy.

Saturday, September 10, 2011
An American Renaissance

In the beginning, there were jobs. Men and women performed jobs. They had jobs because there was a demand for their specific type of service or the things that they produced. Men and women could charge affordable prices and make profits. Business owners employed people to make items or provide services that were in demand. Everyone tried to make a profit so that they could live comfortably. Not ungodly profits but fair profits. Ungodly profits tend to introduce competition and drive prices down. That”s how all of this used to work. Back when we had free market capitalism.

Then the government got involved. First they started taking small amounts of taxes and then later, larger amounts of taxes. Then they started creating new taxes and taking even more. They forced insurance costs upon business owners. State and local governments took all that they could. Big and small government introduced regulation and bureaucracy which forced lower profit margins and compliance was costly and burdensome. Because the government does not create anything usable, they quickly became a drain on society. They plundered everyone’s profits. Their bank, the Federal Reserve, helped destroy the currency that people relied on. It helped create inflation which is another hidden tax by creating too much debt and currency. Government then demanded that business pay for health insurance. Jobs left. Small business owners said fuck it. Big corporations took manufacturing to places where they could make a fair profit again without everything being stripped bare by government. And then government scratched it’s head and said, “what’s wrong?” as though they had nothing to do with it.

In fact, the only thing wrong with free market capitalism is government. Sans government, society and the free market perform admirably.

We cannot get our way of life back until we rid ourselves of this cancer we call government. Giant agencies like the Department of Energy that waste 100’s of billions of dollars providing absolutely nothing. Ask somebody what the Department of Energy does and you will get a shoulder shrug. At the most critical juncture in the economic life of this country- a point where bankers and government have absolutely raped this country and stolen it’s wealth- we elected a statist who wants even more.

Don’t take it personally- Obama simply lied about who he was. That’s all. He came off like a centrist on purpose to get as many votes as possible. He has tried to turn us into a full blown socialist state and that’s ok too. In fact, we may become bankrupt far sooner and quicker because of Obama. I call that a blessing. I prefer quick death to slow death.

To call Obama and his administration delusional is entirely too simplistic. He doesn’t know the first thing about government and it’s role in creating or destroying jobs. Obama and his ilk are job destroyers. They think they can just throw money, i.e. stimulus around, and like Miracle Grow- jobs will materialize. They don’t understand people or free markets. And that’s what takes this history full circle.

Business owners and people work to make a fair profit. They do not work so that they can take all of their profits and turn them over to a government that has gone berserk. Free markets work the best when government gets the fuck out of them. The more government interferes in free markets with crippling taxes and regulation that force places insurance and gobs of it, unemployment, workman’s comp, liability packages, health packages- we become socialists. People quit working. The system freezes up and vapor locks because there is no point in working for layers of government intent on regulating, taxing, and stealing your work product. Workers just say fuck it. Businesses just say fuck it. Low level government employees just say fuck it because they don’t make anything related to GDP anyway. Government supervisors allow piss poor performance because they aren’t out anything. In government, everyone has their head in the trough. Tragically, the only guy that gets screwed in this entire performance is the taxpayer. And unfortunately or fortunately perhaps- the taxpayer is all but dead.

We are out of jobs and we are out of taxpayers. The demographics are such that the younger generations can’t support the older, larger generation. That’s what happens when a society implodes. It’s really not much of a mystery. We can’t pay the debt or the tax bill. We don’t have jobs and this government of ours has absolutely ruined any chance of changing that structural flaw. After wasting trillions, Obama wants to waste another 500 billion more on a jobs problem that is so fundamentally flawed- structurally damaged- that it cannot be fixed. Who did that? Who ruined the American dream?

It doesn’t really matter anymore. There is no solution in beating a dead horse like Obama. Those of us who can do something- do it. Those who can’t- teach. Obama doesn’t understand Economics 101. He was probably smoking dope before class. There cannot be an American renaissance until we address the structural job killing policies of a government gone insane. We cannot begin to address the return of jobs stateside until we fix all of the bureaucratic regulation, policies and trade policies, taxes, insurance, that drove businesses offshore in the first place. Piece by miserable piece. Maybe if we can identify all of those broken parts and fix them- we can get government the hell out of our lives and return a few jobs to our shores.

Or we continue as we are. How’s that been working out so far?

The US is a low-tax regime bristling with people who don’t want to pay any, pronounce government a ‘cancer’ and would revert to survival-of-the-fittest calling it social cleansing. Shame on those with such cold hearts, lack of humanity and a myopic view of democracy. You included. — Garth

#100 From Mississauga with love on 09.10.11 at 11:32 am

#66 Utopia
I sincerely hope you are right but i do not think so. I don’ t see double digit declines in Toronto at all. As a matter of fact, people here in Mississauga are asking really ridiculous prices watching their homes sit for months before they reduce to current pricing let alone going down. They are playing this game here.
You say the market needs a fresh burst to recover from here, but what was the fresh burst given this spring? Interest rates did not go down just the same madness after the cmhc tightening. Spring is a regular cycle up.
Now, if we keep getting bad economic and job news like today into the spring that would be a different matter I agree. But our government is now warming up to deficits again and may stop laying people off and that wonderful mayor ford may delay his plans to tear apart the city.

#101 BrianT on 09.10.11 at 11:37 am

#59Myth-The climate change/carbon credits scam is a hoot. Every public school kid has already had this stuff force fed. Ask the same kid about oil depletion and you will get a blank stare (the same stare you will get from his sheeple teacher).

#102 Killer Chicken or Imploding Boomer? on 09.10.11 at 11:39 am

46 Betty – awesome job! But why the “secret”? According
to this website, your tax payable on $103K is about what
an income stream of $40K interest, $30K large corp
dividends and $33K cap gains would be, not including
the senior credit. I also feel the advice “past performance may not be indicative of future performance” should be heeded.


Also, wrt millionaires, this wiki article compiles info
from “World wealth reports” thru the years. Be careful to define “millionaire” (individual or more typically
household) and “million” (net worth vs investible assets)


#103 Snowboid on 09.10.11 at 11:48 am

Since the comments have become a slugfest between opposing nutjobs, I offer my own contribution as a part-time nutter.

We are all being affected by the coming full moon ion effect.


Don’t worry, we will all be better by Tuesday

#104 Ronaldo on 09.10.11 at 11:50 am

#28 Tim – the fact that house prices have risen so much in the past year or so will make the price drops even greater when the market turns (and it will).

Many people who owned property in Vancouver in 2005 before the big rise are sitting on huge equity. When these same people decide to sell, it will be no big deal for them to drop 2 to 3 hundred thousand if they have to since they will still walk away with a bundle. They are just phoney paper gains created by lowest interest rates in history and manipulation by the real estate industry.

Too bad for the late comers to the party though as they will be sitting in a shack worth much less than their mortgage. (as what has happened in the U.S.) Be patient. Not much longer now. This party is coming to an end. Another major world event could be the trigger.

As Garth has stated, even low interest rates won’t keep it going any longer. The next few weeks should be interesting.

#105 CrowdedElevatorfartz on 09.10.11 at 12:07 pm

@#31 Smoking Man
Buddy, when you’re at the doctors tomorrow for your blood test. Ask him to check your medication. Its not working.

#106 Peakoilist on 09.10.11 at 12:08 pm

#58 BrianT on 09.10.11 at 7:51 am
Just wondering if you using sarcasm yesterday…sometimes I don’t read that so well
If so, cool, we’re probably kinda , sorta on the same page. If not, that’s ok too, agreeing to disagree works too. this forum is plump full of differing opinions, that’s why I like it so much. we all like to push our own personal/political agendas.

#107 eddy on 09.10.11 at 12:45 pm

Yuri’s problem was created by various governments. There is too much newly minted debt chasing the ‘average’ price houses. Basically the cheaper stuff is inflated more that than the higher priced stuff.
Partially the result of incentives for 1st time buyers, the city of TO gives rebates on their land transfer tax to 1st time buyers, but Yuri will have to pay it if he upgrades. He can thank Toronto City Hall for that one

#108 MGTF on 09.10.11 at 12:45 pm

“Conservatives do not put ideology ahead of social welfare. Those who do are called extremists.” — Garth

“The politics of austerity at this juncture would guaranty a deflationary debacle, seriously screwing hundreds of millions of people. You should start caring about that.” — Garth

re: climate – “Nice to hear from the Flat Earth lobby.” — Garth

Thank you Garth! As you’ve noted, a lot of us read this blog but don’t comment. The the little quotes above made it worth while.

#109 foolsrushin on 09.10.11 at 12:56 pm

What blows my mind is that this blog is inundated with facts and figures why housing in Canada (and many other things) is going to move down (just like everywhere else in the world). Yet people still have to have you process their paperwork of whether or not they should sell and what they should do. Well you might save them on their house today but they surely will hand their profits all back eventually because you can’t save them from themselves.
Here’s some worldly advice. Pull your head out of the sand, make an effort to see what’s going on around you (regionally, provincially, federally and worldwide), spend a some time on educating yourself on the economy and your finances and make your decision. Oh and be prepared to live with it not because someone told you this was the right thing to do but because it makes sense.
By the way, for every person that’s saved by this blog, another one gets thrown into the fire. Net result, no change in the Canadian position, just a personal one.

#110 Aussie Roy on 09.10.11 at 1:03 pm

penpal on 09.10.11 at 9:17 am

What I find truly amazing is that housing “bears” in Canada must PROVE their case with fact, historical precedent, etc. and often do, but the housing bulls merely pass their opinion , largely based on platitudes and hope.

How very true, its the absence of history being even relevent to many people that puzzles me. They seem to look at very recent history, 10, 20 years and base the future on their lived history. Who was it that said “the thing we learn from history is, most people don’t learn from it”.

History shows, when house prices aren’t supported by wages they fall.

Last 10 years
Wages +42%
House prices +212%

We have been here before, in recent history 1980s and as far back as the last great “commodity rush” in 1880s.
That bubble burst as will this one.

That really is the definition of insanity doing the same thing over and over again and expecting a different result.

Melbourne – Voted the most livable city 2011

1890s Melbourne Land bubble

Melbourne’s population reached 280,000 in 1880 and 490,000 in 1890. For a time it was the second-largest city in the British Empire, after London. In terms of area, Melbourne was already one of the largest cities in the world.

In the 1880s the long boom culminated in a frenzy of speculation and rapid inflation of land prices known as the Land Boom. Governments shared in the wealth and ploughed money into urban infrastructure, particularly railways. Huge fortunes were built on speculation, and Victorian business and politics became notorious for corruption. English banks lent freely to colonial speculators, adding to the mountain of debt on which the boom was built.

In 1891 the inevitable happened: a spectacular crash brought the boom to an abrupt end. Banks and other businesses failed in large numbers, thousands of shareholders lost their money, tens of thousands of workers were put out of work. Although there are no reliable statistics, there was probably 20 percent unemployment in Melbourne throughout the 1890s.
The 1890s depression was far worse than the Great Depression of the 1930s for Australia.



The Land Boomers: The Complete Illustrated History


We can learn a lot from history, not sure why some refuse to.

#111 Ronaldo on 09.10.11 at 1:17 pm

#23 Andrew – this guy is 80% in as well. Listen.


#112 Mr. Lee on 09.10.11 at 1:22 pm

You bring up some very pointed and accurate facts sir.
No matter if Perry or Romney were to win the Presidency (I am not sure that they will) the U
American people must be the one’s to demand change. 50% of the US federal budget is appropriated to defence spending. This is exactly what President Eisenhower warned of. Although I sympathize with the like of Ron Paul and truly do feel he is a sincere gentleman. His brand of Libertarianism worked in a world of less than one billion people, now we are 7. Although I subscribe to individualism and individual responsibility, it has become a little more problematic in today’s world. If people over extend themselves on debt as they have done and are doing, living beyond their means, and rolling the dice……..libertarianism goes out the window to the degree that Paul and others are calling for. Remember, these folks are against brining back Class Steagal.
As for gold and silver, as they cannot be created out of thin air as Fiat currency, take these commodities into a basket of currencies for the valuation of individual currencies. This proposal is floating around the G20.

No doubt we will get out of this, but not without major modifications to how we live and spend. So another tip of the hat Mr. Turner as you try to educate us all.


#113 jess on 09.10.11 at 1:23 pm

wow google sure needs a lot of energy to run those servers!

Google reveals electricity usage – The Globe and Mail
http://www.theglobeandmail.com/report-on-business/…/article2159659/You +1’d this publicly. Undo
23 hours ago – The search company said that it had used 2.26 megawatt hours of power in 2010. Had its demand for power been spread evenly over the year, …

#114 Macrath on 09.10.11 at 1:26 pm

Since this is not a poverty Blog . Canada’s Top 10 richest neighbourhoods.


#115 Junius on 09.10.11 at 1:31 pm

#99 Bob Copeland,

You said, “Everyone tried to make a profit so that they could live comfortably. Not ungodly profits but fair profits. Ungodly profits tend to introduce competition and drive prices down. That”s how all of this used to work. Back when we had free market capitalism.”

Nonsense. Pure Fiction. Has no basis in fact or history.

So called Free Market capitalism was in full swing in the 1860s and quickly led to the age of the robber barons. This was the age of the Carnegie, Mellon, Rockerfeller and the rest of this lot. Hardly how you describe it. Instead of creating wealth they simply acquired it through anti-competitive practices.

This led to the first crisis of US capitalism and the recession of the 1880s. The resulting government intervention was the first pillar of competitive markets – The Sherman Act of 1890 which brought in the first ant-competition laws.

The next big crisis was the crash of 1929 due to over leveraged corporations and banks due to an out of control stock exchange. The result was the creation of the SEC in 1933 and the Glass-Steagall Act regulating banking activities.

These are the 3 pillars of a competitive market economy – Anti-competition, financial and securities regulation.

The Western economies grew for their longest sustained period for the next 40 or so years. However the so-called “small gov’t” movement arrived in the 1980s and began chipping away at these foundations.

The result is that regulations have been weakened, the SEC under funded and Glass-Steagall all but repealed paving the way for the environment that has led to the current banking crisis.

Is it any coincidence that over the past 30 years wages have not risen for most of the population (on an inflation adjusted basis) but have for the top 5%?

We are back in the age of the robber barons. We have seen it at Tyco, Enron, Worldcom, BP, and the list goes on. The Steve Jobs are few and far between. This time they have convinced naive people like you that gov’t is not the solution so they can get rid of the laws that keep them in check.

#116 jess on 09.10.11 at 1:42 pm

Protectionism…is it really a bad thing?

if you realize your countries wealth has been exploited and your natural resources such as water are polluted and most of your population lives on the garbage dump….

Africa’s Odious Debts: How Foreign Loans and Capital Flight Bled a Continent
by Léonce Ndikumana and James K. Boyce

protectionism…isn’t that a tax haven?
inversions leakage artifical migration
Senator Levin once again proposed to modify the definition of residence for domestic corporations (IRC 7701). Section 103 of the Act seeks to “[s]top companies run from the U.S. claiming foreign status by treating foreign corporations that are publicly traded or have gross assets of $ 50 million or more and whose management and control occur primarily in the United States as U.S. domestic corporations for income tax purposes.”10

Tanzania: Taxing the untaxed taxables-leaders should show the way MENAFN
Aug 19 – The author, Mr. Lyimo (a socioeconomic commentator based in Dar es Salaam) asks why Tanzania, a country still classified in the category of Least Developed Countries continues giving tax exemptions to ‘Constitutional Office holders’ such as the President. Sandra Kidwingira.

shame vs no shame

Greek Financial Ministry issued this statement:
“The publishing of names will significantly help improve the efficiency of revenue collection and strengthen trust between the ministry and taxpayers through the promotion of transparency.”
Naming and shaming tax evaders could well result in the national coffers filling, though it is individuals who are most likely to bear the shame of being named.

Read more: http://www.digitaljournal.com/article/311307#ixzz1XZWCpNEu

no shame

the just walk away strategic defaulters


U.S. Senate Committee on Finance
September 8, 2011

#117 timo on 09.10.11 at 2:05 pm


“But he warned that the economy, in its third year of recession, is shrinking at a faster-than-expected pace, further hampering ambitious efforts to cut the budget deficit to 7.5 percent of gross domestic product this year.

“The forecast in May was a 3.8 percent contraction, and we are currently above five percent,” he said. ”

17,000 angry citizens protesting with general a general tax revolt creates stability. Cutting back spending will always lead to hording and turn public sentiment into preservation of wealth.

3.8 is not inflating the debt away but creating a crushing debt burden. Start printing because that is all you have left to shore up the banks.

Damn I’m optimistic today ;)

#118 Cookie Monster on 09.10.11 at 2:20 pm

#43 westcanguy on 09.10.11 at 1:27 am
Easy on the protectionism and China, free trade does work, it’s working now. Forcing prices higher only punishes the consumers of the products. The reason the jobs are gone and going is because the conditions for business to setup and operate here in N.A. are terrible. To much meddling by socialist governments and wasteful inefficient program spending that over ladens domestic companies combined with to much union support by gooberment. Businesses need the ability to hire and fire freely and to adjust wages up and down as necessary to remain competitive. To compete businesses need capital, the need machinery and equipment, they need to retain earnings.

China doesn’t need us, they have the factories and a large domestic market. They’re hurting themselves by furnishing goods to N.A. in exchange for progressively worthless paper tickets. At least they are spending some of their tickets building empty high rises, it’s better than holding paper.

#119 timo on 09.10.11 at 2:23 pm

if your interested in what is happening in Greece here a live link to today’s events. The world is not going to end and life will go on but there is resistance to public debt servicing private speculation.


#120 Junius on 09.10.11 at 2:27 pm

#99 Bob Copeland,

You Fantasy Land Tea Baggers remind me of the 18th Century Philosophers who wandered the woods and reminisced about the “Noble Savage” and the world we have lost through civilization. People like Jean-Jacques Rousseau who argued that man was noble but corrupted by society.

Of course, when anthropology later studied man in our earliest state of nature we found life to be brutal and genocide a common practice. Our nature was simply different than these philosophers assumed as our recent history from Nazi Germany to Pol Pot to Saddam Hussein has proven.

Likewise with capitalism is may be that Marx had it right and capitalism’s internal contradictions will due it in. He was smart enough to point out that the nature of capitalism is that it allows economic power to rapidly consolidate. Eventually, he thought, we would have only a few capitalists left and everybody would just tire of them and overthrow the system.

For those of us who believe in capitalism as a system we know that in order to save we need strong rules and competitive laws to keep the worst parts of it from overwhelming the system. Unfortunately the pendulum has swung very far in the wrong direction over the past few decades.

It is shocking to me that so many people don’t see the role in the so-called “small government” crowd in bringing about the current economic crisis.

#121 Ghost of Tom Joad on 09.10.11 at 2:37 pm

Funny thing is, my definition of nut job is a person who subscribes to globalism, free trade, and fiat.

Some men you just can’t reach.

#122 Ronaldo on 09.10.11 at 2:45 pm

#46 Betty Danin – absolutely awesome. Here is an article that I believe you will find quite interesting.


#123 Cookie Monster on 09.10.11 at 2:49 pm

Conservatives do not put ideology ahead of social welfare. Those who do are called extremists. — Garth
In Canada, all politicians and constituents are basically socialists, so this statement makes perfects sense.

The truth, however, is that sound ideology must precede social welfare. There must first be a prosperous state, individual freedoms and property rights including the right to retain one’s earnings, in order to have a healthy economy. And the bonus is a healthy economy doesn’t need much welfare, charity can take care of the down and out or misfortunes much more effectively than any government run boondoggle.

Charity is only given where it is obviously needed and it’s transfer is direct with laser focused with 100% power. The giver is also inclined to actually participate in ensuring their charity is highly effective. Government welfare systems are total disasters open for abuse and massive ineffective waste.

Libertarians are also considerate and compassionate but we’re also smart enough to see the causes of poverty and suffering and know the solution is to raise all ships in a rising tide, not to cut down the best for redistribution.

#124 Alister on 09.10.11 at 2:57 pm

Attention BCers.

The HAM arguement is not holding up in California.


#125 Ghost of Tom Joad on 09.10.11 at 2:59 pm

“Shame on those with such cold hearts, lack of humanity and a myopic view of democracy. You included. — Garth”

And I suppose you think the pre-emptive wars that Canada and the US wage against the Middle East are loving and humane?

You’re kidding, right? Easy to be “loving” and have such progressive views, driving a hummer living high off the horse, isn’t it?

The hallmark of a losing argument is the use of ad hominen. You just bombed. — Garth

#126 Two-thirds on 09.10.11 at 3:02 pm

“The politics of austerity at this juncture would guaranty a deflationary debacle, seriously screwing hundreds of millions of people. You should start caring about that. — Garth”

Sadly, the alternative to austerity would likely lead to an identical outcome, eventually: How can a few more years of serious government (i.e., taxpayer-backed) stimulus not end up “seriously screwing hundreds of millions of people?”

Sustained stimulus (now )= increased deficits (now/later) = higher taxes + austerity (later) = economic slowdown (later)

The repulsion of austerity today is simply kicking the can down the road. I agree with Merkel and the German cabal: fundamental reform (today) is what is needed for long-term economic health.

Pain now = health later.

Sometimes caring must be shown with tough love.

Precipitating a depression is cruel and avoidable. Doing so for to adhere to a morality unshared by the majority is criminal. — Garth

#127 I told you so... on 09.10.11 at 3:13 pm

Funniest picture ever….

#128 Utopia on 09.10.11 at 3:26 pm

#100 From Mississauga with love to #66 Utopia…

“I sincerely hope you are right but i do not think so. I don’t see double digit declines in Toronto at all”.

I am not making this stuff up.

The numbers are real enough. TREB furnishes them. Garth had done a post on the topic not long ago showing that average prices in Toronto declined 22% over a four month period. August results showed another 9% shaved off July’s lows.

That is why this is not just a little soft patch for Toronto and region anymore as a trend change is now obvious in pricing. The trend is very clearly down.

CMHC itself reported on this indirectly when it issued its quarterly report and we learned that insurance applications had literally crashed following the governments rule changes.

Most of the demand had indeed been brought forward as many rushed to beat the deadlines. The remaining eligible first-time buyers suddenly got cold feet too as the warnings against carrying too much debt grew louder and more forceful.

We will wait and see September and October numbers for confirmation if the correction is underway (it is). But as I said yesterday, I will not be at all surprised to see year-over-year prices fall into negative territory by that time.

And that is when the public will wake up and realize the prison of debts we have built for ourselves as the equity wealth effect vanishes seemingly overnight.

To Joe-Public it will just seem that one day we had money and the next we were deep in recession. He will not have the benefit of timing nor gather that this conversation of ours has been going on for almost three years now already.

The news will come to him as a complete shock.

#129 Bottoms_Up on 09.10.11 at 3:32 pm

#99 Bob Copeland on 09.10.11 at 11:25 am
With increased taxes came increased standard of living for many, many people.

Ask anyone what a nuclear physicist does and they will shrug their shoulders.

Bank regulation in Canada basically saved our country. Bank deregulation in the USA almost destroyed the world.

#130 Bill Gable on 09.10.11 at 3:37 pm

Mercy me, there are a veritable plethora of people cheering for a crash, or worse.
My Grandmother told me with alacrity, that without a garden the Family would have starved in the Thirties.
People are so Khardasian sated, they have no clue how close we are to a cliff.
Where is the compassion? Some people made big mistakes – fine – but we don’t throw people under the bus for being naive or greedy.
This is going to be a tough patch – take no pleasure in a neighbors pain.
Reminder – you can’t eat granite countertops.
Now back to our regularly scheduled programming – oh, look it’s Mike Holmes discovering another home built by contractors with zero competence.
Nice cold zone!

#131 miketheengineer on 09.10.11 at 3:38 pm

Garth et al:

I have 2 engineering friends that I work with (both are on contract). Both are sticking sticking their necks outs too far.

Guy #1

Sold his original home. Now renting a McMansion @ 2k per month. Last month bought a 600k house in Markham, new due to complete in 2012. He is on contract. His spouse has returned to school…no income and now school bills on top. Imagine if the market drops 15% before he closes. Ouch potential big time.

Guy #2

Divorced and renting with wife #2. Bought the old home (the one he had with wife #1) and is renting it out. Rent covers mortgage payments but not taxes etc. So he is subsidizing the tenants. His thoughts are that RE goes up 5% a year, it is an investment. How can I loose he tells me. I told him to boot out tenants, sell house, or stop renting and move back into home. He said that he was looking for 2nd home to move in with wife #2. (and hence more debt.)

I see 2 people stretched out beyond what they should be, and come a real cut back in RE prices, both could be in trouble. (Guy # One cause he will be with one income and or out of his contract job when the home closes, and Guy # Two cause he will buy at top of the market and have “all” of his assets in RE)

I tried to warn both about the coming RE decline and to hold out for another 12 months or so. Both were emotional…and could not be convinced to not do what they are doing. Of course I could be completely wrong and they could have 1 million each in the bank…to cover everthing, or they could be stretched out to the max on their lines of credit.

In 6 to 12 months we shall see where these 2 guys end up.

#132 Moneta on 09.10.11 at 3:47 pm

One of his major points is that he wants to stop the foreign wars, close most foreign bases, and bring the troops home.
Great. Hundreds of thousands coming back home to what job? Fighting a civil war?

#133 Cookie Monster on 09.10.11 at 3:55 pm

#99 Bob Copeland on 09.10.11 at 11:25 am
Wow. Nail on the head. Is there a link? Who wrote it?

The US is a low-tax regime bristling with people who don’t want to pay any, pronounce government a ‘cancer’ and would revert to survival-of-the-fittest calling it social cleansing. Shame on those with such cold hearts, lack of humanity and a myopic view of democracy. You included. — Garth
Garth, what is the number one expense/serivce government has monopolized in Canada, right, health care. And what are the provinces economic incentives? Right, fast and swift death of all customers, since there revenues are brought in by taxes all services provided are simply expenses. For the province to spend money keeping people alive only increases their future expenses, it’s in the provinces best interest to provide horrible treatment and hope you pass away quickly.

Now, lets consider a privatized competitive health system where businesses compete to provide us healthcare. First we would have much lower taxes through out our lives and second we would have a very effective and competitive choice of services to choose from where the best would thrive while the worst go bust. And best of all, in this private system the incentive is to do everything they can to keep you alive! They want repeat business!

So in a nut shell, bleeding heart liberals want to giver everybody everything but in the process they reverse the very factors and incentives the make any system work. Socialists are well meaning but short on intellect regarding cause and effect.

Health care is a human right. — Garth

#134 Moneta on 09.10.11 at 4:02 pm

It’s tough to predict how it will be resolved. One can make the case that the entire crisis is being either engineered, or at least exploited by the so-called “globalists” and others
I keep on asking myself this quesion:

If Canada and the US were to sign a pact of autarky, would we have enough resources and labour to produce everything we need to have a good life?


#135 Moneta on 09.10.11 at 4:04 pm

foolsrushin on 09.10.11 at 12:56 pm


#136 BrianT on 09.10.11 at 4:35 pm

The MSM is working overtime blaming the economic ills of the USA on those nutjob teabaggers, but unfortunately the gigantic, unprecedented size and scope of the financial fraud that has been facilitated makes even the normally pliable American public cynical and skeptical.

Don’t you ever stop with this conspiratorial drivel? — Garth

#137 Mr. Lahey, Trailer Park Supervisor on 09.10.11 at 4:47 pm

Kudos to you Garth in setting straight the whackos who support the platform of the ultra whacko Tea Party. The later John Kenneth Galbraith, the Canadian economist who went to work for the US government during the Great Depression and who wrote numerous best selling books on economics, would be proud of you. Galbraith had many great retorts as do you when confronted by these right wing whacko idealogues. For those who think a minuscule government and minimal taxes will bring about a deluded utopian economic paradise, I surmise you have all raided Ricky’s weed field . Such utopian fantasies have never, repeat, never been implemented in any society at any time with the end result, a thriving middle class environment ensuing. Never, nada, squat. Galbraith once commented on Chile using the late Milton Friedman’s (the Guru of the right wing extremist whackos) as commendable as that would indeed be the fastest way to bring down the brutal dictatorship of Pinochet. Keep up the great work Garth, I know how you feel having to deal with a bunch of misfits and whackos on a daily basis.

#138 Canada housing to crash 70% in 10-15 years! on 09.10.11 at 4:47 pm

Everyone and their dog would say that’s impossible. It’s the same imporrible of Nortel going to zero? Canada in the world market is grossly overvauled and faces 100% chance of falling 50% in value short term 6-10 years. The average Canadian house is more then double the cost for the average American home. How is that possible when historically the prices are even with the US being just slightly higher. Also How will Canada be able to compete for jobs when Americans will be able to cut their wages 20-35% in the coming years? They would be able to still afford housing. Could Canadians afford housing if wages even fell 10%? Don’t forget interest rates are at rock bottom. I think I now understand Garth when he said slow bleed….. Japan style? In 10-15 years housing in Canada might be 70% cheaper then todays prices. NEVER you say? Ok just like Nortel would never become worthless?

#139 Live Under Your Means on 09.10.11 at 5:07 pm

The US is a low-tax regime bristling with people who don’t want to pay any, pronounce government a ‘cancer’ and would revert to survival-of-the-fittest calling it social cleansing. Shame on those with such cold hearts, lack of humanity and a myopic view of democracy. You included. — Garth


Very well said Garth.

#140 Moneta on 09.10.11 at 5:14 pm

And best of all, in this private system the incentive is to do everything they can to keep you alive! They want repeat business!

Yes, in your ideal private system, companies will minimize costs as to keep you alive as long as possible with as many chronic problems as possible.

But insurance companies will not insure you.

Therefroe the health care industry would implode.

#141 Daniel on 09.10.11 at 5:22 pm

Obama and his 500 billion dollar plan. Is this going to help more than the other 2 trillion he spent. No.

Most people don’t really understand how much 500 billion is, never mind 2 trillion – this put it in perspective.

The whole Space Shuttle Program; from 1980 – 2011, the whole program, all the wages, ships, launches, etc. – 250 billion …

The US needs to let the market fall, so that it can rebuild on solid group, if you keep propping it up, you’re just postponing the inevitable and it will be worse.

The market is the market, with value based on the worth of companies traded on it. Surely you know that. — Garth

#142 Moneta on 09.10.11 at 5:22 pm

The truth, however, is that sound ideology must precede social welfare
I’ve rarely met ideologues who cared about people’s welfare because more often than not they are impractical idealists or rigid and blind partisans .

#143 Live Under Your Means on 09.10.11 at 5:27 pm

#126 Ghost of Tom Joad on 09.10.11 at 2:59 pm
“Shame on those with such cold hearts, lack of humanity and a myopic view of democracy. You included. — Garth”

And I suppose you think the pre-emptive wars that Canada and the US wage against the Middle East are loving and humane?

You’re kidding, right? Easy to be “loving” and have such progressive views, driving a hummer living high off the horse, isn’t it?

The hallmark of a losing argument is the use of ad hominen. You just bombed. — Garth


Ghost of Tom Joad – Do you really believe Garth drives a ‘hummer’. He’s an ‘environmentalist’ AFAIK with a great sense of humour and doubt he’d ever drive a gas guzzling hummer. You just sound jealous that he’s financially savvy, worked hard, and has done well in life.

#144 Daniel on 09.10.11 at 5:32 pm


Looks like you and F agree on Obama’s plan – great company you keep.

#145 GregW, Oakville on 09.10.11 at 5:35 pm

Hi Mr Garth Turner, could you please clarify your comment from yesterday, “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.”

Is that amount per person or per couple/house hold? Thanks in advance.

#146 BrianT on 09.10.11 at 5:35 pm

#137Garth-You should be asking that question of the legion of trial attorneys suing your trusted financial firms-now even Norway has got into the act. Maybe all these lawsuits are just a nutbar “conspiracy theory”. Hopefully the sheep will buy that one.

Norwegian lawyers. Now I’m shaking. — Garth

#147 Live Under Your Means on 09.10.11 at 5:42 pm

#135 Moneta on 09.10.11 at 4:02 pm
It’s tough to predict how it will be resolved. One can make the case that the entire crisis is being either engineered, or at least exploited by the so-called “globalists” and others
I keep on asking myself this quesion:

If Canada and the US were to sign a pact of autarky, would we have enough resources and labour to produce everything we need to have a good life?



Wow – I had to do a search for the definition of ‘autarky’. We might, but who would be willing to pay more when they can buy cheap products based on slave wages in the 3rd world and emerging markets.

#148 TurnerNation on 09.10.11 at 5:45 pm

Garth once you reach 5000 friends on facebook they block you or something. I’ve heard of people being banned for “too many friends”. I think the next step is a fan page where an unlimited # of “likes” is permitted.

Don’t feed the Beast (giant wordwide computer that knows all).
Oops, too late ;)

#149 GregW, Oakville on 09.10.11 at 5:57 pm

Hi Garth, re: “Health care is a human right” issue.

I saw this guy (Med. Doc.) the other night, he sounded about right, for most people anyway.

Yes I know he’s selling information stuff, but he did talk about much for free on the PBS TV show, between pledge brakes. Some may finds it of use?
FYI http://www.drfuhrman.com/

#150 timo on 09.10.11 at 6:00 pm

#134 Cookie Monster,



Healthcare costs rose while insurance coverage fell, studies show
The changes have left nearly half the working-age population without enough protection from illness. Altogether, 44% of American adults were either uninsured or underinsured last year, according to the Commonwealth Fund

Good luck with your ideology. Health care when privatized will only listen to shareholders and will only follow short term profits. The proof is in the link above.

#151 Lana on 09.10.11 at 6:02 pm

The US is a low-tax regime bristling with people who don’t want to pay any, pronounce government a ‘cancer’ and would revert to survival-of-the-fittest calling it social cleansing. Shame on those with such cold hearts, lack of humanity and a myopic view of democracy. You included. — Garth

Well said. You remind me of Bill Maher, Jon Stewart and Steve Colbert…good hearts and smart brains (and a wicked sense of humour). I don’t go a day without the 4 of you (well Bill unfortunately isn’t on every day).

#152 T.O. Bubble Boy on 09.10.11 at 6:11 pm

@ #129 Utopia:

The numbers are real enough. TREB furnishes them. Garth had done a post on the topic not long ago showing that average prices in Toronto declined 22% over a four month period. August results showed another 9% shaved off July’s lows.

That is why this is not just a little soft patch for Toronto and region anymore as a trend change is now obvious in pricing. The trend is very clearly down.

Utopia – you are one of the best posters on this blog, but I have to disagree with your analysis here (even if I agree with the conclusion).

If you look at historical numbers, *every* May to August period experiences average price declines.


Over the past 7 years plotted on guava.ca, every single one has the average price declining from May to August.

In terms of dollar decline — yes, 2011 is probably the biggest May-to-August drop… however, that is because you are dropping from a higher starting point. The percentage drop is just slightly higher than usual.

#153 Junius on 09.10.11 at 6:19 pm

#137 BrianT,

What do you think was the cause of the financial crash?

I certainly don’t blame the tea baggers for the crash because they weren’t really around but I do think they offer the wrong prescription to get us out of it.

Here is my short summary. Tell me where we differ.

The environment was created by the deregulation of the banking industry in the 1990s led by Texas Senator Phil Gramm with the repeal of the Glass-Steagall act. And yes, this is when Clinton was President. Although the US deficit was under control and the budget showing a surplus.

Other changes including the lowering of banking reserves and the non-regulation of financial products such as derivatives combined with the globalization of the banking industry left the system in a more risky state.

George W. Bush start 2 wars but refused to fund them through tax increases or by cutting other programs. Instead he ran up a deficit of 3-5 Trillion dollars. He also prodded his Fed Chairman Alan Greenspan to drop interest rates in order to keep the economy humming. He complied.

Meanwhile Wall Street was looking for more AAA rated product to sell and discovered a bonanza in securitized mortgages. The combination of weak regulation, poor SEC over sight and credit agencies that were on the take led to the creation of an unsustainable housing bubble.

In 2006 the bubble that started in 2002 began to pop. By 2008 it was clear that the banking system was deeply in trouble due to the amount of securitized mortgages on their balance sheets. The rest is history.

So, the causes where 3 fold. The first was deregulation or lack of regulation of the financial services sector. The second the policies if George W. Bush in going to war, not figuring out how to pay for it, cutting taxes and adding nearly $5 Trillion to the US deficit. Thirdly, Alan Greenspan lowering interest rates and creating the credit bubble that blows in 2008.


#154 Junius on 09.10.11 at 6:25 pm

#124 Cookie Monster,

You said, “Libertarians are also considerate and compassionate but we’re also smart enough to see the causes of poverty and suffering and know the solution is to raise all ships in a rising tide, not to cut down the best for redistribution.”

It amazes me that you can’t see the contradictions in your logic. Libertarians who want to end gov’t and all redistribution of wealth but will bring better lives by rising all boats. Don’t you see the contradiction?

The libertarians you follow blame the poor and unemployed for their situation. They aren’t going to help anyone. This is why they hate all entitlement programs from Social Security to Health Care to public education to anything they think they can do without.

Why don’t you just call them the “Wedon’tgiveadamnaboutanyonebutourselvers.”

Although it is interesting to note how many Tea baggers and current Republican Presidential candidates have been willing to accept government hand-outs, bail outs and anything else when it suits them.

#155 Stevie Why ?? on 09.10.11 at 6:36 pm

Now here is some horse sh!t from Union Gas:

Delivery – $4.60
Storage – $ 1.10
Transportation – $ 4.42
Monthly Charge – $ 20.00

GAS USED – $ 8.67

Over $30 DOLLARS in charges for $8.67 of actual gas used. Time for a wood burner before the snow falls.

#156 Moneta on 09.10.11 at 6:37 pm

We might, but who would be willing to pay more when they can buy cheap products based on slave wages in the 3rd world and emerging markets.
The thing is we’ve been buying cheap products with credit money and this game is coming to an end. Our middle class is tapped out but the globalists could not care less.

We could force protectionnism and bring back our manufacturing or we could let the globalists drop our middle class without a care in the world because they can easily replace it with the new budding middle class in emerging markets.

That’s what free trade globalization will do. Can it be stopped? I don’t know.

#157 Moneta on 09.10.11 at 6:39 pm

You said, “Libertarians are also considerate and compassionate but we’re also smart enough to see the causes of poverty and suffering and know the solution is to raise all ships in a rising tide, not to cut down the best for redistribution.”
Something tells me there are sociopaths in all political parties.

#158 jess on 09.10.11 at 6:45 pm


New Market tax credit

“Prudential CEO John Strangfeld has been well-rewarded for his firm’s tax avoidance creativity. His company’s most creative moment: The insurance and real estate giant has managed to pocket megamillions in tax refunds for its investments in luxury hotels, through an initiative intended to create jobs and better housing in low-income communities.
The program Prudential has exploited, the New Markets Tax Credit, has been around since 2003.Tax refunds available through the program only go to Census tracts with high poverty rates. But ace Prudential tax avoiders realized they could claim a project to renovate the ritzy Blackstone Hotel in downtown Chicago for the refund — because the Census tract surrounding the Blackstone hosts large numbers of students from nearby universities. These students, while hardly poor, technically qualify as low-income.The Blackstone renovation generated $15.6 million in tax refunds, much of which went to Prudential Financial and its partner in the project, JPMorgan Chase. Prudential pocketed another $27.3 million refund for another luxury hotel in Portland,Oregon.(footnote 19 )
The company reported a total IRS refund of $58 million in 2010 for investments in low-income housing and other tax-creditable activity.expense that was recorded by the companies. They do not write off the added option expense on the profit statement for shareholders. The result: earnings reported to shareholders end up overstated and taxes end up reduced.
A tax credit that is supposed to help poverty-stricken communities is instead being used to finance at least two luxury hotels, an antique car museum, a small theater in an upscale neighborhood, and other dubious projects, while lining the pockets of wealthy banks and investors.
19. Michael Cohn, “Gaming the New Markets Tax Credit,” Accounting
Today, February 23, 2011. See: http://www.accountingtoday.com/
Prudential Financial, Form 10-K report for fiscal year 2010,
Feb. 25, 2011. See: http://www.sec.gov/Archives/edgar/

#159 TurnerNation on 09.10.11 at 6:49 pm

#31 Smoking Man on 09.09.11 at 11:51 pm

Yes it’s tempting to blame those groups for what happened – and I used to – but no longer. The real control is still wielded by the British Royal Family – just a cute tourist attraction we are told??

Britain created the state of Israel in ’48. Britain conquered Africa, Canada, Australia, and many others.

We live still under their heel: witness Harpo slavishly following orders with our new “Royal” air force and Queen’s pic.

Whose mug is found on the rear of our coins – a true Canadian’s nope? It’s a face of a conqueror. Never forget. Prince Charles is leading the greenwashing brigade, and Prince Philip is downright evil if you look into his eyes. As per Wikipedia, his sisters all married high ranking nazis back in the day. Makes sense, they are a German royal family who changed their name. It it true, look it up. WW2 was not what it appeared to be.
“V” is indeed for Vendetta.

#160 TurnerNation on 09.10.11 at 7:07 pm

#34 westopia on 09.10.11 at 12:09 am

Ron Paul is controlled opposition. Recall Obama saying really amazing things, yet nothing changed? Geneva Convention is still a quaint relic, Afghan and Iraq are still invaded, the USA drone terror attacks and chaos is esculating in Pakistan under his control.
Nobel Peace prize? Orwell must be laughing. Actions pal, not words.

#161 anjing bau on 09.10.11 at 7:15 pm

Globalisation is it a good thing? This is the foundation for the argument of its benefits…..

In economics, the law of comparative advantage says that two countries (or other kinds of parties, such as individuals or firms) can both gain from trade if, in the absence of trade, they have different relative costs for producing the same goods. Even if one country is more efficient in the production of all goods (absolute advantage), it can still gain by trading with a less-efficient country, as long as they have different relative efficiencies.

but as the Jess # 117 has pointed out the theory in practice has been nothing more than a corporate version of colonialism.

The ideal would have been that America outsourced jobs in basic industries to emerging countries until such time as a middle class could arise in those countries and they could consume thier own manuafactured products in the domestic market. Once the country has “emerged” those jobs could then be domiciled back into North America.

hasn’t really worked out like that. For the turth of the matter you have to follow the money trail. Who benefits the most financially? This is where the truth of the matter lies. In the globalisation / free trade game… the winner is the global conglomerates.

#162 Nostradamus Le Mad Vlad on 09.10.11 at 7:52 pm

#43 westcanguy — “Look at how much they have spent and borrowed and what has it got them?”

Good question, and some answers are here are some links (opinions only), here, and here. But debts don’t need to be repaid right away, they are transferred to the next govt. Deficits, AFAIK usually have to be repaid ASAP. Don’t forget to include Obama (Health) Care, and govt. waste, of which there is plenty, just like Canada.

#61 Euro Girl — You may be on to something there. Greece If Mish is partly right, Oct. 17 is when Greece is out of money, then the other PIGS may fall.

#70 Peakoilist — “Nature doesn’t give a rat’s ass about our comfort.” — ‘Sright. We’re only here for a great and short time!

#80 The American — Good post. Recently, a link posted stated TPTB (the elite) had created a third party (which is the Tea Party) which was associated with both of the others, and one of theirs may end up being Prez, so it looks as if everything is going according to (their) plan. But life has its own surprises, usually at unexpected moments.

#133 Moneta — Good point, and the link posted earlier suggested that US troops are not coming home, their next destination is Venezuela.

The US has ‘claimed’ (no proof) that rebels are interfering with Colombia which, by pure coincidence, is the country whom the US established new military ties with.

Besides, Venezuela has more oil than SArabia. Could that be a reason?

#156 Stevie Why ?? — “Time for a wood burner before the snow falls.”

I prefer pellet, ‘tho the thought is on the money — cut back on electricity and natural gas and switch to a much more efficient way of heating.

#163 penpal on 09.10.11 at 7:52 pm

@ 100 From Miss with Love

Did you see the TREB numbers from August 2011?
Can you comprehend / interpret them?

If you saw them and can comprehend them, how could you possibly argue against Utopia’s asertations.

Simple really, you choose to ignore facts (as reported by those who sell the houses in the first place!) and reality and believe in fiction and your “feelings”.

But, don’t feel bad, you have a lot of company in this country.

#164 Fool on 09.10.11 at 7:55 pm

We’re only a few data points from another economic stimulus plan. Canada lost jobs and the economy contracted recently.

Whatever happened to the rising rate environment everyone was talking about?!?

In the US, on the other hand, is it time for those that hold gold to sell and buy a house?

#165 wtf????? on 09.10.11 at 8:04 pm

#60 Bub……you did read what you pasted right?

‘Deterirating for decades’…read…….Liberal Party under Trudeau the Idiot King creaming the dollar and hollowing out the manufacturing centers’ to level out society with his socialist mentor Fidel Castro. Oh how Trudeau worshipped Fidel.

David Dodge was an appointed Liberal Party hack…and still dribbles Liberal bafflegab in the same manner as always.

It will take decades to bring manufacturing back to Canada after the drubbing the industrial sector took under the wacko Liberal policies of Capital equipment taxes…a perpetually low dollar that made it hard to compete when having to put up with outdated machinery…..and extremely high corporate tax.

Heck….the dough head union skunks should be happy that plants are finally being retooled under the Conservative policy of a stronger dollar and lower corporate taxes. It allows factories to upgrade to productivity efficiencies equivalent to Germany…..and drool about those highly paid skilled jobs as opposed to the Liberal jobs of kids pulling rickshaws for tourists who only came to Canada because young prostitutes were cheaper than in Mexico.

The Liberal Party had begun to degrade Canada into a balkanized third world country to make it easier for themselves to gain more seats through the politics of division……oppression and enforced poverty.

We are still living with the crushing legacy of high taxes supporting the highest per capita civil service in the G8. The Cons are too slow in picking this monstrosity apart.

Actually, Mr. Harper raised government spending, turned a surplus into a deficit, increased the size of the civil service, sustained the largest deficit in Canadian history and reversed debt reduction that took place under the previous government. Quite a record for just five years. And not too conservative. — Garth

#166 Jody on 09.10.11 at 8:04 pm

“Shame on those with such cold hearts, lack of humanity and a myopic view of democracy. You included. — Garth”

And you call what we currently have an actual functioning democracy? Really? What happened Garth when you tried to represent your constituents best interests/the interrests of Canadians? Did you not get booted? You had to vote the party line. All MP’s have to vote for the party line or they are out of the party. How can someone claim this is a democracy when the people we elect are told to vote the opposite of what the majority of their constituents want? Do you seriously think if a vote on abortion came up in the house of commons that it would be a “free vote?” And exactly how many “free votes” happen in a session? Here’s an idea, abolish political parties, at least then it would cost the corporate lobby groups more money to bribe every politician.

The only representing MP’s do is to represent their party and the only representing parties do is to represent the corporate theocracy that has bought and paid for them since this failed experiment started. And technically we aren’t even a democracy, we are a constitutional monarchy and the US is a constitutional republic, people can’t even get that right.

I care deeply for others, I am currently putting up out of work friends for free, I donate monthly to Kiva, I help fund the arts through Kickstarter, I gave $1000 to the red cross after the Japan disaster and I would give more if I had more. Yes, some people are greedy and would go off and keep everything they could but the majority of people out there would contribute to the public good without being forced to by some faceless government. Ever been to a small town? I grew up in one and surprise surprise the majority of things (golf course, fire department, rink, swimming pool), were built by volunteer labour and volunteer money, not government grants or tax payer money. Buy some land, grow some vegetables and fruit and then try to sell that produce, go ahead, I dare you. Try that, then come back to me and tell me what a great functioning system we have.

You may say some people are cold and heartless Garth but I think you have lost a lot of your faith in the human race. The cities may implode if a financial crisis hits but the small towns across North America will do just fine without interfering muppets from the cities, thank you very much.

What sparked that? The context was a rebuttal to those who see no role for government, and who seek to impose their view on the majority. — Garth

#167 Mike Rotch on 09.10.11 at 8:05 pm

RE Jess, 114 – Google’s electricity.

Warning, rant ahead. I got a bit angry at the sloppiness of MSM in general and I’m taking it out here. Read pieces of three papers today, and damned near every article had fatal errors in it. Not just spelling, I’m talking impossibilities, completely wrong word used, etc.

Does anyone even fact check or proofread newspaper articles anymore?

Crap! If they’ll pay me a lousy $20 an hour, I’ll do it early mornings, evenings and lunch breaks…..just so I don’t have to get angry at the MSM’s chronic and rampant stupidity any more!

Anyway, the Globe Google power article:

“……The search company said that it had used 2.26 megawatt hours of power in 2010. Had its demand for power been spread evenly over the year, that would have amounted to a constant supply of 258 megawatts, or about half the output of an average power plant…..”

Upon reading the first sentence, my first thought was “what’s the big frigging deal? The last industrial facility at which I worked used well over 2.26 MW-h per hour. Doesn’t even take much…..That demand is roughly equivalent to three 1000 HP motors going non stop at full load….big, sure, but far from unheard of.

Anyway, if you keep reading, you see the stupidity:

Rate of power consumption is reportedly 258MW. So calculating demand for a year is 258MW x 24h per day x 365 days = 2.26 !!!MILLION!!! MW-h.

Bit of round off error there, like a factor of a MILLION!

OK, that’s actually pretty frigging big dent in the electrical grid!

And the newspapers wonder why no one will pay for their ‘birdcage liner’ printed versions!

#168 Herb on 09.10.11 at 8:07 pm

Junius @ #155,


And no, Cookie Monster and similar “libertarians” can’t see the contradiction because seeing it would be counterproductive to their pursuit of happiness.
Remember, “Socialism for the rich, …”

#169 penpal on 09.10.11 at 8:08 pm

@ # 104 Rolando

Very good point about the price flexibility some people will have given the huge run-up in prices since they bought and its affect on pricing dynamics.

I wonder what effect the ‘greed factor’ will have on all this and how it will keep the number of listings up (as unrealistic other sellers remain delusional in their asking prices and the properties sit and their numbers swell).

It will be interesting to watch Vancouver and Toronto prices gyrate in the next 12 months.

#170 Min in Mission on 09.10.11 at 8:30 pm

timo @ #51 – thanks

That was a great article.

#171 penpal on 09.10.11 at 8:31 pm

@ 133 Moneta

To suggest it is preferable to have your fellow man in “harms way” in a war zone than at home because there are no jobs for them in the alternative, is the most cynical statement that I have read in many a year.

Please clarify if this was in fact the correct interpretation of what you have written.

#172 maxx on 09.10.11 at 8:43 pm

#72 T.O. Bubble Boy on 09.10.11 at 9:20 am

@ #50 Taking stock

Does anyone else agree that the stock market is being manipulated by professional day traders? We are sitting ducks as our pensions trickle away.

Attention Human Trader, you are no longer needed

Influenced, not manipulated. Big difference. — Garth
…question of degree…

#173 Moneta on 09.10.11 at 8:50 pm

172penpal on 09.10.11 at 8:31 pm

I believe in world peace but I’m a pragmatist. Bringing back those soldiers would be great if only they could actually manage to fix the economy first.

The way the system is currently set up, these resturning soldiers would probably have more chance of dying from diabetes, alcool, drug addictions, and car accidents than by staying overseas.

#174 BrianT on 09.10.11 at 8:52 pm

#154Junius-Seriously-it is 2011 and there has been a ton of evidence presented on this subject for anyone interested. Anyone that hasn’t figured it out by now IMO isn’t going to or will continue to feign ignorance on the subject.

#175 Moneta on 09.10.11 at 9:03 pm

I wish Americans were less belligerent but imagine these kids coming back home in today’s economy:


#176 Cookie Monster on 09.10.11 at 9:12 pm

Health care is a human right. — Garth
A human right can not impose an obligation on any other citizen(s). Therefore healthcare is not a right. Food is not a right either, since someone has to farm and/or prepare it.

You disgust me. — Garth

#177 timo on 09.10.11 at 9:21 pm

#171 Min in Mission

Thanks but Garth is the one who should take most of the credit. After reading his 1st book I started to dig into bubbles and speculation and realized that we just repeat things over and over when memories fade.

keep your money safe..


“Donahoe, a 36-year-veteran of the Postal Service, wants Congress to allow the USPS to bust the anti-layoff provisions in its union contracts. He also wants permission to pull his 563,000 employees from the health and retirement plans that cover federal employees so the USPS can provide less generous programs.”

social security and medicaid is next?!

#178 Ronaldo on 09.10.11 at 9:30 pm

#170 – penpal – “Very good point about the price flexibility some people will have given the huge run-up in prices since they bought and its affect on pricing dynamics.”

Thank you. I will give you an example of why I made this point.

In Feb. 0f 1972 I sold a townhouse in North Vancr in order to purchase a single family home in Port Coquitlam. At this time house sales were booming and places were selling before the sign was put in the lawn and prices were starting to take off like you wouldn’t believe. The townhouse that we had purchased 2 years before for $21,000 was sold for $28,000 (33% gain over 2 years). We thought we’d died and gone to heaven.

Then, we started looking for houses in North Vancouver and Vancouver but nothing in the price range that we wanted to be in. (not that we couldn’t have afforded it)

We settled for a small 2 b.r. house in Pt. Coq

#179 Utopia on 09.10.11 at 9:43 pm

#134 Cookie Monster said…

“For the province to spend money keeping people alive only increases their future expenses, it’s in the provinces best interest to provide horrible treatment and hope you pass away quickly”.

Your comments are getting more delusional every day lately Cookie. I just shake my had in disbelief by what you are writing.

Healthy populations are a net benefit to a country, not a simple debt liability. You seem to only see the expense side of the equation without appreciating how the nation is strengthened by people have access to good care.

Let me give you an example.

One afternoon in Addis (Ethiopia) I was sitting in a sidewalk restaurant. A lady stepped out into traffic and was struck by taxi. She flipped through the air and struck the pavement hard, both legs clearly twisted and broken.

Now there is no universal medical care in that country. Few emergency services and only a rare ambulance that can coming to your rescue if you are mortally injured. There is no welfare, no pensions like ours and only a meager social safety net provided by foreign NGO’s. Incomes average one lousy dollar a day.

So that lady, (previously healthy) was rendered a beggar that day when her legs were wrecked and she became a non-productive casualty and a tremendous burden for her family. Suicide rates are very high for such victims.

So what happened? A stranger in another vehicle drove her to a hospital, a large group of passerby’s lifted her gently into the back of a pickup and she was whisked away to await whatever fate might come. I stuffed the bills I had in my pocket into her hand to help and never saw her again.

Try the daily reality of health care in the Third World before you criticize the system we have here Cookie. And then think back to the first time you broke an arm or a leg or had a serious dental infection.

Where would you be today if the bone was not set or the tooth was left to rot inside your gums?

#180 Ronaldo on 09.10.11 at 9:54 pm

#170 – Penpal – further to my previous post (hit the submit buttom in error before completed my story)

So we settled for a small 2 b.r. house in Pt Coq and paid full price of $26,000. Prices continued to rise over the next several months to the point that our little shack was going up at the rate of a thousand a month. (but so was inflation) Then the oil crisis hit and the Arabs shut off the oil taps.

By this time, our little place had risen in value to 51,000. This was July of 74. So now I am transferred up north and have to put the house up for sale. We list it for 49,000….no takers. 47,000….no takers. Meanwhile we are settled in our company provided accomodation and winter has set in. The banks had tightened up on lending and rates were around 10.5%. We finally sold it under and agreement for sale for $41,000 and held a second mortgage at 12%. Still a tidy gain of 58%. We were overjoyed.

A few months later, the recession had really taken hold and prices of everything was skyrocketing. The buyer loses his job, his wife leaves him and goes back to momma and it takes 10 month to get him out under foreclosure. In the meantime free rent. Not only that, but he pocketed the rent from renting the garage out to a guy who was rebuilding old cars. Nice guy.

Once the foreclosure was up, we ended up selling it privately to the guy renting the garage for same price as we had originally sold it for. A lesson learned.

Didn’t mean to be so long winded but the point I wanted to make is that prices back then had risen so high so fast that the same huge equity had been built up and it was no big deal for us to drop it until somebody bought. I am certain we will see the same situation with housing prices in the lower mainland in the months to come.

And by the way, our townhouse in North Vancr had risen to $74000 at the time that the house in Pt Coq had risen to $49,000. Says something about location.

To give you an example of what happened to real estate prices after that. The townhouse was priced at arount $72000 in the summer of 1986. 14 years later.

Once the banks stop lending. Look out below.

#181 jess on 09.10.11 at 10:15 pm

Thanks Mike for that explanation.
Here’s another story that caught my eye regarding energy. The Koch brothers must have been Calderon’s advisors.

The Power and Light Company, provided electrical service for central Mexico, where a majority of the population live. Calderon dissolved it by executive fiat and brought in soldiers and police to expel the workers from the generating stations.

Successive governments have sought to privatize the electrical grid, although such a move is barred by the Mexican constitution. Once the company was dissolved, the government declared the union nonexistent (a decision later overturned by the courts, but ignored by Calderon).

In the face of court decisions upholding the workers’ right to strike, the government brought heavily armed police into Cananea and reopened the struck mine….

Mexicans in poverty around ten million, that working income has dropped by a third and that three million more people find themselves jobless. Seven million young people, who are the fastest growing segment of the population, can’t find work nor have the money to go to school.


#182 Utopia on 09.10.11 at 10:16 pm

#153 TO Bubble Boy wrote…

“Utopia – you are one of the best posters on this blog, but I have to disagree with your analysis here (even if I agree with the conclusion)”.

Many Thanks (don’t you know that I am really an immature and obnoxious person though?). One day I really have to grow up….anyway….

The charts helped me. There is a reason though that I see this particular period as being different from the past though.

When I consider first the very high levels of home ownership, typical indebtedness per family, falling GDP and jobs losses now again appearing I cannot arrive at an optimistic outlook for the future housing growth.

Couple this with the very high levels of condo speculation in the region, excess supply headed to market, a slowing global economy, a coming reduction in Federal supports, the potential for diminished immigration numbers and serious austerity underway in both the city of Toronto and the Province and it makes even the most optimistic person begin to sweat.

So fair enough. This is not my region and I don’t know it well. I am merely adding up the factors that are on the horizon with what is known about the political environment and knowledge of the real estate market in general.

My conclusion is also partly based on what Garth has written here and the known limitations for strong future housing demand. Granted the rental market is tight but I do not believe this will sustain as the speculative money exits the market and as housing prices decline.

In a nutshell, this time is different. I wish I were wrong.

#183 jess on 09.10.11 at 10:37 pm

82 Tea Bagger

…so what do you propose…the tax holiday idea , but then you would have to be a Mitt Romney supporter.
Read :

Social Security for Beginners
Friday 22 July 2011
by: James Kwak, The Baseline Scenario

Social Security has just entered its 77th year as an essential source of economic security for millions of Americans in their retirement. However, some politicians – such as Florida Senator Marco Rubio and Governor Rick Perry of Texas – have recently said that Social Security is bankrupt and will not be there for them or their children.This is not an accurate assessment. The latest projections from the Congressional Budget Office (CBO) show that Social Security will remain fully solvent through 2038. Even if Congress makes no further changes to the program, Social Security will be able to pay slightly more than 80 percent of scheduled benefits from 2039 on. As pointed out in a recent letter to Senator Rubio, this means he can expect to receive a benefit of $41,439 if he retires at age 67 in 2038 and at least $33,151 (both in 2011 dollars) from then on. In other words, the projections show that Social Security will continue to exist and pay a substantial benefit to retirees indefinitely.
CEPR has updated the table below (incorporating the newest CBO projections) to show the scheduled Social Security benefit for each current member of the Senate. The table also shows the payable benefit assuming that the projections for the program prove accurate and there are no further changes to the program. (Congress has made numerous changes in prior decades, most recently based on the recommendations of the National Commission on Social Security Reform in 1983.)
This table is intended to help inform Senators – as well as other members Congress and the general public – in understanding and making decisions about the future of Social Security. Hopefully this will help prevent inaccurate or misleading statements about Social Security as discussion of federal budgets and deficits continues.


#184 Cookie Monster on 09.10.11 at 10:46 pm

You disgust me. — Garth
Yes, I plan on gaming the system every way I can. I plan on paying next to nothing in taxes for the rest of my life and I will age in Canada and burden our health care system when I have to by DEMANDING the best care possible, and I will be educated on my needs and my RIGHTS as a taxpayer.

I will disgust everyone to no end, I’ll shit the bed everyday and hopefully live to 100. And of course I’ll have tons of my own money to make sure I keep myself alive in a pinch whenever necessary. I’ll put all those young punks in the poor house with my rights to live for ever at their expense. I’ll show em’.

#185 NOT ALARMED on 09.10.11 at 10:54 pm

Then Americans can elect a hang-em-high, small government politician who likes protectionism and thinks climate change is commie talk.

Well, man-made climate change IS commie talk. As Lord Christopher Walter Monckton (a former policy advisor to Margaret Thatcher during her years as Prime Minister of the United Kingdom) once explained, these alarmists call themselves GREEN because they are too YELLOW to admit that they are actually RED.

Here are a couple interesting articles on the topic:

New NASA Data Blow Gaping Hole In Global Warming Alarmism

Sun Causes Climate Change Shock

#186 Mr.Lee on 09.10.11 at 11:18 pm

From what I can gather, there appears to be a rather wide left/right debate on this blog. Mr. Tunrer has always appeared to me to be a moderate. A moderate in his politics as well as his financial advice. Do not put all your eggs in one basket (Houses and Gold) for example…..makes sense to me. No where has this man said do not buy a house of invest in Gold……just be reasonable.

The same holds true for the left Right paradigm. There are parts to both which will work and parts that will not. As long as we focus on the divisions, we cannot work on what works and what will get us out of the mess that we find ourselves in.

#187 45north on 09.10.11 at 11:25 pm

Utopia: The numbers are real enough. TREB furnishes them. Garth had done a post on the topic not long ago showing that average prices in Toronto declined 22% over a four month period. August results showed another 9% shaved off July’s lows.

that’s huge Utopia, 9% drop in a month! in prices not sales! I wonder if the banks know this?

Euro Girl: I am scared. Goodbye beautiful Europe That’s cause you read ZeroHedge. I’m scared too.

Jody: Gibson Guitar: Homeland Security looks like a complete ass.

#188 Rich Renter on 09.10.11 at 11:34 pm

Unthinkable only 4 years ago, but 2 for the price of 1 has taken on a new meaning in Ireland. No it’s not April 1st.

#189 Cookie Monster on 09.10.11 at 11:38 pm

#167 Jody on 09.10.11 at 8:04 pm
Excellent, well said. Imagine people actually knowing what they want and willing to build/finance it. In your world what is a government to do? Nothing!

#169 Herb on 09.10.11 at 8:07 pm
The difference between socialists and libertarians is we don’t need to steal from anyone to support our ideology. So stuff your bleeding hart humanitarianism and explain exactly how your social rights work without stealing from those who have in order to supply what you need.

You socialists are just a bunch of thieves who use the needy and poor as cover to steal from successful people who are better than you. Disgusting indeed.

You know we’ve already fought two world wars over this utopian ideology already and it looks like WW3 is now inevitable, especially when surveying all the half wit opinions of people in Marxist Canada. Junius.

#190 Jody on 09.10.11 at 11:44 pm

“What sparked that? The context was a rebuttal to those who see no role for government, and who seek to impose their view on the majority. — Garth”

Sorry, I was just starting to think the majority of comments were making things here look like the comments section of the Globe and Mail website. Although I would hope people who see a very minimal or no role of government would not want to impose their view on the majority, otherwise they would be just like the statists who think everything is a right.

#191 Cookie Monster on 09.10.11 at 11:50 pm

#180 Utopia on 09.10.11 at 9:43 pm
I’ve paid for all my own dental care since age 20, I’m now 41.

Healthcare is in fact a luxury, so it’s not surprising it’s not readily available in third world countries. Food is a necessity and we don’t let the government control our food productions and distribution.

Two Russian women were in the bread line talking, one women said to the other, you know we’re lucky we only have to wait 3 hours to get bread in Russia, in other countries their governments don’t give out any bread at all. Imagine that.

Health care’s no different, so smarten up. Read a book, I don’t have time to educate every halfwit who comes here.

#192 MasterBootLicker on 09.10.11 at 11:55 pm

the elephant in the room. Over the past decade the S&P stock market is down 14% . The HUI index which consists of blue chip mining companies is up 1400% in the same time period. A massive wealth redistribution is in motion yet mainstream media and blogs refuse to even acknowledge its existence.

#177 Cookie Monster
Food , shelter, water. All ingredients needed to live are a human right. So you are the guy who sees an elderly person being mugged yet all you do is whip out your iphone and film it for your utube account.

#193 Kaganovich on 09.11.11 at 12:08 am

Cookie’s credibility looks like it is negatively correlated to the number of comments he makes.

#194 Ronaldo on 09.11.11 at 12:10 am

Here’s a nice little fixer upper in Kits for only 1.275 mil


Here’s what you can get in Calgary for around the same price


or this


Don’t get much for you money in Vancouver anymore do you? Maybe time to move to Calgary.

#195 Junius on 09.11.11 at 12:17 am

#175 BrianT,

On the contrary I think that many people still have not figured out why we are in this mess. However I will assume that you accept my explanation that the main causes where a combination of financial services deregulation, George Bush’s reckless war spending along with tax cuts followed by Alan Greenspan’s low interest rate policy.

Clearly you are not one of those nut jobs who would blame gov’t spending on social security, health care and other programs.

#196 Nostradamus Le Mad Vlad on 09.11.11 at 12:21 am

New Jersey’s Tent City, with pix; Job Stimulus Another view; David Cameron says the Eurozone should become The United States of Europe; Death Wish Actually, it’s a Euro death wish, Govt. lies The head is right — the only thing govts. do well is lie, and Greece for the umpteenth time.

Very Convenient The G8 (west) says banks (almost all west, and who charge interest) can help Muslims; Lotsa links; 14:46 clip Debt:The first 5,000 years are the hardest; Chart on jobs, and Seems this is being covered regularly.

Parma, Italy 45 tremors in 48 hours; Two clips See the heading plus ths one; Saudi Arabia Links posted recently said the UN – US – NATO were going for Yemen and Saudi Arabia. Seems SArabia’s # has been called; Energy Has Japan considered Thorium? Supposedly, it is cheap and plentiful.

Commutes Some are dull, others are terrifying; The AP Material baloney, not the food Bologna.

#197 Junius on 09.11.11 at 12:31 am

#169 Herb,

Thanks. This issue really does scare me.

I understand the superficial appeal of libertarianism. I was once one myself. When you really get into it you understand pretty quickly that it is unrealistic. However what has really begun to scare me is that with the rise of the Tea Party it has become a massive Con job on the US and obviously our population promulgated by groups like the Koch Brothers.

They recently held their secret retreat in Colorado where a number of Republican politicians including Rick Perry and NJ Governor Christie had to fly and kiss the ring. These billionaire brothers fund lots of organizations with names like the Heritage Foundation to promote their ideas. These foundations try to appear as objective think tanks but they only have one message and they play for keeps. It is getting really scary.

#198 Junius on 09.11.11 at 12:43 am

Just a few interesting stats to show how far off track our friends South of the Border currently are. List comes from Professor Doug Speth of Vermont Law. Sad.

In comparison to other Western countries, America now has:

the highest poverty rate, both generally and for children;

the greatest inequality of incomes;

the lowest government spending as a percentage of GDP on social programs for the disadvantaged;

the lowest number of paid holiday, annual and maternity leaves;

the lowest score on the United Nations’ index of “material well-being of children”;

the worst score on the United Nations’ gender inequality index;

the lowest social mobility;

the highest public and private expenditure on health care as a portion of GDP;

the highest infant mortality rate; prevalence of mental health problems; obesity rate; portion of people going without health care due to cost; low-birth-weight children per capita (except for Japan); consumption of antidepressants per capita;

the shortest life expectancy at birth (except for Denmark and Portugal);

the highest carbon dioxide emissions and water consumption per capita;

the lowest score on the World Economic Forum’s environmental performance index (except for Belgium) and the largest ecological footprint per capita (except for Belgium and Denmark);

the highest rate of failing to ratify international agreements;

the lowest spending on international development and humanitarian assistance as a percentage of GDP;

the highest military spending as a portion of GDP; the largest international arms sales;

the most negative balance of payments (except New Zealand, Spain and Portugal);

the lowest scores for student performance in math (except for Portugal and Italy) (and far from the top in both science and reading);

the highest high school dropout rate (except for Spain);

the highest homicide rate;

and the largest prison population per capita.

#199 The InvestorsFriend (Shawn Allen) on 09.11.11 at 1:13 am


Canadian Mortage rates are fantasically low. But U.S. rates are far better.

In Canada the best big bank advertised 5 year locked in rate is 3.79% – Bank of Montreal (special rate posted at this bank is 5.39%) . AGF trust is advertising 3.54%. Variable rates are advertised as low as 2.25%.

So those are great rates, the five year rate is miles and miles lower than rates were twenty years ago. These low rates allow mere mortals to “afford” $500k houses.

Bank of Montreal also has a special 5.24% rate for 10 years locked in (posted is 6.75%).

The problem with these rates is that after five or ten years there is typically not that much paid down on a mega mortgage. The home buyer takes a risk that payments could rise dramatically upon renewal.

Meanwhile in the United States, government insured mortages are apparently available at 4.12% for 30 years. The homeowner faces NO risk of renewal at a higher rate. AND, the homeowner gets the right to refinance upon payment of a relatively small fee if rates drop. (no interest differential is payable)

I have never seen an explanation of why and how the U.S. can offer 30 year rates (with a refinance option thrown in) for less than Canada can offer on a 10-year with no refinance option. These juicy 30-year mortages in the States are almost as low as the best 5 year rates in Canada.

What gives? 30-year government bond rates in Canada are now LOWER than in the U.S. so that is not the reason.

My understanding is that Federal rules mandate that insured mortgages be made available at 30 years and must include the refinance option.

Banks are fine to take the credit risk since repayment is insured by the government.

But U.S. banks were not in a position to accept the refinance risk. This is probaly a major reason why banks in the U.S. always seem to sell their mortgage receivables to others. Banks cannot take in short-term deposits and use that to fund 30-year mortgages. AND, they can’t even take in 30-year deposits to fund the 30-year mortgages since the mortgages could be pre-paid early and refinanced.

So, the banks found investors to buy their mortgages. Possibly the investors were fools since it these investors who have been losing out on their expected interest when home owners refinanced.

I wonder what stops a Canadian bank from offering a 30-year fixed rate with a refinance option? It could be that CMHC won’t insure it. Why not? It could be that there are not enough investors in Canada eager to buy the mortgage receivables from the banks especially if the home owners had refinance options.

Rather than worry about the fact that we pauy a bit more for books and such maybe our government should look into why Canadians cannot get the juicy and low risk 30-year mortages that Americans can get.

As an aside those juicy 30-year fixed mortgages in the United States should result in higher home prices down south, all else equal. But, all else never is equal…

#200 TaxHaven on 09.11.11 at 1:29 am

Garth, how many years of day-by-day gathering economic gloom, lower living standards, ever greater government & personal debt and income disparity will it take for you to admit that re-starting the motor is impossible?

“It’s fallen over and it can’t get up…!”

#201 Smoking Man on 09.11.11 at 2:39 am

The n=smoking man is wated again, was going to do a bit on 911

cant type well at the moment will finish tomorow.

food for thought

building 7.. silverstein says pull, BBC reports the fall of building 7 1/2 hour before it falls….

fk do you need any more….if you do… got some properties in Vancover that need an owner……..

my next posting will be epic……don’t know if it will make it past garthos mood……but if it major educations grass hoppers.

#202 timo on 09.11.11 at 2:43 am


The Greek debt-to-GDP is currently at 140%. It will be close to 180% by year’s end (assuming someone gives them the money). The deficit is north of 15%. They simply cannot afford to make the interest payments. True market (not Eurozone-subsidized) interest rates on Greek short-term debt are close to 100%, as I read the press. Their long-term debt simply cannot be refinanced without Eurozone bailouts.

Was anyone surprised that the Greeks announced a state fiscal deficit of 15.5 billion for the first six months of 2011, vs. 12.5 billion during the same period last year? What else would you expect from increased austerity? If you reduce GDP by as much as Greece attempted to do, OF COURSE you get less GDP and thus lower tax revenues. You cant do it at 5% a year, as I have pointed out time and time again. These are the consequences of allowing debt to get too high. It is the Endgame.


Noam Chomsky on Power Hunger
(long and drawn out but a good lecture
21:00 min+ will give your head a shake)

save your money and stay out of debt.

#203 meslippery on 09.11.11 at 4:18 am

So to borrow money at credit card rate,s @ 19% or more.
And put money in the bank at 2% or less.

Something is not quite right her.

me thinks

#204 Moneta on 09.11.11 at 7:23 am

A human right can not impose an obligation on any other citizen(s). Therefore healthcare is not a right. Food is not a right either, since someone has to farm and/or prepare it.
I guess all us moms should stop feeding our kids.

Let me guess, you’re against abortion, right?

#205 Herb on 09.11.11 at 8:28 am

“Cooky” Monster,

since your grasp of economics and politics is exceeded only by your demonstrated grasp of history, I take all of your #190 as a compliment.

#206 Moneta on 09.11.11 at 8:32 am

Healthcare is in fact a luxury,
Health care is a continuum that goes from tucking someone in bed and bringing a glass of water to major treatments.

If I feed and hug my children why shouldn’t I expect them to care for me when I’m old?

Silly me, for one moment I thought it was all part of the cycle of life.

#207 BrianT on 09.11.11 at 8:50 am

#196Junius-Social Security and Health Care spending are longer term problems that are not material to the current dilemma. IMO the US financial system is broken and basically the whole structure that broke it continues to run the ship (I am not referring to Obama or any USA politician). IMO indications are that this misallocation of taxpayer capital will worsen until things get really interesting.

#208 penpal on 09.11.11 at 8:56 am

@ 199 Junius

You are not really surprised by this list are you?

I travel to the US all the time and between all the Bentleys and Cadillacs, I can clearly see this rising tide of destitution and privation. One just needs to open their eyes and look past the ‘feel-good’ reporting and surface (and largely unpaid for) glitz.

Think of an old prostitute with her face make-up that is applied with a trowel.

The USA is on a one-way trip to a “second world” status of a country like Chile currently.

The metrics don’t lie.

#209 BrianT on 09.11.11 at 8:59 am

#186Not-IMO the term “commie” confuses the issue. There is huge money in the carbon credits scam and the whole climate change trip in general-Al Gore is too fat with cash to even bother with anything else at this point. Certain Wall Street firms have also been known to make a nickel off this scam. It’s all about the Benjamins.

#210 penpal on 09.11.11 at 9:05 am

@ # 200 The Investor’s Friend

Think about it.

There are what, 6 major chartered banks in Canada. It is what is referred to as an “oligarchy” in economics.

If the 30 year mortgage was in those banks’ best interests, they would be available.

Do you think that international pension funds , etc. wouldn’t buy Canadian mortgage debt of 30 year duration?

No, the Canadian banks have the market right where they want it (most profitable and convenient for them) and what they want, they generally get in this country.

The concentration of banking in this country is without peer in the world to the best of my knowledge.

Welcome to Snowistan.

#211 Sky on 09.11.11 at 9:15 am

All this talk about human rights. Puhleeze! We have no rights. All we have are PRIVILEGES granted to us by the powers that be.

And these privileges are subject to change and revocation… sometimes at lightning speed. Ask the 6 million Jews who were hauled into the ovens, the 10s of millions who were deliberately starved in the Holomador, or the 50-60 million Chinese wiped out under Mao about ” human rights”.

What about the huge ( and undisclosed ) number of Iraqis who paid the price for the SAUDI hijackers of 911? The women of Fallujah are terrified to have babies now because of the horrific birth defects ( take a look at the pictures ) thanks to the depleted uranium the west dusted the Middle East with. Where are their human rights?

What of our own soldiers in Afghanistan? Some of them are so messed up that they end up committing suicide when they get back. What was their sacrifice for?

Many of you will be in for a very rude awakening soon. It won’t be a soft landing. We have been ALLOWED to attain a relatively high standard of living – a standard of living that’s vaporizing. Never to return.

The globalists no longer need to maintain the illusion of western prosperity ( based on a mountain of debt ). Their agenda is well advanced and they’re about to take it to the next level. Talk to me THEN about your so-called human rights.

This blog has officially submerged beneath the waves of conspiratorial idiocy. I’m going out to play with my dog. He is more balanced. — Garth

#212 penpal on 09.11.11 at 9:21 am

@ # 188 45 north

“I wonder if the banks know this?”

Of course they do and why would they care?

Any mortgage they have made in the past 5 years with “unconventional” (i.e. less than 20% down) financing is INSURED by CMHC.

They have virtually NO RISK , the taxpayer (who ultimately backs CMHC), bears the full risk.

#213 penpal on 09.11.11 at 9:32 am

@ # 183 Utopia

“In a nutshell, this time it’s different.”

Um, …. actually no, it isn’t different really Utopia.
The math never lies.
Bubbles pop.
Losses ensue.
Wailing and gnashing of teeth commences.
As constant as gravity, my friend.

Note, I’m not disagreeing with you, just clarifying that while the outcome varies from past history, the cause of the “debacle to be” is constant.

Math doesn’t change.
People’s perception and risk tolerance attitudes can only defy reality for so long.

Your conclusions, however, are spot on!

#214 Markey on 09.11.11 at 9:42 am

#134 Cookie Monster- My father was a physician who was initially opposed to socialized medicine until it was implemented. The wait list for surgery jumped from two days to two years overnight. He met people who had been living with debilitating, painful conditions and he was horrified. He became a great advocate our inclusive medical system.

#215 penpal on 09.11.11 at 9:47 am

@ # 180 Utopia

Poignant and apt example of how delusional Canadians are regarding the level and quality of of health care they receive.

A few years back, ambulance response times were being criticized in Toronto for being too lengthy at something like 13 minutes on average, if I recall correctly.

Now, obviously, in any medical emergency, time is of the essence and the goal is to keep the response time to a minimum.

When it was determined that a reduction of 3 or 4 minutes in response time would TRIPLE the cost of ambulance services (and require a sizeable assesment payment from each Torontonian), the discussion stopped.

In some countries, it is not a 13 minute wait , no, its more like NO ONE COMES……….EVER!!!!!!!!!!!!!

#216 Utopia on 09.11.11 at 10:01 am

#192 Cookie Monster to #180 Utopia

“I’ve paid for all my own dental care since age 20, I’m now 41”

Forty one!!?? You are 41?

I honestly thought I was dealing with a twelve year old after reading so many of your disconnected and anti-social bizarre posts.

So you are now telling me you are actually a grown man with a bad attitude, the sensibilities and simple logic of a small child and the reasoning capabilities of shellfish (apologies to all mollusks).

You need therapy pal. Really a lot. Lots of therapy.

#217 penpal on 09.11.11 at 10:05 am

@ 174 Moneta

I am not talking about world peace here.

A pragmatist you say?

No, you are much, much darker than that.

You, I fear are a cynic. On life.

“The way the current system is set up, these returning soldiers would have more of a chance of dying form diabetes, alcohol, drug addictions and car accidents than staying overseas.”


No, seriously, WTF are you saying? That soldiers have a chance of better quality of life in a war zone than at home with their loved ones?

And, if I recall correctly from your prior postings, you are a mother?

Is your last name Cheney (as in Dick Cheney, former VP under George W. Bush) ?????

Let’s send your kids over there and see how you change your tune!

Unf’ing believable!

#218 Utopia on 09.11.11 at 10:10 am

Oh sorry. That previous comment was an Ad hominem attack on Cookie so I apologize to the other readers. Sweet name that (Cookie) for such a person with so many dangerous, anti-social and dark-ages attitudes. I really just want to call him an idiot but that would have been over the top and excessive language to use.

Oops. Did I just say that out loud?

#219 Timing is Everything on 09.11.11 at 10:26 am

#200 The InvestorsFriend

I wonder why too. Ma and Pa, back in 1965, got a 25 year fixed rate mortgage at 5% (credit union). Of course, they are still in the same house. But somewhere along the line, those mortgages ‘went away’. I remember 1980 well. Ma and Pa sailed thru it with their 5% mortgage.

#220 Junius on 09.11.11 at 10:44 am

#186 Not-IMO,

Yeah, right. People who believe in climate change are commies. Actually, they are called scientists.

What is fascinating for me is the link between libertarians and the anti-climate changes nut jobs.

The reason they hate it so much is that it will require more government regulation of the economy to control. Anything that forces government action they are against.

The other thing to point out is many major polluters like the Koch Brothers (Oil industry) and those pushing the libertarian agenda.

So, BrianT is you really want to follow the dollars it is coming here from the polluters. Of course, this is also why people like Tom Friedman are on their hit list as he is a clear believer.

#221 Junius on 09.11.11 at 10:45 am

#209 penpal,

Surprised at the list? No.

Saddened? Yes. Particularly since not a single issue on this list is part of the US political debate. None of them are on the Tea bagger agenda either.

#222 Moneta on 09.11.11 at 10:59 am

No, seriously, WTF are you saying? That soldiers have a chance of better quality of life in a war zone than at home with their loved ones?

Look, in an ideal world the Americans would mind their own business, stay at home and consume less.

I would truly love it if the Americans brought back all those soldiers so they could enjoy a good quality of life. But many of those soldiers are out there BECAUSE they could not see a much better future at home.

We’re talking about a country that gave freedom to a group of people without even fixing anything in their system to help them cope with their new freedom. All I can see is Ron Paul bringing back the troops, tapping himself on the back while they come home to abject poverty and bitterness.

Am I a cynic or a realist? I’d like to think I’m a realist but many would call me a cynic I guess.

Does it break my heart to see those kids join the army? Yes.

Do I care for the people around me? Believe or not, yes.

#223 Killer Chicken or Imploding Boomer? on 09.11.11 at 11:00 am

Shawn @200

“The problem with these rates is that after five or ten
years there is typically not that much paid down on a
mega mortgage.”

Actually Shawn, your principal is paid down more quickly at a low interest rate.

#224 Utopia on 09.11.11 at 11:05 am

“This blog has officially submerged beneath the waves of conspiratorial idiocy. I’m going out to play with my dog. He is more balanced” ~~ Garth

Please Garth. It is not the blog. Just a few crazies who interject poison into an otherwise normal world. They would almost all shut the hell up if they had to use their real names. But there are some amazing, intelligent and very thoughtful people who come here every single day to talk, post, read and connect. I swear…..this is the best of blogs on the web and I look forward to reading it each day. Best part is the comments section and all those people who are smarter and better educated than me.

Some crazies included.

#225 Moneta on 09.11.11 at 11:09 am

No, seriously, WTF are you saying? That soldiers have a chance of better quality of life in a war zone than at home with their loved ones?
From what I have read, if Americans were to repatriate all of their soldiers, chaos could probably guarantee even more civilian blood in the “occupied” countries than the number of soldiers who lose their lives. The US has screwed up a lot of countries and bringing back their soldiers does not instantly mean peace and safety.

Frankly, I’m not an expert on military issues but I do get the sense that bringing back their soldiers is not as easy as 1-2-3.

Comparing me to Cheney and Bush was really cheap. I’m surprised you didn’t include Hitler and Stalin in there.

#226 Stefan on 09.11.11 at 11:19 am

so what’s wrong with small government, liberty, and sound money?

#227 Killer Chicken or Imploding Boomer? on 09.11.11 at 11:24 am

211 Penpal – I believe the economic term is “oligopoly”.
“Oligarchy” refers to political power. Also correct to a certain extent when referring to our banks.

#228 Moneta on 09.11.11 at 11:35 am

If the 30 year mortgage was in those banks’ best interests, they would be available.
I have to say I agree.

Not exactly. It is legislated in the Bank Act. – Garth

#229 TurnerNation on 09.11.11 at 11:50 am

I heard Bandit is starting his own blog?


#230 OttawaMike on 09.11.11 at 12:03 pm

Last post from Cookie at # 190.
Hm, did you perhaps finally quit while you were ahead?

Every time you post you just dig yourself in a little deeper and not in a good way. Are you for real or are you just trolling this site because you can’t get enough attention anywhere else?

Just like the proverbial atheist in the fox hole who finds God, let’s see you fall into one of life’s uncontrollable tailspins such as serious illness or your financial security being compromised. I’m guessing your worldview on rugged individualism would change in a heartbeat.

#231 Moneta on 09.11.11 at 12:16 pm

have to say I agree.

Not exactly. It is legislated in the Bank Act. – Garth
More precisely, I don’t see why we could not have 15-30 year mortgages… especially in this environment.

#232 westcanguy on 09.11.11 at 12:18 pm

Actually, Mr. Harper raised government spending, turned a surplus into a deficit, increased the size of the civil service, sustained the largest deficit in Canadian history and reversed debt reduction that took place under the previous government. Quite a record for just five years. And not too conservative. — Garth

Isn’t it great being an armchair quarterback?

You of all people on here know what its like to be in those government trenches. Every country has been swirling in the cesspool of global economic uncertainty and in this country, the gov’t had to manage with a minority.

Given your experience, I would love you to post a rendition of how you thought a minority gov’t should have managed the economy the last 5 years so that there was no deficit and what they should be doing now to ensure there wouldn’t be one. Also please do add your thoughts on what has to be done to so that we, as a country, come out of this global mess unscathed.

Armchair quarterback? I got elected, fought for my beliefs and took the consequences. How about you, Mr. Anon? — Garth

#233 Moneta on 09.11.11 at 12:23 pm

Time for some decompressing:


#234 BrianT on 09.11.11 at 12:39 pm

#221Junius-It appears you cannot even comprehend the importance of China in your whole pollution scenario. So what is the point of this endless recanting of the same old mantras of your authority figures?

#235 Daystar on 09.11.11 at 12:45 pm

#200The InvestorsFriend (Shawn Allen) on 09.11.11 at 1:13 am

#211penpal on 09.11.11 at 9:05 am

Excellent points. I’ve wondered this myself, but never took the time to articulate the comparisons (its been a busy year). Thanks for taking the time Shawn. Have to agree totally with penpal’s points on the matter as well. The Harper government has gone overboard to cater to Bay Street in a quest for power as most paying attention well know. Its been great for shareholders of our chartered banks and great for realtors, developers and homeowners who flipped for profit but it hasn’t been great for those who renew compared to the U.S. example.

I guess two ways of looking at it is that the U.S. housing meltdown is 5 to 7 years ahead of ours so they need this more than us but when our housing bubble blows here in Canada which will likely be triggered by interest rates in late 2012, 2013, our government could finally get off its lazy ass, quit pining for Bay St. profits, look the dangers of loss lying ahead and try 30 year terms just before interest rates are set to rise (somewhat dramatically as any 3 or 4 point rise now will be dramatic) but knowing how things have been run in this nation the last 5 years, I would wager that such policy comes way… too… late to help anyone. I hope I’m wrong, but there is a history here worth noting. Greed and lust for power narrows vision, pure and simple.

#236 eddy on 09.11.11 at 12:57 pm

Property tax grab in greece


#237 Mr Royale with cheese on 09.11.11 at 12:57 pm

Please explain the today signification of mounted in RCMP?

means to sit on a cup of Joe in a brewery organizing a piss-up!

Or to sit on a crown prosecutor face in giggles so the judge let’s you out on bail after you murder your wife!!
K Wiens enjoys early retirement now and a sexy probatiOn agent !!!!

To be a twitter rider and twit away in sunset in a yellow striped uniform!!!

Wrong blog. — Garth

#238 jess on 09.11.11 at 1:19 pm

162 anjing bau
corporate version of colonialism.
and then when the colonists move out but the caste system never left….for example, the latest wiki leak on that minister who used a private jet to pick up a pair of sandals!!! true or false yes or no either or this or that rinse lather repeat…


james deningpole he claimed that as a journalist “it is not my job” to read peer reviewed papers, his role is to be “an interpreter of interpretations”.[13]wiki

who is the International Policy Network.[1]

The International Policy Network (IPN) is a global think tank headquartered in the City of London. It defines itself as a non-partisan, non-profit organization, but has also been described as a “corporate-funded campaigning group”.[1] IPN runs public education campaigns on international issues ranging from trade and development to healthcare and the environment.

In the context of global policy issues, IPN’s campaigns highlight the role of markets and market institutions as a means of empowering individuals so that they are able to improve their own lives and the lives of others. IPN hopes that as a result of its programs, individuals will be better able to achieve their aspirations, regardless of race, color, creed, nationality or human condition.

IPN works in partnership with over 75 think tanks around the world.

The Bastiat Prize is a journalism award given annually by the International Policy Network.[1] The Bastiat Prize recognizes journalists whose published works “explain, promote and defend the principles of the free society.”[2][3] The award comes with US$15,000.[4]

The Broken Window
Instituted in 2002, the Prize has been inspired by the 19th-century French philosopher Frédéric Bastiat and his defense of liberty. Bastiat’s use of satire and allegory enabled him to relate complex economic issues to a general audience. In keeping with his legacy, Bastiat Prize entries are judged on intellectual content, the persuasiveness of the language used and the type of publication in which they appear.

#239 The InvestorsFriend (Shawn Allen) on 09.11.11 at 1:25 pm


Garth explained at 229 that the reason we don’t have 30-year mortages in Canada is due to the Bank Act.

That sounds plausible, as I said at number 200 it is too risky for Banks to offer 30-year locked in mortgages like that because their deposits can usually be withdrawn with little notice. And certainly they could not offer the right to refinance if rates fell. UNLESS that is, they securtitise the mortgages and sell to (idiot) investors like in the U.S. Our banks are allowed to securitise but maybe since they can’t offer the 30-year there is little point.

Bank regulators here perhaps saw that securitised loans sold to idiot investors can come back to bite. The iinvestors sue the banks if it turns out they gave out loans to dead beats or otherwise failed to dot every i, cross every t.

The reason the 10-year locked in rate in Canada is HIGHER than the 30-year rate with option to exit in the U.S. has NOT BEEN EXPLAINED (Garth?). Our base government interest rates applicable to CMHC are LOWER than in the U.S. So securitization should allow our banks to offer the low rates.

Oligolopy of six banks should not prevent competition. Witness two or three airlines will usually compete to the death. In what part of the economy do we have MORE than six major competitors? few if any. Yet competition is stiff. Money is the ultimate comodity, no brand value from each bank, so why not more competition?

KILLER CHICKEN at 224 pointed out mortages get paid down faster at today’s low rates. True in theory, but not true in practice. In practice low rates drove house prices to $500k sort of levels and people struggle mightily to pay the mortgage and have none left over to pay on principal. AND, any realistic extra payment on a $300 or $500k mortgage (say $5k or $10 k per year extra) is a drop in the bucket. Today’s newer mortgages will have very little paid off in five years and the risk of HUGE payment increases is very real.

U.S. home owners get a MUCH sweeter and low risk deal with their low rate 30-year mortgages with option to refinance. They should give daily thanks for the fact that idiot pension funds and investors are taking the other side of that deal and lending money so cheap.

Obviously though not ALL mortgages are securitised in the states. They kept a lot on their books. FOOLS, they should have sold them all (to idiot investors). U.S. banks that keep 30-year mortgages on their books are taking HUGE risks and getting paid a pittance for it.

#240 jess on 09.11.11 at 1:34 pm

Cookie Monster
how do you feel about young person of 24 dying from a toothache?

the private system
The “free market” or outsourcing agents and HMO’s tourist medicine
but then why are the post op complications charged to the taxpayers!

or how about following those research clinical trials offshore. Will the outcomes be published through “interpreters” of science.

#241 timo on 09.11.11 at 1:58 pm

#226 Moneta,

Comparing me to Cheney and Bush was really cheap. I’m surprised you didn’t include Hitler and Stalin in there.


Godwin’s law,

In other words, Godwin put forth the hyperbolic observation that, given enough time, in any online discussion—regardless of topic or scope—someone inevitably criticizes some point made in the discussion by comparing it to beliefs held by Hitler and the Nazis.

#242 new Era on 09.11.11 at 2:21 pm

The politics of austerity at this juncture would guaranty a deflationary debacle, seriously screwing hundreds of millions of people. You should start caring about that. — Garth


Yeah garth and what path is Obama leading America.
I can only see Czars and more Czars, bigger government and more useless spending to help his buddies and special interest group. Which will eventually lead to a greater downfall and de-basing of the greenback.

Next thing your going to call the tea party is a bunch of Racist.

#243 Cookie Monster on 09.11.11 at 2:55 pm

#205 Moneta on 09.11.11 at 7:23 am

A human right can not impose an obligation on any other citizen(s). Therefore healthcare is not a right. Food is not a right either, since someone has to farm and/or prepare it.
I guess all us moms should stop feeding our kids.

Let me guess, you’re against abortion, right?

#207 Moneta on 09.11.11 at 8:32 am

As usual Moneta, you’re missing the point. The point is it’s not ok for you to take MY stuff to care for YOUR kids, caring for you kids is YOUR job and should come from YOUR (husband, wife, family, friends etc) pocket(s).

I’m totally pro choice. Abortion is the domain of rights of the women and her own body. You own your body and everything in it, until the thing in it is born and your life is safe (since child birth is dangerous, you might die).

Some days the force shield of stupidity is impenetrable.

#244 Utopia on 09.11.11 at 3:00 pm

#230 OttawaMike

“Just like the proverbial atheist in the fox hole who finds God, let’s see you fall into one of life’s uncontrollable tailspins such as serious illness or your financial security being compromised. I’m guessing your world view on rugged individualism would change in a heartbeat”

Thanks Mike. Great point too.

There are indeed places in this world where you are finished as a person the day you fall between the cracks.

Few in the West even believe it possible. There are still places where broken bodies don’t get fixed and nobody gives a damn because they are just too poor to help you anyway.

Cookie seems to think that is a world worth aspiring too. We should embrace financial issues before social cares. It is all about money and tax levels to him.

In other places though (the real world), places with no money at all and plenty of people weakened by poverty, you can simply NEVER afford to fall between the cracks.


All she wrote. One bad break there……you are done.

#245 Mike Rotch on 09.11.11 at 3:01 pm

RE: Mortgages in general, anyone here renewed recently?

Just wondering what sort of ‘real’ rates one can negotiate these days.

In my limited experience through opening a new mortgage once, and renewing or blend+extending a couple times, the real rate you can negotiate is a damned sight lower than the posted rates….does anyone actually pay the posted rates, or is that like a car or furniture sticker prices?

Only wondering because I’m about 2 years into a five year closed, and wondering (hoping) if I can shave off another half point or more with a B&E in the not too distant future. Would love to cut the interest bill by another 10% and add the savings to portfolio deposit plan (screw paying down the house for now)

Anyway, anecdotal info is appreciated from mortgage pros, or from public at large who have recently renewed.

#246 Cookie Monster on 09.11.11 at 3:19 pm

Regarding global warming due to CO2. I’m a libertarian and a science major, engineering, and I accept the science at face value. The fact is the composition of the earth’s atmosphere does affect the climate due to the well known and undisputed green house effect. The CO2 ppm has gone from 280 to 350 over the last 100 years, that is no doubt due to all the burning of fossil fuels and destruction of forests globally.

But as a libertarian, it worries me also what is going to happen by all these socialist governments in the name of global warming, these socialist pricks have already used the poor and unwashed for decades as their main excuse to nationalize, control and steal assets, so this global warming now gives all them commies one other issue to back their collectivist agendas. They’re sick.

#247 Moneta on 09.11.11 at 3:27 pm

timo on 09.11.11 at 1:58 pm
#226 Moneta,

LOL! That’s why I put those 2 names, hoping they would be argument killers or the butt of a joke.

#248 Cookie Monster on 09.11.11 at 3:32 pm

Whoops mistake, The CO2 ppm has gone from 250 to 380 over the last 100 years.

Just to clarify, I don’t have a problem with honest governments trying to help solve global problems, I think they do have a role to play in passing laws based on science to help solve the climate problem, I’m just worried there is a fraction of the politicos who will try to take advantage of the situation for their socialist causes.

#249 The InvestorsFriend (Shawn Allen) on 09.11.11 at 3:36 pm


Whiuch to buy stocks or bonds?

10-year Government of Canada bonds pay out or yield 2.2% on your money.

source: http://www.bankofcanada.ca/rates/interest-rates/canadian-bonds/?page_moved=1

10-year corporate bonds rated A pay higher at rates like 3.4% (407 International 2021 bond) 3.6% (Enbridge Inc 2021 bond ). Rogers Communication which I believe is rated BBB- pays 4.5% for a 10 year bond.

If you are a fixed income INVESTOR (not trader) who plans to hold to maturity this is all you will get on your 10-year bonds, 2.2% government, 3.5% or so for higher rated bonds and 4.5% for bare investment grade bonds . (Higher yields are available in high risk bonds). This is the MOST you can get as a bond INVETOR holding to maturity. In the extremely unlikely event of bankruptcy you could get less.

Okay, that is Bonds.

How ’bout Stocks?

The TSX index currently yields an average 2.7%.
Source http://www.tmxmoney.com/HttpController?GetPage=EquityIndices&Language=en&Exchange=T&SelectedTab=QuoteResults&IndexID=0000&OpenIndex=N

So stocks are only at 2.7% yield and if yield is the goal then even the palty yields from 10-year bonds look better.


Stock yields come from paying out an average of about one third of the earnings. The other two thirds of earnings are retained for growth.

The EXPECTED (no gurantees whatsoever) return from stocks is the dividend yield plus the long-term growth in the yield.

If companies earn 10% ROEs (many do that or better) and retain two thirds of that then we can EXPECT (no gurantees) dividends to grow at about 6.7% per year. That would give a return from stocks EXPECTED at 6.7% plus the 2.7% dividend or 9.4%.

Another way to look at it is the TSX has a trailing P/E of 15.6. That’s an earnings yield of 6.4%.

The DOW Jones Industrial Average has a P/E (trailing GAAP earnings) of 12.3 for an earnings yield of 8.1%.

So the point is looking at the next ten years is there any remote possibility that bonds at 2% to 4.5% are going to provide a better return than stocks that yield about 2.7% and that have earnings yields of 6 to 8% and that with ROEs of 10% can be expected to grow dividends in the range of over 6% annually?

My answer is anything is possible but it seems exceedingly unlikely.


Warren Buffett explained all of this in a 2001 article (when he found stocks over-priced, as he also warned in 1999) and noted how obvious it was to him in 1980 that stocks were then the better deal. Today’s stock valuations are more like 1980 than 2001. And bond valuations today are in a bubble not seen since 1950. (afterwhich bond investors got crushed)

Over to you Warren:


Thanks Warren…

Look, I have no agenda to suggest people buy stocks. In fact I feel very nervous suggesting it and I don’t suggest that any individual buy stocks since I don’t give individual advice. I just point out that the MATH (not me) says, buy stocks. BUT if the financial world is about to fall apart the earnings on stocks could evaporate. In that case buy guns, ammo, canned food and a bunker.

Nobody should buy individual equities without an investment portfolio of seven figures. Nor should you invest in equity mutual funds. One asset class has exaggerated market risk, the other poor overall performance and high costs. ETFs provide equal exposure, dividend pass-through and far superior diversification, reducing risk. As for bonds, I’ve never met anyone who bought a long bond to hold, which I have pointed out to you on numerous occasions. Investors today absolutely require a fixed income component to achieve a balanced portfolio and sustain growth while mitigating volatility. — Garth

#250 Ronaldo on 09.11.11 at 3:36 pm

#220 – Timing is Everthing –

“I remember 1980 well. Ma and Pa sailed thru it with their 5% mortgage”

I remember it well also. After spending 5 years in the toolies in Northern BC with my young family, we moved back into civilization in the spring of 79 and with the cash we had accumulated from living rent free we built our home. Luckily we locked into our mortgage in the spring at around 11% only to see it rise to 14% by the time we had completed building it a few months later.

By mid 1981, the rates had peaked at around 22% and people were still running to the banks to borrow for fear the rates would go higher. It was nuts. Rates stayed high for quite a while and were still at around 14% when my renewal came up in 83. In the meantime, house prices had crashed.

In January, the year before (1980), people were lining up in -30 degrees to buy their oz of gold at $850/oz. Now that was nuts. The herd mentality.

If we go back to that point in time when interest rates were 20% and a typical starter home was around $90,000 and a decent wage was around $30000 we can see what the effect that interest rate had on the average family and compare it to today in Vancouver.

$90,000 with 20% down = $72000 mtg. interest rate 20% = interest cost of $14,400/yr. or .48 of gross income. (1 person)


$1000,000 with 20% down = $800,000 mtg. interest rate 2.5% = interest cost of $20,000/yr. Equivalent salary of $60,000…..= .33 of gross income. (1 person)

The big difference and the reason for the most concern is that we are at the lowest rates in history with the highest priced homes in history with rates nowhere to go but up.

In 1980, the rates did not stay at 20% for long but stayed high (about 14%) for at least 5 years before returning to normal levels of around 11%. At that point the house that was purchased 5 years before and although it may have dropped in value, the cost to service the mortgage was now roughly half what it had been and certainly very affordable even for a single wage earner.

Today, at 2.5% and even a 1% rise from that point, results in 40% increase in mortgage cost. And with that will come a serious loss in equity with prices falling at least 20%. (to begin with) Not a good position to be in for certain. It’s time people woke up and time for banks to stop with this charade already.

#251 Stevenson on 09.11.11 at 4:05 pm

Everybody is trying to throw facts, statistics, and history into play here. What really is going to happen will have nothing to do with them. Does anybody have control over the macro environment? Everybody has their confirmation biased opinion here.

Real estate is not a bad place to put into the money into unless you know of an investment that you can serve multiple purposes.

If the Real Estate market doesn’t tank or fall somebody is going to rub it in. On the other hand if it eventually does happen sometime in the future(whenever that is) someone is going to rub it in too.

The question is what are you going now? Sit back, wait, maybe rent and help someone else’s mortgage for however long it takes for this possible bubble to “MAYBE” burst?

Stop complaining about high real estate prices in metropolitans and either make more money or move further away. Unfortunately that is reality.

You can’t say people who maxed their debt to buy the most expensive house they can 3 years ago made the wrong move… even if they only put 5% down. What position are they at now and how much wealthier could you “have” been?

#252 Cookie Monster on 09.11.11 at 4:08 pm

All you Marxists Canadians, if your socialist system was working I would have nothing to argue about, so prove me wrong, balance the governments books, pay back all the debts and maintain all public services and you win.

I’m going to play with my wiener (dog) then out for a ride (on my pedal bike).

#253 Cato on 09.11.11 at 4:20 pm

The Obama jobs bill misses the mark by a pretty wide margin but at least it was a start. The tea party fails to realize that gov’t debt isn’t the real issue here, its the consumer debt which is sinking the ship. If the US does not go all in and attempt to rekick economic growth then its game over, the consumer will be crushed under debt they can’t escape. No-one , rich or poor, does well in a depression. Doesn’t matter if you can buy a house or land or a factory for pennies on the dollar if there are scant few investment opportunities to grow real wealth everyone, even the rich, become poorer. Those in high places egging on the movement needs to realize this is a fickle mob who frankly have no understanding of the repercussions of what is being proposed. Just wait and see how fast things degenerate once food stamps get cut and someone starts to chant tax the rich.

Canadians need to fear the tea party. Its time for the Canadian gov’t to grow a spine and start drawing a line in the sand. Forget about political ideology and start lending support to what is in the best interest of the country. I’ve met this new breed of republican, they don’t want to be our friend. Many are the same knuckle dragging, rabid evangelicals who called for dropping nukes after 9/11 and pray daily for Armageddon. You can’t reason with their view of the world. Doesn’t matter if you happen to agree with their ideology & drink the cool-aid, if you aren’t an american your not a friend.

Living in fear is just another form of slavery. We now have a world of global opportunity, there is no reason to hide under a rock. Americans & Canadians both place too much emphasis on gov’t deficit as reflection of national health. Americans are far too pessimistic, Canadians are overly optimistic. Here in Canada gov’t coffers are not a reflection of health in the economy. The level of consumer debt is what counts and Canadians are in real trouble. Gov’t fiscal health will deteriorate quickly once the housing bubble begins to deflate. Then comes fear which feeds the economic contraction and destroys the finances & lives of the unprepared.

The smart money will always realize that as long as there are 2 humans on the planet they’ll seek to trade with each other. Wants, needs and desires just don’t disappear. Some will be forced to live in misery of their own making due to debt, others will cower in fear of risk. Both will probably believe the world is coming to an end. Just because those in the middle class see their world changing doesn’t mean the world economy is going to collapse and fall apart. The world will go on without them. Financial ruin for some just creates opportunity for others, its all a matter of perspective.

#254 MasterBootLicker on 09.11.11 at 4:43 pm

#247 Cookie Monster
Your first mistake obviously is you spent too long in the brainwash centres they call Universities, and have gobbled up all the slanted information they have fed you. Carbon records show that carbon levels in the atmosphere preceed temperature rises, not lead them. Plus climategate has already shown through leaked emails a concerted effort by U.N scientists to forge , fake and change research to support global warming. The planet has always gone through cycles, just look back to the medieval warming period. And the last I checked the Knights of the time didn’t drive suv’s. So carbon emissions are just one big scam to teach gullible people like yourself, so people like Al Gore can run the largest carbon credit trading enterprise in the world and make billions.

#255 Euro Girl on 09.11.11 at 4:51 pm

61 Euro Girl: “I am scared. Goodbye beautiful Europe”
188 45North:”That’s cause you read ZeroHedge. I’m scared too.”
I have never read ZeroHedge and I did not heard of it until someone mentioned it on this blog. I am not interested in gloom-and-dom theories, but I am very worried and quite saddened that the social gains my parents and grandparents (and even myself, to a lesser extent) fought so hard to gain will be lost forever, due to the ecomomic crisis. It´s just to easy for the right wing to gain power in times of uncertainty.

#256 timo on 09.11.11 at 5:04 pm

Q: “What do you call a stockbroker?”

A: “Waiter!”


Amid the ashes, the survivors of the decade say that eventually time rewarded those who persevered. Says Mr. Johnson: “If you had invested in 1975 and held until 1985, you had some very fine returns.”

#257 avenirv on 09.11.11 at 5:19 pm

westcanguy , china will not protest but the american companies that moved their manufacturing to china. just check what GE just did in the last 2 months with its historic manufacturing facility.
do you think the american politicians are not financed by the american companies ? in what fairy tale world do you live ?
do you want to pay 5K for the laptop you use to post here ?

#258 Smoking Man on 09.11.11 at 5:22 pm

On #212 Garth said
This blog has officially submerged beneath the waves of conspiratorial idiocy. I’m going out to play with my dog. He is more balanced. — Garth

Today I was going to post a big 911 pcs, decide to not do it. It aint worth. Any public figure that remotely suggest that 911 wasn’t exactly how it was told may be out off work for a long time, hence I forgive you Garth for turning a blind eye on this one, even shilling for the cause.
I read every Toronto paper today not one mentioned wtc 7 it’s kind of the Ron Paul of buildings. Passionate eye did a psc on 911 conspiracies, again no building 7.


I am damn good at predicting the future, and a word of warning, we are now entering a very dangerous period of time when it comes to free speech and free opinions. Hosni Harpo is bringing back the anti terror laws where by you can be rounded up arrested solely based on the whim of authorities, criticize your government or even another country that Hosni likes. You could end up missing for a while.


Me being an out spoken critic of anything status quo is playing with fire in this new environment. Developments in the middle east and the finance problems of Europe are going to lead to big problems, if you are not on the right team, you’re toast.

Look at my once great blog…….it’s gone I deleted everything. I know whats coming.


#259 John on 09.11.11 at 5:40 pm

Australia may face US style housing crash soon. Canada, are you next in line?


#260 The InvestorsFriend (Shawn Allen) on 09.11.11 at 6:00 pm

Garth responded to me at 251

As for bonds, I’ve never met anyone who bought a long bond to hold, which I have pointed out to you on numerous occasions.

Well bond INVESTORS (by definition) do buy to hold to maturity. For one thing bonds have high trading costs (bid/ask spread at your broker). Bond TRADERS buy bonds to SPECULATE on lower interest rates or lower credit spreads. Those who don’t buy bonds with intention to hold are by definition traders and speculators not investors.

Fixed Income INVESTORS should surely be prepared to hold to maturity.

Finally, that 10-year bond paying 2% to 4.5% or whatever does not give a hoot who owns it, how many times it is traded. That bond is going to pay not a cent more than its yield to maturity.

Investors (plural as a population) are only going to earn the low yiels to maturity on bonds even if some smart trader can get a capital gain on the bond if rates fall yet more. Investors plural as a group who go into equities today that have earnings yields of 8% are very likely to make better returns than bond investors.

My post said the math said equities appear more attractive than bonds. (no gurantees though) I never said to avoid bonds altogether, I just reported the math.

I never said buy individual equities. ETFs are fine. I NEVER tell anyone in particular to buy anything. What I do is report valuations on equities as a whole and on individual stocks for those interested.

Investors are grown ups and can make their own decisions. I just report what the math and facts seem to be saying.

Warren, can you please tell Garth to read again your 2001 article?


As for fixed income Warren, can you also tell Garth that we are all in violent agreement that preferred shares are a better source for that than bonds.

Tell him long term bonds suck.

This is why people do not buy long bonds to hold to maturity. Are you hard of hearing? — Garth

#261 penpal on 09.11.11 at 6:08 pm

@ # 253 Stevenson

A few points your post overlooks;

1) Hindsight is always 20 / 20.

2) The game isn’ t over yet.

3) Bubbles always burst.

4) Those who prosper by luck generally lose by luck.

5) Putting all your eggs in one (heavily leveraged) basket is ALWAYS an investment mistake.

6) Having a highly leveraged sole asset is ALWAYS inherently very risky.

Hang on a bit longer bud, you are about to have your investment thesis sorely tested.

When it is found wanting, my guess is we’ll never hear from you on this blog again.

#262 r on 09.11.11 at 6:09 pm

“Plus climategate has already shown through leaked emails a concerted effort by U.N scientists to forge , fake and change research to support global warming.”

actually the latest news on that was that the accusation that research was faked was itself based on information that was fake.

#263 Dr. WAYNE on 09.11.11 at 6:19 pm

#185 Cookie Monster … try a mixture of Dexedrine and Effexor … that should fix you up.

#264 penpal on 09.11.11 at 6:21 pm

@ # 228 Killer Chicken

You are absolutely right.

My apologies and I stand corrected.

Thank you for pointing out my error, guess I was just tired.

#265 Ha on 09.11.11 at 6:26 pm


#266 jess on 09.11.11 at 6:26 pm

negative gearing …like that guys laugh

#267 poco on 09.11.11 at 6:30 pm

#250 Stevenson—you said—-
If the Real Estate market doesn’t tank or fall somebody is going to rub it in. On the other hand if it eventually does happen sometime in the future(whenever that is) someone is going to rub it in too.
The question is what are you going now? Sit back, wait, maybe rent and help someone else’s mortgage for however long it takes for this possible bubble to “MAYBE” burst?
Stop complaining about high real estate prices in metropolitans and either make more money or move further away. Unfortunately that is reality. You can’t say people who maxed their debt to buy the most expensive house they can 3 years ago made the wrong move… even if they only put 5% down. What position are they at now and how much wealthier could you “have” been?

Remember– location– location– location–to make an all encompassing statement (as above) regarding the profits being made in the entire Canadian housing market is just plain DUMB…..(if that is what you are insinuating)

Maybe you should seek out these two recent buyers and ask them of the financial gains they have made in the last 2 years –both condos in Coquitlam
V882730–bought aug 09–481.74k—now at 394.9 since may11
V873989–bought june 09–518.8k—was 430k in Mar11 then dropped to 380k in May –now at 369k now
hundreds in the tri cities and outer areas sellng for a lot less than owners paid a few short years ago

That is exactly what i am going to do–pay my rent and wait –not for the “bubble to burst” cause that happened in my area long long ago–when i see properties drop 10k –15k and 20k–no need to rush in –i look at it as living rent free, if you know what i mean

stevenson –come on by –i’ll take you around –show you some of the many properties that are underwater and can not drop their price any more–so they sit and sit with no takers—
or the townhouses i looked at recently 1 down 56k from original asking price–the other down 61k

stevenson–you appear to be one of the last real pumpers on here–realtor?????—i forgive you!!!

#268 penpal on 09.11.11 at 6:37 pm

@ # 226 Moneta

I’m a lot of things, but cheap ain’t one of them.

If you recall, I asked you to clarify what you meant by your original post. Based on what you then wrote, I responded.

I don’t think the idea you wished to convey was presented in the way that you meant it, and now that I read your last response, it is clear that you did not comprehend the meaning I took away from your post.

My reference was to Dick Cheney, Bush’s name was added , in parentheses as well, for clarity so that people could recognize to whom I was comparing you to.

The comparison stands, if in fact you have as callous disregard for human life as your post seemed to indicate.

Let’s not waste anymore bandwidth trying to decipher your original post, shall we. It is pretty obvious to me that is where the miscue started.

You should perhaps be a little more careful how you post, lest it lead someone to believe you hold different beliefs than you attempt to articulate.

#269 penpal on 09.11.11 at 6:41 pm

@ # 222 Junius


Even sadder is what this portends for the average person in the future.

#270 BrianT on 09.11.11 at 6:44 pm

Wow-what the hell happened to Paul Krugman? Is a Ron Paul endorsement next? http://krugman.blogs.nytimes.com/2011/09/11/the-years-of-shame/?smid=tw-NytimesKrugman&seid=auto

#271 Moneta on 09.11.11 at 7:19 pm

penpal on 09.11.11 at 6:37 pm
@ # 226 Moneta

I’ve read enough of your posts to know that we tend to be on the same side so I was quite surprised by your reaction!

Anyway, as time goes on, I’m growing thicker skin.


#272 The InvestorsFriend (Shawn Allen) on 09.11.11 at 7:20 pm

Garth responded to me at 262 saying:

“This is why people do not buy long bonds to hold to maturity. Are you hard of hearing? — Garth”

Garth only a short-term Speculator buys an asset with intention to hold short-term if they think it sucks if held long term.

I won’t hold a bomb in my hand even if it is not set to go off for a year. Why would I?

Frankly, it’s hard to imagine why you would state that “no one” buys long term bonds to hold to maturity. Have you any proof of that whatsoever? Don’t pension funds and insurance companies buy long term bonds to hold to maturity?

Anyhow, I direct my observation that equities appear to offer better long term returns than bonds to long term investors, not to you.

Depsite the rhetoric, there are still some long term investors.

And if stocks and bonds won’t pay off in the long term, then good luck trying to get them to pay off simply by rapid trading with other investors.

Warren Buffett has explained many times, trading stocks and bonds decreases returns to investors as a population. Only the underlying earnings and yields determine the overall long-term return from investments.

If you agree long-term bonds suck long term, I fail to see why any one other than a speculator would hold them short term.

If you just want a place to park money for safety buy short-term stuff, not long term.

Garth, maybe you are just a trader at heart, not an investor at all. Hence your attitude that even houses are meant to buy and sell, rather than to buy for keeps. And that one should uproot and sell his house just because it is over-valued.

I am ending this pointless series of conversations with you. Go and learn that bonds are as capable of yielding capital gains as equities. Then come back. — Garth

#273 Hoof- Hearted on 09.11.11 at 7:21 pm

Sir Garth:

Please..no more stories about parties that lucked out with an RE purchase….have made thousands, even millions , and ask for advice what to do.

Translation : aka they are bragging, cheap,….and should STFU…..stupid is as stupid does.

#274 disciple on 09.11.11 at 7:36 pm

#42 saanichtonian…well played…we are financing our own slavery…
#68 Bubble Boy…waning manufacturing base? Yeah maybe 20 years ago, Mr. Dodge, where have you been? Only 4% of our national economy is manufacturing, and those are official govt numbers, imagine what the piddly figures are in Ontario…do you honestly still take BoC statements seriously? They’re not on your team, if you didn’t know already…

#275 wtf????? on 09.11.11 at 7:48 pm

Garth, I can’t agree that a person with less than seven figures shouldn’t buy individual equities. I started trading stocks over a payphone in the school hallway with my rent money and made seven figures over a period of time.

I would say that building a portfolio of stocks starting with thranches of up to $5000 in each issue towards developing a aquiver of twenty five to thirty five stocks up to the million level….and then branching out. There are plenty of well paid GARP dividend stocks..preferreds and otherwise that allow for both security and growth. Choose exceptional stocks in the five main areas of the economy.

At any age I will always regard risk as an acceptable part of the overall plan…….it is time that is important..not the current state of an individual issue. The macro is never wrong. Gold, resources, oils…..all good bets on the macro……make these 15 to 20% of your portfolio for a higher long term yield of at least 20% over generic ETF’s, preferreds or bonds. Lets not forget inflation is not 2% as the BOC states and you will run out of money listening to the liars in Ottawa.

You said,

“Actually, Mr. Harper raised government spending, turned a surplus into a deficit, increased the size of the civil service, sustained the largest deficit in Canadian history and reversed debt reduction that took place under the previous government. Quite a record for just five years. And not too conservative. — Garth”

Lets not forget that the Liberals only ‘balanced the budget’ by off loading debt and responsibility onto the taxpayers in individual provinces and minor jurisdictions. The Liberal’s created a ‘surplus’ by trebling income taxes in the last years of their de facto dictatorship.

Debt reduction was curtailed at the oppositions insistence while the Cons were in the minority at the beginning of the last ( and present) recession. The idiocy of Keynsian economics was the boondoggle that the Liberal Party shovelled down our throats and we are still mired in a predominatley Liberal appointed civil service.

It will take at least a decade to root those rats out along with the scabrous judiciary who seem hell bent on releasing as many crimianls as possible into the streets while they are sitting pretty in theri appointed seats and telling the rest of us to go to hell.

But I will agree that the Cons pandering to the civil service as a tactic to gain a majority was an unacceptable political tact. The Cons spent far too much of taxpayers money getting elected for sure. I would have preferred the Cons remain true to our Conservative values and simply gone in and fired the entire civil service rats nest.

Your stock strategy may have worked for you, but it is disaster on wheels for most. I hope you were more truthful with the investing story than with statements like this: “The Liberal’s created a ‘surplus’ by trebling income taxes in the last years of their de facto dictatorship.” It was actually the result of reduced spending and maintaining the cash cow GST which they had previously vowed to slaughter. Mr. Harper raised government spending in his first budget and kept on going. His GST reductions guaranteed federal finances would be gutted if any recession hit. It did. Bad gamble, taken for ideological reasons. BTW, the plural of ‘Liberal’ is ‘Liberals.’ I guess you were stock trading in the hallway when they taught apostrophes. — Garth

#276 Nostradamus Le Mad Vlad on 09.11.11 at 8:06 pm

#260 Smoking Man — At least we’re almost one of a kind — question everything and everyone. When five people present five different answers, do basic research and investigation.

Don’t bother with the paid-for and controlled m$m, and conspiracy theories are now accepted as the norm, because the m$m are a bunch of cheating liars.

All else aside, ’tis a byootifool day here! Damn, it’s good to be retired.

#277 Beach Girl on 09.11.11 at 8:10 pm

Poverty is almost impossible to overcome.

Unfortunately, I know many people in this position. Lack of education or just general IQ. A history of poverty, illness, lack of dental care. Mental illness unaddressed.

You always hear of mega millionaires blowing smoke telling everyone how they overcame the impossible. I think most of that is B.S. We are supposed to applaud them. My personal hero was June Callewood. Probably spelled that wrong.

Although I was not born in the lap of luxury, and have attained far more than I could have ever imagined. My immigrant parents rented out every room, closet space what ever. The grandparents fed the boarders, as both parents worked full time. All illegal in Parkdale. I slept in the dining room on a mattress.

But I would never, ever diss the under privileged. There will soon be a lot more of them. I will be there. You can call me a vulture, but I know what life is like. And I am a fair and caring person, most days.

#278 Ron Paul's Ghost on 09.11.11 at 8:24 pm

In the land if the black and white,
The righteous and da loser,
I am the last adress on the cul-de-sac.

I roam among a sea of judges,
With a ship full of labelled nutbars,
Who break surf of the mighty God estate owners

All ahead the mighty island of truth,
Rest in the shades of this fierce fog of lies,
Ayoye the mates scream for land salvation.

To claim an illusion of sanity,
in an abyssmal illusion,
Of wealth and darkness.

I’ve had it. — Garth

#279 The InvestorsFriend (Shawn Allen) on 09.11.11 at 8:35 pm

Garth responded to me at 274, promising to end the conversation.

“I am ending this pointless series of conversations with you. Go and learn that bonds are as capable of yielding capital gains as equities. Then come back. — Garth”

Yeah well, I never even said bonds can’t give a capital gain. Long term bonds have given juicy capital gains for years now.

But those gains are different than stock gains.

A stock can rise in price and stay high and march higher forever. (Though seldom in a straight line). Think Apple. Or how about Berkshire Hataway up from $15 in 1964 to over $100,000 today. Can your bond do that? (Yes and more if it is a perpetual AAA bond and interest rates fall to zero, in which case the bond has infinite value, but real bonds, no)

A bond always comes back to at most par value at maturity.

Capital gains on bonds are simply the cashing in early on the value of the coupons when interest rates fall. But the total dollars of the coupons to be paid is fixed.

Capital gains on equities can reflect lower interest rates as well as higher profits. Profits on companies can rise. Think Apple.

Now go learn some math and don’t be so petty as to block this post. Simply don’t respond to it.

And good luck finding capital gains on a 2% yielding 10-year bond, Do you really think interest rates are headed to 1% for a ten year bond? And note that will give only a 10% capital gain in the unlikely event it happens.

Why turn away from basic math? Read and learn.

#280 45north on 09.11.11 at 8:36 pm

Penpal: replying to my question: “I wonder if the banks know this?”

Of course they do and why would they care?

The terms and conditions of the CMHC insurance will change according to the attitudes and political environment at the time of payment. It’s a question of a bird in the bush. For example posters on this blog give the case of a borrower who skips a payment every year. The effect is to turn a 30 year mortgage into a 35 year mortgage. The same except if the borrower defaults and the bank makes a claim against CMHC. At which point CMHC could argue that the bank did not defend its own interest so the claim is invalid.

My question was of course sarcastic. I think that the banks are keenly aware of their risk and if the trend continues the banks will tighten their mortgage rules.

#281 Sky on 09.11.11 at 8:40 pm

‘This blog has officially submerged beneath the waves of conspiratorial idiocy. I’m going out to play with my dog. He is more balanced.’ — Garth


Yes and no.

No : Where’s the conspiracy? Years ago maybe, but now..no. Sure the globalists meet and plan in secret but their agenda and the results of their policies are right out in the open for anyone to see. Eg. Agenda 21, or the UN’s International Narcotics Control Board which sets the drug policies even for countries who have NOT signed onto their agenda ( Canada is often in doodoo with these people because of its softer stance on cannabis). Sovereignty’s just a word.

More than 2 generations ago prof Carroll Quigley, in an epic tome, spelled out some of the elite’s agenda.



Yes : ‘I’m going out to play with my dog. He is more balanced.’ — Garth…………. No doubt. Dogs are usually always more balanced than people. Why? Because their owners love them. Ours don’t.

It sounds like you have a case of the New World Order Blues. Here’s a pain killer :


#282 jess on 09.11.11 at 8:42 pm

yes, beach girl , why some go to be nurses for dictators

…or how about the church called the Phoenix Goddess Temple police seized evidence showing that “male and female ‘practitioners’ working at the Temple were performing sexual acts in exchange for monetary ‘donations,’ all on the pretense of providing ‘neo tantric’ healing therapies,” Phoenix police said.

#283 Cookie Monster on 09.11.11 at 8:46 pm

Few in the West even believe it possible. There are still places where broken bodies don’t get fixed and nobody gives a damn because they are just too poor to help you anyway.

Cookie seems to think that is a world worth aspiring too. We should embrace financial issues before social cares. It is all about money and tax levels to him.
No Utopia, you can stop twisting what I say. You say “… they are just too poor to help you anyway”. Exactly, in a poor country where everything is consumed and nothing is saved everyone suffers. A wealthy nation means it has savings and capital, production and technology.

Proof you are confused you say “We should embrace financial issues before social cares.” Financial issues ARE social cares. Economics is social science. Gawd!

Like I said earlier, you liberals are all hearts and no brains.

#284 Utopia on 09.11.11 at 9:25 pm

Going to be a freeze on Wednesday. Minus 2 possible. That is it for the tomato season. Damn. I could always bring them in for a night or two but there is no fighting the inevitable. Winter is coming.

#285 penpal on 09.11.11 at 9:27 pm

@ #282 45 north

I respectfully disagree with your conclusion(s).

The CMHC may win a few cases (after many years of being tied up in court by the absolutey richest corporation sin the country, i.e. chartered banks) based on the fact that their employees did not vet ( do due diligence on) some mortgage customers.

My bet is legal actions will involve only the truly egregious examples, but there will be no mass “put” back to the banks, as they would be too ‘ruthless’ in enforcing their claims to be palatable to the bleeding heart politicians.

No, taxpayers will eat the losses, but not before the Feds or CMHC tries to prop up prices by granting special “assistance” for homeloaners.

This, of course, will just add to the total bill we will eventually pay for this “inclusive” policy of ‘everybody gets a house , even if they can’t afford it’ nonsense.

This decade should be a doozy!

#286 NAGA on 09.11.11 at 9:44 pm

Garth – good posts – after reading your posts for a few weeks I think you have finally come through with a prediction on future economic scenario. You have chosen to go with deflation and you now accept that interest rates will stay low. Q – in a deflationary world what happens to investment in stocks? Please do not tell me to buy your book.

You have also correctly cautioned individuals not to sell RE for the sake of selling (or because RE will collapse in value?) – but you continue to promote the value of diversification including leveraging (going into debt) to invest in the stock market. I think that this could be dangerous. Diversification is not the way to build wealth but it is a sure way to keep advisors happy.

So this is my prediction on the scenario and interest rates – We will see interest rates continue to stay low (even possibly going down in the short term) until sometime between 2014 and 2016 – then very likely will rise but only if inflation takes off. During this period we will see a scenario of stagflation – with food, taxes and others fees going up while real wages, real estate and the stock market staying flat or even dropping from current levels.

So what is one to do for investments? My recommendation is for people to do what they are most confortable with and nothing wrong with paying down debt or saving for moving strategically when opportunities present themselves.

Personally I understand real estate and I will be looking for opportunities in Mississauga, Toronto close to GO or TTC. In Mississauga if I can find a SFH on a 50ft lot in the $450K range I will be buying to rent for approx $2000.00/month. They do not make any more of these and there are many bungalows in older neighbourhoods close to GO line with older folks that will be selling during a period when RE prices will be soft. I will put 20% or 25% and 15 to 20 years I am very sure that I will be in good shape as far as return on my investment goes – easly 6%/year or higher. Yes this will mean doing some sweating once in a while to do maintenance on the property….but it pays rather than to pay for a health fitness membership….I will wait for the property, location and price as I trust it will come.

I have been trying to verify some data – if you can comment on this much appreciated:

1. % of Canadian families owning homes approx 70%;
2. % of new home buyers going in with low down payment I think it is appeox 40% – also some investors);
3. % of Canadians with no mortgage – I think it is around 45% to 50%;
4. Of the # of Canadians that own their home how many also own rentals as investments – I have no idea – but I think it is a pretty good #;
5. How many Canadians also own second recreational properties?

The point of all this is that I think a small percent of owners have big debts and therefore the major risk to their wealth if it is tied up in RE is if they loose their jobs – so I do not buy the theory that RE will collapse in Canada. But I do not really care abaut Canada as RE is local – as long as I am right about the GTA or even the western portion – Etobicoke and Mississauga. In both of these areas in good hoods SFH (forget Condos) will do just fine albeit prices may soften in the short term.

If I do not buy – I’ll have to take an extra vacation or two per year….renters will continue to look good in the short term but in the long run they are the real loosers – but if they are happy loosers good for them.