Bankers

Dave and his live-in GF left their rented apartment in Vancouver’s self-absorbed kingdom of Kits on the weekend and, he says, ran right into a sure sign of the apocalypse. “Within two blocks we had seen 6-8 open houses, mostly for the $500k leaky condos but also for those million dollar shacks people buy here. Another sign of your coming apocalypse happened this summer, when 4 places got listed in my building. Two of them took over 4 months to sell the other two are up still up, no action.”

But, like most economists, it’s not real estate prices that steamed Dave. It’s debt.

“I have been one of your converted ever since one of my buddies at work turned me onto your blog. Mostly because as a young professional (born and raised in Toronto moved to Vancouver) I feel completely priced out of the market and downright angry. Not just because for me to own a home in one of my two favourite cities I would have to knock off my own mother and take her house but because the prudent are going to have to pay for the actions of the idiots. Moral hazard, I believe if I can remember my econ training. It really does irritate me when I have to hear my friends yak about how the bank pre-authorized them for $600k, when all they have to their name is a company car and cellphone … it’s predatory.”

People borrowing badly is the biggest thing we have to worry about. So, Canadian interest rates will rise before those to the south. The loans must stop. You know why. A trillion in mortgages outstanding. People retiring with fat lines and HELOCs. Four in ten families unable to meet monthly payments. A negative savings rate where house prices are highest.

Now Moody’s warns that this will impact bank profits. “We are concerned that Canadian consumers are relying on low interest rates to support high debt loads,” the ratings agency says in a new report, which fingers CIBC as most vulnerable.

“The creditworthiness of Canadian banks depends on the continued financial health of the Canadian consumer. While robust growth in consumer credit has driven strong systemwide earnings year-to-date, this trend will be constrained as households reach borrowing limits at the same time the economy shows few signs of anything beyond tepid growth.”

I’ve told you already Canadians now have debts equal to about 150% of what they earn. That’s an average number, so once you remove all the rich people, the sensible retirees and the financial geniuses who read this pathetic blog, you can tell how many of your family members, neighbours and fatuous friends are screwed. This is a ratio higher than that of American families, and establishes a new record for both countries.

As for the banks, says Moody’s: “While we continue to view the strong retail franchises of these banks as supporting their current high ratings, the banks face challenges if a combination of housing price corrections, economic/employment downturn or increased interest rates materialize.”

And the odds of those three things taking place in the next year or so? Total.

Of course, this does not mean the banks here will stumble and fall as they did in the US three years ago. We have the taxpayers standing behind all those billions in high-ratio, high-risk mortgages made to people with no money and a lust for granite. We don’t have the orgy of mortgage securitization that Yankee banks were exposed to. And, except for Alberta, there’s no jingle mail in Canada – homeowners who lose their equity can’t just walk out on their mortgages.

In fact, one bank economist disputes there’s any debt crisis at all. He’s Matthieu Arseneau, of National Bank, who says because Americans have to allocate up to 20% of their incomes to pay for private health care, while ours is funded through higher taxes, things here ain’t so bad. “If we adjust for this factor, the debt ratio of U.S. households exceeds that of their Canadian counterparts by 12 per cent.”

But, if true, does that really matter? How can anyone actually dispute that ridiculously low rates have led to bloated debt and toxic house prices? With the economy slowing by the day, real estate wobbling and the certainty that the cost of money will rise faster than debt is repaid, how will there not be consequences?

Actually, I’m not worried for bank profits or their shareholders. In a financial crisis, they’d be the last to suffer. Moody’s forgets that in a country with only six (the US has 8,400 banks), the feds will always protect.

In fact, I’d sure rather have a hunk of my net worth in bank equity than I would in house equity. The bankers have been throwing sandbags around their Bay Street towers for the last three years, while millions of idiot Canadians have just been bagged. They borrowed big to buy assets now falling in value.

Remember that feeling you had when your first ride died, with fourteen payments to go? It’s about to come wafting back in large swaths of Toronto and Vancouver.

Italy’s debt was just downgraded. It has legendary cars, wine and babes.

And you?


129 comments ↓

#1 T.O. Bubble Boy on 09.19.11 at 9:34 pm

Now Moody’s warns that this will impact bank profits. “We are concerned that Canadian consumers are relying on low interest rates to support high debt loads,” the ratings agency says in a new report, which fingers CIBC as most vulnerable.

shocking.

The bank with the 7% cashback mortgage and liar loans is the most vulnerable to consumer credit.

Who could have guessed that one?

#2 martin on 09.19.11 at 9:37 pm

the ending was fun about italy !!

#3 Young Old fart on 09.19.11 at 9:47 pm

….It has legendary cars, wine and babes. And you?

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

Super car amongst others in the toy garage…. a few boxes of fine vintage downstairs….. and my soul mate

I’m good….. You?

#4 A Fan in Van on 09.19.11 at 9:48 pm

Another sign of the coming apocalypse here in Kits. Down the street there’s a teardown listed at 2.4 M. The listing boasts of the fact it has 2 long-term tenants paying 44,000 a year. For kicks, I plugged 2.4 M into a mortgage calculator and it hilariously returned the result of 144k in payments per year. So for a nice round 100k a year, you too could be a Kits landlord!

Don’t believe me? Here’s the listing:

http://www.realtor.ca/propertyDetails.aspx?propertyId=10932246&PidKey=152332182

#5 A Fan in Van on 09.19.11 at 9:50 pm

Oop. Make that 2.2 M. Not that it makes a difference.

#6 Mr. Lee on 09.19.11 at 9:54 pm

“the prudent are going to have to pay for the actions of the idiots”

“The bankers have been throwing sandbags around their Bay Street towers for the last three years, while millions of idiot Canadians have just been bagged.”

Great article and two wonderful quotes above. Mr. Carney has said many times.” all debts must be repaid and asset values rise and fall but debt stays.”

How any “idiot” thinks, believes, dreams or tunes out that this does not apply to he/she is beyond understanding.

#7 Smoking Man on 09.19.11 at 9:55 pm

Good post……..Garth

The new Two and 1/2 Men Sucks…………

The old version drunken doped up guy who is bad to the bone and get all the ladies.

The new version non drinking tall well endowed billionair who is nice and polite gets all the girls.

Puke…….Chuck Lawry screwed up big time……..

#8 Plain guy on 09.19.11 at 10:04 pm

Went with a buddy to help him buy a house in Richmond Hill from a builder. We talked to a sales guy and expressed that we wanted to buy a specific house. He put a red sticker for that lot. After few minutes the sales guy came back to us and said that another guy is willing to 10000$ more if we give up. I, who right from the beginning who advised my friend not to buy now asked him to accept that money and just walk away. He asked his wife if they can get that 10000$ and get someother house somewhere else. I even suggested them to take that money and go on a nice vacation somewhere. But it didn’t work out. Oh well… It is difficult to convince my friend to withdraw the contract especially after someone who tried to give money to withdraw the contract. They both were very very happy. They both know that I came out of the market before three years expecting that the price will drop.

#9 Frances on 09.19.11 at 10:06 pm

I also am furious to be one of the taxpayers who will bail these idiots out, while my family decided the stakes were too high for us for the past eight years, and so have had to move from rental house to rental house as our kids grew up. And put up with attitude from people about “renters.” Meanwhile, we put two kids through college, saved money to fund two more, have no debt, and can afford to travel. But it seems ridiculous that people whose income falls in the top 1 percent of family income in Canada cannot “afford” a simple, basic family home in Victoria. But we can’t. Or I should say, won’t enslave ourselves to the banks to do so. Because the banks would be more than happy to trap us–and have tried to, multiple times. “It’s a great time to buy a house,” our ex-real estate agent said to us, two years ago. Really? And who would have benefited from that, might I ask? Me? I don’t think so. But using logic and experience certainly doesn’t guarantee we won’t be affected by the coming crisis. Why? Because we are TAXPAYERS. And we hold the bag.

#10 WI BOOMER on 09.19.11 at 10:15 pm

Yes. The Ritz hit the fan. Markets down, RE on its tail for the longer term. Jobs that pay decently are very tough to find. Welcome to the USA.

OH, I keep forgetting… This is a Canadian Blog. Well then, let me see…. Ritz hitting the same FAN!! Markets down, RE finding few buyers, and prices are out of sync with paychecks.

Sorry, been there done that, got the tee shirt. Your Turn. Your idiot banker says “” American’s pay 20% for health care.” Hardly, but 7% yes, is closer to reality, and we do. It’s a difference in TAX RATES isn’t it? About 7% is almost exactly the right number. Even if you eliminate the BUSH TAX CUTS, which brings it up to 10% for my income group, so what? 10% is hardly more than a rounding error.
Back in 2000 the US Tax rates were paying off the National Debt, but add in 2 tax cuts, 2 wars and a falering economic outlook and today, we are heading toward tits-up land without a paddle.

Still, they hesitate to even restore tax rates -on everybody. They just want to tax the rich. Who are they, exactly? Well, it turns out to be them, maybe but don’t count on it. Greece goes, then the next few dominoes in the EU. Then what? Prosperity or maybe ma’s parody?
Debt sucks when momey gets more expensive. Bank equity might be ok. Wanna buy some Bank of America shares?? Even they beat DEBT.

#11 U-The Man on 09.19.11 at 10:20 pm

House prices have been propelled higher by speculators and property virgins,using easy credit and emergency very low interest rates. The conservatives have promoted spending on housing by their CMHC policies. Savers and fiscally prudent Canadians will bail these greater fools out unless they cashed out on time pocketing capital gains from flipping real estate. The real estate brokers of course pulled out millions of commissions from these transactions. Taxpayers and future generations will pay a heavy price for all this debt.

#12 Mr. Lahey on 09.19.11 at 10:21 pm

I agree with you Smoking Man. Chuckie Lorrie botched up big time with the new Two and Half Men. I am watching the Charlie Sheen Roast now… Canadian banks will always be…WINNING!

#13 dd on 09.19.11 at 10:22 pm

….In fact, I’d sure rather have a hunk of my net worth in bank equity…

Wouldn’t touch them with a ten foot pole. Most banks are levered beyond pruedent measures (10 – to 1) and their derivative book is a black box.

Fiction. — Garth

#14 The thing in the basement on 09.19.11 at 10:47 pm

“But it seems ridiculous that people whose income falls
in the top 1 percent of family income in Canada
cannot “afford” a simple, basic family home in Victoria.

Frances -according to this link, the top 3% or so is $250k/yr. At the “safety margin” of 3X income you can easily afford a home even if rates go up considerably. I am sure $750k would find you something “basic”.

You are of course free not to, probably the better decision. No need to be angry or bitter.

http://www40.statcan.ca/l01/cst01/famil106a-eng.htm

#15 45north on 09.19.11 at 10:52 pm

The bankers have been throwing sandbags around their Bay Street towers for the last three years, while millions of idiot Canadians have just been bagged. They borrowed big to buy assets now falling in value.

the sandbags are invisible: internal audits to make sure all mortgages are properly signed and registered, aggressive and thorough foreclosure process, case law is in place, swat teams ready to go. Oh yeah and tightened lending standards.

Moody’s said bank profitability will decline. Maybe not.

#16 Grooby on 09.19.11 at 10:56 pm

Penpal #62 from previous post
“Do you even read Aussie Roy’s postings? or any Australian news?

Google what’s happening and open your eyes and mind!”
———————————————————

I see you missed what I was saying. If I have to ‘google’ it to find Steve Keens’ blog or money morning Australia, then that’s not exactly mainstream news, is it?
Your Sales volume info takes into account the impacts of the floods in Queensland. As far as I’m concerned, only what happens in Melbourne and Sydney really matters.

I read Aussie Roy’s posts all the time (and they are great). Not a single post from a major paper has yet said ‘the bubble has burst’. It’s not a water cooler topic yet. Don’t get me wrong, the end result is not up for dispute. I just don’t get why people are always posting here that the ‘Oz bubble has burst’, cuz that’s not at all the perception here. I have a number of well-to-do friends looking at buying investment property #2 or #3, despite my warnings. The RE boards are possibly more influential here than in Canada.

So, please re-read what I posted and open your eyes to what goes on day-to-day, not blog postings. The average Australian does not look at these; in fact, they barely read ‘The Age’ or SMH.

#17 Tim on 09.19.11 at 10:56 pm

Thanks Stephen Harper for creating this mess and putting taxpayers on the hook through CMHC. The pussy won’t stand up to the banks…

#18 nonplused on 09.19.11 at 10:57 pm

What Matthieu Arseneau, of National Bank fails to mention is that we pay those taxes that pay for medicare, so it still gets paid. Canadian taxes are generally agreed to be higher than US taxes, but I don’t know how true that is anymore. But either way, the same guy that has to pay back that 150% of income in debt also has to pay for medicare. Ergo, NB should hire better analysts.

#19 T.O. Bubble Boy on 09.19.11 at 10:58 pm

Somebody please correct these stats if they are off, but I believe that Vancouver (Greater Vancouver Area) might soon pass Toronto (GTA) for total RE listings?

In the August 2011 Toronto RE stats, the GTA had 17.258 listings. As of today, the Vancouver area is almost at 17,000 listings! (16,775 as of tonight)

http://vancouvercondo.info/forum/topic/september-2011-daily-numbers

Yes, Toronto has probably seen the # of listings grow this month also, but isn’t it a bit odd that Vancouver has essentially the same number of homes for sales – but for probably 1/3 as many people?

#20 fiendish Thingy on 09.19.11 at 11:33 pm

Today’s post brings up several questions/observations:

1) already addressed somewhat by Garth- if Canadian banks’ creditworthiness is at risk, how does that affect their preferred shares?

2) “the prudent will suffer for the mistakes of idiots”; well yes, I suppose, but the 30% who don’t own homes won’t be bailing out the 70% that do, ALL Canadians will be taxed to pay the CHMC to cover the bad mortgages, no? I’d still rather be one of the prudent 30% paying more in taxes with no debt, than one of those with a 150% debt to income ratio, no savings, with a higher tax bill on top of that. In addition, if the cost to borrow money goes up, won’t the benefits of saving/investing improve too? And of course, the prudent 30% will be able to vultch on the soon-to-be affordable homes of the 70%

3) speaking of idiots, if a borrower defaults, how does the bank/CHMC squeeze blood from a turnip? Can they attach wages? How long is a defaulter’s credit ruined before they can get another mortgage for the next bubble?

Please forgive if there are obvious answers to these questions- I’m a Californian, soon to be BC resident, who doesn’t mind paying taxes for healthcare and even a CHMC bailout instead of illegal wars, torture and wiretaps.

The profitability, not the creditworthiness, of Canadian banks may be affected. This will likely have no impact on preferreds, but cause common stock to decline in value. — Garth

#21 stage1dave on 09.19.11 at 11:45 pm

Me? I got a pile of legendary cars, the babe, but no WHINE!

Doesn’t anyone drink VO anymore?

Great post, btw; glad to know I’m not the only one who was paying attention in some of those economics classes…life would have been so much more convenient if I’d been a narcissist.

#22 Smell The Coffee on 09.19.11 at 11:46 pm

DEBT DEVIL The Bankster’s ethic, (or a method purloined from your local drug dealer to make a debt slave).

1st credit card … ‘just try it, see how it feels’

2nd. credit card … ‘see how great it feels and experience how attractive your new look is’

3rd credit card… ‘keep partying & holidaying buddy, it’s all fun, you deserve it’

New Car Loan … ‘its essential; new image, new wheels’

1st Mortgage … ‘hey, a house is permanent security… remember forced savings account”

2nd Mortgage to cover over due credit cards …. ‘we understand, debt consolidation is smart… stretch your junk purchase over 30 years… cause you deserve it.

Long term care insurance… for the the stroke you get from hypertension to meet the never ending payments you signed up for.

Debt devil.. lets review:

I took your personal morals (check),
I took your emotional security (check),
I took your happiness (check),
I took your health ( check),
I am about to take your life – what else is there to take?

Oh yes, Buddy, your soul.
How much for that?

Your answer… fill in the blank _________.
It is all you have left, maybe?

#23 Jsan on 09.19.11 at 11:51 pm

Here is a good video of Peter Schiff giving a Testimony Before Congress on Obama’s Jobs Bill from 9/13/11.

http://www.youtube.com/watch?v=_BHLguFEN3M&feature=player_embedded

.

#24 young & foolish on 09.19.11 at 11:53 pm

hahahahahaha …….. great post!

#25 timo on 09.20.11 at 12:12 am

http://www.financialarmageddon.com/2011/09/the-sharks-will-soon-be-swimming-our-way.html

To grasp the magnitude of our nation’s insolvency, consider what tax hikes or spending cuts are needed to eliminate our fiscal gap. The answer is an immediate and permanent 64% increase in all federal revenues or an immediate and permanent 40% cut in all federal noninterest spending.

http://www.economonitor.com/nouriel/2011/09/19/how-to-prevent-a-depression/?utm_source=rss&utm_medium=rss&utm_campaign=how-to-prevent-a-depression

Today, Spain and Italy are at risk of losing market access. Official resources need to be tripled – through a larger European Financial Stability Facility (EFSF), Eurobonds, or massive ECB action – to avoid a disastrous run on these sovereigns.

http://finance.yahoo.com/news/Bernanke-Europe-hold-key-to-rb-1965361031.html?x=0&.v=3

Housing “is dead and it will stay dead, and I don’t expect anything out of unemployment either,” said Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey. “The biggest event is Bernanke.”

just plain ugly out there.

For a little good news, Treasury Secretary Timothy Geithner was told to mind his business. Telling Europe how to solve problems is pretty arrogant considering the EU is holding a ton of toxic debt from bad US mortgages.

keep your money safe.

#26 InvestorsFriend (Shawn Allen) on 09.20.11 at 12:16 am

WE’RE IN A BAD MOODy’s

So Moody’s walks into Canada and says:

“We are concerned that Canadian consumers are relying on low interest rates to support high debt loads,”

TRUE, but it’s worse than that.

Many Canadians are actually relying on lines of credit to support high debt.

As long as their is room on the old line of credit no one need be late with a payment. One can spend more than their income for quite some years, borrowing to cover the short-fall. (Just ask Greece). And the bank credit rating machines and the FICO score process will likely show you with a good credit rating and raise your limits.

How many Canadians are using lines of credit to pay the mortgage? I don’t know. Sadly, I don’t think the bank’s know either.

Certainly CMHC has no clue.

The ponzi scheme can continue until the bank turns off the lending… then they may notice that their loan re-payments slow down…

#27 timo on 09.20.11 at 12:17 am

http://www.cnbc.com/id/44588239

A big market-making state bank in China’s onshore foreign exchange market has stopped foreign exchange forwards and swaps trading with several European banks due to the unfolding debt crisis in Europe, two sources told Reuters on Tuesday.

here we go again!?

#28 Nostradamus Le Mad Vlad on 09.20.11 at 12:21 am


So the banxters are in al Queda (The Toilet), which is apropos for the stuff they are doing.

“Now Moody’s warns that this will impact bank profits. The creditworthiness of Canadian banks depends on the continued financial health of the Canadian consumer.”

Ummm, has anyone bothered to take into account all the mfg. / industrial / IT jobs which have been shipped overseas, leaving NAmerica with booming unemployment figures? And those who are now unemployed, with nothing more than EI or SS benefits to live on, let alone pay bills and mtgs., where are the next lot of $30 / hr. jobs going to come from?

A link I posted recently said ChIndia was growing so rapidly with their workforces, that they had shipped numerous call centre jobs back to America. Role reversal has taken place.

ChIndia, B and B, Thailand and others are not daft. They welcome this new found wealth, as it boosts their economies. Meanwhile, we are left with the NHL, CFL, NFL, NBA and MLB, strikes and seasons of growing discontent.

So how are NAmerican consumers supposed to spend? What have they got? How much of what they have do they actually need? If I were a singleton, the home I live in now would have gone a few years ago, and I would have rented, cut way back on costs and enjoyed retirement, without having to mow lawns or shovel snow.

“I’d sure rather have a hunk of my net worth in bank equity than I would in house equity.” — Same here, with the bank preferreds paying out every quarter, liquid — add in some great dividend-paying blue chippers, REITs and ETFs, that makes for an abundant income.

“It has legendary cars, wine and babes.” — Never mind the last two, check this out — A Ferrari? Too slow for moi.
*
Banking “The founding fathers knew the evils of a privately owned central bank.”; Merkel Coalition crumbling; EU Bonds rollover debt via Chinese bailout; Less bang fer yer buck; 5:43 clip BoA bankrupt? Guess so; 2:46 clip Degree in worthlessness; China Trying to keep inflation in check; Link in O’bomba’s new jobs plan incl. taxing the hell out of everyone, which is what TPTB want — more taxes; The Reign of Spain stays mainly in the US via Job Stagnation; Dances With Wolves or Swimming With Sharks?

Spontaneous Combustion in Fukushima, and More Radiation in July and Aug.; Michigan nuke plant springs leak, and along with ones in VA and Calif. breaking down, there is more for the US to be concerned with than war; Geography Oil and the Falklands. Let’s have another war! Politics Aside Some foes are uniting, and this is one reason why; Weetabix Cereal turned to The Dark Side (oh nooooo!); Phoney Tony Blair He may suffer from brain-in-little-toe disease; More BS and smearing of SArabia and 9-11.

Idiots GW cultists claim heat is hiding. Utterly desperate; O’bomba Seeking a fight with China, and O’bomba Proposing new taxes. Sheeple are angry? Better believe it. Taxing the rich is cheap talk, but taxing the middle class is likely to send plenty over the edge; Link inArticle says to prepare to defend America . . . from CanadaFreePress.

#29 jimboyyc on 09.20.11 at 12:23 am

CMHC insured mortgages are recourse mortgages in all provinces including Alberta. So taxpayers will pay for mortgage shortfalls in Alberta and all other provinces if there is a significant drop and CMHC runs out of funds.
Of course, in Calgary our prices peaked in 2007 and have been in a soft landing since then, slowly but steadily dropping 10% or so.

#30 Jimbo on 09.20.11 at 1:00 am

#9 Frances…

“But it seems ridiculous that people whose income falls in the top 1 percent of family income in Canada cannot ‘afford’ a simple, basic family home in Victoria. But we can’t. Or I should say, won’t enslave ourselves to the banks to do so.”

I’m in a similar boat. But in my case, I’m probably in the top 1% in Canada in terms of net worth rather than income, given I retired at a young age after selling my business. Yet I rent an old, run down house because a basic house in North Vancouver costs $1.0M+. I refuse to pay that much for crap. And I’m not paying the $2M required for a reasonably nice place that would cost $500K tops in most US cities.

It’s beyond ridiculous. It’s evil. You want to own a house here? You must become a debt slave for life. Or you must throw your hard earned money into what is clearly an insane bubble that could burst any second, making you the final “greatest fool”.

#31 cb on 09.20.11 at 1:15 am

Moody warns of low interest rates fueling high debt loads??? Does somebody pay these people to figure these things out?

#32 sam on 09.20.11 at 1:18 am

now thats an expert opinion.
http://www.youtube.com/watch?v=-tQWnLFU-4U

#33 Edmontonian on 09.20.11 at 2:32 am

In Edmonton the Market looks like it could be on the verge of going off a cliff! Two bedroom condos from $65,000! http://www.mls.ca/PropertyDetails.aspx?&PropertyId=10665065&PidKey=-1860538964

2 bedroom houses from $99,000

http://www.mls.ca/PropertyDetails.aspx?&PropertyId=11101443&PidKey=406128966

The foreclosures are really taking off here in Edmonton. Poverty is up over 78% since 2009. It has become a terrible place to live. Our Conservative Governemnt has given HUGE TAX CONCESSIONS to the rich erroding the middle classs & increasing poverty! See recent Video on the POVERTY SURGE in Alberta…
http://www.albertaprimetime.com/Stories.aspx?pd=2467

#34 George on 09.20.11 at 2:33 am

Garth,
How does diversification work in what’s happening in the markets? Looking forward to your analysis.
Please look at information below from an article from Mish’s Global Economic Trend
Analysis

No Hiding Spots Except Despised US Dollar: Equities Red, Metals Red, Energy Red, Grains Red

Equities, foreign equities, and most commodities (including gold), are down sharply on the day. About the only winners are the US dollar, US treasuries, the Yen, and German Bonds.

Currency Futures

Energy Futures

Grain Futures

Metal Futures

US Equity Futures

European Equities

$SSEC Shanghai China Stock Index

Italian 10-Year Government Bonds

No Hiding Spots Except Despised US Dollar

If you have not done so already done so, please consider the possibility there will be no hiding spots except for US dollars and short-term US treasuries (yielding nothing) in a renewed strong downturn.

I expect gold to hold up in a major decline, but I could easily be wrong. One encouraging sign is the $HUI gold miner index is down less than a percent even though gold is down by 2% and the S&P and Dow are down by almost 2% as well.

#35 Thetruth on 09.20.11 at 3:12 am

Get ready for ‘HIM’ money from India.

NRI means non-resident Indians and there are a million of them in Canada (Permanent residents). As of this month, they can bring twice as much money out of the country. $200,000 now per person per year.

HAM money is liquid while HIM money is in land. Land prices in Indian cities make Vancouver look downright cheap. And this money is coming to Vancouver and Toronto in the near future!

http://taxworry.com/resident-can-gift-nri-relative-upto-200000-us-dollar-now/

Below is a link to some prices per square foot in the suburbs of Mumbai. 2008 prices…double today…over $1000 per square foot!

http://indiahousingbubble.blogspot.com/2008/01/insane-housing-prices-in-mumbai.html

Yes Junius, these are the poor immigrants coming here…If you would dig a little deeper, you would have found that they just can’t get their money out of India.

Now answer me this…, what does it mean for Vancouver and Toronto housing when noting Indian and Asian cultures prefer LAND and hold it for GENERATIONS and will be the MAJORITY POPULATION in these cities in a few years??

#36 Thetruth on 09.20.11 at 3:20 am

And a few more things…

Housing price to income ratios mean nothing in India as the ration is off the charts…

Mortgages are very uncommon in India; mostly cash deals (generational wealth) …

Over 2,500,000,000 people in China and India where the above is the norm. Is Canada so different with 34,000,000 people?? … with say 10,000,000 trying to come here.

We live in a globalized world now.

#37 Dorothy on 09.20.11 at 3:53 am

The value of bank stocks may fall again, along with many other equity prices, but I agree with Garth that it’s very unlikely the government would allow any of the banks to actually fail; because the ramifications would be too enormous. So I’m not worried about the money I have in the bank.

But I am worried about the prospect of a worsening recession. Because I think that rising unemployment is going to be the biggest problem facing us all over the next few years.

Real Estate values will fall, and some may lose their homes. But there will be lots of homeowners who simply hunker down and live as frugally as they can until these current economic times improve. The recent period of high consumerism is now past history, and will remain so for quite some time. But that doesn’t mean everyone will end up out on the street. The world is not coming to an end.

However, society will be irrevocably changed by what is to come. As the gap between the rich and poor continues to widen, and the middle class continues to shrink, people will become ever more discontented and political and social change will be the final result.

It may take years, but I think the greed that caused this financial mess in the first place, will ultimately be the cause of the emergence of a vastly different society than the one we’ve become used to.

Only time will tell whether the change will be better or worse.

#38 MasterBootLicker on 09.20.11 at 4:14 am

And people are still naive enough to think governments run countries. Its the banks that call the shots you silly sheep.

#39 js on 09.20.11 at 6:20 am

It’s funny. I walked into CIBC with no house asking for a savings account and they tried to sell me a mortgage

#40 R.O.V. on 09.20.11 at 6:21 am

In my neck of the woods (NE Avalon) we have two mega projects coming online over the next year which will lower unemployment and provide 5-6000 high paying jobs. This will keep housing prices into the stratoshere and climbing over the next 5 yrs….

#41 BrianT on 09.20.11 at 6:28 am

#13DD-DD you are delusional. These constant tales of rogue traders losing billions of shareholder dollars are just fiction. All you have to do is simply read the bank’s financials and everything you need to know is right there-so what if management is often unaware of where the exposure is-the board of directors is overseeing everything so your money will be safe. I think Wayne Gretzky is on one of these boards.

#42 Mike on 09.20.11 at 6:30 am

I saved $15k a year for a decade. I couldn’t come close to a downpayment. Housing prices rose like a carrot on a stick. I looked at how futile my attempts to save money were… and realized that if my money is depreciating faster than I can save it, and traditional investments are chaotic, I should invest in experience and education. So I quit my job and started to travel.

Secretly though, I just want to own a house. I like having a yard and a workshop. Otherwise I wouldn’t be reading this blog.

#43 Montrealer on 09.20.11 at 6:33 am

20% health cost in the US?

I know a ton of people in the US (lived there in the past) and no one paid a large amount for health insurance… Unless youa re self employed, you get coverage and only need to buy extra insurance. no where near 20%!!!
these numbers are bogus

#44 bigrider on 09.20.11 at 6:58 am

House humping, condo consecrating, roof rubbing, brick licking, lumber laying, driveway dry-humping, front door fondling, lawn loving, stainless steel swinging, granite grabbing horny dog housing sex all here to stay in the GTA.

#45 bigrider on 09.20.11 at 7:02 am

My kitchen cabinets are a bleached wood colour, oak not maple ,and my counter tops are arborite not granite. My bathrooms have faux gold fixtures instead of the nickle coloured ones which are all the rage right now. My house is 14 years old.

My house is paid for and I have plenty of savings. Should I renovate? Anyone.

#46 T.O. Bubble Boy on 09.20.11 at 7:24 am

FINALLY – the condo boom is coming to Calgary!
(wait – didn’t condos just crash in 2007-2008 in Calgary?)
http://www.calgaryherald.com/business/Another+Calgary+condo+boom+coming/5426089/story.html

#47 T.O. Bubble Boy on 09.20.11 at 7:44 am

And – one final link for the day… next time you hear “China’s real estate bubble is going to crash”, think ‘literally’:
illegal thinning of steel reinforcement rods in Chinese construction

#48 Mr. Lahey. Trailer Park Supervisor on 09.20.11 at 7:49 am

#45 Big Rider Of course you should renovate Big Rider. You have no debt cowboy. Life is too short to not have some of the finer things. Do you want to be like some of your forefathers with stacks of cash in the bank and plastic on the couch? I also have a paid off home (two actually) and plenty of savings and I have renovated, done the granite counter tops, new kitchen, new bathrooms, etc. It’s one thing if you borrow to do these, quite another if you do it from savings.

#49 DARLENE on 09.20.11 at 8:01 am

bigrider on 09.20.11 at 7:02 am

My house is paid for and I have plenty of savings. Should I renovate? Anyone.

********************************************

Only if you plan to sell in the future. But if you do, keep your renos on the cost effective side. Refinish the cabinets to a darker richer stain and replace your faux gold fixtures with chrome. Brushed nickle is on the way out, doesn’t hold out well with vigorous cleaning do to hard water staining.

#50 Ron on 09.20.11 at 8:12 am

Watched Cinderella Man on the weekend….feeling prepared, and grateful.

#51 Ret on 09.20.11 at 8:43 am

Let’s not forget student loan debt for another “asset” that has already crashed -the Great Canadian beer and fine arts B.A. degree.

Taxpayers have also guaranteed those student loans from the banks in the event of a default. Thousands of new teachers, nurses and engineers can’t find work now.

Ontario’s answer? Expand colleges and universities by 60,000 spaces in 6 years. Brilliant Dalton! Party on Ontario.

#52 Brandon on 09.20.11 at 9:04 am

No more doom and gloom… HOCKEY IS BACK!

#53 bigrider on 09.20.11 at 9:12 am

TheTruth says- ” India and China all moving here…etc etc. ” “what do ou think that means for land prices..”

Really ? All coming here ? None interested in the U.S as an immigration point of interest? 8 times the number of people emmigrate to the U.S over Canada and it has not helped their housing collapse recover. If all these Asians and Indians are coming here buying up all our property with ex patriated money then why has our CMHC grown its loan portfolio something like 5 times it’s total since the start of the decade.

Our property prices have been propelled by increased debt and low interest rates. Foreign buyers overwhelming our RE is a myth exagerated and perpetuated by agents, mortgage brokers etc. who have a vested interest in seeing the bubble continue to inflate.

#54 Ben on 09.20.11 at 9:13 am

Where you going to invest your money? Some housing bubble that’s on the verge of bursting or the stock market where bargains are plentiful?

#55 bigrider on 09.20.11 at 9:19 am

#48 Mr Lahey to bigrider- “renovate..”

Got ya but I got my eye on the new Harley streetglide CVO. Think I’m gonna do that over a new kitchen and bathrooms. More fun.

Two houses you got. Tell me you’re not renting one of them to Ricky. That idiot throws BBQ’s full of rotisserie turkey into the back yard of trailers.

Also hope your net worth in trailer based RE does not exceed 40% of your net worth. ..LOL

#56 amos811 on 09.20.11 at 9:52 am

Broadcom just closed Markham office, 100 more people let go.

#57 Moneta on 09.20.11 at 9:56 am

Look at what is coming…

http://www.newswire.ca/en/releases/archive/September2011/19/c4752.html

“Ontario Liberals will help seniors who want to remain in their homes by letting them defer increases in property taxes as long as they choose to stay, Ontario Liberal Party President Yasir Naqvi says”

A race for the bottom. LOL!

#58 HouseBuster on 09.20.11 at 10:13 am

Yeah and Italy also changes its government every 6 months.

#59 vreaa on 09.20.11 at 10:15 am

Are economists ignoring Australia’s property bubble?

Excerpts:
http://wp.me/pcq1o-2Xh

“Many leading economists whose analysis and commentary the public relies upon have so many conflicts of interest it would fill a small book. Consultancies, university chairs, endowments, six-figure salaries, and industry directorships comprise part of the package that ensures economic “thought leaders” within government, industry and universities speak the words pleasing to the rich.”

…and, of course, in Vancouver, we’re ALL ‘rich’.

#60 gregW, Oakville on 09.20.11 at 10:17 am

Hi #28 Nostra, Thanks for the updates on the ongoing
Fukushima man made nuclear disaster.

But I still think the CANDU EC-6 is a better choice, as it seems we need to make energy some how, even when the wind isn’t blowing just right, and the sun isn’t up.

But what Do I know, I might not be thinking it through quit right? I’m not sure it’ll be very good if we get a big solar flar that knocks out power needed to refill the cooling pools were the spent fuel is being stored at all the nuclear power plants. I hope there is long term backup power plans in place is that happened??

#61 Sky on 09.20.11 at 10:35 am

@ bigrider, # 45…..To renovate or not ?

Be afraid. Be very afraid. Some renovations end, others don’t. Some drag out through the decades, like in my own case. So renovating’s always a gamble. And the odds aren’t in your favor. The House always wins. Trust me.

House starts out whispering sweetly in your ear – Maybe some new taps…and my countertops are looking a little dated. Just a little facelift. I promise. We’ll both feel so much better.

House is a pathological liar. First it’s the crying and the pouting because the new taps don’t go with the wall color anymore. So you give in to House’s still modest requests. It’s just easier that way. Big mistake. You’ve created a monster.

Because of course the crying escalates to the cold shoulder treatment, temper tantrums , shouting matches and finally outright guerilla warfare whenever you don’t give in to House’s increasingly insatiable demands.

What started out as a facelift has now snowballed into tummy tucks, botox, butt lifts, and lipo. The whole nine yards. You’ve ripped out the flooring, baseboards, the cabinets, and the lighting fixtures . The drapes no longer match anything . And neither does the furniture. So out it goes.

Enough! Enough, you scream. What happened to you, House? You used to be so easy to get along with. We had some good times. Now I hardly recognize you. You get mad at a few dishes in the sink and your furniture may look great but it hates me – I’m never comfortable in it. I’m outta here!

Fine by me, says House. By the way, it takes two to tango. Have you looked at yourself in the mirror lately? You’ve really let yourself slide. I’m sure I’ll be much happier with a new set of owners . And take the damn dogs with you when you go! I’m sick of all the hair.

So be careful, bigrider, at what you set in motion.

#62 Just(not)AnotherSheeple on 09.20.11 at 10:39 am

To #35 and 35 TheTruth

Immigration figures for “HIM” from the source:

http://www.cic.gc.ca/english/resources/statistics/facts2009/permanent/10.asp

Around 26-30k PR/year from HIM land

And this nice article for HIM land from Bloomberg:
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aErNiP_V4RLc&refer=news

#63 GSpan on 09.20.11 at 10:46 am

It is going to take some very drastic action for this entire generation to get out of the Debt Slavery trap that we so willingly walked into. Our addiction to consumerism over the last 20 years or so has led us to a debt spiral that we can never get ahead of. Quite a few of the leading economists of the world a suggesting that Greece just default on their debts. Maybe we should all listen to their advice…

#64 Mr. Lahey. Trailer Park Supervisor on 09.20.11 at 10:47 am

#55 Big Rider I would not be a good followers of Captain Garth’s net worth distribution if my real estate exceeded the 40% factor of my net worth. Ricky has been a splendid tenant over the years and his occasional forays into growing weed (Smoking Man and Ricky should hook up) and the stack of shopping carts that line the back of the property, have not made me want to kick him out. So go for the Harley over the renos and enjoy life. Follow your bliss as the late Joseph Campbell enjoyed telling his students.

#65 bill on 09.20.11 at 10:51 am

big rider
go for the new bike. no brainer really. what are you going to do with new fixtures ect.??
mind you the granite counter would be a good engine rebuild area if its one of those central island thingies
handy for parts washing in the sink.

#66 Tony on 09.20.11 at 10:59 am

You’ll likely get a percentage of your money back because things will be that bad. CDIC will probably still be around but in a different form. I’ll guess you’ll get two-thirds of your money back. That’s why people tell you to put your money in T-Bills or leave it in cash… liquidity when the huge run occurs like in America.

#67 TurnerNation on 09.20.11 at 11:14 am

A lot of chatter about YLO on this weblog. YLO 6.25% Debentures trading for only 40% of par value currently, if you dare….!

#68 Stevenson on 09.20.11 at 11:23 am

The bubbles been around for so many years. Those that bought when they thought there was a bubble can sell and prosper. Now on the other hand the prudent will suffer? lol….

Everyday we talk about real estate market slowing down and everyday we get news that it is increasing if not steady.

Wishful thinking is not going to get you far. There are dreamers and then there are dreamers who act and not just dream.

#69 Abitibi Doug on 09.20.11 at 11:29 am

When you know what hits the fan and the Feds bail the banks out, it will be with taxpayer’s money. Why not buy some bank shares, especially if there is another dip in the market. That way, at least you get to recover some of your money that went to bail them out.

Garth said: and the financial geniuses who read this pathetic blog. If I were a financial genius there would be no need to read this blog, but probably would do so anyways as it’s entertaining as well as informative!

#70 penpal on 09.20.11 at 11:31 am

@ # 16 Grooby

If you are waiting for MSM confirmation of a bubble bursting in Oz, then hang on for at least another 6 to 12 months for the press to tell you what many will already know and have acted upon to their benefit, months in advance.

Maybe you ascribe great value to old news, I don’t.

Try investing that way and see how soon you go broke.

I thought the whole idea of blogs like this were to be predicative (leading edge) as opposed to following the herd (bleeding edge).

No accounting for taste I suppose.

#71 mad vancouver on 09.20.11 at 11:48 am

Today a 26 yrs old woman who explained to me that she lives “beyond debt”:
“Once your debt reaches such a high level, you just cannot keep worrying all the time. For survival, you just start to ignore it. It feels really good.”

That concept was totally new to me!

#72 Aussie Roy on 09.20.11 at 12:11 pm

Grooby on 09.19.11 at 10:56 pm Penpal #62 from previous post
“Do you even read Aussie Roy’s postings? or any Australian news?

Google what’s happening and open your eyes and mind!”
———————————————————

I see you missed what I was saying. If I have to ‘google’ it to find Steve Keens’ blog or money morning Australia, then that’s not exactly mainstream news, is it?
Your Sales volume info takes into account the impacts of the floods in Queensland. As far as I’m concerned, only what happens in Melbourne and Sydney really matters.

I read Aussie Roy’s posts all the time (and they are great). Not a single post from a major paper has yet said ‘the bubble has burst’. It’s not a water cooler topic yet. Don’t get me wrong, the end result is not up for dispute. I just don’t get why people are always posting here that the ‘Oz bubble has burst’, cuz that’s not at all the perception here.

Many parts of Australia have had falling house prices for some time, for these areas the bubble times are over, as you rightly point out as do I, the average Aussie in the street has not got a clue what has started.

I think this perception by most in the community is to be expected, after all we are told relentlessly no bubble, its different here, china etc etc.

Its only when we can look back after confirming, Yes we actually do have bubble (the perception changes) that we can really identify when the house price rot first set in.

A bubble only pops when it runs out of greater fools and not before. Have we run out yet?, only time will tell. This Aussie thinks , there are not too many left and the bubble is deflating now, it will continue to do so for many years.

#73 dddd on 09.20.11 at 12:13 pm

#66 bill on 09.20.11 at 10:51 am
big rider
go for the new bike. no brainer really. what are you going to do with new fixtures ect.??
mind you the granite counter would be a good engine rebuild area
—————————————-

or just buy a honda or yamaha and spend your time driving it instead of rebuilding engines!

#74 Howie Meeker on 09.20.11 at 12:16 pm

#52 Brandon No more gloom and doom, hockey is back.

Amen brother!!

#75 Aussie Roy on 09.20.11 at 12:21 pm

Aussie Update

Auction Nat clearance rate below 50%.

Adelaide 27.8%
Brisbane 21.7%
Canberra 26.7%
Melbourne 53.8%
Perth 33.3%
Sydney 52.2%
Tasmania 50.0%

Wt Nat Ave. 48.9%

http://www.myrp.com.au/upload/0.5309013765609095.jpg

DIVORCE and separation settlements are dragging out longer because of a soft real estate market.

Tindall Gask Bentley partner and family-law specialist Jane Miller said her clients are struggling to sell their assets and move on.

“They just want to get on with their lives but now they are trapped holding on to a joint asset which is taking months to sell,” she said.

http://www.adelaidenow.com.au/ipad/soft-house-market-hits-divorcees/story-fn6bqpju-1226138322356

#76 r on 09.20.11 at 12:24 pm

“As of today, the Vancouver area is almost at 17,000 listings! (16,775 as of tonight)”

don’t get overly excited about it just yet. we peaked over 20,000 when the world ended in 2008/9, so there is room to grow. we have been stuck in this range for months and it’s only been in the last little while that numbers started ticking up again. a little more time and we’ll see where it goes…

#77 Devore on 09.20.11 at 12:29 pm

#77 r

What the inventory numbers don’t show is low sales, which are on track to give us the lowest or second lowest September numbers in a decade. Not exactly business as usual. But it’s way too early to get excited over anything yet.

#78 Devore on 09.20.11 at 12:34 pm

BTW, inventory numbers got really high in the 2008/2009 dip because sellers threw in the towel. Normally, listings expire at the end of the month, so you get a jaggy inventory line that’s pretty flat. This happens because unsuccessful sellers think the market will improve next year or next spring or whatever. It’s when they stop hoping for an improvement ahead that they keep the house on the market, and start dropping prices.

#79 Brad Mitchell in Calgary on 09.20.11 at 12:48 pm

One thing that rarely gets talked about – consumer bailouts. I think the housing correction will be much milder than most people here think (especially in Calgary, where affordability measures are relatively fine, even if historically high). But let’s assume a 25 to 35% drop across the nation. I think the government will step in and help these people because they are
a) consumers
b) voters
I personally think it’s incredibly unfair if that happened because it’s not fair to the prudent people who chose to forego.
As as been the theme recently on this blog… when did we have this shift in society where the prudent are supposed to subsidize the irresponsible?
Anyways, I predict some sort of government bailout for all those consumers who might end up taking a bath in real estate.

#80 Steven Rowlandson on 09.20.11 at 12:52 pm

Contracting debt is all about calculated risk based on figuring out how much you can afford to pay each month and live at the same time. If the numbers don’t fit then don’t borrow and don’t buy untill either the terms of the deal are more favorable to your interests or you save enough of a down payment that makes borrowing safer or un nessesary.
If you bend or break the old time tested rules for borrowing all kind of bad things can and will happen.

#81 TomFromTheBurbs on 09.20.11 at 12:59 pm

I don’t understand the whole debt-to-income figure. If I have an income of $100,000, a margin trading account (fully utilized) of $500,000, and $1,000,000 in stocks, it implies my debt ratio is 500%! Without taking the assets ($1,000,000) into account, it implies I’m highly leveraged, when in reality I have no debt at all (I could sell my stocks at any time to cover the margin debt)! What am I missing here?

#82 Blacksheep on 09.20.11 at 1:06 pm

Bigrider #55,

“I got my eye on the new Harley streetglide CVO”
———————————————————-
BR,

Pass on the CVO and pay half as much for the regular
FL of you choice.

Put on, a good intake, exhaust + dyno tune by a reputable shop and your golden.

Get rid of the lean jetting imposed by Gov. emissions and it will run cooler/better than the factory CVO.
Did this to my Streetglide and it’s great.

Take the spare 15K and do some renos, keeping everyone Happy :)

take care
Blacksheep

#83 Calgary Rip Off on 09.20.11 at 1:31 pm

Garth. I bought a mortgage. Im now a mortgage owner. $30K off the asking price, down the street from the rental(easy move), 25 year term and $23K down on the place. My payments are a little bit more than my rent with the taxes.

My realtor asked me if I am excited. What is there to be excited about? All the houses in Calgary are overpriced and remain so. The rentals are also overpriced. I will remain at my stable job for many years, healthcare, so it is foolish for me to subsidize yet another landlord idiot that did nothing other than buying at the correct timing to profit off of my money. Ive already given him $80,000. Enough is enough.

I still retain my view that Canadian real estate and most real estate for that matter is a pain in the ass and overpriced crap. But you need a place to live right, so better to buy with a proper downpayment and doable mortgage terms than finance some idiot landlord.

Ive joined the club of mortgage owners. I dont own the place until the mortgage is paid. That commercial “homeowners helping homeowners….” makes me want to puke what a bunch of idiots. You arent a homeowner until the bank isnt lending you the cash.

So I plan to get the thing paid off sooner rather than later and hope that there isnt a war or the house gets struck by lightning etc…

#84 LS on 09.20.11 at 1:36 pm

I think another interesting to note is that in Canada, when you take unsecured debt, like a credit card or line of credit, if you can’t pay it back, the creditor can, and depending on the amount, WILL go after you assets. Meaning, they will find out if you own anything, like a house, put a lien against it and even force a sale. All the while racking up big legal expenses.

To me, this is really not ethical/ fair because the bank lent this money on an unsecured basis and charged a higher interest rate to do it. Meaning, if you have assets, you might as well get a secured loan and pay a lower interest rate because any unsecured loan can be “turned into” a secured laon.

It is my understanding that the laws in the US favour the consumer more and that creditors don’t have this right to go after your assets for unsecured debt.

I know someone who as a result of terminal illness could not pay his credit cards off. They went after his summer home which was mortgage free for an amount owing of about $10,000 (which included accrued interest at 18%.) In the end it cost $14,000 (with legal fees) to get it straightened out.

The point I make is that creditors can go after people’s equity when they can no longer make payments. Considering the record level of debt, more and more people could lose their homes in this fashion as well. (Or they have to rely on friends and family to bail them out.) The buck will stop somewhere.

#85 wtf????? on 09.20.11 at 1:37 pm

You can be sure that the debt issue will n ot become a poitical football anytime soon as Canada has ‘officially’ contracted again into the second half of the year and rates will not be moving up for several years at this point. Savers will continue to be punished while debt monkies will continue to be rewarded….such is life in a recession that the government is convinced it can paper over will tax dollar spending.

As government spending increases to fund the excesses ( we can’t cut can we?) personal taxes of every kind will increase ad perpetuum. In BC the government has put a tax on job seekers. They have introduced a $65 fee for every young person to ‘take a course’ on nonsensical training’ before they can be employed. What utter nonsense….and how insidiuos…whats next…a tax per flush? A ‘smart meter’ on the bowl?

http://business.financialpost.com/2011/09/20/eu-problems-fixable-carney/

The douchebags in government tried to talk the recession away…it never went away and only massive spending and increased debt and taxes made it magically ‘appear’ to have gone away…but that wasn’t the truth was it?

Seniors and those on a fixed income are screwed in this enviornment…..the working poor ditto. Inflation is screaming…food costs are driving people to desperation…rent/mortgage or food….Canada is just as third world as others I have seen on this regard. The hidden poverty in this country is being hidden by the personal indebtedness numbers…too bad more people don’t connect the dots.

Those gluttons collecting government paycheques and outrageous pensions don’t have any threat of going hungry…thats why there is no political will from within to ‘save the savers’.

Real Estate will not go down in this scenario….the Cons have put taxpayers money to work to ensure this. Free money and rampant inflation guarantee’s the real property prices will double over the next five years.

About as deeply flawed an analysis as I have ever read. — Garth

#86 disciple on 09.20.11 at 1:52 pm

#3 leading cause of death is Death by Doctor. I stand in stark defiance of the medical mafia. Join me. Here is a good starting point in your journey:

http://www.youtube.com/watch?v=acd1omQInYk&feature=youtu.be

All major diseases in animal livestock have been cured with simple vitamin/mineral/supplement concoctions. It’s time for the human livestock to get off the farm.

#87 disciple on 09.20.11 at 2:10 pm

Often Hollywood will introduce ideas into the mainstream mind to prepare us for what’s next on the agenda. Case in point, the number of terrorists in films prior to 9/11.
Someone mentioned Cinderella Man, austerity to come for Americans. Decades ago, Blade Runner – glamorizes the idea of “synthetic” people. Here is more info on this VERY REAL phenomenon.

http://www.youtube.com/watch?v=cCD6dk2OtK8&feature=youtu.be

Truth is sometimes more fantastic than fiction. Science is magic we understand, magic is science we do not yet – paraphrased from the recent Thor movie.

#88 Tom from Mississauga on 09.20.11 at 2:22 pm

Well consumer spending is definitely tailing off. My men’s hockey team has filed with 2 leagues that didn’t get enough teams to make a go of it and folded. 4 teams have called me desperate to get a guy that can pay the $600 registration fee to play. I’ve never been so popular. Maybe reading your blog has made more popular?

#89 Salacious Crumb on 09.20.11 at 2:22 pm

@ #33, Edmontonian

What do you think about all the talk that Alberta is gearing up for the big boom in 2012? My hubby is in the oil patch and there’s a mad scramble to find workers for the patch and in-office in Edmonton & Calgary.

There’s a lot being said about real estate climbing again as the “wealth effect” kicks back in.

Could Alberta be the North American anomaly?

Absolutely not. Oil demand will lessen as the economy cools, keep prices at current levels or lower. How do you make a boom out of that? This is vapour talk. — Garth

#90 disciple on 09.20.11 at 2:30 pm

Swathes of retail closures indicates Northern Manitoba property bubble, ecomonic boom times, delusions of grandeur, all evaporating…interesting also…two females for every male under the age of 30. Young guys, you listenin’?

#91 MasterBootLicker on 09.20.11 at 2:35 pm

86 wtf?????
agree with your post. Not sure about the property increase. People need money and jobs to buy and not sure that will be in high supply. Also government decide nothing. They are just the pitch men for the banks and globalist lurking in the shadows yanking the chains attached to the elastic wastebands on the government briefs .

#92 MoneyMyHoney on 09.20.11 at 2:52 pm

Thousands of year back some one predicted: ‘The Messiah will return to earth and defeat the Antichrist Devil in the battle of Armageddon’
Nothing happened so far.
Three years back Garth Turner started predicted ‘HouseAgeddon’.
Nothing happened. A few thousand years to go.

Dude. I am the chosen one. — Garth

#93 debtified on 09.20.11 at 2:53 pm

#82 TomFromTheBurbs on 09.20.11 at 12:59 pm

I don’t understand the whole debt-to-income figure. If I have an income of $100,000, a margin trading account (fully utilized) of $500,000, and $1,000,000 in stocks, it implies my debt ratio is 500%! Without taking the assets ($1,000,000) into account, it implies I’m highly leveraged, when in reality I have no debt at all (I could sell my stocks at any time to cover the margin debt)! What am I missing here?

***********************************************

Just guessing but maybe what you are missing is the fact that the average Canadian does not have the investments and assets that you speak of. They may not even have any savings.

They may likely have a nice house, though – with lots of nice stuff in them like granite, stainless, leather, toys in the garage and big screens TVs. They may also party all the time to show off all that stuff to their so-called “friends”.

#94 bigrider on 09.20.11 at 3:33 pm

Bill, Mr Lahey, Sky and Blacksheep.

Thanks for all the advice. Never planned to renovate anyway, just eliciting reactions. Colossal waste of money in my opinion. 100 to 150k to do everything and within 15 years needs to be done all over again because all out of style once more.

Notice how housing styles change at a more faster pace nowadays.

As for bike not sure there either. Park that anywhere without a constant eye on it and it will magically drive away on it’s own if you catch my drift.

“Under the radar” “be inconspicuos” my motto.

#95 Darryl on 09.20.11 at 3:43 pm

Tom from Mississauga
I have seen the same thing . A couple of teams have asked me for the same reasons . I should start my dry land training soon.

Maybe a beer first.

#96 not asian on 09.20.11 at 3:53 pm

You really have to wonder why debt is at a historical high? When I was growing up in a upper middle class neighborhood, my mother would go to Woodwards to buy slacks $9.99. These days, kids (who aren’t earning money) buy a pair of jeans for $285. Holt Renfrew is bustling with shoppers paying over $1000 for designer handbags and shoes. When did it become the norm to shop at these prices? It used to be that the average families spent money when needed. You would buy a pair of shoes for your kid when they grew out of the pair they had or you saw a hole somewhere.
I blame this behavior on reality tv. Real Housewives of New York are not really your average housewives or families. Let’s get back to a real reality people.

#97 Moneta on 09.20.11 at 4:13 pm

Tom from Mississauga on 09.20.11 at 2:22 pm
Well consumer spending is definitely tailing off. My men’s hockey team has filed with 2 leagues that didn’t get enough teams to make a go of it and folded. 4 teams have called me desperate to get a guy that can pay the $600 registration fee to play. I’ve never been so popular. Maybe reading your blog has made more popular?
———
Can you imagine what will happen to minor league hockey with so many families spending more than 5K per year on hockey.

#98 Cookie Monster on 09.20.11 at 4:13 pm

The Truth, Housing price to income ratios mean nothing in India as the ration is off the charts…

Haha, you too eh?
I always make that mistake too, I try saying ratio but it often ends up ration. Must be a automatic brain, finger, keyboard thing. Damn brain doesn’t work right!

#99 Moneta on 09.20.11 at 4:17 pm

All major diseases in animal livestock have been cured with simple vitamin/mineral/supplement concoctions. It’s time for the human livestock to get off the farm
——
OMG… I hope I never get a piece of meat from an 80 year old beast!

#100 Mark on 09.20.11 at 4:37 pm

#90, “My hubby is in the oil patch and there’s a mad scramble to find workers for the patch and in-office in Edmonton & Calgary. “

Not seeing evidence of this on the APEGGA Careers website. In fact, my neighbour’s salary in the patch has been cut dramatically from the 2006-2007 timeframe (and he grumbles a lot!).

From what I’m hearing, many of the oilsands projects won’t be going ahead because the price of oil just doesn’t justify such. Nexen’s/Opti’s Long Lake project was a complete disaster — producing oil at $200/barrel. Uncertainty around pipelines is also chilling the investment climate.

If you want proof of all this, just look at the stock of Suncor and some of the other O&G producers these days. So low right now that share buybacks are far more attractive than investing cash into new production, especially with the risk that’s out there.

Natural gas remains in the dumps, and the industry learned its lesson in terms of the wage and price spiral it induced 5 years ago and won’t be repeating that fiasco.

#101 Skillz on 09.20.11 at 4:48 pm

What is the historic relevance of the debt to income ratio of 150%? I mean in the context of secured borrowing, does that really matter?

Has anyone actually gone into the bank and asked, how much can I get on a maximum multiple of salary basis? Is it still limited to 4x salary?

In the U.S., there is the concept of paying for private healthcare, although that might be covered by an employee’s healthcare plan. So in effect it might not make sense to adjust salaries on that basis (as it would be excluded). Also in the U.S., there is an ability to deduct taxes from interest (although this is an arguable point, because interest rates are so low).

Anyone looked into the relationship between CMHC and the banks? I am sure it is a very close relationship.

#102 Cato on 09.20.11 at 4:54 pm

More intervention is on the way, forced sacrifice for savers to prop up the irresponsible spenders. At least this time around Canada will feel the same misery the rest of the western world is facing. No arrogant platitudes from our politicians proclaiming our superiority.

The planet is being split into 2 separate economic worlds co-existing side by side. It means misery for some & prosperity for others, it’ll be the death of the middle class. Picture the future of a Canada as a kinder, gentler Russia. Better social infrastructure but a widening gap between have and have nots where size of bank account dictates social,education & economic opportunity.

Didn’t have to be this way, but the collective stupidity of the country may have killed the Canadian dream.

#103 Cookie Monster on 09.20.11 at 5:00 pm

#62 Sky on 09.20.11 at 10:35 am
Hilarious!

#70 Abitibi Doug on 09.20.11 at 11:29 am
Garth said: and the financial geniuses who read this pathetic blog. If I were a financial genius there would be no need to read this blog, but probably would do so anyways as it’s entertaining as well as informative!
—-
Financial Geniuses, I thought Garth was talking about me, then thinking about it, the term financial genius is an oxymoron since there’s nothing genius about finance or economics, it’s simple really, it’s more like bullshit baffles brains.

At times when I think I am a genius, I think of how long some thing takes me to figure out and all the mistakes I make so often, then I realize I’m just above average, and that my true strength is in my persistence, I’m just too dumb to quit!

#104 jess on 09.20.11 at 5:08 pm

An auditor’s comparison

james treadway 1983 sec file
interesting reading from this period on fraud in fiancial statements
http://c0403731.cdn.cloudfiles.rackspacecloud.com/collection/papers/1980/1983_0311_TreadwayCooked.pdf

http://retheauditors.com/2011/09/02/the-berkshire-hathaway-corporate-governance-performance/

http://www.law.virginia.edu/pdf/faculty/garrett/genre.pdf

#105 The InvestorsFriend on 09.20.11 at 5:13 pm

BECAUSE THEY CAN!

Number 97 notasian wonders why people pay $275 for jeans at Holt Renfrew.

Well, it’s for the same reason that dogs lick their own nutz. It’s because they can.

And in both cases, this a good thing. Let us celebrate the wealth that allows this purchase. (The dogs are already celebrating.)

#106 blase on 09.20.11 at 5:34 pm

Re Hockey Leagues lack players: I think a lot of families want their boys to grow up to be pro hockey players so they can support their parents in an opulent way. Sad reflection on life in Canada.

Calgary Rip-Off, you finally broke down and bought a house!? The last one to the party, enjoy your 25 year stay in cowtown. Don’t they need health care workers in parts of Canada where homes cost half or less what they do in that cold, treeless front-runner town?

#107 InvestX on 09.20.11 at 5:56 pm

Garth, you’re not flip-flopping now, are you?

“Of course, this does not mean the banks here will stumble and fall as they did in the US three years ago. We have the taxpayers standing behind all those billions in high-ratio, high-risk mortgages made to people with no money and a lust for granite. We don’t have the orgy of mortgage securitization that Yankee banks were exposed to. And, except for Alberta, there’s no jingle mail in Canada – homeowners who lose their equity can’t just walk out on their mortgages.”

In the past, you downplayed these factors. For example, you disregarded jingle mail as being a factor, noting that states without jingle mail also experienced the real estate drop.

Please clarify, G-man.

Housing values can fall significantly in Canada with minimal impact on bank stability. — Garth

#108 Mike Rotch on 09.20.11 at 6:07 pm

RE: 89 Tom from Mississauga on beer league hockey.

Seen the same thing with my adult rec sports leagues.

Once upon a time if you didn’t register and fork over 100% payment by the deadline, you didn’t get a spot.

Nowadays, you are lucky to find 10 warm bodies per team, and I see lots of guys paying in installments. I’m not even talking about the “expensive” sports like ice hockey either with a $600 per player per season kind of cost.

Guessing folks are a) feeling poorer? b) working longer and harder? and c) forgoing stuff for themselves so their kids get “everything”?

I’m also noticing less travel, fewer nights out, etc. in my broad circle of friends/acquaintances.

Guessing this is symptoms of some of the stuff we see here about many having no savings, 100+ percent debt to income, and no idea how they could come up with a few thousand to cover a surprise!

#109 TurnerNation on 09.20.11 at 6:09 pm

Haha, good news from “[email protected]” – deflationary GIC returns, now easier than ever!

New online system aims to replace GIC brokers
Monday, September 19, 2011
By IE Staff

Choice, convenience, speed, low cost and transparency are the new buzz words for the old-fashioned Guaranteed Investment Certificate, according to Toronto-based Finizi Corp.
The tech company is rolling out an online system that effectively replaces the GIC broker as the preferred channel-of-choice for acquiring the fixed term instrument at lower cost.
According to Finizi founder and CEO Daniel Shain, the new online system, will “save institutions significant acquisition costs and save consumers time, hassle and often the embarrassment associated with negotiating a better than posted rate with their bank branches.”
Shain likens GIC’s to commodities, “There is little difference in the features, but significant variability in the rate of interest offered.”
Finizi’s preferred e-World channel will allow consumers to go online at http://www.finizi.com and access Finizi’s free-of-charge platform, check for the best rates from financial institutions and select the rates and terms related to the amount of their GICs – instantly.

#110 Edmontonian on 09.20.11 at 6:25 pm

It’s interesting to see hoe delusional people can get thinking the Alberta Economy is plunging.

Facts:
ALberta exports 80% of it’s products to the US and their demand is contracting faster than demand from ASia is picking up (if it wasn’t for ASia we’d be in a severe depression in Alberta).

Alberta has the HIGHEST Vacancy rates min Canada but the HIGHEST RENTAL RATES too as the Government does nothing to help control rates to provide a decent standard of living for the middle class.

ALberta has the highest overall consumer debt in the WHOLE G-20 at about $330,000 perfamily or $36,000, only to be matched by BC since they have a slightly bigger housing Bubble.

The average Hourly Oil Patch Worker is making less than 25% of what they were making 4 years ago!

Average saving rate in Alberta has plunged from about 27% in the 80s to 0% in the 2000s.

We’re not different here the housing/commercial Real-Estate market is starting to go off a cliff!

#111 Devore on 09.20.11 at 6:49 pm

#56 amos811

Cascades Closes its Burnaby Containerboard Mill

100 more in BPOE.

#112 Devore on 09.20.11 at 6:54 pm

#68 TurnerNation

A lot of chatter about YLO on this weblog. YLO 6.25% Debentures trading for only 40% of par value currently, if you dare….!

Check out their preferred series. Market losing confidence in this company fast. What are they gonna do, go bankrupt, sell off all assets?

#113 Nostradamus Le Mad Vlad on 09.20.11 at 6:55 pm

#17 Tim — Agreed. As that lying, two-faced SOB arrogant, control freak of a PM we have now said a few years ago, “. . . you won’t even recognize Canada by the time I’ve finished with it.”

We are well on the way now, ‘tho if the four western provinces choose to quit Canada altogether, there won’t be much left anyway.

Maybe it is time to seriously contemplate going our separate ways. We’ll be fine out here.

#61 gregW, Oakville — G’day Greg. Not overly sure I agree using nuke power is the answer — possibly a combination of solar and thorium seems to be a better alternative, cheap and plentiful. But there are greater minds than ours at work (somewhere). Cheers!

#103 Cato — “The planet is being split into 2 separate economic worlds co-existing side by side.” — Good analysis, which flows with response to #17 Tim above.
*
“Dude. I am the chosen one. About as deeply flawed an analysis as I have ever read. — Garth”

U R a deeply flawed chosen one? Man, the shit has gone to pot!

#114 ballingsford on 09.20.11 at 7:07 pm

I’ve been in debt, but have been debt free since Feb 2010. I have some savings and I rent. Credit card is paid off every month.

Am I worried that I’m looked down upon because I’m a renter?

Hell no and screw you who do!

Need to check my rib eye roast and chill my Cabernet.

After dinner, need to start the planning of the winter vacation that will be paid for.

Man, it sure sucks to be renting. I miss all the sleepless nights worrying about debt!

Oh well, a guys gotta do what a guys gotta to do.

Cheers!!!

#115 Bill Gable on 09.20.11 at 7:10 pm

#72 Mad Vancouver…you nailed it.
I am a self professed “Turnerite” – and a lot of my friends know it. They seem perplexed that I don’t take my considerable pile and buy a BMW and some money pit in West Van. Simple.
Debt.
This young friend of our poster today, sadly, is like many I know. I have a pal who chuckles that he has “them fooled” as he kites payments from Visa, to Mastercard, American Express and his Sears card, because ” if they are stupid enough to give me the money, heh, party on!” This guy makes good money, but is in construction, ooops….has a boat, a Yaletown condo….goes to Oahu every winter, and he was just about proud that he said he didn’t have a cent saved.
Why?
His parents.
He’s doing what I call “ghouling” — waiting for his Emphysema ridden Dad to leave him the million buck blowdown in Point Grey.
This kind of thinking makes me crazy.
Is it just me?
I would rather starve and still have my late Parents still in my life, and yet here is this guy just well, acting so self indulgent and twisted, I am trying to distance myself from him. He has been a friend for a long time. What has happened to Society?

I am totally perplexed.

Houses have turned into horror shows and I believe this kind of horror just adds another dimension to this mess.

Sheesh, is all I can say, politely.

#116 ALbertaBoy on 09.20.11 at 7:21 pm

I don’t see ANY “boom” happening again anytime in ALberta if Poverty is soaring beyond control, the RE market shall follow… “DRAMATIC” rise in Poverty in Alberta Stats Canada says since 2009… I live here-I can see it, lack of Social Services+ plunging wages, expensive food, & Utilities, Education Soaring…

http://www.albertaprimetime.com/Stories.aspx?pd=2467

#117 ballingsford on 09.20.11 at 7:29 pm

Oh, I forgot to mention that my rental has a back yard that allows for a 6 seat patio table and space for a large Broil King barbeque and a small garden and also container pots for our favorite herbs.

I’d love to buy a home in this neighborhood, but at the moment, it just seems ridiculous. Homes previously listed have fallen $50 grand but they still aren’t selling.

Went to to birthday party for a child/friend on Sunday who used to live in this hood on Sunday in Kanata and while I was outside getting some fresh air (read: having a cigarette), I could hear them talking inside and I was surprised how clear I could hear them especially on the windowless side of the building (Richcraft homes). The heating costs might surprise our friend this winter.

This will not end well!!! I’m staying put for the time being.

#118 Harlee on 09.20.11 at 7:41 pm

Vancouver is one strange city. When I got back from there on Sunday I sent an e-mail to all my contacts which started with :”Well, I just got back from the Twilight Zone…, I mean ,Vancouver, this morning…|” I was only half joking. I only really got to know that city in 1975 when my parents moved there. Back then it was still fairly modest. Now ,there’s a whole generation living there that really believes that “the whole world was watching the Stanley Cup riot” as one 20-something told me while I was there. That’s because it’s a “world class city”. The mind boggles. (There’s only one WCC in NA and that’s NYC.No other city need apply).
not asian @ 97. I couldn’t agree more with your post. Common sense has become less common . Especially when it pertains to financial matters. That’s what makes me the most depressed about the world today. Or rather about the people living on this world today. Rod Serling would have loved the 21st century…..

#119 john m on 09.20.11 at 7:59 pm

Great post Garth……….How could this have been allowed to happen?? ………… well i guess in a world where a countries wealth is determined by their ability to borrow more money to function is not surprising…sadly this mindset has flowed down through our population.. catch -up day is coming…..this will not end well…..thanks for your wisdom Garth!

#120 Maxamillion on 09.20.11 at 8:11 pm

#45 bigrider

I have a story for you, it’s about my childhood home. It’s located in the Bloor and Ossington area in TO. You see the home had no real kitchen. I didn’t realize that until I was 15yrs old when my dad put the home up for sale. I only found out about the missing kitchen when people came to view the property.

There was a mud room in the back so that became the kitchen. The door was sealed off and on one side there was a gas range. There was barely any room to put cabinets. The refrigerator was located in another room, yeah really fancy. We never saw a missing kitchen. What we did have was some of the world’s greatest meals come out of that small space. Good times, birthdays, nonna’s birthday and many family gatherings.

My father was fully capable of building a kitchen since he worked in the construction industry and Italian. We never thought about the kitchen, nor did we care. I long for those days when we didn’t notice the kitchen. So if the refrigerator is in the house, don’t renovate. If the refrigerator is located on the porch then it might be time.

#121 Nostradamus Le Mad Vlad on 09.20.11 at 8:12 pm


Won’t Get Fooled Again Memories of the early 70s, groups trashing hotel rooms, Keith Moon overdosing on elephant tranquilizers — is it any wonder we’re still alive?!
*
Monetary System Stranger things have happened. We’re all relatively strange here, anyway; Trillion Dollar underground economy; US Fed boosting somethubg, but 9:10 clip Now the Arab Spring is all but over, ‘owzaboud the American Spring 2012? 2:34 clip Fake silver bars, and 3:09 clip After Gorgeous Greece falls, Viva l’Italia! 5:36 clip Nice chart.

Collapsing Ponzi Scheme The Euro, and this is what it looks like; No comment necessary, except — “It’s a run on the US Government.” wrh.com; Second link “This is not good news for the Eurozone.”; Corporate Bank Run has started; Triumph of Capitalism Jobs gone elsewhere.

1:38 clip Ankara, Turkey blast. I wonder who is responsible for that? The same people here? 6:06 clip Ain’t this great double-crossing? Wall St. Day of Rage continues, third day now; 0:48 clip Some areas around Fukushima may never be suitable for life; Marmite or Vegemite? Roughly the same, diff’rent countries; ‘Net overkill Probably coming here soon; Just what the US feds. want — an enforced draft.

Winter Take that snow and shove it! Hermit in Russia Play on words; 1:11 clip Gadaafi’s speech. Like the Energizer Bunny, he’s still going and going . .; m$m done? Indications are that it is; Partner-Relationships More than meets the eye; Dictatorships Many ways Big Brother uses to force people out of their homes and off land; Prisons Harper is going to build new prisons here as well.

#122 penpal on 09.20.11 at 8:26 pm

@ # 95 Bigrider

I read a CMHC report, about four years ago now I believe, that calculated that the average renovation yielded only 52 cents out of every dollar expended on resale of the house that was renovated.

This averaged ALL improvements from pools to new kitchens, mind you.

I believe you can find these stats through CMHC and I think they are optimistic.

#123 Timing is Everything on 09.20.11 at 8:33 pm

#36 Thetruth

Same in S. America. Buy a house/condo/estate with a suitcase full of money.
Speaking of…Peru looks pretty good. My wife’s bro (60-ish) is looking to retire down there. Weyburn’s nice and all, but he’s had enough. Really, why retire ‘in Canada’?

#124 worried realtors on 09.20.11 at 8:39 pm

Look at worried realtors like the truth who has no clients or sales and spend hours on this blog to spend lies and propaganda. Hey the truth why had housing crashed all over the world Including the USA where the majority of Indian and Chinese immigrants immigrate . Why and how is housing crashing in the US? CHMC is the only reason why Canada is in this housing ponzi.

#125 Observer on 09.20.11 at 9:13 pm

Arseneau of National bank say Americans have to pay 20% of their incomes for private health care.

Correct me if I’m wrong , but in America isn’t interest on a mortgage tax deductible?

Seems like a wash to me.

#126 T.J. BONES on 09.21.11 at 12:13 pm

Garth Could Greece be the test civilized country the IMF is using to see how far they can push their policies before the populace up and starts a total meltdown revolution and removes the elite association? I use Germany in the year 1933 as a strong example, look what happened there.

#127 GregW, Oakville on 09.21.11 at 2:09 pm

Hi #116Nostra, FYI, with links to nuclear issue stuff.

Thorium is still nuclear, it’s just a different type of fuel. Much harder to make bombs out of it and less or no Plutonium-239 by product(if I recall correctly?), also needed for nuclear bombs or at least easier to make bombs with it (Pu-239).

Thorium is still radioactive and so is the spent fuel, so it still need to be kept out of the biosphere for quit a long long time.

As for the “there are greater minds than ours” not totally sure about that anymore. Plato’s cave comes to mind or the movie ‘Doctor strange love’, or that guy with the wax wings flying to close to the sun.

I’m not sure I like the idea that the PM Harper sold the Canadian CANDU AECL to for profit corporation.
I hope he supports the canadian nuclear regulator with enough funds and backs them up for the public good?
Do you recall the Maple reactors issue or Chalk River?

The CANDU EC-6 can use thorium as fuel, it’s been tested in one of the CANDUs in China already.

Lots of the electricity in Ontario is coming from the CANDU nuclear plants here. I for one like to be able to turn on the lights when the wind isn’t blowing and the sun isn’t shining, and that is often on the hottest and coldest days here.

Some nuclear issue links:

Developing robots to inspect nuclear reators.
(good for a couple trips anyway before breaking down from repeated radiation exposure)
http://web.mit.edu/newsoffice/2011/nuclear-robots-0721.html

(I’m not sure how this may affect uranium stock price in the near and far term?)

China make nuclear-power breakthrough
“predict this will help extend the lifespan of proven uranium deposits to 3000 years from the current forecast of 50-70 years.”
http://www.physorg.com/news/2011-07-china-nuclear-power-breakthrough.html

PS, Nostra thanks for your links. most anyway. ;)

#128 Behavioral Finance on 09.21.11 at 7:13 pm

Matthieu Arseneau, of National Bank, who says because Americans have to allocate up to 20% of their incomes to pay for private health care, while ours is funded through higher taxes, things here ain’t so bad. “If we adjust for this factor, the debt ratio of U.S. households exceeds that of their Canadian counterparts by 12 per cent.”

This statement is so off the charts it’s not even funny. Americans spend on average 6% of their income on healthcare. If an American has a job majority of the insurance premium is paid by the employer.

#129 Behavioral Finance on 09.21.11 at 7:15 pm

Remember that feeling you had when your first ride died, with fourteen payments to go?

I can relate, but the car was just paid off when it died:)