Too much love

Some days ago, bleeding-heart helicopter parents accused me of insufferable insouciance over throwing grown children out of the house. They should, I said, launch. Strikes me no healthy adult in their twenties deserves suckling, or that sheltering your offspring from financial reality is useful. In fact, it could breed a self-absorbed social monster who thinks they should go from mom’s house to their own house – but with nicer counter tops.

Of course, I was pilloried for this. There are way more cloying parents than I thought possible. Scads of them think they’re doing kids some kind of favour by shielding them from rent, transitional poverty, budgeting, failure, want and the qualities this engenders. Like self-reliance, ingenuity and confidence. Not to mention smarts.

In fact I fear for the new army of basement-dwelling, under-employed, higher-educated, coddled children who are waiting for those $90,000 jobs and sexy downtown condos. When they finally stagger out on their own, they may find that momsy just squished half a dozen of the best years of their lives.

But whadda I know? I moved out at 18, married at 20 and built a house at 23 with a 12% mortgage. In between, my bride and I lived with bugs, ate KD and learned how to get by on nothing. It was filled with desire for something better, and gave us a base line of expectations for life.

But this post is not about idiot parents and their entitlement brats. I’m far too sensitive and empathetic to delve into such things. Instead it’s about financial illiteracy, now an epidemic. Especially among the brats.

I mentioned my first mortgage was 12%. After that we felt blessed to buy other properties and get a little less than 10%. Thank god we didn’t  have to renew when they spiked north of 20%, and even when we bought a house in Ottawa after I was elected in the late Eighties, the loan was at 14%.

Over the course of the last 20 years the average five-year mortgage has been 8.2% – a fact which helped keep mortgage debt under control, since borrowing cost so damn much. That, in turn, kept real estate more or less affordable – provided you could cough up a down payment equal to a fifth of what you were paying.

As you know, mortgages are now 3% or less. Mortgage debt has soared to $1 trillion and the average family in Toronto, Calgary or Vancouver can hardly afford the average home, even at 3%. That’s because over-borrowing allowed over-spending, so real estate values have soared even when incomes did not.

In other words, there’s a straight-line connection between cheap money and expensive houses. Most new buyers in the last five years cannot even dream of paying off their loans. Worse, it seems a startling number think 3% mortgages and normal and will last forever.

So, Manulife threw out some numbers this week. About 35% of people between the ages of 30 and 39 (you’d think they would know better) believe today’s rates “are average or relatively high.” In this group, half said they’d be free of debt by age 50. But in the same survey, 80% of people between 50 and 60 said they were indebted.

What does this mean?

Simple. Young borrowers probably have no idea how easy it is to borrow and how hard to repay. Many have been lulled into thinking of debt as just a tool to get what they’re entitled to – like a house. They lack the financial literacy to understand real estate has never cost more, and money’s never been so cheap. Or to expect that both will revert to the mean – over time houses will fall and rates will rise.

It could mean there are tens, or hundreds, of thousands of people who will find it impossible to service their debts if rates normalize (and they will).

Most significantly, it means kids hopped up preapprovals, waging bidding wars like they were video games, driving valuations higher just because some irresponsible banker game them a pile of it (plus a cash-back bribe) have helped render housing unaffordable. For everyone. And the trip back down will be painful.

The last major real estate correction in Canada’s largest market occurred in 1990. Prices plunged after hitting an historic high. Today’s 30-year-old was nine. If he missed reading the financial pages for a few days, I guess I can excuse that. But his parents were living through it, coping, learning from their mistakes.

The greatest parental gift is not a cloister, but knowledge. And a timely boot in the ass.

 

256 comments ↓

#1 Hoof - Hearted on 09.12.11 at 9:53 pm

Phyyyrrrzzztt !

#2 Devore on 09.12.11 at 9:54 pm

There were many mistakes I made early in my life that taught me valuable lessons. I was, in fact, already taught those lessons, but have not learned them. That I was just starting out meant they were cheap lessons, and that I was young meant the damage was easily repairable.

This applies to more than just finances ;)

So, parents, stop coddling your children, or they will grow up to continue being children, regardless of what their ID says.

#3 rosie on 09.12.11 at 9:54 pm

Amen to that.

#4 T.O. Bubble Boy on 09.12.11 at 9:55 pm

Generation Debt (the Xs and Ys) feel that they know more about finance because:
A) They can logon to their online brokerage vs. picking up the phone
B) They can use the ATM vs. talking to [email protected]
C) They can play with the fancy charts on Google Finance

Too bad those ATMs might be part of the problem, since they now advertise Debt products:
http://www.thespec.com/news/business/article/585524–banks-reaching-out

#5 Rainbird on 09.12.11 at 9:56 pm

“thousands of people who will find it impossible to service their debts if rates normalize (and they will).” – Garth.

I don’t find this statement very convincing because there is nothing on the horizon that indicates that the rates will normalize – nothing. This is an empty statement.

On the contrary people are willing to purchase US Treasuries at zero interest – just to preserve their principal. The bond market is crazy – it seems they are happy with zero interest – as long as the know they will get the principle some day.

The paper money seems to be flowing out of Governments like water – and it’s hurting those on fixed income the most.

#6 Raincouver on 09.12.11 at 9:57 pm

lets see borrow and pay for 30 years by the time your 60 you have paid it off, and if its worthless, YOU LOSE:) and the prize for that no money saved, no retirement, and a life of SHIT. Thanks for the low interest.

#7 Nice on 09.12.11 at 9:58 pm

First

#8 Jim Sinclair on 09.12.11 at 9:59 pm

could I be second?

#9 CyberNick on 09.12.11 at 10:00 pm

Thank you Mr. Turner, well said!

– Nick

#10 U-The Man on 09.12.11 at 10:00 pm

Garth you are so right!
Thanks for your insight.

#11 LH on 09.12.11 at 10:01 pm

Repaying debt is easy. Just save 90% of your after-tax income like me. Don’t eat out. Don’t own a car. Rent your personal home. Live way below your means.

Oh, and it helps to have cheap-as-possible VRM’s (e.g. P-0.9 or better). A mid-six figure salary also helps. Another half decade of wage slavedom at this rate and i’ll be free!

#12 Keeping the Faith on 09.12.11 at 10:03 pm

Garth,
Once again you knocked it out of the park.
I’m in my late 30’s and everyone I know either 10 years older or 10 years younger, wouldn’t know an average interest rate if it hit them upside the head.

Most of them would know: the first names of at least 2 of the the Kardashians, who was on dancing with the stars last season or where to buy the trendiest childrens clothes/toys.
It’s all very sad.
My generation has been shielded from so many experiences that should make them adults. Parents that coddle and society that encourages it. Tough experiences in life are invaluable and those parents that think they are helping their offspring by supporting them financially into their adulthood are delusional. Launch them and get a dog. The dog will appreciate you more anyway.

#13 Mr. Lahey, Trailer Park Supervisor on 09.12.11 at 10:04 pm

Hey if we are going to brag about what interest rate one paid for their first mortgage then let me throw my two cents worth in the fray. 14.5% in 1990. I read at the time, in the Toronto Sun of all places, that rates would be 5.5% in 1993. So I went short term and voila, in 1993 my rate was indeed 5.5%. Funny to note that the sheeple haven’t really changed. I advised my cousin at the time of the looming drop in rates, citing the article that I had read and figured that Lloyd Atkinson, chief economist for the Bank of Montreal knew what he was talking about. But just as today, readers of this blog have been frustrated as they warned family members and friends about buying into this lunacy, my cousin scoffed at a 5.5% rate and locked in 12% for five years. Some things never change. I was mortgage free in Toronto at the age of 29. And no, I wasn’t living in a trailer…

#14 martin on 09.12.11 at 10:06 pm

great post!! that’s why the new generation is screwed and will be working til the day they die

#15 HouseBuster on 09.12.11 at 10:08 pm

You know parents and can help their kids and educate them at the same time.

Letting them stay home through university and save money and keep them out of debt of tens of thousands of dollars is a great help.

#16 Snowboid on 09.12.11 at 10:08 pm

It amazes me how many people don’t have a budget plan or keep track of income and expenses.

Many of them don’t care because they transfer the credit card debt (used to autopay bills) to the line of credit. It is obvious some of them no longer have any equity in their homes.

One can only provide advice, but I fear most of them will soon recognize how painful the trip down will be.

About a year ago I spent 6+ hours with a close relative setting up spreadsheets and an open-source accounting package for them. I asked a few weeks ago how things were going, got the ‘shrug’, then an admission they hadn’t used the software since I set it up for them.

They were bleeding about $ 1500 a month back then, and that was on two incomes – now they only have one.

At least our children picked up some of our attention to detail, although one still refuses to believe RE prices will go down!

#17 dosouth on 09.12.11 at 10:08 pm

Amen!

#18 Elmer on 09.12.11 at 10:09 pm

Maybe young people wouldn’t have it so tough if it weren’t for all the old geezers who refuse to retire thus making less jobs available for new grads. Maybe houses in Toronto wouldn’t be so expensive if all the old farts would move to a small town or to Florida instead of taking up valuable space in the GTA. Walking around my neighborhood, about 90% of the people I see are old. What are they still doing here? I’m sick of all the old boomers sitting in their mansions and wagging their fingers at young people, when in fact they’re the cause of all our problems.

That was amazing — Garth

#19 john m on 09.12.11 at 10:10 pm

Great post Garth and oh so true………………lmao at the picture :-)

#20 Smoking Man on 09.12.11 at 10:11 pm

Entering uncharted waters.

Time for some Floyd. Waters and the boys always show me the way……………….

Garth I need your help. At the end of my sermon……

Side note…..I just figured out the pic from yesterdays post, I hurt myself laughing. I always miss the obvious….too focused on the puzzle…. Weather real or imaged who the hell knows…

Since Feb 20 2009 I have been a bull on real estate and stocks. Ya I called the meltdown in 2008, then the buy back in Feb 2009, all on the globe and mail, and have been posting here mini trends long term trends with super human accuracy down to the minute.

Truth is been watching world developments closely, been watching how govt’s are reacting to events. Same way I use economic news, not for the content it’s always agenda driven. but to gage and weight how markets react to that news then make my bets.

Any one catch the false rumor about China buying Italian Bonds this aft, market surged till the a few saps at a hedge funds doing all the buying realized they were the only ones swallowing the big rumor.

Looking at Egypt, Greece Turkey and a big power country and my scenarios for outcomes are troubling. I am going to be forced to choose sides in the future. Choose wrong your done.
( At this point Smoking Man’s The Fans say—-“Not in Canada smoking man? stop abusing stuff, you are losing it”)

We are at a cross roads. The tax farm slaves world over are broke (Canadian ones just don’t know it yet).

AFTER THE REAL ESTATE COLLAPSE that’s heading our way WHO THE HELL WILL PAY FOR THE USELESS BOOMERS? THE KIDS THAT WE DON’T ALLOW TO MAKE SQUAT$$?

This frustration is building, it’s concealed, but power knows, power thinks it knows what to do and is making plans. The main share holders of some 200 companies have all the poker chips and they have lots, bonds too, in fact soon they will be paying to own them. FEMA camps in THE USA are real my cuz is making a killing supplying em..

IN CANADA TERROR LAWS ARE BEING RESURRECTED.

WHY?

THE SAD TRUTH IS POWER IS NOT AFRAID OF FEW BROWN PEOPLE IN CAVES TAKING OUT A FEW LOCAL TAX FARM SLAVES.

THEY ARE AFRAID OF THE TAX FARM SLAVES CHANGING THE RULES OF THE GAME AND COMING FOR THEIR HEADS. AND THE TERROR LAWS ENABLE THEM TO BUY A BIT MORE TIME.

WIKILEAKS, GOOGLE, FACEBOOK ARE ALL SURVEILLANCE TOOLS SERVING POWER. (SM 2011)

Power as history proves will not go quietly into the night, “here is your money back slaves lets be friends and start a new game”. Historical speaking it never ends that way. Ask Hosni….in 5 months he went from being god to maybe a hanging. Madam Attwa said let them eat cake only to briefly stare at her blood pumping neck from the bucket.

Now here in the west after a few generations of inbred arrogance, the offspring of founding power think they have it all figured out, they never made it by then selves, it was handed to them. They don’t know squat.

THEY DON’T KNOW THAT EVERY ONCE IN A WHILE YOU GOT LAY DOWN A FEW WINNING HANDS JUST TO KEEP THE GAME ALIVE A LITTLE LONGER….(SM 2011)

This is the last political psc I will do…

Garth if I have too much to drink, or smoke and I go down this road again, please don’t post it…(It’s getting dangerous you just don’t know it yet grass hopper)

You have saved my ass a few times with your delete button….You are a good man……Who in my option has the math and the facts but has no idea of the herd or mob…sorry brother………

I know you think I am nuts and I probably am but please accommodate me on this one.

Thanks, I will keep contributing and making this blog a bit more fun with all the other crazy people who post here.

My wash room experience was hilarious you should have posted it. Pissed me off………

Smoking Man (the man that knew too much, so much so that I have know idea how to shelter my millions when the rules change.)

How the hell could GW Bush (is he really that stupid) attend that event yesterday……Bloody……Nerve… and …Sick……… at leased Chaney had enough sense to stay away.

Ahhhhhhh As he blows out smoke rings listening to ( I have be come comfortably numb…………………………….)

Ps started writing the post stone cold sober, by the time I got to this line f-en wasted……..I love life… I type slow……………….Listening to Cohen’s Hallelujah CRANKED alone in my man cave………………………………..

Crazy Diamonds is next, while watching the harvest moon, wish you where here kids………………

#21 Peter B on 09.12.11 at 10:12 pm

I remember when I was in High School I had saved up $4000 and put them in Canada saving bond for a double digit return.

If I knew then what I did now I would have bought bonds that mature in 30 years. I can’t do the math because that would be just too sad.

#22 LH on 09.12.11 at 10:15 pm

By the way, I am in my mid 20s, yet I DO remember how high interest rates were in the early 1990s. My parents took me to the bank often on errands. I DO remember how cheap houses were in the mid to late 1990s (think 1/4 current prices in some areas).

There are many fools in my generation but that doesn’t mean that all of us are doomed to serfdom (e.g. lifetime debt burden)

If interest rates are raised substantially this time around, there will be blood in the strasse. My generation can’t afford even a 1-2% increase in rates. Carney knows this. That’s why the regulators are trying to reign in borrowing through tighter (but still too-loose) standards. Even the banks are playing their role by making VRM’s more expensive these past few weeks.

I’m counting on rates to stay low forever, but that doesn’t mean that house prices won’t fall.. just look at Japan. A long and ugly grind of disinflation awaits us all…

#23 Dan in Victoria on 09.12.11 at 10:16 pm

Just when I thought you were getting soft……
A good boot in the ass works wonders.
And a little tough luck will straighten them back up.

#24 Jack the Land on 09.12.11 at 10:18 pm

Garth,

You forgot to mention the part where you had to walk to and from school in 6 feet of snow… everyday… and it was uphill both ways.

If I’d only had shoes… — Garth

#25 Mr. Lee on 09.12.11 at 10:18 pm

I am 41, and in 1981 this eleven year old was treated to the econmic realites of the first great ression of my live, the NEP, 20% interest rates and 5% inflation (calculated the old way and not the subsitution method employed today)

My dad being in the oil patch of Alberta was “down sized” we lost the house but not our home. My parents taught my why this happed and ever since that lesson has stuck with me. All debts must be re-paid, assets go up and down in value, and equtiy/liguidity is better than debt and illiquid assets.

Perhaps this is a lesson the needs to be learnt again, and with what is going on in the world of economics and finance, perhaps it will. One thing is for sure, that the mantra of, “it can’t happen here.” will become a painful memory for many.

Good Luck

#26 Steven Shaw on 09.12.11 at 10:18 pm

In ordinary times I’d agree but these are not ordinary times. House prices are high. Rents are high. Plus food and utilities. Now is the time for people to bunker down, live with family, let spare rooms, share houses. Parents can still teach their kids while they’re living in the house (or have come back for a stay). Plus children can share the cost of living and help pay the parents mortgage by paying some rent.

#27 DM in C on 09.12.11 at 10:19 pm

41 years old, been living on my own since university. Married at 24, kids at 25. First mortgage, oh so long ago, in 1999 @8.25%. On a bungalow for $75k.

Starter home with 1970’s green shag carpet, baby blue kitchen cupboards and rec room basement paneling. Great bones, that one had. We loved it.

I couldn’t imagine the 20 somethings even giving that place a second glance these days.

My boys hear it all the time — save and invest, debt is a prison, a house is not a home. A trade is useful and you can go where the jobs are.

Your family makes it a home. And you don’t pay $400 large for a particle board mcmansion with a 10 foot ease way where you can pass a beer to your neighbor.

Oh, and there is no shame in renting. I’m a VP for my company, and I didn’t get there by being stupid.

#28 Mr. Lee on 09.12.11 at 10:25 pm

One more thing please, one does not get rich by following the trend of the herd. How many more times do people have to learn this.

#29 Gord In Vancouver on 09.12.11 at 10:25 pm

Angry Rich Asians?

Over 75 Kerrisdale properties contaminated with gas: Shell

http://www.news1130.com/news/local/article/276673–over-75-kerrisdale-properties-contaminated-with-gas-shell

#30 Link to your sources on 09.12.11 at 10:26 pm

Garth

You should start posting links to the reports you cite or at least give us the title so we can find it ourselves.

Your blog is great, but nothing beats reading and forming one’s own conclusions.

I just Googled ‘Manulife survey Sept12’ and got it in one second. That’s less time that it took you to ask me. — Garth

#31 Diane on 09.12.11 at 10:27 pm

Hear Hear.

But have faith in us young people. I rent, and save my pennies.

What really struck me a couple years ago was my previously landlord telling me I only covered about 1/2 the mortgage payment. Yes, I live in Vancouver, but that’s ridiculous. Why did he buy to “invest in rental property”, only to get a negative cash flow?

#32 Romeo Jordan on 09.12.11 at 10:29 pm

Smoking Man

Scary. I agree with much.

#33 OttawaMike on 09.12.11 at 10:30 pm

One of the better pics from the stock photo vault.

” I moved out at 18, married at 20 and built a house at 23 with a 12% mortgage. ”

Pretty close to my story, out at 18, married at 21, 1st house at 24 with a 12% mortgage in ’85. The mickey mouse trust company gave us 500$ cash to take out a mortgage with them.

Divorce changed things for me though and turned my life back about 25 years financially.(in inflation adjusted figures)

#34 OttawaMike on 09.12.11 at 10:35 pm

#125 detalumis on 09.12.11 at 6:59 pm
As I posted, I’m no huge fan of the existing health care model. In the interest of brevity I didn’t expand.

Mainly because of the issue you raised. I recently went through the same ordeal for something that turned out to be benign. The delays were unacceptable but you really must be your own advocate even in the US system.

#35 Don on 09.12.11 at 10:39 pm

I’m with Mr. Lee

But I was ten at the time. Less we forget. And to all those generation bashers – stupidity transcends all generations as well as common sense.

Good to help the children through University by letting them stay at home and not rack up so much debt. But then you are on your own with the appropriate common sense guidance from your family.

#36 Moose on 09.12.11 at 10:47 pm

In 1990 I was 9 … What caused the crash in 90’s ? what were rates like then? Seems like there has to be a perfect storm for a housing correction to occur? I wonder if the massive govnt debts will kept interest rates low 4 eva?

#37 Shaun on 09.12.11 at 10:49 pm

Hey Garth. Great piece. I find it crazy how people my age don’t think twice about spending money as soon as they get it. I was talking to someone in their late 20’s who was complaining about bank fees at the ATM. I told him that some credit unions don’t charge fees as long as you have $1000 in your account. He said he rarely has $1000 in his account, while we were both having steak and a few drinks at Earls…

Another example was at a wedding prep course, one of the questions was “what would you do if you got $200 today”. Me and my fiancee were both like “just add it to the savings” while everyone else were talking about vacations.

Smoking man, I’ve been reading your stuff for a while (including G&M) and you have been right 95% of the time (still remember your call on IP which went up 500 or 600%). However, you’ve been getting really stressed out lately. I know it might be hard to shut the mind off from time to time, but maybe just focus on you, your trading and hobby’s for a while and forget about internet privacy. Unless you’re planning on leading a resistance, it’s out of your control. Not worth losing sleep over it.

#38 nonplused on 09.12.11 at 10:50 pm

Rates aren’t going up anytime soon. But alas, they will one day.

I wonder what the mortgage market looks like in Greece these days. Is the 2 year variable rate 60% like the bond market?

Over at chpc.biz he is reporting that sales and prices were off in most Canadian markets in August. Looks like it’s just seasonal to me but even Shamcouver had a slight drop. At least it’s not hockey season.

#39 squidly77 on 09.12.11 at 10:56 pm

Great post, like you I was out the door in my teens and married by 21, but there was no house purchase for us. Nope it was 7 years in a rental basement suite for us. It took me nearly all of that to save the $18,000 down payment that was required to buy a house.

Parents that allow there kids to live at home when they are in there twenties are doing a great disservice to their kids (unless they are furthering their education). These parents are too reliant on needing to keep their adult offspring children. At twenty its baby making time, every failed attempt felt like a victory to me, as I knew my wife would want to keep trying. And trying.

#40 Island girl on 09.12.11 at 10:57 pm

I am one of those mid thirty people and I have to totally agree with you. I moved out at 17 for university, moved home after flunking out the first year. Lived at home for about 4 months before deciding that I needed to get out on my own. Rented an apartment smaller then my parents bedroom. And now I’m a parent of two little ones. Will I let them live at home while they go to school, yes, but will it be rent and responsibility free? Not a chance, easy life creates lazy people. The only way they will learn how to budget is by being made to do it. A child living at home while they work means an extra income for me in the form of rent. Parents that don’t force their kids to realize that they can’t have everything they want are robbing their offspring of valuable lessons. I know I’m in the minority and most of my generation is living with it’s head in the sand.

#41 Markey on 09.12.11 at 10:59 pm

Right on Garth! A dear friend of mine has three entitled young princes in their mid to late twenties. They can’t be bothered to contact their parents – even to return phone calls – except when they are looking for a hand-out. My friend wonders why. Yet the parents and grandparents fall over each other to lavish the lads with expensive toys worth hundreds or even thousands of dollars, vacations and, yes, real estate down payments. These kids never had to earn anything for themselves. I believe they have been crippled by all this “love”. The entitlement generation is a monster created by my generation (the 50 somethings).

Thank goodness my own young adult daughter is loving, respectful, independent and self-sufficient. She knows how to budget and to delay gratification. As a teenager she had to earn at least part of the cost of expensive items by babysitting or undertaking paid chores for neighbours because I was a single parent and couldn’t afford to do otherwise.

#42 squidly77 on 09.12.11 at 11:02 pm

Last year’s floods in Pakistan were the worst in the country’s history, covering some 20% of the entire country, leaving millions of people homeless. This year’s floods are not as bad, but the torrential rains have already left 200 dead and affected hundreds of thousands of people. The U.S. on Monday sent food and medical aid to Pakistan for flood victims. Food aid is targeted at nearly 350,000 Pakistanis, while Washington hopes the medical assistance can reach “about 500,000.” US sends aid to Pakistan flood victims

When government does not help its own citizens, even a hostile one the U.S.A. is always ready to help.

#43 Tim on 09.12.11 at 11:03 pm

the Fed has pledged to keep rates low for at least two years, so rates will likely stay low for the forseable future, they have been low now since about 2000, lucky for those who have mortgages, they’re getting a hell of a break

Not in Canada. — Garth

#44 Utopia on 09.12.11 at 11:05 pm

#127 Beach Girl said…….

“Sorry. Nite, nite, the Jack Russell and I are exhausted. Sleepy times”.
—————————————————–

It is Jack Daniels dammit.!!

Stop confusing everyone with the the whole “Russel” thing. The thirsty people are both confused and upset by your strange wording.

#45 Not Fooled By Property Spruikers Hype on 09.12.11 at 11:08 pm

Garth

A great site your readers might be interested in going to to understand what truly drover prices up.

Easy to understand & follow.

http://www.khanacademy.org/video/the-housing-price-conundrum?playlist=Credit%20Crisis

(You might wish to also write up what he says so people can understand?)

#46 Not Fooled By Property Spruikers Hype on 09.12.11 at 11:09 pm

Dooh!!!

That should read “Drove” … :-)

#47 nocte_volens on 09.12.11 at 11:11 pm

#18 Elmer

Obviously it’s all about you. Your sense of entitlement is amazing.

#48 The InvestorsFriend (Shawn Allen) on 09.12.11 at 11:13 pm

FINANCIAL ILLITERATES AND OVER-ENTITLED

I totally agree with Garth.

Look how many people bash the banks and view ANY interest rate level as some kind of “usury”.

People don’t stop to think that the money they borrow represents the savings of someone. How cool is that so many geezers have money to lend that you can borrow their money for a paltry 3%? (not cool for the geezers, who only get maybe 1% of that while the bank gets 2% for itstroubles and costs).

And no, banks don’t print money in their basements. They borrow it from their depositors. For example Canadian Western bank at page 12 of its Q3 report indicates that it sources 59% of its deposits from its branches and gets the rest from people buying GICs from a network of brokers.

Canadian Western Bank makes a “spread” of 2.8% (before costs) as the difference between what they pay theuir deposiotrs and what they lend money out at.

It’s stunning that many people will disagree with this and have bought into the fairy tale that banks are ripping them off lending out money they created out of thin air.

(Yes banks as a group TOGETHER with their ciustomers do create money, but that money is ownded by depositors not the bank. If a bank lends out money at 5% and it ends up deposited back in another bank at 2%. Well that is how it works but their is nothing nefarious about it.)

If you think banks are ripping you off, borrow some money from them at 3% and buy their shares!

The point is many people are indeed illiterate about banking.

People also are quick to blame their problems on others.

Canada is a land of opportunity. Go out and get it.

#49 cata on 09.12.11 at 11:14 pm

If people were paying 4 times higher interests in the 80’s….and they survive, people will survive paying more expensive homes and lower interest. House prices will freeze, I have told this for the last couple of years!

#50 Bottoms_Up on 09.12.11 at 11:28 pm

#40 Island girl on 09.12.11 at 10:57 pm
————————————–
Yep, being out on my own at a young age definitely helped me mature and taught me valuable lessons.

I lived with various people over a decade (to save on rent) and I learned that everyone’s different and people have their own way of doing things and there’s nothing wrong with that.

I hated having to cook meals, do dishes, laundry, pay bills, deal with utilities/internet companies etc. but it made me accountable for my own life.

And as Garth said, it was all a huge confidence booster.

#51 bill c on 09.12.11 at 11:30 pm

Well Garth it looks like the real estate bubble is about to burst big time. I hope your happy that millions will lose a lot of money. I dont think you should rub it in that you were right. Its about to get real ugly this fall. There is bigger trouble than even you knew. A lot of people will lose more tahn ever imagined. Low interest rates will not help. We are beyond that.

#52 debtified on 09.12.11 at 11:32 pm

Left home against my father’s will at 17. The best decision I have ever made was to stop depending on my parents for money when I turned 18. Those parents who think they are doing their kids a favour by sheltering them long after they’ve become adults are doing the same kids a disservice.

#53 T.O. Bubble Boy on 09.12.11 at 11:39 pm

@ #31 Diane

What really struck me a couple years ago was my previously landlord telling me I only covered about 1/2 the mortgage payment. Yes, I live in Vancouver, but that’s ridiculous. Why did he buy to “invest in rental property”, only to get a negative cash flow?

It’s called “Negative Gearing”, and is extremely popular in Australia and in certain parts of Canada (like Vancouver and Toronto – with all of the rental suites). Losing money year after year in hopes of making it all back in equity gains is a crazy strategy, but still makes more financial sense than buying an “income property” only to leave it EMPTY and hope for equity gains (a common practice in China right now, and even for many condo purchases in Toronto).

#54 KH on 09.12.11 at 11:39 pm

“The last major real estate correction in Canada’s largest market occurred in 1990. Prices plunged after hitting an historic high. Today’s 30-year-old was nine. If he missed reading the financial pages for a few days, I guess I can excuse that. But his parents were living through it, coping, learning from their mistakes.”

My parents lost their house in the 1990 correction and resorted to renting a house for a fraction of what their mortgage had been in order to save money for about 10 years at which point they then hopped back into the market when things were more affordable again (and used every last penny for the downpayment). Oddly enough though, at 35 years old, I am being judged by them for being a renter and not buying right now at extraordinary prices (in Vancouver of all places). I’m not the only one amongst my peers whose parents have this attitude…didn’t learn from their mistakes at all unfortunately.

#55 Soylent Green is People on 09.12.11 at 11:43 pm

Seriously I don’t have an issue with kids living with their parents. Rent is high and the tuition ponzi scheme leaves with with what choice?

And it doesn’t matter if that nine year old was reading newspapers in 1990. Even then it was all sunshine being blown all the time. You would never read it was a bad time to buy in any newspaper or on any t.f.

Newspaper and t.v. – the very worse place to get any real news.

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#56 P F Murphy on 09.12.11 at 11:46 pm

I’ve rarely heard such anti-social rhetoric, but I guess we should remember that Garth was a member of the Harper Conservatives and, as such, being a social misfit comes with the territory. This prate sounds like a bank advertisement of “Kick your kids out so they ‘ll start getting loans young and we can make a pot of money from them and, oh yeah, they’ll learn the value of a dollar by having none!” This is economic stupidity! If our kids were all lippy, opinionated boors, then that would surely be a reason to ask them to leave, but to ask them to leave to teach them the value of a dollar, you have to have missed Parenting 101 and be shouting economic baffle-gab at them. Wise up, boyo, you’ve still got some growing up to do!

Too bad you could not spit out your point without belittling he who holds an opposing view. You lose. — Garth

#57 walter safety on 09.12.11 at 11:51 pm

There called a teaching moment when your kids are young .Like buying them a snow shovel for Christmas and sending them out in the cold to make money.Then they find its not a bad feeling .That’s when it becomes a learning moment .Teaching and learning are not the same thing ,you learn when your emotionally involved.
When you tell your 24 year old “you gotta go” they get emotional involvement real quick.
Years later when you talk about it they thank you .Its not tough love its just the right thing to do .

#58 LJ on 09.12.11 at 11:53 pm

The problem with kicking the kids out is that they are already pretty much pre-approved for one of those monster mortgages and will just add to the problems facing their generation because they know nothing about finances. Heck, while living in their parents basement, they might actually be saving money (a good thing, right), if they were taught the proper strategies and read this blog!

#59 Victoria on 09.12.11 at 11:56 pm

Well put Garth!

and I have 4 monsters!

#60 Victoria on 09.12.11 at 11:57 pm

Baby Boomer parents can’t let go and can’t say no.

#61 Joe on 09.12.11 at 11:58 pm

Hi, I’m Joe and I’m a coddled child.

Hi, Joe.

I can safely say being coddled got me nowhere. I didn’t pay off debt more quickly, but I did get accustomed to a completely unsustainable standard of living due to an unrealistic amount of disposable income, roughly 90% of my income, even after university, even with a government job! My poor husband was left to do the dirty work when I moved from my parents’ nest to his moldy basement apartment with lavender walls and leaky pipes. We tried the “envelope system” and I promptly spent the majority of the budget on clothes. “It’s okay, we’ll just eat cheap this week,” I said. He’s an awfully patient guy. Not blaming my parents for what they did, they were trying to help, but paying for my car, tuition, my phone and rent and utilities when I did live on my own for school didn’t teach me a damn thing. They assumed that I had learned frugality and budgeting somewhere along the way, but they never taught it when I was young and it’s not really an intuitive skill, so I missed the point of the whole exercise. From the age of 5 I plan to ask my children what their budget is before we step into a store with their hard earned money clutched in their tiny fists. That’s right, hard earned. No one gets money for doing nothing. I did and I didn’t learn a damn thing. Some may thing five is a bit young, but it’s something I wish had been done for me.

#62 wtf????? on 09.12.11 at 11:59 pm

The ‘entitlement generation’ has it all wrong……crap is actually good for the soul. I agree with you on that one Garth. I was borrowing millions at 16%+ to slap up BC spec houses into the late eighties and made a bomb doing it….

I was drinking back then….can’t tell you how I felt…..pure adrenalin and booze……risk taking is the juice of life. So many of the kids today have yet to experiance the ‘real thing.’ Sphincter up boyz and girls….I borrowed to make money…you just owe money….world of differance.

BTW….look at CHE.UN…….look deep…..juicy….who says you need an advisor?

#63 Nostradamus Le Mad Vlad on 09.13.11 at 12:03 am


“Of course, I was pilloried for this.” — At least people read the post and vented, one way or the other but there are two sides to every story.

Yes, kids should be out getting some real life experiences, by struggling to make ends meet, learning to live fairly responsibly, etc.

But times now are far removed from the 50s, 60s and 70s, when people could generally move from one job to another in the blink of an eye.

No more. Jobs have gone to Chindia, Brazil, Bangladesh, etc. and wars are prevalent. When kids need help, do parents give the basics of life, or do nothing at all? Circumstances can dictate a moderate outcome.
*
#20 Smoking Man — “. . . Chaney had enough sense to stay away.” — Cheney is too busy with Halliburton and Blackwater, screwing around in other countries to be bothered with US citizens. Great post.
*
Strikes If it happens, this would bring the UK economy to a screeching halt; Huntsman Hosted by Lynn de Rothschild; Mutual Destruction Guess that’s their freedom of choice; Smoking Man, currency revaluations in the MEast. Something’s up! IMF delusional, and Unemployment What are the real figures, incl. hidden? EU Credit Collapse This appears to play right into TPTB’s hands, as it gives them full control of Europe; Greek Tragedy All this has been happening since 9-11. Is there a connection? Signs “So why is Greece so important?” EUCFR China wants a G3 world, which (obviously) doesn’t include Canada.

Politics sure makes for really strange bedfellows; Rough Landing Is this what’s in store for us? Russia and Iran More nuke co-operation; Backfired Not only has the fake War On Terror failed miserably, it has had the opposite effect — turning Muslims into fanatics; Peasants By letting TPTB control us, we have all become peasants.

Canary Islands Remember the ‘quake-o-canoes? Cancer Crocus treatment; Reflections Until the west killed it, Iraq (and Libya) had made great advances in plenty of things; 3:25 clip F-5 tornado, Joplin, Miss., May 22; Sea Salt Ten health benefits; Fire Rainbow Pic of colorful clouds.

#64 604genX on 09.13.11 at 12:09 am

Not only doesn’t the 60-year-old Seattle woman plan to leave her daughters an inheritance when she dies, she’s trying to spend every last dime on herself before she goes.

“My goal is when they carry me away in that box that my bank account is going to say zero,” Willison said. “I’m going to spoil myself now.”

Read more: http://www.vancouversun.com/Boomers+children+count+inheritances/5390839/story.html#ixzz1XnngL5ld

#65 Rich Renter on 09.13.11 at 12:13 am

Geez the old boomers are having a field day today. My granddad used to walk 4 miles either way to school, starting working at 12 and never could afford a brand new car. I took the bus to school, starting working at 19 and bought a brand new car when i was 28, it sucks to be born at the wrong time eh old farts.

#66 Smell The Coffee on 09.13.11 at 12:15 am

True story.

Less than 4 years ago I presented an opportunity to a mixed graduating group of MBA & engineering students at a Canadian university.

I had $2,000,0o0 in private R&D funds fully secured for this project. All I had to do was assemble a qualified team.

After presenting this opportunity (out of which would have come several permanent jobs), I was by some variously:

a) accused of being a capitalist, and oppressing the working stiffs

b) no one would consider working for less than $70K as starters

c) No one wanted to take any risks, they only wanted to understand the perks.

I abandoned any hope for this generation, and every time I see one of these university degrees cited on a prospective job application, I toss it into the trash.

Dear future non-empolyee. You’ve wasted 100 grand on a worthless degree that taught you no skills in getting let alone keeping a job.

I am not your family, and not responsible for your un-merchantable knowledge and vacuous attitudes, and I couldn’t care less about your debt burden.

Now, I usually higher degreed immigrants that energetically want to learn, and they will do anything needed to help me build a business, that as it prospers in turn helps their financial future.

They unlike the current whelps of Snowistan, are very loyal and deserving. I love new Canadians.

#67 Coldlazarus on 09.13.11 at 12:21 am

Great post
Somehow, I thought we baby boomers might raise a generation that would work harder and smarter, appreciative of the largesse afforded them by the rapidly wrinkling boomers.
Apparently not.
Did we let consumerism and amusing ourselves to death (apologies to Neil Postman) get us and the kids as well?
This unfolding mess should keep future sociology historians employed for years.
Oh, and that distant noise you can hear? it’s the kids places like China eating our lunch.

#68 Bill Gable on 09.13.11 at 12:23 am

At 18 / Dad said, well – you best look for place. Your adulthood starts now.
Best thing that ever happened to me. Ate KD – lived in freezing basements – working my up to a small home and well, we worked our fanny off. No Big vacations. Saved, and well – life is better in black.

#69 Sasquatch on 09.13.11 at 12:26 am

Since parents are too scared, stupid, etc to teach their kids basic economics. Perhaps that should become a high school course. provided the kids actually ever go that place.

#70 Mr Buyer on 09.13.11 at 12:29 am

Garth-I would like to see you start out again in the present climate and see where you end up…confidence is all well and fine, but transitional poverty is now a mythical thing that boomers endured for all of about a month after they landed their first job. There was tons of cash and tons of ways to make it when I started out. As I mentioned before, borrowed money is not independence (plug in coddled debtor in all of the places you slagged on spoiled kids in your post). With a hostile economic environment that sees borrowed money from banks aggressively destroying independence and even innovation a new set of character traits have come to the fore those of delusion and denial. My child in grade 1 spends literally hours on her homework daily, not because she can not do it (she does it perfectly). No, in a country of 125 million or so she has to do faster. It is not about churning out layabouts but rather those that can work harder and longer and contribute as little as possible to the onslaught of the money lenders. The more borrowers the more dominant the influence. The family as an enterprise…there is nothing innovative about borrowing money and it is becoming a deadly drain. I think you were emoting a tad. If you do not get what I am saying come to Japan and check it out for yourself….

#71 poco on 09.13.11 at 12:33 am

#116 I’m Stupid
#131 Herb————from last post

with regards to the Charter Arguement concerning “being tried within a reasonable time from the date of the offence”
same thing happened to me here in Port Coquitlam—i was well prepared to present my case but was not allowed to because i failed to notify the Court of my intention to present a “Charter Arguement”–apparently you have to notify them in writing several weeks before the trial date if you intend to do this.

The nice lady Judge explained it all to me–i claimed ignorance of this fact –showed her my pages of notes–which she quickly scanned and asked me “What do you wish to do today ?”
I asked for an adjourment to another day, to which she said–” granted and good luck”
Seven months later, i was back in Court—the Mountie had transferred out of poco—case dismissed—true story

for anyone getting a ticket, the usual time for disputing it is 30 days—-wait til the last day of those thirty before disputing it –those 30 days count towards your defence if using the “to be tried within a reasonable time arguement “

#72 InvestX on 09.13.11 at 12:38 am

#5 Rainbird:
“thousands of people who will find it impossible to service their debts if rates normalize (and they will).” – Garth.

I don’t find this statement very convincing because there is nothing on the horizon that indicates that the rates will normalize – nothing. This is an empty statement.

——————————-

I agree. We were given the expectations that rates would have risen by now.

And what’s to say they can’t can’t stay low for an extended period time as they did in Japan?

Or maybe they will rise at a gradual pace that can be managed, especially when owners have been able to pay down the house during these periods of low rates.

#73 Mr Buyer on 09.13.11 at 12:40 am

All these stories about I moved out when I was two and walked backwards up a hill with no pants on to work 23 hours a day and eat sand until I could BORROW money to buy a house and I am now the man of steel amazed by the marshmallow peons at my feet. Well that borrowing, even then, allowed prices to inflate and for people to get it in their heads that they I can get something for nothing. PS…I left home at 15 and I am still in the process of pulling my head out of my butt…ENTITLED indeed. All these whiny young kids making out like they are entitled to a living wage, even quality health care. Next these lazy asses might get it in their heads to make huge cuts to retirement pensions to maintain their entitled expectations to see a doctor when they have an ear infection. As for entitled and coddled I think it is a case of twinkle twinkle little star what you say is what you are, we boomers were the coddled ones that sent this whole thing into the crapper…

#74 Garths blog rules on 09.13.11 at 12:44 am

We are lucky that a man like Garth would even bother with a blog . Think about it… this man has hung out and worked with the elite of the country. These are the top people in Canada and Garth was/is part of the big boy’s club. I am greatful he throws some of his knowledge at us. Add in some of the others who while not in Garths league are very interesting like smokingman and Nostradamus Le Mad Vlad who provide interest veiw points. Thank-you garth for all your work/wisdom.

#75 Music Fan on 09.13.11 at 12:44 am

“Adults create the world, children live it.
Juvenile delinquency is always rooted in adult delinquency.”

Ministry
“So What”
Released November 1989

Not exactly a new debate. I think James Dean weighed in on this one and the Beat Generation thought they had it all sorted out. My great grandmother agreed with Ministry when I played their album for her in ’90, and she was born in 1890. I suppose that means we’re not going to get anywhere on the nurture vs. launching thing tonight.

I truly wish you were still my MP, although it might mean lobotomizing and muzzling yourself to be a HarperDroid. Is it just me, or is there an eerie similarity between today’s parliament and the school-age cast of The Wall?

It’s probably best that you stick to dispensing well thought-out advice to those of us in the peanut gallery. After all, with the propaganda arm of the govermedia busy doing its thing, someone needs to make a vain effort to help us overcome our hormonal urge to borrow senselessly to buy stuff we don’t need. But if you’re not careful, someone might actually have enough money to retire on or something.

Remember kids: Every Time Garth Gives Advice, A Banker Gets His Wings!

#76 Mr Buyer on 09.13.11 at 12:50 am

I was having a chat with a group of retired Japanese businessmen and I asked them what their earliest memories were. One started off by saying that he remembered B sans coming at night (B17 bombers) and the bombs looking like fireworks and seeing his friend next door’s charred body and the entire city demolished. Another described the earth shaking at kindergarten, splitting open, some kids and a teacher falling in and the earth slamming shut and the entire city demolished. Another went on to describe a massive flood sweeping away their house with their mother in it (this would be hard to imagine but that story has played out again with video now) and the entire city destroyed. All these men have hard working children living at home. All of them. But hey maybe you can teach them a thing or two about the character building aspects of Kraft dinner and the financial reality of borrowing (borrowing by the way is only 1 of many financial realities).

#77 S on 09.13.11 at 12:52 am

I guess we all have to deal with the consequences of our choices. I don’t know about others but my kids daydream of studying dentistry and medicine. Each degree would add up to around $200,000 if cost of living is taken into account. What to do… let them start their lives 200 big ones in debt or help out by letting them live at home while studying and even covering most of the tuition? For me it’s an easy decision, but what do I know… Damn, should have never started them with kumon, music classes and plethora of other activities that deceived them into thinking they could actually aspire that high.

In a Calgary gym I know well there is a slogan posted on the wall. It reads: “Success is a result of a lifetime of correct choices.” Cut your kids off too early and watch how many correct choices they will get a chance to make. These days there are entire industries out there devoted to leading young ones into debt and keeping them there. I think I`ll try to give mine a fighting chance.

#78 Hoof- Hearted on 09.13.11 at 12:55 am

Keiser Report: Peak Everything (E169)

http://www.youtube.com/watch?v…..ure=relmfu

Max is red hot…..one of his best…… IMHO

#79 Bickity boom on 09.13.11 at 1:05 am

Another post from mr. G that proves he fails to give up his own way of thinking.

Why not look at the on going trend with interest rates within the last 5 years? Your teaching people from an expired book that is outdated and misleading in todays world.

#80 Debtfree on 09.13.11 at 1:06 am

@ # 18 gimme your house ,gimme your job .
@ # 30 gimme a link .. gimme gimme gimme .waaaaa waaaa waaaa. You x y ers gimme a break and get your own shit together . Most of us boomers got our own shit together when we were 18 . Now you whiners want ours . Bite me .

#81 Pat on 09.13.11 at 1:12 am

#11 LH wrote:

“Repaying debt is easy. Just save 90% of your after-tax income like me. Don’t eat out. Don’t own a car. Rent your personal home. Live way below your means.”

Why don’t you simply fall into coma – you could be saving 100% of your income?

#82 timo on 09.13.11 at 1:16 am

http://www.arabianmoney.net/islamic-finance/2011/09/13/nakheel-still-7-6bn-in-debt-after-20bn-in-write-offs/

These assets include two abandoned palm-shaped islands, the stalled Waterfront project and the largely empty map of The World picked out in man-made islands.

http://www.economonitor.com/blog/2011/09/the-fate-of-europe-nearing-the-point-of-decision/?utm_source=rss&utm_medium=rss&utm_campaign=the-fate-of-europe-nearing-the-point-of-decision

Despite the critics, Europe does not face economic failure, as the core EMU nations have the capacity to easily support the PIIGS through the restructuring process. And the PIIGS are restructuring fast. The Greeks, Spaniards, and Portuguese have accepted the EU-imposed depression better than many expected (me, too), showing a remarkably high level of social cohesion. I wonder if America could do so well.

It’s not just an European event. Chaos there will echo around the world. Coordination among governments in Europe and globally will be essential to minimize the shocks, but prove impossible to achieve.

#83 Timing is Everything on 09.13.11 at 1:19 am

Did I ever tell you about the time me and wifely lived on KD and wieners for a summer. Good times.

Try tellin’ that to the young people of today….

http://www.youtube.com/watch?v=-eDaSvRO9xA&feature=related

#84 wetcoaster on 09.13.11 at 1:22 am

Listings piling up and sales sucking the big one in Victoria. The inevitable is in motion and the young & dumb, as well as the old and greedy will soon learn a very hard lesson. A major correction is so long overdue it’s ridiculous, just have to look at the crap for sale for $700,000 in below average neighborhoods.

Kicking the kids out is the best thing that could ever happen. I don’t get todays kids, when I was 18 I wanted out on my own to make my stamp on life and do what I want. Too many kids who live in the basement are just wussies who will have issues later on. Grow a pair kids, the umbilical cord was cut for a reason.

#85 Thetruth on 09.13.11 at 1:22 am

#22 LH

Japan has had a declining population for 20 years. Canada is booming population wise!

#86 timo on 09.13.11 at 1:23 am

http://www.ritholtz.com/blog/2011/09/jp-morgan-explains-the-euro-crisis-with-lego/

follow the arrows….

http://michael-hudson.com/2011/09/euro-sos-debate/

interesting debate on Europe

#87 TakingResponsibility on 09.13.11 at 1:31 am

Ahhhhh….sweet, sweet nostalgia!

Such fiction from every generation but I luv hear’n’ all the good ole stories!!

Hope there’s lots of generationist finger-pointin’-walkin’ both ways uphill in a snowstorm- stoopid azz youngun’s- worked my fingers to the bone – for reals stories / comments!!

Gotta’ luv ’em!

#88 Mr Buyer on 09.13.11 at 1:33 am

Duty, to family and country, courage in the face of death and honor, all in a pack of Kraft Dinner…

#89 Samsara on 09.13.11 at 1:46 am

Great post tonight! I’m one of the “lucky” early 30 year olds that managed to stay away from home and learned one or two life lessons.

While I definitely see the majority of young people not taking responsibility for their lives, there does seem to be a movement (albiet a very small one) towards a different style of living. Perhaps more like our grandparents generation. The savers, the DIY’s, etc. My wife and I are trying to learn skills that seemed to be lost on our boomer parent generation: gardening, canning, preserving, making yoghurt, etc. I remember my parents generation doing these things when I was young but something happened…people don’t seem to do these things anymore. Anyways, my wife and I feel much more like our grandparents generation….we plan to do as much for ourselves as we can (and we’re not doomers or hippies).

#90 Aussie Roy on 09.13.11 at 1:47 am

Penpal
Will see if I can get the historical stats off the ABS web site re the value of mortgages taken each year.

We have just had the latest figures released and it shows an increase in mortgage demand. However what is interesting is most of this demand is re-finance. Another sign times are getting tough for the mega mortgage mugs, of course just like most of the world they believe the answer is to take on more debt. What could go wrong house prices never fall, much.

Aussie Update

ABC media watch, part of this weeks episode tells the facsinating story of the power of Advertisers – Real Estate advertisers that is.

http://www.abc.net.au/mediawatch/transcripts/s3315985.htm

More power to the tentants as landlords refuse or can’t afford major repairs on their properties.

http://theage.domain.com.au/real-estate-news/dodgy-landlords-facing-crackdown-20110912-1k5zg.html

Are Aussie Banks close to a “Minsky” moment, no?, perhaps more of a selective Minsky warm up.

http://www.theage.com.au/business/property/bank-blacklist-puts-floor-under-risk-20110911-1k455.html

#91 Jody on 09.13.11 at 1:57 am

Good post Garth. To many parents these days hover over their child never really letting them experience life. It’s high time they sod off. We have become a continent of pussies, geldings, we’ve been fixed. I blame the womens television network, the food network and of course HGTV – the pit of hell itself. It wouldn’t surprise me if half the men out there were wearing their wife’s panties. Men need to become men again. I recommend men visit the art of manliness website.

http://artofmanliness.com/

Men of North America unite, grow back your bollocks.

#92 Bast on 09.13.11 at 2:20 am

Quick question, Garth. How much insurance should the average person carry and what should it be? I’m looking at another $135/mo for $100k of critical illness insurance (47) and that is a lot for me. Thoughts?

#93 GPC on 09.13.11 at 2:29 am

As you have explained Garth, the the BoC does what it has to in order to keep the economy afloat,

It has resulted in exactly what human nature does-exploitation and excess…

I wonder about the banks, and the mortgage brokers and any other shady lender who approve these loans, I only think it must be ignorance and greed otherwise it’s criminal.

Matt Taibbi from RollingStone mag is a favourite of mine, he hammers away at the perpetrators of the subprime debacle, clearly demonstrating that all of them are criminals and must be prosecuted, but of course nothing happens.

Garth, your fundamentals are correct, we all know where this is heading, but I keep getting cut off by F350’s here in Edmonton as I cross the street to catch the bus on the way to my second job.

Oh by the way I rent.

#94 Utopia on 09.13.11 at 3:07 am

Over the past two years that I have been here I have always offered what advice and guidance I knew to the best of my abilities.

I have never promoted any stocks or humped any investments. I have nothing to sell to you. Nothing of real tangible value to offer.

Just ideas and thoughts.

Long before commodities rose so sharply I told you to invest in commodities. I told you why it was a good idea too and in the subsequent months they doubled and tripled in value. You could have made a killing had you listened to that advice then.

Few listened though. Fewer acted.

When Silver prices were still in the gutter I told you to buy Silver. Back up the damn truck I said, even commenting that I was sure it was going to the moon.

It did, in fact. Prices rocketed well beyond the expectations of most analysts. I knew where they were headed of course and my remarks of the day prove it (here and elsewhere).

Just mere days before Silver crashed though, I also told you to get out. “Hurry”, I said. It was urgent. I was proven correct as Silver plummeted off its highs.

On three separate occasions I wrote in to this site and warned of major stock market sell-offs. Every time I was correct. One of those events actually resulted in a record setting market decline over the number of days and had you listened to me then you would have caught a major break (if not a huge buying opportunity).

But nobody listens. You are all too smart. I give up.

When I wrote here that equities would be the preferred choice of investors in the future because those investments represented real worth as opposed to the failing debt obligations of nations and states,…some of you smirked and chastised me.

I suggested corporate bonds as a better alternative to sovereign debt instruments. I warned that the bond market would eventually roll over and while that is still in the future you can be sure it is coming (just wait..you ain’t seen nuthin yet!).

So I also said that no QE3 was coming. Again I was 100% right. I told you that the Fed had recognized that stimulus in that regard was actually causing an outbreak of debilitating inflation and that there would be no QE3 as a result. That the QE’s were actually driving us all back into recession.

I was right again. Many of you still did not get it though. You still believe inflation is coming while home prices deflate and melt all around you.

You swore up and down that a hyperinflation was about to break out. That we were going to be damned by all the so-called money-printing. You thought the USD was headed for oblivion and the world was going to end.

I said “relax, the dollar is heading higher”.

And when the Gold-Huggers and dollar-doomer’s tried to warp my mind with all their distorted logic about why Gold would someday rule the world, I stood almost alone in objecting to the nonsense and tripe spouted by that sorry, sad-sack camp of hyperinflationist’s and panic-people (thanks Garth, for being there and backing me up).

So I got bolder.

I made a real call on the USD. I told you all this past summer that it was in fact headed much higher and that it was going to reach .77 and I even told you why (in detail). Check the record for yourself if you doubt me.

Not one analyst or economist in a hundred made that call without reservations. I did though. And better yet, I did so in absolute confidence because I never doubted my own numbers. I got it right. I will say so quite gladly without the shadow of pride ever getting in my way.

But still, not one person on this site ever gave me credit for any of those moves. I can only assume none of you really paid attention anyway. Too absorbed in your own worlds. Too busy talking to listen or hear.

So I give up. This is a waste of my time.

#95 jjpetes on 09.13.11 at 3:24 am

Garth, As you know, I school you pretty hard when it comes to gold. That and your market timing in RE as its psychology and market tops typically take 5-7 times longer to play out then market bottoms.

But, on this one sir when it comes to the boot in the ass, you sir…are Absolutely Correct! You damn right and I’m a gen x’er to boot. I went through my knocks and I will be mortgage free in 6 more monthly payments. It was tough and I bought within my range, modest, and a solid down payment I saved for. When we upgrade, I will be in a fiscal position to do so (if I am not already).

I absolutely agree we are in for a solid RE correction. I am holding out for a good upgrade in several years yet. For those “parents” who coddled their precious, you destroyed their futures. You did not teach them to hunt but brought food to them at their beckoning. When they go out in the real world, they will be up against very experienced hunters like me who will be secure when I retire and drive by many of my Gen x peers holding signs on the streets.

Its going to be one heckuva time over the next 20 – 30 years, I am prepared because my parents taught me to hunt. Yes I am highly financially literate.

jj

#96 Beach Girl on 09.13.11 at 3:53 am

I also did not spoil the two idiots (offspring). But at 12 years of age each, they decided Daddy was a better option. Not a problemo, sign hard, third copy is yours. I also insisted full custody to be revoked. In case an idiot burned a school down. I have little faith. Teenagers suck and are stupid and ugly.

Oh, I was given visiting rights. Every other weekend, and a Wednesday night. After court I told my young lads, you will be seeing me on the twelfth of NEVER. $800 a month support. I laughed. Good luck with that.

Well now Disney Dad is totally dusted. Is going on welfare. $585 a month. They tell me they hate him. I don’t hate him, he is just a pencil headed geek.

Lighter note. 15 years ago. The judge asked why he was seeking a divorce. He went on and on. The Judge asked me if I had anything to say. I said not really, except he is starting to look like his mother. I got everything. LOL.

I imagine they have little regard for me. But, I am the only one with any money. Life is a bitch. Don’t say it. HAHA.

#97 Jimbo on 09.13.11 at 4:14 am

I’m just so sick of this. We’ve been renting for several years waiting for sanity to return to the markets. We’ve got the cash to buy, mortgage free. But all around us manic crowds with pre-approved mortgages are bidding up house prices higher than we’re willing to spend.

For us, this is REAL money. We earned it. We saved it. We invested wisely and diversely. And, most importantly, we lived well below our means for years and years to accumulate it.

For the mortgage junkies, it’s all just free, instant, meaningless cash that they can use to recklessly bid up real estate prices into the stratosphere.

The US government and Federal Reserve are the true culprits in this artificially low interest rate travesty. The Fed is creating and selling mountains of derivatives (in the form of put options and credit default swaps) to insure US debt instruments, driving yields to zero. But insuring your own debt is FRAUD, and the US is doing it on a massive scale.

Without this fraudulent insurance nobody would be comfortable holding debt in an insolvent nation that pays only a fraction of a percent interest.

#98 C on 09.13.11 at 4:20 am

“Failure to launch kids”

My brother is one, and I think this example is just a forsign of what is to come… read on:

My brother (33) never moved out with my Dad, till my dad died at 65 (just as he started collecting CPP, OAP). Then suddenly, my brother “moved out” as Dad died and had to pay the rent, bills, food and live. My bro is now on his own, his $4500/mo lifestyle (on $2000 mo income) is gone, $400/mo cell phone, $1000/mo eat out food, gone. Quite the adjustment.

Sadly, my Dad never saved up and we learned he was going broke (never said anything to us), I doubt he had enough to live another year supporting them both.

Hopefully someone can learn from this.

Garth is 100% right, move out when you are young, you’ll have a better life if you do.

#99 Mike on 09.13.11 at 5:02 am

When the parents are too old to help, it’s the wrong time to take chances. The kids are just borrowing their inheritance. Like they borrowed everything else.

#100 Live Under Your Means on 09.13.11 at 5:29 am

#4 T.O. Bubble Boy on 09.12.11 at 9:55 pm

We bank at TD. I recall many years ago they would automatically increase our credit limit. We always fully paid off our Visa cards each mo. Finally, we called them and told them we only wanted a specific credit limit. We do all our banking online. I haven’t been to our branch in at least 3 years and never use an ABM. If I need cash, I can get it at Stupid Store, Costco, etc. We use debit cards for purchases and I haven’t paid banking fees for at least 30 years. Several years ago we rec’d notice TD would start charging us for our transactions. My husband spoke to the Branch Manager and threatened that we would move our accts. to another Bank and that many of his colleagues would also. He gave my husband a bunch of his business cards so his colleagues could arrange an appt. with him, which they did. The banks make enough money on us as it is.

#101 OttawaMike on 09.13.11 at 6:42 am

Smoking Man,
Be careful about openly discussing FEMA camps and internet privacy in a public forum such as this.

For years this guy played a role in exposing govt. conspiracies and they finally assassinated him this week:
http://www.bendbulletin.com/article/20110901/NEWS0107/109010401/

#102 David B on 09.13.11 at 7:10 am

Ditto ……

And I was one of those few who had to renew with a move to another province with rates hugging 20% … long story but we made it.

#103 bigrider on 09.13.11 at 7:22 am

Great post Garth but normalization of rates ??

When will that happen ? These 30 something year olds might be 50 somethings before that happens..LOL

I’m afraid a new era of stealing from the savers to give to the borrowers has been firmly established.

#104 blase on 09.13.11 at 7:42 am

Beach Girl, you really showed your kids a thing or two. I didn’t know that children chose divorce, I always thought it was the husband or wife.

#105 JOC on 09.13.11 at 7:44 am

Great post Garth!
Kicked out of the house at 16 for bad behaviour the best gift my parents ever gave me. The toughest years of my life but in hindsight the best lessons ever learned. by 19 thought i had made it big making lots of money working long hours in the beaches renovating homes then the 20 % mortgage killed that (the second lesson) then never looked back.
I know employ 70 people most of whom are young and all I hear when I try and make sure they don’t go down the wrong path is it will be different for them and I don’t understand and sadly there parents support there views.
So I think there needs to be 2 kicks in the ass
As my brother in law says the only way to keep sanity in this life is realize those around you are only there for your amusement
Sad but true

#106 Moneta on 09.13.11 at 7:45 am

“thousands of people who will find it impossible to service their debts if rates normalize (and they will).” – Garth.

I don’t find this statement very convincing because there is nothing on the horizon that indicates that the rates will normalize – nothing. This is an empty statement

———–
Right now our yields are low because we are seen as a safe harbour.

But as Europe goes down in a tailspin, we might just get a spike German bond yields.

If Canada’s economy weakens and housing is showing its carcks when that happens, Canadian yileds will not stay where they are now. And Carney will have had no word on this outcome.

Why would I buy a 2% Canada if I could get a German bond for more?

A new tune for those of you who are stuck on a jumping record.

#107 Steve on 09.13.11 at 7:46 am

I’ve been a regular reader of this blog for a year or so. I don’t always agree with everything Garth says, but I sure agree with him today. I am 60 years old, and have suffered through the crazy mortgage rates of the early 80’s. And although I learned some tough lessons, unfortunately I didn’t do enough to teach my own kids. And so they grew up with the same degree of financial illiteracy as most of their generation. Thankfully, they both seem to have matured somewhat, but they still make financial decisions that I would never make. We don’t do our kids any favor by sheltering them. I wish I could turn the clock back about 30 years, but still retain all of my experience and wisdom (yes, I believe I have at least some wisdom). I would certainly do a few “parenting” things differently.

#108 timo on 09.13.11 at 7:47 am

http://www.forexlive.com/blog/2011/09/13/us-data-debt-impasse-causes-small-business-to-in/

monthly Small-Business Optimism Index comes in at
88.1 vs 89.9 last month. The Index has now been in decline for a full
six months. Expectations for real sales gains and improved business
conditions account for most of the decline.

not looking good folks

#109 X on 09.13.11 at 7:51 am

I think there are enough self entitled people out there, enough to do a show on at least.

http://blogs.sunlife.ca/todayseconomy/2010/09/gail-vaz-oxlade-vs-the-princess/

And of course that is what the Manulife survey showed for that age group (of which I am a member), for the most part that is all they know, low interest rates. Most have no clue how much debt they are in or how long it will take them to pay off their houses.

I have no intention on working for the rest of my life to pay off my house. Most have no clue.

#110 Regan on 09.13.11 at 8:01 am

I think it’s hard for young people to learn good lessons about debt when university costs are so high. I managed to work and pay for my own school, but that was when tuition and books came to $1500/year. Now it’s closer to $20,000 and 19 year olds can’t possibly pony up the money themselves. So instead of learning self-reliance, they learn to borrow and lean on their parents and take on “good” debt because it’s an “investment in their future.” It’s a perfect set-up for a lifetime of debt.

#111 Bottoms_Up on 09.13.11 at 8:04 am

#101 OttawaMike on 09.13.11 at 6:42 am
——————————————-
I’m fairly certain no one would put in energy assassinating a 96 year old. I mean, what kind of damage can the guy do with his remaining years that he already hasn’t done?

#112 OttawaMike on 09.13.11 at 8:08 am

#94 Utopia on 09.13.11 at 3:07 am

I have been listening and I’m sure many others do to.

The problem Utopia, is that you are merely one good source and as you surely know we are all inundated with too much information.

Being able to separate through all the chafe these days is the holy grail of the info era.

#113 Smoking Man on 09.13.11 at 8:17 am

#101 OttawaMike on 09.13.11 at 6:42 am

Mike that was bad……….Hangover from hell, head pounding, I go to the link and start laughing my guts out. Good One al the same…………………

#114 GTA Girl on 09.13.11 at 8:19 am

Reading one of the above comments made me shudder. You get a snapshot into a persons life, very very bitter.

The fellow who warns not to discuss FEMA camps gives a link to the Reynolds aluminum magnate who he claims was assassinated because of his advocacy?

The gentleman died at 96 yrs of age…..so the assassins really waited to get their man?

#115 Bottoms_Up on 09.13.11 at 8:25 am

#81 Pat on 09.13.11 at 1:12 am
—————————————-
I agree, LH calls that ‘living’, I call that missing out on the best years of your life.

Reminds me of a friend (mid-twenties) who bought a suburban house with 3 bedrooms in a family-filled neighbourhood (he lives alone and doesn’t have a steady partner). Plans to pay off the mortgage in 10 yrs with payments that eat over 70% of his income. He has no money to enjoy life.

But hey, when he wakes up at 35 he’ll own a mcmansion in the burbs.

#116 fancy_pants on 09.13.11 at 8:25 am

just remember there are young victims here too who can’t afford to move out (are you stereotyping kids who live at home or simply sticking it to the lazy ones?) just asking cause I wasn’t sure.

Either way many of them are screwed.

#117 Joe on 09.13.11 at 8:27 am

Hate to burst your bubble Garth but the days of 12% interest rates are in the history books. Canada is on a trajectory of near 0% interest for the next 2-3 decades.

Is there intelligent life on your planet? — Garth

#118 mississaugaboy on 09.13.11 at 8:34 am

Excellent post Garth!

Totally true, me being 28 (turning 29); our generation is totally screwed. I find myself one of the few fortunate ones mainly due to a good job but also because my parents are probably what we consider the lesser-abled boomers. The ones who are still in debt, still have a mortgage, can still barely get by and never knew anything about finances (as soon as I got my mortgage, they called me for help!). I never received help doing my homework or had my tuition paid etc.

I had to borrow OSAP, make some mistakes (not many since my older sister did most of them for me) and I still managed to pay down over $20k in OSAP in 3 months.

I always thanked my parents for not helping me and my siblings because then I’d turn out like my cousins. They had a much wealthier upbringing; parents made lots of money, had a mansion, nanny, their car bought for them, their tuition paid for them and even got a very nice fat downpayment made to them for their first home. They are the ones who would spend $1.10 for every $1.00 they made and my aunt knows this. Yet she tells them exactly how much money they will inherit. Great way to teach your kids. She still does the auto insurance shopping for them, car repairs etc. I assume the money will be completly gone in my lifetime once she passes away.

But I cannot be mad or jealous, the only good thing is that my cousins are still good people, generous and not selfish or greedy, just financially not as smart and not as street smart.

I still pay my parents money every month to fund their retirement but that’s OK; that’s the price to pay for the lessons they taught me; that I’d be damned to ever become like them.

So I sold my home for a nice profit, am renting much closer to work and started investing and am debt-free.

As for my friends, they are even more screwed. One just bought a condo and spent a lot of money renovating a 20+ yr old condo and complains how much more it is costing (gee shocking…I tried warning her renos cost way more than expected and takes much longer) and the other one is renting out her condo because she can’t afford to stay in it yet when I ask if it covers all costs it does not. She’s out $600 (maintenance fees) a month!

Good luck to them all.

Thanks mom and dad!

#119 Live Under Your Means on 09.13.11 at 9:24 am

#64 604genX on 09.13.11 at 12:09 am
Not only doesn’t the 60-year-old Seattle woman plan to leave her daughters an inheritance when she dies, she’s trying to spend every last dime on herself before she goes.

“My goal is when they carry me away in that box that my bank account is going to say zero,” Willison said. “I’m going to spoil myself now.”

………………

We have no children. And we’ll both be cremated so they won’t be carrying us away in a box. We’ve a will & have been meaning to update it. I want to exclude some family members & and hubby wants to include another. This is in case we both die at the same time. Yet, my DH, who will probably live longer than I (I’m 9 years older and have a health problem) said, half joking, that if he lived into old age he’d hire a couple of cute young nurses who’d take care of him at home. Yeah right. Actually, I wish euthanasia was legal here. Apparently it costs about $33K in Switzerland, factoring in all costs.

From the article you posted “Many boomers already are giving the equivalent of an inheritance, except they’re doling out the cash while they’re still alive, said Ken Dychtwald, chief executive of research firm Age Wave.”

My PIL’s have been doing the same little by little over the years due to high inheritance tax where they live. My mother did something similar, only on a much smaller scale.

Read more: http://www.vancouversun.com/Boomers+children+count+inheritances/5390839/story.html#ixzz1Xq1nEtUs

#120 Daisy Mae on 09.13.11 at 9:25 am

Timing is Everything on 09.13.11 at 1:19 am — “Did I ever tell you about the time me and wifely lived on KD and wieners for a summer. Good times.”

Yes…it IS those hard times we remember, isn’t it? I remember trying to find 365 different ways to cook hamburger ’cause it was 3 pounds for $1.

#121 Ron on 09.13.11 at 9:27 am

Great post Garth.

I wonder how the teenagers in Greece feel knowing that no matter what they learn, they’ll be paying for it for the rest of they’re lives.

#122 BrianT on 09.13.11 at 9:37 am

#114GTA-It is called sarcasm.

#123 Waterloo Resident on 09.13.11 at 9:37 am

Hi Garth, hope you’re having a nice day.
What I meant about not ‘Launching’ a kid was that I think that we should follow the way the Japanese and Chinese people treat their kids, they seem to do it right. In their society they care for their kids if its needed, but at the same time they advise their kids, give them education and information so that they can go out and strike it on their own at an early age. They do promote the idea that children should leave the house early IF POSSIBLE, and for that they give the children much needed information and education (something parents don’t do here), but if difficult times come around then everyone sticks together and they all help each other, so no one automatically gets “Launched” at a certain age if they are having problems or the economy ‘sucks’ (like it does now here in North America, and Japan.)

That’s all.

#124 bigrider on 09.13.11 at 9:38 am

An update on Markham Ontario.

Builder released 60 lots, 33 footers to 40 footers 80ft depths last weekend. Horrific postage stamp lots. Lineup of 200 buyers. First 60 in the trailer bought ,all sold out by noon,paperwork completed by mid afternoon.

40 footers went for 888k, lucky number for 59 asians who bought and one ‘lucky’ non asian. Bus load tours starting in the GTA as well.

So much for RE correction.

My sources are first hand, information communicated to em in Italian, have no doubt about that.

This is why the danger increases. Looking for a real estate correction among the greater fool kiddies is futile. They are cannon fodder. — Garth

#125 Moneta on 09.13.11 at 9:39 am

Tough experiences in life are invaluable and those parents that think they are helping their offspring by supporting them financially into their adulthood are delusional. Launch them and get a dog. The dog will appreciate you more anyway
—-
I left home when I was 18. Paid my own way through university and graduated without any debt. My parents had the means but I never asked for 1$. LOng story. Too proud.

Ten years ago, I was on business trip with my boomer boss and he started talking about the young candidates he was interviewing. He kept on telling me how much better they were than us with all their volunteering, their good marks because they did not work and their exchange trips to Europe. They were so much more worldly.

He was essentially telling me that my resume would have been thrown in the garbage. At the time, I had 2 kids under the age of 2, so you can imagine what kind of questions I started to ask myself on the parenting front. How do I hover without making them lose their sense of responsibility for their own lives. A HUGE endeavour if you ask me.

How many employers out there currently value my type of experience vs. those who value the wordly one?

The answer and how you view the future will probably impact whether you become a helicopter parent or not.

#126 Brandon on 09.13.11 at 9:40 am

Oops — I was sheltered until I was 25. Just bought a bigger house than my parents own… but thanks to all that sheltering I had a 50% down payment and my mortgage+property tax is cheaper than rent. Unfortunately that down payment money is now locked away in my house…

What are your plans to pay them back? — Garth

#127 Sean on 09.13.11 at 9:42 am

This is way bigger than financial education for housing. I am 25 and I would say 75% of the people I know, close friends, are all knee to shoulder deep in debt. They spent big time on school but made sure they enjoyed expensive nights out and trips across the globe. All on borrowed money. Everyone I know has a minimum undergrad degree and most with a Masters or currently pursing. Huge debt 20k to 50k but all are extremely confident the first job will be high paying and debt will be gone in no town. So far…no big jobs.
Funny enough I’m on of the few with a decent job yet I certainly don’t spend anywhere near what they do, I never understood how they had so much money to burn. They all can’t wait to put a down payment on a home. The few that lived at home through school are starting to do just that on crazy downtown Toronto condos.

I’m telling you, this is the reality. I see it everyday.

#128 BrianT on 09.13.11 at 9:42 am

#91Jody-OTOH a feminized society is a controllable society. With what is coming down the road we need more sheep, not bulls.

#129 Bottoms_Up on 09.13.11 at 9:48 am

#116 fancy_pants on 09.13.11 at 8:25 am
———————————————
Trust me, your young victims CAN afford to move out.

A 2 bedroom apartment with indoor parking near downtown in the Hammer (Hamilton) goes for less than $800/mo.

Split that with someone (and add on food, tv and internet and miscellaneous bills) and you’re looking at living expenses of $1000/mo. With a car, probably around $1500/mo.

Someone working for $10/hr can afford to be living out on their own.

Definitely doable.

#130 Steven Rowlandson on 09.13.11 at 9:53 am

Once I read a book by Harry Figgie Jr about the problem of the out of control debt situation in the states.
In the book they also did a study of latin american countries and one businessman told Harry that inflation can help out with pay roll costs. All you have to do is avoid raising the pay of most if not all of your employees and eventually your paying them nothing.
———————————————————-
The reason why construction of homes has dropped off a cliff more or less is that everyone that can tolerate the payments and live at the same time has a home. 10 or 15 dollar an hour workers/tradesmen are at the financial glass ceiling more or less and can be alive in canada but not live in canada except with mom and dad if they are lucky. Then again alot of them are cheating by putting the wife out to work if they have one.
You can thank the real estate and job market for that one Garth.

“The wife”? — Garth

#131 RobM on 09.13.11 at 9:58 am

Hey Garth,

I was one of those kids kicked out on my own at 18. By the time I had put myself through school I was deep in debt. I had to be very careful with money, and my job or I would not be able to afford the room I rented. I could not afford even 1 month out of work. It was not until I was 30 that I was solid on my feet.

Now that I am closing in on 40 I can see that the people who where able to stay at home are way better off financially then me.

I have yet to see the downside of staying at home too long.

#132 abraxas on 09.13.11 at 10:05 am

In the book “The Millionaire Next Door” the author presents data that shows children who receive substantial help from their parents at the start of their adult lives tend to fare much worse in the long run than those who received no such aid. This is chiefly due to launching them straight into a lifestyle their graduate salaries can’t sustain but also there is an element of learned helplessness. The rude awakening happens when the parents are gone or no longer able to subsidize their offsprings’ opulent lifestyles.

#133 Moneta on 09.13.11 at 10:05 am

The entitlement generation is a monster created by my generation (the 50 somethings
————
As long as this group of helicopter parents are also doing most of the hiring, princesses and princes will be hired at the top levels.

Where I have worked, most of the people my age made it in through the door because dad was a client.

Heli parents are this way because that is what has been working for the last 2 decades.

However, the times they are a-changin me thinks.

#134 crashing yuppy on 09.13.11 at 10:05 am

Durham numbers out

Sept volume down 11%

Price down 4%

Has it started? Well Garth has it???

#135 Waterloo Resident on 09.13.11 at 10:06 am

Part of the ‘education’ that I am talking about is sitting down with your kids and talking about money, having them truly understand how hard it is to make it in this world, giving them a very small weekly allowance when they are young so that they know the value of money, then getting them to get a part-time job when they are teens so that they get work experience. If they need to live at home when they turn 18 then they should STILL TRY to get a job, ANY JOB, but that money should be given to their parents so that their parents will put 100% of it into a savings account and it won’t be spent on new I-Pods or stuff like that. If they want to waste their money on junk then they have to LEAVE THE HOUSE, those are the rules that the Chinese / Japanese use in their society and I think Canadians should do the same.

#136 panopticon singularity on 09.13.11 at 10:08 am

#66 Smell The Coffee

be honest, you “higher” (lol) immigrants because they take 10-15$/hr as opposed to 25-35$/hr.

get off your high horse and learn to spell.

#137 Gord In Vancouver on 09.13.11 at 10:16 am

It’s Different Up Here – It Certainly Is

Canada household debt rises further in 2nd quarter

http://news.yahoo.com/household-debt-rises-further-2nd-quarter-130209157.html

#138 alf on 09.13.11 at 10:16 am

Wow, savers and borrowers appear to suck equally.

Humanity needs to evolve or die.

#139 Hammer1 on 09.13.11 at 10:20 am

Literally, fifteen minutes ago,[email protected] called and offered me an unsecured LOC for 18K…
woohoo !!
because I am such a great customer !
they are giving away more cheap money, I just had to tell her that I have a job(unverifed of course) she really doesn’t care.
What do you guys think?
I don’t plan on using it,but………..

#140 Brad in Van on 09.13.11 at 10:21 am

We’re not leaving our kids a damn dime. We will provide them a good education, love, guidance and support. That’s what helps to build a person of good character not some mound of cash when you are dead.

Now onto greater things. I have reached my goal because I landed a great job in Seattle working for Microsoft and we will be moving there November 1. Here is why BPOE is so wrong on every level. Seattle is a much much larger metro than Vancouver and it has more to offer. It is definitely underrated but the world is catching onto it quickly. They are building so many new public works projects that the city will be in constant change over the next 10-15 years. Also housing is considered affordable when compared to Vancouver. The neighbourhoods in Seattle tromp any of those compared to Vancouver. The neighbourhoods are amazingly clean and very unique with great architecture to boot. I know Vancouver has some nice spots as we live in Kits, but when you compare it to the Seattle equivalents none of our areas really measure up. We will be able to actually afford a nice house in a nice area at around $800,000-$1,000,000 depending on the area. We are all just so excited to be a part of such a wonderful place while surrounding ourselves by highly educated people. We think it is a tremendous service to our children to have this experience. We’ll even have sufficient funds to provide our children private schooling if we choose to go that route and the schools there are quite nice. We are doing our part as parents and we are teaching them that putting all your money in a single asset is just plain stupid. Here is why we are not going to miss Vancouver. Yes we like Vancouver but the affordability is out of control and we own our place. The cost/benefit analysis does not add up and there are places on this planet that are just as nice if not nicer that we can live and be happy while being able to save sufficiently for our retirements. We could not be more pleased.

http://www.kiplinger.com/magazine/archives/best-cities-2010-seattle-wash.html

Seattle surpassed Vancouver as “Top 20 Overal Cities” in the world landing a spot at #7, where Vancouver landed at #14 according to The Globe and Mail “It’s becoming a Venti Force to be reckoned with”

http://www.theglobeandmail.com/news/national/toronto/the-rankings-top-20-overall-cities/article1926610/

Even Facebook thinks so!

http://www.facebook.com/pages/Seattle-is-the-best-city-ever/157890734226168

Most walk-friendly city in the US

http://www.theatlantic.com/life/archive/2011/05/pedestrian-perfection-the-11-most-walk-friendly-us-cities/238337/

#141 Brad in Van on 09.13.11 at 10:24 am

Okay I said we can get a nice house in a nice neighbourhood anywhere from $800,000-$1,000,000. Maybe I should say this is in a nice middle class to upper middle class area. If we want to live in a nicer area than this then we would be spending $1,250,000-sky is the limit. My point is homes there are going for what feels like half the amount.

#142 GregW, Oakville on 09.13.11 at 10:33 am

Hi Garth, I hope the parents with kids at home that aren’t still in school are at least charging them rent! And encouraging them to try and max their RRSP contributions.

#143 Waterloo Resident on 09.13.11 at 10:36 am

To #66 ‘Smell the Coffee’, you said:
(” Less than 4 years ago I presented an opportunity to a mixed graduating group of MBA & engineering students at a Canadian university……. All I had to do was assemble a qualified team……
b) no one would consider working for less than $70K as starters. ” )

Dear Mr ‘Smell the Coffee’, I would LOVE to work for you, and I will work for you FOR FREE, $0, on a 3-month contract just so that you can see if I’m worth of keeping or not. Once the contract is over you can just let me go and no hard feelings. If you decide you want to keep me then I’ll take $15 per hour (part-time or full-time is okay), and I’ll be VERY HAPPY to get that in these days!

I’m both an electrical and mechanical engineer, age 47.
Let me know if you would like to try me out as a new hire.
Thanks!

#144 Mr Buyer on 09.13.11 at 10:44 am

Lets all just take a big crap on the young. They were not around to see real estate cycles so they are clueless. Wait a minute here. We boomers were all around to see real estate cycles. We became familiar with the key elements of the system. Did we take measures to insure the kids coming up do not get nailed. Did we institute a few key bits of legislation. No. What did we do. Well we were in the know now so all we had to do was wait around for another cycle and screw the next bunch coming up. Pretty inovative eh? Money for nothing, chicks for free!!! Well now its blowing up in our faces. As for inovation. The Canadian scientisits that are attempting to domesticate an engineered virus and have it chase down and kill metastisizing cancer, well forgive me if I feel that is inovation and getting a ton of borrowed money from somebody as something of very little real value. The kids today are doing what we did and we did nothing to prevent it from happening again. As for the young reading this. Read closely…read the eating the young sentiment…do not believe anything you are being told about how easy you have it. It was a breeze for most of us and we did not have to do much to get our opportunities. Most of us did even less for our companies at our jobs. We spent most of our effort trying to figure out how little we could do for the money our companies paid us. We let jobs pour out of our country while we borrowed. We did not give a thought about you or your generation and what we were doing to you and your future. You owe us nothing. As you can see we have no loyalty or concern for you. Get into to power, claw back as much cash from us as you can and go forward into the future with your children. Stand by your kids, teach them and get them ready. They will use you up as is the way in nature. Do not look back on us boomers, there is not much of value to see. We really screwed you. PS…good luck in 2050 and my apologies.

#145 Live Under Your Means on 09.13.11 at 10:45 am

#68 Bill Gable on 09.13.11 at 12:23 am
At 18 / Dad said, well – you best look for place. Your adulthood starts now.
Best thing that ever happened to me. Ate KD – lived in freezing basements – working my up to a small home and well, we worked our fanny off. No Big vacations. Saved, and well – life is better in black.

…………….

Lived at home until 21. But, paid rent & if I rec’d a $5 increase in weekly salary, gave half to my Mom. My 2 sisters did likewise. BTW, babysat from the age of 9 – no TV, just radio to listen to until until midnight or longer – maybe 25 cents an hour. It was just up the street in a small town. We later moved to MTL & from grade 8 on I sewed and/or paid for all my clothing, except for school uniforms. I took my eldest brother’s suits and made slacks for myself. I loved them, but a few ‘snotty rick kids’ in my school made some snide remarks which really hurt. Also worked part time.

P.

PS – just called legal firm to send me an electronic copy of our wills. Must have deleted my copy. We do have paper copies in the bank safe and in our ‘bolted down’ one at home, but that one is covered by boxes, so will leave it to DH to get it.

#146 Dave on 09.13.11 at 10:47 am

In Canada, mortgage amortizations are between 25 and 30 years, but most terms are 5 years or less.
In the US, is it safe to assume that most people elect a mortgage with a mortgage term equal to the amortization period?
If so, it seems that the US will have a much easier route to recovery than here in Canada. While rising rates will not affect existing mortgage carrying costs in the US, the same is not true in Canada where rising rates would affect all mortgages (eventually).

#147 debtified on 09.13.11 at 10:58 am

Coming to a neighbourhood near you. A sneak peak of Canada’s Real Estate future.

From Mish Shedlock’s Blog: “Dreamland (or Nightmare) Real Estate Agents Dump Homeowners Asking Too Much; Housing Shills Still Cheerlead Others to Doom”

http://bit.ly/qjl4np

#148 Moneta on 09.13.11 at 11:01 am

While rising rates will not affect existing mortgage carrying costs in the US, the same is not true in Canada where rising rates would affect all mortgages (eventually).
——–
Imagine that… Over the next couple of years young couples will be buying 150K houses and getting a 4.5% fixed rate for 30 years!!!

Here in Canada, our young ones are stuck with 350K houses and will be renewing at much higher most probably.

Yes, Canada is healthy and the US is dying. LOL!

#149 bigrider on 09.13.11 at 11:02 am

#124 Garth’s response to Bigrider- “This is why the danger increases. Looking for a real estate correction among the greater fool kiddies is futile. .They are cannon fodder”

Who are the greater fools? Who are the kiddies ? The asians who bought all those homes in Markham over the weekend? possibly yes, agreed, but I will tell you who they are not.

The fools are NOT the big builders who are selling all the product to them who were told that they ‘overpaid’ for the lots/raw land they built all that product on a few years ago. They are NOT the RE agents sitting in the trailers lapping up 5000 dollar commission days simply signing names to forms and photocopying feverishly. They are NOT the mortgage reps sitting beside the agents as the deal is signed. They are certainly NOT any of the hundreds of related businesses associated with the construction and finishing of said homes who make out like bandits selling overpriced kitchens, doors ,granite ,moldings etc. etc.

And so far at least Garth ,they certainly are NOT all the buyers/investors who have ‘foolishly’ bought early into each and every one of these “new releases” only to flip them out for a tidy and easy profit to some new “greaterfool” who in turn flips to the next.

Garth , this RE correction remains elusive and frustrating for me , it must be torture for you, isn’t it ?

#150 Steven Rowlandson on 09.13.11 at 11:24 am

“The wife”? — Garth

You know the female person that wants to be equal with us guys and go out to get a job, earn money , pay taxes and have as few babies as possible so that the bulk of earnings can go to banks, governments and real estate. Wait a moment those aren’t wives those are slaves to money and political agendas.
Definitely need to knock a couple zeroes off real estate prices to restore affordability before real estate makes canadians extinct.

#151 Nemesis on 09.13.11 at 11:34 am

“If I’d only had shoes”… Hon. GT

The Four YorkshireMen

http://tinyurl.com/yggwqyw

&Nostra… this one is for you (file it under ‘the natives are getting restless’ category)

RT – Russian military chief urges high alert after Mid-East turmoil

http://tinyurl.com/62cdq2e

#152 Another Albertan on 09.13.11 at 11:46 am

A few anecdotes, for what they’re worth…

First, I was speaking with a colleague here in downtown Calgary. He’s an investment banker in the energy arm of a large first-tier Canadian bank. He told me a story about interviewing candidates back in the spring for junior research analyst positions. Two candidates, 21 and 22, brought their parents to the interview. At first, the banker thought the parents were there just to sit in the reception area. Noooooooo…. the “kids” were adamant about the parents actually sitting through the hour-long interviews. And not along the wall in the interview room… right next to the “child”.

The banker first though he was being subjected to a practical joke, but “played along.” The second time (about a week later), he knew it wasn’t a joke.

His comment still resonates with me. “As I-bankers, we are sharks. It’s how we’re wired. We want to stalk, dominate, control, kill, and consume. We get two candidates who claim they want to be sharks, but who bring mom and dad for support. You don’t train a shark. Either you are a shark or you are not. These people are so disconnected from day-to-day reality that it isn’t even funny. I felt sorry for all of them. They are all going to roadkill at some point in the future. They don’t even know it.”

The second anecdote is from Victoria. Another colleague moved there from Calgary 15 months ago. She bought a condo in a very nice location for $750k. She is a teacher, but her parents have significant means, so there is a lot of “support”. A similar unit down the hall is on the market for $575k… no buyers yet.

Is she concerned about the $175k paper loss? Well, yes, but really, no… because it was really dad’s money who bought the unit…

PARENTAL INTERFERENCE AND/OR CODDLING DRIVES ME CRAZY.

Everyone else’s mileage may vary.

#153 The HOUSING CRASH IS HERE on 09.13.11 at 11:47 am

The debt will CRUSH all those in overvalued housing.

Household debt rises in second quarter
http://www.theglobeandmail.com/globe-investor/personal-finance/household-finances/household-debt-rises-in-second-quarter/article2163907/

#154 Feral Children on 09.13.11 at 11:48 am

I can’t believe a lot of these posters supporting keeping their ‘kids’ home past the age of 18. When you are that age you should at least be providing your share of the rent, utilities and upkeep. (not to mention feeding yourself).

Every single person I’ve ever met who stayed at home suffers some sort of deficiency.

The man children who stay home learn that they can spend all of their disposable income (so that’s like, 100%); on video games, dope and liquor.

The ‘women’ who stay home learn that they can burn up their earnings on designer clothes and latte’s, clubbing, whatever.

That may seem stereotypical, but when you see 40+ examples of this it’s pretty hard to not stereotype.

What’s the first thing I see these idiots do when they’re ready to move out? Why buy a house or a condo of course! Why they didn’t stay at home NOT learning how to bake a potato all these years to move on to lower living standards – they want what mommy and daddy had. Now that they are half way through paying off their college debt and got that nice new job at $47.5 K a year, the entitlement complex is well and truly developed.

What, just because they don’t know what a power bill looks like, never went on a grocery run; and never had to pack a lunch doesn’t mean they aren’t fully capable of taking on another half million in debt.

I’m sure there are exceptions to the rule… parents that demand some sort of accountability for having their offspring take up their living space past 18. Kids who use the time at home to build skills, knowledge and pay down debt; but I’ve seen none. That’s why we see a tremendous amount of leveraging for the young folk in say, Calgary; where the practice of having non-paying residents is so common.

For the record, I’m 28. I know plenty of people that are still home with the folks; and I hang around none of them. Why? Because they are still children. Because they speak and act in a frivolous and unresponsible fashion. Because beyond the Kardashians, they’ve got little to talk about.

Do yourself and your kids a favor. Send them SOMEWHERE when they turn 18. They’ll thank you later; after they realise it’s not cool to take 30 months to pay down a playstation.

#155 Smoking Man on 09.13.11 at 11:50 am

#114 GTA Girl
OttawaMikes
post was a joke, its about tin foil hats.

#156 Country Girl on 09.13.11 at 11:57 am

#94 Utopia,
Please don’t give up on us.

#157 BrianT on 09.13.11 at 12:08 pm

#149Big-You might be right but the top end properties in the nicer TO core neighbourhoods are not moving right now. I would expect a decline in the ave 416 price again this month.

#158 Moneta on 09.13.11 at 12:10 pm

I can’t believe a lot of these posters supporting keeping their ‘kids’ home past the age of 18. When you are that age you should at least be providing your share of the rent, utilities and upkeep. (not to mention feeding yourself).

Every single person I’ve ever met who stayed at home suffers some sort of deficiency
————-

LOL! I would say that when I look at our western lifestyle, totally dissociated from nature we are ALL deficient.

I am quite amused by all you thinkers in the box who claim that children NEED to move out by 18 to be responsible.

Kids have been coddled in thousands of ways and it’s not just because they’re still at home after the age of 18. That’s not THE trigger.

Cripes my aunt lives with her 90 year-old mother and takes care of her. Is she a failure? She’s a savior for the entire family. Let’s give respect where respect is due.

It’s all about whether our kids can stand on their own two feet. If they’re free loaders, they need to be kicked out. If they are productive and responsible, why would you do this unless you absolutely need peace and quiet?

#159 BrianT on 09.13.11 at 12:12 pm

#144-I like you Mr. Buyer-there is no lying in you.

#160 BrianT on 09.13.11 at 12:17 pm

#132Abr-That book’s stats rested heavily on the USA RE boom-when the boom busted the numbers of millionaires declined substantially.

#161 Mr. Lahey on 09.13.11 at 12:26 pm

To Big Rider. Captain Garth is both right and wrong on the issue of the greater fool. To date, since he began this blog in 2008, he has been wrong that a full scale real estate meltdown would occur in Canada. The last three years have seen tremendous gains as you are painfully aware. Captain Garth is right though that excessive debt in a home is a killer. Consumer debt needs to be paid off asap in order to start accumulating real wealth. On this point, Garth is smack dab on the proverbial bull’s eye. He may eventually be proved right on a real estate decline as well, but to date, as witnessed first hand by you and your builder buddies, the party rages on. “Randy, I hear a Harley coming into town. I think it’s that Garth Turner fellow…”

Now, now, don’t be a revisionist. I am not calling for a ‘full scale real estate meltdown’ but something more insidious and lengthy – a correction, then a melt. Are you ready? — Garth

#162 Live Under Your Means on 09.13.11 at 12:26 pm

#77 S on 09.13.11 at 12:52 am
I guess we all have to deal with the consequences of our choices. I don’t know about others but my kids daydream of studying dentistry and medicine. Each degree would add up to around $200,000 if cost of living is taken into account. What to do… let them start their lives 200 big ones in debt or help out by letting them live at home while studying and even covering most of the tuition? For me it’s an easy decision, but what do I know… Damn, should have never started them with kumon, music classes and plethora of other activities that deceived them into thinking they could actually aspire that high.

In a Calgary gym I know well there is a slogan posted on the wall. It reads: “Success is a result of a lifetime of correct choices.” Cut your kids off too early and watch how many correct choices they will get a chance to make. These days there are entire industries out there devoted to leading young ones into debt and keeping them there. I think I`ll try to give mine a fighting chance.

……………..

One neighbour’s son at 40 years of age (Mining degree) is back living (7 yrs) with his parents – long story. Their other son (42+ studied mechanical engineerig. He worked in TO years back creating mechanical limbs (sorry forget the actual term). Returned home and went to Med school. He married a Dental student. His Mom & I did all the flowers, from our gardens, for their wedding. :-) In her 4th year she had an affair with a fellow dental student & they took off to VCR. He was devastated and never suspected she was having an affair. Guess they were both too busy studying. Neighbour’s son is one of the sweetest guys one could meet. He’s been an anaesthetist for several years now. He has 2 children (4 & 18 mos.) They finally got married this summer, but no fan fare.

#163 Burnt Norton on 09.13.11 at 12:27 pm

After a few years of parenting, I can tell you that unsolicited parenting advice is almost always worth exactly what you pay for it.

———————–

Too much love vs not enough love:

While raving social Darwinist tea baggers prospectively cheer for the deaths of uninsured patients, hospitals in Vancouver will soon start routine HIV testing for all inpatients “just in case” they are infected and don’t know it.

In the words of the eminent Bart Simpson: “Ay caramba”

http://www.huffingtonpost.com/2011/09/12/tea-party-debate-health-care_n_959354.html?ir=Canada

#164 Peakoilist on 09.13.11 at 12:51 pm

My ex-wife and I were married in’84 and saved for a few years in our little cheap apt in London, Ontario. We lived on one salary and saved all of the other. After 3 years we built our 1st house using a general contractor. I drew the plans and we bought a little half acre lot outside Strathroy. We built it for $87,000, no money owing. (1500 sq ft, double attached garage, not fancy , but nice)
We didn’t know how good we had it, but we just thought everybody did that.
In ’91, we sold it for $129 k (after sitting on the market for almost 2 yrs..painful time), .. We built the next house on another half acre lot just north of London, for about $130 k, but owed her parents for the lot..about 25k. the house was basically bought and paid for, because I was the contractor this time and had all of the headaches, but it was worth it.
We separated a year later, and sold that shack for 160 K. I walked away with maybe 70 k ( had to pay her folks too)
I loved that house, probably more than her. But I digress. i think it was easier back 25 years ago..at least for us. It was a simpler time..seemed less complicated.. but maybe it was because my marriage failed. Maybe the house was more important than having a happy home. I’m not really sure . All of you guys in your early 50’s, was it easier back then, or did we just live more within our means?

#165 Genghis on 09.13.11 at 12:54 pm

Everyone that follows this blog knows about the house price bubble in Canada. But watch out for commodities too:

http://www.businessinsider.com/woe-canada-trouble-ahead-for-the-true-norths-economy-2011-9

There is a link in the article to a chart, which appeared in the Globe & Mail nearly a year ago. It shows that *national* average house prices went up 121% over the previous 10 years. After adjusting for inflation that is a 76% (real) increase. This national price average includes the many areas of Canada, outside the major metro areas, where prices went nowhere!

#166 Live Under Your Means on 09.13.11 at 12:55 pm

Not getting much accomplished today. Haven’t even checked my emails. Topic today & most days is really interesting. Love Garth’s blog. ………….

Lawyer just called back and will send me an electronic copy of our wills. Asked him how much Executer’s fees are now. Knew it used to be 3%. Still 3% but could be as high as 5% depending on the assets/work required. Registrar of Probate determines the amount. My youngest bro may end up as sole executor and am sure he’ll take the max. allowable.. Before we went on vac. this year I updated all of our financial info and put it in our home safe. Bro knows where the combination & key to it are hidden. Better to be prepared. This is not meant to be a ‘doomer’ post.

#167 Peakoilist on 09.13.11 at 1:00 pm

oh , yeah I forgot to mention. The reason that house sat on the market for 2 yrs, was because SHE insisted that we list it for 165,000k so that we could cover the next building lot. I didn’t like it because a realtor had said its value was 130k. We actually got an offer in the 1st month of around that value.but…..she said NO. anyway, after languishing on the market for 2 painful yrs, we got..an offer for you guessed it…$129,000. Yeah!!!
I think that’s what did our marriage in, it was Hell.
Thanks guys for listening, it was very therapeutic.

#168 jwkimba on 09.13.11 at 1:02 pm

#66, I graduated with an MBA about 4 years ago myself. Why would I join your crappy one-shot limited opportunity for less than 70k when the other three offers I had were all over 90k? Employers have to compete for the best employees. I am guessing your definition of ‘Qualified Team’ differs from the norm….

#143 I hope that was sarcasm….

#169 OMG on 09.13.11 at 1:04 pm

It ain’t going to be be much fun being being old,

once the kids figure out they they can vote.

They don’t need old people,

they have each other.

Plan your exit strategy,

now.

#170 Melt Fouse on 09.13.11 at 1:21 pm

Boomer – you left us to be latch key kids with no hope of direction from you.
We – took your lack of supervision and raised self-interest (at the expense of everything/everyone) to an art form
Boomer – you felt guilty for leaving us home all alone so you threw your excess money at us to feel better about your lack of attention.
We – assumed that a free ride was a right and we haven’t figured out that life = work
Boomer – you tried to “give us everything you didn’t have?”
We – assumed that the world was our “oyster” and we deserve “the best” – who cares how much it costs.
Boomer – you didn’t want us to worry about the future.
We – assumed we would never have to worry about the future.

Yeah – the Boomers are “Reaping what they have sown” but Gen Debt (me) doesn’t have a finger to point. We have all been party to “making this bed” we now live in. Anyone with an ounce of “un”common sense would be selling a house they have very little equity in, paying off all their debt, driving a car they can afford in cash, living with-in their means. It not easy – it hurts and is a struggle every day – but that’s what life is. Live it. (Oh and move out of your parents basement – quit playing video games like it is your living and go to work for less than you are “worth.”) You might actually find that there is some good thing buried in this thing called real life.

Sorry – couldn’t help but submit a comment after all this blame was being tossed around.

#171 I'm stupid on 09.13.11 at 1:23 pm

#22 LH
You said yesterday.
Agreed 100% ! or should I say 90%?
Since I graduated from college and started working 5 years ago, I have saved more than 90% of my after-tax income. This is the surest way to get rich in a deflationary (or at least disinflationary) environment. You don’t go out for dinner or own a car. That’s great.

Don’t be stupid, life is about balance that’s the point of this site. Your pissing your youth away, you will be left with a shit load of money and no memories, a wrinkled old man wishing you did more when you were younger. I dont think anyone on their death bed ever wished they had a nicer home or made more money. I’m not saying sell the farm but get out their and have fun.

#172 S on 09.13.11 at 1:25 pm

Where I live landscape is quite hilly. Several days ago I narrowly avoided a head on collision with three unattended children on bicycles speeding down the middle of 16% grade winding hillside road in pitch black. It was around 10 pm. Not a single light on the bikes. None of the kids would have been more than nine years old. (O yeah, they wore helmets, so apparently some parenting was involved.) This event was not unusual. Here one can regularly observe teenagers rushing down that same road and others like it on skateboards at all times of day and night. I can go on about teens wondering the streets well past midnight, the drunken beach and bush parties with occasional knife fights etc. Being connected with healthcare field I should also mention 15, 14 and yes, at least two twelve year old girls I personally know of, giving birth to children. Yup. Great parenting. I figure most of those kids will be out on their arse at 18 assuming they live that long. I am positive that many of these will turn out fine and will then post comments on a blog just like this one exalting the virtues of “early release“. The ones that fall through the cracks we will never hear from on any forum.

Just to be sure I am not saying here that those of the posters here that left home early had bad parents. Perhaps you were just smarter (or luckier) than most. Perhaps your parents were astute enough to know that you’d make it. But to all future parents I will say: think real hard. It takes about 22 years to fully raise a child, to provide it with a profession or a skilled trade. Can you make that commitment?

#173 disciple on 09.13.11 at 1:33 pm

#66 Smell the Coffee…true story…you’re a liar and a hypocrite. Just because they apply to you for a job, doesn’t mean they want to work for you, so don’t take it personally, it’s just business, right? Please…continue in your delusion that you are “higher”-ing immigrants because they are harder workers, when in reality you are justifying your choice of slave labourers. I have shaken hands with many of your type over the years, either programming code or selling/making industrial machinery. Thank you very much for selling out your own country. You do us proud (sic).

#174 disciple on 09.13.11 at 1:35 pm

#70 Mr. Buyer…what took you so long? You make some good points but thankfully, this ain’t Japan, man. Come back home and then we’ll talk.

#175 BrianT on 09.13.11 at 1:36 pm

#152Albe-Wimps like your buddy the shark crack me up.

#176 JeffD on 09.13.11 at 1:48 pm

It would seem some of our friends down south khave some opinions most Canadian’s don’t think possible.

http://www.businessinsider.com/woe-canada-trouble-ahead-for-the-true-norths-economy-2011-9

#177 Mr. Lahey on 09.13.11 at 1:57 pm

Now, now, don’t be a revisionist. I am not calling for a ‘full scale real estate meltdown’ but something more insidious and lengthy – a correction, then a melt. Are you ready? — Garth

You must have glossed over my post at #13 which stated that I paid off my home when I was 29, almost two decades ago…

#178 Aussie Roy on 09.13.11 at 2:04 pm

T.O. Bubble Boy on 09.12.11 at 11:39 pm @

#31 Diane

What really struck me a couple years ago was my previously landlord telling me I only covered about 1/2 the mortgage payment. Yes, I live in Vancouver, but that’s ridiculous. Why did he buy to “invest in rental property”, only to get a negative cash flow?

You are right, its not an investment but pure speculation on never ending house price appreciation.

It’s called “Negative Gearing”, and is extremely popular in Australia and in certain parts of Canada (like Vancouver and Toronto – with all of the rental suites). Losing money year after year in hopes of making it all back in equity gains is a crazy strategy, but still makes more financial sense than buying an “income property” only to leave it EMPTY and hope for equity gains (a common practice in China right now, and even for many condo purchases in Toronto).

Negative gearing cost Aus $10B in lost taxation last year, currently 16% of Australians claim the deduction, of these 85% are geared into …….drum roll…….. you guessed it, infestment housing.

The Aussie numbers are mind blowing and with a tax system like this, is there any wonder. Check out the cost of housing in annual income terms at the following link since negative gearing began.

http://en.wikipedia.org/wiki/Negative_gearing_(Australia)

Don’t be sucked into negative gearing

http://www.smh.com.au/articles/2004/02/20/1077072841275.html?from=storyrhs

As a political party, we don’t support negative gearing because it encourages speculation.
(No wonder this party no longer exists on the Australian political landscape).

http://www.democrats.org.au/docs/2004/TAXATION_Negative_Gearing.pdf

ATO Tax guide – Negative gearing.
http://www.ato.gov.au/content/downloads/IND00191817n17290609.pdf

#179 jess on 09.13.11 at 2:06 pm

How about parents who use leverage ,send their kids to university to get a degree with hopes of attaining a high paying income in order to look after them in their old age.
=

Three Canadian internet service providers have until the end of Monday, Sept. 12, to hand over the names of customers suspected to have illegally shared The Hurt Locker movie online.

Although, trying to get the names of tax evaders in secrecy jurisdictions is a private matter.

Dimon Says US Banks Should Dictate to Regulators « naked …
http://www.nakedcapitalism.com/…/dimon-says-us-banks-sho... – United States – CachedYou +1’d this publicly. Undo
1 day ago – Dimon Says US Banks Should Dictate to Regulators.

http://www.oecd.org/site/0,3407,en_21571361_43854757_1_1_1_1_1,00.html

#180 Adviser on 09.13.11 at 2:10 pm

Utopia,

Don’t assume that just because nobody acknowledges your posts, they don’t read them. I have learned to find you credible and even my personal portfolio has learned to benefit from you advice. Please keep the info coming, at least sporadically.

#181 bigrider on 09.13.11 at 2:12 pm

#157 Brian T to Bigrider ” you may be right but top end homes are not moving in nicer areas of T.O”

You are right Brian , I have noticed same but does not matter. Momentum is on the side of the bulls at the lower end of market BOTH on volume and price. In fact ,if housing was a stock and you were applying technical analysis, housing ticker symbol would be LLL on the TSX..LOL. Momentum is accelerating.

#161 Mr. Lahey- Yes it is painful to watch some of the dummy’s I know flip houses , dummy’s who barely know how to spell there own names , make money while they continue to tell me that the stock market is for suckers and “investment advisors” are all thieves and losers ( think Madoff and Jones two guys that the media drilled into everyones heads which have shaped prevailing attitudes).

Sorry Garth but that is the concensus in the building/sales RE industry. An industry you cannot ignore in T.O that’s for sure.

#182 spaceman on 09.13.11 at 2:26 pm

715 MILLER AVE MLS® 297327 $449,900
Property Type Single Family Assessment $498,000 Days On Market 42
Price Dates
Current Price $449,900
Price Original $509,000 Date Entered Jul 30/11
Sale Price $435,000

thats 74,000 dollars people, and this is not the only one, on average I see 3br SFH selling 30K below asking.

74K pays my rent for 6 years… on a 3br.
And inventory is sky rocketing…

#183 City Slicker on 09.13.11 at 2:31 pm

Getting married early nowadays seems crazy to me. 62% divorce rate in Alberta, leading province I beleive. And I don’t see anything wrong with living at the parants place until you get on your feet. So long as you have a plan to move on someday. And I think most would but with how ridiculous house prices are it seems better to stick around and save.
I think it’s mostly a North American thing to move out ASAP after highschool. Other parts of the world they move out when you marry.
I wonder if there is a strong correlation between the divorce rate and house prices….I think in the US there certainly is. Financial stress is a true acid test to see how in “love” couples really are.
In general, times are way different than when Garth was early 20’s, and generally way crazier.

#184 Cookie Monster on 09.13.11 at 2:36 pm

Ejecting your kids into a reasonably good economy I agree is not a bad thing, especially if they’re lazing around at home too much.

But, teaching your kids to swim by tying their hands behind their backs and binding their legs together and loading their pockets with loose change then dumping into the lake is not recommended.

Swim boy swim! Use your neck muscles! kick your legs together! paddle with your arms like you’re doing the wave! Try harder! Don’t give up! I have faith, you can make it! Push off the bottom! Think positive! oh dear.

#185 timo on 09.13.11 at 2:50 pm

http://www.cnbc.com/id/44503938

The question of course is, is this a one month catch-up purge or will it continue at high levels for a while? And if the latter, will other banks follow suit quickly? Because if other banks see Bank of America pushing more loans to foreclosure, which will inevitably means more properties heading out for sale, they may want to get in before that glut of properties pushes prices down even further.
——————————————————

my 2 cents.

If they can speed up the foreclosure process this might bring about a bottom in US real estate in early 2012.

It might be prudent to start thinking about an investment property. Commodities and Oil should go up temporary because Britain and the US are going to have to make up for bank losses buy printing but after things settle our dollar,commodities and oil will drop significantly .

Time it right and you can have a good revenue or retirement property and a higher US dollar to boot.

When this happens speculation will flee Canada and start in the US again. After a couple of years you should be able to roll back into commodities and then bring your profits back home because Vancouver will be begging buyers to return and the haircut they will be facing will make a bald man look like a hippie.

If the tea party gets in or they force austerity on the American public then I retract everything I just said and hope you have learned how to can and sew because that trade will be in great demand.

rant over….. :)

#186 myjunkisonfire on 09.13.11 at 2:56 pm

Aaah yes, pile it on boomers, we can take it.
Am I the only one who senses the irony? A generation that has lived though the longest stretch of economic prosperity in history, and yet contains the largest majority of financial failures lecturing us younguns about entitlement?
In fact, we don’t need anything from you – thank you very much. Your twilight draweth near.

#187 penpal on 09.13.11 at 3:08 pm

GENERAL COMMENT

With the advent of widespread, cheap and accessible credit, the “value” of money has been distorted and that is just the way the financial industry likes it.

Unfortunately, I see evidence of that financial illiteracy across all age demographics, predicated largely on poor math skills and a lack of critical thinking abilities.

Plainly put, you can’t fix stupid.

#188 timo on 09.13.11 at 3:19 pm

http://newsone.com/nation/jothomas/tea-party-uninsured-americans-die/

As Blizter continued his line of questions asking, “So congressman are you saying society should just let him die?,” members of the audience can be heard cheering “yeah,” as if they approved.

lol, the priorities are crystal clear.

#189 penpal on 09.13.11 at 3:21 pm

re @ # 30 Link to your sources

I rest my case!

(made in my first posting today)

#190 Smoking Man on 09.13.11 at 3:28 pm

This last Friday Bond yeilds where at record lows, not moved much since, you should be able to get a 5 year fixed mortgage well under 3% with benchmark yeild at 1.29

Somthing is not right, thats why I have become a bear..

#191 I'm stupid on 09.13.11 at 3:35 pm

I was talking to a realtor friend of mine yesterday, he spent the better part of his day talking to mortgage lenders on a listing he has. He did this to make sure that enough equity is in the home for him to get commission after sale.

Here is the backdrop to the story.
My friend represented this couple, now in their early 40’s, when they won the home in a multiple offer in 2007. The home is located in Brampton.

Let’s see what this now 40’s couple won in 2007.
They paid 335k for the home with 80k down. My friend said the home in it’s current condition will get 350k not bad but here is the kicker, they took 50k heloc because they were falling behind on payments.

Now they are going to walk with bad credit and no equity.

My question is now what?

I think they are screwed.

#192 westopia on 09.13.11 at 3:38 pm

Greek default is a given now. Canadian banks are throwing in the towel. Here comes the ‘double dip.’ We’re all screwed.
http://www.cbc.ca/news/business/story/2011/09/13/scotia-recession-canada.html

#193 Devore on 09.13.11 at 3:38 pm

#66 Smell The Coffee

b) no one would consider working for less than $70K as starters

c) No one wanted to take any risks, they only wanted to understand the perks.

Your story sounds plausible, but we don’t have both sides of it.

There are plenty of people willing to take risks. You have to find them. While 70k sounds like good money, what if other employers were offering 90k? At that young age, that’s a lot of coin. Were your benefits (ie partial ownership, profit sharing in case the venture hits it off) sufficient to offset the reduced salary, lower benefits (pension, vacation, perks, etc) and increased risk?

You’re immediately assuming you were passed up because the kids preferred “a sure thing”, but does not sound like that is something you know for a fact. Did you ask them?

I will agree there is a general decline in entrepreneurship, especially amongst the MBA crowd, so look elsewhere. What does an MBA give you that you need?

#194 jess on 09.13.11 at 3:49 pm

WASHINGTON (AP) — Consumer advocate Elizabeth Warren is jumping into the Massachusetts race against Republican Sen. Scott Brown.

#195 BPOE on 09.13.11 at 3:50 pm

Don’t forget your umbrella and rainboots. Enjoy the wonderful I-5.
Brad in Van on 09.13.11 at 10:21 am

Now onto greater things. I have reached my goal because I landed a great job in Seattle working for Microsoft and we will be moving there November 1

#196 disciple on 09.13.11 at 3:57 pm

What do birds do? They throw their offspring outta the tree as soon as they are well-fed. Fly or die, you peckers!

Peakoilist, it is a different world now, obviously, and you see things differently when you actually do have kids, as I understand many boomers commenting here don’t…I believe in launching early but not quite like the birds would. I think it is a natural way of things that children eventually disagree with their parents’ worldview and subsequently feel the need to move on, but if they aren’t ready, then it is your fault as a parent. But every situation is different, and every child is different, no one-size-fits-all.

#197 EdmontonJim on 09.13.11 at 3:58 pm

Before I left home at 17, I’d somehow learned that I was entitled to self-worth, and nothing else. My dad was a lay minister and would sometimes bring me along as he brought relief to families that were in desperate need. Most of these people I saw were hard-working, honest and talented, but due to things beyond their control were living in poverty.

I learned from him that in most cases what people ‘deserve’ has nothing to do with what they get. I also learned that a person can just as easily be happy in poverty as in wealth, but the transition – in either direction – makes people miserable if it’s not in their control.

And that’s all wealth by debt is. Transition from poverty to wealth, and back again. Miserable the whole way.

#198 disciple on 09.13.11 at 4:00 pm

Utopia…maybe try bullet-form instead of essay style? Nah, still wouldn’t work, reading is a lost art…back to hieroglyphic symbols for language (iphone apps)…archaic revival…cycles…speaking of which, MSM is strangely silent on Comet Elenin…

#199 Coho on 09.13.11 at 4:01 pm

Boomers should be given as much credit to do with the prosperous decades after WW2 as they do with the sun going down on the west today. Almost none. Society is like the tide. Tides are driven by the moon. The “moon” is the power behind world affairs. We’re just along for the ride. The tide is now ebbing in the west while rising in the east and it was planned this way probably many many decades ago.

The boomer generation was born at the ‘right’ time — a good time to be born into Canada/USA to achieve financial prosperity. Sure, people worked hard for what they have, but there was more opportunity. There were more lifelong jobs available. Your dollar bought much more. There was a strong manufacturing base with many good paying jobs. People were more optimistic about the future.

Today is a different time and a very different world than it was then. It is the same demons running the place, but things have progressed as they’ve planned for the most part. Unfortunately their goals and interests are ultimately bad news for people and to their detriment.

Trilions are being spent on the “war on terror” although more Americans are becoming of the opinion that the greatest threat to their national security is their own government. Our manufacturing base has been gutted. Good paying jobs are gone only to be replaced (if at all) by ‘McJobs’. Our dollar buys much less. The average job lasts only a few years rather than decades, therefore there is a lot of job insecurity. Still, people go into half mil mortgages.

So boomers, quit bragging and disparaging the younger generations. They’re only taking advantage of whatever “opportunities” that their parents and grandparents had available in their time. Unfortunately, these “opportunities” are a mere shell of what they once were. True opportunity has almost vanished and been replaced by false hope and alluring debt traps.
There’s enough blame to go around for everyone. There are always too many fence sitters, usually 95%, fearful, not wanting to rock the boat, either by being unaware, uncaring, or practicing cognitive dissonance and waiting for the 5% (that’s all it ever is) to bring hope and positive change for the future. It may have been a similar situation back in the time of the American Revolution.

#200 penpal on 09.13.11 at 4:19 pm

@ #80 Debtfree

To paraphrase H.L. Mencken;

‘Experience keeps a dear (read expensive) schoolroom, but some will learn at no other.’

My fear is that most of these entitled fools are woefully unprepared “emotionally and spiritually” for any real austerity, let alone financially. The social costs may be devastating (increased numbers of suicide, divorce, addictions, criminality, etc.)

#201 meslippery on 09.13.11 at 4:28 pm

#124 Bigrider

Markham 60×110 $538k
Nice house
http://www.realtor.ca/propertyDetails.aspx?propertyId=11104489&PidKey=1138190379

#202 penpal on 09.13.11 at 4:36 pm

@ # 88 Mr. Buyer (and all previous posts today)

I think your tied your kimono a little too tight today.

#203 penpal on 09.13.11 at 4:42 pm

@ #90 Aussie Roy

Thanks for that.

I did not realize that refi mortgage demand was so strong in OZ.

I was referring to NEW mtge originations and applications. I understood them to be the lowest on record, though, of course, it is possible I interpreted the data incorrectly. I am, after all, really only a hairless monkey. LOL!

Again, thanks for your consistent input.

#204 penpal on 09.13.11 at 4:44 pm

@ # 81 Pat (re: LH)

I think he already is, he just doesn’t know it yet.

#205 Live Under Your Means on 09.13.11 at 4:48 pm

#171 I’m stupid on 09.13.11 at 1:23 pm
#22 LH
You said yesterday.
Agreed 100% ! or should I say 90%?
Since I graduated from college and started working 5 years ago, I have saved more than 90% of my after-tax income. This is the surest way to get rich in a deflationary (or at least disinflationary) environment. You don’t go out for dinner or own a car. That’s great.

Don’t be stupid, life is about balance that’s the point of this site. Your pissing your youth away, you will be left with a shit load of money and no memories, a wrinkled old man wishing you did more when you were younger. I dont think anyone on their death bed ever wished they had a nicer home or made more money. I’m not saying sell the farm but get out their and have fun.

…………………………….

I’m with you #171 – Don’t sacrifice life for a big bank roll. Life is too short. I wouldn’t trade all the wonderful memories I had when I was young – travel, etc. Same goes for my DH who had traveled extensively before I met him. And now, we still vacation & and enjoy those precious moments w/family, old and new found friends. It’s all about balance.

#206 Live Under Your Means on 09.13.11 at 4:50 pm

#184 Cookie Monster on 09.13.11 at 2:36 pm

You have extremist views.

#207 penpal on 09.13.11 at 4:51 pm

@ #91 Jody

Shhh!

Hush!

I have been enjoying the relatively feeble competition these feminized lightweights provide for the fairer sex’s attentions for years!

Some ladies really do want a ‘real’ man in all his masculine glory. LOL!

Works for me!

#208 Cane Box on 09.13.11 at 4:56 pm

This is an interesting article as I just experienced this. I’m buying home in Canada for the first time and realize every house that I’ve liked has gone in an auction mode with people bidding 5% over the asking price (which itself is inflated) without any reservations. On top of this realtors are encouraging this behavior especially where there is more than one ‘offer’. Hope there is more transparency and sensibility as after 1 month in this ‘game’ I’ve certainly slowed down my search.

#209 penpal on 09.13.11 at 5:02 pm

@ # 94 Utopia

With all due respect fella, if you only arrived at “So I give up. This is a waste of my time” after two years of posting so many predictions here, I’d say that is evidence of insanity, not prescience.

That said, what did you expect from this crew? – A statue outside the parliament buildings?

BTW…. Did you actually take any ‘real money’ positions in these investment themes, and if so, how did you do?

#210 penpal on 09.13.11 at 5:10 pm

@ # 96 Beach girl

Charming.

What a role model.

And, such a happy person you seem, to boot!

P.S. it is ‘pencil necked geek’ not ‘pencil headed geek’ unless, of course, you may be referring to an unfortunate endowment.

#211 bigrider on 09.13.11 at 5:54 pm

#201- Meslippery to Bigrider.

Forget resale meslippery, everybody lining up for new.

Mebuysused everytime however.

#212 Proud Gen X -er on 09.13.11 at 6:08 pm

Thought I would share my “gen x” experience of leaving home at 17, paying my own way, and having finally paid off my thousands of dollars in student loan debt. As a couple, we took years to save a deposit to purchase a condo in Vancouver in our 30’s. Only what did we discover? In our building, older owners who purchased units at 1/4 of the price, and now living on fixed incomes. What does this mean? That the building will need stuff – ie. a roof, etc., usually paid for by an assessment. But – one older owner in particular, the one who has lived here for 20 years plus, – has said they cannot afford an assessment due to fixed income situation – they will have to sell. So what does that mean to us?

Our “elders” in our building initially had an expectation that we, as young able bodied gen xer’s, would do all said maintenance work around the building for free, yes, by us – painting, concrete sealing, pavement repairing, cleaning etc. – (specific maintenance dictated by the strata) so as to save the maintenance fund for further assessments and so not force certain people out.

Of course saying ‘no’ has meant dead rats left under our window, constant harassment, etc. Also, different rules for them than for us – they can leave stuff in the halls, we can’t. Oh it goes on and on. Non-stop. There is an unwritten laundry schedule. You can’t do this. You can’t do that. The older strata (only one other 30’s owner here) wanted to pass a No-using-your-kitchen-after 9pm rule, even though we often don’t get home from work until 10pm. Really, some people just don’t like to share. Even their walls. (Hey, we even offered to do all the lawn care, for free, when we first moved in – but this wasn’t on the list of things they wanted us to do, so they said no -).

Ironically, IF they were nice to us – even reasonable, we probably would have considered doing some work for free – as long as there was sufficient WCB coverage (they would like you to do the work for free as an owner because the strata then doesn’t have to provide WCB coverage. SO you can just go ahead and fall off that ladder….).

Now, we are either going to go into more debt OR commute in order to purchase a house, with NO strata title: because we are tired of living in 500 sq feet and being punished constantly for having been born at the wrong time. (Crazily, rent in someone else’s house in our current neighborhood is currently more expensive than the current mortgage & strata fees we pay, even with property taxes and money saved for an assessment.)

TO ALL GEN Xers out there: IT IS ABSOLUTELY WORTH IT TO GO INTO EXTRA DEBT TO BUY A HOUSE over a condo, and worth scrimping to save a deposit to do so. DO IT. DO IT. DO IT. I will never get back the wasted time dealing with the strata, never. NOTE TO GEN X: If you do buy a condo, really really really consider who lives there, it is more important than the contingency fee. Otherwise you will be faced making difficult decisions. I mean, when the furnace goes and the older person your parent’s age in the building who bullies you doesn’t have the money to fix it, do you really want to be the bad guy who insists their unit be put up for sale with a lien to pay their share?? And face the consequences? If you own your own home, Terasen will put in a gas furnace and add it to your bill. JUST SO MUCH EASIER. No one demanding an engineers report on whether or not you need a new gas furnace when it’s 30 years old and about to kick the bucket. Wow, worrying about interest rates is NOTHING compared to the reality of purchasing a condo and living the reality of living with a multi- demographic existence with people you are NOT related to.

And honestly, after this experience, I know I would rather help my own family out than work for free for people who make my life miserable on a daily basis. It really makes you appreciate your own family. You know, people who you don’t mind looking after because they would never do the kind of things that these unrelated people would do to torture you when you won’t give them money (in the form of free labor) to better their real estate – because once you’ve lived through this kind of hell you absolutely want to support people who treat you well.

For all of you saying you aren’t going to leave your kids anything, etc, well, maybe you will change your mind in 10 years time when you begin facing health challenges, or in case your financial situation ever abruptly changes and you need to rely on them. Both of us – who saved our deposit ourselves with our jobs – will continue to help our extended families out financially for the rest of our lives, without ANY expectations. Really. Because I know they will never leave dead rats outside my window, swear at me, pound on my walls, leave nasty notes, or dump stuff on my head out of their windows if I don’t support them financially.

The kind of living where you have such a range of income due to speculation (ie. people who bought and fully paid off a unit in a building that has tripled in price but no longer work or are on a disability pension) as well as diverse ages is what people face in the future in terms of housing – when families no longer can afford to bring up kids in a house and so do so in a condo complex where boomers have retired to. There’s going to be some tension, especially if there is only one washing machine for everyone to fight over. (But perhaps this builds “character’?)

Honestly, a house with your extended family – or, a condo complex where in each unit you have up to 3 generations and a strata torn between generational divide?

I don’t know what is so wrong with a multi-family living situation with kids living at home paying into a family mortgage with an agreement at the end that when you sell they receive a percentage.(I hear laughter – but they OWE US SO MUCH for living at home all these years!) But isn’t it in a way similar to a no-money-down condo purchase? They make a payment and maintenance fees each month. I would ABSOLUTELY do this with my kids (and I don’t even have any). It makes more sense to me than your kids paying out fees to share a condo building with strangers while you rent out your basement suite to a stranger.

And, if you have it, why wouldn’t you put out a deposit to start out the kids you brought into this world? Why’d you have them?

Really, its not about how much real estate you take with you when you die, or making family suffer. Family is more important than money. Come on, WHY would you want to see members of your own family struggle when you are comfortable, and say it’s for their own good? `I struggled so they need to to?’ Both sets of our (fantastic) grandparents helped our own boomer parents out. They were able to live in houses, and have us, and a decent quality of life, and be there for them in old age. (And no, neither of our parents ever had neighbors walk over from the house next door and pound on their walls for using their kitchen at 9pm at night just “because you open your cabinet doors too loudly and I could hear it and it bugged me so stop”.)

Fine, MAKE your kid live in a divey apartment, pay their own way – perhaps the cost of cleaning up the bed bug infestation they bring with them on visits home because they are sharing a building with 30 other high turn over units will “show them”. Or the bits of glass from the smashed car windows brought in to your home on your furniture because of the limited place they can afford to live – “they are finding their own way”. Maybe you prefer not having any grandchildren because they just won’t be able to afford it.

#213 Martin on 09.13.11 at 6:08 pm

Interesting post!

Seems like I’m reading about myself there. Well, except for that whole notion that kids living with their parents are nothing but leaches who won’t amount to nothing in live.

I’m 28 and still live with my parents, though I’m kind of itching to move out… but I keep reading this blog and it keeps me planted. Why would I buy if prices are so damn high? Why would I rent when I can live at home rent-free?

My beef is that you stereotype the “homeboys”. Well I have $50k in savings (TFSA, Bank Preferreds, Stocks, Bonds, Gold). I have a good job paying $60k/year and I’m calmly saving up to launch one day soon. So you see, we’re not all fiscal fools. But I do agree there are a lot of incompetent financial fools out there, but they come from all walks of life, age groups, and locations, not just the failure-to-launch kids.

#214 Cookie Monster on 09.13.11 at 6:18 pm

#206 Live Under Your Means on 09.13.11 at 4:50 pm

#184 Cookie Monster on 09.13.11 at 2:36 pm

You have extremist views.
—-
Thanks. I try to be extremely refreshing, informative, provocative, intelligent and entertaining.

If you misunderstood my post about swimming then read Coho’s post at #199, same message, different style.

#215 Beach Girl on 09.13.11 at 6:18 pm

Love these remarks.

____

#196 Disciple What do birds do? They throw their offspring outta the tree as soon as they are well-fed. Fly or die, you peckers! (That is funny). See I am laughing.
____

#210 Penpal

Charming.

What a role model.

And, such a happy person you seem, to boot!

P.S. it is ‘pencil necked geek’ not ‘pencil headed geek’ unless, of course, you may be referring to an unfortunate endowment. (Are you being a weinie?)

____

I can insult my ex any way I want. You did not marry him. For your info, I am paying for the education of the two idiots. Only for one reason, so hopefully they might be able to look after themselves.

Henri M., where were you when I needed you.

Commenting on male appendages is nasty. I would not go there. And, actually I am a happy person. I go to bed laughing, about all the comments on this blog. Pure, free entertainment.

Also the Jack is a Jack Russell, Known as Miss Daisy. Besides Jack Daniels is a vile, sugary drink. Dry wine is better.

#216 jess on 09.13.11 at 6:20 pm

the captive mortgage reinsurance probe

lenders + insurers

According to Jeff Horwitz
The two sides created “elaborate financial structures that had the appearance of reinsurance but failed to transfer significant amounts of risk to their bank underwriters.” The scheme was really “a way to hide illegal business referral fees.”

http://fairwhistleblower.ca/content/banks-took-6b-reinsurance-kickbacks-investigators-say

#217 Cookie Monster on 09.13.11 at 6:27 pm

#206 Live Under Your Means on 09.13.11 at 4:50 pm

#184 Cookie Monster on 09.13.11 at 2:36 pm

You have extremist views.
——
Truth is an extreme, honesty is an extreme, perfect understanding is an extreme, correct knowledge is an extreme, reality is an extreme. Cognitive deficiency is a non-extreme.

#218 Jason on 09.13.11 at 6:35 pm

I’m shocked to hear people still talking about multiple offers & quick sales! This certainly isn’t happening here in Edmonton!
In Edmonton, ALberta at appears we are going into A HUGE but slow credit bubble burst. Huge restaurants/Bars in premium central locations of shut their doors after being deliquent for rent for over 90 days or declaring bankruptcy! Many of the retail & restaurants had been in business since the early 80’s and survived the huge credit bubble bust that occured in 1987.
My point is everyone is do indebt here in edmonton, we are all tapped out! Actual TOTAL residential & land sales commercial is only about 15% of what it was in 2007!
Dozens of newer condo highrises and low rises I know of built over 4-6 years ago have dozens of suites left in them not able to sell! Still a developer with a new developement that collpased in 2009, but has restarted brgas in the newspaper about the upcoming real estate boom in Edmonton!
Don’t believe everything you read in the newspaper folks!

#219 Nostradamus Le Mad Vlad on 09.13.11 at 6:51 pm

#74 Garths blog rules — Thanks, and I agree. Smoking Man provides good thinking / talking points, as well as Garth (and others).

#82 timo — “It’s not just an European event. Chaos there will echo around the world. Coordination among governments in Europe and globally . . .”

Indeed, but who profits from the chaos? Who funds both sides in a war? That is where the coordination comes in mighty handy.

#96 Beach Girl — “But, I am the only one with any money. Life is a bitch. Don’t say it. HAHA.” — Good story, which again proves women are invariably two steps ahead of men. Maybe in our next lifecycles we can play catch-up by rebirthing as ladies!

#142 GregW, Oakville — “And encouraging them to try and max their RRSP contributions.” — Hi Greg, disagree on RRSPs — I would choose a TFSA any day. Much more flexible, But to each their own. Cheers!

#151 Nemesis — Hi Nemesis, and thanks for the link. Is the sound of the war drums getting louder every day? Sure seems so. SArabia and Iran are on the US’s radar, followed by Venezuela.

But it’s only because the WH is incapable of looking after their own — they must keep citizens permanently distracted so they won’t see their govts’. own faults.

#190 Smoking Man — “Somthing is not right, thats why I have become a bear..” — You’re right, see #151 Nemesis post. It’s all coming together — everything, but it’s gonna hurt a lot more sheeples than we will ever know.

#199 Coho — “Trilions are being spent on the “war on terror” although more Americans are becoming of the opinion that the greatest threat to their national security is their own government.”

That is correct. The only ‘terror’ being created comes straight from the Pentagon and a couple of other sources, which is why TPTB brought up the Tea Party, with it’s extremist views. The west is toast, one way or the other.

#220 Smoking Man on 09.13.11 at 7:10 pm

Hey ottawa mike how is this for a tin foil

http://www.youtube.com/watch?v=yuC_4mGTs98&feature=player_embedded

#221 Westernman on 09.13.11 at 7:17 pm

Elmer @ #18

Hey BOY…
Shouldn’t you be out somewhere getting yet another tatoo to increase the wonderfulness of yourself?

#222 Keeping the Faith on 09.13.11 at 7:27 pm

#77 S … you’re an idiot.

#223 Westernman on 09.13.11 at 7:37 pm

Beach Girl @ # 96
See men? THIS is why you don’t marry them…use them for your amusement and send them on their way. Don’t live with them either…you will be legally married after a short period of time in the eyes of the law.

#224 SafetyBear on 09.13.11 at 7:37 pm

“In other words, there’s a straight-line connection between cheap money and expensive houses.”

The Reserve Bank rate here in Australia is 4.75%. Not uber-expensive I’ll grant you, but the prices here are still ridiculous.

#225 Ron on 09.13.11 at 7:38 pm

#94 Utopia

By chance, are you of British descent?

#226 Waterloo Resident on 09.13.11 at 8:08 pm

My best advice to ALL MEN is this : “DON’T GET MARRIED !!!”

If you get married, there is a 70% probability that your wife will cheat on you, screw you in court, and you will be paying (no; ‘bleeding’) alimony support payments through your eyeballs for the next 2 decades.

For just a bit of sex; ITS NOT WORTH IT !!!!

I would have to say that Buying an over-priced house and Marrying a woman are BOTH really stupid things for ANY MAN to be doing right now.

There is ONE exception to this rule: the 7 year rule.
For some reason, MOST cheating happens around the 7-year mark, so if you and your significant ‘other’ have been together for 9 or 10 years then go ahead and marry her, she’s not going to cheat on you. Otherwise, WAIT for at least 7 or 8 years before you get married. if you don’t you WILL BE SORRY.

#227 timo on 09.13.11 at 8:10 pm

http://theautomaticearth.blogspot.com/2011/09/september-13-2011-he-said-she-said.html

rumours on he said she said.

‘BNP, Société Générale and Crédit Agricole together hold nearly $57 billion in Greek sovereign and private debt, versus $34 billion held by the largest German banks and $14 billion at British banks.

French banks also held more than €140 billion in total Spanish debt and almost €400 billion in Italian debt as of December, according to the latest figures from the Bank for International Settlements. If either of these latter two governments were to default, their banking systems could collapse and take the French system with them.’

Come on Ben, fire up the helicopter and end the card shuffling at the casino. Bring the large money bags this time because your going to need them.

#228 Derek R on 09.13.11 at 8:10 pm

#212 Proud Gen X -er on 09.13.11 at 6:08 pm wrote:
Thought I would share my “gen x” experience of leaving home at 17, paying my own way, and having finally paid off my thousands of dollars in student loan debt. As a couple, we took years to save a deposit to purchase a condo in Vancouver in our 30′s.

I am truly sorry for your awful experience. It reinforces my opinion that condo-living combines the worst aspects of owning and renting. I hope that people take notice. Buying has one set of advantages and disadvantages. Renting has another. There is a time when one may be better than the other. But they shouldn’t be mixed.

#229 Sky on 09.13.11 at 8:11 pm

@ Utopia : What you’re looking for – you won’t find it in cyberspace. You need to look in the flesh and blood world for that. You might not find it there either, but at least you’ll have a shot. Good luck.

@ Mr Buyer : Great posts. You sound like a wonderful father. Blessing to you and your family.

#230 Andrea on 09.13.11 at 8:13 pm

Hi Garth,
Have you seen the new curriculum for grades 4-8 called Financial Literacy? http://www.edu.gov.on.ca/eng/document/policy/FinLitGr4to8.pdf
All the best to you and your family. Thanks for sharing your story today.
Andrea

#231 GregW, Oakville on 09.13.11 at 8:33 pm

Hi #219Nostradamus, Yes I was going to also mention the TFSA too, but I couldn’t remember the how the acronim went at the moment I wrote the comment, so I only mentioned the RRSP. Which was the only one of the two that was around when I started saving. I did think someone here might notice that omition. Thanks for pointing it out ;)

#232 TurnerNation on 09.13.11 at 8:41 pm

Sorry Ewetopia – Smoking Man you ain’t.

#233 Hoof - Hearted on 09.13.11 at 8:50 pm

#185 timo

From what I am gathering, the banks don’t want to touch the foreclosed homes for a number of self -serving reasons.

One is they (banks) can can still claim poverty and hope for more bailout money. One would think that foreclosure should obligate them to own the asset, and then set it back on course with a new quantum level of the economy unfolding.

If they don’t foreclose, perhaps the owner should stay. perhaps de facto still own it?

Foreclosed home shouldn’t remain in limbo.

They are still an asset , simply depreciated in value.

Perhaps the aforementioned exposes the scam of the Banking System even more.

#234 OttawaMike on 09.13.11 at 8:51 pm

Smoking Man,
With the 10th anniversary celebration just having passed, I have a lot of new questions about what happened that day. All my questions are over and above the ones posed in your vid link.

#215 Beach Girl on 09.13.11 at 6:18 pm
Jack Daniels = Fiery Toilet Water

#235 Smoking Man on 09.13.11 at 9:03 pm

#37 Shaun on 09.12.11 at 10:49 pm

I have been stresed my idiot oldest son just joined the army..
I offered him a huge soom of money not to do it, so he could open his music studio….It’s going to be funny when they discover his RON PAUL Revolution tatto.

See what happens when you young idiots fall for a dame then it ends, you do stupid things…

I offered to buy him as many ho’s as it took to forget about her. Not one he wanted…

WW3 is only a turkish gun boat escorting a gaza aid boat getting sunk…….

So looking to buy a cabin way up north so when sh!t hits the fan I will have him a hide out. Problem is don’t think it will matter. He’s nuts

#236 The thing in the basement on 09.13.11 at 9:24 pm

Given today’s topic, I though I might change my moniker again. Only up to comment 150. Hope to get back before next post starts.

Killer Chicken (or imploding boomer)

#237 Ronaldo on 09.13.11 at 9:24 pm

Way to go Garth, you hit a home run with that one. Keep on swinging. Some will eventually get it.

#238 daystar on 09.13.11 at 9:30 pm

#94 Utopia on 09.13.11 at 3:07 am

Cheer up, bud. Just ’cause people don’t interact doesn’t mean they don’t read you. The majority of readers are silent, y’know?

#239 TO Girl on 09.13.11 at 9:45 pm

RE #212 Proud GenXer

As a fellow member of GenerationX, and a first generation Canadian from an immigrant family, I say AMEN and thank you for your post!

My parents survived WWII in Europe, childhoods raised in rubble, poverty and need. They came to Canada and built a life for themselves and their children. They’ve given me and my siblings everything, and in turn we’re there for them.
This life promises us nothing. I’m lucky. My family is shelter from the storm.

#240 Keeping the Faith on 09.13.11 at 9:46 pm

#213 Martin

I guarantee you would have a better relationship with your parents if you left THEIR HOUSE AND BECAME AN ADULT! If you feel the need to continue to be a leech and an infantile adult all at the same time, you could go to the food shelter with a soother in your mouth to satisfy your personality disorder of being “Stuck in Grade 9” Grow up! 60K/yr, 28 yrs old, living in your parents house, 50K in savings and investments?!?!? What a mama’s boy! Seriously, get a life, is this what you dreamed of?!?! What a joke, straight from the horses mouth, does mama do your laundry too? does she pack your lunch and bring it to you at work when you forget it?!?! LOL

#241 Cookie Monster on 09.13.11 at 9:47 pm

Garth, you get your clock fixed?
Time of this submission is: 09.13.11 at 9:47 pm

That’s Ron Paul time. — Garth

#242 simkev on 09.13.11 at 9:56 pm

Smoking Man
Now I am really worried about you bud ! I Think you Think to much. But I realize why you do.

#243 HouseBuster on 09.13.11 at 9:58 pm

#66 – Now, I usually higher degreed immigrants that energetically want to learn, and they will do anything needed to help me build a business, that as it prospers in turn helps their financial future.
——————————————————————–
Traitor!

#244 ttfh on 09.13.11 at 9:59 pm

You know what I have been waiting for? With all those dumbnuts who bought real estate in Calgary in 2007, when it went through the moon, all their mortgages are going to be up for renewal. Everyone knows that the first 5 years of any new mortgage, you’re just paying off the interest…you get NO equity in your home. Well, when their mortgages are up for renewal next year, their homes will not be remotely worth what they paid for it in 2007, they are not making near as much money as they were then (if they haven’t already been laid off), so they are not going to qualify for a mortgage. I sold my place at 240% more than what I paid for it 5 years prior. All these stupid people who just have to “keep up with the Jones'”…stupidity does NOT pay off! I predict Calgary is going to be in a housing bubble burst next year and I am just rubbing my hands together, just waiting with my cash in my pocket. BRING IT ON!! (o:

#245 The thing in the basement on 09.13.11 at 10:23 pm

Lots of interesting comments today. Monetas @158 was good. So what do I do about the thing in my basement?
22 yrs old. Barely grad’d grade 12. No ideas what he wants to do. No ambition. Worked full time for 9 mos, then part time since for 4 years. Does SFA to help out
around the house.

And the worst thing. His mother defends him. “he’s not like you” she says. I’m nothing special in that regard. But given my in-laws, I must appear very special to the Mrs.
It’s so frustrating.

#246 Stevenson on 09.13.11 at 10:24 pm

Garth – I think you’re your wrong here. I don’t see whats the problem with a parent supporting their child and giving them a head start on life. It is just the matter of the method they help rather then shelter in general. Some family’s are better off and others don’t get that type opportunity, but it should not be seen as a negative influence.

My parents put me through private school and paid for all my education until I finished my MBA. All the people I have met during my high school years have proven to be very helpful in my career as well. I feel very grateful that I did not need to worry about my expenses and the advantage of entering the workforce without any debt.

I stayed at home until 25 worked and started my internet start up company on the side. Saved enough money for large down payment and moved out. I am 45 with 2 children and completely out of debt.

All I can say is that none of this could of been done without sheltering parents. The problem is not sheltering but “how” its done.

#247 rental monkey on 09.13.11 at 10:55 pm

~ As always Garth, very informative.

Smoking Man~ You rock! I bet you would be a hoot to party with!!!

Beach Girl~Your post earlier is everything that is wrong with women not being given a fair chance. You have stated yourself how: the court gave you most of the assets in your divorce, the bank gave you some big loans and you LUCKED out making some sweet equity. Your over-all attitude suggests that you are a TAKER and not a GIVER. Unfortunately, you give the rest of the females that work HARD for their money a bad name. I bet you have been called a female canine PLENTY of times, and quite frankly, it sounds like you deserve it. Kisa are only a product of their environment. HMMMMM.

And Utopia: don’t get discouraged, it’s the lack of nicotine in your system that is making you feel all insecure. Well, that and maybe the full moon…..Don’t worry you are still loved. Feel better? Sincerely, I hope so.

And Nosty your links are always awesome!!

Now, I need to work on my Garth blog addiction……

#248 604genX on 09.13.11 at 11:03 pm

Great post Proud GenX, despite the, er, rant at times.

As Garth keeps telling us, those Boomers are totally screwed and will be cash poor and house poor just in time for retirement. Your post reminded me that there are going to be an awful lot of bitter Boomers festering in condos all over the country. Just like your place. thanks for that harsh reminder to avoid that life at any cost.

PS Get the hell out of there, pronto. Don’t look back.

#249 Bottoms_Up on 09.13.11 at 11:07 pm

#213 Martin on 09.13.11 at 6:08 pm
————————————-
Dude, you already have proven your ‘failure to launch’ based on your own admission.

You’re 28 with a good job in a city with relatively low housing prices. You should have launched half a decade ago.

#250 Beach Girl on 09.13.11 at 11:38 pm

3247 Rental Monkey

Beach Girl~Your post earlier is everything that is wrong with women not being given a fair chance. You have stated yourself how: the court gave you most of the assets in your divorce, the bank gave you some big loans and you LUCKED out making some sweet equity. Your over-all attitude suggests that you are a TAKER and not a GIVER. Unfortunately, you give the rest of the females that work HARD for their money a bad name. I bet you have been called a female canine PLENTY of times, and quite frankly, it sounds like you deserve it. Kisa are only a product of their environment. HMMMMM.

___

If I was a man, you would be saying, right on bro. What do frustrated monkeys do.

I would not bother giving you a HARD time but I am sure you would be a TAKER. Pun on your B.S. You got that one in hand I bet. LOL.

And the girls that you know who work HARD for their money. I hope it is not on you.

That would be true desperation. And dogs are loyal. lovely companions.

#251 jshum on 09.14.11 at 12:10 am

I am in my own apartment not supported by my parents. Maybe I like this because I am jealous of people in a house. I hope you are wrong and people don’t end up in over their heads. There certainly seems to be the feeling that you have to have a house, whether you can actually afford it or not

#252 jshum on 09.14.11 at 12:13 am

I hope the stuff in comment 218 isn’t the canary in the mine warning us that what you have been talking about will soon occur

#253 Judy on 09.14.11 at 3:33 am

@#94 Utopia on 09.13.11 at 3:07 am:

You are making the mistake of thinking that the people that post here are the only ones evaluating your advice. In fact, there is silent majority of lurkers (me included) that read and take in the intelligent posts on this site. Over the years (yes, I’ve been here that long), I’ve identified who is smart, who is knowledgeable and who is a loon. This at least saves me time since I no longer have to read through all the posts. After reading Garth’s post of the day, I do a key word search for my favorite commentators. You are among them (special thanks also goes out to Junius, DA (I like both sides of the argument, so sue me), and the ever interesting Smoking Man). So yes, you are making a difference and people are listening.

Some other thoughts. Just because someone does not take your advice doesn’t mean they don’t appreciate it. There may be many reasons (including no $$$$) why someone may pass over good investment advice. Also, if you are looking for feedback from your readers, consider starting your own blog. The number and, uh, variety of posters here can make one to one conversations difficult.

Cheers.

#254 betamax on 09.14.11 at 5:38 am

#117 Joe: “Canada is on a trajectory of near 0% interest for the next 2-3 decades.”

Thanks for the belly laugh of the day.

#255 betamax on 09.14.11 at 5:53 am

Beach Girl – I like the cut of your jib.

(What’s the etymology of that phrase, anyway? No, don’t tell me, I’ll google it.)

I have no kids but some nieces/nephews, all mollycoddled young adults who are unrepentent underachievers.

Once I visited them on a hot summer day. Their parents were out and they were sitting in a sweltering living room, watching TV. The windows were all closed and a large upright fan was sitting at the side of the room, not turned on.

They complained of the heat but didn’t think to crack a window or turn the fan on all day. I did both as soon as I got there and the room was immediately cooler.

They were amazed at my seemingly magical abilities.

I was appalled at how their parents, with the best of intentions, had created these overly dependent, useless human beings. Nice kids, but I wouldn’t hire them to wash my car.

#256 Martin on 09.14.11 at 7:51 pm

#240 Keeping the Faith

Haha, no I pack my own lunch. But my roommate (aka my mom ;) does do my laundry. Sweet deal!

I do appreciate your comment though since I feel like I’m wasting my good years. Cheers fella!