Courage

When I was a rebel. long-haired, denim-coated, radical peacenik youth I enjoyed feeling  unconventional. One day my old man asked me why all the kids looked and sounded the same. It was a shocking revelation. Every suit in his Rotary Club had more individuality than the doped rockers I hung with.

Experience teaches us that people herd. Herds turn into crowds, and crowds grow a logic and belief system of their own. Suddenly the herd members are doing stuff just because everybody else is. This makes it a lot easier to understand bidding wars for houses when prices are absurd, the rush into gold just before it crested or the billions people threw at no-profit dot-com stocks.

It also comforts me when, with quivering fingers, I pry open the heavy padded door of this pathetic blog each sunrise. Most days I stagger into a Mephistophelian barrage of doomers, conspiracists, metalheads, tin foilers and people convinced we’re on the verge of systemic financial collapse. In other words, they’ve had the crap scared out of them.

This makes me happy. I turn my fuzzy, chiselled chin upward to catch a shard of sunlight and fondly remember my dad asking me what kind of idiot I was, running with the crowd.

This brings me to now. The negativity rampant on this site is hardly contrarian, as most think, but truly and fairly reflects prevailing public sentiment. A survey published Thursday shows the market mayhem of the past two months has convinced people the end is nigh. Half of 1,500 respondents think they’re worse off than a year ago, and that 2012 will suck. The number who believe the economy’s improving has sunk 13% in a mere three months.

Some of this is reflected in the Occupy movement I wrote about yesterday. These are people who feel victimized by a system failing to deliver what they expected and hoped for. It’s why Barack Obama is now in such trouble.

But why the negative sentiment among middle-class people who already have houses, investments and jobs? Building throughout the year has been an irrationality which has put billions in the orange guy’s shorts, blinded people to opportunities and lately had them turning paper losses into real ones. Why would anyone do that? Only one reason – fear of the future. They think it’s 2008 all over again.

Of course, it’s not.

No credit or liquidity crisis now. No spike in inter-bank lending rates. Record corporate profits. Massive political coordination. And a shift in debt from companies to countries – who have the power to tax their way out of it. Those five factors alone should change every mind.

But more fundamentally, what’s there to fear? Greece won’t change your life whether it goes pointy-side-up or not. The US will never default on federal debt or hyperinflate. American dollars will stay the most coveted assets on the planet. Two and a half billion Chinese and Indians will reflate commodity prices. Europe will survive. There’ll be no global financial meltdown.

Instead, expect quasi-recession, glacial growth, no wage gains, falling house values, reduced consumer spending, and copious bitching and moaning. Politicians will be gored the most, along with investors who miss what comes next.

Fear is so August. The emotional sell-off following the downgrading of US debt by the comedians at Standard and Poors was totally overdone. The 20% decline on stock markets since 2011 highs was more emotional than fundamental. Looking back, what new information was there to prompt the slide? Nothing in Europe, the US, Asia, bank boardrooms or government backrooms that markets shouldn’t already have known or suspected.

Of course, we have problems. The economy will punish most of the people you know, nagging them with debt, licking at their home equity, toying with their employment and deluding them that real estate is the safest haven. All this will continue the emasculation of the middle class, and shuffle us closer to the retirement crisis so many Boomers richly deserve.

You can ride with that crowd if you want. God knows you’ll have enough company. Mainstream angst.

Or you can decide to be on the other side of a yawning income gap. It will take some courage, of course. Understanding that the age of the house is coming to an end, that stuff does not equal wealth, or liquidity is freedom – these are hard concepts for most people to absorb. So they won’t, until they learn the hard way.

In practical terms, it means doing the opposite of what your MIL tells you. Houses are dear. Stocks are cheap. Economies are down. Risk has tumbled. Most people think danger augments when markets fall. They sure have that one wrong.

New York-based BlackRock manages $3.6 trillion. Said the CEO yesterday: “What is happening today is predominantly a de-risking. There’s trillions and trillions of dollars of money sitting on the side. So it’s very different than ’08 and ’09. Money is there, it’s just people are frightened.” And: “This fear and the irrationality I’m seeing in the marketplace is now giving me an indication we’re bottoming.”

A Bloomberg survey this week found Wall Street strategists thinking we’re about to see the biggest market move in 13 years. It might happen. Maybe not yet. Perhaps there’s more down before the up.

But, as I learned long ago, contrarian works. Even with a haircut.

195 comments ↓

#1 Deano on 10.06.11 at 9:25 pm

I think what has got the Occupiers all fired up is what you predict in today’s entry….I think they would quite welcome some kind of collapse. While I certainly wouldn’t, I completely understand why they would.

#2 Mister Obvious on 10.06.11 at 9:25 pm

“Fear is so August.”

That’s just brilliant.

#3 WI BOOMER on 10.06.11 at 9:27 pm

Good Advice Garth-

Now, suppoose one were to add to the equity side of their portfolio.

With growth flat, Europe unsettled, and consumers tapped & trapped by DEBT…where might this “growth” be coming from?

While I am a huge believer in the equity markets, and just today moved money into there from the Bond side, where it was benefitted mightily from the “fear quotient”
I see a trading range gain, but no sustained growth on the visible horizon. That said, if I could see that sustained growth so would everybody else. So, ever being he optimist, or stooge, I am adding to my equity positions. I don’t mind being paid to wait either

#4 blase on 10.06.11 at 9:28 pm

Just reading Peter Lynch “Beating the Steet” from 1993. The more things change…

#5 Rafa on 10.06.11 at 9:28 pm

Best picture ever! LOL

#6 Goldfinger on 10.06.11 at 9:35 pm

Someone who would disagree as to the Financial / Economic state of our world.

IMF advisor says we face a Worldwide Banking Meltdown:
http://youtu.be/6UGDTtqklSo

Another hot no-name source, like the idiot ‘I-dream-of-recession’ trader last week. You guys are grasping. — Garth

#7 NoName on 10.06.11 at 9:35 pm

” Perhaps there’s more down before the up”…
market going down not necessarily bad thing specially if you cashed out back in June. I was called stupid back then. Who is lafin’ now… it’s just make more attractive for me to keep buying on weakness and selling on strength, i did same back in 2009, i don’t know was it a luck or just fluke back in 2009… but i do remember reading somewhere, “when everyone is thinking a same, noone is actually thinking.”

#8 Helicopter Ben on 10.06.11 at 9:37 pm

Lehman Bros failing started off run the 2008 plunge, Greece and the failing Euro Banks are bigger problems, your right people are afraid of 2008 happening again, and they should be as 2008 was never fixed, just more borrowed money thrown at unpayable debt. it will be worse this time around, if housing is your biggest worry you dont see the bigger picture.

You have no idea what you are talking about. — Garth

#9 Bigboy on 10.06.11 at 9:37 pm

Garth is right. I have a balanced portfolio of 400g’s. I am down a total of $6,000. And that is in my TFSA account where I hold some riskier stocks. I am retired, debt free, lucky to have 2 indexed pensions. Fee for service advisor but I pay attention, read, learn and hold some cash ready to buy. Maybe should have Monday but there will be another dip, then I buy. Listen to Garth, then sleep well.

#10 Goldfinger on 10.06.11 at 9:39 pm

To suggest that governments can print trillions and charge this newly created money in taxes to their already overtaxed citizens will resolve the problem is a bit naive if not disingenuous. If it was that simple Greece would not be in the condition it is, a condition that will be repeated on a grand scale in the US.

Seems like Garth has turned into Helicopter Ben!

How’s that apocalypse working out for ya? — Garth

#11 mississaugasold on 10.06.11 at 9:43 pm

You are so right. I think even then with the volatility that has occurred this past summer/month, anyone who was contrarian would have made a lot of money.

Hopefully this is happen to housing SOON.

#12 timo on 10.06.11 at 9:43 pm

good post Garth,

a rally is coming but what a soap opera it is. Fire up the helicopter and print man print…….

http://theautomaticearth.blogspot.com/2011/10/october-6-2011-occupy-this-mark-banks.html

The Bank of England announces QE2 (£500 billion?). The ECB will provide unlimited credit to European banks. The IMF will buy EU sovereign debt (so the whole world is forced to finance what the EU itself so far refuses to). All this drives up the markets.

#13 THE TITANIC on 10.06.11 at 9:47 pm

With Respect I gotta agree Garth, massive market move coming. Feds gonna keep pumping, currency’s are going to become weaker as far as buying power is concerned. Good ol’ hyperinflation then, boom deflation. Well most developed nations are already experiencing a taste of this with the massive real estate bubble that popped and will leak air for a long time to come. Eventually we’ll deflate the massive debt bubble the G 20’s and their central banking system have created…along with all the oblivious borrowers that have contributed to our messed up fiat system. Man too much info… the fed is running this economy like a drunk backing up a trailer. Good news one day, the sky’s falling the next. Its a mess… the IMF is mapping out a change in our present financial system. Every 30 to 40 years it gets restructured. This one won’t last, they never do…if gold and silver suck as you say, where do we go to protect ourselves? I think agriculture is the next run. It’ll be a long time before people don’t need food and water. Its too bad no one has the jam to say it…but the reality is the world’s Population and demands are not decreasing. A morbid thought but we have one solution if we want to continue with our present system and fast food North American standard of living. Scary thought huh?

#14 kc on 10.06.11 at 9:49 pm

Here is a different aspect to what you are saying Garth. Don’t know if it is doomer stuff or just a bunch of screwy numbers that someone pieced together for something to do on a bored night.

USofA is in a pickle for what reasons??

U.S. Debt Crisis, What America Needs is Hope

http://www.marketoracle.co.uk/Article30800.html

OWS’ers do have a point.

#15 Wizard of Ozzie on 10.06.11 at 9:50 pm

Meanwhile in Vancouver, our young are lining up to buy real estate with the help of Mom and Dad.

http://youtu.be/vaTvcryUPRg

#16 timo on 10.06.11 at 9:54 pm

http://www.rolandberger.com/media/pdf/Roland_Berger_EURECA_project_20110927.pdf

1.Bundle Greek state assets worth EUR 125 bn in a central trustee organization (holding company)
2.Sell entire holding company to European Union for EUR 125 bn
3.Allow Greek state to use proceeds to repurchase bonds from ECB and EFSF
4.In so doing, reduce Greek debt from 145% to 88% of GDP

and there is your land grab. sell enough debt to hang a person and then take all their assets. what corruption

#17 Nemesis on 10.06.11 at 9:59 pm

You had me at, “When I was a long-haired rebel”.

Pardon the transposition, it just works better.

Ok, I know I’ll regret this. But…

Just for fun… on some Gloomy ColdWet Weekend, when we could all use a laugh… post a “Snap” ‘o GT. Long haired. Rebellious. Wild.

You know. The guy Dorothy fell in love with.

Narratives are made of such stuff.

#18 Smoking Man on 10.06.11 at 10:06 pm

There will be no housing crash in Toronto. (SM Oct 5 2011 )

The people of Toronto have demonstrated how truly stupid and void of logic they are, they voted for mc slimy. He will see to it that your Insurance rates, Carbon tax, echo tax, and tax he hasn’t invented yet will go up, he will offer untended green contracts to his buddies, cost of everything will go up except of course your salaries.

This tells me that they don’t think, they are gullible and stupid and ripe for explotaion, Main street media and the real estate industry just need to say on TV everything is fine, prices will rise. Buy Buy Buy, They will swallow and say thank you.

Fence sitters what are you waiting for there are millions upon millions of greater fools in Toronto.

Smoking Man now plotting how to take advantage of the fools………………….

#19 Liberal Lou on 10.06.11 at 10:11 pm

Looks like the Liberals are back in power. Whether they get a majority will soon be determined.

#20 Liberal Lou on 10.06.11 at 10:12 pm

In Ontario of course.

#21 martin on 10.06.11 at 10:14 pm

great !!!

i am a person that never reads, but i am hooked to your posts.

#22 Bigboy on 10.06.11 at 10:28 pm

WTHeck, (try not to swear). 10pm and smoking man is sober!
Are you getting ready for something?

#23 Steady Eddie on 10.06.11 at 10:29 pm

“The US will never default on federal debt or hyperinflate.”
http://www.youtube.com/watch?v=-_N0Cwg5iN4

“No credit or liquidity crisis now.”
http://www.ifre.com/credit-taps-run-dry-for-european-lenders-setting-scene-for-liquidity-crisis/1518344.article
http://www.forbes.com/feeds/ap/2011/10/06/general-eu-britain-economy_8720878.html

“who have the power to tax their way out of it”

lucky tax payers…. it’s a good thing ‘capitalism’ doesn’t require savings.

one more thing…

remember G20? – watch the CBC report
http://www.globalresearch.ca/index.php?context=va&aid=19928

same thing like in the french revolution where the govt used “agent provocateur”…

jp morgue donates to NYPD to ‘crack some skulls’ wow the god ol days are back
http://ology.com/politics/jpmorgan-chase-donates-46-million-nypd-during-ows-protests

no the system won’t collapse… it is the most resilient, self-healing social and economic system every devised in the history of mankind… but it will suck for a lot of people

welcome back to the early 1900s – eat what you kill.

#24 NFN_NLN on 10.06.11 at 10:31 pm

#15 CommonCitizen on 10.06.11 at 10:16 pm

A bunch of investors with “money on the side” simply means that they have the potential to become Buyers. Buyers use “money on the side” to trade them for securities held by Sellers.

The “money on the side” goes to the Seller and the Buyer gets the security. After this transaction, there still remains the same amount of “money on the side”…

Unless of course… the “security” goes up in value to soak up more of the side money. Tada…

#25 Helicopter Ben on 10.06.11 at 10:31 pm

You have no idea what you are talking about. — Garth ……….. Sometimes the feeling is mutual Garth, you cant seem to grasp the bigger picture.

My grasp is fine. But I’m worried about you. — Garth

#26 Charles Ponzi on 10.06.11 at 10:33 pm

The herd mentality took us to great heights of optimism and now it will take us to great depths of despair. A sane person thinking for himself will be shocked by both the highs and lows. The problem of course is that very few of us think for ourselves.

I respect your view that sanity will prevail–but sanity didn’t prevail on the way up and I rather doubt it will prevail on the way down.

#27 Steady Eddie on 10.06.11 at 10:37 pm

I hate to double post, but this guy has a really good printing press imitation:

LMAO this guy was a riot

http://www.youtube.com/watch?v=tvjP4nFFJQQ&NR=1

#28 InvestorsFriend (Shawn Allen) on 10.06.11 at 10:38 pm

WHY THE LONG FACES?

As Garth says or alludes to here, one man’s loss is another man’s gain.

A lot of people in the U.S. have seen their house values drop. Tens of millions actually. The average loss I understand is about 35%.

Average Smaverage, some have lost $millions. Millions have lost their home. But millions more have lost next to nothing or merely suffered a paper loss on a fully paid for house that they had no intention of selling.

But all these losses are surely someone’s gain. Not many houses physically dissappeared. (Yeah a few were wrecked, very few).

Millions of young renters in the U.S, can now afford a house. Let’s celebrate that. Vacation homes in the south are often selling way under replacement cost of the home itself with the land thrown in for free! Some people are winning big buying those!

The AVERAGE 30-year mortage rate has fallen under 4% for the first time ever.

In any situation there are always opportunities.

Stock markets are down 20%. Sucks for those who lost that and now have no money to buy at the lower prices or are too scared to.

But others will swoop in and take advantage.

Go ahead and click the link to my web site at the link above and you will find lots of educational articles. I am basically sharing my journey to wealth. In the last 12 years I have made a few hundred thousand on stocks. I have shared all my stock picks and thinking on this.

Sorry, Garth but from now on when I post here I am giving a link to my site. After all your software invites me to do so, it actually asks for my web site name.

I judge myself to be a valuable contributor to the discussions here and will no longer do it just for the (considerable) entertainment value. Beside’s which you don’t appear to take ads anyhow and I view ads as not worth paying for. In return I will direct people to your Site

#29 Helicopter Ben on 10.06.11 at 10:40 pm

My grasp is fine. But I’m worried about you. — Garth ……….I appreciate the concern Garth, i will expect a christmas card in a few months from ya

#30 Devore on 10.06.11 at 10:41 pm

#2 timo

and there is your land grab. sell enough debt to hang a person and then take all their assets. what corruption

To sell, someone must buy.

#31 alf on 10.06.11 at 10:52 pm

Lots of great ideas on this blog as well as a very dedicated host/author, but I still don’t understand how the views espoused on this blog can be considered “contrarian.” Have you bothered to type the words asset diversification, or balanced portfolio into a search engine. Not saying that Garth’s advice is ineffective, just that there are millions of contrarians with the exact same advice, coincidentally working in the same industry. How many people with the exact same opinion
does it take to constitute a heard?

#32 Off the river on 10.06.11 at 10:53 pm

So the governents tax their way out of it? I can’t fathom how much tax it will take for the US to get out of their mess. It seems the tea party movement will put an end to new taxes for the time being.

What gets me is the fact that between debt and more tax, it doesnt give a helluva lot of cash on hand for the consumer.

#33 not 1st on 10.06.11 at 10:54 pm

Garth, if corporations are sitting on 2 trillion in cash, then they could be doing all sorts of things to signal a healthy economy like share buybacks, or increasing dividends or hiring and expanding, but they are not doing any of that.

Why? because they are holding on to the cash to do a massive buyout of deflated assets when they get cheap enough. Its just picking from the bones of the crash, not real economic growth. Maybe stop writing little books for a while and dig into some news stories.

#34 InvestorsFriend (Shawn Allen) on 10.06.11 at 11:02 pm

UNCommon Common Sense?

Common Citizen at number 22 wisely says:

“The “money on the side” goes to the Seller and the Buyer gets the security. After this transaction, there still remains the same amount of “money on the side”; it just changed hands from the Buyer to the Seller.

Ridiculous comment.”

Absolutely right my friend, I have said that for years. Money passes through the stock market. It does not go into stocks or companies (except at IPOs and such when the company actually gets the money)

Number 25 NFN responds:

“Unless of course… the “security” goes up in value to soak up more of the side money. Tada…”

No, my friend when I buy stocks from you for $10,000 you get $10,000 if later the stocks are worth $20,000 in my account, you still have $10,000. No money was “soaked up”.

In fact the stock market creates and destroys wealth out of thin air every day.

I explained it all here, many years ago.

http://www.investorsfriend.com/nov_24_2001.htm

#35 bromance on 10.06.11 at 11:03 pm

#25

Money flows through, not into the market.

#36 One Defrauded on 10.06.11 at 11:07 pm

“….expect quasi-recession, glacial growth, no wage gains, falling house values, reduced consumer spending, and copious bitching and moaning. Politicians will be gored the most, along with investors who miss what comes next.”

Garth, sounds like you think that the good times may just be around the corner.. ( a few years hence)

“The worst is yet to come….” trends journal
http://youtu.be/OPD-cWW2ks8

I guess I would rather drink your Kool-Aide Garth. It is better, more enjoyable, goes down easy, and I sure hope that I will not be defrauded again! I think though…. Gerald Celente may just be on to something, Cheers

#37 Devore on 10.06.11 at 11:08 pm

#22 CommonCitizen

What does BlackRock imply when it talks about “money on the side”?

[…]
Ridiculous comment.

No more ridiculous than “buyer’s market”. How can it be a buyer’s market? Isn’t there exactly one buyer for every seller?

It’s a term used to indicate direction. Who’s in the driver’s seat, so to speak. Who has more bargaining power.

“Money on the side” is money sitting in safe liquid assets (money market, bills) that can be quickly redeployed to buy more risky assets.

Don’t take things so literally.

#38 Jason on 10.06.11 at 11:12 pm

“A Bloomberg survey this week found Wall Street strategists thinking we’re about to see the biggest market move in 13 years. ”

Garth please explain ? Do Wall Street strategists believe the Market will move up or down ?

#39 Observer on 10.06.11 at 11:20 pm

“Fear is so August.”

Real estate is so “2007”. ;-)

#40 Waterloo Resident on 10.06.11 at 11:20 pm

I don’t listen to the news out of Europe or Wall-Street, I simply look at the charts and from what I saw on the charts last night it looked like a good time to buy stocks, so around 9:45 this morning I bought a whole ton of DDM (U.S. market) and HXU (CDN market).

From my system of indicators, it looks as if the fallout from Europe is finished for now and we can look forward to the rest of 2011 with positive results, these stocks should be up about 20 % by the end of the year.

If anyone is smart here, then maybe you should do the same?

#41 Aimhigher on 10.06.11 at 11:28 pm

Garth, I used to visit your blog a few years ago to read what you had to say about housing market. I now stick around for investment inputs. I would even say you know more about mass psychology than the real estate. Lord knows when the property values will go down in lower mainland (you’ve been saying that for years), but I am happy to report that your heavy doses of confidence and reminders of not giving in to fear have saved me thousands of dollars.

I KNOW not to sell during fearful times and not to buy during heady days, but knowing something and doing something are two different things. Sometimes gentle reminders keep you on the steady path.

Thanks for your insights & for the clarity of your reasoning toward market behavior.

#42 City Slicker on 10.06.11 at 11:36 pm

“A Bloomberg survey this week found Wall Street strategists thinking we’re about to see the biggest market move in 13 years.”
———————————–
Ok well take your marks everyone, thats the que to get back in and go for a ride.
All rigged and orchastrated I tell ya – JMHO

#43 Goldfinger on 10.06.11 at 11:56 pm

Another No-Name goes Apocalyptic!

World facing worst financial crisis in history, Bank of England Governor says
The world is facing the worst financial crisis since at least the 1930s “if not ever”, the Governor of the Bank of England said last night.

http://www.telegraph.co.uk/finance/financialcrisis/8812260/World-facing-worst-financial-crisis-in-history-Bank-of-England-Governor-says.html

#44 Fritz M on 10.06.11 at 11:57 pm

Things continue to unwind. Condo madness continues apace in Toronto. But with all the building and “investment” buyers, why the low rental vacancy rate? This was an interesting story. Also look at the comments. It seems low vacancies are pushing people into the RE market. Vacancies are low, but as an “investment” condos only make sense if they appreciate…
http://www.thegridto.com/life/real-estate/rental-illness/2/

#45 LS on 10.07.11 at 12:04 am

For example, recently it appears to me that NOT having a tattoo makes you a rebel.

#46 LH on 10.07.11 at 12:04 am

just what we needed, double digit increases in hydro prices for each of the next four years!

i was going to buy another house in M5R or M5T but I think i’ll pass now

#47 Nostradamus Le Mad Vlad on 10.07.11 at 12:05 am


“I turn my fuzzy, chiselled chin upward with quivering fingers in the orange guy’s shorts [to fondle his bum], God knows you’ll have enough company. Mainstream angst.” — That is a column in itself!
*
“Herds turn into crowds, and crowds grow a logic and belief system of their own.” — Not me, and I bet there are countless others as well.

Screw society and stuff the establishment. I’m too old and decrepit to bring myself down to their hell. They have created and earned the right to live there, let them wallow in their own mire while slapping each other’s backs.

#7 Goldfinger — “Another hot no-name source, like the idiot ‘I-dream-of-recession’ trader last week. You guys are grasping. — Garth” — “. . . the market mayhem . . . No spike in inter-bank lending rates.” — Order Out Of Chaos. Why would that IMF robot have said there may be a WW banking meltdown shortly? To increase fear among sheeple? Is this nothing more than a huge FF psy-op, orchestrated from a bunker below Brussels?

Just suppose for a moment: What if the US and Eurozone are in such a mess, they are both going under, China and Russia both know this and are deliberately letting their economies tank as well, as they see good business after this?

Apparently, there was an American spy arrested after he gave China a whole bunch of papers concerning the state of the west. The spy is supposedly in jail in the US, waiting to be charged (or sent to Guantanamo and left to rot).

There are many things going on thruout the world, almost all of which no one will ever notice. You are correct in saying there are great opportunities to buy into markets, and profit handsomely from them. But as other posters have rightly pointed out, when someone gains, somebody else loses. The world has become a lottery — win and you’re in, lose and adios! Pays yer money, takes yer chances.

“. . . the power to tax their way out of it. . . . glacial growth, no wage gains, falling house values, reduced consumer spending” — Not if citizens are homeless, unemployed and in bread / soup lines. Those folks won’t be handing anything over to govts.
*
#212 Smoking Man on 10.06.11 at 8:28 pm — Thanks!
*
UK Ummm yes, this crisis is bad, so please fix it! Hmm. Change is good, but is it really necessary; No Euro Deal Germany is seeing things far more clearly, and Greece is possibly why the Greeks, who have no use for warships, are being pressured by France to bail them (France) out; Census Housing crash worst in GD1; Soros Trying to wriggle his way into Occupy.

Snakes Alive! Lunch time, pix free. Steer clear of cobras! Provoking Riots A prez. can do what he likes, provided he isn’t caught doing it. As with 9-11, Follow The Money (Deep Throat); Fukushima Radiation map from the Ministry of Energy; Speeding Up Obama increasing power line grids, which means they will have Smart Meters; NATO Syria’s next. Why? They haven’t done anything. However, there could be a connection with Occupy’s protests; Michelle Obama pending like there’s no tomorrow; GW? Sure, it’s cooling.

#48 EtownR on 10.07.11 at 12:07 am

I’ve been reading this blog for awhile now and I have to agree that the negativity and spite is sometimes a little over done by some comments. I’m not sure which context people are reading in but, I kinda take it like the news. A mostly unbiased, non sensationalist, independent news source. With a twist. I’m pretty sure I’m reading an educated opinion and not a gospel being etched in stone as you would think, judging by the comment section.
I don’t think G-money really gives a rats rear end what the doomers, gloomers and humpers think but, I appreciate that his words reveille these twits in their own manner. I like to know what fools I walk among in this crazy world. Keeps me on my toes. Just another small lesson Ive taken from these postings.
Thanks Garth, keep’em coming.
Any news on your next book? ‘Money road’ was sweet justice!

#49 Ozy on 10.07.11 at 12:12 am

The Prime Sinister is insane if he thinks we believe him he sees no evidence of a bubble!!!!!

No one can afford to buy anything in Toronto, you have semis at 500-600-700000 and he thinks there is no bubble. Amigo, how much were these semis 3 years ago? If 30% in top of high prices is not a buble, then what is?

Go back to grade 2 sukka.

#50 Cookie Monster on 10.07.11 at 12:19 am

C is for concentration of wealth, not good enough for me!

occupy sesame street

#51 Aussie Roy on 10.07.11 at 12:33 am

Aussie Update

Spruik feast – Why Aussie RE won’t crash – LOL.

http://news.domain.com.au/domain/real-estate-news/property-price-crash-dont-bet-on-it-20111006-1ladi.html

Reality

Housing starts are predicted to drop 20 per cent over the year to June 2012, as the sector faces nervousness among buyers and weaker industry conditions.

Investment bank Merrill Lynch believes new home commencements will drop to 134,000 in the year to June 2012, from a peak of 167,000 in the year to June 2011, with a risk they could fall further.

http://www.smh.com.au/business/more-gloom-ahead-for-housing-sector-20111007-1lcob.html#ixzz1a4DyBUgQ

Construction activity weakest in 31 months

It was the 16th consecutive monthly fall and construction activity is at its lowest level since February 2009.

All four construction industry sub-sectors experienced falls in activity.

The only glimmer of hope is the engineering sector, which is contracting at a slower rate.

The houses, apartments and commercial sub-sectors all recorded sharper declines in activity in September.

http://www.smh.com.au/business/construction-activity-weakest-in-31-months-20111007-1lcb9.html#ixzz1a4EOe8fm

#52 nonplused on 10.07.11 at 12:38 am

Not bad today Garth and at least between you and the comments I have a few things I can sink my teeth into. I have tomorrow off so why not.

First, “And a shift in debt from companies to countries – who have the power to tax their way out of it.” (Garth). While your other 4 points might have some merit, this one is a fallacy. There is no money out there to tax! What are they going to do, get Randal’s machine from Monster’s Inc. working and suck the scream out of Gen Y??? People cannot pay the bills now, and many don’t have jobs. Taxes are not going up. Tax rates may go up, but the few left to pay won’t make up for those sliding down the brackets.

Second, “What is happening today is predominantly a de-risking. There’s trillions and trillions of dollars of money sitting on the side. So it’s very different than ’08 and ’09. Money is there, it’s just people are frightened.” (Black Rock CEO) This fallacy has to die. There is no such thing as money “sitting on the side”, certainly not trillions of dollars. There aren’t “trillions of dollars” in existence, the whole of M1 is something like 2 trillion dollars and it isn’t “sitting on the side”, it’s circulating. When you sell a stock you either buy something else yourself, say a Treasury bill maybe, or you put it in the orange guy’s shorts and he buys a 5 year Treasury with the money. But other than circulating cash (M1) all of that money is in something. Anyway, others have beaten this subject to death, such that no well read person would utter the phrase “cash is sitting on the side” any more unless they are “talking their book” in trader lingo. I don’t know how much money you have “sitting on the side”, but I have at best a few thousand dollars planted in the garden.

#1 Deano,

The occupiers are definitely not looking for a crash. These people are down and out, and wondering why Goldman Sachs was paying out billions in bonuses just after being bailed out, while the “occupiers” got kicked out of their house and lost everything, including their jobs, and all they got was food stamps. People so misunderstand what is going on there. The occupiers think the system can and should feed them (as well as a good deal of other trite ideas worthy only of the teacher’s union in practicality). They don’t think the system is collapsing.

#2 Mister Obvious

“Fear is so August”.

That is brilliant.

Garth has a way with prose, but obviously never ran a mid-office risk management system before. 350 point upticks indicate risk just as much as 200 tick down days. The volatility in the market only went up during September, and so far October isn’t looking any better. All of the moves appear to be based on what dumb thing some hapless European semi-official said that the news picked up.

#26 Helicopter Ben and Garth on same

Remember, crazy doesn’t know its crazy, and we all have at least a little. So stop arguing, we can’t tell you apart.

#53 Sorry, Occupy'd on 10.07.11 at 12:40 am

Garth, I just wanted to thank you for this blog. As a contrarian member of Generation Y this site has been a beacon in the dark. My wife and I made some big sacrifices to pay off our $50,000+ student loans and to avoid getting into the mega-mortgage debt trap of so many of our peers. I am happy to report a very liquid and diversified portfolio in the hundreds of thousands. Oh, and best of all, I sleep very well at night.

There are many of us who passionately support the Occupy Wall Street movement. Regardless of your feelings about it, thank you for giving it some coverage on your blog.

#54 Tom from Mississauga on 10.07.11 at 12:52 am

It is looking like it may be near a bottom. Made a nice rebound today. Maybe time to switch 60 40 to 70 30 equity to fixed income… Some of these doomer comments are totally ridiculous again tonight. Time to grow a set. I am still up 7% from this time last year on my balanced portfolio. Dialed back on equity a bit after Japan nuke disaster. Agree with Garth, the world is not ending, time participate in it.

#55 Jody on 10.07.11 at 12:52 am

“the retirement crisis so many Boomers richly deserve.”

Garth, those words just make me want to hug and snuggle you, thank you, you’re the dude.

and for everyone else, always with the negative waves man.

http://www.youtube.com/watch?v=Xyh-JpWdGmQ

#56 VancouverBoy on 10.07.11 at 1:10 am

Garth, you have referred to “the orange guy’s shorts” a few times on this fine blog. I don’t quite get this reference, please enlighten me. Thanks.

#57 new-era on 10.07.11 at 1:47 am

GArth one variable which has to be accounted for is PURE FEAR.

What drove the housing market up to the Strato-sphere (pumping and fear) can also drive the market to its knees. The reality is you don’t know the future.

And there is a probability that the us can fall flat on its face. The Euro can collapse. The probability can be small but its can easily be something small which sets the domino’s effect off.

#58 westopia on 10.07.11 at 1:47 am

Yup, nothing to see hear folks. TSX up 300 points today. Everbody can go back to sleep. There is no problem with the system….

A week after the BBC exploded Alessio Rastani to the stage, an interview with IMF advisor Robert Shapiro, the bailout expert has pretty much said what, once again, is on everyone’s mind: “If they can not address [the financial crisis] in a credible way I believe within perhaps 2 to 3 weeks we will have a meltdown in sovereign debt which will produce a meltdown across the European banking system. We are not just talking about a relatively small Belgian bank, we are talking about the largest banks in the world, the largest banks in Germany, the largest banks in France, that will spread to the United Kingdom, it will spread everywhere because the global financial system is so interconnected.”

http://www.youtube.com/watch?v=6UGDTtqklSo&feature=player_embedded

You’re right garth, this isn’t 2008. It’s worse. Much worse.

See what I mean? — Garth

#59 Jody on 10.07.11 at 2:03 am

When the MSM (BBC newsnight makes the CBC look like what the CBC really is, full of stupid amateurs.), starts putting this stuff out as often as they do now then we should not wonder why there are so many negative waves out there. No, something will trip the whole thing up. It’s the herd mentality, it’s coming and there’s f*** all we can do about it except to diversify, don’t buy only guns, buy some ammo and seeds as well.

http://www.youtube.com/watch?v=6UGDTtqklSo&feature=player_embedded

#60 daystar on 10.07.11 at 2:04 am

Right you are, Garth. Investors priced in a recession before it got here. We only have more and more mouths to feed and technology becoming ever more refined, its not like commodities will stay cheap forever. Buy low, sell high.

Recently I put up this graph, the one year chart for Ventures:

http://tmx.quotemedia.com/charting.php?qm_page=29904&qm_symbol=^JX

and another blogger presented the 3 year chart citing fear and risk associated with a revisit of 08′ (of which I’ll just put up the 10 year and be done with it):

http://tmx.quotemedia.com/quote.php?qm_page=8075&qm_symbol=^JX&locale=EN

What I see looking at Ventures are 2 things: First, the market was overbought back in March/April of this year and needed to correct itself… and it has. There was no stellar news that was able to sustain the markets at valuations back then. The second is that the U.S. dollar has had a major role in pricing commodities throughout the last ten years due to its slide and that has boosted commodities tremendously. Whats happening in the markets is clearly not an 08′ moment as Garth has explained. There is no North american credit freeze but more importantly, commodities have had a major boost in the last 3 years alone by a devalued U.S. dollar. Investors began to seriously price in a U.S./global recession ahead of the numbers following a correction and now, for the time being, the market is oversold.

Now… if the U.S. slid into a recession with some serious negative numbers while Europe went there, we’ve got trouble, a global recession and Ventures below 1,000 coupled with the TSX below 10,000 is easy to imagine and this is the risk investors are afraid of, duely noted, but this can’t happen for the rest of this year (at least, in terms of hard evidence anyway). I believe the U.S. GDP estimate in November will be flat or near zero. If, however, the actual GDP number in late December falls .6% or more below estimates, we have a problem the markets will react to, especially if there are other large nations going negative but this is after christmas so there is a great deal of time between now and then for the markets to play out so for the short term… where’s the risk?

Buy low, sell high. Isn’t that how investors make money?

#61 Ben on 10.07.11 at 2:06 am

“A Bloomberg survey this week found Wall Street strategists thinking we’re about to see the biggest market move in 13 years.”

Must have had a 3 day rally. lol

#62 Onemorething on 10.07.11 at 2:41 am

Great Global Reset underway!

Largest robbery by the Banksters and Global Elite ever in history. The Sheeple played to a very bad demise this time.

As Garth says “slow melt” and this only means that yes government will give hope by way of further usless stimulus only to take the economy slowly down in an orchestrated move so total chaos doesnt enter the room.

It’s like someone who breaks into your house and only steals $20 per day, you wont notice it today or tomorrow but compounded over the next few years maybe 5-7, it’s gonna take hold.

The Trillions on the sidelines that all the economists speak of are those who are 3% of the population, dont get fooled again!

#63 patrik53 on 10.07.11 at 2:45 am

“No credit or liquidity crisis now. No spike in inter-bank lending rates. Record corporate profits. Massive political coordination. And a shift in debt from companies to countries – who have the power to tax their way out of it. Those five factors alone should change every mind.”

Garth, maybe you should have done more pondering before putting these words on paper. These words my come back to haunt you. You’re way too sure about something that you may not even understand. No, I’m not saying that you don’t have a clue, by the way I think that you’re way more knowledgeable in this area than F. But, I believe that you’re way oversimplifying when making your point.
There is liquidity crisis: http://online.wsj.com/article/BT-CO-20111006-708347.html and most of European banks are insolvent and will need to be recapitalized.
There is also spike in inter-bank lending: http://www.thisismoney.co.uk/money/markets/article-1645325/LIBOR-Latest-inter-bank-lending-rate-charts.html
I’m not so sure about the power of governments to tax their way out of it. Anyway, you made some claims that can be refuted, but that’s not my point.

We live in a very complex world, and especially financial system is by no means robust or as resilient as it should be. You know that. You know that if 15% of people decided to withdraw their money tomorrow that it would bankrupt the banks. F.A. Hayek was very humble person, unlike you, and I especially like his lecture named The Pretense of Knowledge (http://mises.org/daily/3229) he gave on the night he received his Noble Prize. If I may suggest, please read it.

You foolishly think that your grasp is fine, but you’re mistaken, ’cause nobody really knows. In some twisted way you were right when you said to Helicopter Ben: “You have no idea what you are talking about.” But do you?

P.S. I was overly critical today, but most of the time I really enjoy reading this blog. It’s a joy to read it at the and of the day. My friends are probably sick of me sending them some of your blog posts too. I agree with you (from delusional Vancouver) that real estate is not “real” anymore. It’s been inflated into oblivion and there will be huge price to pay. Today, however, I have to disagree with some of your opinions.

#64 Thetruth on 10.07.11 at 3:17 am

The rezoning from a couple RS1 to RM1 almost complete Garth. Had bought in spring 2008 in Vancouver. Basically each RS1 property doubled in value because of the rezoning. And no its not in Richmond or Van West :( Even i am amazed.

Held onto it because my belief that high immigration is
THE key driver of demand. I know many will disagree on this blog. Buying property with potential rezoning possibilities is a win win in Toronto or Vancouver.

I’m done with Cnd real estate after this. Maybe a farm in the USA. Done with currencies too.

Garth , want to be my financial advisor now?

#65 T.C. on 10.07.11 at 3:24 am

Last Tuesday is beginning to feel like the bottom to me. It will be interesting to see if there is much of a reaction to any future Greek default – if it happens.

#66 Robert Dudek on 10.07.11 at 4:17 am

Instead, expect quasi-recession, glacial growth, no wage gains, falling house values, reduced consumer spending, and copious bitching and moaning.

This is supposed to be good news? Sounds pretty bad to me.

#67 C on 10.07.11 at 4:48 am

Garth, I always enjoy reading and sharing your posts, today I hope your post is right, but my gut says no.

Europe is much worse off than you suggest and if Greece falls there is a lot of talk on the TV about Italy and Spain falling too. How can this not affect the world?

The ECB has $480 billion in cash reserves to bail out the EU, they are planning to leverage this to $20 Trillion. (according to the BBC).

Is China’s boom real? The only financial information coming out of China is gov’t approved.

I hope you are right Garth, but here in Europe it’s a different story.

#68 Jack the Land on 10.07.11 at 4:50 am

Garth,

Can you please post a link to the Bloomberg article you mentioned.

#69 Ben on 10.07.11 at 5:50 am

U.S. 30 year mortgage below 4%

#70 Tony on 10.07.11 at 6:09 am

Re: A Bloomberg survey this week found Wall Street strategists thinking we’re about to see the biggest market move in 13 years.

The next likely move will be akin to the last drop in the NASDAQ from 5,000 to 1,000. This time the NASDAQ will be falling from a lower level to a much lower level.

#71 Bob Copeland on 10.07.11 at 6:50 am

So quit one group and join another? Sometimes you suck the hope right out of me. I do not have one penny in debt. Not a mortgage, not a car loan nothing. I cashed out my retirement savings 6 years ago and bought gold in the $400’s. I should quit that group and join one that has been losing money?? The more I read the more I feel like no matter what I do I’m going to lose because the other group is the only way to go.

Sure hope you sold that gold consistently on the way up, as I suggested. — Garth

#72 bigrider on 10.07.11 at 7:03 am

WoW Wow Wow !

unemployment rate falls from7.3% to 7.1 %

economy adds 60900 jobs !

And therefore RE correction now postponed indefinitely..look for higher prices, S%&T

#73 Susan from London on 10.07.11 at 7:31 am

Ohhh… you got your Sas from your dad, I love it. That generation knew their stuff…

#74 bigrider on 10.07.11 at 7:36 am

For all you preferred share humpers and corporate bond braggers sitting smuggly through this correction in equities.

Make sure you sell some of them , as they are expensive(especially preferreds as they are most coveted) and buy some of the two key areas that have been smashed, namely oil and gas which is outrageously cheap right now and yes some( just a bit) gold equities and silver shares. Tread lightly, you are steering a ship not hairpin turning a BMW M3.

Remember, you are the same individuals which watched your preferreds and bonds lag during run-up March 2009 to June 2011.

#75 timo on 10.07.11 at 7:43 am

#72 bigrider on 10.07.11 at 7:03 am

WoW Wow Wow !

unemployment rate falls from7.3% to 7.1 %

cough……teachers returned to work 38k
but still better than expected.

#76 President of ING on 10.07.11 at 7:46 am

#56 Vancouver Boy

Garth is referring to people stuffing their money in my shorts and getting their better than the chartered banks interest rate.

#77 Moneta on 10.07.11 at 7:46 am

There’s trillions and trillions of dollars of money sitting on the side. So it’s very different than ’08 and ’09. Money is there, it’s just people are frightened.” And: “This fear and the irrationality I’m seeing in the marketplace is now giving me an indication we’re bottoming.”
——
Where are we supposed to put those extra trillions?

A huge part of those trillions to be invested come from sectors that don’t participate in the private sector.

Furthermore, a large percentage of our consumption is in stuff that is made in emerging markets, often ininvestable.. hmmm… one of those place has 20 empty cities.

There is too much money for existing investment opportunities.

#78 Ron on 10.07.11 at 7:56 am

#18 Smoking Man

Unfortuantely its the PC Feds that are controlling the interest rates causing the nation-wide housing bubbles, not the Toronto Libs.

#79 Moneta on 10.07.11 at 8:02 am

Our equity market still needs to tank some more because there are still a lot of Canadians with huge mortgages and low rates who instead of paying it off are investing their “extra” funds in the equity markets. Either buying gold and other resources or buying funds which are HEAVILY weighted in the top 3 sectors of the TSX.

When the real estate bubble bursts and Cdn households start paying down their mortgage debt, suddenly there won’t be very much money for playing the markets. Portfolios might even get liquidated to reduce debt.

As real estate tanks, boomers will also finally realize that it’s not Freedom 55, 65 nor 75. It will be work forever. And if they already have a rainy day fund, why bother saving 5-10K per year and make you life miserable? That would also lower the floor on the TSX.

My 2 cents.

#80 timo on 10.07.11 at 8:04 am

http://www.charlierose.com/view/interview/11925

Jeffrey Sachs, Director of The Earth Institute at Columbia University on his book – Reawakening American Virtue and Prosperity

interesting interview

#81 Bond junkie on 10.07.11 at 8:07 am

Don’t be lured in by the inevitable cheerleading that the Canadian mainstream media will no doubt be partaking in today. Look at the industry breakdown beyond the seasonal components. Teachers and forestry made up the bulk of 90% of the hiring in Sep. Cyclical industries mftg, trade, transport, IT, finance all down and not by a small margin (below) not to mention a ton of self employed. Recession is not around the around the corner folks, we are in one.

Sept Aug. July June May Apri March
2011 2011 2011 2011 2011 2011 11
==========================================================================
All industries 60.9 -5.5 7.1 28.4 22.3 58.3
———————————————————-
Goods-producing 6.6 -40.1 17.1 3.3 -14.9 -11.3
Agriculture 2.1 2.0 -9.4 1.9 0.0 -3.6 -2.6
Forestry, fishing 17.1 -11.5 -11.3 -1.9 -2.8 6.6
Utilities -0.8 -9.2 -3.2 -4.0 7.0 -7.7 4.5
Construction 11.6 -24.3 30.8 2.1 3.3 -5.8
Manufacturing -23.5 3.1 10.1 5.3 -22.5 -0.8
———————————————————-
Service-producing 54.2 34.6 -10.0 25.1 37.2 69
Trade -4.7 -6.6 27.5 -2.0 34.4 -16.5 -19.9
Transportation -7.0 -13.5 27.7 14.5 -9.8 6.6 –
==========================================================================
Sept Aug. July June May Apri March
2011 2011 2011 2011 2011 2011
==========================================================================
Finance, insurance -35.3 2.6 5.2 11.3 -3.5 18.7
Professional 35.6 3.5 1.6 -19.2 14.0 1.3 9.1
Bus. Support -4.6 -2.2 -14.0 9.1 4.5 17.2
Educational 38.4 9.5 -30.0 2.6 -26.8 8.4
Health care -2.9 50.1 -39.4 7.6 14.1 7.7
Information -21.5 -11.4 3.9 6.9 14.5 7.2
Accommodation,food 30.7 -6.1 14.7 1.9 2.4 3.8
Other services 11.9 8.1 4.9 -10.6 -8.3 10.8
Public admin. 13.7 0.5 -11.8 3.1 1.6 4.3
———————————————————
Public sector 36.9 22.0 -71.5 50.7 -44.3 20.6 –
Private sector -14.9 -20.6 94.5 21.9 37.1 35.6
———————————————————-Private employees 22.0 1.4 23.0 72.6 -7.3 56.3
Self-employed 38.9 -6.9 -15.9 -44.2 29.5 2.1

#82 Moneta on 10.07.11 at 8:13 am

As real estate tanks, boomers will also finally realize that it’s not Freedom 55, 65 nor 75. It will be work forever. And if they already have a rainy day fund, why bother saving 5-10K per year and make you life miserable? That would also lower the floor on the TSX.
———
And if they already have a rainy day fund, why would they bother saving/investing 5-10K per year and make their life miserable?

#83 Moneta on 10.07.11 at 8:20 am

The Bank of England announces QE2 (£500 billion?). The ECB will provide unlimited credit to European banks. The IMF will buy EU sovereign debt (so the whole world is forced to finance what the EU itself so far refuses to). All this drives up the markets.^
———-
The problem is that if long bonds are at 2% what are equity spreads supposed to be?

2-6-12-20%???

Because bond yields are at all time low, the market seems to think that money can now only be made in equities. However, we know that government intervention crowds out the private side. So how much higher can equities really go?

Just watch. — Garth

#84 Moneta on 10.07.11 at 8:23 am

Because bond yields are at all time low, the market seems to think that money can now only be made in equities. However, we know that government intervention crowds out the private side. So how much higher can equities really go?
——
And when you look at historical examples of printing, you always get a contraction in earnings before the newly printed money starts going through the system. Therefore you always end up with a market crash before it takes off again.

Another 2 cents.

#85 Hammer1 on 10.07.11 at 8:29 am

Garth,I really hope that you’re right. However, historically, there have been moments when the herd has been right. Would you argue that? Sometimes I feel that we’ve reached an apex of some description…perhaps a huge reset that every so often,though very rarely,just happens like a huge forest fire. But,anyway,I guess your message is that a smart “individual” can make a killing during these times..can I be that person? Maybe I need a huge reset in my mind..I’ll let you know how it works out. thanks( though I have many doubts that I have to work through)

#86 Otto Doppelganger on 10.07.11 at 8:31 am

http://www.bclocalnews.com/vancouver_island_south/victorianews/news/131066118.html

“Asked whether he thought real estate prices might ever drop significantly, Fimrite said, ‘Not really, no.'”

Ladies and gentlemen, the David Lereah of the Canadian housing bubble

#87 pbrasseur on 10.07.11 at 8:34 am

Job numbers are out for the month.

Looking good on the surface, but private employment is down. Not so good.

#88 Devil's Advocate on 10.07.11 at 8:49 am

”You can ride with that crowd if you want. God knows you’ll have enough company. Mainstream angst.” – GARTH

You gotta ride with that crowd Garth but have the foresight to know where they are next headed that you might be there and leave there first. For it is the “crowd” which moves the markets one way or the other. To be contrarian is to risk “not being there for the moment.” We are a sedentary herd species not nomadic loners. Suits or denim in mind we are all the same. Economics is the backstory of all history and demographics is the backstory of all economics. Demographics is of “crowd” not of “contrarian”. You said it yourself; “…these are hard concepts for most people to absorb. So they won’t…”.

As a sedentary herd species we all need a roof over our head. Rented, mortgaged or owned shelter will be sought. It may change in popular form but it will remain always – be it a cave, a teepee, or a McMansion. Shifts will take place. Just as oil and the automobile fueled the advent of suburbia so to may changes in them quell and abate in consequence. But suburbia’s demise will only spawn a new trend. Even if that new trend results in the abandonment of traditional forms of procuring shelter by the masses that they should rent rather than buy they will still procure shelter by one means or another to fill that need. And someone must buy that shelter that they may offer it to the renter – ultimately for some form of profit at the expense of the renter. For without profit why take on such venture?

But aren’t we all renting in the end? Renting from the bank, renting from a landlord or renting from your future by investing such opportunity cost in a home. Yes indeed we are all renting. Housing has a cost associated with it regardless. Housing is a necessity. We all need shelter. And where there is a “need” there is a market and where there is a market there must be buyers and sellers. Who thinks otherwise is the “Greater Fool”.

#89 Oasis on 10.07.11 at 9:01 am

Sure hope you sold that gold consistently on the way up, as I suggested. — Garth
______________________________________

and you would have been consistently wrong to do so.

Maybe on your planet. — Garth

#90 Devil's Advocate on 10.07.11 at 9:02 am

Garth;

I’ve often thought I should propose a wager with you (gentleman’s or reward). I would propose that we each equally invest a given amount of money (real or academic) in the markets – you financial, me real estate – for a given period of time. At the end of that time we should see who faired best.

Game?

Sure. Start today and tally at Christmas. You buy a house in Kelowna. I’ll buy the S&P. — Garth

#91 Steady Eddie on 10.07.11 at 9:04 am

DOW 36000! LOL

#92 Ron on 10.07.11 at 9:07 am

Any thoughts on how the markets should perform with a large cohort of boomers starting to retire and facing they’re 2nd large market dip in less than 4 years.

Most have inadequate liquid assets and too much real estate. They have no choice but to seek growth (at least the smart ones). — Garth

#93 Moneta on 10.07.11 at 9:09 am

Garth,I really hope that you’re right. However, historically, there have been moments when the herd has been right.
—-
Perfect example… real estate in Canada from 2001 to 2011. There is a time to follow and a time to stay away.

#94 Moneta on 10.07.11 at 9:10 am

But,anyway,I guess your message is that a smart “individual” can make a killing during these times..can I be that person
—–
Maybe it’s just not losing money for the next year.

#95 Keith in Calgary on 10.07.11 at 9:14 am

The banksters on Wall Street are no different than the crooks in the real estate bizz.

They always say what you want to hear because they too get paid on commission.

Skepticism is good. Too much cynicism will leave you in the dust. — Garth

#96 Moneta on 10.07.11 at 9:17 am

The problem is that if long bonds are at 2% what are equity spreads supposed to be?

2-6-12-20%???
———-
In terms of risk you have it in this order:

Treasuries
Corporates
Preferreds
Equities
Derivatives

Right now spreads on corporates are going up… so it’s hard to believe equities can go higher as spreads increases are moving up the curve.

When you start playing with QE, you are playing with fire. If equities shoot up in that type of environment that means risk pricing is totally out of whack and if equities go up, it will be in hard assets.

#97 Devil's Advocate on 10.07.11 at 9:21 am

”Timing has a lot to do with the good outcome of a rain dance” – unknown

I smell rain.

#98 cxcroney on 10.07.11 at 9:25 am

Half of those new jobs are hiring consultants to help Harper find ways of balancing our budget. The other half are hiring loyal Tories and failed candidates from the last election with 3 year contracts to tell the general public what the Tory government can do for us. Just a statistical blip.

#99 Devil's Advocate on 10.07.11 at 9:29 am

Of course in Vancouver it’s always raining – opportunity or cats and dogs.

Interesting segway to housing for as the story goes; the saying “raining cats and dogs” comes from when houses had thatched roofs -thick straw-piled high, with no wood underneath. It was the only place for animals to get warm, so all the cats and other small animals (mice, bugs) lived in the roof. When it rained it became slippery and sometimes the animals would slip and fall off the roof… Hence the saying “It’s raining cats and dogs.”

You see, we all need shelter.

#100 Yvonne on 10.07.11 at 9:30 am

Please take a look at those articles by the same author and six years apart:

http://www.vancouversun.com/business/Vancouver+home+prices+lead+nation+bungalows+average+million+survey+finds/5508562/story.html

http://www.skyscrapercity.com/archive/index.php/t-264829.html

I strongly believe prices in Vancouver are crazy and will correct but who knows when? We can see that some people thought so SIX years ago. Notice the price in Richmond at $355K … This is a total “irrational exuberance” and we all know how that one ended.

P.S.
Sorry Garth, I accidently posted it in yesterday’s thread, I meant to do it in this one.

#101 Peakoilist on 10.07.11 at 9:40 am

#18 Smoking Man on 10.06.11 at 10:06 pm
Well, I kinda liked you up until that lovely post. So, it’s all about how many of your fellow citizens you can engulf. good. I hope you get really fat and cirrhosis of the liver is surely in your future……(by the way karma is really cruel)

#102 TurnerNation on 10.07.11 at 9:41 am

This is not really a YLO blog, but their exchange traded debentures bottomed at 15 cents on the dollar a few days ago, trading now at 28 cents on the dollar.

That was a decent gain for whoever dared to buy. I wonder if the debs semi annual interest payout is safe.

#103 Devil's Advocate on 10.07.11 at 9:47 am

PHOENIX Market Summary for the Beginning of October 2011

Sales volumes dropped in September while supply failed to decline for the first time since December 2010. To compensate we saw positive pricing movement for the first time since the second quarter.

Looking into the ARMLS data across all areas and types we see the following:

Sales per Month: 7,832 in September – down 11% from August but up 17% from this time last year.

Active Listings (including AWC): 26,869 on October 1 – up 0.2% from September 1 but down 40% from this time last year.

Active Listings (excluding AWC): 19,327 on October 1 – up 0.6% from September 1 but down 50% from this time last year.

Pending Sales: 10,841 on October 1, down 5.8% from August 1, but up 12.4% compared with this time last year.

Listing Success Rate: 75.7% on October 1 – up from 74.5% on September 1 and up significantly from 56.9% on October 1, 2010.

Contract Ratio: 95.2 on October 1, down from 99.5 on September 1 but dramatically up from 40.0 last year at this time.

Days Inventory: 99 on October 1, the same as September 1 but dramatically down from 179 at this time last year

Cromford Market Index™: 159.3 on October 1, up from 155.6 on September 1 and 85.4 on October 1, 2010.

Sales Price as a Percentage of List: 96.70% on October 1, almost the same as 96.72% on September 1 but up from 95.43% on October 1, 2010

We can see that all these numbers are far better than 12 months ago but most are not as good as last month. However the Cromford Report Index™ continued to improve. This is because this index is a seasonally adjusted measure and it is normal for inventory to increase between September and October. In fact the inventory increased only 0.2%, far less than in an average year and causing most of the improvement in the index.

It is also normal for sales volume and pending listings to decline between September and October. This year sales volumes fell faster than pending sales, which is partly due to the decline in REO listings. With fewer lender-owned and HUD properties available, last year’s sales volume for REOs is no longer sustainable. We now see demand in slight decline and expect to see the Cromford Market Index™ fall back from its recent highs as a result.

REOs are losing market share very quickly now. Fewer trustee sales are taking place. There were 2,689 residential trustee sales in Maricopa County during September 2011, 44% fewer than the 4,808 of September 2010. In addition a larger percentage of these auctions are now won by third parties (42% in September 2011 versus 20% a year ago). So the quantity of homes reverting to the beneficiary is dropping extremely fast. Only 1,280 single family homes went back to the lenders in Maricopa County in September 2011. This is the lowest total since November 2007. It is also 61% lower than the 3,289 that they received in September 2010. They are selling far more than this number through ARMLS each month and so the lenders’ inventory is being rapidly depleted.

It is a clear sign of the strength and dominance of negative sentiment that this remarkable turn round is mostly overlooked. At the same time, a completely irrelevant increase in foreclosures between July and August (due entirely to August having 23 trustee sale days instead of July’s 20) managed to make headlines in the local papers. When bad news is amplified like this and good news is ignored we know sentiment has swung too far.

For the housing doom fans who like foreclosures, September 2011 was a pretty dismal month. There were a total of 4,544 new notices issued in Maricopa County of which 4,335 were residential. This is 39% lower than September 2010. This new number is actually slightly higher than April through July 2011, but 15% lower than last month and lower than every month prior to April until we get all the way back to December 2007. The downward trend has slowed but remains in place. The bigger news is that there were only 2,840 trustee sales of all property types. This is 44% down from September 2010. This is also the lowest number since March 2008 (except for November 2010 when Bank of America completely halted its trustee sales). Foreclosures are clearly well past their peak and the short sale is looking likely to overtake the foreclosure in the coming months as the primary mechanism to resolve homeowners’ financial distress.

Pricing

After hitting a low point in late August and again in mid September, pricing is on a slight upward trend again. The monthly median sales price has climbed from $107,000 on August 18 to $114,950 on October 3 (all areas & types). That’s a 7.4% increase in less than 7 weeks and illustrates how violently the monthly median sales price reacts when REOs start disappearing from the mix and increasing in price at the same time. For Greater Phoenix REOs the monthly median sales price has jumped from $80,000 to $86,400 in the same period, an 8% increase. Pricing for short sales and foreclosures has not followed suit and neither have sales prices for normal sales. In fact pricing has been a little weaker at the higher price points cancelling out some of the gains at the bottom of the market. The overall average price per sq. ft. is up only modestly. Having hit a decade low of $78.51 per sq. ft on September 15, we are now looking at $79.81 per sq. ft. for October 3, a bounce but not a very convincing one. The most encouraging sign is that the pending $/SF has finally started to change direction and is moving up again after trending downward for a prolonged 15 month period since May 2010. We wait with bated breath to see if it can keep this up throughout October.

Adam Tarr PC, Associate Broker
ABR, CDPE,RSPS, ePRO
Citywide Real Estate and Investments
Phoenix, AZ

Encouraging no?

#104 cliffard on 10.07.11 at 9:48 am

But why the negative sentiment among middle class people who all ready have homes investments and jobs ahh duh. Garth yesterdays post was nothing but net todays more like a big smelly brick or actually more like a big smelly stinky hippy brick

Try again when you’re sober. — Garth

#105 Devil's Advocate on 10.07.11 at 9:58 am

<blockquote#89Devil's Advocate on 10.07.11 at 9:02 am

Garth;

I’ve often thought I should propose a wager with you (gentleman’s or reward). I would propose that we each equally invest a given amount of money (real or academic) in the markets – you financial, me real estate – for a given period of time. At the end of that time we should see who faired best.

Game?

Sure. Start today and tally at Christmas. You buy a house in Kelowna. I’ll buy the S&P. — Garth

GREAT! You set the rules; amount, gentleman’s or reward, real or academic etc. I trust you’ll be fair, but, as you always say “investing is a longer term gig” wouldn’t you agree a longer time than three months would be in order? I’m not suggesting five years but something more than 3 months might be more appropriate for both of us… your call.

You have my email. This will be fun! ;-)

#106 Peakoilist on 10.07.11 at 9:58 am

#24 Steady Eddie on 10.06.11 at 10:29 pm
thanks for that..Mr. G makes such bold, empahtic statements with such certainty as all experts do. This is, of course,to keep his “herd” calm and staying the course and not straying over to that “herd” of crazies. However, if he is wrong , I wonder if he can handle the heat that will ensue. We’re all in herds, whether we like it or not. Which herd will be right? I hope that G is right, but so many experts, sadly are usually wrong.http://www.cbc.ca/doczone/episode/the-trouble-with-experts.html

#107 Georgian on 10.07.11 at 9:59 am

China is slowly imploding

http://chovanec.wordpress.com/

when this accelerates, Canada will be dragged down as demand to our resources will fade.

corporate America is hoarding cash because they are preparing for a credit/banking crisis. When capital markets/financing run dry, they will have enough cash on hand to deal with operating and M&A activities.

#108 jess on 10.07.11 at 10:01 am

Staple financing ? and “cozy” bidding private equity

http://dealbook.nytimes.com/2011/10/06/del-monte-and-barclays-settle-investor-lawsuit-for-89-4-million/

#109 vreaa on 10.07.11 at 10:09 am

Vancouver Professors Cross Threshold – “After this fiasco we are completely done. I phoned U.Alberta today and told them that we will take the jobs if they offer them to us. In our view this city is being rapidly ruined.”

http://wp.me/pcq1o-32I

A ‘must-read’.
The loss to Vancouver of two bright professionals, and their family.
One example of the misallocation of human capital caused by the speculative mania in housing. It is crippling our city.
Only the most blasé RE bull will be able to read stories like this without feeling concern for the health of our community.
– vreaa

#110 Kilby on 10.07.11 at 10:14 am

Walked by a small “payday loans” shop in North Vancouver last night at 7:30, there were 5 customers in line for the one open wicket, all fairly well dressed “middle class’ looking…..I wonder if these places mirror the economy……

#111 Devil's Advocate on 10.07.11 at 10:15 am

Chill out – I’m going. It’s after 7:00am here now and my Province is waking up. Homework and chatting is done for the day. Time for me to get to “work”. }:-)

#112 Peakoilist on 10.07.11 at 10:24 am

#32 alf on 10.06.11 at 10:52 pm
Exactly, it does sound like a herd of investors. Are they all right? alright? they’ve created their own profession that creates nothing out of nothing, that will ultimately be nothing. wow, what a game. I want to go to that casino..but alas, I’ll be plunking my pennies into the penny slot machine. Oh well. I’m just a loser (but I have millions and millions of comrades around the world from Somalia to Greece to Silicon Valley)..are we all wrong?

#113 David B on 10.07.11 at 10:30 am

Cool, Mr. “T” Up is down, left is right, bad is good, night is day, rich is poor, east is west and of course the world will progress as it was intended to since the “Big Boom” …

So my question is as it has been for years?

In a crowd of people if one person stands alone is the crowd wrong or that single person?

If the crowd had financial wisdom, each member would be secure. Today almost all are insecure. There is your answer. — Garth

#114 Incubus on 10.07.11 at 10:31 am

“BC In-migration Turns Negative ”
http://www.youtube.com/watch?v=MQY2-25AZYA

#115 Helicopter Ben on 10.07.11 at 10:36 am

History Channel Video on Fort Knox, interesting Video.. http://www.history.com/shows/brad-meltzers-decoded/videos/brad-meltzers-decoded-fort-knox#brad-meltzers-decoded-fort-knox

#116 TaxHaven on 10.07.11 at 10:38 am

WHY no one should rely on “professionals”:

http://www.vancouversun.com/business/growth+surges+September/5518482/story.html

The big headline: “JOB GROWTH SURGES IN B.C.”

The small print: “The public-sector accounted for a gain of 36,900 workers, while there were 14,900 fewer in the private sector and 38,900 more people were self-employed.”

#117 Peakoilist on 10.07.11 at 10:40 am

Despite what I said earlier about experts, I still believe in G’s RE assessment. (he could still be wrong about the slow melt thing). I still feel confident about our RE situation( thanks Garth). If our house devalues, it will be a long time before neg equity kicks in. But was it our money anyway?
However, we still don’t have a lot of money left over each month to invest. I really would love to belong to that herd deep down but it’s hard to see it. I think maybe that’s what’s driving the OWS phenomenon. A lot of people seeing it slipping away.

#118 timo on 10.07.11 at 10:41 am

http://jaredbernsteinblog.com/a-few-picture-to-keep-in-mind/

the only way for many families to get ahead amidst the flat income growth of the latter period was through cheap, easy credit. (In other words, there’s a linkage here between flat middle class incomes, the debt bubble, and the big crash.

#102 Devil’s Advocate

I know what your saying but please admit that incomes are dropping and the only way your going to have housing rebound is with outside investment and not with actual regional wages dictating prices.

This is going to take a long time to fix and if they cut social programs you are going to see the consumer put his or her wallet away.

http://www.bloomberg.com/news/2011-09-13/poverty-in-u-s-climbed-to-17-year-high-in-2010-as-household-income-fell.html

Median household income declined 2.3 percent, and the proportion of people living in poverty last year climbed to 15.1 percent, or almost one in six Americans, from 14.3 percent in 2009, a U.S. Census Bureau report yesterday showed.

#119 arctodus on 10.07.11 at 10:47 am

Garth, Garth, Garth……

The hopeful baby boomer in you is showing through.

Herd mentality is alive and well and you seem to be right in the middle of the herd my friend.

Peak Energy has sealed the fate of the modern agroindustrial world…..true cost economics garantees it.

Pumping a bunch of bank investments and advocating selling overpriced shacks will do nothing to change that hard nosed reality. The fact that you insist that gold has peaked makes me smile (and not because gold will save us either).

The world economy is in a hard contraction now that will not stop. Anyone that cannot see that is either deluded or so damn scared that they will do any mental gymnastics necessary to avoid the logical conclusion.

Yes it is a”doomer” stance and it just so happens to be the truth.

I am in small business and a professional and I am involved every day in making payroll, management decisions, worrying about my kids, making investments and all the other day to day crap that most Canadians deal with……but I am also a realist…and I can see the world through a glass darkly…..

The future is always fuzzy in detail but stark in broad view.
Our world is over….we are now on the downslope of the Hubbert curve and that spells death for any form of modern economics…..

Forget stagflation, forget inflation/deflation….hello uber depression worldwide….and it will not end now until we are medieval and much reduced in population.

Simple mind exercise for all you bright lights out there.
What are people made of?

When you answer that (and it is a very basic bedrock non philosophical answer)….you will understand why we are finished as a modern society.

Ya’ll have a simply wonderful day.

‘Our world is over’? Then why did you have kids or start a business? Your ageism also shows your immaturity. I’d be working on that. — Garth

#120 Peakoilist on 10.07.11 at 10:50 am

#114 Peakoilist on 10.07.11 at 10:40 am
Omgawd..I said I believe in garth’s assessment..I just typed that wo even thinking.it’s like a freakin religion..and I come to church faithfully every day to swallow the wafer. That’s ok, I feel better after, or maybe I enjoy bearing that cross. Garth, you need to cut back to a once a week posting. we are all so hooked. I’m leaving for today(maybe till later)..bye

#121 Kilby on 10.07.11 at 10:54 am

The president of the Victoria Real Estate Board and his statement that Victoria is “different” and unaffected by the problems that real estate is suffering from elsewhere is hurting his own people. Talked to two realtors in Victoria that are having a hard time convincing sellers what price to list at….VREB, Global News etc.. have them convinced that their properties are worth far more than they will sell for. They think by being straightforward about a realistic selling price that they are being duped so that the realtor gets an easy, fast sale.
As well, one realtor sold their house last year and is renting for at least a year as they are convinced that the market will come down significantly.
So different perspectives from the working realtors.

#122 timo on 10.07.11 at 10:56 am

http://economicaldepression.blogspot.com/2011/10/roseanne-barr-guilty-wall-street.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+EconomicDepression+%28Economic+Depression%29

lol now that is extreme !

Roseanne Barr: ‘Guilty’ Wall Street Bankers Should Be Sent to Reeducation Camps or Beheaded

http://www.amlinkint.com/English/china_economy/article_house_price_drop.html

China House Price Is to Drop 40% to 50%, Research Indicates

Thank god we in North America can pick up the slack as it seems the miracle in Asia is a mirage.

#123 Leighton Tebay on 10.07.11 at 11:00 am

I’m not a doomer but I think there are significant downside risks to the economy. So much so that I’m completely out of equities.

Many US and European banks are still under-capitalized because they they count certain assets as more valuable than they really are. (mark to model) If Greece goes pop Germany and France will likely bail out their banks and make it through. But if contagion does spread there just isn’t enough in the tank to get Europe through it unscathed.

America’s is maintaining their GDP numbers through massive deficit spending. Take that away and you’ll have massive drop in economic activity.

Whether Peak Oil happens in 2012 or 2018 or 2022 the higher costs associated with oil extraction continue to be a growing weight on the economy. The increasing tension between supply and demand for things like grain will keep commodity prices at least modestly higher. This is good for Canada and Australia, not so much for many other countries.

The size of the financial services industry has grown so large it has become a weight to the productive private economy. Borrowing money for consumption is inherently less efficient than saving and buying. Every time we use a credit card we take 1-2% between us and a vendor we give to someone else. As much as we might want to blame big banks for the situation we are in, for many of us it was our own greed, our own inability delay gratification that led us to hand so much money over to the financial services industry.

As the boomers wash over retirement it will put an incredible strain on the medical system.

I will have more confidence in the economy when a few things happen.

1) I see a more trustworthy account of capital reserves in major US and European banks

2) A significant road maps to transition away from hydrocarbons for transportation and home heating.

3) Tighten consumer credit significantly. Create or enforce regulations that curb predatory lending. The size of the financial services industry needs to shrink. At 5% of the economy it is an efficient mechanism for facilitating investment, at 20% it is a ball and chain on society.

4) The United States learns to live with its means. While they still have a little ways to go before their debt begins to truly cripple them, I don’t see how they are taking their trajectory seriously. They are going to see significant pressures on their entitlement programs. It is very hard to see how they will pay for them.

The best investment most of us can make right now is paying down debt, especially if that debt is unsecured. The TSX has offered something in their neighbourhood of a 5% annualized return over 10 years and 0% over 5. When you factor in capital gains tax, inflation, and investment fees there really isn’t a lot left.

#124 Peakoilist on 10.07.11 at 11:07 am

#49 EtownR on 10.07.11 at 12:07 am
ok still here..anyway Etown,you better stay on your toes..your comfiness might be interrupted by a sharp bite in the a$$ (look, snuck up behind ya..didn’t see it,did you?) You utimately might be a crazy fool, if you’re gonna throw rocks here, expect some thrown back. this is an open forum for all opinions.

#125 Peakoilist on 10.07.11 at 11:19 am

#92 Moneta on 10.07.11 at 9:09 am
Garth,I really hope that you’re right. However, historically, there have been moments when the herd has been right.
—-
Perfect example… real estate in Canada from 2001 to 2011. There is a time to follow and a time to stay away.
==================================
thanks moneta, but I was thinking more along the lines of the French revolution (cut their heads off),or Tiananmen Square type stuff.

#126 disciple on 10.07.11 at 11:29 am

Here are some of many neat tricks they use to discourage voting:
-forcing you to another poll station further away, because your name doesn’t appear on their official list,
-taking their sweet time to verify your name is on the list and folding your ballot an insufferable number of times both before and after you place your X.
-creating the fewest possible ballot boxes so as to consume the most amount of time
-conveniently skipping explanations throughout the process to consume even more time as folks re-do steps or ask for help, oh sorry, you messed up, it’s invalid.
-causing me to exclaim: what a horrible experience. I vote only to negate the tired old cliche in nasally tone, “you can’t complain if you didn’t vote”. Yeah, okay, so I did vote, now what?

Definition of voting: Deciding which criminals will legally confiscate your wealth. Taxation = Theft.

Another great fraud has been perpetrated on Ontarians yesternight. Not even half of them “voted”? Really? But you were reporting that there was expected to be a record number of turnouts based on preliminary early voting numbers…hmmm…do I read too much into things as some have suggested? Perhaps not this time.

For anyone who doesn’t believe that a minority Liberal legislature was pre-orchestrated, I would ask them to cut back on the ganga.

#127 Marnic on 10.07.11 at 11:34 am

Understanding that the age of the house is coming to an end…

Garth, true, but it’s not the only thing. Actual real growth is coming to an end. Growth is wholly dependent on affordable energy…and the accelerating rate of its decline is happening as quickly as our reliance on it is exponentially increasing. This blunt reality affects everything.

#128 disciple on 10.07.11 at 11:36 am

If the Ministry in charge of elections were really interested in your vote, they would hunt you down and get it. Just like the Revenue people do with taxes. That’s God’s honest truth right there. How many more ways can I get you to plainly see the obvious?

#129 disciple on 10.07.11 at 11:38 am

I remember Chilliwack or Chaddyshack or such similar someone retorted a while back to me with some “official government numbers” that more people voted Tory than NDP last federal election. Enough said.

#130 Florin T on 10.07.11 at 11:43 am

Hi Garth,

The question you should try to answer is not whether this crisis has ended or not, but rather why the (capitalist) system had gone from crisis through crisis since almost it’s inception. This is not the first Recession or Depression. They do seem to occur regularly, and no, I don’t blame the price fluctuations (hence manias) on the people themselves. Tx

#131 somejerk on 10.07.11 at 11:45 am

In the law of averages your post probably is more correct than most will believe… though I think you may have either gotten some or gotten into some bunker vino prior to writing this/ or your ass’ets positioned so correctly that things look awesome for you and thus you may have a rosier view than most.

“All this will continue the emasculation of the middle class, and shuffle us closer to the retirement crisis so many Boomers richly deserve.” this will continue to cause things to look gloomy for awhile to come even though they may actually be

love being a contrarian, things don’t look as good as they are ; vice versa things don’t also look so bad …

after the bounces in the market recently my random thought yesturday, one for the masses…

the markets can remain solvent longer than one can remain rational…

#132 Heart of the World on 10.07.11 at 11:48 am

There ya’ go! Some other nameless, faceless nobody, George Soros, claiming that ‘the system’ has in fact collapsed but that this has not been generally recognised. He likens the economic situation in the west now to the collapse of the Soviet Union:

http://www.businessweek.com/news/2011-10-06/soros-says-europe-u-s-turmoil-reminds-him-of-soviet-collapse.html

So then: how is it wise to take your hard earned and hand it to some counter party who writes you a ‘promise to pay’ you back eventually, if the system is in mid heart attack?

OK, I am going back now to the dumpster behind this blog (great line Garth!) to be with George and Mervyn (King, the Governor of the Bank of England).

#133 Marnic on 10.07.11 at 11:48 am

…expect quasi-recession, glacial growth, no wage gains, falling house values, reduced consumer spending, and copious bitching and moaning.

Don’t see how any of this is good for equities, Garth.

What crisis? Well, according to Mervyn King, Governor of the Bank of England, “This is the most serious financial crisis we’ve seen, at least since the 1930s, if not ever,” and you wouldn’t exactly call him a no-name.

News bulletin: This ain’t Britain. — Garth

#134 Puzzler on 10.07.11 at 11:50 am

“Most days I stagger into a Mephistophelian barrage of doomers, conspiracists, metalheads, tin foilers and people convinced we’re on the verge of systemic financial collapse.”
Bravo!
Some of us come here for the fine writing.

#135 Stevenson on 10.07.11 at 11:51 am

So no recession and no long awaited housing collapse anymore? What happened to the firm predictions?

Can you read, Stevie? “Expect quasi-recession, glacial growth, no wage gains, falling house values, reduced consumer spending, and copious bitching and moaning. Politicians will be gored the most, along with investors who miss what comes next.” Apparently not. — Garth

#136 Stevenson on 10.07.11 at 11:53 am

So gold and silver will inflate and not drop like a rock?

#137 Anonymous on 10.07.11 at 11:55 am

Gareth sounds like the main-stream media and all the financial blogs out there. “This the inter-bottom to the stock market, look for a large rally”. What your saying is worse, because everyone is thinking the same, so it must either be true or everyone is wrong again.

Sounds like you are. — Garth

#138 Trev16 on 10.07.11 at 11:56 am

Garth,

I love how objective you are in terms of the world economy and how everything is going to evolve. Here is a clip of an IMF advisor who says we are on the brink of a meltdown………but from your point of view…no worries….it’s all good…..this guy is clueless and has no idea of what he is talking about.

http://www.youtube.com/watch?v=6UGDTtqklSo

The US is bankrupt…..they can never pay off their debt….unless they turn on the printing presses and print to oblivion making the US dollar good only for toilet paper. No….it’s all good…..and lets forget about all the derivatives. Maybe you might want to point out on your blog to all your followers how the the Federal Reserve system was created and what backs it up. I would recommend to anyone who wants to EDUCATE themselves on the Fed to read Rich Dad Poor Dad’s Conspiracy of the Rich.

Cheers,

Trev16

The US is not bankrupt, nor does it (or any) country need to ‘pay off’ its debt. That clip was posted a few times already. Do try to keep up. — garth

#139 debtified on 10.07.11 at 11:57 am

#89 Devil’s Advocate on 10.07.11 at 9:02 am

“The Bet”
***********************************************

Can I be in on this bet? 

DA, you buy a house (or houses) of your choice that is (are) listed on the MLS now. I will buy stocks of my choice that are listed on the TSE at the same time. We hold both “investments” for a pre-defined period of time. 

I will match the total cash that you put in including transaction costs. 

We track carrying costs, to be subtracted from the proceeds upon liquidation. This includes, among other things, maintenance costs, utilities costs, taxes, interest costs, etc…

Upon liquidation, we subtract from the gross proceeds the initial purchase cost, transaction costs and carrying costs. Who ends up with higher net proceeds wins. 

The difference in net proceeds (absolute value) is the price, with the lower net proceeds as the minimum. 

Should one party fails (or refuses) to liquidate by the predefined time, such party is deemed to have lost the bet on default. The price will be equal to the total of all invested amount by the party that defaults, including transaction and carrying costs.

I give you credit for proposing the bet and I will understand if you’d just rather do it with Garth. Goodluck!

Good comment on #87, btw. 

#140 Lisa on 10.07.11 at 11:59 am

“When I was a rebel. long-haired, denim-coated, radical peacenik ”

Hey Garth, how’s about a pic of the young rebel Turner!

:o)

You’d cringe. — Garth

#141 Min in Mission on 10.07.11 at 12:03 pm

#124 disciple,

Isn’t it “ganja”?

#142 Anonymous on 10.07.11 at 12:06 pm

By the way I agree the odds are high on a rally back to $SPY 1300, because everyone is saying it, so it must be true. You are contradicting yourself, because you state not to be a follower, but you have to follow the trend to make money, as you have to go with the flow of what everyone else is doing. You don’t sound logical at all. Unless you are so good at investing you make the right moves before a market changing event happens. IE S&P downgrading the USA. Which it was obvious it was coming, maybe a little early.

Logic is putting together a balanced portfolio with the right asset allocation, not trying to flit around beating the index. Why is this so tough for people to understand? — Garth

#143 Trev16 on 10.07.11 at 12:12 pm

The US is not bankrupt, nor does it (or any) country need to ‘pay off’ its debt. That clip was posted a few times already. Do try to keep up. — garth

What’s your definition of bankrupt? 100% debt to GDP….as you know the US debt currently is 98.9% to GDP. The only reason you could even suggest they are not bankrupt is because they still have the reserve currency of the world (for not much longer) and they can continue to print their fiat currency. To suggest to your followers that this is going to continue is a little disingenous.

Cheers,

Trev16

The US is infinitely capable of servicing its debt. Hence, no bankruptcy now or ever. — Garth

#144 Anonymous on 10.07.11 at 12:12 pm

BREAKING: Fitch downgrades Italy to ’A+’; outlook negative. Have fun. :)

Yawn. Old news. — Garth

#145 Marnic on 10.07.11 at 12:13 pm

News bulletin: This ain’t Britain. — Garth

Nice one; even you aren’t disingenuous enough to believe he was only talking about the predicament of the UK.

I listened. He was. — Garth

#146 Trev16 on 10.07.11 at 12:22 pm

The US is infinitely capable of servicing its debt. Hence, no bankruptcy now or ever. — Garth

Thanks for agreeing with me….”infinitely capable”……printing presses going crazy pumping out all that funny money out of thin air……assuming countries will still accept the US dollar.

Cheers,

Trev16

Actually not. The ‘funny money’ has just been proven once again to be the world’s reserve currency and the safest of havens when people like you get horny. — Garth

#147 Trev16 on 10.07.11 at 12:35 pm

Garth,

“The ‘funny money’ has just been proven once again to be the world’s reserve currency and the safest of havens ”

Thanks for making me laugh. The public is waking up and you will soon see in the US……”End the Fed” protests really picking up……As people learn the history of the Fed and the private interests who are behind it.

Cheers,

Trev16

I see you are long on tin foil. — Garth

#148 Mr. Plow on 10.07.11 at 12:36 pm

#89 Devil’s Advocate

Not a good idea.

Investing in real estate should be a long term play. You can’t judge success after a few months or even a few years.

#149 Devore on 10.07.11 at 12:42 pm

So I’m reading here that in Milton offers with condition of buyer selling their current house are considered normal. Wasn’t Milton on fire just a few months ago, with lineups and multiple bids? Anyone have details on this market?

#150 Devore on 10.07.11 at 12:45 pm

#101 TurnerNation

I was actually gonna post yesterday, but refrained ;) that YLO is looking mighty cheap, after losing dividends and two large write-downs. Even the convertible preferred might be worth looking into, although dilution would be a big issue. Anyways, management seem to be doing the right things, and I threw down a couple large before closing yesterday… how often do you have something trading below book?

#151 Dad on 10.07.11 at 12:50 pm

European Banking Crisis (Credit-Anstalt)
Dollar Rally
American Protectionism
Mass Movements

Hrm, I think I’ve lived through this before. Maybe its the Dementia setting in.

#152 Kayak Freddy on 10.07.11 at 12:57 pm

Garth, you can’t refute the fact that Debt is the pin in the bubble. I would love to invest in some blue chips, government bonds and preferred bank shares…but our society has spent decades tossing caution out the window and living on the hog…where in history has our society built up such a debt load – this will be entered into the history books as the one that nearly destroyed the world financial markets..mark my words!

You noted “reduced consumer spending” – I call an outright total shut your wallet approach.

I work on the front lines of debtors who come to file a bankruptcy or proposal. The stories over the years are becoming more dire and desperate. People today are focused on one thing – keep the house. Avoid all expenditures. And your very words that the housing will need to correct – guess what. That just adds more squeezing to the family budget just to keep simple items.

I don’t need to look at any stats to know what the economy is doing. Just listen to what businesses are doing. Car manufacturers offering 84 month – 0% financing…if that doesn’t make you think.

Resturants are offering incredible deals lately, every home furnishing store is throwing in 52 inch tv’s if you buy the couch. Garth, come on guy – you can’t have a contained housing melt down (or slow melt) without having an adverse effect on everything else.

And just as you noted Garth, the Herd thinking, our society has always been governed by that aspect. So how can you approach the blog by saying that we will have a orderly slowdown. Spook the crowd, spook the baby boomers and guess what – the stampede will begin. In your very words – the boomers are in a world of hurt if the housing falters…but you think they will hold onto their savings (investments) when the value of their home drops daily. Pleaseeeee, the herd will dictate the next direction our society will face…run with the herd or be prepared to be stomped on!

Just noting facts people – (and I am a very positive person who see’s good in many things) .. just not naive like some in here.

#153 timo on 10.07.11 at 1:05 pm

http://www.nytimes.com/interactive/business/2011-economy-sentiment.html?hp

a very interesting visual on the public view on the economy and future.

#154 disciple on 10.07.11 at 1:10 pm

#140 … Min, I think you’re right, but in the urban dictionary, either way is ok, although ganga is ambiguous.

http://www.urbandictionary.com/define.php?term=ganga

#155 fancy_pants on 10.07.11 at 1:16 pm

FEAR is only in the way when GREED is in play. And GREED is a very brazen and tough player that takes no prisoners. That is the one emotion that can pursuade you into illogical thinking and take you down before you know you are toast, yet people love to dabble with it. maybe it creates endorphines? If I could only patent a candy bar that stimulates the brain the same way – it would be a top seller.

Fear, not greed or lust, is the greatest motivator. — Garth

#156 Alex on 10.07.11 at 1:21 pm

The US is infinitely capable of servicing its debt. Hence, no bankruptcy now or ever. — Garth

Garth, you mean by creating more debt notes infinitely? Isn’t that called devaluation or hyperinflation? Could you please explain?

Perfectly clear. No default. Ever. All you need to know, son. — Garth

#157 TurnerNation on 10.07.11 at 1:28 pm

Something that’s worth noting, on this lecherous weblog:

What do you call the vacant land surrounding your land? Why, it’s known as Crown Land.
Not our land, but CROWN land (owned by UK monarchy).

As I’ve stated, Canada as we know it never existed.

If you look at our flag’s maple leaf, it almost looks like the top half of a six pointed “star of david”. Copy it, flip it over, join the two images, to see.

My point: Israel, too, is a UK-created colony (from 1948).
This is why Harper talks up Israel so often; we are both Crown colonies. Perhaps our flags share the same stylized image base.

Harper must be gunning for a peerage, a lordship down the line.

Royal Air Force, Crown Land, Minister Baird removing Canada in favour of a Royal Crest on his business cards, the Monarch’s mug on the rear of our coins – instead of a true Canadian’s.

Are you getting the picture? Canada as we know it never existed! Quoting disciple, it is all a part of the “mind control illusion”.
Wave that flag, and god save the queen??

**If the UK monarchy is simply a “quaint tourist attraction” franchise then why not scrub them from our daily lives? It’s like having Mickey Mouse’s face on our coins, right?

But no, tourist attraction maybe – of a bloodthirsty elite lineage who owns us. They are shaping the world: Princes Charles, Phillip, and soon William are leading the global greenwashing and eugenics control programs.

Example: When will we drop food from planes onto Libya and starving Africa? Answer = Never. We’ve playing for keeps.

#158 timo on 10.07.11 at 1:45 pm

the US cannot default,

http://drpinna.com/the-u-s-cannot-repeat-cannot-default-18200

The U.S. has the right and the ability to print as much of their currency as they wish. No matter how much the U.S. Government owes to its borrowers it can, at the click of a computer, print all the money it needs.

and with a simple swipe of a pen could raise taxes on the top 20% to bring in stimulus. It would not happen now but if sentiment changed it could.

#159 C on 10.07.11 at 1:47 pm

Put some TSX Financial Shorts on yesterday. Everyone’s looking for a rally here, when they should be shaking in their boots.

#160 Pr on 10.07.11 at 2:07 pm

….Most days I stagger…metalheads……remember my dad asking me what kind of idiot I was, running with the crowd. Less than 1% of the people own gold and silver , 99% dont!!! So chose the good crowd!

#161 disciple on 10.07.11 at 2:12 pm

I tore myself away from this blog, and walked into a Shopper’s today, noticed the ridiculously high prices of EVERYTHING. I went to pay cash instead of credit (as is my new habit) and had to worry if the three Queen Elizabeths’ would be enough to cover the shampoo, bandaids, dishsoap, cookies and milk. I’m seeing inflation of 100%, I don’t know where the federal crooks get their numbers…Jeez. I then went to fill up my truck and maxed out at the $100 limit they impose, which I hope was just enough to fill the tank.

We’re cooked like dinner. That reminds me, I forgot the Turkey…

#162 Nostradamus Le Mad Vlad on 10.07.11 at 2:16 pm

#30 Helicopter Ben — “I appreciate the concern Garth, i will expect a christmas card in a few months from ya”

Can I have a ‘Get Well Soon’ card?! I lost all my marbles!

#96 Devil’s Advocate — “I smell rain.” — Agreed. Monsoon or drizzle?

#105 Peakoilist — That explains Bre-X and Nortel!

#127 disciple — Canada should follow Oz’s lead, where voting is mandatory. Whether or not one can deliberately spoil a ballot, or None Of The Above is an option I’m unclear.

#156 TurnerNation — “Quoting disciple, it is all a part of the “mind control illusion”.

Excellent post. The mind is no more than an adequate to good servant. Each has their own box of toys, each is free to re-arrange them any way they want to, but the spiritual law of non-interference prohibits anyone from ever interfering in another’s path or life.

By using imagination and feeling, and knowing all creation is finished here in the lower psychic regions, anyone can have pretty much whatever they would like, or better still, what is necessary.

#163 Moneta on 10.07.11 at 2:23 pm

Well I’m back from a lunch with advisors.

I asked them what kind of investments their clients were entertaining and they laughed.

The answer was that they have given up and are now spending and consuming. They know they’ll never have enough to retire so they are enjoying the money and not saving anymore. They just don’t trust the financial industry anymore.

Food for thought.

#164 Moneta on 10.07.11 at 2:26 pm

They know they’ll never have enough to retire so they are enjoying the money and not saving anymore.
——-
So now the question is are they going to pay down debt, plunk 5-10K in their portfolios or spend it?

#165 Blacksheep on 10.07.11 at 2:51 pm

“The US is infinitely capable of servicing its debt. Hence, no bankruptcy now or ever. — Garth”

Garth, 100% agree, but this comment reads like it’s taken directly from the MMT manual.

I will defuse “The US Gov. has the ability to tax” argument, because we both know that while the pool is deep, it is certainly NOT infinite.

We also know the sale of bonds, outside the Fed.(more MMT) is, certainly NOT Infinite.

I thought I asked you about MMT and if memory serves, you thought the it unsound?

ps: I won’t tell the other kids.

take care,
Blacksheep

#166 Garth Against the Doomsdayers on 10.07.11 at 3:16 pm

It seems from the last few posts today Garth, that this blog has taken on a new tone. It appears like a battle between the bears and the bull. Stay tuned ladies and gentlemen to see how this battle of future events unfolds.

#167 Regan on 10.07.11 at 3:19 pm

“a shift in debt from companies to countries – who have the power to tax their way out of it.”
That pretty much sums up the complaint of Occupy Wall Street. Corporations don’t like paying tax, but except taxpayers to foot the bill for their losses – the same people who are still being held on the hook for debts that are being written off. The U.S. middle class has been squeezed to bits and the lower classes are incarcerated en masse, incidentally funneling more free labour to private corporations at huge public expense. And on top of it, the public now gets to bail out the corporations who want to dodge the consequences of the higher reward = higher risk fundamental of capitalism. It’s corruption in the financial sphere and it’s a serious problem.
I’m agnostic on the prospect of financial collapse, but I do know of one pre-capitalism example that concerns me. In the European middle ages, after the plague had wiped out 80% of the population, so many people had bequeathed their wealth to the Church that there were whole economic regions where the Church owned everything. Literally everything, in an economy where land rights and tithing rights were everything. It brought all economic activity to a screeching halt. Trade stopped because there was no one to trade with. This destroyed the value of the assets because, of course, they couldn’t be sold to anyone anyway because only the Church owned anything of tangible value. In the end, the Church had to give away most of its assets (keeping some choice bits for itself, of course) just to get trade functioning again. My current concern is this – there is so much debt… years before its paid off levels of debt all over the world. Who holds this debt? I worry the sum extraction of wealth has been so excessive and the concentration of it so narrow that the function of trading itself will be damaged. This blog talks a lot about houses being worth less when no one wants to buy them. What about when no one can afford to? What is any company worth if no one has money to buy its product?

#168 Timing is Everything on 10.07.11 at 3:21 pm

…Victoria will be lucky to see a 1% migration. — Garth

Good. There’s too many here already. And for Gawd’s sake…Don’t waste time and money on a bridge!

http://tinyurl.com/8gpgd

Been there done that…And we don’t even ‘ice over’…

http://tinyurl.com/6btyna7

http://www.youtube.com/watch?v=AWtCittJyr0

#169 timo on 10.07.11 at 3:30 pm

http://www.bloomberg.com/news/2011-10-07/u-s-consumer-credit-fell-9-5-billion-in-august-biggest-drop-in-a-year.html

wow, they are putting away the credit cards. America is starting to hunker down.

#170 JRH on 10.07.11 at 3:31 pm

I think we need a period of deflation. We have had inflation for many many years. Leave interest rates low, but drop the prices of everything else. Those with debt will be hooped, and those who saved will see their dollar buy more. Problem solved !!!

#171 J on 10.07.11 at 3:39 pm

#56 VancouverBoy

I believe the orange guy he is referring to is ING Direct, a company that offers savings accounts that deliver 1.5% or so and who’s branding is very orange.

#172 5moking Man on 10.07.11 at 3:57 pm

@Peakollost
Enjoy Dalton running up the bar tab which you don’t even get a sip just the bill when it comes time to pay the bill me and my loot will be somewhere warm. And if I need a new liver I will jump on a plane and buy one in china

#173 TurnerNation on 10.07.11 at 4:01 pm

A great line from the Tragically Hip’s old song ‘Trickle Down’:

“Belly up, all the drinks are on the Crown / It’s just a matter of trickle down”.

I take that to mean: it all trickles down to the bottom of the heap, with the guy on welfare spending his free money at the bar. Indeed his drinks are on the Crown; It’s just a matter of a trickle down!

http://www.youtube.com/watch?v=eXFiXh1BSYk

#174 Comrade on 10.07.11 at 4:02 pm

@ #112 David B

And they used to lynch people for claiming that earth is spherical. The crowed believed it was flat.

#175 Moneta on 10.07.11 at 4:21 pm

Who holds this debt? I worry the sum extraction of wealth has been so excessive and the concentration of it so narrow that the function of trading itself will be damaged
——
Developed world 55+ in their pension plans or investment portfolios.

#176 Timing is Everything on 10.07.11 at 4:22 pm

#102 Devil’s Advocate

Bro just bought a nice pad in Chandler, AZ.
last weekend. Higher end stuff…done deal. Couldn’t resist. But then, he lives Estevan. Going down in November to check it out.

Some Chandler stats…

http://www.trulia.com/real_estate/Chandler-Arizona/
http://www.trulia.com/real_estate/Chandler-Arizona/market-trends/

#177 Moneta on 10.07.11 at 4:23 pm

Developed world 55+ in their pension plans or investment portfolios.
—–
And if you write down the bad debt, you write down the pensions assets… so government no matter what is stuck printing anyway.

#178 arctodus on 10.07.11 at 4:30 pm

‘Our world is over’? Then why did you have kids or start a business? Your ageism also shows your immaturity. I’d be working on that. — Garth

Because I prefer the joy of watching my boys grow up to wearing a hair shirt and self flagellation? Because I was raised for a healthy contempt for government and all that it stands for. Because I was not so priviledged to have been born in a slightly earlier time when you could essentially get a degree and have a job garanteed for life. Because unlike so many I can see that economics as such, is a fraud and a joke and prefer to study history and ecology.

I have little use for ageism but prefer to critisize based upon what some one advocates for and against.

Immaturity…I have no idea….having lived more than my fairly allotted 40 years and having seen how most of humanity lives outside the vaunted arches of “western civilization” I would doubt it. Being afraid for ones life in the early morning hours of an African sunrise tends to drive out the boy in most.

Our society is done like a thanksgiving turkey but that does not mean we should stop living as thinking sentient beings…..just so few of us are.

Nice to know we have moral and ethical, sentient and covetous people like you to be our conscience. — Garth

#179 Cato on 10.07.11 at 4:32 pm

The herd is dangerous, the most shameful episodes in human history were caused by those who chose to follow the mob. The tea party and its occupy counterpart are just as dangerous and threaten to lead us down the same worn out path of intolerance and hatred. Sure, we could probably tear the entire system down build a new financial system on the wreckage but the process of rebuilding would be long and arduous , it would never happen in our lifetime. Future generations not yet born would benefit, but current generation would go through a lifetime of extreme hardship. I highly doubt that fact would go over well with a generation raised with such a twisted sense of entitlement and it won’t be long for old hatreds to start appearing.

The true reason we are in this mess isn’t due to a global conspiracy. Its due to an entire generation collectively making one piss poor financial decision after another. Do you think we could spend a lifetime shopping for cheap goods at Wallmart screwing our neighbours out of manufacturing jobs with no long term consequences? Instead we focused on creating a fantom economy based on debt that had everyone placing the nations collective wealth into a dead asset like housing that produces nothing constructive to society as a whole.

The world is evolving, its actually getting to be a better place. The big adjustment is in the west where having a heartbeat is no longer a ticket to entitlement at the expense of others. There will continue to be exceptional people doing exceptional things becoming exceptionally rich, thats never going to change. This time around the concept of a middle class will be global in nature but for that to happen many western nations will face painful adjustment. Some will be able to maintain their standard of living but most won’t make it.

Unfortunately its those most vulnerable who will pay the greatest price. We are already seeing this in spades out here in BC as the bureaucrats throw those unlucky in the genetic lottery of life off the bus first. So much for protecting the weakest among us but thats just what political animals do. Don’t think for a minute gov. is smart enough to save the middle class. Anyone who doesn’t take personal responsibility for their long term financial health deserves to reap the consequences of placing their future in the hands of others. The few who refuse to follow the mob will enjoy a world of even greater opportunity.

#180 westopia on 10.07.11 at 4:42 pm

“The US is infinitely capable of servicing its debt. Hence, no bankruptcy now or ever. — Garth”

Garth, can you recommend an asset class that would provide great leverage in this scenario….?

Go ahead Garth I know you want to say it…. G—

The scenario that won’t happen? — Garth

#181 jess on 10.07.11 at 4:55 pm

Markopolos: Bank of New York
His team’s investigation into the rigging of currency trading by the … custodial banks has led to a lawsuit filed by the NY Attorney General on Tuesday against Bank of New York Mellon. … filed suit on Tuesday (against Bank of New York Mellon) for stealing money from pension funds on currency transactions

#182 Abitibi Doug on 10.07.11 at 5:55 pm

Interesting, I noticed the same thing that Garth did when I was a teenager. I had heard all this talk about how we were the radical, individualistic, Me Generation that rebelled against the establishment. I also noticed this conformity, of how you were supposed to have the right brand of jeans and other accessories. Even at age 15 I saw the contradiction in it all and to this day still don’t completely get it
.
Now fast forward to the present. In earlier postings I said how investors should work like an engine with a governor. Now is the time when the speed is so low the throttle is almost fully open. On days like last week when stocks took a dive, the throttle is pulled fully open and the supercharger picks up, which forces more air (and along with it more fuel) into the intake manifold to produce more power and torque to restore the speed. Translated to financial talk, now the markets are low it’s time to buy if you haven’t already done so.

#183 jess on 10.07.11 at 5:59 pm

Levin has introduced S. 1346,

http://www.scribd.com/doc/60872769/The-Stop-Tax-Haven-Abuse-Act-Summary

http://levin.senate.gov/newsroom/press/release/gao-report-discloses-mixed-record-on-use-of-tax-treaties-to-combat-offshore-tax-abuse/?section=alltypes

#184 Greece and IMF on 10.07.11 at 6:25 pm

Greece is not insignificant…its default will affect the entire world.

Here’s current IMF advisor Dr. Robert Shapiro–also advisor to Clinton and Obama–saying so…

http://www.youtube.com/watch?v=6UGDTtqklSo&feature=player_embedded#!

Posted eight times already by the metalheads. And, no, Greece will not shake the world. — Garth

#185 Nostradamus Le Mad Vlad on 10.07.11 at 7:12 pm


#174 Moneta — “Who holds this debt?” — TPTB, the elite, etc. Those who fund both sides in a war to increase their wealth
*
“Life is too important to be taken seriously.” — Oscar Wilde (today’s Wise Words from the KDC), and

Thought For The Day: “Ye shall know the Truth, And the Truth shall make you angry!” — Aldous Huxley (wrh.com.)
*
Timo — 2:27 clip Erin Burnett again in a different interview. Send in the clowns! Obomba is not responsible for creating the fiscal downturn, but he is responsible for exacerbating it; Stealing Bridge Guess there is money in steel; Interesting NATO and US troops are invading MEast countries illegally, the remaining 99% are invading banks here. What goes around . . .; 4:54 clip Credit ratings falling in UK; Ignoring the reality of life. The protesters aren’t going anywhere.

Oshit The plan is working well (so far). No retirement — work ’til you die! Soros Who has been a naughty boy then? 4:31 clip Father of Reaganomics to kids — leave the country; Thai media Going global? US unemployment About a third have been out of the workforce for at least a year.

Occupy Dallas plus 9-11 truth. That is an interesting pairing. BTW — “I just got off of the phone with the owner of a restaurant in New York who says that so many people are down at the Occupy Wall Street protests that business has dropped off for the rest of southern Manhattan island!” wrh.com and Occupy Dame St. See where it is; COINTELPRO techniques for the ‘net; How Convenient! “It isn’t benign or it wouldn’t be there at all, and most likely it is Israeli. Don’t be surprised when a drone “wanders off by itself” and hits a target that kicks off war with Iran!” wrh.com. Why? To shift attention away from Wall St.!

3:14 clip Monsanto’s name is mentioned; Odamn And Blast The Solyndra Fraud; Fukushima Radioactive seawater may affect maps. Also — Radiation and Sickness spreading; Domains No one really cares anymore and neither does the govt. here; 7:22 clip The US — a decade of war; BP and the GoM BP’s costs should be much higher; Northern Pass foes Money rears its ugly head again.

#186 westopia on 10.07.11 at 7:13 pm

“The US is infinitely capable of servicing its debt. Hence, no bankruptcy now or ever. — Garth”

Garth, can you recommend an asset class that would provide great leverage in this scenario….?

Go ahead Garth I know you want to say it…. G—

The scenario that won’t happen? — Garth

———————————————-

I was referring to the scenario where there would have to be an infinite amount of currency debasement to service this infinite debt. Where does all this money come from anyway? If only there were an asset with limited industrial use that was primarily used as a stable monetary base against such infinite debt servicing…. One could make a fortune!

#187 cata on 10.07.11 at 7:30 pm

The US is infinitely capable of servicing its debt. Hence, no bankruptcy now or ever. — Garth

Garth, could you explain the reasons for US been capable of servicing its debt?…

Because it can. Same as Canada and Britain. — Garth

#188 The American on 10.07.11 at 7:32 pm

At #157: Timo… BINGO! The U.S. won’t default due to the foresight of the centralized banking structure to print money at-will, whenever it necessary. That’s all there is to it.

#189 Markey on 10.07.11 at 8:26 pm

Deflating China’s housing bubble: http://www.reuters.com/article/2011/10/07/us-economy-china-property-idUSTRE7960D720111007

#190 eddy on 10.07.11 at 8:27 pm

BBC doc about BIS, gold and the Banks who financed Hitler

http://www.youtube.com/watch?v=YauM5dHLn1s

#191 Bobby on 10.07.11 at 8:47 pm

For #120 Kilby,

I will have to agree with your observations. Have spent the last few weekends at open houses. The realtors are not projecting a sense of optimism. And with 2.5 realtors on record for each prospective sale, there are a lot of realtors not getting paid.
Sadly, many still cling to the tired statements of ” we expect an offer tonight” at an empty open house for a tired dated home that has sat on the market for months.
Time to consider making a few lowball offers!

#192 Chris on 10.07.11 at 8:51 pm

“Perfectly clear. No default. Ever. All you need to know, son. — Garth”

Garth, why do you so quickly shutdown legitimate questions like this? Are you assuming that someone like Alex (the person who was asking it) is just a doomer, and consequently you don’t want have entertain it?

Or are you convinced that you know (for whatever reason) what everyone else doesn’t seem to know?

Or are you just that arrogant?

I share Alex’s question. I really don’t know why the USA can’t default. I’ve never seen it explained in terms of why either.

As a former politician, you no doubt recognize the importance of explaining your arguments. So why do you shut down questions you don’t agree with?

That’s poor form in terms of debate, and it does nothing to educate anyone. If sharing a messianic vision without explaining it is your goal, then fine. Otherwise, I would want to hear the “how” and the “why”.

I’m not shutting anyone down. But the question is so naive it’s hard to bother penning an answer. The richest and largest economy in the world, home of the global reserve currency, will never default on its debt obligations. If it did, you’d be eating bugs. — Garth

#193 Timing is Everything on 10.08.11 at 12:04 am

Turf my last one…Sorry wrong blog day.

#194 Derek R on 10.08.11 at 12:36 am

#191 Chris on 10.07.11 at 8:51 pm wrote:
I really don’t know why the USA can’t default. I’ve never seen it explained in terms of why either.

It’s basically because the USA hasn’t promised to pay its debts in gold or oil or wheat or steak or donuts or anything else of real value. Instead it has promised to pay its debts in dollars which can be created by the USA at next to no cost and whose value is dependent on what they can be exchanged for at the time the debtors receive them. As long as there is US taxation and fines the dollars will have some value but what it is will be of no concern to the US government. As far as they are concerned, if their debtor has received the number of dollars specified in the bond contract, the debt has been paid.

That is why the US will never default on its debt obligation.

#195 bill on 10.08.11 at 1:32 pm

#56 VancouverBoy

orange you glad you asked…..