The uncrisis

Some days ago I told you why things would work out. On cue, the GreaterFool death squad moved in and sprayed anthrax all over the damn place. Took the babes three shifts to detail my Harley. Plus, we did not appreciate the intestines and limbs they left behind. Doesn’t anyone pick up anymore?

My thesis was that (and I quote myself, which always works out well): “The crisis is over, at least until the next one. Volatility won’t end, but August sure did. So did fears of a US recession, as consumer spending and business investment jump. So did the commodities rout, as demand swells and prices recover. So did war, as operations wind down in both Iraq and Libya. So did the Euro disaster, as bondholders take a haircut and the bailout pot grows.

Meanwhile corporate profits continue to augment, the OWS movement squanders its potential and it dawns on more people that stocks are priced 24% below their ten-year average, based on the money companies are actually making. This is what the VIX is trying to tell us. Also why you can come out of the bathroom now.”

Let’s review what’s happened since.

The nob who runs Greece announced the country would have a vote on the big plan EU leaders came up with to bail the place out. Everyone called him an idiot and two days later he was facing defeat, so he reversed himself. So much for democracy. (What do the Greeks know about that, anyway?) Now the referendum’s off.

Meanwhile the European Central Bank cut interest rates (more surprises) as part of the move to potentially kick Greece out of the union. Cheap money makes people horny to borrow some, so this is seen as a stimulative move. Commodity prices shot up. Stock markets recovered one day and surged the next. The EU was saved for another day and in France  the G20 leaders made nice and deepened international economic ties.

This is all good. Unless you are one of the doomer goons who have, by the way, been consistently and utterly wrong. They said in August the US would default on its debt obligations. They preached the certainty of a double-dip recession. They’ve gone hoarse calling for hyper-inflation and a destruction of the US dollar. Last summer they said European countries would topple like dominoes. They’ve insisted 2008 never ended, and every day since the financial crisis has moved us a step closer to the next one – systemic collapse.

Of course, none of this has happened. Nor will it. The US economy is moribund, but showing signs of recovery (the latest jobs numbers support that, plus a resurgence in GDP). The Yankee dollar is the world’s reserve currency and its warmest bosom during scary days. We remain far closer to deflation than inflation. Europe’s still standing, even with the certainty of a Greek default plus a toxic mess in Italy.

What the fear brigade fails to understand is widespread financial meltdown is impossible so long as the elite fends it off. This is what the G20, the EU, the G8, the IMF, WB, ECB and the FSB (which Marc Carney will probably head by the weekend) are all about. These guys make the rules. They can nationalize banks, bail out countries, force taxes and austerity measures, recapitalize institutions, raise or lower interest rates, expand or contract the money supply, regulate or deregulate and in the course of it all, modify human behaviour. That means they can prevent a run on the banks, influence the bond market or make mortgages irresistibly cheap.

This coordination was taken to a new level following the crisis of 2008-9, and unless we break out in global conflict, it will never be dismantled. Collectively, there is so much power – to create liquidity, to tax, to curb excess, to put out fires – that those who go short on stability and long on disorder will be wiped out.

Of course, this does not mean an end to occasional chaos, market plunges or panic. But you can forget an impoverished US, a Hovered stock market or people buying food with nuggets. Ain’t happening. The worst financial crisis of an entire generation is in the rear view mirror and the very fact it took place is insurance it won’t again.

However, most people are at risk. Their own actions have been so profligate and indulgent they have tough years ahead. Too much debt. Too much house. Too little liquidity. No diversification. These are the Four Dudes of the Apocalypse that pose the real threat. Riding, riding, riding. On to a street like yours.

If you feel like worrying, start there.

Just don’t touch my damn bike.

215 comments ↓

#1 Phil Indablanque on 11.03.11 at 9:46 pm

Let me be the FIRST to say that is a fine looking mug

#2 vyw on 11.03.11 at 9:54 pm

Excellent post Garth.
I would only add that our fed Govt is acting like a currency user and stubbornly enacting austerity when it should be spending into the economy.

We are not Greece or Italy which are users of the euro and have no central bank powers. Here is a good post that describes the problems with austerity and the likelihood of recession in Europe: http://www.creditwritedowns.com/2011/11/how-austerity-in-europe-works.html.

The doomers have been way off with their predictions of money collapse and hyperinflation but they have influenced Govts around the world to enact austerity. We’ll be writing about these mistakes 20-30 years from now.

The next crisis is indeed deflation because even though the ECB can backstop sovereign debt, it is the fiscal stimulus that will save the real economies. And this requires a fiscal union of sorts among the 17 Euro-nations.

#3 Kilt on 11.03.11 at 9:54 pm

A fine looking pair of Mugs.

Kilt.

This is a financial blog. Smarten up. — Garth

#4 TurnerNation on 11.03.11 at 9:57 pm

In the news:

Credit Suisse laying of 1000
AMD (AMD chips) cutting 10% (1400) of workforce.

Companies are tightening up their bottom lines. Great for earnings, bad for the middle classes.

p.s. Bottoms up!

#5 Mister Sanity on 11.03.11 at 10:01 pm

Financial catastrophe may be averted, but that doesn’t mean we’re not going into recession. All is not roses and butterflies yet, and won’t be until the world’s underlying fundamental economy improves. As I’ve said before, this debt business is just the curtain, and behind it lies slowing worldwide growth, and now, recession. Don’t let the 3Q GDP “estimates” lull you into thinking we’ll slow-grow out of this. Bad times are still ahead. Doom & gloom enough?

#6 QuimBoy on 11.03.11 at 10:01 pm

I’ll drink to that… clink!

#7 Smoking Man on 11.03.11 at 10:06 pm

This Darn Pathetic Blog

NICE PIC

Garth you must know some big shooters who lack creativity, cause whenever I come out with something sort of twisted but true, low and behold it’s picked up by main street media a few days later. Your old collages must be totally void of originality, so they come here for inspiration, losers. Bet they all have diplomas hanging on the wall.

I bet even big bad F and Hosni Hapro come here once in a while to take a peak.
Harpo you are so owned, when you put on a hockey sweeter and play Canadian you’re just a pretender. Fat man trying to be big and please your masters……..You’re not big you’re just fat. History will be nasty to you……

When I was pushing, you don’t need school to succeed on here, few days later Amanda Lang introduces a concept of Skillionaires, No school but success.

Been on an anti university rampage lately and so group hits the media saying the same thing. Thieves I say. That my shtick……..

I say yo better ask the Greeks first, and Papi says lets have a referendum, idiot losses his job cause he or his people must read this pathetic blog……….

I predicated OWS on here, the first day of OWS I said it’s starting, look what happened…………….I’m saying now watch Oakland………..

Kids I am tuned in via the subconscious conscious consolidator that’s my name for it. SCC or that little voice in thy head. Disciple it isn’t god, he doers not exist. Merely an old fashion control strategy for the then tax farm slaves.

The second I walk through the door of a Casino, or make a bet on the markets, I dip deep into the SCC I know if I will win or lose right there and then. It’s never wrong, ever…….We all have it, but finding it, and trusting it is a different story.

In my case I cheated, drugs and alcohol helped me go deep, let me trust it, the voice showed me BAT MAN.

Now that I’m trying to make the wife happy, void of mind altering stuff I walk the world blind. Mr. happy works again but hell I can’t see shit. At leased she goes Oh Ah now days, provided the right angle of attack is applied 

To you pricks steeling my stuff on this pathetic blog and pushing it on Main Street Media, accolades are due thieves.

Just had a smoke with my older son talking about wife’s late parents how great they were. Hard ass Scotts I loved them too. (The son that is joining the army, not if I can help it)
And I told him they would be disappointed with the way the other family members turned out. He’s a bit down has not had the financial success of his cousins, he’s an artist but unaware of it yet.
I told him straight up dude the others follow a script written by them from others.
We in this house write our own script. In your life if you have money or no money, you write it and live with it do what you love doing and f-m all.

I have given every one of my kids soul. I’m a proud dad. I did Great Job. He tried what Son number 3 did and it worked he starts tomorrow………………

#8 InvestorsFriend (Shawn Allen) on 11.03.11 at 10:14 pm

IT COSTS A LOT OF MONEY TO BE POOR…

Sadly, poor people pay the highest interest costs (sub-prime mortgage, credit cards) … The rich pay off the credit card each month and use credit cards for free while the poor pay the freight.

The poor pay hefty NSF fees at the bank and to whomever they wrote the bounced cheque and pay monthly bank fees (the rich keep $5k or whatever minimum in the account and pay no monthly fees and have overdraft protection so that NSF never happens).

The poor buy lottery tickets (tax on the desperate).

The poor often smoke and/or over-eat just to gain some comfort.

The poor even get to pay higher tax rates in many cases since a dollar of income may be taxed at 25% but then may cause a 50 cents deduction in some social benefit or other.

The rich pay low rates on capital gains and on dividends.

The rich are in a better posoition to negotiate every purchase.

The poor may have to buy food from the high-priced convenience store,having no car to drive to the distant mega-mart.

It can be a very tough cycle to break.

In short, it really sucks to be poor. Try to avoid it if you can!

#9 Marc L on 11.03.11 at 10:15 pm

NICE pic. I’m getTIng a cold beer ouT of the SS fridge.

#10 smartalox on 11.03.11 at 10:16 pm

I’m not a doomer by any means, but I do sort of worry that the global elites have committed so much to help Greece, that there will be nothing left if another country gets into trouble. How can we be sure this isn’t happening?

#11 Ping Pong on 11.03.11 at 10:18 pm

OK – those calling for recession in the US obviously haven’t been looking at the Q3 earnings numbers!

http://seekingalpha.com/article/299362-what-recession-earnings-season-starts-with-a-bang

This is not the dismal Q3 that everyone was expecting…

#12 Not 1st on 11.03.11 at 10:24 pm

Yup Garth, bet on stability (socialism), just like MF Global did. They are the first of many to come.

The G20, EU, G8, IMF, WB, ECB and FSB can’t do anything but print money and debase currency, spike inflation and diminish purchasing power. Eventually that hits the common man who realizes he can’t keep up and then doesn’t try anymore.

Thats ok, let the powers that be debase all they want. I’ve got real physical inter generational assets that will long survive any storm they can muster.

That little miracle of wealth called the stock market is over. Its not even a roulette wheel or poker table any more, its VLT with programming skewed heavily to the house.

http://www.theglobeandmail.com/globe-investor/investment-ideas/streetwise/canada-most-worried-about-high-frequency-trading/article2224446/

#13 Makaya on 11.03.11 at 10:27 pm

“But you can forget an impoverished US”.
Maybe you have not read the news over the past couple of years, but the US people, at least the middle class, is already impoverished. What’s the unemployment level again? Are people getting back to work over there? How many foreclosures in the last few weeks?

Yes, some people in the US are making like bandits right now, but this is not the case for the majority of people. Get down from your ivory tower…

“people buying food with nuggets”
No, they don’t need to, all they need is food stamps. 46 millions currently and counting.
http://www.dailyjobsupdate.com/wp-content/uploads/Food-Stamps-Monthly.jpg

“The worst financial crisis of an entire generation is in the rear view mirror and the very fact it took place is insurance it won’t again.”

It’s not in the rear view mirror, we’re still in the middle of it. Absolutely nothing has been fixed yet. Where are the tough regulations on the financial? Still waiting… Remember MF Global? That was three days ago… Have the banks in Wall Street and in the city started to deleverage? And by looking at the number of people getting laid off, it seems that there are not doing so well these days…

2008 won’t happen again? Yeah right… Let’s wait for the speculators to go after Italy and Belgium, the next two on the list. These are much bigger cookies to swallow than tiny Greece. And wait for the Chinese house of cards to collapse, and what we’ve seen so far was just a rehearsal.

The only thing that has been done so far is to create more debt to fix a problem of excessive debt. Anybody with half a brain and a bit of granny’s common sense can see how this is all going to end.

For those who have lived in debt and indulgence, badly. For those who have lived within their means, well. — Garth

#14 InvestorsFriend (Shawn Allen) on 11.03.11 at 10:28 pm

THE END IS (NOT ) NIGH

In the 60’s when I was (as Garth puts it) still filling my diapers, pollution was going to Ruin the world (Rachel Carson, Silent Spring). If not pollution than a nuclear attack from the russions, in school we had drills where we hid under desks.

In the 70’s it was still pollution and the hole in the Ozone and acid rain that was going to kill us. Lack of jobs and high inflation to kill savings. Whatever amount one saved was unlikley to buy “a loaf of bread” by the time one retired.

In the 70’s and again in the early 80’s we were going to run of oil and gasoline real soon.

Let’s see 80’s also had the giant stock crash of 1987 and oh yes, in 1979 I believe it was time magazine the trumpeted the “end of equities” stocks had done do bad.

In the 80’s we were sure Japan would take all our jobs and we never even noticed China sneaking up on us.

In the late 80’s Free Trade came in and many were sure that would kill jobs and instead the 90’s were very prosperous.

In the early 80’s it looked like interest rates would stay high forever but instead they begain a drop that may not be over yet, reaching the lowest level in recorded history.

In 1999 we faced Y2K

In 2001 it was 9/11 and for a time we all looked up at every plane with suspicion, not to mention (sorry , but it is true) at every turban.

The entire time, people spoke of how stable the world used to be and said how uncertaint things were in “times like these”.

The entire time the risk-averse hunkered down in GICs while the more enterprising (and successful) people in the population grew their wealth in stocks and business.

Yes, the end of the world has been predicted since the very beginning of recorded history.

It ain’t happened yet, and really what would be the point of trying to prepare fot it?

#15 Herb on 11.03.11 at 10:31 pm

“… the G20, the EU, the G8, the IMF, WB, ECB and the FSB …”

Saved by “the elite”, or “the Masters of Mankind”, as Chomsky might call them. Who would have thought that all those impecunious North American homeowners and revolting Greek tax delinquents would have brought out the big boys to save the world!

Let’s have more jugs and beer! Prosit!

#16 InvestorsFriend (Shawn Allen) on 11.03.11 at 10:32 pm

THE END OF THE WORLD IS (NOT) NIGH…

Oh and remember when SARS was going to kill us all? (neither do I except vaugely, but at the time it was scary), not to mention West Nile virus, and what was that flu last year or the year before… Anthrax…

and on and on and on, always something to panic about…

#17 The Future... on 11.03.11 at 10:34 pm

looks frothy.

#18 jess on 11.03.11 at 10:36 pm

thing in the basement

…start my own corp you mean like an S corporation?

Did you read this ?
June 13, 2010
S Corps as a way to avoid payroll tax–will the Republicans succeed in “saving” the tax evasion technique?
As most know by now, the “extenders” bill, which extends several of the Bush tax breaks for a few more years, will cost money. So it requires revenue raisers.

Two of those revenue raisers are things Congress should have done anyway–taxing “carried interest” for all those managers of partnerships as everybody else’s compensation for services is taxed, and taxing the profits of S corporations (at least the small ones with a few people whose services are the income of the corporation) as the compensation income it is. For carried interest–especially in the case of private equity funds, real estate partnerships and other service partnerships– that means taxing it now at ordinary rates instead of preferential capital gains rates. For S corps, the bill would recognize that distributions are really compensation on which payroll taxes are due for these corporations with 3 or fewer service shareholders….

http://ataxingmatter.blogs.com/tax/s-corporations/
============
Or could one put their licenses / diplomas in a steel box on the side of a building in a more tax friendlier jurisdiction where payment for services would go to that address.
=======

“You know, there’s two schools in economics on this. One is that there are some good taxes and the other is that no taxes are good taxes. I’m in the latter category. I don’t believe that any taxes are good taxes. ”

– Stephen Harper, July 10
http://www.theglobeandmail.com/news/opinions/a-very-scary-pm-i-dont-believe-that-any-taxes-are-good-taxes/article1216778/

#19 Dr. Wayne on 11.03.11 at 10:38 pm

THE PIC … man’s two most favourite pastimes …

#20 For Ping Pong on 11.03.11 at 10:46 pm

“OK – those calling for recession in the US obviously haven’t been looking at the Q3 earnings numbers”

The U.S. GDP data to be released Thursday will nearly certainly lift the voices of those who have been singing that the global economy is chugging along just fine. Expectations are for the third-quarter numbers to be the best so far this year, showing an annualized growth rate of 2 to 2.5 per cent.
That figure, though, requires some explanation.

About half of it probably reflects a rebound in the auto sector, following the Japanese earthquake. It is very likely that this is a non-recurring event.

So there’s your answer Ping Pong…

http://m.theglobeandmail.com/report-on-business/economy/economy-lab/david-rosenberg/how-the-five-stages-of-grief-are-driving-us-gdp/article2213235/?service=mobile

#21 Mister Sanity on 11.03.11 at 10:48 pm

#11 Ping Pong

Don’t let these Q3 GDP numbers fool you – we’ve been here many times before – here’s an article for you titled “Third Quarter GDP is a Head Fake”

http://www.minyanville.com/businessmarkets/articles/gdp-q3-gdp-third-quarter-gdp/10/31/2011/id/37670?page=full

#22 Ronaldo on 11.03.11 at 10:52 pm

#8 InvestorsFriend (Shawn Allen)

That was a very good post. Much of what you said applies to some of those rich people that I know that are poor. Poor as far as money but rich any many other ways. You obviously have a tender spot for those less fortunate.

#23 Peakoilist on 11.03.11 at 10:54 pm

You made me laugh tonight..and this blue is going down mighty fine. (subliminal conditioning..didn’t have any German suds on hand)

#24 City Slicker on 11.03.11 at 10:54 pm

Nothing is been solved since 2008. More ‘kicking the can down the road’.
Watch gold explode to the upside, and I mean violently in the $2000’s. Feel free to slander, I’ll re-post shortly after it happens.

It will be as riveting then, I am sure. — Garth

#25 Foggy on 11.03.11 at 11:00 pm

” Who cares? Greece is a nothing burger…”

– Anonymous quote

#26 martin on 11.03.11 at 11:02 pm

this is the best financial advice i have ever had in my entire life. thank you

There wasn’t any. Oh wait, gosh, was that satire? — Garth

#27 Paul on 11.03.11 at 11:11 pm

http://www.castanet.net/edition/news-story–23-.htm#f162715

#28 Habs76-79 on 11.03.11 at 11:17 pm

( INVESTORS FRIEND SAYS):

IT COSTS A LOT OF MONEY TO BE POOR…

**** No, it costs a lot of money to be stupid/ignorant.

Sadly, poor people pay the highest interest costs (sub-prime mortgage, credit cards) … The rich pay off the credit card each month and use credit cards for free while the poor pay the freight.

**** No, rich, middle poor are and have been guilty of carrying debt including stupid debt. Many people of all incomes do pay off credit cards each month. Being wealthy does not make one immune from being irresponsible with money and credit.

The poor pay hefty NSF fees at the bank and to whomever they wrote the bounced cheque and pay monthly bank fees (the rich keep $5k or whatever minimum in the account and pay no monthly fees and have overdraft protection so that NSF never happens).

**** Not all so called poor write bounced cheques and yes rich people have written bounced cheques too. I am far from being rich, am just a regular guy, I HAVE NEVER BOUNCED ONE CHEQUE IN MY LIFE!

The poor buy lottery tickets (tax on the desperate).

**** Actually it’s not just the poor who play lotteries. All classes are known t do so. Rich though can often be seen blowing wads of cash in Casinos in Vegas, Reno, Atlantic City etc. I buy the occasional lottery ticket. I figure I spend maybe $75-$85 per year on such. I win a few bucks back, but it’s just a small cost for me to day dream the things I’d do and not all just for me but for family and friends as well as some charities I believe in if I were to win it big.

The poor often smoke and/or over-eat just to gain some comfort.

**** WHOA! bad living habits are across all incomes. Many a rich person is known for poor eating too and many like their booze too. As for smoking it may be a stupid comfort that many poor fall into but again all incomes have smokers. I’ve NEVER SMOKED IN MY LIFE and I am again just a reg. Joe.

The poor even get to pay higher tax rates in many cases since a dollar of income may be taxed at 25% but then may cause a 50 cents deduction in some social benefit or other.

****WHAT ARE YOU SAYING?

The rich pay low rates on capital gains and on dividends.

**** But they cry like babies that they pay too much income tax.

The rich are in a better position to negotiate every purchase.

**** NO! Informed, rational buyers are be they rich, middle or poor negotiate better their purchases. Ignorant, irrational buyers often pay more.

The poor may have to buy food from the high-priced convenience store,having no car to drive to the distant mega-mart.

**** WHAT THE ****! The quality of shopper for food is determined based on upbringing and how much effort one puts into shopping for food, not how much money one makes or how far they may have to go to buy food.

It can be a very tough cycle to break.

**** Intelligence and logic goes far to break any cycle. I bet stats will show just as many so called rich go broke per capita as middle and poor classes do. The rich just are often good at suckering and/or kissing up to their well off buddies to help em back up. Ask Donald Trump, Nelson Scalbania, or Peter Pocklington to name three examples.

In short, it really sucks to be poor. Try to avoid it if you can!

**** No, in short it really sucks to be stupid and ignorant in life but more so its worse to go through life as an arrogant a$$hole. Those friends you may have aren’t but only play the role to use ya just like you them. Arrogant a$$holes are really the losers in life, they just can’t see it.

#29 Devil's Advocate on 11.03.11 at 11:25 pm

Garth you keep this up and I’ll have no reason to plague this “pathetic blog” any longer.

#30 Rich Renter on 11.03.11 at 11:27 pm

The greeks will be kicked out of the Eurozone eventually anyway as they are a nation of lazy bastards.

#31 cool on 11.03.11 at 11:32 pm

the pic makes me thirsty..

#32 Ronaldo on 11.03.11 at 11:41 pm

http://www.theprovince.com/news/City+urges+speculators+cool+housing+market+heats+along+Cambie+corridor/5641368/story.html

Speculators buy blocks of houses along Cambie near 41st in Vancouver for 3.4 million each…..

#33 The thing in the basement on 11.03.11 at 11:41 pm

18 Jess – no, sorry, not too worried about what the
republicans do or dont do. I live and have a small
business in Canada. I also have an accountant. No way
for the layman to figure it out though you may get the
general idea – split income for workers, smooth out the
bumps. Have thought about starting second corp, but acct advised against it until we really know how I am going to divest corp assets.

#34 nonplused on 11.03.11 at 11:47 pm

Well that was certainly the real Garth writing tonight. Unmistakable style, and he mentioned his detail crew, which the ghost writer isn’t allowed to do in case he gets any ideas.

Loved the photo. At least the Germans know financial crisis or not there is always time for beer and the lasses.

I beg to differ on your pronunciation of the end of the crisis. It is not over. But you are right, we doomers tend to greatly blow things out of proportion. I think we’ve got years more debt unwinding ahead, but it won’t be so bad as to shut down the economy. The economy will continue and eventually recover, but not because of the folks running the IMF, ECB, Fed, Government, or the banks. It will be in spite of them. They don’t know what they are doing, or we wouldn’t have this mess to start with. They caused it. Remember the Canadian housing bubble? Who caused that? (I’ll give you a hint: It’s primarily 2 individuals who are frequently referred to in these pages.) And who’s still in charge?

That said, the tools that the powers that be will attempt to use, or should I say will eventually learn to use very effectively, will have the effect of solving the debt crisis. But the effects will be very inflationary. Not hyperinflationary, unless they loose control or China drops the money bomb, but very inflationary none the less. A GarthPlan ™ is still the best defence, maybe with a bit higher gold weighting of 10% but buy on dips not advances, because there will be both.

There will be many more MF Globals, at least a few more Greeces, and a bunch of Rhode Islands in there too. The pension contracts the governments at all levels have will need to be heavily reworked. The social contract will change (from pay high taxes, receive services and a safety net to pay even higher taxes and receive either services or a safety net but not both.)

#35 Tom from Mississauga on 11.03.11 at 11:48 pm

Yup, the monetary and political scientists will do everything to keep a coordinated recovery going. The people that know how to play it will do well. The rest will continued to be squeezed. Personally I made more on the market in the last month than I did working. Good thing too. Working for a living is exhausting.

#36 nonplused on 11.03.11 at 11:50 pm

PS I should clarify that I have disagreed with Garth all the way along on taxes, but it’s a fine point. Garth says taxes are going up, whereas I say tax receipts have peeked for the medium term. I agree the government may raise tax rates. Receipts will still decline.

#37 Van guy waiting on 11.03.11 at 11:54 pm

Looks like the party is still rockin in the GTA.

http://www.torontorealestateboard.com/market_news/release_market_updates/news2011/nr_market_watch_1011.htm

#38 Patz on 11.04.11 at 12:10 am

Garth sez:
The worst financial crisis of an entire generation is in the rear view mirror and the very fact it took place is insurance it won’t again.

the logic of that entirely escapes me.
(Cue snarky response.)

#39 Carp on 11.04.11 at 12:17 am

What mugs? I’m just seeing hot babes on that pic!

#40 BC Bring Cash on 11.04.11 at 12:18 am

#12 Not 1st
No kidding! The whole system is rigged. The Mutual Fund Industry, so called democracy,the stock market, bond markets, etc… The fact that high frequency trading exists
is proof that the system is rigged in favour of of the insiders.

#41 neo on 11.04.11 at 12:19 am

“What the fear brigade fails to understand is widespread financial meltdown is impossible so long as the elite fends it off. This is what the G20, the EU, the G8, the IMF, WB, ECB and the FSB (which Marc Carney will probably head by the weekend) are all about. These guys make the rules. They can nationalize banks, bail out countries, force taxes and austerity measures, recapitalize institutions, raise or lower interest rates, expand or contract the money supply, regulate or deregulate and in the course of it all, modify human behaviour. That means they can prevent a run on the banks, influence the bond market or make mortgages irresistibly cheap.”

Oh I fully understand what they are doing and they’ve done this before. I just don’t think it will work because at the end of the day they can make all the rules they want. But they still need the masses to play along and investors need to know what the rules actually are. The awakening of the masses is accelerating to your above quote everyday. I find it interesting that you’re finally conceeding we no longer have a free market thanks to the 0.01% actions you reference above. I guess it comes down to how many of the 99.99% souls get awakened to the fact that everything is rigged and what they choose to do about it. One thing though Garth, these men aren’t infallible. They can screw up and have things spiral out of control when they are trying to juggle a 1000 balls in the air at once. Perhaps you can write that paragraph again in the opening of your next investment book that comes out.

Truest words you’ve ever written here.

#42 The thing in the basement on 11.04.11 at 12:21 am

18 Jess – it goes something like this (cant say my numbers work in this example but that’s what the acct is for)

Your small business makes $120K
You and Mrs. declare incomes of $70K each
Result is $20K loss each year in corp
You live on $100K less app $38k tax and CPP
Creates “shareholders loan” of $40k owed by corp to u.
Repeat for 5 years – corp has $100k in bank
Have big year of $200k (for $300k total)- but carry loss from 5 years Corp only has $100k income.
Take $200k “tax free” for shareholders loan.
Pay $15k corp tax, take $85k divedends
A $300k year for you with maybe $25k in tax.

Something to that effect anyways.

#43 Druid on 11.04.11 at 12:22 am

“The crisis is over, the powers that be have the power to solve it” is an incantation. In other words, magic for those who know. Real magic does not operate through supernatural powers, but by affecting minds, by affecting perception, by affecting behaviour.

The question is, why do those powers that be want to solve the crisis, when it was their own magic that brought the crisis about?

Could it be that they have been playing with forces they do not understand and cannot control? Have they let the daemon (the word means knowledge in ancient Greek) out of the bottle? Or do they have a larger plan, and this is merely a phase?

Is Garth a warlock?

There are incantations to protect you against the spells the powers that be are currently casting on all of the first world through the media. Some of them are:

“I will not trust that someone else will look after me and mine.”

“I will not borrow to excess.”

“I will live within my means.”

“I will live frugally.”

“I will not succumb to buying a Mercedes.”

“I will not buy a McMansion.”

“I do not trust my government.”

“I perceive that every organization, from Green Peace to TEPCO, is looking out for themselves.”

“I will not believe anything I see on TV or anywhere else, unless I can observe it myself through experiment and observation.”

“There is no such thing as magic, only perception. But to influence perception is magic. I must protect my perception or become slave to the magician.”

#44 JRRO on 11.04.11 at 12:26 am

Sorry to hear about your bike, even if people don’t agree they have no right to damage your property.

Now I’m scared. — Garth

#45 LJ on 11.04.11 at 12:30 am

Yes, Garth, Greece is old news. The train has pulled away from that station and it is only looking in the rear view mirror that we can see the mess born there.

Next stop, Italy. Then…..

http://www.theglobeandmail.com/news/world/europe/european-debt-crisis-spreads-to-italy/article2225003/

#46 Nostradamus Le Mad Vlad on 11.04.11 at 12:35 am


The uncrisis is an interesting title, as it shows how this current mess could easily be manipulated by TPTB, along with Israel taking out Iran’s not-so nuke WMD, just as dubya did with Iraq.

It’s all part of the game played by the upper echelons, moving chess pieces across the board and knocking over others, as happened in Libya.

“. . . sprayed anthrax all over the damn place.” — Are you referring to Castle Anthrax?

“Now the referendum’s off. This is all good. However, most people are at risk.” — These would be the greater fools who took out cheapo VRMs (or whatever they’re called).

But who were the ones who urged them on then left them in the lurch when the rates went up? The only reason was they had a vested interest in making higher profits for their companies.

There is no problem with increasing profits, as long as it’s not done with the “couldn’t care less” that most of the bigwigs seem to have. That’s what has people mighty pissed, and they obviously are prepared to fight for their rights.

“. . . and unless we break out in global conflict . . . modify human behaviour.” — That is the one thing no one can do, not Freud, Jung, Dr. Phil or Tweety Pie.

No one can look directly inside another’s head, and say they should do this or that. No one can prevent another from taking their own life — that is their own freedom of choice, and they have to live with the consequences — all they can do is advise them, then let it be.
*
#183 shanks on 11.03.11 at 7:14 pm — Well done! There are several links and video clips around the ‘net showing agent provocateurs are from the FBI, goons hired by big biz etc., quite clearly showing they were the first to break windows, inciting fights and all that.

There’s more to this than meets the eye. Cheers!

“This is a financial blog. Smarten up. — Garth” — Damn pretty too. RE has flown the coop?

#7 Smoking Man — “. . . an anti university rampage lately . . .” — Total student loan debt (US only) is slightly over US$1 trillion.

Ron Paul has said he can cut the same amount immediately, if elected (he swept Iowa, and has won most of the others).

I agree with you. Education will have to take a long, hard look at itself, and see where the new jobs are going to be. Call centres?
*
OWS A different view, but the word ‘marxist’ indicates Soros and Obama are involved; Brit. Taxpayers and UK women bear the brunt; All these supposed ‘leaders’, squirming like maggots as their so-called savior plans end up in the gutter; Pensions and strikes go together like management and unions; Greece Only the Globalists want them in, but globalization doesn’t work. The citizens of Iceland and Ireland know what the results are; Nostradamus, Occupy This! Certainly! Where do I sign up? Exodus On Main Street The EU . . . and so it goes; Pipeline between Russia and North Korea starting in 2013.

Spare Cash, IMF style; BoA employees seem to know there’s something up; Waterloo Nanny State; ECRI Chart; Unemployed for over a year; 58:36 clip Documentary from 1980 shows conditions in a north Chinese factory.
*
2:52 clip starring Conan O’Brien. Proof the m$m is bought, paid-for and controlled; Fukushima and Tokyo Bay Radiation 15x over legal limit; Acute Leukemia rising; 2:58 clip (starts automatically) The Secret Garden . . . under 40 feet of ice; Eminent Domain for the UN, Monsanto, etc.; Asteroid Will it hit the dark side of the moon, or just flatten us, and 2:52 clip Wot if it plops in the ocean? 5:11 clip Occupy Oakland.

#47 bill on 11.04.11 at 12:37 am

laugh now…

#48 BC Bring Cash on 11.04.11 at 12:38 am

Are we doomed to an Elite Feudal Society? I hope not. Perhaps the Internet Society may intervene. Unless the Internet is shut down by the Elites.
http://www.silverbearcafe.com/private/11.11/feudal.html

#49 Leighton Tebay on 11.04.11 at 12:41 am

Isn’t there a position somewhere between pass the ammo because the world is going to fall apart and lets all jump in to equities? Is there like a doomer light position?

Where did I say ‘buy equities’? — Garth

#50 Marnic on 11.04.11 at 12:43 am

No growth. Or any prospect of the amount needed to keep the credit bubble inflated. And the minute that changes (probably through more QE), watch the price of ever scarcer energy supplies go through the roof on the increased demand. Oops, there goes the “recovery.”

Governments can make the rules all they like, but the math will defeat them all in the end.

#51 westopia on 11.04.11 at 1:05 am

Whew! The Greek referendum is off. Crisis averted! Everybody can go back to sleep. No problem with the system here. Pay no attention to the real inflation rate which is closer to 10-12%, yes 10 to 12 check your grocery and gas receipts. If you still don’t beleive that number google Canada’s M3 numbers which were 7 to 9% year over year leading up to 2007 and 12% beyond that. We also can boast a -3.2% of GDP current account, 7.1% unemployment, and a TSX still well below peak 08 levels. – Nope, nothing to see here.

It’s funny Garth how you can correctly disfavor excessive borrowing on a personal level, but on a federal level when it comes to excessive issuing of bonds and T-bills (debt) to the Bank of Canada, you see no problem with it.

Stop exaggerating my position. There are major issues, but no reason to believe they will overwhelm potential solutions. — Garth

#52 Junius on 11.04.11 at 1:11 am

Garth,

I hope you are right but i remain far less sanguine about our prospects than you. I still believe that until the worlds leaders come to terms with the fact that they will have to write down a significant portion of the current debt we will striggle. No collapse but a slow grind.

We need more Iceland and less Ireland. While our current leadership continues to be controlled by the banks it will just be more extend and pretend until reality takes over.

#53 german on 11.04.11 at 1:19 am

I love Munich!

#54 uk lad on 11.04.11 at 1:31 am

With all due respect Garth, this financial crisis is far from over.
Virtually all western governments are saturated in debt, creating more debt will not solve the problem.

If the european banks were forced to mark to market the majority would be insolvent.

The mandate of the ECB is to protect the value of the euro, it is now breaking it’s own rules buy buying up toxic bonds, yet another way of counterfeiting, sorry quantatative easing.
Wealth cannot be created out of thin air, creating money like this is akin to coin clipping in the Roman Empire. Debasement of a country’s currency ALWAYS leads to the demise of that currency and the destuction of peoples savings held in that paper.

I fail to understand why you keep having digs at people who own precious metals, I repeat, it is the best performing asset class of the last 10 years, bar none.

again I ask, prove me wrong? you cannot.

I believe financial advisors like yourself do a great disservice to the general public by portraying precious metal investors as fringe elements or raving loonies, when in actual FACT we have made terrific gains over the years while the majority of the sheeple have been fleeced.

There’s nothing wrong with having a PM component in a balanced portfolio (read my books). Most gold investors, sadly, have no balance or diversification. Big mistake. — Garth

#55 Thetruth on 11.04.11 at 2:52 am

The author of this blog keeps touting equities. Sure, as long as banks, airlines, telecoms, etc etc have their oligopolies.

Bell Canada’s profit is up 41 % this year. Closing in on billion dollar per 90 days club.

Can it keep rising? Sure if these corps keep r***** Canadians. But one day people will say enough is enough!

Whose side are you on Garth?

False. I do no tout equities. Learn to read. — Garth

#56 Tim on 11.04.11 at 3:09 am

“Unless you are one of the doomer goons who have, by the way, been consistently and utterly wrong. ”

Kind of like you have Garth on real estate and interest rates?

No, actually. The RE market is right on schedule. — Garth

#57 Trev16 on 11.04.11 at 3:24 am

“Ain’t happening. The worst financial crisis of an entire generation is in the rear view mirror and the very fact it took place is insurance it won’t again”

Garth,

I love your optimism and I just may have to start drinking the same Kool Aid. As I said before….you can’t solve a debt problem by adding more debt. Also I don’t think our little quadrillion derivative problem has gone away. In addition those little Occupy Wall Street protests are just the beginning……there is a reason why the American government has built FEMA camps.

Cheers,

Trev16

There are no FEMA camps. What an whackjob conspiracy theory. — Garth

#58 Victor on 11.04.11 at 3:58 am

how much can we trust the accounting?

#59 Phil S on 11.04.11 at 4:23 am

Well, liquidity injection seems NOT to have worked anywhere:

America has done zilch, nada, nothing to “fix” the underlying debt problem (which has become a lot worse since the Taxpayer-funded Corporate largesse);

China? Seems the dragon is “having a rest” in terms of commodities utilisation (esp. iron ore and coking coal – sorry Australia, you’re really stuffed!);

Europe? Really lookimg good, especially with today’s news of “dissatisfaction in the Ranks” within Greek military – seems a coup d’etat might be in the offing (and that’s a definite default on ALL the debt!)

And let’s not forget the quietly emergent problems of extensive multidrug resistance in all those little microbes that regard us as “lunch”, you know, the ones with the catchy acronyms XDR-TB, NDM-1 Coliforms, CRKP Klebsiella – all nice, very efficient little killing machines. Comes of having a “Global Village” – everyone in the village catches the same old Cold in the end . . . . . !

As for the US having the advantage of their $ being the World’s Reserve currency – one wonders just how much longer? I gather that China feels that it is time for their currency to have this privilege, especially seeing as they “own” a considerable portion of the US.

Interesting times ahead (and no, I’m NOT a metalhead, nor a particularly doom and gloomer – just working on the principle of being aware of ALL possibilities, not just the “nice outcome for us” set.)

#60 Groovin123 on 11.04.11 at 5:10 am

” We remain far closer to deflation than inflation. ”

Apparently Garth never puts fuel in his car, or eats. Oh wait, those trivial items aren’t part of the CPI. I guess we can always eat I-Pads, they’re getting cheaper.

But yes, buying the market bottom in early October almost felt like stealing. They will always figure things out, usually through monetary policy that I would hardly label as deflationary.

Asset deflation, with price inflation. I have explained this numerous times in the past. — Garth

#61 Aussie Roy on 11.04.11 at 5:58 am

Aussie Update

How’s this for a loss

The legal dispute between a WA couple and their former investment adviser The Investors Club over losses incurred on a Gold Coast investment property has returned to Federal Court of Western Australia court this week as the two parties attempt to seek a mediated solution.

It comes just a week after the couple crystallised their losses on the three-bedroom bushland house they purchased in Highland Park. The property was sold by Matthew Mariconte, principal of Champions Property Sales for $391,000 on October 24.

The property reputedly cost $630,000 when the couple bought it in 2007, but official records show a public sale price of $905,000.

http://www.propertyobserver.com.au/residential/investors-club-legal-mediation-resumes-as-gold-coast-house-sells-at-huge-loss/2011110452215

Oh no a GOLD site

Interestingly seems like the RE supporters are so shaken they have become TROLLS.

http://www.bullionbaron.com/p/australian-property-forum-trollscam.html

The RE market is BOOMING, booming with listings

http://www.macrobusiness.com.au/2011/11/melbourne-housing-supply-goes-ballistic/

UK

Where RE financing goes, so does prices

Despite lending increasing by £1bn in total, the Bank reported 50,967 approvals for house purchase in September, which was down from 52,347 in August. This was higher than the previous six-month average of 31,140

http://www.ftadviser.com/2011/11/02/mortgages/mortgage-data/borrowers-double-whammy-shows-no-sign-of-abating-boe-UaO5fmPk1syZETkxlsV6gL/article.html

It’s a global thing.

#62 Aussie Roy on 11.04.11 at 6:03 am

USA

Several correspondents have just told me that some of Greg Mankiw’s students at Harvard are staging a walkout from his first year class. They’ve written an open letter to Mankiw to explain why:

An Open Letter to Greg Mankiw
http://hpronline.org/campus/an-open-letter-to-greg-mankiw/

I applaud them for this move. Mankiw’s various economics texts are among the most simplistic of the many neoclassical textbooks that parade this flawed paradigm as a flawless jewel of human reasoning. I’m delighted that his students have taken the rebellion against this paradigm to one of its key promulgators.

I did likewise forty years ago–against far less well-known advocates of neoclassicism. At the time, I probably knew as much as these students do today of the enormous literature that establishes how fallacious neoclassical theory is, and which of course neoclassical texts like Mankiw’s completely ignore.

http://www.debtdeflation.com/blogs/2011/11/03/harvard-starts-its-own-paecon-against-mankiw/

#63 Humpty Dumpty on 11.04.11 at 6:06 am

This is what the G20, the EU, the G8, the IMF, WB, ECB and the FSB (which Marc Carney will probably head by the weekend) are all about. These guys make the rules.

Beware of wolves in sheeps clothing.

http://www.goldmoney.com/gold-research-videos.html

#64 David B on 11.04.11 at 7:00 am

It is always different when it is you, of course the world will not end even that Europe part, but unemployment will rise especially for the young. Couched in that word of the day “Austerity” the standard of living will fall for the old and hospital care will slip further south, I attended the funeral of ode friend this past week who was put on hold twice for a serious operation, matters not why now.

Perhaps we should lower interest rates and move ams to 50-60 years better still take as long as you want up to 100 years and build buy and finance and open our doors to the world ….. then just maybe their will more money for health care.

Like it or not y’all will get old and lonely if you live long enough …. and it comes faster than you think.

Eat Drink and be Merry for tomorrow …… Greeks now this as the world is stepping to the plate to help them continue one way or another ….

#65 Benny Hill on 11.04.11 at 7:04 am

HUGE COLLAPSE IN CANADIAN JOBS NUMBERS, LOSING 54K (Analysts expected 15K New Jobs)

there you go,cracks in the foundations….Interest rates are not going anywhwere soon.

#66 bigrider on 11.04.11 at 7:15 am

Wow that beer looks really refreshing.

Gotta go get me some.

#67 Keeping the Faith on 11.04.11 at 7:16 am

Garth,
Great piece and the pic … better.

Serious question,
I’m starting my Christmas shopping list, when will your new book be out?
I have some people in my life that could benefit from the latest rendition of “The World According to Garth”.
Please tell me it’s pre-holiday, don’t want to give Suze Orman as a surrogate.
Thanks

#68 Drake on 11.04.11 at 7:20 am

Economic planning worked so well for the Soviet Union too. The Austrians will win the day.

#69 pbrasseur on 11.04.11 at 7:33 am

What the fear brigade fails to understand is widespread financial meltdown is impossible so long as the elite fends it off. – Garth

Not sure you would have said something like that a few years back, but you are learning, as I am.

Now you’re really on the money!

#70 pbrasseur on 11.04.11 at 7:36 am

@Benny Hill #65

“Interest rates are not going anywhwere soon.”

Wrong if the Canadian economy gets into serious problems Canadian bonds might become cheaper (and interest rates higher)

#71 TurnerNation on 11.04.11 at 7:45 am

Not a surprise – the goal is decimation of middle class. Tell us something we don’t already know.

From Bloomberg:

Canada Jobless Rate Rises as Economy Loses Most Jobs Since 2009
By Andrew Mayeda – Nov 4, 2011 7:32 AM ET

Canada’s economy lost the most jobs since the 2009 recession during October, led by losses in the manufacturing and construction sectors, government figures showed.

Employment fell by 54,000 jobs after an increase of 60,900 jobs in September, Statistics Canada said today in Ottawa. It was the biggest monthly decline since February 2009.

The unemployment rate rose to 7.3 percent from 7.1 percent, which was the lowest since December 2008. Economists surveyed by Bloomberg News had forecast an increase of 15,000 jobs and a 7.1 percent jobless rate in October.

“The headline was bad, and the underlying numbers don’t look great either,” said Rudy Narvas, senior economist at Societe Generale in New York, by phone. “It’s not pretty.”

The world’s 10th-largest economy shrank in the second quarter, two years after its last recession. Finance Minister Jim Flaherty told lawmakers Nov. 1 that the global economic recovery remains fragile and uncertain, and that too many Canadians remain unemployed.

#72 Kevin on 11.04.11 at 8:16 am

@Habs76-79:

“Bad living habits are across all incomes. [Smoking]may be a stupid comfort that many poor fall into but again all incomes have smokers.”

Of course all incomes have smokers. But it’s not evenly distributed. Numerous studies have shown that smoking correlates with both income and education levels. That is, the lower income level you look at, the higher percentage are smokers. It’s not an even spread across all income levels. You can’t say, “30% of people smoke” and assume that 30% of low income people smoke (it’s higher) and 30% of rich people smoke (it’s lower).

And with respect to the taxation issue, Shawn was saying that sometimes, if you really contort your point of view, it could be argued that the marginal tax on an incremental dollar earned by a poor person is higher than that of a rich person, when you factor in the loss of income-tested social benefits. For example, a low income person might be receiving subsidized housing, but if they get a raise at work that increases their income by just $1,000/year, they may no longer qualify for subsidized housing, and now must find their own housing at full market rates, costing them far more than is compensated for by their $1,000 raise. Thus, if you lean far enough to the left, it could be argued that their effective “tax” on that $1,000 is actually more than 100%.

#73 vyw on 11.04.11 at 8:31 am

#57

Debt isn’t the problem. The main problem is economic growth ie. GDP, aggregate demand, jobs.

Debt will continue to increase no matter what. The path forward is to grow the economy.

Unfortunately, we treat our federal finances like our own. But when we’re pro-cyclical – paying down our own debt, cutting back spending, our Govts should be counter-cyclical ie. spending into the economy.

The central bank policies and bank backstops help on the debt issue but it’s the fiscal side that grows the real economy.

#74 Bruce on 11.04.11 at 8:31 am

Hahaha Garth! Thanks, I needed my morning laugh. I think you’re on drugs.

#75 Moneta on 11.04.11 at 8:36 am

http://hpronline.org/campus/an-open-letter-to-greg-mankiw/

Something tells me we are going through a change in paradigm.

In 1998, the Fed panicked because of Long-Term Capital. We were taling about something like 6-8 billion.

Now let’s put some things in perspective… in the crisis, a few trillion were distributed within a few months. How anyone can even think that things will be stable after handing out so much money with so little thought and oversight is beyond my understanding. What I find even more troubling is the level of complacency and how nervous Nellies are being ridiculed.

Up to recently, country defaults were lone occurences where all leaders could sit around the table and pitch in a few bucks to “help” restructure. Today, we are facing a different reality. Nearly all countries are tapped out. And some countries are getting punished more than others for equal profligacies. Because happiness is all relative, humans are very good at sensing injustice. Especially leaders who want money and power.

What is happening today is bound to humiliate a few and when this happens the backstabbing and conniving will take off.

My prediction is that Chavez was ahead of the pack.

#76 Bruce on 11.04.11 at 8:44 am

Carney is now leader of a new “world banking watchdog?”; the “New World Order”. Surprised? Everything is shaping up quite nicely, right Garth? The pictures coming out of Europe show big smiles secretive, smug smiles.. DO NOT trust them! What is there to smile about? This is serious to “the people” but obviously not to them. AND why couldn’t they have done this by phone or internet? Why the big ceremony and all the secrecy? Boy do they love patting themselves on the back while congratulating each other on being Masters of the Universe. The wine of their fornication will become apparent soon enough… Sorry Garth, you can remove your rose coloured glasses because I’m not buying any of it, and as a Christian, I know what this is all leading up to.

‘The wine of their fornication?’ This blog just hit a new religious low. Holy crap. — Garth

#77 Robert Dudek on 11.04.11 at 8:49 am

Garth,

While the doom-saying nutters have been and will be consistently wrong, you have too much faith in the current system. Much too much. Neither their doom and gloom, nor your Panglossian views are likely to come to pass.

Extend and pretend will work for a long time, but the actions this week have given a massive boost to the long-term strength of gold (most especially the Euro rate cut).

Eventually another crisis will emerge worse than we saw in 2008 because nothing has been fixed. It may be in 20 years, but sure as the sun rises it will come.

Disagree. — Garth

#78 T.O. Bubble Boy on 11.04.11 at 8:55 am

hmmm… home prices rising, job numbers falling.

maybe everyone got giant severance packages?

#79 rosie on 11.04.11 at 8:56 am

Beware Greeks bearing democracy!
Beware frauliens baring breasts.

#80 Tony on 11.04.11 at 9:00 am

Nothing has changed the United States still pulls their job numbers out of a hat then revised them downward. Europe may or may not have bought a little more time but the scenario hasn’t changed. The U.S. still lies about everything so nothing they report can ever be taken at face value. Europe is headed into a recession and at some point in time America will finally have to admit their GDP, company profits and job reports are all fictitious when they’re in recession/depression.

You must be a lot of fun to live with. — Garth

#81 tb on 11.04.11 at 9:06 am

#42 The thing in the basement

Your small business makes $120K
You and Mrs. declare incomes of $70K each
Result is $20K loss each year in corp
You live on $100K less app $38k tax and CPP

——-

Since you’ve declared a total of $140K (2x$70K) income, wouldn’t your income tax be much higher than that $38K, which I believe you based on $100K? The fact that you loaned your corp $40K should not deduct that amount from your taxable income.
So when you take that $200K “tax-free” in the end, you have in fact pre-paid all of the income tax on it.

#82 The American on 11.04.11 at 9:07 am

At #57: Trev16, care to tell me where the American Government has built tese elusive FEMA camps? Seriously, where did you read such stupidity? People like you epitomize Americans’ take on Canadians (not that the general take is true). It just goes to show both sides have a lot to learn.

#83 eaglebay - Parksville on 11.04.11 at 9:07 am

#42 The thing in the basement on 11.04.11 at 12:21 am

The money in the “shareholder’s loans” is after tax money. Therefore not tax free.
Some of your other assumptions are also wrong.
Get yourself a “real” business accountant.

#84 Ron on 11.04.11 at 9:08 am

Not sure why people would be surprised that the ECB lowered interest rates. It was well known for almost a month that they are back into recession.

With all the cuts and lay-offs in the EU, where is the spending to come from? Do anyone honestly believe the EU consumer will continue to spend in this environment?

The surprise to me was earlier this year when they jumped the gun and raised interest rates all because Germany started recording some higher inflation numbers.

Just shows how the ECB is concentrated on Germany, all but ignoring the effects of severe austerity measures in other Euro zone countries.

To your point Garth, I really don’t have much faith in these guys. They all look to be very short sited.

#85 Billy in Nobleton on 11.04.11 at 9:15 am

9 Marc L on 11.03.11 at 10:15 pm

Dear Mark L,

Be honest, have you ever had a girl like that?

#86 InvestorsFriend (Shawn Allen) on 11.04.11 at 9:20 am

Habs 76-79 and HOW TO RESPOND TO A POST

Number 28 Habs76-79 responded to my post at 8 and gave a clinic in how to respond intelligently.

1. He (let’s face it we are 90% of us, male here so I will assume he) identified who he was responding to (oops he gave my handle but not the post number but close enough)

2. More importantly he copied in the particular sentences of mine that he took issue with. Then he gave an intelligent rebuttal. Bravo.

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

I spoke of how it costs a lot to be poor. Of course I was generaliszing. What I said applies to the poor on average but not in every case of course.

Our man Habs finished off by saying:

“it really sucks to be stupid and ignorant in life but more so its worse to go through life as an arrogant a$$hole.”

Hmmm “arrogant a$$hole” well, don’t knock it until you’ve tried it! And, it helps to have some reasons to be arrogant. As for stupid, I have no experience with that. As for ignorant, my post at 8 was not ignorant in either sense of the meaning of the word.

#87 Ron on 11.04.11 at 9:30 am

#77 Robert Dudek

Completely agree with you sir.

Kicking the can down the road doesn’t solve the problem, and it can’t be resolved without severe economic consequences.

Much too early to be optimistic (especially with news this morning that Canada’s unemployment rate has risen).

#88 mike on 11.04.11 at 9:31 am

It is quite obvious that you and the rest of the population at large just isnt getting it. Its probably me though because I dont play well with others. Its about debt, lots of debt, debt as far as one can see. It will never be paid back because we cannot come to terms with how much is owed, nor can we fathom turning the clock back to live like our immigrant parents did when they first arrived. This is the ONLY action that will clear the debts and renew our economies. Everybody says Canada is immune to what is happening around the globe. I say thats a load of crap, look at the national debt and then add in all the other personal lines of debt and then try to tell me nothing can go wrong. I will stick with my gold, silver and oil, for now. At least until I see the Govts of the world stop falling on their printing presses to bail them out of their problems. When that happens, we will then take another look at things.

Government debt can be serviced, and need never be repaid. Personal debt always has an end point. Do not confuse the two. — Garth

#89 Junius on 11.04.11 at 9:41 am

#73 vyw,

You said, “Debt will continue to increase no matter what. The path forward is to grow the economy.”

Yes but isn’t the fundamental problem that the debt servicing is hampering all economic growth? We have governments and consumers soaked in record levels of debt. Meanwhile we have an economy that requires consumer spending to grow.

How do you grow the economy while servicing so much debt? That is the dilemma and the reason that Canada’s economy is no longer growing and probably part of the reason our jobless rate has spiked up.

#90 Junius on 11.04.11 at 9:47 am

#75 Moneta,

Completely agree with this post. I believe we are going through a major shift as well.

If you have the time a very good book on this point is “Capitalism 4.0” by Anatole Kalestsky (editor-at-large of The Times of London). He does a great job of putting these changes in historical context.

#91 Beach Girl on 11.04.11 at 9:48 am

Regarding Occupiers

Unfortunately, it is the way of the world.

No one listens to young people as they are young, broke and stupid. We were all there.

More unfortunate are old, broke, stupid people. People care for them even less.

Money is power, if you have none, your done.

#92 disciple on 11.04.11 at 9:55 am

I take this today’s entry to be one part satire, one part cryptic logic, and of course, many parts humour. Don’t focus only on the G’s words at face value, but also consider the intent. Which can be summarized as follows: AWAKEN!

This blog, to me, is like that favourite stop and shop with the neon sign still glowing “Open” while all others have closed for the night.

Which is why we are drawn to it. Like the sight of a Fiat I saw this morning crushed like a little bug by a turning double-semi construction behemoth. I hope the poor soul got out alive. Speaking of alive… unless you are truly awake you might as well be one of the Walking Dead (great series btw).

For this reason, I pick some of the most perceived nutbar topics to help you to wake up. These subjects are touchstone, they make the magic happen, that glorious moment when you realize you have been deceived your whole life: vaccines, dinosaurs, electricity, energy crisis, religious history, DNA, central banking, expanding Earth, mind kinetics, 007 Macrobes, Face on Mars, etc… geez, what haven’t I covered? I’m taking requests… just when you thought that some topics were sacred holy cows never to be questioned, along comes disciple to shatter your world into tiny little itty bitty pieces, from which you must start anew. For many of you, it’s too daunting a task to start all over again, your seat of disillusionment is too comfortable, and you resort to ridiculing me. No problem, your loss.

Like realizing that house prices DO NOT ALWAYS GO UP. The scale of that illusion alone is staggering.

I think we all get a kick out of Garth poking the “fear brigade” every time the world does not come to an end. But I would say that the world has ended and been born again many times. You know, does a circle have no sides or an infinite number of them? Depends on your choice of perspective, as with many things, there is no exclusive definition. And yet a circle exists, doesn’t it?

#93 Sky on 11.04.11 at 9:55 am

A team of orangutans pounding out random digits could’ve done a better job managing the global financial system than the much vaunted elite.

So are the elite stupid? Far from it.They’re criminal. But that’s neither here nor there. Things are going according to script.

All eyes on tiny, inconsequential Greece. Ignore Japan’s MUCH larger debt. And while we’re at it, let’s all pretend that utterly impoverished and starving China rises from the communist ashes in a scant few decades and emerges as one of the world’s powerhouses. And China accomplishes this with the renminbi worth about 15 cents to the dollar. They had a really GOOD team of monkeys playing with the Chinese money numbers.

Everyone on board with the program so far? Good.

We have a juxtaposition of crisis/uncrisis. Uncrisis pertains to govts and the elite’s financial system. Govts may fall but they’ll be replaced. So- in one putrid form or another- govts will survive.

You won’t be able to shake off the international financial system either. Sorry, but the parasites aren’t just skin deep anymore. They’ve penetrated the dermis and are merrily multiplying in your bloodstream now.

I’m afraid it’s crisis mode for the peons, though. Debt or no debt, jobs will be scarce. A deadly combination of globalist trade policies and technocracy ENSURED this outcome. So even if you’re doing fine personally, you can look forward to watching your friends and family sink into the mire. Especially the student debt encumbered youth.

Austerity measures won’t be popular in struggling Greece. Remember what Celente says: ‘ Those who lose everything and have nothing left to lose- lose it !’

Greek riots are just tip of the iceberg. Frau Merkel can barely hang onto her own govt. Wait until the Germans scream ” Genug! ” ( enough). That’s when all hell will break loose. And right about then is when the Homeland- or its puppet – pulls another rabbit out of its hat and attacks Iran.

Buy oil.

#94 Marc L on 11.04.11 at 10:04 am

#85 Billy in Nobleton on 11.04.11 at 9:15 am

9 Marc L on 11.03.11 at 10:15 pm

Dear Mark L,

Be honest, have you ever had a girl like that?

___________

I am married to a better girl than that.

How’s your mom doing?

#95 Realitybytes on 11.04.11 at 10:06 am

Those girls don’t look old enough to drink.
And that’s a more depressing thought than all the doomers put together

Just sayin… I feel old.

#96 Fat Charlie on 11.04.11 at 10:07 am

I am starting to wonder if the paranoid are simply screwed and looking the blame the “system” and the “new world order” for some self gratification.

My kid does that when he’s caught with his hand in the cookie jar. It’s sort of cute then, sort of embarrassing when you are still blaming others for your failures at the age of majority and beyond.

The fact at a CEO makes 5 mill has no correlation to the fact people over borrowed to buy depreciating assets.

#97 Beach Girl on 11.04.11 at 10:09 am

When I was young, I went on protests for Kamchatka, or whatever the hell that was. I think nuclear missiles over Canada. It was just a big party, and I was ultra hot. Me and my girlfriends just looking for boys.

Then we went on walk-a-thons, don’t know why, or what cause. Don’t recall anyone getting money from me, had no sponsors, didn’t look for any. Again, another party. Just fun. Way before Terry Fox. At least that meant something.

But, I do recall that some hippie RETARD had a MESSAGE and cared. There was a spokesman. An actual assessment of what they were trying to accomplish.

Bypassed me at the time. Most of this crap, just dies down and goes away.

These people are pathetic.

#98 refinow on 11.04.11 at 10:14 am

Rode to work this am…. Great moring for a ride…

But how does one repair this ever widening black hole of debt? Once again they (all the countries) spend money they dont have.

Spend our grandchildrens money (who are not even born yet)…

The irony of Canada, is that a housing meltdown is actually a means to fix the problem….

This is why things in the US are starting to improve… They have had their bad douse of housing correction medicine, and now with prices more in line, people are taking on financial obligations that are more realistic.

The first time home buyers in the US who waited, or were lucky enough to be of such an age that only now they are in a position to buy now have been financially rewarded with realistic mortgage payments on realistic house values….

There in itself lies the solution….. The problem is we all know its going to hurt like hell, many will have to be sacrificed on the way down….

This is kind of like having to go to the dentist for a root canal… You can keep postponing the appointment, but your tooth keeps hurting… You know it will hurt when you go…. But you also know it will feel better when it is all done….

I will just keep waiting on the sidelines, and continue to watch the scrificial lambs enter the housing markets of today….

Back on my bike>>>

#99 disciple on 11.04.11 at 10:19 am

Without Steve Jobs (February 24, 1955 – October 5, 2011) we would have:
No iProducts
No over expensive laptops

Without Dennis Ritchie (September 9, 1941 – October 12, 2011) we would have:
No Windows
No Unix
No C
No Programs
A large setback in computing
No Generic-text Languages.
We would all read in Binary…

I guess it’s who you know. Or how much white monoatomic gold dust you ingest… How good your mind control kung fu is. Not how much you contribute to your fellow man…

I once asked a class of IT hipsters at university how physically and logically, a computer language interfaces with the binary code of a silicon switch… I got blank stares, followed by ums and ahs, and finally… no good workable explanation. I guess none of them bothered to study the mind of Dennis Ritchie…

#100 MoneyMyHoney on 11.04.11 at 10:23 am

The worst financial crisis of an entire generation is in the rear view mirror…- Garth
You can say that after 2013, may be. Right now, it is thick financial fog, poor visibility, can’t see beyond 24 hours. The so called fog lights aka economist doesn’t know which way to shine.

Pull your head out. Visibility will improve. — Garth

#101 The thing in the basement on 11.04.11 at 10:34 am

81 tb – the tax is paid on the $140k total (along with CPP)

http://www.walterharder.ca/MarginalTaxRateCalculator.asp

As you enter the higher marginal rates somewhere after $70, I usually contribute the excess to RRSP.

83 Eaglebay – correct – you will notice the quotations around “tax-free”.

The effect was described to me as “pre-paying tax at a lower rate”. I dont know how well it works with the numbers I’ve used, if at all. Every year, when I think I understand it better, my acct pulls out something else
that seems to work to my advantage. Feel free to point out wrong assumptions.

#102 Dave from Calgary on 11.04.11 at 10:41 am

Garth,

All this talk about volatility – vxx has been a great play – up almost a 100% since August and peaked at about 150% not too long ago. Paid for my yearly rent in about 2 days. Also, you said shorts will get killed – you talk about technicals from time to time. How about what the candlesticks have been saying lately: a near perfect abandoned baby Thurs, Fri, Monday, and now today if we get a large red candle we’ll complete a falling 3 methods pattern indicating bearish continuation – all this under the 200 day MA – look at the 50 week moving average and what happens when it rolls over – it’s about to. I’d be erring on the side of bearish….

#103 Steven Rowlandson on 11.04.11 at 10:42 am

When government fails to show a profit and pay down debt all kinds of bad things can happen. It is not real austerity that should offend people but prolifigacy and fake austerity that should have people roasting the bankers, politicians and special interest groups over a slow fire. Deficits and borrowing are not fiscal accidents, they are deliberate policy to financially and morally undermine society for the benefit of the powers that be.

Governments do not run profits. That is called over-taxation. Not something I want my leaders to engage in, even if you do. Deficits are run for the benefit of citizens who wish to enjoy more services than they want to pay for. Try thinking this stuff through. It will be less embarrassing. — Garth

#104 Cristian on 11.04.11 at 10:54 am

Garth sez (again):
“The crisis is over, at least until the next one. Volatility won’t end, but August sure did. So did fears of a US recession, as consumer spending and business investment jump. So did the commodities rout, as demand swells and prices recover. So did war, as operations wind down in both Iraq and Libya. So did the Euro disaster, as bondholders take a haircut and the bailout pot grows.
Meanwhile corporate profits continue to augment.”

Reality sez:
“U.S. stocks fell in morning trading on Friday after two days of steep gains as richer nations appeared to back away from a European Union plan to broaden funding for a euro zone bailout fund.
A mixed report on the U.S. labor market was expected to keep trading volatile going into the weekend.
German Chancellor Angela Merkel said hardly any countries in the Group of 20 industrialized nations are willing to participate in the euro zone bailout fund, throwing cold water over plans to stabilize Europe’s sovereign debt crisis.”
http://news.yahoo.com/greek-face-vote-ecb-rate-cut-boost-shares-022314484.html

“The Canadian economy unexpectedly shed 54,000 jobs last month, the most since 2009, a sign faltering business and consumer confidence is slowing the pace of hiring.”
http://www.theglobeandmail.com/report-on-business/economy/jobs/canada-sees-biggest-monthly-job-loss-since-2009/article2225234

Corporate profits continue to augment, eh, Garth?
And the bailout pot grows?…
You should try to come to our planet once in a while…

You should stop obsessing about one day’s news. — Garth

#105 Marc L on 11.04.11 at 10:59 am

Hey Billy from Nobleton

Don’t forget to pick up some crusty bread at the Italian Bakery at the Nobleton Plaza on your way to mommy’s for lunch. She’d like that…

MarC L

#106 eaglebay - Parksville on 11.04.11 at 11:00 am

#94 Marc L on 11.04.11 at 10:04 am

Love is blind.

#107 MoneyMyHoney on 11.04.11 at 11:02 am

In the past you have said rates are going to go up. Nothing happened. If it is going to go anywhere it is definitely not up.
There are lots of variables that come into play. We can only pray and hope for the best not the beast. But when the beast come out to play be prepared to be the prey.

#108 Marc L on 11.04.11 at 11:02 am

#99 disciple on 11.04.11 at 10:19 am

Without Steve Jobs (February 24, 1955 – October 5, 2011) we would have:
No iProducts
No over expensive laptops

Without Dennis Ritchie (September 9, 1941 – October 12, 2011) we would have:
No Windows
No Unix
No C
No Programs
A large setback in computing
No Generic-text Languages.
We would all read in Binary…

I guess it’s who you know. Or how much white monoatomic gold dust you ingest… How good your mind control kung fu is. Not how much you contribute to your fellow man…

I once asked a class of IT hipsters at university how physically and logically, a computer language interfaces with the binary code of a silicon switch… I got blank stares, followed by ums and ahs, and finally… no good workable explanation. I guess none of them bothered to study the mind of Dennis Ritchie…

_______

Although without him, we would have teens and young adults who could carry a conversation and look you in the eye when they ask for something. They may even say please and thank you. Like – you know.

iphone and ipod = isociety, igranite, iSSappliances, imortgages, iMcMansion and iLoveCheapLoans

#109 Pr on 11.04.11 at 11:03 am

Iceland was one of the hardest hit nations in the immediate aftermath of the September 2008 economic meltdown. Asked by their own government to pay Britain and Holland for bailing out their Icesave-exposed banks, the people overwhelmingly said “NO.”
The actions of the Icelandic people present an example for the rest of the world. Just say no!

Iceland has one-third the population of Mississauga. Nobody cares. Get over it. — Garth

#110 Van guy waiting on 11.04.11 at 11:03 am

Anyone know what the scoop is on the lot on 1100 block of w Georgia st in Van? That’s the land that was suppose to be the Ritz Carlton. There’s a big hole there since the 2008.

Could this be the same problem we could see for the Cambie corridor?

#111 Marc L on 11.04.11 at 11:12 am

#106 eaglebay – Parksville on 11.04.11 at 11:00 am

#94 Marc L on 11.04.11 at 10:04 am

Love is blind.

———–

Lovin’ every minute of it…

#112 Johhny on 11.04.11 at 11:19 am

Good timing again Garth. You are a fab contrarian indicator.

#113 Lowbase on 11.04.11 at 11:21 am

Garth,

On another doomer note, I wonder what you think of the concept of “Generational Dynamics”. I find it a new and fascinating way to study history.

However, predicting the future is another story. But the author of this website sure does make an interesting case that we are soon to experience a worse recession than we’ve experienced so far, based on generational attitudes from the past and into the future.

What do you think, Garth?

http://www.generationaldynamics.com

#114 Kilby on 11.04.11 at 11:25 am

#97 Beach Girl
Amchitka, I still have a banner………….

#115 Alex G. on 11.04.11 at 11:26 am

“What the fear brigade fails to understand is widespread financial meltdown is impossible so long as the elite fends it off. This is what the G20, the EU, the G8, the IMF, WB, ECB and the FSB (which Marc Carney will probably head by the weekend) are all about. These guys make the rules. They can nationalize banks, bail out countries, force taxes and austerity measures, recapitalize institutions, raise or lower interest rates, expand or contract the money supply, regulate or deregulate and in the course of it all, modify human behaviour. That means they can prevent a run on the banks, influence the bond market or make mortgages irresistibly cheap.”

Garth, so your entire argument is that given that the “elites control the world” they won’t let it falter and therefore it’s all behind us. Yes, the IMF, ECB, BIS & Co manipulate nations through rapacious loans and so forth. Yes, if they felt like it, they could make the world a better place, through the enactment of measures that would actually enable countries to pay back their debts. However, their grip is slowly slipping. They can enforce all the austerity they want, people will only take it to a point, and in many countries around the globe, that point was 2 years ago. It is when they loose control, that things can get ugly very quickly. Yes, OWS is slightly unorganized and poses no real threat to the U.S. government, yet, but people are protesting and WILL protest more and more all over the world. Do you suggest that the solution is totalitarian government by “forced austerity measures” if there are people in the streets throwing rocks, bottles, and everything else they can (bullets perhaps) at the cops and military? That’s civil war not the solution to our problems. I’m not suggesting this will happen tomorrow nor that it will necessarily degenerate to that point at all, but there’s only SO much people are willing to put up with. The elites have to at least consider the stance of the masses or they will loose their footing all together.

You’ve been preaching (and rightfully so) that the housing bubble in Canada is growing and will collapse for years now. If a couple of years into your attempts to “warn” people, some would call you a loon because it “hasn’t happened yet” what would you say? Same here, the doomer’s scenario hasn’t happened yet, but just because it hasn’t happen doesn’t guarantee that it will NEVER happen. The system is still kicking the can down the road for now. But remember this, you can only kick the can down the road so many times, until you eventually reach the edge of the cliff; at that point, the only way to go is down!

These things are still avoidable, alas, as you said, the elites are obsessed with the perception of power that they currently possess and believe that they can do pretty much anything. And it is true, up until you’ve backed everyone into a corner, then, watch out because the backlash won’t be pretty.

With all these demonstrations, someone, somewhere is bound to do something incredibly stupid and all it takes is a death (or X deaths) to get people from more-or-less peaceful protestors to a repeat of the 1992 L.A. riots (http://www.youtube.com/watch?v=1bEG2AMaM7w), only this time, it could be nation-wide or even continent-wide. I really hope it won’t come to it, I’ve just learned to expect the unexpected from humans, both good and bad.

#116 disciple on 11.04.11 at 11:29 am

There’s a sink hole at Steeles and Bayview the size of a trailer… they say it will take a week to fill and fix. Bandaids, man, bandaids. The earth is expanding…

#117 Long Gold on 11.04.11 at 11:29 am

“UNCRISIS”- but last few weeks Garth said that gold is NO safe haven in a “CRISIS” -so was it/is it, a crisis or not?

fact is the crisis has been going on for a long time, if you would just look at a long term chart of the US dollar vs gold. The clown show out of europe is just part of the ongoing crisis….the undeniable obliteration of paper currencies. Only sheeple dont see this massive ongoing transfer of wealth as an uncrisis.

#118 arctodus on 11.04.11 at 11:31 am

Lets see how well the “elites” do sitting on top of their pyramid as the terminal decline phase of the world’s liquid petroleum picks up speed.

Maybe they should review what happened to the Mayan elite as they entered “corn energy” decline…or maybe the Roman experience as they entered “wheat energy” decline…..or perhaps the Anasazi experience as they entered “pine nut energy” decline….or….or…..

Oh yeah..right….modern elite are so much more powerful…so much smarter and more astute……

Monkeys chittering on a pyramid….they will scatter and dissappear like so much flotsam as the hammerstones of energy decline pound on.

#119 The thing in the basement on 11.04.11 at 11:34 am

109 Pr – I understand the foreign deposits and loans at
the Icelandic banks were multiples larger than the
Icelandic GDP. Dont know where else those conditions
might apply.

#120 Canuck Abroad on 11.04.11 at 11:35 am

It’s a bit rich to mock and ridicule the doomers because a crisis has not materialised in a couple of months, no? After all, you Garth have been predicting a real estate correction for, what, three years now? Four? And it is just getting going now.

These things take much longer to happen than anyone imagines, particularly since every central bank world wide will fight this. Of course the US won’t “default” on its debt. It doesn’t need to – it can print. So by devaluing the dollar slowly they can do a soft default as well as create inflation, which they will do because deflation is the thing central bankers fear most of all.

I think you should maybe reserve your doomer ridicule for a few years at least. Then, if the EFSF has worked and everything is calm in Europe, and the US is finally creating jobs and interest rates are rising again, then you can dismiss the doomers as idiots. It is still far too early to do that.

Anyone going long on chaos, loses. — Garth

#121 Not 1st on 11.04.11 at 11:36 am

If government debt never has to be repaid, then why is the IMF lurking around the bowels of europe trying to lock countries into long term bail out loans? Greece should just default, and run the drachma off the printing press like there is no tomorrow.

Fact is government debt is sovereign debt and its owed to people who are stupid enough to buy govt bonds with a 1 or 2 percent yield, but its still owed to someone and must be repaid just like your mortgage.

#122 Trev16 on 11.04.11 at 11:36 am

There are no FEMA camps. What an whackjob conspiracy theory. — Garth

Garth,

You should know by now that I only deal in facts. FEMA camps are very real as they were included in the HR-645 bill which passed a number of years ago in the states.

Jesse Ventura did a show on it last year which exposed the camps….but unfortunately it only aired once. The reason for only airing once is because Homeland Security phoned Warner Brothers and told them to never air that episode again…..but I guess you would say that I am crazy and censorship doesn’t exist in our media. You can still watch it on the internet and here is the link:

http://www.youtube.com/watch?v=3Qx20LA4PM0

By the way Jesse Ventura is having a press conference today which should be very interesting as his lawsuit against the TSA got thrown out of Federal Court yesterday.

Cheers,

Trev16

Now I need a shower. — Garth

#123 Tony on 11.04.11 at 11:39 am

#116 Long Gold on 11.04.11 at 11:29 am

As the crises in Europe continues and gets worst the U.S. dollar should rise in value and gold and silver should both fall.

#124 jess on 11.04.11 at 11:41 am

savings an loan crisis and how it relates to banking chapter review ….what lessons did they learn?

The S&L Industry, 1980-1982

S&Ls were losing money because of upwardly spiraling interest rates and asset/liability mismatch.(competition for deposits) bad real estate /oil leases accounting control fraud etc

http://www.fdic.gov/bank/historical/history/167_188.pdf

page 8 -9 -kicking the can

regulatory change affecting net worth was the liberalization of the accounting rules for supervisory goodwill. July 1982, changed existing 10 year amortization restriction on goodwill, thereby allowing S&Ls to use the general GAAP standard of no more than 40 years”in effect at the time. This change was intended to encourage healthy S&Ls to take over insolvent institutions, whose liabilities far exceeded the market value of their assets, without the FSLIC’s having to compensate the acquirer for the entire negative net worth of the insolvent institution.20 Not surprisingly, between June 1982 and December 1983 goodwill rose from a total of $7.9 billion to $22 billion, the latter amount representing 67 percent of total RAP capital. The FHLBB also actively encouraged use of this accounting treatment as a low-cost method of resolving troubled institutions. Unfortunately, like other Bank Board policies that resulted in the overstatement of capital, the liberal treatment of supervisory goodwill restricted the FHLBB’s ability to crack down on thinly capitalized or insolvent institutions, because enforcement actions were based on regulatory and not tangible capital.21page 8/22

19 Supervisory goodwill was created when a healthy S&L acquired an insolvent one, with or without financial assistance from the FSLIC. It is known as “supervisory” goodwill because the FHLBB allowed it to be included as an asset for capital purposes. For a more in-depth discussion of goodwill accounting, see National Commission, Origins and Causes of the S&L Debacle, 38–39, and Lowy, High Rollers, 38–41.
20 An example of a typical transaction will help to explain the relevance of this change. The assets and liabilities of the thrift would be “marked-to-market,” and since interest rates were very high, this usually resulted in the mortgage assets of the
thrift being valued at a discount. For example, a $100,000 loan paying 8 percent might have been marked down to $80,000 so that it was paying a market rate. However, the liabilities of the institution were generally valued at near book, so a
$100,000 deposit was still worth $100,000. Even if the acquirer paid nothing for the thrift, the acquirer was taking on an assetworth $80,000 and a liability of $100,000, a $20,000 shortfall. This would be recorded as an asset called goodwill with
a value of $20,000. One should note that the borrower would still have a $100,000 loan outstanding and would be expected to pay back the entire loan balance. The $20,000 would be booked as an off-balance-sheet item called a “discount.” The accounting profession considered the goodwill and the discount two independent entries. After the merger, the goodwill would be amortized as an expense over a set period. The discount would be “accreted”
to income over the life of the loan, usually around 10 years. Under RAP accounting, before June 1982, goodwill was amortized over the same 10-year period. Afterward, the accounting picture changed dramatically. Under GAAP, the goodwill
could be amortized over as many as 40 years. The expenses for the amortization of goodwill would be much lower than the income from the accretion of the discount for many years. This “allowed thrift institutions to literally ‘manufacture’ earnings
and capital by acquiring other thrift institutions” (Office of Thrift Supervision Director Timothy Ryan, testifying before the U.S. House Committee on Banking, Finance and Urban Affairs, Subcommittee on General Oversight and
Investigations, Capital Requirements for Thrifts As They Apply to Supervisory Goodwill: Hearing, 102d Cong., 1st sess., 1991, 31).

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

21 Recognizing that the use of supervisory goodwill had contributed to the magnitude of the thrift crisis, Congress legislated a five-year phaseout of goodwill that had been created on or before April 12, 1989. This change, and tighter capital requirements
for thrifts, rapidly forced a number of S&Ls into insolvency or near-insolvency. Many of these institutions sued the federal government, and on July 1, 1996, the Supreme Court ruled in favor of three of them in United States v. Winstar

http://www.law.cornell.edu/supct/html/95-865.ZO.html24 Public Law 97-320, § 202(d).

#125 Long Gold on 11.04.11 at 11:44 am

the doomer goons who have, by the way, been consistently and utterly wrong. They said in August the US would default on its debt obligations.
–PAYING DEBT WITH PRINTED MONEY IS DEFAULT–

They preached the certainty of a double-dip recession. –US GROWTH IS BELOW THE INFLATION RATE, THEY NEVER GOT OUT OF RECESSION–

They’ve gone hoarse calling for hyper-inflation and a destruction of the US dollar.
–IT DOESNT HAPPEN OVERNIGHT, US DOLLAR HAS LOST 99% OF ITS VALUE AGAINST GOLD SINCE INCEPTION, 100% WILL COME, GIVE IT TIME.–

Last summer they said European countries would topple like dominoes.
–WE ARE RIGHT, EUROPE IS TOPPLING AS WE SPEAK ….OR DO YOU CONSIDER THIS SLOW MOTION CRASH AS “GOOD TIMES?”–

They’ve insisted 2008 never ended, and every day since the financial crisis has moved us a step closer to the next one – systemic collapse.
–THE OTC DERIVATIVE NIGHTMARE HAS ONLY GOTTEN BIGGER AND NOT IN ANY WAY BEEN RESOLVED, COLLAPSE IS CERTAIN AND THEN A RESET.–

–GREEN SHOOTS, QE,ETC…. THOSE ARE THE FAILURES, COMPLETELY AND UTTERLY WRONG, DOOMERS WIN AGAIN–

Doomers never win. Even when they yell. — Garth

#126 disciple on 11.04.11 at 11:45 am

#91 Beach Girl…”More unfortunate are old, broke, stupid people. People care for them even less.
Money is power, if you have none, your done.”
————————————-
Don’t you share the same roof as your tenants? No one else to share those free turkey dinners with? Sorry, that was a cheap shot but I’m just trying to see how your shoes fit…

#127 Jimbo on 11.04.11 at 11:45 am

Each month the US Govt borrows an additional $650 in the name of each living American. But don’t worry about them right Garth…they know what they’re doing…

#128 Peakoilist on 11.04.11 at 11:49 am

Asset deflation, with price inflation. I have explained this numerous times in the past. — Garth

even though I don’t often agree with your predictions, Garth, I have to admit that that you’ve remained pretty consistent. Been a loyal follower for a Looong time now.

#129 mousey on 11.04.11 at 11:53 am

The Irony: first year Harvard students write open letter to economics prof and walkout to protest bias is class. Prof was too focussed on Adam Smith and did not provide a balanced introduction to other schools of economic theory. Additionally, the walk out was to protest the corporatization of higher education (I particularly liked this phrase) and the failure to address the economic injustice as underscored by the Occupy protests. What is the tuition at Harvard these days? Who paid it and where did it come from. The rich eating their own?

#130 Van guy waiting on 11.04.11 at 11:56 am

Sales for Oct/11 were 2,317 – the 2nd lowest for Oct in 10 years. Benchmark prices have continued to fall since June/11 peak – including in high-end West Side and West Vancouver SFH’s:

Benchmark SFH price declines:

Greater Vancouver Overall: -1.34% MoM, -2% since June/11 peak

Burnaby: -5.5% MoM, -3.34% since peak

Coquitlam: -2.2% MoM

North Van: -2.3% MoM

Port Moody: -6.5% MoM

Van West: -1.1% MoM, -3% since peak

West Van: -1.3% MoM, -5.5% since peak

However: Van East +2.2% MoM

Slow death as predicted by Garth.

#131 Peakoilist on 11.04.11 at 11:56 am

#91 Beach Girl
it’s different this time..o crap, where have I heard that before…..
anyway, this is history in the making..way different than that time you were a protester, looking for boys..
the world is running out of gas..that’s why its different this time.. it will still take time, just like the RE is taking a really long time to unwind. If Canada’s RE market had collapsed like the US’, then there’d be a lot more folks out there right now across our land.

#132 Long Gold on 11.04.11 at 11:57 am

What the fear brigade fails to understand is widespread financial meltdown is impossible so long as the elite fends it off. – Garth

What you fail to understand is that there are no accidents at the elite level, the crisis you see now is preplanned, the coming meltdown has been meticulously planned for some time now, the elite will be laughing when they watch their masterpiece unfold…they dont fear the impotent masses.

This is delusional. I give up. — Garth

#133 Billy in Nobleton on 11.04.11 at 11:58 am

#105 Marc L on 11.04.11 at 10:59 am

Dear Marek L,

I’m always there, ask around if dare.

#134 Long Gold on 11.04.11 at 12:03 pm

Iceland has one-third the population of Mississauga. Nobody cares. Get over it. — Garth

Icelanders look like those beer babes at the top of this post. Have you seen the rabble in Mississagua!?
Iceland is worth a hundred GTA’s

#135 VICTORIA TEA PARTY on 11.04.11 at 12:19 pm

#114 Alex G.

Yep. I agree. You gotta watch those elites.

They do have percuniary interests, in the stock and bond markets. They also have various avoidance issues, such as wishing to stay out of the boiling stew pots of the ravenous, starving OWS street hoards the world over who’ve nothing left to lose.

If the elites are so grandiously capable of keeping this ragged-assed system afloat, then how did it become raggedy- assed in the first place?

And what about the glorious past and its stories of fallen empires and wars to end all wars, everyone of which was “organized” by the elites of their day, to prevent “bad things from happening.”

After this goof-ball conflab in Cannes who, for the umpteenth time, can trust ANYONE in charge? If, by some miracle, things “work out OK”, then it would be thanks more to unintended consequences, than good planning amongst our betters.

Meanwhile, the jobless, raging rabble gather tonight in downtown Greece to await the fate of their accident-prone prime minister and his socialist government.

The IMF says no more loot for the Greeks until they decide upon their continued EU membership.

Something’s gonna blow at some point. It’s in the air.

It’s increasingly clear, yet again dammit, those who should know what they’re doing, clearly don’t.

And that’s a BAD thing. That, after all, is what upcoming Remembrance Day is all about.

Right?

#136 Long Gold on 11.04.11 at 12:28 pm

This is delusional. I give up. — Garth

-false flag attacks are delusional?
-deception by humans is delusional?
-elites playing power games for fun and profit is delusional?

yeah you should give up. this stuff is self evident.

It is nutbars like you who make reasonable PM investors cringe. — Garth

#137 Tkid on 11.04.11 at 12:34 pm

The consequences for Iceland’s no have been harsh. Just Saying No did not mean the happy times continued in their country. But they are far better off than the Greeks will be once they default on their debt – Iceland always collected taxes. Serious allegations have been made on the ‘net that most Greeks do not pay taxes and their revenue service makes little effort to collect taxes.

If idiot foreigners cease lending the Greeks money, where will their income come from to keep the good times rolling? I think the situation there will get a lot more violent. If they are rioting over losses in income and benefits, what will they do when they are forced to pay taxes on what little is left?

And then there are the consequences Greece will face by Just Saying No, some of which will be very petty. Some Icelandic institutions have made it onto Britain’s terrorist list.

#138 Long Gold on 11.04.11 at 12:42 pm

#22 Tony…..”As the crises in Europe continues and gets worst the U.S. dollar should rise in value and gold and silver should both fall.”

maybe, maybe not, Or maybe at the height of the europe crisis with the fools heavily invested in US paper, financial markets are halted and then overnight obama with geithner at his side, announces a revaluation of gold to $3000, or higher. thats a real possibility, and the banksters may one day order thier political puppets to pull that stunt.

all rallies by paper against gold end badly…in flames.

when the Europe mess is done, the US mess will probably take centre stage…at that point those in US paper will be headed to the breadline, no one will be talking about falling real estate, but where to get the best free soup. US bond implosion will see a high suicide spike….banksters will be rolling on the floor laughing.

#139 Martin on 11.04.11 at 12:49 pm

Asset deflation, with price inflation. I have explained this numerous times in the past. — Garth

Would that mean housing could very well stay flat in nominal prices even if there is a correction in real values? If inflation stays above 3%, housing would have to correct at a faster pace (over 15% in the next 5 years) to see a drop in nominal prices. Of course flat prices over 5 years doesn’t make housing very attractive, but it’s not something that would worry most people either.

I agree that Canada’s housing market should see some type of correction in the coming years, but I’m not sure if people who are predicting big price corrections are factoring in the effect of high inflation.

For the record I’m still renting and saving. There’s just too many advantages to renting vs owning for a young couple without kids (who are also not obsessed with HGTV).

#140 scared on 11.04.11 at 12:50 pm

You sound like my 76 yr old mother. One day you say that the crisis is coming, the next you say that any crisis is over. So when it’s convenient she’ll always claim that she was right. The only difference between Garth and my mother is that she doesn’t own a Harley. I’ve read that you claim that real estate prices will decline 10-15%, but I’ve also read that you predict a possible decline of 40%. You’ll get along well with mom.

Average prices of housing will decline in the range of 15%. Some individual markets (you know who you are) will be hit much more. As for a crisis, there is a personal one brewing for most people, but not for the financial system. Hope you read better than Mom. — Garth

#141 Long Gold on 11.04.11 at 12:52 pm

It is nutbars like you who make reasonable PM investors cringe. — Garth

But is it reasonable to assume that the elite leave things to chance? what does it mean to have POWER?…to be a victim of circumstance???? -NO! it means you are the cause of effect.

The power elite either control and shape, or they do not deserve the title “power elite”

The powerful control and manipulate–this too is self evident.

I ask who is the unreasonable one.

#142 Timing is Everything on 11.04.11 at 12:52 pm

Garth, You ruined a perfectly good crisis. May your stomach roast in hell.
————————————————————-
Doomers. Just 4 U…

http://www.youtube.com/watch?v=WlBiLNN1NhQ

#143 The thing in the basement on 11.04.11 at 12:53 pm

“Out of blog” for 48+. I will miss you guys.

#144 Marc L on 11.04.11 at 1:01 pm

There is always a crisis of some sort.

Elderly with a couple of hundred K in GICs at 2% are in a crisis.

The poor guy who is driving across TO in his 1998 Honda Civic for $12/Hr paying $1.40 for gas is in a crisis.

A 20 year old who is looking for a way to apply for a credit card by texting with his iphone and avoiding talking to someone is in a social crisis.

Some young couple who has saved 75K in Richmond BC and are getting the courage to put an offer on a home that cost 1.2M will be in a crisis.

#145 Billy in Nobleton on 11.04.11 at 1:04 pm

Dear Mark L

How does it feel knowing that you may die with both of your hands untied?
Some countries don’t have vast resources or miltitary protection. Some countries Spend to Defend.

So while your only conrcern is your puny investments, don’t bother writting about things you know nothing about. Stick to talking about your wife,kitchen or whatever.

#146 Moneta on 11.04.11 at 1:10 pm

The fact at a CEO makes 5 mill has no correlation to the fact people over borrowed to buy depreciating assets
——
LOL! In fact they are perfectly correlated… those 5 mill are the deposit that came from the debt created.

#147 OkanaganInvestor on 11.04.11 at 1:25 pm

Kilt on 11.03.11 at 9:54 pm
A fine looking pair of Mugs.

Kilt.

This is a financial blog. Smarten up. — Garth

I disagree with Garth.

This is more than bust a financial blog!

#148 Marc L on 11.04.11 at 1:29 pm

#144 Billy in Nobleton on 11.04.11 at 1:04 pm

Here is some help

http://www.apa.org/topics/anger/control.aspx

http://www.splashesfromtheriver.com/spelling/courseoutline.htm

http://www.how2getagirlfriend.com/

#149 Van guy waiting on 11.04.11 at 1:30 pm

Garth,

Get on Facebook. I’m sure you will be liked for sure. That is the best way to get people to read this blog.

Like this? — Garth

#150 TaxHaven on 11.04.11 at 1:33 pm

Re: Greece… “Meanwhile the European Central Bank cut interest rates (more surprises) as part of the move to potentially kick Greece out of the union. Cheap money makes people horny to borrow some, so this is seen as a stimulative move. Commodity prices shot up. Stock markets recovered one day and surged the next. This is all good.”

Really? So you think this problem can be “solved”?

Garth, this is the beginning of a long, slow and eventually worldwide, slide down. A ten-year slide at least. Real incomes and living standards will follow. [Check Canada’s (un)employment rate today.]

You persist in taking the “nothing happened this past year (six months, 3 months, one week…), so the problems ARE imaginary” view…

Ah, where did I say anything is ‘solved?’ Contained is the operative word. — Garth

#151 GTA Girl on 11.04.11 at 1:34 pm

A developer building an enormous condo project in the wastelands of north Oakville with panoramic views of highway says his first stage is 70% sold out in 2 weeks.

Each hotel room sized unit selling for $275k to over $500. Roughly $780 a sq ft.

I have to start believing that this is some type of laundering scheme in the development community. Especially when looking at today’s local paper. RE ads for resale homes, 2000sqft, small lots closer to Toronto asking $350. Many homes for resale.

Sense has flown out the window. Especially with Garth mentioning that Canada only brings in 125,000 immigrants a year. Trust me, they aren’t buying these units.

Then trades are saying they are backed up with so much work in the new build condos for next 3 years.

Whole thing stinks to high heaven.

#152 O.R. on 11.04.11 at 1:41 pm

I agree with your basic message of “Too much house, too much debt, etc.”

This being said, on what really happened, you have been wrong since 2008 basically saying “It will happen any day now, the market will correct, you will see…” And mostly I agree with that.

This being said, blaming the doomers because predictions made merely 3 months ago didn’t materialize yet is ironic given the context.

You can bet your bike they have the same defense as you… “Don’t you just wait and see…”

Except I was not wrong on housing. Try selling a home in Victoria, the Fraser Valley, SW Ontario, outer GTA or Nova Scotia, to name a few markets. Real esgtate will correct, but there will be no financial collapse. Pure fiction. — Garth

#153 new_era on 11.04.11 at 1:48 pm

Nothing turns me on more than three drunken ladies

Canada expected an increase of 12000 jobs but got a decrease of -54000 jobs. Off by only 66,000.

http://www.reuters.com/article/2011/11/04/markets-canada-dollar-bonds-idUSN1E7A310P20111104

#154 Devore on 11.04.11 at 2:03 pm

#150 GTA Girl

Sense has flown out the window. Especially with Garth mentioning that Canada only brings in 125,000 immigrants a year. Trust me, they aren’t buying these units.

Why not get it from the horse’s mouth:

Canada – Permanent residents by gender and category, 1986 to 2010

http://www.cic.gc.ca/english/resources/statistics/facts2010/permanent/01.asp

I referenced an average in the 250K range over the past few years. — Garth

#155 Fred on 11.04.11 at 2:07 pm

This listing is a couple blocks from us. Same house was listed last week for $50,000 less and had a weekend open house. I assume they expected a bidding war that didn’t materialize, now are going with a wishing price. Would love to see the day when greedy bastards like this get squeezed, but some fool will probably pay 700k for that box.

http://www.realtor.ca/PropertyDetails.aspx?PropertyID=11284350&PidKey=-1307021173

http://www.realtor.ca/PropertyDetails.aspx?PropertyID=11284350&PidKey=-1307021173

#156 mac on 11.04.11 at 2:08 pm

They can nationalize banks, bail out countries, force taxes and austerity measures, recapitalize institutions, raise or lower interest rates, expand or contract the money supply, regulate or deregulate and in the course of it all, modify human behaviour. That means they can prevent a run on the banks, influence the bond market or make mortgages irresistibly cheap.

… if they can do all this why won’t they keep interest rates low for the foreseeable future in Canada while wages catch up, thereby circumventing major house price declines in most major Canadian cities ?

Because people are debt pigs with little self-control. — Garth

#157 Blacksheep on 11.04.11 at 2:12 pm

“There’s nothing wrong with having a PM component in a balanced portfolio (read my books). Most gold investors, sadly, have no balance or diversification. Big mistake. — Garth”

In my opinion, this is sound advise for the masses that don’t see the big picture.

However, for the savvy dogs paying attention:

1] This is a balance sheet, not liquidity issue.
2] We will see sub 0 % real interests rates, for years.
3] We’ve painted ourselves into a corner, via our 70% consumer economy.
4] We have more labour supply globally, than required.
5] The cheap oil is gone, removing excess profits, that had been shared in the past.

Invest accordingly.

take care,
blacksheep

#158 AACI Okanagan on 11.04.11 at 2:16 pm

The third largest economy in Europe is Italy. As per the world bank, Italy’s GDP in 2010 was 2.05 billion dollars, almost 7 times bigger than Greece’s economy. This week, the yield on Italy’s 10 year government bond hit 6.4%. Ireland was forced to ask the ECB for a bailout when it’s 10 year bonds hit a yield of 6.5%. Portugal, it was 7%. The EU can afford to bailout Greece, but they cannot afford a bailout of Italy… the sad thing is Italy is doing nothing about it.. the clock is ticking..

#159 jess on 11.04.11 at 2:33 pm

This one is for you smoking man, Your sons may enjoy this

How Harvard Lost Russiajaninewedel.info/harvardinvestigative_InstInvestorMag.pdf

http://hpronline.org/campus/an-open-letter-to-greg-mankiw/

Several correspondents have just told me that some of Greg Mankiw’s students at Harvard are staging a walkout from his first year class. They’ve written an open letter to Mankiw to explain why:
http://www.debtdeflation.com/blogs/2011/11/03/harvard-starts-its-own-paecon-against-mankiw/

#160 Van guy waiting on 11.04.11 at 2:40 pm

Newbie question Re Tfsa:

My family have some debt we need to clear. We would like to withdrawal all of the funds in our tfsa. We don’t want to repay this back. Are there any penalties or any downside to this? Thanks and any help is appreciated.

No penalty. — Garth

#161 Rob M on 11.04.11 at 2:47 pm

Garth,

If you predict that interest rates will rise then is now a good time to be investing in insurance companies?

Rob

Always a good time for their preferreds. As for common stock, look at Sunlife and Manulife for some lessons. — Garth

#162 Roland on 11.04.11 at 2:53 pm

Investors’ Friend,

But don’t forget the Great War.

Sometimes a world of growing wealth and increasing market integration does actually fall apart in a horrible protracted mess.

The elites can turn out to be a bunch of idiots. The centre doesn’t always hold. The so-called “serious people” sometimes find out that Miss Clio wasn’t kidding.

I’m not saying that the “doomers” are right. I am saying that it’s your sort of complacency that really makes the doom possible.

#163 Moneta on 11.04.11 at 2:54 pm

Because people are debt pigs with little self-control. — Garth
——–
Does this include the top 1%?

Why would they borrow? — Garth

#164 Habs 76-79 on 11.04.11 at 2:58 pm

Habs76-79 REPLY to.

INVESTORS FRIEND:

In my previous post about stupidity and ignorance I was not directing those words to you. I don’t know you. I was noting that regardless of income, it is the stupid and ignorant people in life who truly suffer worse.

For instance a rich guy who buys say a $200,000 car is financially stupid by doing so. Why? Because in 3 years that car will only be worth maybe $75,000. A loss of $125,000. Not wise financially other than he can probably absorb the loss for the thrill of ownership. Hell I’d love an Audi R-8 FSI V-10. $200,000. And I’d buy one if I could for the thrill of it but financially it would be stupid. The point is we all buy things on discretionary money that may not be financially wise but may be fun and appreciative to own.

Same thing with a person who plays the lottery. Maybe he/she blows lets say $5.00 per week= $260.00 per year. They could be very well KISSING all of it good bye but they may win some of it back in smaller prizes and gee wizz maybe even win a big prize. But lets just say they kiss $260.00 good bye each year. For that it gave them 52 weeks of playing a game and day dreaming “WHAT IF!” They are less likely worse off than the well off/rich guy may be with his $200,000 car or worse if he bought a $5Mill. BAYLINER that will after 3 years be worth less than half.

Of course if you spend the money you’d normally do for food, shelter and utilities on the lottery YOU ARE STUPID regardless of status. But many a rich guy spent too much money on frivolous things when maybe his personal empire was falling apart too.

As of arrogance, again it was not meant to be directed at you. Again I don’t know you. But as a point that arrogant people and yes many so called well off and rich are arrogant jerks, they are the real losers in life. Why? Again because all they know is only revolving around them and those they know and may call friends aren’t likely real friends. The arrogant a$$hole thinks he/she has true friends but they likely don’t. Their so called friends use them and are used by them. It’s a copacetic ritual/relationship for these types of people. That makes them clear LOSERS in life in my books.

#165 Moneta on 11.04.11 at 2:58 pm

We are suffering from austerity and this man is smiling in parliament and telling us the referendum plan was just a joke,” said Alexandra Rouva, a 27-year-old Greek who has been unemployed for more than a year.
——–
Oil on a fire.

#166 jess on 11.04.11 at 3:13 pm

136 Tkid

I think they need more than yoko ono’s peace light
http://iceland-dori.blogspot.com/2011/10/imagine-peace-light-turned-on-by-yoko.html

==
bill moyers: “News is what people want to keep hidden; everything else is publicity.”

Bill Moyers keynote at Public Citizen’s 40th Anniversary Gala
http://www.youtube.com/watch?v=uOIQ5-W1Epw&feature=player_embedded#!

#167 vyw on 11.04.11 at 3:17 pm

#89

The indicator we should use is debt/GDP. The debt will always grow so the key is to grow the GDP.

If the Govt cuts spending, it lowers the money in the economy, demand falls, unemployment rises. And due to automatic stabilizers like EI, the deficit actually increases. During a recession, the Govt needs to be the counter-cyclical party – increase spending, increase debt to grow the GDP.

Our GDP growth at 2% is too low – we need at least 2.5 – 3.0% just to account for population and productivity increases. A 1% GDP gap is about $17-$18 Billion that the Govt needs to ADD to the economy. If it doesn’t, we’ll have more of the same – sub-par growth, layoffs, high unemployment, and NO reduction in the debt/GDP.

#168 zeeman1 on 11.04.11 at 3:19 pm

Jesus, Garth. Today’s photo is amazing.

I had to ask her to don a less revealing top. — Garth

#169 Coho on 11.04.11 at 3:24 pm

What the fear brigade fails to understand is widespread financial meltdown is impossible so long as the elite fends it off. This is what the G20, the EU, the G8, the IMF, WB, ECB and the FSB (which Marc Carney will probably head by the weekend) are all about. These guys make the rules. They can nationalize banks, bail out countries, force taxes and austerity measures, recapitalize institutions, raise or lower interest rates, expand or contract the money supply, regulate or deregulate and in the course of it all, modify human behaviour…

What people need to understand is that these elite and the institutions they run are the tools of those above them. They themselves are programmed and influenced through subtle and not so subtle means like the rest of us. So the question is, what is the nature of the force expressed by those influencing the “elite” or even the ruling class (monarchies)?

There are agendas at play that transcend economics and the power and influence exerted by the list above helps achieve those agendas. The very active human ego tends to pull everetyhing towards the self. Assuming things will or won’t happen just because it would have an adverse affect on people, economies, health, the planet, etc is unwise. To those behind world affairs, every one and every thing has its use and a use by date. And the way nations are quickly getting onto a war footing, one must wonder if humanity itself has run out of shelf life!

The elites may also be doing what they are paid to do: look after those with no self-control and who always act in their own self-interest. — Garth

#170 Grimbot on 11.04.11 at 3:30 pm

Hmmm….even CMHC is seeing a ‘leveling out’ in Canadian housing market coming…

http://finance.sympatico.ca/home/contentposting_reuters/housing_market_leveling_off_cmhc_says/86ca362a

#171 Moneta on 11.04.11 at 3:33 pm

http://www.youtube.com/watch?v=FO725Hbzfls&feature=related
————
Everything will be fine, just like 7 years after this speech everything was fine.

One of your sillier posts. — Garth

#172 Habs 76-79 on 11.04.11 at 3:34 pm

Because people are debt pigs with little self-control. — Garth
——–
(Moneta): Does this include the top 1%?

Why would they borrow? — Garth

___________

If I may.

The top 1% are not immune from over borrowing and being irresponsible either. They too see CHEAP CREDIT and leverage it. Being human they have shown that some if not more of the 1% (BTW in Canada that anyone with a taxable income of about $400,000+ per year) make foolish investments and purchases too.

Some of the top 1% has seen by their own debt exuberance and their arrogance of status and often contrived intelligence have seen their little empires crumble too.

Wealth is not an indicator nor guarantee against the level of stupidity, poor choices, greed blinding some one, nor typical ignorance.

The level of true intelligence, better financial self-control and quality of general upbringing will affect more people positively than how much money they file as income on a tax form or supply on income statement.

meh my 2 cents (being devalued by time as I write) on as Garth himself says this pathetic blog. :-)

#173 Moneta on 11.04.11 at 3:37 pm

Does this include the top 1%?

Why would they borrow? — Garth
—–
Well you keep on telling us that the rich pay off their house, borrow to invest and deduct the interest.

Then we don’t need to worry about them, do we? — Garth

#174 Moneta on 11.04.11 at 3:40 pm

Then we don’t need to worry about them, do we? — Garth
——–
I’m not worried, I’m just wondering if the pig definition extends to them too.

#175 Moneta on 11.04.11 at 3:41 pm

One of your sillier posts. — Garth
——–
With 7 billion people on earth, silly things are bound to happen.

#176 Timing is Everything on 11.04.11 at 3:46 pm

Just thought I’d mention it…

Stressed-out B.C. workers to get expanded benefits – CBC

http://tinyurl.com/3plpoaj

#177 Lowbase on 11.04.11 at 4:00 pm

Garth,
I’ve been waiting to see your response to Generational Dynamics theory. What are your first impressions?

Bunk. — Garth

#178 Onthesidelines on 11.04.11 at 4:14 pm

Real esttate will correct, but there will be no financial collapse. Pure fiction. — Garth

That’s just arrogance talking.

Experience and knowledge. And you? — Garth

#179 Blacksheep on 11.04.11 at 4:24 pm

“The elites may also be doing what they are paid to do”:

Privatize profits, then publicly distribute losses, while maintaining the appearance to:

“look after those with no self-control and who always act in their own self-interest. — Garth”

There Garth, I fixed it for Ya, and yes, reality has made me cynical.

take care,
Blacksheep

This blog has disappointed me today. You act like a kid at a wall with a spray can. — Garth

#180 Screwed in BC on 11.04.11 at 4:34 pm

#175 Timing IE

No wonder BC workers are stressed out. The liberals F*&%$#@ the economy. BC’s economy is a (bad) joke
for that matter.
By the way, Canada’s Misery Index is on the rise.

And yeah Garth…the politicians and Central Bankers will fix the mess they created.

#181 wetcoaster on 11.04.11 at 4:38 pm

Very amusing how CMHC is plugging the dike about Victoria predicting balanced market conditions (from a buyers market with signs galore), and rising home starts when they have been down 19.7 % after a big increase prediction of last year blew up in their face.

Also falling net migration the past few years, and they can somehow polish the crystal ball and come up with an increase, God knows how one knows how many move here til you actually see it. Must be all those saps in Ontario who can’t wait to see the worst winter in 20 years. I guess if you are trying to prop up a pig on stilts you will go to all lengths to calm the masses.

#182 GregW, Oakville on 11.04.11 at 4:41 pm

Hi 46 Nostra, re: link(s) you gave:

‘Asteroid’, 23 min long, why? It was 23 min long to tell me what we already know and he said we have been told by JPL. That it’s going to miss the earth and moon.

‘Conan O’Braen’ link, it at lease demonstrate what some might not already know, that the corporate mass media doesn’t seem to be independent anymore. If it ever real was?

that last link. What looks like storm troopers show up, then “someone” starts a fire on street.
(IMO, a dumb thing to do by anyone ‘someone’ with a very low IQ and/or malicious intent.)
Storm troopers do what there are told and use chemical weapons on all the people in the street. It’s not clear if the fire started before or after the storm troopers appeared?

Has anything like that happened before?
The Toronto G20, stripped down police cars, placed in the street for hours and eventually set on fire by “someone” and left to burn for hours. (Need a good photo op for the mass media before letting the fire department in to put it out.)
Then the next day people in the streets are taken into custody, some with extreme prejudice and physically and emotionally harmed, just for having the ‘believe’ they can demonstrate peacefully in the designated areas, in Canada! And that was before PM Harper had a majority!

You might be interested in these articles, all can be found through the same link;

November 2011 issue
COVER STORY
-24 Hours at Fukushima
A blow-by-blow account of the worst nuclear accident since Chernobyl
By Eliza Strickland
http://spectrum.ieee.org/magazine/

-Fukushima and the Future of Nuclear Power
-New Biosensor Chip Picks Up Heart Signals Remotely
-Toyota’s Healthcare Robots Are Ready to Help You
With Absolutely Everything

#183 Beach Girl on 11.04.11 at 4:45 pm

#113 Kilby

Thanks, really could not remember the name of that none event. Was fun though. Will look it up for historical reference. Was it successful?

Another occasion, I was alone, just walking down the street. I remember PET smiling at me from his limo. He actually pulled over. Went home and told Dad, I met the Prime Minister, he said was a pervert. LOL.

Truth. I was 15.

#125 Disciple

I make a great turkey, and my shoes are a size 7, but you could not fill them.

Have a very nice day.

#184 Blobby on 11.04.11 at 4:48 pm

This is being posted all over facebook

http://gawker.com/5855715/how-american-banks-are-engineering-the-next-apocalypse-again

However i cant articulate well enough to my fellow facebook buddies just how much nonsense a lot of this is, wondering if you could help me with a sound byte

#185 T.O. Bubble Boy on 11.04.11 at 4:53 pm

Average Detached SFH in the 416 is still $20k-$25k lower now than in May:

May = $774k

Oct = $751.6k

#186 Beach Girl on 11.04.11 at 4:59 pm

#125 Disciple

Don’t hate me because I am rich, beautiful and smart. Oh, toned too. I actually won the Ontario Science Award. Presented by William G. Davis.

Now, I run a few homes for unwed mothers and my specialty, single, unwed fathers. I won’t be lonely at Christmas will you. A shitty marriage doesn’t count.

I am curious about your tag name. Disciple of what?

#187 Onthesidelines on 11.04.11 at 5:05 pm

Governments do not run profits. That is called over-taxation. Not something I want my leaders to engage in, even if you do. Deficits are run for the benefit of citizens who wish to enjoy more services than they want to pay for. Try thinking this stuff through. It will be less embarrassing. — Garth

Pray do explain why you consider governments running a surplus in their finances undersireable while at the same time massive corporate profit sitting on the sidelines is perfectly acceptable?

Aren’t ordinary folks paying for it either way?

Talking out of both sides of your mouth again, methinks.

Governments tax in order to run states for the benefit of their citizens, not to gather excessive revenue that should be put to use creating economic activity and employment. Still embarrassing yourself. — Garth

#188 Coho on 11.04.11 at 5:05 pm

The elites may also be doing what they are paid to do: look after those with no self-control and who always act in their own self-interest. — Garth

True, but weakness of will and selfishness transcends race, nationalities, and social status. There is a mixture of sincere ones and selfish ones in all levels of society. We can see how much damage average greedy/unethical people can do to themselves and those near them, let alone when they find themselves in positions of power.

Just some general comments: I feel we are ALL being played on some level, including the Obama’s and the Carney’s etc. It’s like we’re on a giant chessboard where most of us are the pawns with limited movement. Those with power and influence are the rooks, bishops, knights, and queens. They have more power and thus freedom of movement. The king can’t do much, but it is protected. Perhaps the king symbolizes the system. But, someone or something is moving all the chess pieces.

What if we find ourselves in another World War and this time major Canadian cities are in someone’s target sights? We’ll be wondering how the hell we ever got into this predicament when all we really want (as do our soon to be determined enemies, the Iranians, Syrians, etc) is to earn a decent living, raise our families and live in peace. Ah but, it is not the Iranian people nor the Syrian people we have a beef with say the warmongers, rather it is their governments. The truth is, it is the people that suffer and die while their “governments” and infrastructure get bombed to smitherines. It is the people that pay for war with their lives and their tax dollars. And the profits go to the Halliburtons, BP, and the Raytheons.

The MSM is beating the war drums. Iran this, Syria that…I urge people not the buy into CNN, Fox News demonizing of Iran, Syria, etc which just happen to be next in NATO’s target sights.

Something is pushing humanity down a very dark path and people are starting to feel like something is very wrong and that it is more than just a tumultuous period or downward economic cycle we’ve entered.

Please indicate which leaders you consider acting in their own selfish interest. Chose any G20 central banker or head of state. Thanks in advance. — Garth

#189 Tkid on 11.04.11 at 5:14 pm

Demonizing of Iran? Please read “Assassins of the Turquise Palace” and then talk about demons.

#190 Coho on 11.04.11 at 5:28 pm

People in pursuit of attainment of power for power’s sake and holding on to that power even to the detriment of those they are supposed to serve, in my opinion, are serving themselves.

Perhaps in a few more months or years as things continue to unravel you can give me a list of the real standout leaders. Thanks in advance, Garth. :)

In other words, that was all hype and hyperbole. You’re outed. — Garth

#191 gee Marc L and Billy on 11.04.11 at 6:00 pm

hey guys, get a room already :)

#192 gee Marc L and Billy on 11.04.11 at 6:00 pm

hehehehe ouch my ribs

#193 Timing is Everything on 11.04.11 at 6:02 pm

#181 Beach Girl said “…and my shoes are a size 7”

Men’s or women’s?

#194 Moneta on 11.04.11 at 6:04 pm

Junius on 11.04.11 at 9:47 am
#75 Moneta,

“Capitalism 4.0″ by Anatole Kalestsky

———
Thanks. I’ve grown wary of books with isms in them but I’ll take a look.

#195 triplenet on 11.04.11 at 6:10 pm

Re #76
I drank some wine after fornication too.
Although I peaked as predicted I am on the recovery trend feeling smug and taking pictures.
although we all could have met at a resort we did not…thanks to the Internet.
Ps
I am not a Christian so I don’t know how this will end.
However I will be relieved….holy crap!

#196 Blacksheep on 11.04.11 at 6:44 pm

“This blog has disappointed me today. You act like a kid at a wall with a spray can. — Garth”

Notice you critique the alteration style, but not the content.

Graffiti quote, France 1968,

“Only the truth is revolutionary”

Take care,
Blacksheep

The style had more substance. — Garth

#197 Coho on 11.04.11 at 6:44 pm

Garth, do you think Gillard participating in the coup to overthrow an elected leader in Prime Minister Rudd was not self-serving, among other things? Harper asking the GG to prorogue parliament twice? Did that serve the people or his hold onto power?

You don’t need names. You don’t need a list. The fact that there is party politics which get in the way of elected politicians from effectively serving their constituents deems it unnecessary. Look at the circus in the USA? You think these life long politicians, dems and repubs alike are putting their country first?

Through your own experience, you know what happens when you don’t play ball — when you try to put people before the Party.

Let’s be honest.

#198 Abitibi Doug on 11.04.11 at 6:56 pm

I recall comparing investing to a governor that gives the engine more power (increase buying) when the speed drops farther below the setpoint (stocks get cheaper). The governor worked as it was designed, as I bought more stocks and funds in the last 3 months when they were on sale (and still are, but less so). Again thanks, Garth, for assuring us the world wouldn’t end and that such a fear induced correction would be a good buying opportunity.
Oh, and did I mention in a comment to the previous posting that I saved up a lot of this money invested during my relatively cheap (but none the less enjoyable) stay in Timmins?

Abitibi Doug, honourably named after Lake Abitibi and the mighty Abitibi River

#199 live within your means on 11.04.11 at 7:01 pm

#148 Van guy waiting on 11.04.11 at 1:30 pm
Garth,

Get on Facebook. I’m sure you will be liked for sure. That is the best way to get people to read this blog.

Like this? — Garth
,,,,,,………

LOL. I just deleted my Facebook account the other week. Never invited or became a friend of anyone else, that I’m aware of. Have made a comment on a couple of Facebook accounts.

I agreed with some online articles and naively didn’t realize those articles were pasted to my Facebook account. If I do open another Facebook account, I’ll know better.

#200 Junius on 11.04.11 at 7:07 pm

#192 Moneta,

Below is an article from him. Sort of a “Goldilocks” approach that says that we need to find a middle ground between gov’t regulation and a competitive market economy. Based on your posts I think you will merit in the argument.

Link is here:

http://www.time.com/time/business/article/0,8599,2006845,00.html

#201 Junius on 11.04.11 at 7:13 pm

#186 Coho,

You said, “Something is pushing humanity down a very dark path and people are starting to feel like something is very wrong and that it is more than just a tumultuous period or downward economic cycle we’ve entered.”

Yes but you seem to feel that “this thing” is somehow a mastermind or some force that has it all worked out. Isn’t the simple explanation just that a radical group of so-called conservatives have come to dominate our political and financial institutions?

That the shift in our political culture over the past 3 decades to a “government is the problem” and “unfettered free markets are our god” philosophy turned out to do the same thing in our age as it did in the 1860-90s and put the robber barons in control. Seems to me if we simply respond as people of that age did we can correct the ship. However it is sad that we had to learn these lessons again.

#202 amazing on 11.04.11 at 7:25 pm

\bunch of nuts in this site!

#203 shane on 11.04.11 at 7:59 pm

Garth, I would like your comment on this headline below?

Canadian housing market to stay pretty much the same in 2012, CMHC says

#204 Nostradamus Le Mad Vlad on 11.04.11 at 8:02 pm


An utterly magnificent cornucopia-collection of posts today, almost too many to absorb.

#180 GregW, Oakville — G’day Greg. Thanks for the links. This Nov. 8 – 12 is a curious set of days — all this preparation work being done for what? Nothing has happened (yet). Cheers!
*
9:43 clip “Imperial Power and Control discusses the power of debt-based money, embodied in the bond market, and its ability to exert total top-down power and control over the empire. You will learn how our system is not a free market and how neoclassical economics misses so many key points. Plutocrats Not part of the Disney family; “Note: Further episodes located in comment section.”; Bank Transfer Day “Bank dumping days begin”; Credit Unions Doing better than expected; HSBC and Twitter. Dancing partners? Guilty GS + pix; 17:41 clip The world is broke. Actually, it’s only the west; South China Sea This could be the US’s achilles heel; Jobs Not many new ones; Crap “No one gives a sh*t about public opinion unless it can be used as leverage!”; Economy Reeks Will the last one out please turn the lights off is becoming more commonplace.
*
Greg W. — Things might be getting a little testy in the MEast. Another Chernobyl – Fukushima in the offing? — Iran It appears phase one of the west’s assault on Iran has begun. Not surprising, as Oblunder is taking the troops out of Iraq and will put them straight into Iran. It pretty much guarantees that China and Russia will become involved; Syria US advises? Oh dear; Jessie Ventura Thinking of running for prez; The Toilet And the US govt. wanted to wipe them out. How hypocritical; Microsoft “Nuke the hackers”. A very good idea; 80% of Oz is below normal temps. (Sorry, GC is a nutbar conspiracy theory, and doesn’t exist); Pizza from Hell “The dominoes are trembling.”

Health in a deteriorating world; Libya The globalist attack on national sovereignty; Western mercenaries pouring into Libya. How convenient Gadaafi is gone.

#205 TurnerNation on 11.04.11 at 8:11 pm

Garth maxed-out his Facebook friends (the internet is free, up to a point).

A modern day twist on the 1980’s “Video killed the radio star” (lyrics)!

Facebook is creepy-cool. And creepingly so.

#206 TurnerNation on 11.04.11 at 8:14 pm

#115 disciple on 11.04.11 at 11:29 am

Within the past few years there was a massive sinkhole on Finch W. Closed it down, long detour.
Hard to believe the egghead engineers could get it so wrong? Or did they?

#207 live within your means on 11.04.11 at 8:21 pm

Just having a discussion with hubby re RE in France.

He sent me the following site:

http://www.french-property.com/guides/france/finance-taxation/taxation/capital-gains-tax/

Several years ago DH’s parents turned over their house to their 3 sons. Paid taxes to do so. Parents have the right to live in their home until they move elsewhere. Once they do so, the home automatically goes to their 3 sons. DH started reading the following site and said we’d really have to study it for any tax consequences. Too tired tonight. Might be a warning for people planning to buy property in France.

#208 TurnerNation on 11.04.11 at 8:22 pm

A new brand new low rise/in-fill downtown Toronto condo with up to 40 units listed on MLS (flippers) at any given time.

Look closely into the bedroom. What’s that you see. Why, it’s a big honkin’ concrete post! Bet that was not shown on the showroom floorplans.

http://www.realtor.ca/PropertyPhotos.aspx?propertyID=11276030&PhotoNum=7

Must be the runt of the litter.

http://www.realtor.ca/propertyDetails.aspx?propertyId=11276030&PidKey=-722225949

#209 live within your means on 11.04.11 at 8:22 pm

Oops. Meant to say the above site.

#210 a prairie dawg on 11.04.11 at 8:26 pm

#49 Leighton Tebay

From the Doomer light handbook:

Put all your money in bonds, and buy 8 weeks of canned food and a BB gun…

j/k

#211 Blacksheep on 11.04.11 at 8:49 pm

“The style had more substance. — Garth”

You must have earned your chops boxing,
as your bobbing and weaving skills are
exemplary :]

take care,
Blacksheep

#212 Where's The Money Guido??? on 11.04.11 at 9:19 pm

Re: #63 Herb on 11.03.11 at 5:41 am

Just look at the criminals running BC Hydro, all BC Lieberal appointments. They put off debt with tricky accounting, stealing over 3 billion in the last 10 years, producing a profit on the books so the Lieberal gov’t can take that 3 billion and lower their deficit on THEIR books and then these same CEOs pay themselves HUGE bonuses over their hundreds of thousands in regular pay, saying they’re in the black while the taxpayers get enslaved to ever increasing HUGE increases in our hydro bills (this is apart from the theft in payouts to their buddies that have been placed as CEOs in Independent Power Projects (IPPS), which Hydro has to pay 5 times the going rate for their power).
My hydro bill has gone up 150% in the last 5 years and it’s supposed to increase by at least 100% in the next 5.
Time to start polishing those widowmakers, it’s gonna be a blast!!!!!
BC has turned into the most corrupt area west of Washington, no wonder Guido Campbell got the call to the Bilderberg conference a couple years ago and now sits living it large in London….he sold us out HUGE….

#213 TurnerNation on 11.04.11 at 10:41 pm

I notice the most un-informed and posts originate from those pumping their own blogs here:

Moneeta
Investors Fiend

#214 disciple on 11.04.11 at 10:58 pm

WTC6… never heard of it? It lay beside wtc7. It was sliced in half by some unknown force. The bulk of the mass of both wtc7 AND wtc6 simply disappeared and was blasted into oblivion. Neither thermite, nor debris from the two main towers could cause this. It turns out that the same force that caused 9/11 (Directed Energy Weapons) is behind crop circles.

There was no seismic signature. A controlled demolition by thermite is then not possible, it would have ruptured the slurry concrete basement of the Hudson River in which the towers stood and flooded all of New York.

Here is John Lash to explain Dr. Judy Wood’s work on bringing all this to light. Well worth your time…

http://www.youtube.com/watch?v=3m2Oc5OZ9f0&feature=youtu.be

#215 TurnerNation on 11.05.11 at 11:15 am

disciple great link. We have much to learn.