Planning

Young Angie lives in a town a half hour east of Calgary. “There’s something I argue about with my partner,” she says. Natch, it’s real estate. Together they make $85,000, pay $800 in rent, own two beaters, save $500 a month and have $33,000 in personal debt. No assets.

Then this. “We are being urged to purchase a home, but I feel that houses are still very overpriced. I also think that purchasing a condo or townhouse will result in our being stuck with a property we might not be able to sell. Prices in this town can’t possibly remain this inflated, can they? My partner wants to buy now, but the mortgage I am comfortable with (250,000 with 20% down) is first, impossible now as we have nothing close to 50,000 in savings and secondly, not able to purchase anything very good in this town. I hope that in five years prices will have lowered, although I’m not sure what  the best is that I can expect, as many home owners around here bought at ridiculously high prices (400,000+) and can’t afford to sell for much less.

“My question is two-fold: first, should my partner be saving money, or simply paying off debt? secondly, should I invest my savings in other investments, or start paying down my partner’s debt?”

Why did I bring you this email? Nothing sexy here, after all. Just two Alberta kids muddling through financial puberty. But in its normalcy, this note underscores how and why so many young couples are in the process of throwing themselves off a cliff.

After all, Angie and beau are both working, but have a negative net worth. At their current rate, it would take them six years just to pay off their debts. They’ve got no assets, spend most of what they make, and are being pushed (probably by a helicopter mother) to buy a house. Angie actually thinks she could live with a quarter-million dollar mortgage, if she only had a down payment. Worse, her squeeze wants to buy without one.

And in Hicksville, AB. Where real estate stands about as much chance of long term success as feeder cattle.

This brings us to financial illiteracy, Part Deux.

Or, as I like to summarize: most people are screwed. Sadly, I’m sure this includes most of your family, the people at work and the girls in your Tuesday night evangelical erotic belly-dancing class.

You probably heard the latest numbers about personal debt. They’ve been rising faster than Cookie Montser’s sperm count looking at a Ron Paul poster. In the second quarter of the year we hit yet another record high, as people gobbled down personal loans and mortgages. So, the ratio  of household debt now equals 149% of disposable income, on average. Not good. Even the Americans we love to categorize as Oakies with credit cards never achieved this.

But it gets worse. Personal net worth is now going down. It declined by an average of only a thousand bucks a household, but that was at the same time real estate values were going up. Just imagine what the effect will be when all those people in BC with no savings and million-dollar houses suddenly have real estate dysfunction.  As brother Mark Carney has told us, the number of folks who are now vulnerable to an economic shock is at the highest level in nine years.

And what might that shock be?

Well, according to Scotiabank’s ace economists it’s now likely Canada will be the first of the advanced economies to fall into a recession. Blame a slump in business conditions, American malaise, government spending cuts and a weakening housing market, the bank said.

Imagine that. What happened to that ballsy talk about Canada leading the world in job growth, avoiding the global slowdown and everything being different? According to the Conference Board, the only thing growing fast here is the canyon between the rich and the rest. It’s now increasing more rapidly than even in the United States, were CEOs make millions and (as of this week) 46.2 million people live in poverty.

In fact, if this continues our middle class might look a little more like that to the south – where median household income actually fell last year at stunning 3.2%, while the number of poor people increased by 1.1 million. As you already know, 40% of US home-owning families no longer have any equity, simply because real estate values fell after the debt bubble burst.

I’ve told you before on this pathetic blog that the great divide is opening. On one side will be those who believed their co-workers, real estate marketers, F and their idiot brother-in-law, borrowed to excess because rates are cheap, and bought big. On the other will be the contrarians who sold what others lusted for, got liquid, got invested and paid attention.

So, Angie. Save, don’t borrow. Invest, don’t spend. Rent, don’t buy. Ignore your family. Get a new BF. And move to Vancouver. They need ya, babe.

174 comments ↓

#1 Young Old fart on 09.13.11 at 10:19 pm

Don’t need to be…but sure wanna be…..
FIIIIIRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRST!!
And if I ain’t….it’s still quaint…….
Cuz it pisses off people so much they
BUUUUUUURRRRRRSSSSSSST!!

#2 T.O. Bubble Boy on 09.13.11 at 10:39 pm

Move to Vancouver, when they can’t afford the outskirts of Calgary?

I assume that was tongue-in-cheek… but for anyone considering the Vancouver area, beware: even Squamish thinks that houses should be $2M each now!

http://www.squamishchief.com/article/20110913/SQUAMISH0101/110919984/-1/squamish/squamishs-first-2-million-home-sold

#3 Mean Gene on 09.13.11 at 10:44 pm

First = Moron.

#4 Aaron - Melbourne on 09.13.11 at 10:52 pm

“So, the ratio of household debt now equals 149% of disposable income, on average. Not good. Even the Americans we love to categorize as Oakies with credit cards never achieved this.”
******************************************
Yaha, but the stupid skippies down under did!

http://www.rba.gov.au/publications/confs/2011/kearns.pdf

from page 14.

“As discussed above, several factors contributed to the strong growth in house prices up to the mid 2000s with a key one being the liberalisation of the credit market. Greater access to credit enabled households to substantially increase their borrowing over the 1990s and 2000s. The growth in household borrowing outpaced house price growth so that the housing gearing increased from 11 per cent in 1990, to 21 per cent in 2000 to a little under 30 per cent in 2010. Once house prices and borrowing were rising together, it was difficult to determine whether increased borrowing capacity led to higher house prices or rising house prices spurred increased borrowing.

One benchmark is to compare Australian households’ debt levels to that of other countries. In 1990 Australia had one of the lowest household debt-to-income ratios in the developed world at 46 per cent. By 2000 it had doubled to 94 per cent and was similar to that in Canada and the United States. By the end of the 2000s, the Australian ratio at around 150 per cent of household disposable income was one of the highest in a group of comparable developed economies (Battellino 2010).

Even with these higher levels of debt, loan arrears rates and defaults have remained low compared to history and international comparisons (RBA 2011). Further, most of the debt is held by higher income households who appear well placed to repay this debt (Battellino 2010). Nevertheless, as recent international experiences demonstrate, household debt can amplify shocks. As Stevens (2010b) notes, Australian households would be prudent not to increase their indebtedness at the same rate as over the past two decades.”

******
Aussie burst/melt/fizzle/correction is in full swing so take heed Canadians, your immediate future looks much like our present.

#5 Jsan on 09.13.11 at 10:53 pm

Meanwhile Australia’s house of cards continues to tumble.

Why is it that every single housing Bubble (or any bubble for that matter) has their own “pet” myth as to why house prices should be at the ludicrous levels they are at? It’s because Bubbles need myths to explain away what is nothing more than greed and fear driven irrationality. That’s a bubble after all. It is an asset class that soars to unbelievable levels riding on a myth that is chanted by those who have the most financial reasons to drive the myth (Realtors and Real Estate associations, home builders, housing speculators) and unfortunately the naive and gullible get sucked in and later get crushed as the myth, the bubble and the prices inevitably implode.

It’s almost comical how often this pattern of Boom, Bubble than Bust is repeated unfortunately many people get hurt in the process. It’s especially puzzling when we as Canadian’s have a front row seat to the post Bubble housing carnage next door across the border. This especially naive and fiscally retarded generation will soon find out, that it is NEVER “different here” or “different this time”.

Canada, a country that has millions and millions of empty develop-able acres yet so many fell into the Bubble trap……again, bewildering?

“Home-Shortage Myth Pits Blogs Versus Banks in Call Australia Set for Crash”

http://www.bloomberg.com/news/2011-09-11/housing-bears-say-shortage-myth-means-australia-set-for-crash.html

.

#6 Mike Rotch on 09.13.11 at 10:56 pm

I guess they just live a higher standard of broke than the schmucks in the less desirable neighbourhoods:

http://www.moneyville.ca/article/1053154–toronto-s-toniest-neighbourhoods-are-the-most-in-debt

I recently heard an anecdote about some poor stroker who grosses $20K a month in salary, but is so maxed that he couldn’t secure a $5K “Home improvement” loan……guess the banks finally figured out he only needed that to keep his car from being repo’ed, and decided to stop pouring money down a black hole.

Yeesh! Amazing that I’m much closer to my first million than an idiot that somehow grosses a quarter of that every year!

#7 Mr. Lahey, Trailer Park Supervisor on 09.13.11 at 11:00 pm

It’s official Randy, Canada is leading the race to a recession. The shithawks are here Randy boy, it’s time to take cover.

#8 Smoking Man on 09.13.11 at 11:00 pm

Garth who can fight you on this…..Mabey BEOP

For the last 25 years, John Crow and Good old Brain Maloney set the stage for the globalization agenda. It worked. Saw him few weeks ago on bay street thought about sucker punching him in the face and thought, he is to old…..

Our kids think it’s cool riding bikes to work and living in 500 sqft cubes, that cost 500k they want to be just like the Chinese cause David Suzuki and the teachers we in trusted them to said so. God I miss my Trans AM . and my 69 Chevy Malibu..

Bottom line is power took away it all, my dad a psychologically damaged ww2 vet who’s occupation was a sweeper, could easily buy a house cottage and car on a sweepers wage.

Not to day, power has so screwed the young ones, not only did they do it with masterful precision , but the young have no idea they are screwed. They line up at TIFF to get autographs… I wana puke anytime I see that….

The good news is they will wake up a lot sooner than power thinks………

#9 City Slicker on 09.13.11 at 11:01 pm

Good write up as usual, Garth. The fall numbers should be interesting for all centers.

#10 martin on 09.13.11 at 11:02 pm

11 o clock news:

incredible canadian debt. garth its right even if the rates are down real estate will plunge. i didnt think it would but apperantly it will

#11 JohnnyBravo on 09.13.11 at 11:04 pm

Repeat after me:
“Canada’s economic fundamentals remain strong. Canada’s economic fundamentals remain strong. Canada’s economic fundamentals remain strong. Canada’s…”

#12 Montrealer on 09.13.11 at 11:08 pm

I can’t believe people think that it’s better to save for a downpayment than repay debt.
Debt should be the first thing to clear, unless it’s at like 0% interest. And it’s after tax income you need to repay it…

Garth, where to invest a filled TFSA of $15k (ETFs?) and another $10k outside TFSA (dividends?)? this is the first question after getting out of debt…

#13 Small Steps on 09.13.11 at 11:09 pm

Hi Garth,
We are officially throwing in the towel with our home ownership goal. We are going to be taking the down payment we saved up (100k) and investing it into our business.
However, we will still read your great blog!!

Good choices. — Garth

#14 45north on 09.13.11 at 11:13 pm

Last month in Ajiji Mexico, we were talking to an American couple. I said it would be very unusual if you didn’t personally know someone that had done very badly in real estate. The husband replied that indeed a guy at work owed $400,000 on a house worth $300,000. He and some neighbors (American neighbors) drank some wine and after due deliberation decided to mail in their keys.

You know, the Canadian real estate market right now is like super cooled water. Water normally turns to a solid at 0° C but very pure water can be cooled below 0° C and still remain liquid. It’s fairly easy to do and you can cool water to -10° C and it will remain a liquid. If you stick an object such as a metal rod into the water it will very quickly freeze. There is a theory that super cooled water at high altitude played a role in the crash of AF 447.

I really don’t know what the shock to Canadian real estate will be but it’s coming.

#15 Cookie Monster on 09.13.11 at 11:14 pm

rising faster than Cookie Montser’s sperm count looking at a Ron Paul poster.
—-
That’s disgusting.

#16 Rich Guy on 09.13.11 at 11:17 pm

GOD BLESS THE LITTLE PEOPLE!

Thank goodness for all the people with negative net worth and who are screwed and all.

I mean if everyone was well off financially then I could not feel so darn smug about being well off, now could I?

Fact is, being rich is all relative. Without poor people none could consider our selves rich.

I mean we could all be doing okay, but to feel rich we need to be better off than most people. Sad but it’s true.

Thank you all you financially illerate people who are not well off financially.

(Sorry but I had to use an alias for this one, a bit politically incorrect to say the least. But you all know I am right)

No problem, Shawn. — Garth

#17 Victoria Tea Party on 09.13.11 at 11:18 pm

OBAMAVILLES: SOON ALL OVER THE PLACE

Ageing Boomers will remember their folks talking with derision about Hoovervilles, those hobo hangouts for the Dirty Thirties’ American homeless.

They were named after Republican president Herbert Hoover, who helped to introduce the Great Depression. He was replaced by FDR, who only prolonged the agony unnecessarily due to too much guvmint. But Hoovervilles have stuck in the American conscience ever since.

Now we have what I call Obamavilles, all over the place. They are shanty towns inside LA, at the camp grounds of state parks, and anywhere where the like-minded homeless and hopeless decide to squat, for who knows how long.

Here’s some more from Bloomberg, about the US depression:

“…The distress the consumers are feeling now is historic in its scope,” said Mark Cole, chief operating officer at CredAbility, a provider of non-profit credit counseling.

An index that tracks the financial condition of the average household published by Atlanta-based CredAbility hit a low in the fourth quarter of 2009. Out of the 31 years CredAbility has measured consumer distress, the worst rankings have occurred in the last 13 quarters.

While many families are cutting back to live within their means, in households that have been hit with job losses “things are not getting better,” Cole said. ”

Now, a reminder from Karl Denninger of Market Ticker as to the root cause of all of our collective economic malaise:

“…It’s simple: We’re all Greece.

There’s no material hiring going on in the US, nor will there be. Not because business wouldn’t like to hire, but because there’s no organic demand with which to require the hiring to take place. As a former CEO I can tell you that hiring is a dispassionate decision: You hire staff to produce the goods or services you sell – and for no other reason.

The Government took upon itself to create false economic demand after 2008 through deficit spending. Private business knows this cannot continue forever, or you get Greece. It’s not really very complicated; try using your credit card to maintain a $173,000 lifestyle when you only make $100,000 and see for how long you’re able to do it. That’s what our Government has sequentially done for three years running from 2008-2011.

Every businessperson with an IQ larger than their shoe size knows that this path forward will – because it mathematically must – fail. They were willing to accept a short-term incidence of this back in 2008, because that’s exactly what they believed it would be – a very short-term phenomena.

But now, in 2011, it’s clear that it isn’t a short-term phenomena. And as a consequence there is no hiring going on, because this Ponzi must end, and when it does these businessowners know the outcome will be horrific. They do not intend to get caught not under the falling knife, but the falling grand piano.

The President and the Republican candidates can claim to have “plans” or want “stimulus” or whatever. The fact is that none of this will work. It will not work because the claims of “deleveraging” and “balance sheet repair by consumers and households” is a lie.”

BACK IN CANADA’S REAL ESTATE MAGIC LAND…

ScotiaBank has just dropped fixed mortage rates by a few breatheless basis points. This should smoke out the only ones left in Canada who haven’t yet “purchase a home” at “historically low mortgage rates!”, space aliens.

MEANWHILE BACK IN CHINA

China’s outgoing Premier Wen’s speech to the World Economic Forum meeting in Dalian, China, overnight, was broadcast to the world on BBC!

Two main things stood out in his talk:

–China will spend the next five years growing the country (as the world’s economy continues to implode); and

–It will invest most of its education budget in training new generations of scientists.

Back at Rancho USA, we remain fixated on the pneumatic members of the Kardashian families providing daily gossipy entertainment to mouth-breathers everywhere in that besotted land.

AND…

Over in Kabul, Afghanistan, the Taliban, are hurrying up Mr. Obama’s wish for US troops to finally leave the place, just like the Soviets, the British, Alexander the Great before them. Have I forgotten any other empires? Likely. But the Taliban sure as hell hasn’t!

#18 Jon B on 09.13.11 at 11:20 pm

The widening gap between rich and poor is incredible. I don’t think there are many people who realize how an economically polarized society will vastly change the quality of life for everyone. Won’t take much to see the wealth canyon widen even further.

#19 HouseBuster on 09.13.11 at 11:20 pm

Jobs are being outsourced right, left, and center. Where are people going to work?

How are people going to afford million dollar homes?

#20 Mike - Kristine - Ajax on 09.13.11 at 11:24 pm

I have a small flooring business and I must admit something is up these days. I have lost so many jobs lately due to my company not offering financing. I have not offered this option in a decade and I never ran it no this before!!

I guess borrowing/debt is the new thing with folks these days!!!

#21 City Slicker on 09.13.11 at 11:27 pm

A lot of stock charts in 2008 are very similar, a steep accent then collapse straight down, and it seemed to happen on a dime.
The real estate chart could look the same, soon.

#22 Samir Azza on 09.13.11 at 11:29 pm

This can’t happen in Canada. My real estate agent told me prices will continue to go up and the best time to buy is right now. I asked her how she knows prices would continue to rise. She said her astrologist told her. I was impressed, who am I to argue with astrology, it’s a science. I mean, they launched the Hubble telescope so mankind could have pretty pictures to look at.

So I went to visit my bank to get a mortgage. I told them that my job was a bit shaky and I haven’t been able to save much money. They said no problem, will lend you $500K. I was impressed, so I asked how they are able to do that. The mortgage lady said that the bank takes no risk. Something called the CMHC insures all mortgages or something like that. They are floating this stuff on a bond market with the backing of the government. Wow, the CMHC sounds like one great hockey league. I told the mortgage lady if you, the bank, take no risk, I have $1 Million.

So I am now the proud owner of $1 million dollar house. All my friends are impressed. My real estate agent and her astrologer are really happy. I’m living the dream.

This wonderful story is brought to you by CREA, CMHC, your bank and the Harper government. “Live the Dream”.

#23 wtf????? on 09.13.11 at 11:33 pm

Normally I like the guys over at BNS…but saying that we’ll be first to fall back into recession? Bwahahahahahahaaa !! When did we get out of the recession we’re already in? The ‘growth’ of GDP has all been illusory BS and economic bafflegab by the finance dept trying to talk us into spending more in the hope that a consumer led drive would lead us out of the recession……hasn’t happened. It has been expediant for the Conservatives to tell us that everythings fine….so when wasn’t the government full of crap…this time it’s no differant. The numbers are all being hidden…keerist..you have to have a spreme court case to get any information out of the FED these days under the FOI.

We just have more people with whopping big persoanl debts. BTW the income / debt ratio is now ‘officially 149% …another lie…..it’s been over two hundred since rates were crushed by the sleazy FED. C’mon …if a house costs ( house…not condo) costs a million in Vancouver and the average wage is $80K….what kind of a math wizard does it take to figure out how insane this all is.

#24 Smoking Man on 09.13.11 at 11:36 pm

Bubble heads when is the next bond fire marsh melo party, Im in.

#25 Love this Blog on 09.13.11 at 11:37 pm

@ #1, Young old fart.
I don’t care who you are, that’s funny, right there. LOL. Good post

#26 West Coast on 09.13.11 at 11:41 pm

Nothing says classy like making fun of fat girls.

It’s the guy we’re giggling over. – Garth

#27 Burnt Norton on 09.13.11 at 11:46 pm

#15 Cookie Monster on 09.13.11 at 11:14 pm

rising faster than Cookie Montser’s sperm count looking at a Ron Paul poster.
—-
That’s freakin hilarious

#28 Beach Girl on 09.13.11 at 11:57 pm

#247 Rental Monkey (last post)

I am rely enjoying this blog.

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’ve 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.

#8 Smoking Man

Our kids think it’s cool riding bikes to work and living in 500 sqft cubes, that cost 500k they want to be just like the Chinese cause David Suzuki and the teachers we in trusted them to said so. God I miss my Trans AM . and my 69 Chevy Malibu..

You are on the money tonight, my crazy friend. Lets have an anti-Suzuki day

#29 Suede on 09.13.11 at 11:58 pm

That poor guy in the picture….

#30 Carp on 09.14.11 at 12:10 am

My first hobby farm experience sucks – good thing I rented :-) very little water in the well for 3 weeks. If you live in the country – water is vital.

Our garden rocks mind you – no water to irrigate but enough rain this summer for nature to do its duty.

Visited a home to rent today. 3 acres, nice place – we might rent it. Overall cost of renting is at least 10K per year less than buying a place in the area. If you include interest charges and opportunity costs … ouch …

We also need to visit a 65 acre farm tomorrow. So we can get sheep, a goat for milk and chickens and go one more level into farming …

I like being a renter and having options to play the game of live versus being in debt and stuck in suburbia … ..

#31 Hoof- Hearted on 09.14.11 at 12:13 am

Re #2 T.O. Bubble Boy

While realtors also touted the value of other Squamish homes listed in the $1.3 million to $1.7 million range, it’s not just higher-end properties that are drawing interest. Last Thursday (Sept. 8), a group of 50 architects, home builders and investors from Japan, Korea and Taiwan visited Squamish during a tour of the Lower Mainland, Squamish and Whistler that was part of a Global Buyers Mission organized by the B.C. Wood Specialties Group and the international branch of the Canada Mortgage and Housing Corp. (CMHC).

======================

WTF is CMHC doing in all this ” international branch ???””

#32 AB Bust on 09.14.11 at 12:22 am

I just caught highlights of the tea party debate. Apparently the only way to fix the middle class state side is to cancel social security and do away with capital gains and dividend taxes. Wohooo, we will all be saved in 2013.

#33 Aaron - Melbourne on 09.14.11 at 12:25 am

http://www.theage.com.au/business/australian-homes-are-overpriced-but-how-much-20110914-1k8tm.html

Excellent work by Macrobusiness blogger Leith van Onselen.

#34 Only The Bankers Laugh on 09.14.11 at 12:27 am

Interesting stat on how Canada really did recently in the spectre of amazing house price growth… in Barrick Gold website – investor presentation on Sept 8/11… Flaherty, you pumped this up real, real, real good

Slide 6 ..or 7
http://www.barrick.com/Theme/Barrick/files/docs_presentations/2011/Barrick-MerrillLynch-Sept2011.pdf

Real GDP per person Q4 2007 to Q2 2011 (% change) -negative 2% for Canada! Yes!

Reminds me of the best motivational line from my university hockey coach, ex-Toronto Toros Jack Gibson “Let’s go out and prove that we’re the best of the worst” … Flaherty could not have said it better and will continue to do so.

#35 Debs on 09.14.11 at 12:31 am

Quick question since my husband and I are also muddling through financial puberty – assuming ditching the boyfriend isn’t an option that Angie goes with, which is the better path to take? Maximize savings? Or maximize debt payments? Seems to me that trying to do both at once gives the impression that you’re not getting very far on either front (or at least you’re getting there very slowly!). Thanks.

#36 Jsan on 09.14.11 at 12:33 am

I watched the show “Flipping Vegas” on A&E TV the other day. It’s the first time I have ever watched the show, I didn’t even know it existed. “Stunning” is the only word that comes to my mind when I saw how cheap houses are going for vs what they originally sold for at the bubble peak. I can still recall around 5 or 6 years ago listening to the mayor of Las Vegas talk about the booming Vegas real estate market and about how Las Vegas was the fastest growing city in the United States. He was talking like there was no stopping the progress and how there was no end in sight.

Once again, it just shows how quickly a Boom can turn into a bust, especially when the only thing really fueling the boom is too much cheap and easy credit and a bunch of fools who have no clue what a bubble is and how badly they always end.

When you had a housing boom like Japan had that absolutely crashed, even after everyone agreed that there was no more usable land in most of the major Japanese cities and even though at the time Japan had one the most powerful export driven economies on the planet second only to the US and still their housing bubble absolutely collapsed, what in the world do Canadians think will keep our colossal bubble inflated forever? Tim Horton exports?

#37 Johnny O on 09.14.11 at 12:40 am

I’ve been enjoying the blog a lot lately but I need help with “rising faster than The Cookie Monster’s sperm count looking at a Ron Paul poster.” Are you saying that the Cookie Monster is a gay Tea Partier? Not that there’s anything wrong with that.

#38 Two-thirds on 09.14.11 at 12:53 am

Priceless picture:

– Mortgage
– Underwater mortgagor

Hats off to you, Garth.

#39 BigAl (Original) on 09.14.11 at 12:53 am

Not sure if anyone posted this article from the Irish Times on Canada’s housing bubble/economy – the ‘Northern Tiger’:

“The government may well exert a strong influence on underwriting standards on paper but, in reality, the government-backed guarantees have introduced moral hazard through the transfer of default risk from bank shareholders to taxpayers.

Bank managements are incentivised to play hard and fast with the written rules and, should a negative shock arise, the CHMC has little room to absorb the losses. The government-owned company currently insures $536 billion in mortgages and has just $11 billion in equity: just 2 per cent equity against its total exposure. It’s easy to envisage a scenario in which the taxpayer is left holding the bag.

The Northern Tiger has attracted plenty of admirers in the recent past but, upon close examination, an accident may well be in the making. Will it happen? Time will tell.”

Full Article:
http://www.irishtimes.com/newspaper/finance/2011/0909/1224303758284.html
Irish Times, Sept. 9/11

#40 Nostradamus Le Mad Vlad on 09.14.11 at 1:00 am


Re: Angie (and beau) — Follow Garth’s advice.

Oohhhh that was hard . . . even I understood that!
*
#235 Smoking Man on 09.13.11 at 9:03 pm — “WW3 is only a turkish gun boat escorting a gaza aid boat getting sunk…….”

Theoretical scenario: The US, after taking out Yemen and SArabia, then takes on Iran. Russia and China run right back in to protect their interests (gas, oil and nuke power plants).

While all this is going on, Turkey and Israel square off, hoping nobody notices. Chavez and others take Turkey’s side, while Harper bleats on about things he knows nothing about, and tries vainly to make himself look important.

Can you say We’re f*^&ked?

#247 rental monkey on 09.13.11 at 10:55 pm — Thanks!

#4 Aaron – Melbourne — “Aussie burst/melt/fizzle/correction is in full swing so take heed Canadians, your immediate future looks much like our present.”

The Greatest Show On Earth is underway! All sheeple have to do is watch the play unfold right before our eyes!

#17 Victoria Tea Party — “. . . Mr. Obama’s wish for US troops to finally leave the place, just like the Soviets, the British, Alexander the Great before them.” — Alexander the Great held Af’stan for 36 months, the longest-ever. All the other so-called superpowers had to walk away with their tails between their legs. Empires are so full of themselves, they don’t ever learn diddly-squat.
*
Financial WMD Yes, CDS have blown up Wall St. 60 Minutes clip; Everyone Default! Then after WW3 is finished, a new single currency economy will be brought in. Whether we’re here to see it is a moot point; Great Myths of the Great Depression (PDF); US Bank profits fall. Does the infighting on Wall St. have anything to do with this? Depression? Opinion only; China is right on this; Geithner has a bloody nerve — passing the buck to Germany.

Smoking Man — No link, but “. . . the Americans of their plan to hold a DEFCON 1 “Cocked Pistol” maximum readiness alert drill on 27 September which will be overseen by President Obama at one the United States most secure bunkers located beneath the Denver International Airport.” Isn’t this similar to events just prior to 9-11?

Japan and South Carolina. What do they have in common? Fukushima is expecting a new dose of radiation, SC has plenty of plutonium in it; 14:45 clip FDA set to ban new supplements; Syria doesn’t need any sanctions against it, and neither did Libya; Solar Flare What if one knocked out all the nukes here? At least we would all be on a level playing field.

#41 BigAl (Original) on 09.14.11 at 1:05 am

#19HouseBuster on 09.13.11 at 11:20 pm wrote:
Jobs are being outsourced right, left, and center. Where are people going to work?

How are people going to afford million dollar homes?
====================================

Outsourced yes…and lets not forget the over 200,000 Temporary Foreign Workers every year who are not on any immigration stream – just temporary filling vacancies that all the business owners say are worker shortages.
But the mistake people make is they automatically assume this is low skill workers, and nothing is further from the truth. It is across the board from executives to management to administration to professionals.to semi-professionals to workers. And it is in every industry – IT (especially IT), manufacturing, services, finance, every kind of company imaginable. Golf courses, advertising firms, restaurants, architecture firms, design firms, tire companies, hotels, cable/cell companies, banks, construction, hairdressers, sled-dog tour companies, horse trainers, investment analysts…..and on and on and on.

And another thing people think is that this is some sort of left wing bleeding heart thing. It’s actually the business community who is (quite loudly) demanding their ‘right’ to bring into the country whoever they want to work for them regardless of nationality or borders.

You are now directly competing with everyone in the world for jobs in Canada.

#42 Einsam Solo on 09.14.11 at 1:17 am

I have a recurring dream of Ozzie Jurock being pursued by an angry mob with pitchforks and torches. Just as Ozzie is about to be forked, a helicopter full of realtors pluck him from the melee. But the pilot is F, the Leprechaun of Finance who flies the helicopter into a mountain of cheap money.

#43 vreaa on 09.14.11 at 1:48 am

Vancouver ‘Trophy’ Property Seeks Sugar-Daddy Investor

Bring Lots Of Money

http://wp.me/pcq1o-2Vy

#44 Angie on 09.14.11 at 1:53 am

Thanks for the advice, Garth. Now I have something to show my M.I.L. next time the house question comes up. I really prefer renting until we’re more solvent. I emailed you because I wanted to hear from someone who has no vested interest in my life but is also informed about economics.

I did mean that I would take on a quarter million mortgage only of we were out of debt; I’m sorry I didn’t make that clear. And I adjusted that for decreased income should I take on a lower paying job. I am trying to be more financially aware. I’ll be the first to admit my knowledge is limited, but I’m trying!

When you said dump the BF, I’m assuming you meant stay away from his financial mess. I’ll do that.

@ Montrealer: I am paying down my debt. I wanted to know if I should start contributing more to paying off my partner’s debt. My Debt is student loans, and I pay over the reccomended amount. I don’t finance things; I pay cash. My partner is carrying the larger amount of personal debt. And I’m not saving for a down payment alone, I’m just saving. 19% of my net monthly income goes to savings.

#45 Tim on 09.14.11 at 1:54 am

The unemployment rate in the states is 9.1 %. The unemployment rate in Canada is 7.2%. The percentage of foreclosures per capita in the US dwarfs that of Canada. 60 million people are on food stamps in the US. To top it off Rick Perry is leading the Republican race! Canada is nothing like America

#46 Ghost of Tom Joad on 09.14.11 at 2:10 am

Smoking Man – you’re something else!!

Garth – sorry for getting grouchy with ya the other day … your “nut job comments” about Ron Paul don’t make any sense to me – and boil my blood. Garth you’re still great in my books even though you’re confused about a number of things including globalism, free trade, carbon killing us, etc. Stop drinking all that Ontario fluoride they’re putting in your water to dumb you down and kill you off.

You boomers are way to trusting in your government. Who controls your government though?
Maybe it’s cause I’m not quite as nice as you folks that I can see the bad guys are coming for you. Like it or not, there is a new world order and it is here.

Not trying to brag, because I sure am not much to brag about. However, I scored in the top 5 percentile in mathematics through all of Ontario during my high school years and graduated with highest honors in comp science and math … so I’m no dummy. I don’t have your financial experience Garth, but I’ve learned a hell of a lot in the past 4 years about the subject and I can see that Mr Lahey person keeps saying shithawks are here is right. This is going to get horrible and scary. Not something I am looking forward to.

#47 stage1dave on 09.14.11 at 2:17 am

After sitting on the sidelines the last few weeks, I amused myself by trying to think of anyone I actually KNEW who had actually MADE MONEY by working/saving…I came up with three individuals; out of all the hundreds I know (or do business with) over the last two decades.

All of the others have followed the modern formula of borrowing to buy stuff, & then hoping it appreciates. Make your payments in the meantime…I guess sooner or later you’re supposed to zero out at a certain age because of rising property values, or well timed stock picks, rich recently-deceased relatives, or Lotto 6-49.

(I omitted one dude who inherited several hundred thousand dollars & started a successful business, & another who bought a 68 Charger R/T with a #’s matching hemi engine for a song & then sold it for over 130K 10 yrs later)

Anyhow, I know very few individuals who by hard work and/or skill have built up a sizeable nest egg. I guess that’s why I’m attracted to this blog, the majority of the people I associate with have made a bunch of “money” on housing simply by making their payments & have (almost exclusively) spent this equity buying stuff…on a daily basis, I have to put up with an unending verbal stream of how debt has made them rich. (that’s the short version)

Invariably, this “equity” has been blown on new SUVs, big screens, 5K chandeliers, (really!) $3500 barbeques, (what the hell ever happened to Hibachi?) vacations, & my personal fave; “revenue property”.

(as several of my relatives are currently experiencing, this “revenue” thingie can run both ways…sometimes AWAY from you!)

What I can’t fathom is how “the same” all of this crap is…is there really that much tribal security in owning a Japanese SUV that looks exactly like a Ford SUV? Using borrowed money to borrow more money to buy instantly (& constantly) depreciating assets just strikes me as ludicrous…besides, driving down the average suburban street anymore makes me feel I’m on the set of “The Stepford Wives”.

My concern about the current RE situation is that homeowners’ are not in control of the asset appreciation (or depreciation) & very few of the people I talk to seem to understand the potential pitfalls…& the disastrous fallout that will impact most Canadians to some degree.

(My GF & I understand that every time we are given a dollar, it’s our choice to either spend it or save it…we do this on a monthly basis knowing neither of us wants to be crawling under rusty cars in another 10 yrs. That realization influences whether it gets tucked away, pays bills, invested, re-invested, or blown! We have yet to use any of it as a “down payment”)

Canada is the only country in the western world that hasn’t experienced a debt bomb…yet! Considering all the evidence surrounding us, we could have used other countrys’ disastrous experiences to perhaps mitigate our own impending collective writedown…

Oh,wait…it’s different here…

#48 C on 09.14.11 at 2:44 am

Angie:

I’ve been renting now for 3 years, before this I owned 2 homes. Let me say that owning isn’t all sunshine and lollypops. Owning eats up your time like a shark, you spend months trolling around IKEA or JYSK, HomeDepot or Totem buying stuff to feed the house. You’ll spend months looking at kitchen stuff, bathroom stuff, decor, appliances and more just to feed the house more.

Then you’ll fork out property tax, maintenance and throw your money away on mortgage interest.

Don’t forget about “keeping up with the neighbours” too fund.

Also shovel the snow, mow the lawn and clean the gutters.

Then you get to worry about rates going up and house prices on a monthly or even daily obsession.

Rent and you worry about your yearly lease may go up. while if anything needs fixing or updating you just call the landlord.

Renting is a breeze of cool air on a hot day. But it’s not for everyone (like winning the lottery).

#49 In Edmonton on 09.14.11 at 2:46 am

In Edmonton Aberta here we are now down over $50,000 less than 2007 prices for an average SFH. Foreclosures are the highest in the country! People are desperate to get out but how can they? IN 2006 & 2007 over 80% of all people did a 40 year mortgage with nothing down so they are all underwater!
The social fallout from this is going to be BAD! Major retail & recreation are experience a “depression” type plunge in the later half of this year from people I’ve talked to in the industry. The contraction of the economy in ALberta this fall is going to be off the charts… and the housing market? Getting siker as prices continue to slide.

#50 C on 09.14.11 at 2:47 am

#19HouseBuster “How are people going to afford million dollar homes?”

We can. But we chose to rent instead; so that’s 1 more buyer out of the market who could have bought that million dollar+ home.

#51 timo on 09.14.11 at 3:13 am

http://www.washingtonpost.com/blogs/ezra-klein/post/imf-austerity-boosts-unemployment-lowers-paychecks/2011/09/12/gIQAl5ebPK_blog.html

“And the IMF cites a number of ancillary benefits that come from reducing deficits, such as lightening the burden from interest payments. But the historical record is clear: Austerity does ugly, ugly things to a country’s economy in the short term”

http://www.nytimes.com/2011/04/02/health/policy/02medicaid.html?_r=1

Austerity hits the poor first.

#52 Joe on 09.14.11 at 3:47 am

“So, Angie. Save, don’t borrow. Invest, don’t spend.”

This would be good advice 20 years ago but unfortunately savers are suckers in today’s economy.

The best Angie will do with your advice is stuff her & her BF’s $500 monthly savings into the orange guys shorts cuz any financial adviser who doesn’t work for a bank will simply tell her she doesn’t have enough to invest through them. Maybe helicopters parents is what’s needed for many young couples afterall.

#53 Aussie Roy on 09.14.11 at 4:02 am

Aussie Update

But we have a shortage, we need to build more houses says building industry. – Yeah right!

http://www.urbantaskforce.com.au/viewmedia.php?id=565

The number of new homes starting construction dropped 4.7 per cent in the second quarter of the year to 37,820, seasonally adjusted, following growth of a revised 3.3 per cent in the first quarter of the year, according to the Australian Bureau of Statistics

http://www.smh.com.au/business/more-gloom-as-home-starts-fall-20110914-1k8nf.html#ixzz1XuZTIsLm

January may mark a turnaround in Brisbane’s flagging property market, but there is no sign of conditions improving before then, according to leading economic forecaster BIS Shrapnel.

This is the same forecaster that said “expect prices to rise 15-20% during 2010. – LOL

http://www.brisbanetimes.com.au/business/property/property-rebound-months-away-forecaster-20110913-1k73a.html#ixzz1XuZfzDhy

Harry Dent on morning TV – House prices in Australia are stupid and will fall.

http://au.tv.yahoo.com/sunrise/video/-/watch/26605901/economic-tsunami-warning/

Canberra real estate comparison. Six McMansions worth an island?

Imagine an island 2 miles from the centre of Copenhagen, imagine a 200 room building on that island made out of two and a half million tons of solid granite. Imagine a harbour, and a helipad.

How many suburban Canberra houses would be worth that?

http://the-riotact.com/canberra-real-estate-comparison-six-mcmansions-worth-an-island/54683

#54 Rural Rick on 09.14.11 at 4:12 am

Canada has a huge potential to create value added products. Fresh water, metals, grains, and brains.

#55 Jody on 09.14.11 at 4:27 am

“rising faster than Cookie Montser’s sperm count looking at a Ron Paul poster.
—-
That’s disgusting.”

Yea Garth, geez, it should be an Ayn Rand poster or perhaps a bar of gold.

“Won’t take much to see the wealth canyon widen even further.”

Very true Jon, plus most people think they are going to be on the wealthy side, they won’t be, think billions to be on that side.

A scary thought for you kids, Angie and her man friend represent the small proportion who use some of their brain, just think and wonder how the hell the other 98% get through life.

Anybody else out here in Alberta voting in the provincial election on September 17? Go Alison Redford. Boo to the twit Gary Mar. If that bible humper Morton gets in I’m moving to Moose Jaw to drink myself to death.

#56 I'm stupid on 09.14.11 at 4:35 am

Hi Garth

You missed one fact. The poverty line in the calculation in the US is a family of 4 with a household income of under 25k. Imagine what the number would be if they used relative numbers. I would guess the actual poverty line in the US should be at least 50k. What do I know.

#57 Fool on 09.14.11 at 7:02 am

The US has the highest poverty level in 17 years. What happens to Canadian poverty levels when our housing market goes bust?

One day we might look back fondly on these days.
http://seekingalpha.com/article/293312-hyperinflation-and-the-fiscal-case-for-gold

#58 timo on 09.14.11 at 7:06 am

http://wakaaustingmot.files.wordpress.com/2009/07/freebasing-cookie-monster.jpg

this one is for you cookie.

#59 X on 09.14.11 at 7:13 am

So Carney and the BOC would like to keep rates low for the next little bit b/c of the uncertainty in the economy.

And if RE debt is the largest debt most Canadians are foolishly taking on, wouldn’t that mean that Flaherty should be acting to control the growth of this debt, and that any non action on his part would be an indication of a much greater risk of a coming recession in Canada than perceived by the public.

#60 neo on 09.14.11 at 7:16 am

On BNN they have the debt to income at 150.8% not 149%. But at this point why quibble. Can’t wait until October when the lemmings who haven’t been paying attention and better yet have been living a lie realize we ARE in a recession and the slow tip toe to the housing exits commences.

#61 allister on 09.14.11 at 7:27 am

For those who are interested in why debt has soared since 2000, you can see income growth in the charts here.

http://advisorperspectives.com/dshort/updates/Household-Income-Distribution.php

dshort.com is a site with a wealth of information brought to you daily.

#62 detalumis on 09.14.11 at 7:31 am

#8 most of the kids who live in the 500 square foot condos are products of the suburbs and guess what, once they get a taste of life outside of the ‘burbs they will choose the city almost every time. People with a whole lot of money will still choose Manhattan over a huge spread in New Jersey, the same for London and Paris.

We actually had a whole country full of many cities and towns a generation ago that were vibrant and walkable and full of real live neighbourhoods but today that model is only found in a handful of places AKA Toronto. As long as we pretend (for the sake of maintaining house prices) that it’s really great to live in a garage with a house on the back and shop in stripmalls then the kids will continue to move to the sky boxes and we can do the emperor’s new clothes thingie and say how much we love living in Mississauga.

#63 Susan from London area on 09.14.11 at 7:35 am

Angie you seem like a smart girl. Your assumption when Garth said to dump the BF meant to stay away from his finacial mess was a safe way of putting it(love is blind).
A wait and see approach might be good for now. Bailing him out of his personal debt won’t help him to learn the consiquences of spending now and paying later. Before you know it you will have a mid life spender, and then Poof “out goes the lights…..”(thats a song)

#64 TurnerNation on 09.14.11 at 7:36 am

By Mark Felsenthal
WASHINGTON | Wed Sep 14, 2011 2:21am EDT

WASHINGTON (Reuters) – The Federal Reserve, facing rising global financial strains and recession fears, is poised to increase downward pressure on longer-term interest rates next week in a bid to accelerate a sputtering U.S. recovery.

With one eye on escalating debt turmoil in Europe and another on a stubbornly high 9.1 percent U.S. unemployment rate, the Fed, whose policy panel meets next Tuesday and Wednesday, looks set to begin shifting the composition of its balance sheet to weight it more heavily with longer-term securities.

http://www.reuters.com/article/2011/09/14/us-usa-fed-idUSTRE78C71N20110914

#65 bigrider on 09.14.11 at 7:40 am

Hey Garth, we haven’t seen an update from you in a while with regard to the performance YTD of a/your diversified portfolio of 60/40 equities to bonds.

My guess is minus -2 to 3% YTD which would be good considering what has occurred.

Markham house flipping asians and italians have seen a much ,much better return.

So far, lining up at builders trailers seems to be a better use of a person’s time than shuffling financial assets around a portfolio through ‘active management’

#66 Keeping the Faith on 09.14.11 at 7:47 am

Angie,
Get in the black, pay down debt and learn how to invest with proper asset allocation, i.e. couch potato. Stay away from BF debt and if you can’t turn him to your views, you have to consider he is short or medium term dating material not long-term.

Personal story on Student loans debt from 10+ years ago when I graduated:
I came out with 12K in student loans after my degree and paid it off in 2 years through good personal financial management and living lean, no cable tv, no dinners out, no big trips. A friend from university graduated with 35K in student loans at the same time, and we have had relatively equal incomes since. She lived large and avoided every possible way to pay back student loans. Last year we talked and she told me how “proud she was” that her 35K has been given to a collection agency and she could probably negotiate them down to $0.20 on the dollar and won’t have to pay all 35K back. She thinks she got something for nothing and doesn’t even realize that she lost the last decade increasing her consumer debt and trying to avoid paying student debt only to be further behind. I didn’t have the heart to tell her I’m half way to ‘work optional’ and very stable in my monthly investing/savings plans. To each their own and she will realize this when I’m changing jobs for enjoyment and pleasure not because I have to for financial gain.

Good luck Angie, where do you want to be in 10 years?

#67 penpal on 09.14.11 at 7:56 am

@ # 14 45 north

Interesting analogy.

My thesis is that the ice is getting thinner and thinner and at some point the brittle structure gives way under the weight of negative economic fundamentals and a paucity of buyers.

No triggering by a specific event is required for this market to take a (blood)bath.

Either way, people are going to get ‘soaked’!

#68 penpal on 09.14.11 at 8:01 am

@ # 16 Rich Guy

Hey Shawn,

Grow up and be a little empathetic to those who may be less fortunate than yourself dude.

You are tempting both fate and karma – “pride goeth before a fall…” and al that jazz.

#69 allister on 09.14.11 at 8:01 am

#41 BigAl (Original) on 09.14.11 at 1:05 am

I live in SW Ontario which is vegetable country. I see alot of the temporary workers in the fields every summer bringing you vegetable to your table.

Canadians won’t do the work.

#70 Moneta on 09.14.11 at 8:03 am

When you said dump the BF, I’m assuming you meant stay away from his financial mess. I’ll do that.
————-
I never understood how that can be done.

Throw in a couple of kids in there and ouch!

Think hard before you commit for life.

#71 Waterloo Resident on 09.14.11 at 8:09 am

MY ADVICE:

1st: Get rid of your load of debt by going to a Trustee in Bankruptcy and pay them $2,000 to $4,000 to have both of you put into bankruptcy. That way your debts will be wiped CLEAN and you can start building up your savings.

2nd: SAVE, SAVE, SAVE! : Stay in rentals, try to find a cheaper rental if possible, and save every penny you have for a down payment on a house. In 10 years you will have that $50,000 saved up and you can then go and buy yourself a house.

Don’t buy one now, you have too much in debt and nothing to put down on a house.

#72 Guan-Di on 09.14.11 at 8:13 am

#52 – Joe

You really don’t know what you are talking about! My partner and I use a very experienced advisor in a well respected firm and we do not invest more than $500 a month with him. We have pensions so we don’t need to invest much more than that but he treats us and our meager savings with respect and professionalism. I would strongly suggest that Angie shop around for a good advisor, I’m sure Garth could give you a list of names, provided he has not already done so:)

#73 fancy_pants on 09.14.11 at 8:14 am

Pay off your $33k before you even look at owning a home you moron. You are a prime example of why home ownership is not an entitlement.

The real issue here is whether they are actually qualified/approved by a financial institution for such a mortgage. If so, what a f*ked up system we really do have. This is a prime example of what has brought us to this point.

and the real kicker is I indirectly insure purchases just like this involuntarily (CMHC insurance = taxpayer on the hook).

#74 Moneta on 09.14.11 at 8:28 am

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
————-
From my comfortable armchair…

I would start charging rent. And if the money does not follow, I’d start putting locks on some doors.

Shared TV can only be operated from energy generated from a stationary bike…

#75 Robert Dudek on 09.14.11 at 8:28 am

Jsan,

The Japanese property bubble was orders of magnitude beyond anything Canada has ever experienced.

And they’ve had NPG for a few decades, whereas Canada’s population is steadily increasing. Demographics will soften any real-estate bubble pop.

#76 Moneta on 09.14.11 at 8:31 am

I would start charging rent. And if the money does not follow, I’d start putting locks on some doors
——-
To keep some creature comforts out of reach.

#77 jas on 09.14.11 at 8:41 am

#41 BigAl (Original)

You are now directly competing with everyone in the world for jobs in Canada.

This is globalisation…whether they come here or compete with us from their own country…unless we become competitive, we are doomed.

#78 T.O. Bubble Boy on 09.14.11 at 8:53 am

It looks like housing could a ways from finding a bottom in the US… at least in Nevada and California, where Bank of America just started a new wave of foreclosure processes:

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

(probably all a part of its recent activities to try to keep from going bankrupt)

#79 Hammer1 on 09.14.11 at 9:03 am

#26 West Coast on 09.13.11 at 11:41 pm
I see in that photo the little people about to go underwater.

#80 Herb on 09.14.11 at 9:20 am

Hope everyone watched “This Hour has 22 Minutes” and “The National” on CBC last night. 22 Minutes had a skit on the debt fiasco that could have been written by Garth. The National’s “Bottom Line” Panel should have featured Garth because it was all about what he’s been saying for two years. And if you open the Financial Post this morning, it could have been edited by Garth, right down to “Buy high-yield corporate bonds while markets move sideways”.

Just so you don’t pull a Utopia and ride off into the sunset in a huff because no one has saluted your great calls, you’ve been right on the money, Garth. Well done, and thank you. The economists and pumpers who ridiculed you owe you an apology, which they won’t pay, of course. But what are you going to do to stay a contrarian now that you’re main stream?

(No links to last night’s 22 Minutes and to-day’s FP yet. The “Bottom Line” Panel is at http://www.cbc.ca/thenational/indepthanalysis/story/2011/09/13/national-bottomlineadvice.html)

#81 cata on 09.14.11 at 9:29 am

lol the picture!

#82 refinow on 09.14.11 at 9:50 am

Banks are lowering their posted fixed mortgage rates and raising the rates on the Varaible rates…

Here we go, its 2008 all over again.

This should the the final undisputible sign that housing prices are GOING DOWN…

In the last 3 weeks the lenders have gone from PRIME -.75 down to Prime minus .30..

What this tells me is that if you are considering a variable rate mortgage…. Now is the time… There is always a few stragglers holding on to the remenants of the previous varaible rate mortgage…

So Canada is going to see first hand, just how quickly that previous 20 year surge in real estate prices are going to dissappear.

For those who choose to wait and try and squeeze that last bit of increase in value…. Too late you have officially missed the boat…

#83 torontorocks on 09.14.11 at 9:54 am

I have to say full props to Smoking Man for post #8. Yeah, sometimes the guy brags a little too much but I think he’s got a few good points. The facebook generation is a whiney bunch of brats, and I mean up to 30 year old. Living on facebook, tweeting useless shit, duckface fotos, etc.

#84 stealth on 09.14.11 at 9:55 am

Garth,

How exposed is ‘Orange Guy Shorts’ European bank to the European banking crisis?
and Yes, the emotion is in play here is fear, and yes ignorance is in play also in keeping funds in there in the first place.

Appreciated.

#85 refinow on 09.14.11 at 9:56 am

And #66 keeping the faith… Your friend lied… Student loan debts are one of the only debt that are exempt from Bankruptcy…

You can’t walk away from them…. They will slow the payments down until such a time that you can afford them…

This is assuming they are infact official Student loans…

If they are Bank loans or credit lines the monies may have been used for education purposes but they are not “STUDENT LOANS”

#86 rory on 09.14.11 at 9:56 am

If Canadian debt is similar to US debts then look at this link for a visual on the numbers …

http://www.winkandwink.com/american-family-debt-infographic/

Also from http://www.dailypfennig.com for Sept 14 is a big Yikes ….

“The Big Boss, Frank Trotter, does this thing in one of his presentations about the Investable funds available in the U.S…. let’s do the math… this will really open your eyes to what I’m talking about here…

Total Investable Assets in the U.S. $26 Trillion (pretty good, eh?)
Population 300 million
Households 124 million
Average Investable Assets $209,000 (still pretty good, eh? )

Median (remember from statistics?) $6,000 (not so good now!)

So… the Average Investable Assets are $209,000 but, that includes the Bill Gates, and Warren Buffets… so, when you calculate the Median amount that available per household to invest, it drops to $6,000… “

#87 Brad in Van on 09.14.11 at 9:56 am

Think prices are sky high in North Vancouver? I don’t see what all the fuss is about. Check this out. Medina, Washington is Seattle’s version of North Vancouver, but much larger. Well Medina is even nicer and the wealth is out of control. The average net worth for high bracket tax payers is $25.5 million in this neighbourhood of Medina.

http://www.forbes.com/pictures/edei45imi/medina-wash

#88 disciple on 09.14.11 at 10:12 am

FYI – RE: Post #22 Samir Azza…

I believe this has been posted at least 3 times already on this blog and many times on other blogs. Has anybody else noticed this? Or am I losing my mind? I noticed the same thing with a few other posters and posts. What is going on? Robots or something? Of course, I know for a fact that there are shills paid to sit around all day observing for suspicious internet activity. Just an FYI, folks…

#89 Sky on 09.14.11 at 10:20 am

Ghost of Tom Joad ( # 46 ):

The New World Order is anything but new. They should be called the Old World Order.

They’re stepping up their tyranny, no doubt. But a lot of people are getting sucked into a vortex of disinfo. Don’t become one of them.

A couple of quick points –

Gold:
****
Some have been sold the idea of a return to the gold standard . What you have to realize is that fiat was never really backed by gold. You only thought it was. It was a fraud all along.

Sure, you were told that you could exchange your dollars for gold . But in the event of a dollar crisis with everybody and their dog running to the banks and demanding their gold , what do think would have happened ? Did the Fed and the US banks have the Miller’s daughter holed up in a back room somewhere spinning straw into gold?

Unless your name was Rumplestiltskin or maybe Rothschild, guess what ? No gold for you. There was NEVER enough gold to back up fiat ( no matter what the valuation ). This was always an illusion.

Then there’s the one world single-currency mantra associated with the NWO. Ain’t going to happen. Why ? Because one of the cornerstones of the scam, one of their biggest money makers and an instrument par excellence in the destruction and control of various nations, creating housing bubbles, and so forth and so on… is …currency arbitrage ( carry trade).

Here’s a little evil morsel re: the introduction of the euro-

“The countries whose interest rates fell most as a result of the euro are Greece, Ireland, Portugal, Spain, and Italy. The effect of such low interest rates made it easier for banks within the countries in which interest rates fell and the countries themselves to borrow significant amounts (above the 3% of GDP budget deficit imposed on the eurozone initially) and increase their public deficit and levels of privately held consumer debt. ”

Hmmm. Greece, Ireland,Portugal, Spain and Italy? Well, well, well. Who do we have here? Why, it’s the PIIGS !

So the PIIGS got themselves into a bit of trouble because of the euro, did they ? What a surprise. Good little piggies, they followed along and the euro did exactly what it was designed to do – because now we have a big international flap and everybody’s scared they’re going to get thrown into the pig sty with the PIIGS and forced to eat swill.

Yawn. Just another fun day in Dr. Evil’s currency arbitrage lab. Totally predictable once you figure out how these scum operate.

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

Bonus – Check out this mother of all carry trades – the Plaza Accord- and then follow the trail ( you’ll need to do some research ) and you’ll see how it led to the Japanese RE bubble.

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

#90 jess on 09.14.11 at 10:23 am

According to the Nautilus supercomputer data sets the world news has gone negative ;)

….”combined three massive news archives totaling more than 100 million articles worldwide to explore the global consciousness of the news media. The complete New York Times from 1945 to 2005, the unclassified edition of Summary of World Broadcasts from 1979 to 2010, and an archive of English-language Google News articles spanning 2006 to 2011 were used to capture a cross-section of the U.S. media spanning half a century and the global media over a quarter-century.”…

a network 2.4 petabytes in size containing more than 10 billion people, places, things, and activities connected by over 100 trillion relationships, capturing a cross-section of Earth from the news media. A subset of findings from this analysis were then reproduced for this study using more traditional methods and smaller-scale workflows that offer a model for a new class of digital humanities research that explores how the world views itself. ”

Citation:
National Institute for Computational Sciences (2011, September 8). Forecasting human behavior by supercomputing global news.

#91 young & foolish on 09.14.11 at 10:27 am

Debt can be good, if used as has been demonstrated here on this blog (ie. investments which pay you to hold them, which generate captital gains or dividends, and which provide for tax deductible interest payments). But is this the kind of debt most Canadians are encumbered with?

Remember, RE is nothing more than housing, and it’s value will usually reflect the ability of people make reasonable payments. Cheap money has goosed prices upward, but it’s not a sustainable trend, especially in the face of a slowing economy and the eventual rise in the cost of money.

#92 SRV ES339 on 09.14.11 at 10:31 am

Garth… I see one of the banks is dropping interest rates. Do you see this as a trend to inject life into a moribund R/E market, or just an isolated event?

#93 jess on 09.14.11 at 10:33 am

refinow on 09.14.11 at 9:50 am
You said: “Banks are lowering their posted fixed mortgage rates and raising the rates on the Varaible rates…”

… but with bow tie loans, would it not be favourable for lenders to have higher rates at the end of maturity?

“A short-term, variable-rate loan in which unpaid interest charges above a predetermined interest rate are deferred. A variable-rate loan is a loan in which the interest rate fluctuates in response to market interest rates. So, when bow tie loans are issued, a predetermined interest rate is set and whenever the market rate goes up past that rate, interest payments for investors are deferred until the end of the loan’s maturity. “

#94 Bailing in BC on 09.14.11 at 10:39 am

Hoof Hearted and TO Bubble Boy

That house in Squamish was listed at $2.95 Million. The realtors failed to mention that the seller had to take a 33% hair cut

#95 disciple on 09.14.11 at 10:56 am

This gave me goosebumps. Introducing Chooka Parker…

http://www.youtube.com/watch?v=OygxNTTafOE&feature=youtu.be

#96 Utopia on 09.14.11 at 11:11 am

#80 Herb

“Just so you don’t pull a Utopia and ride off into the sunset…”
——————————
What, and leave this site to be over-run by gold-huggers, dollar-doomers, Ron Paul lovers and hyper-inflationist’s without being around to take a few shots back at the loonie camps?

Screw that.

Anyway….you missed the point entirely Herb. It was not about my “great calls” but rather pointing out that some here simply panic with the herd and lose faith far too quickly.

They leap to all the wrong conclusions and often end by making bad investment decisions. Housing is of course a perfect example. I find it just beyond belief that there are still so many doubters coming here despite the overwhelming evidence pointing to a negative outcome in the future for housing.

Anyway, that post I left was for all the yapper’s who were always so quick to be jumping on my comments about the dollar and gold and getting it all wrong. The guys who called me a shill, an idiot, an apologist a neo-liberal etcetera and who pretty much don’t have a clue what they are talking about. They never come back and eat their words, do they?

Just full of talk.

It was my turn to kick a little sand back at them.

#97 EdmontonJim on 09.14.11 at 11:43 am

Unfortunately I’d agree that the screwed include most of my family, some more than others. My question is – how can I help them without alientating them (after all they’re all I’ve got), or screwing myself financially?

My oldest brother has a wife who spends like there’s no tommorrow and then complains about money (probably no helping them)

My other brother may soon be moving from Calgary to Edmonton and will probably sell and buy for a loss of equity. He’s the most resourceful out of all of us so they’re likely okay, but he’s also accident prone and probably under-insured. He has four kids – one with special needs.

One sister and her husband are frugal but up to their eyeballs in student debt and have little financial literacy.

Another sister’s husband is self-employed and they are
likely stuck forever in their money-sucking house.

And my parents have two mortgaged houses in nowheresville Alberta and are on the verge of retirement.

And then there’s my wife’s side.

One brother is letting his vancouver in-laws murder them financially

Another married an american, and will likely be trapped there forever.

My favorite brother-in-law is a bohemian academic at heart but has the responsibilities of being a new dad.

And their parents own virtually nothing but the farm house dad was born in. Like most farmers, their retirement plan was their oldest son who was to take over the farm (it’s worked for generations), but he passed away several years ago.

Can any of them be saved?

#98 Dontcallmeshirley on 09.14.11 at 11:57 am

Yesterday, the Hamilton Spectator did a story on a mortgage fraud involving Scotiabank and the use of a fake employment letter. The fraudsters got a 373k mortgage on a 382k Vaughan house.

Anyone know why lenders don’t simply cross reference with the CRA to verify income? Can’t be a privacy issue, because a borrower could waive this to get credit approval.

#99 vreaa on 09.14.11 at 12:01 pm

Consequences, Intended and Otherwise

Broad Thought Experiment:
You are the ‘Vancouver Czar of Housing and the Economy Pertaining to Housing’.
What changes would you implement immediately, and what consequences do you anticipate?

http://wp.me/pcq1o-2VL

#100 vreaa on 09.14.11 at 12:01 pm
#101 BrianT on 09.14.11 at 12:13 pm

#96Utop-You get criticized because you are incredibly long winded. You take 50 words to say nothing-I can say nothing in 5 words.

#102 Property Manager on 09.14.11 at 12:13 pm

I manage strata titled properties in Greater Vancouver. Some people are so stretched they can’t pay for even the simplest repairs within their unit. One lady yesterday told a plumber to drain the toilet and turn off the water because she couldn’t afford to replace the toilet seal. She did not pay the bill and the plumber is threatening to bill the strata. I think there’s another bathroom in that unit.

Another guy in West Vancouver wasn’t aware he had to pay strata fees at all, so didn’t. There are lots of realtors who are not concerned about telling new Canadians the details. He got a huge mortgage and can’t afford $300/momth fees or the special levies. The strata is taking legal action to sell the unit to collect the fees.

A few more lost jobs will take a big toll. Strata Corporations can file for Conduct of Sale if the fees aren’t paid, the Court sells the place, the Strata gets first dibs and the “owner” gets what’s left. Wonder how that’s going to work when prices finally come down.

#103 BrianT on 09.14.11 at 12:22 pm

Gluskin Scheff does the politically incorrect thing and points out that the USA is actually in a DEPRESSION http://www.zerohedge.com/news/david-rosenberg-its-time-start-calling-what-it-modern-day-depression

#104 Mr. Lahey on 09.14.11 at 12:26 pm

Angie dear, real wealth begins when you eliminate personal debt and begin building your assets outside of your prinicpal residence. In today’s bloated real estate market, you are paying the premium of 10 years of emergency interest rates that have spiked the price of homes across this fair land (yes, even in our beloved Sunnyvale Trailer Park). Those entering the fray now may well be the last fools in. The point captain Garth continues to drive home is that debt is easy to enter and difficult to leave behind. We live in a conspicuous consumption society run amok. Money has a time value to it and the sooner you start accumulating it in life, the greater it grows via the wonderful science of compounding. I have seen this principle at work in my own life. I eschewed debt from day one, paid off my first home rapidly and have never looked back. “Randy, I hear rumblings in the park. I think Cyrus is back…”

#105 Utopia on 09.14.11 at 12:27 pm

#72 Guan-Di said….

“I would strongly suggest that Angie shop around for a good advisor, I’m sure Garth could give you a list of names, provided he has not already done so”.
—————————————

Some of the newer readers might not have realized it yet, but Garth is in fact a fee based, non commission investment advisor. That is the business he is in. He does not blow his own horn on that topic so I will give you the link to his other site for your general information. (if he doesn’t mind).

http://www.turnertomenson.ca

#106 Live Under Your Means on 09.14.11 at 12:34 pm

#97 EdmontonJim on 09.14.11 at 11:43 am

Reminds me of a couple in my family and one in my husband’s family.

#107 Dave on 09.14.11 at 1:04 pm

#86 rory

re median

Good point, median is a much more useful definition of average than mean, for “most of us”.

Can we start a petition requiring housing/etc. averages to use the median, rather than the mean, as appropriate?

#108 OttawaMike on 09.14.11 at 1:04 pm

Anybody still following the BP gulf disaster?
Yeah the one that has started spewing oil back into the water.

It appears that BP’s liabilities are far from over, a report on the whole mess due to be released will show neglect and cover up to do with the dangerous gas bearing sand in the drilling substrate.

Time to short BP again?

http://blog.al.com/wire/2011/09/report_bp_made_critical_mistak.html

#109 Alister on 09.14.11 at 1:29 pm

6 million American adults between 25 – 34 living with their parents.

http://www.doctorhousingbubble.com/california-shacking-three-trends-crushing-the-california-housing-market-young-workers-income-real-estate-prices-refis/#more-4916

#110 Cookie Monster on 09.14.11 at 1:32 pm

#37 Johnny O on 09.14.11 at 12:40 am
Cookie Monster no gay, not that there’s anything wrong with that.
Cookie Monster LOVE only girl cookie monsters. Cookie Monster also love Ron Paul, but not in girl cookie monster kind of way. Cookie Monster almost toss his cookies when he read disgusting sentence. Cooke Monster ok now.

#111 nonplused on 09.14.11 at 1:43 pm

Hey Garth, what did you think of your friend Dave’s “Breakfast with Rosie” today?

I think you could fill a whole post with the differences between your viewpoint and his. I realize some of your calls are the same (buy bonds), but his macroeconomic viewpoint is different it seems.

#112 Stevenson on 09.14.11 at 1:50 pm

“the ratio of household debt now equals 149% of disposable income”? and “Canada will be the first of the advanced economies to fall into a recession.” Where you getting these stats from?

Also are you being a bit selective here Garth? Are there no articles regarding how the real estate market will continue to boom? Not every market needs to correct if it can be manipulated.

I know of none. Feel free to source. — Garth

#113 Cookie Monster on 09.14.11 at 1:53 pm

#46 Ghost of Tom Joad on 09.14.11 at 2:10 am
I agree. Watching Italy courting China to purchase their debt is disturbing. Populist socialist Italian politicians buy their constituencies votes for decades with debt financing and then when the shit hits the fan they think nothing of selling their country to the communists in China when they need help in desperate times.

The USA has been doing the same thing too. Selling their country one ship load at a time to the commies.

Between socialist Europe and socialist Canada and socialists USA dealing closely with dictators and communists globally, it’s a bit concerning.

When I look at Ron Paul (my sperm count is unchanged) I see the only honest guy with no hidden agenda except the aim to restore America to its former greatness, a man who understands economics and liberty, in the other candidates I see all sell outs, either corporate, socialist or otherwise. I use to like Obama, but he’s proven himself clueless.

Interesting times.

#114 disciple on 09.14.11 at 1:58 pm

#103 BrianT…you obviously did not read that article. Rosie is making a circular argument. He is saying that the bond market is signalling a depression, but then at the end of the article he claims that he has been advocating a flight to the bond market, which would increase bond prices, lower yields, and provide the signals that he is “reading”. Well done, Rosenberg. That’s why I don’t waste my time with MSM nonsense.

#115 Devore on 09.14.11 at 2:02 pm

#48 C

Then you get to worry about rates going up and house prices on a monthly or even daily obsession.

People, as a whole, as a country or society, could be so much more productive, creative and innovative, if they didn’t have to worry every day about the price of dirt. When so much time, attention and money is dedicated for just basic necessities, like housing, growth becomes really stunted. We need to be able to bring more resources to bear on the real economy, solving real problems, and advancing promising technologies, not keeping a roof over our heads.

#116 disciple on 09.14.11 at 2:02 pm

But, make no mistake, BrianT, there will be depression-like pain when credit finally contracts in Canada. Rosie must be a shill, because his article seems well placed to prepare your minds for what is coming, like a “I told you so” cowardly piece, while actually telling us nothing at all that we didn’t already know. I would be more interested in what Rosie IS NOT telling us, but of course, you must dig elsewhere for that…it matters not that zerohedge picked up on Rosie’s channel, the message should be analyzed for what it is…MSM brainwashing.

#117 JohnnyBravo on 09.14.11 at 2:09 pm

Parse this one:

“Most Canadians comfortable with their debt”
http://www.cbc.ca/news/business/story/2011/09/14/rbc-debt-survey.html

#118 jess on 09.14.11 at 2:11 pm

Obit:
Ron Paul Fundraiser
Kent Snyder, 49; Campaign Chief for Rep. Ron Paul
after two months of hospitalization. He had no health insurance.

Friday, July 11, 2008
Friends have established a fund to pay Mr. Snyder’s medical bills, which totaled $400,000 after two months of hospitalization. He had no health insurance.

=
Cookie:
Given that Mr. Paul said that people without health insurance are taking their own risks, and that is the way it should be.

So does this mean that Mr. Synder would have died two months sooner and not racked up a 400k hospital tab, since he would not have received medicare in the first place?

http://blog.buzzflash.com/node/13007

#119 pjwlk on 09.14.11 at 2:13 pm

#69 allister & #41 BigAl (Original):

“… I see alot of the temporary workers in the fields every summer bringing you vegetable to your table.
——
Canadians won’t do the work.”

During the mid to late 40’s my mother used to work during the summer in the Branford area tying up tobacco for the kilns. Even back then the field workers who picked the tobacco leaves were all part of foreign work crews which travelled from farm to farm until the work was all done.

So It would seem that Canadians not wanting to do that kind of work is nothing new. Of course it’s a moot point now that most of the Ontario tobacco farmers have been squeezed out of the market by the big corporations.

#120 Cookie Monster on 09.14.11 at 2:32 pm

#89 Sky on 09.14.11 at 10:20 am
Interesting post. The only thing I would add is that gold backed currency in a fractional reserve system still forces discipline on the banks, it’s what creates the risk/reward or fear/greed balance. At a low ration of say 10:1, they could handle a small run from time to time, they can also call in loans and shrink their balance sheets, they don’t have to have gold to settle all deposit accounts, the 9:1 fraction (assuming no bad loans) should be able to be reversed, leaving only the 1:1 fraction of actual deposits to be settled by gold.

Key is not to have bad loans. Problem is during credit expansion run ups, loans tend to get sloppy, like in housing bubbles.

#121 jess on 09.14.11 at 2:32 pm

#108 OttawaMike

re route?

Governor Calls on President to Deny Pipeline Permit
==========
In his four-paragraph letter, Heineman points out that 254 miles of the Keystone XL pipeline would be situated directly over the Ogallala Aquifer in Nebraska. Farmers count on 92,685 irrigation wells to provide water for more than 8.5 million acres of crops and pastures, he said.
http://www.governor.nebraska.gov/news/2011/08/31_pipeline.html

#122 Edmontonian on 09.14.11 at 3:04 pm

I know several people who are listing their HOuses right now in Edmonton to try to get out. Too late here already. Unless you lower the price to take a huge loss it’s not moving at all.
Good friends of mine decided to do $40,000 in upgrades to their house before liting to “out do” any other listing that may come up in their neighbourhood. Now, after spending the $40,000, they’ve found themselves chasing the market down. Only 2 couples came to see their place after two large price reductions. Last month the average Edmonton SFH FELL $60,000 from the June Peak in 2007!

#123 Devore on 09.14.11 at 3:08 pm

To Garth/webmaster:

Post #77 jas is missing a closing </i> tag that’s italicizing all the following posts.

Thanks. Fixed. — Garth

#124 Devore on 09.14.11 at 3:12 pm

#86 rory

So… the Average Investable Assets are $209,000 but, that includes the Bill Gates, and Warren Buffets… so, when you calculate the Median amount that available per household to invest, it drops to $6,000…

That is funny (well, not really, you know what I mean). Always beware of averages. It is important to understand the distribution and deviation; often, median gives a better picture. A deeper analysis would show those figures, as well as do additional processing, such as excluding the top/bottom percentiles.

#125 Johnny on 09.14.11 at 3:19 pm

On a more positive note Canada just beat Tonga at the World Cup of Rugby!! major upset.

#126 Devore on 09.14.11 at 3:32 pm

#102 Property Manager

A few more lost jobs will take a big toll. Strata Corporations can file for Conduct of Sale if the fees aren’t paid, the Court sells the place, the Strata gets first dibs and the “owner” gets what’s left. Wonder how that’s going to work when prices finally come down.

We’ve heard some pretty amazing stories of people scraping the bottom of the barrel for even reasonable unexpected expenses, such as fixing a toilet. Forget replacing the roof or water tank (or absorbing a strata special assessment). Even apparently well-off people raiding back alleys and recycling rooms for bottles and cans to turn in for deposit money.

This illustrates that we do not need higher interest rates to put a good portion of people in trouble. Merely rising taxes and cost of living (food, energy, transportation, gas, insurance, etc) will put a severe crunch on lifestyle, until even necessities will get squeezed out.

#127 Bottoms_Up on 09.14.11 at 3:50 pm

#105 Utopia on 09.14.11 at 12:27 pm
—————————————
Thanks for posting Garth’s investment website.

Garth — do you (or your colleagues) work with clients with only a little dough to invest ($40,000 up front from an investment LoC with $5000/yr additions)?

Thanks!

Can you cook? — Garth

#128 vic_guy on 09.14.11 at 3:52 pm

Ahead of your time Garth, thanks for the heads up.

The Globe and Mail has hitched to the Garth wagon :

Global uncertainty, European crisis fuel Canadian meltdown fears

http://www.theglobeandmail.com/report-on-business/economy/global-uncertainty-european-crisis-fuel-canadian-meltdown-fears/article2163933/

#129 GtaGuy on 09.14.11 at 4:11 pm

#126 Devore

Totally agree. Interest rates are not going to be the only catalyst to a market drop. Seems like that the only thing anyone ever looks at as a sign that prices will continue to rise. Not to mention immigration demands.

I believe during the last dip in housing prices there were the same number of immigrants let into the country then today. Its always been extremely high yet we still had a 25% dip.

So if there is a double dip recession which there will be and food, gas, heat, hydro, taxes, all keep going up we will see a market pullback.

#130 wtf????? on 09.14.11 at 4:38 pm

Hey Big Al, the stats on foreign workers and immigrant head counting are all bulls**t. One immigrant brings the entire family ( I’ve seen families of four generations totalling more than twenty) in so the official 350K is really more like 3.5 to 4 million on the immigrant ledger. The immigrant lobby doesn’t want to panic the average Canadian by detailing the actual numbers coming in…..even during a recession. Icing on the cake……a new law in BC allows all family members of foriegn workers to be employed ( and collect full benefits) from government and employers. There is virtually no limit on how many ‘new workers’ this feeds in the competition for jobs in BC. All this..at a time when ‘recession’ is creating massive unemployment doesn’t sit well with many citizens. Never mind the additional costs of educating, providing health care etc etc etc to people who never contributed a dime into the system. Nice to see the brand new ‘old folks’ instantly granted space in the care homes and hospitals supposedly limited beds designated for ‘Canadian ‘ seniors……wonder why the schools are bursting at the seams and the tax shortage to accomadate this generosity? Yeah sure…..there are all these Liberal scumbags who’ll argue that Canada is too rich not to be given away…..as a taxpayer I feel zero guilt for having been born here.

#131 simkev on 09.14.11 at 4:40 pm

#16 Rich Guy
I have noticed that [email protected]@@@ just can’t help themselves …
They just “HAVE” to tell everyone how much money they have … NOW that’s the definition of financial illiteracy. Thats why I never trust people that call themselves “financial investors” with my money.
Thank’s Garth …. Thank’s Shawn!

#132 Cookie Monster on 09.14.11 at 4:47 pm

#118 jess on 09.14.11 at 2:11 pm
They should have sent him to Canada where it’s free. Seriously, if there systems was optimal, meaning free market for many decades, I doubt his bill for two months would have been so high, I bet it would have been less than half, maybe a quarter.

But why didn’t a young guy have insurance? Is it because he didn’t have a steady employer? There insurance down there is tied to their jobs, big mistake, it needs to be tied only to the person, whether they have a job or not. Insurance for a young guy should have been cheap, just as auto insurance is cheap for a good driver with a good record.

But regardless, even in their broken system, he got what he needed, he’s alive and they have now run a charity fundraiser to help him.

Not sure what you’re driving at but socializing their system will not fix problems of inefficiency.

#133 OkanaganInvestor on 09.14.11 at 4:54 pm

Angie,
Here is a website that confirms falling house prices in the Kelowna area. Out of 200 listings, 82 have been reduced. The following (with reduced columns) is typical of the nine pages of listings:

Kelowna Real Estate For Sale by Owner
Listing Status* Price City
26650 Active $418,900 Kelowna
26530 Reduced $419,000 Peachland
24561 Active $419,500 Westbank
26082 Active $419,900 West Kelowna
26695 Active $419,900 Kelowna
26541 Active $429,000 Kelowna
26632 Sold $429,900 West Kelowna
26577 Active $430,000 Kelowna
24514 Reduced $444,900 Kelowna
26693 Reduced $445,000 Kelowna
25766 Reduced $448,888 Kelowna
26422 Active $449,000 Kelowna
26680 Active $449,900 Kelowna
25915 Reduced $455,000 Kelowna
26679 Active $458,800 Kelowna
25669 Reduced $468,800 Westbank
26023 Reduced $469,900 West Kelowna
26507 Active $469,900 Kelowna
26210 Reduced $469,900 Kelowna
26319 Active $479,000 Lake Country
26624 Reduced $479,000 Kelowna

http://www.okhomeseller.com/Kelowna-real-estate.asp

Maybe you have a similar real estate website in our own area.

#134 Live Under Your Means on 09.14.11 at 4:59 pm

#118 jess on 09.14.11 at 2:11 pm re Ron Paul

Checkout http://redtory.wordpress.com/2011/09/14/libertarian-hypocrisy/

#135 Edmontonian on 09.14.11 at 5:04 pm

Average per person (includes all children & seniors) of consumer debt in the whole G-20 is the HIGHEST IN CANADA. B.C. & ALBERTA lead the way of the MOST INDEBT PEOPLE in the whole g-20! This means a huge REAL ESTATE CORRECTION is around the corner folks!
http://www.timescolonist.com/business/consumer+debt+highest+country/5376282/story.html

#136 Devore on 09.14.11 at 5:05 pm

Another one of Bank of America’s brain trust abandons the sinking ship.

http://blogs.wsj.com/marketbeat/2011/09/14/bank-of-americas-top-stock-strategist-out-reports/

And another sweet deal bail out for uncle Buffet in 5.. 4.. 3..

#137 Mike Rotch on 09.14.11 at 5:08 pm

@125 Johnny Re Canada Rugby – Can we actually watch this game on tape delay somewhere?

I can’t remember the last time I saw Canada win an international game against a more qualified opponent. I once saw a draw against the Irish in a friendly, but that’s a year or two ago.

#138 Live Under Your Means on 09.14.11 at 5:12 pm

Garth said:

Sadly, I’m sure this includes most of your family, the people at work and the girls in your Tuesday night evangelical erotic belly-dancing class.

&

You probably heard the latest numbers about personal debt. They’ve been rising faster than Cookie Montser’s sperm count looking at a Ron Paul poster.

…………………

No wonder we keep returning to your site (beside your sound advice).

ABSOLUTELY HILARIOUS

#139 Stevenson on 09.14.11 at 5:36 pm

“However, David Onyett-Jeffries, an economist at Royal Bank of Canada, argues that there’s a difference in that buildup of debt in Canada has been gradual over the years, unlike in the U.S. where there was a sharp run-up prior to 2007, followed by severe deleveraging.”

As I have mentioned before. Although we are a passenger of the US economy our mortgage and loaning system is different. We can’t just pick up a mortgage we can not afford. Our banks are much less aggressive and a shoes salesmen can’t decide to start selling mortgages by walking into a bank during his break.

#140 walter safety on 09.14.11 at 5:38 pm

# 22
Astrology is a cult but its nice that it found another cultist in your real estate agent .
The science of astronomy won,t help either , Hubble and bubble never will meet.

#141 Live Under Your Means on 09.14.11 at 5:43 pm

Vancouver—the most livable city?
Good luck finding an affordable home in Vancouver. There are only a few. Six, actually.

Similar signs of collective frustration appeared on news sites last week following reports that Vancouver was no longer the world’s most livable city. A well-known survey of 140 cities across the globe compiled annually by The Economist removed Vancouver from the top ranking because of “increased congestion.” What about housing affordability, many incredulous Vancouverites wondered? As one particularly peeved reader of the Vancouver Sun wrote in the newspaper’s comments section, mentioning having to cheap out on groceries to pay rent: “Screw the scenery! I need to LIVE!”

http://www2.macleans.ca/2011/09/14/the-most-livable-city/

#142 jess on 09.14.11 at 5:46 pm

119 pjwlk
Child Labour
…”Commercial production of tobacco in Malawi goes back as far as 1889, when settlers from the U.S. state of Virginia introduced the crop. In those days “foreign masters” forced the native people and their children to work in the farms for little or no pay.

http://www.corpwatch.org/article.php?id=14947

…”children absorb up to 54mg of dissolved nicotine through their skin — which is equal to smoking 50 cigarettes. As a result, many suffer from green tobacco sickness (GTS). The symptoms including severe headaches, abdominal pain, muscle weakness, coughing and breathlessness.”
http://mg.co.za/article/2011-05-06-tobacco-poisons-malawis-children

#143 Herb on 09.14.11 at 5:52 pm

Kooky Monster @ 113,

Between socialist Europe and socialist Canada and socialists USA dealing closely with dictators and communists globally, it’s a bit concerning.

Man, must that ever be concerning! What does that leave as a refuge for a libertarian like you? Tonga (now even of rugby fame)?

#144 The InvestorsFriend on 09.14.11 at 6:05 pm

THE EVOLUTION OF BANKRUPTCY

1960 – Got no job and no money, then do without, borrow from friends and family, get a part time job whatever. Debt did not get run up. Get any job you can. Why declare bankruptcy?, you have no debt. At least no consumer debt.

1985 – Got no job and no Money, not an immediate problem, for several months you could run up expenses on a credit card. But that had its limits, grocery stores did not take credit cards. Before too long you had to start doing without or get a job. If you did end up bankrupt you usually owed less than $50k

2011 – Got no job and no money. Well you can skate along for many months if you have a line of credit. No need to tell the bank about this. just keep paying your bills with a line of credit. Don’t take the first job offer that comes hold off for a good job. Result, debt is quickly run up in large amounts, the bank unaware. By the time you declare bankruptcy you owe at least $250k. I bet $500k is not so uncommon.

This is progess?

Even countries are doing it. Debt is not an emergency as long as you can keep borrowing to make the payments. And now you can… before you could not.

#145 BPOE on 09.14.11 at 6:17 pm

Are you a Seattle realtor? Sounds like you’ve got buyers remorse.

Brad in Van on 09.14.11 at 9:56 am
Think prices are sky high in North Vancouver? I don’t see what all the fuss is about. Check this out. Medina, Washington is Seattle’s version of North Vancouver, but much larger. Well Medina is even nicer and the wealth is out of control. The average net worth for high bracket tax payers is $25.5 million in this neighbourhood of Medina.

http://www.forbes.com/pictures/edei45imi/medina-wash
.

#146 April Showers on 09.14.11 at 6:53 pm

@145: BPOE you just got served AGAIN! Seattle’s clearly the better choice and you realtwhores have been paying the publicist to try to keep Vancouver in top ranking. That strategy isn’t working though. Vancouver keeps slipping downward in many recent polls of quality of life, lacking in culture, nightlife, education, jobs, entrepreneurship and innovation, affordability, cleanliness, crime, infrastructure, and health of government finances. We have mountains that meet the water. It isn’t enough to make up for all of its inadequacies. BIG DEAL. So does Hawaii which is a real paradise. So does Rio. So does San Diego. So does Monte Carlo. So does S E A T T L E which is a much more progressive a real city. Thats why its so much damn bigger than Vancouver you idiot. No reason our prices should be where they are and they are already slipping too. Good luck with your job at McDonalds.

#147 Nostradamus Le Mad Vlad on 09.14.11 at 7:38 pm


#144 The InvestorsFriend — Good post re: bankruptcy.
*
Higher Poverty Ratios Only three countries have higher poverty ratios than the US; Silvercorp Metals Inc. being investigated. “How amazing that anonymous letters accusing silver brokerages start showing up just when Wall Street is in a panic to keep investors from deserting the equities for hard metals!” wrh.com; GE and Obama rip US citizens off again; BoA “It’s not going to be good for US equity markets says Bank Of America.”; 1:59 clip There is no exit plan for EU-broke countries.

Obama’s last stimulus (cost a bloody fortune); Germany Bailed-out countries to fly their flags at half-mast, so they’re just a little bit dead; Is Greece the catalyst for a world default? Ask the IMF – UN – WTO – NATO — they know! Banks Worldwide “We hope it will work, otherwise the downward spiral will be hell.”; Bullshit and Bluster This may be a diversion to turn sheeples’ attention away from an increase in wars; Bellydancing Drachmas Nice series of pix to lead in to article; Deliberate impoverishment of the west. See IMF – WTO, etc; 1:57 clip Moody’s downgrades French banks; Offshore Taxation Probably be quietly forgotten; Banking – War Crisis, or the modern revolutionary’s manifesto; Gold and Eurozone BRICs takeover; Income Disparity Scroll down for a look at charts.

Erdogan Egyptians’ new hero; Govts. have always lied, and always will; Dismantle the TSA But that would involve touching its junk! Libya Western interference (and new oil and water deals) knows no bounds, plus the IMF looted some of their gold; GoM The US is spreading the blame, to help alleviate BP from being squashed; Heart Failure No, not me but it could be the statin drugs.

CIAl-Quada threatens 9-11 truthers; The US Desperate people do desperate things; Nine Days To Statehood That brings the date for Palestine’s (possible) independence to Sept. 23, and the DEFCON exercise starts Sept. 27, but Russia vs. US all over again? Emotion Detector Not the same as a Cat Detector, but similiar and 4:46 clip Johnny Carson on Lying Politicos; Hospital Gestapo Check insurance is up to date.

#148 Onemorething on 09.14.11 at 8:17 pm

So True about this younger gen right now. Can you say 3 gens living in same house. You wanna see inventory go through the roof!

#149 JRH on 09.14.11 at 8:39 pm

#46 Did they drop the u on your honours diploma ?

#150 vyw on 09.14.11 at 8:52 pm

#130
the immigration stats are at http://www.cic.gc.ca
the average intake is 250,000 immigrants a year and this number counts the family members as well.
add to this the number of temporary foreign workers and international students.

#151 timo on 09.14.11 at 8:56 pm

http://www.telegraph.co.uk/finance/china-business/8761805/China-states-price-for-Italian-rescue.html

‘”I don’t think any country can be saved by China in today’s world. Countries can only save themselves by pushing through reforms,” he told a panel at the forum, echoing langugage from German Chancellor Angela Merkel.

Professor Li said China must stop investing its hard-earned wealth in western debt and switch its incremental holdings into “physical assets”, including the equities of major western companies. ‘

China wants hard assets ,lol! The soap opera is getting exciting now.

#152 vyw on 09.14.11 at 9:04 pm

#152
The ECB can buy up every bond on the market. As the central bank for a floating fiat currency – the Euro – it can purchase an unlimited number of bonds and issue unlimited Euros. Unfortunately there is no fiscal agreement and member countries then must as like provinces and they are at the mercy of the bond vigilantes.

It’s up to the ECB, not the Chinese or the US Fed.

#153 Bottoms_Up on 09.14.11 at 9:11 pm

Can you cook? — Garth
——————————-
Yes I can. My partner likes it when I do prime rib with a thermometer.

But I’ll take your answer to mean you guys don’t help plebians like myself. Guess I’ll have to stay self directed. But your book should help.

I help everybody. Contact me offline, [email protected], and we’ll swap recipes . — Garth

#154 TurnerNation on 09.14.11 at 9:31 pm

Lonnnng term chart:

Dow Jones Industrial Average (1900 – Present Monthly)

http://stockcharts.com/freecharts/historical/djia1900.html

#155 jas on 09.14.11 at 9:33 pm

Garth:
Young couples and singles won’t heed your advice.
For them 2% to 3% of interest rate is ‘normal’.
Life only will teach them.

#156 daystar on 09.14.11 at 9:40 pm

#112 Stevenson on 09.14.11 at 1:50 pm

Lets see, the tiny globe & mail (to name one of many media outlets who ran the story of Canada’s household debt):

http://www.theglobeandmail.com/report-on-business/canadian-household-debt-soars/article1564658/

Not to mention Scotiabank’s economic take in the eccentric Star:

http://www.thestar.com/business/markets/article/1053311–scotiabank-floats-possibility-of-recession

Took me a minute and two whole searches to find this stuff… hmmm.

My sincerest sympathies are with you during what must be a difficult struggle through your present challenging times.

#139 Stevenson on 09.14.11 at 5:36 pm

Of course, ’cause Canada’s an island and its all different here ’cause its Canada and shoe salesmen can’t sell real estate until they get 7 whole weeks of training, lol.

Thanks for the chuckles, bud. Flat earth comedy still grinds out some laughs around here. Cheers! :)

#157 a prairie dawg on 09.14.11 at 9:41 pm

#101 BrianT

Utopia isn’t long-winded. It’s just that society has ‘devolved’ to the point where the majority can’t process anything longer than a tv commercial or a text message.

Too much gadget time is turning the human race into mindless dullards. Sad really, and yet they think they’re better off too.

Ironic.

#158 Habbit on 09.14.11 at 10:04 pm

Globalisation is good for who? The big wigs and corporations and their mouth pieces. The theory is more trade more wealth for everyone. But the reality in the west is moving jobs off shore to lower wage areas with little or no standards. Kind of like child labour in Europe in the 18th century. They do not care where they take profits or how it is achieved. But it’s OK cause $ is being made and what could be more important? This new order will move capital and jobs instantly elsewhere for profit and lower costs. Problem is the standards that have taken so long to establish here don’t exist in many places, so unless we are COMPETITIVE we loose them. Oh I forgot we’ll get them with our innovation! Good luck with that. Technology is moving as well. When we can no longer afford to have the battleships and destroyers operational and in the water controlled by we the people the stew will almost be ready.

#159 Stinky the Fish on 09.14.11 at 10:04 pm

“You probably heard the latest numbers about personal debt. They’ve been rising faster than Cookie Montser’s sperm count looking at a Ron Paul poster. ”

Laughed at this and then did a cartwheel in my living room because of the laughter. Now drinking beer. Sweet times.

Sounds like my friend who has about the same debt load, all consumer debt. They have an investment while they pay 15.3% interest on their debt. Your investment won’t give you a return like the credit card is evaporating from your count. How f-ckin retarded are people? This couple has the financial literacy of a twelve-year Puerto Rican selling Tic Tacs at a beach. Canadians should get into a recession first and then hopefully deflationary times will come for their retardedness. F-ck!

Back to some serious drinking.

#160 meslippery on 09.14.11 at 10:19 pm

This just came to me Re: failure to lunch.
The people that are brought to this country to do the
work ” Canadians will not do ” a lot of the time live
with a big extended familys under one roof.

Working for peanuts but now its us and we are not to do that.

#161 i'm no fool on 09.14.11 at 10:23 pm

Here’s a goof one. Got my latest issue of Money Sense and in the plastic wrapper was a flyer/card pumping real estate as a premier investment. What planet are they on I wonder.

#162 a prairie dawg on 09.14.11 at 10:23 pm

#112 Stevenson

Where you getting these stats from?

– – –

There is a better one I saw a few days ago and can’t find it now. Showed it in graph form over 20 years or so. (I’ll keep looking)

These 2 only took a couple minutes to locate:

http://www.financialpost.com/news/Foreign+investors+help+keep+mortgages/5390194/story.html

http://www.financialpost.com/news/Most+Canadians+feel+their+debt+situation+better+than+others+survey/5400211/story.html

#163 meslippery on 09.14.11 at 10:30 pm

Also if we did launch them all there would be less for
lunch.

#164 BrianT on 09.14.11 at 10:34 pm

This chick should be the leader of the free world-she likes to party http://www.thestar.com/news/world/article/1053927–sarah-palin-had-sex-with-nba-star-snorted-cocaine-book-alleges?bn=1

#165 The thing in the basement on 09.14.11 at 10:35 pm

76 Moneta – all good ideas I would like to implement. Unfotuneately Mrs. doesn back me up.

Ever see Nanny 911? Same theme over and over. Dad wants to discipline, kids run to Mommy.

16 Shawn – every been in one of those deals where somebody says “we’re all gonna be rich!”? That’s the time to sell and get out. Then at least you will be rich.

#166 Markey on 09.14.11 at 10:40 pm

#152 timo – here’s another article for you: http://www.marketwatch.com/story/why-china-would-love-president-rick-perry-2011-09-13

#167 Timing is Everything on 09.14.11 at 11:07 pm

Judy said – If that bible humper Morton gets in I’m moving to Moose Jaw to drink myself to death.

Go to to Dawson Creek or maybe Whitehorse.

http://mjchurches.com/directory.html
http://ecumenism.net/denom/saskatchewan.htm

#168 Timing is Everything on 09.14.11 at 11:41 pm

#168 Timing is Everything

Should read ‘Jody’…sorry about that.

#169 Whistle punk on 09.15.11 at 3:18 am

Bring on the foreclosures, being in the disposal business part time I make money cleaning up house repos and estate sales.

I’am figuring by 2012 around the area I’am at the people that can’t afford their debt will start appearing like a bad rash.

The tourism was BAD this year very little tourist, there is rumblings that people in the tourism industry lost money.

Construction is down there is some houses being built but not enough to keep everybody employed.

Service based business are slowly moving people still are using them but not as much as previous years.

The new saying is “Nobody is spending any money” well it is true people are watching every penny. Many people out there right now are scared sh*tless about the current situation.

Many are seeing the property values dropping they are in denial that property values never go down. They list their house and find out nobody is interested. Some have no choice they have to sell and take a loss, some are taking 50-100 loss. Hearing a little bit about the foreclosures, don’t hear too much about it, people try keep that hush hush.

Many baby boomers have screwed themselves, I think it is funny that a Gen X er (myself) will be cleaning up baby boomer foreclosure houses they had to claim bankruptsy on. Load up my truck and haul the house contents to the landfill or re-use it place.

What I see in the disposal work, the “Silient Generation” especially the ones in the 70-80s have very basic houses. Nothing is overly expensive the stuff they want me to remove is years of built up clutter. They also usually pay in cash and never complain about the bill I hand to them.

Baby Boomer generation especially the ones in the 50s age. Big fancy house, all kinds of expensive stuff, expensive vehicals etc. Look inside their house, how can you afford this. Oh ya the baby boomers are the ones that try skip out on paying their bill. If I see expensive cars and toys the customer is C.O.D they are the worst for trying to ask for discounts or send them a bill they never pay.

Can’t wait to see what happens, bring on the realestate crash. I want to see the smug baby boomers lose everything they own.

#170 Angie on 09.15.11 at 3:38 am

#73 fancy_pants

As you might have noticed, had you read the entire entry, I didn’t ask about purchasing a home at all. I asked if I should sock more money into my savings, or help my partner pay off his debt.

What Garth didn’t post was that our debt is largely his. I have very little personal debt. And since we aren’t married, have no children, hold no joint titles on assets, and don’t even share a bank account, I can very easily seperate my finances from his.

I don’t feel entitled to a home. Again, if you noticed what I said, I am not prepared to take on the purchase of a home without the all important 20% down payment. No need to worry about paying my CHMC insurance; I don’t want to pay for it either.
I thought it went without saying that, had I 50,000 for a down payment, it would stand to reason that all our debt has been paid. I’m sorry common sense is so unexpected by everyone. I would have made that more clear. That’s why my question was: should I invest on my own, or dedicate my savings to his debt? Not: should I buy a house with no down payment now, or buy a house with no down payment later? Because, in my mind, the last two questions are ridiculous.

fancy_pants, I hope calling me a moron, saying that I only qualified for a 250,000 mortgage because the whole system is a disaster, and complaining that I am just one more leach you’ll have to support by paying taxes (something I also do, by the way) has made your day better. To everyone else: thanks for the advice, especially since I provided so little information.

#171 Angie on 09.15.11 at 3:40 am

Also: NOT HAVING CHILDREN. Not now, maybe not ever. Its called birth control, people.

#172 TurnerNation on 09.15.11 at 7:50 am

If I tilt my head ~10 degrees to the right, this weblog one again appears with vertically-positioned text! :p

#173 “I manage strata titled properties in Greater Vancouver. Some people are so stretched they can’t pay for even the simplest repairs within their unit.” | Vancouver Real Estate Anecdote Archive on 09.15.11 at 8:38 am

[…] gets what’s left. Wonder how that’s going to work when prices finally come down.” – Property Manager, greaterfool.ca, 14 Sep 2011 12:13pm Share:TwitterFacebookRedditStumbleUponDiggLike this:LikeBe the first to like this post. This […]

#174 Christine on 09.15.11 at 9:26 pm

Hicksville Alberta? Many of us here in Alta moved here from places like Ontario…probably lived down the street from you, Garth! :-)