Bad planning

She makes $60,000 a year. He earns $75,000. In their late twenties, they have $130,000 in the bank, a chunk of it a gift from his parents. Student debt is down to $18,000. They covet a house. In Vancouver.

“At least we did,” Lynne says, “until we met Malcolm.” He’s a mortgage broker, part of a national chain of brokers which (for now) will remain mercifully nameless. “We decided to go in and talk to a mortgage guy to at least find out what we could pre-qualify for,” the high school teacher (math) says. “Twenty minutes later he said that with our savings and our income he could qualify us to buy a $1 million house. We looked at each other and thought about an $800,000-plus mortgage, and got the hell out of there.”

So now they have lowered their sights. To $750,000. And given up. “That amount of money buys crap,” Lynne says. Then wisely, “Maybe we should think about moving away from here.”

This little tale is true. I tracked the broker down and confronted him. He admitted it. And defended it. Sadly, I think he believed he was actually helping a house-horny young couple who not conceive of having a family without a front porch.

The tale is to illustrate a few salient points: (a) there is no effective control on the mortgage industry, and we will all live to regret that; (b) this kind of excessive, over-the-top borrowing is going on every single day in markets like this; (c) rising real estate values are supported only by debt; (d) no policymakers in Canada have experience handling $1.2 trillion in mortgage debt taken out on assets trading at inflated values; (e) this is a repetition of the US sub-prime experience; (f) the economic danger is extreme, so I sure hope you have your stuff together.

This pathetic blog’s done about all it can to sound the warning. Those who don’t listen, or refuse to, are on their own. I have no doubt what comes next. I also can’t change it. Nor can you. But you can prepare.

This brings is to today’s topic, risk. Everybody you know thinks risk is losing money. But the greatest risk is running out.

Yesterday we chatted here about idiot Boomers and their post-65 mortgage payments. This is just symptomatic of risk now mounting in our entitlement society. Seven in ten people own houses, but four in ten have no savings, half no RSPs, and 80% of people with TFSAs have the money in the wrong place. Almost 70% of people have no pension plans. Of those who do, most belong to a plan whose pay-out in retirement is linked to what happens on the financial markets – called defined contribution.

So, here’s the deal. We can salt away 18% of what we make a year in an RSP and get a fat tax break. A couple can invest $10,000 a year in their TFSAs and never be taxed on the gains. If you have an RESP for your kid the feds will send you a cheque every year. If you leave a job you can get a LIRA and take the pension with you. You can income-split with your stay-at-home wife through a Spousal RRSP. There are RDSPs for disabled kids. When you retire, you can turn your RRSP into a RRIF, shelter gains and take income.

In other words, we have government savings plans, benefits, deductions, incentives and grants coming out of our collective butt, and yet people are falling further behind every year – star struck with real estate while their finances crumble and long-term planning fades.

What’s the Establishment solution? Of course – another plan. So we now have the PRPP.

Legislation for this was tabled in Parliament Friday. Here’s what it means.

The Pooled Retirement Pension Plan is not a pension plan, but a sexed-up group RRSP aimed at employees of small companies, or the self-employed (who already have access to RRSPs, of course). The idea is, if you get a job at a massage parlour, that company will be obligated to have a PRPP and to sign you up (but you’ll have the right to opt out).

Then you can contribute as you would to an RRSP, based on your previous year’s earnings. The employer may or may not also chip in (not required to do so). The money would then be shipped off to a professional manager, likely one of the major banks (who really, really, really like the PRPP), where it would be pooled and invested in assets yet to be determined.

If you quit the massage business to join, say, the Greater Fool Amazonian Harley Detail Team, then your old PRPP could be left where it is, rolled into an RRSP or folded it into the new employer’s plan. There are a ton of details to be determined, such as what fees managers can charge to run PRPPs on behalf of small business employees or what eligible investments might be. Of course, like RRSPs or most corporate retirement plans now in existence, there is absolutely no guarantee of what income you might have after work.

So, the PRPP is not like the CPP. There’s no established payout. There is nothing, in fact, if you don’t make contributions which in this case will be automatically deducted from your take-home pay. Your co-workers can elect to take a pass, in which case the pool of money to be invested might be small and end up being raped by fees.

Mostly, you have to ask: if we already have RRSPs, RRIFs, TFSAa, LIRAs, RDSPs and RESPs, and stupid abounds, will PRPPs change much? Will this solve the retirement crisis? Will people stop lusting for bungs, borrowing obscenely, and suddenly worry about going gray?

When kids can buy mansions, not a chance.


#1 Nick on 11.18.11 at 9:46 pm

No way first

#2 Kits on 11.18.11 at 9:47 pm

100th :)

#3 Canned Goods and Buckshot on 11.18.11 at 9:51 pm

(f) the economic danger is extreme, so I sure hope you have your stuff together:

Mossberg, check
Glock, check
Canned goods, check
silver coinage, check

Seriously, the PRPP is going to save us? What is that really; the Peoples Republic Pension of Purgatory? Will the Greater Fool Amazonian Harley Detail Team be designated at a professional manager for the PRPP?

#4 Sanity on 11.18.11 at 10:08 pm

RE #3 Canned Goods
Don’t forget to pack your meds–the ones for schizoid paranoia.

#5 Theresa Sheridan on 11.18.11 at 10:11 pm

This is what a million dollars will get you in Vancouver.

#6 on the sidelines on 11.18.11 at 10:13 pm

Here’s more shady mortgage broker tactics. I purchased a pre-construction condo in Toronto in 1999. I ended up moving to the US before it was built. When it was time to close, the mortgage broker in Canada filled out my application as a Canadian resident. I told him to change it to US resident but he said it wasn’t my best interest. I didn’t understand so I spoke with my lawyer and she explained that I would have to put more money down and pay GST. I did not want to lie, but the broker refused to let me change my residence in the application. I eventually had to go directly to the bank to get the mortgage. At one point, the broker was telling me to complete an affidavit with my lawyer to change my closing papers from US resident to Canadian. Do these guys have any ethics or integrity?

#7 Fan of Faber on 11.18.11 at 10:22 pm

“Mostly, you have to ask: if we already have RRSPs, RRIFs, TFSAa, LIRAs, RDSPs and RESPs, and stupid abounds, will PRPPs change much? Will this solve the retirement crisis? ”

You answered your own question Garth by stating that stupid abounds. You sound like Marc Faber who states, near the end of this video, that 10% (I think he was being conservative)of the US population are like the village idiots of the middle ages.

#8 Westernman on 11.18.11 at 10:22 pm

Canned Goods and Buckshot,
Ever heard of OPSEC? If not, look it up. If so, you should practice it.

#9 Cristian on 11.18.11 at 10:24 pm

Excellent post, and to the point.
Other than that…
lower one’s sights
Reduce one’s goals or aspirations, as in “Once he got the job I’d applied for, I had to lower my sights.”
This expression alludes to taking aim through the sights of a firearm.

I couldn’t find, however, the definition of “lower one’s sites”…

#10 wes coast on 11.18.11 at 10:24 pm

Why do we need government to save us? We used to be a society that did things. We didmt wait for opportunity, we made it. We don’t need controls on the mortgage industry; risk is that control. We just need to let risk do what it does best – spank those that get ahead of the markets. The CMHC caused these problems by subduing risk. The government needs to enact a public shareholders act – when CMHC eventually has to bail out the banks each citizen that didn’t trigger a default should get shares in the bank. There needs to be some reward for those who had restraint.

#11 T.O. Bubble Boy on 11.18.11 at 10:25 pm

Is there any tax advantage to this PRPP at all over the other options? For example, why would anyone be considering this before a RRSP?

#12 45north on 11.18.11 at 10:32 pm

This pathetic blog’s done about all it can to sound the warning.

yeah it has but its best days lie ahead

speaking of warnings, Zerohedge is sounding more convincing and coherent

#13 bill gates on 11.18.11 at 10:35 pm

this PPRP crap sounds like a prelude to dimantling the CPP. I wont be shocked if that is exactly our fuhrer’s plan. Only thing is, who’s going to pay into those PPRP’s when we’re all locked up in private prisons?

#14 Unistar38 on 11.18.11 at 10:35 pm

A question to all,

In Canada, except the oil sands and the five or six big banks, are there any meaningful private industries? In the meantime, taxes have to be collected to support well-paid goverment employees like teachers, police officers, fire fighters, municipal, provincial and federal employees, and of courses, doctors.

Is this sustainable? Will there be a day that the system will self correct, i.e., implode?

#15 Jsan on 11.18.11 at 10:41 pm

STUNNING is the only word that I can think of to describe a system where 20 somethings are allowed to get million dollar mortgages. Garth, who the HE1L is watching over or regulating our mortgage industry these days? Have they thrown out every last shred of common sense?

You know Garth, there have been people on here who have put their tin foil hats on and suggested that these world wide housing Bubbles are an engineered plan to either take the economic system down or purposely trap people in modern day serfdom, is this as crazy as it sounds? How else can this sort of irrational lending be explained rationally? Only a decade ago people were afraid or barely able to qualify for a 300K mortgage. Now 20 year olds take those “tiny” 300k mortgages out on their vacation homes.

I do agree with you though, when this inevitably ends, it will be an absolute mess and I personally believe it will make the US crash look pale in comparison as I don’t believe Americans were taking out anywhere near the insane amounts that the Canadian youth seem to so eagerly and willingly be taking.

#16 LJ on 11.18.11 at 10:42 pm

PRPP: Pooled Retirement PONZI Plan, where you are left with nothing in old age.

Oh yeah, as of today, I am officially throwing in the towel on trying to convince people that “investing in housing” is a bad idea. Let ’em rot.

#17 Herb on 11.18.11 at 10:42 pm

The PRPP means more profits for banks and financial institutions. I had no idea that this is what the country needs. Thank Dog we have Harper and Flaherty to save us.

#18 rosie on 11.18.11 at 10:47 pm

Beware F’s bearing prpp’s. That was kind of awkward.
How about p.e.r.p.’s. No, maybe b.u.r.p.’s. Or f.a.r.t’s. This is very awkward.

#19 SLN on 11.18.11 at 10:57 pm

Nothing about MF Global stealing money from its customers to the tune of $600 Million? It seems odd that no one is talking about this..

If investment firms can ‘move money’ (right out of customer accounts) and then just declare it to be “missing” when such accounts are supposedly not only secure but INSURED by the CME and face no penalty, no media scrutiny, and no calls for heads on platters then where, exactly, is money safe? Whose investments are safe, exactly?

I believe news of this is being suppressed because it would cause a panic in the markets. It should cause concern..

I don’t know what exposure MF Global has.. would have thought, though, that maybe our news outlets might take an interest.

#20 Westernman on 11.18.11 at 10:58 pm

In answer to your question… no there are very few meaningful private industries in Canada and we are doing our very best to drive the remaining ones away with insane taxation, crushing regulation, unreasonable union demands, over-the-top-safety regulations etc.,etc.etc.
What company in their right mind would want to put up with all that when they can just take their operation to the Asian sub-continent and operate freely and make mountains of money?
Economic growth in Canada is and will remain at a standstill or even negative until the 1000 lb. gorilla of government gets off the backs of productive enterprises.
The economy won’t implode though, it will just grind slowly to a halt – like an axle with a burned up bearing.

#21 Jsan on 11.18.11 at 11:02 pm

Europe is Toast, the US will in the not too distant future be Toast, and now more and more are saying that China will inevitably have it’s day of reckoning, probably much sooner than most realize.

Meanwhile back in Canada, million dollar mortgages are being snapped up by middle class kids from coast to coast without any hint or worry (or should I say understanding) about what will happen to this country when wrecked worldwide economies wipe out Canada’s heavily commodity driven economy.

Gordon Chang: The Reasons For China’s Imminent Bust

LME Warehouses in US Overloaded with Copper, Zinc, Aluminum, Steel because of Economic Downturn

#22 wick little on 11.18.11 at 11:04 pm

“we have government savings plans, benefits, deductions, incentives and grants coming out of our collective butt”….too bad we (who had them) lost so much of our money there due to BAD info coming from (Banks & their other so called money makes) you are told they know how to invest!!!! I curse RRSP’s now & will never touch them again.

#23 Jsan on 11.18.11 at 11:14 pm

On a different note, I keep hearing how Peter Mackay is still all gung ho about spending BILLIONS and BILLIONS on a new fighter jet for Canada, the F-35 which is for all intents and purposes a useless piece of junk. Again, why are our “leaders” making what appear to be such poor decisions be it allowing a runaway housing and mortgage market and now spending BILLIONS and BILLIONS of dollars on US contracts for what is widely being called inferior equipment?

The Truth About the Useless F-35 & F-22


#24 Not 1st on 11.18.11 at 11:15 pm

My little friend the black swan says U.S. and French credit rating downgrade before the end of the year. You heard it here – hang on to your hats.

#25 Beach Girl on 11.18.11 at 11:22 pm

New pension BULLSHIT. I totally agree, I have never heard of a worst investment vehicle. An RRSP is better and most people can’t pony up for that. What kind of crap is that.

Most small companies go bust in several years.

Why would you expect desperate business owners to care about your retirement, when they are just trying to survive.

The level of crap I am reading is astounding me. Hey, I think Judge Brown told them to leave, the OCCUPIERS. I don’t really care, just find it funny.

#26 VicBC on 11.18.11 at 11:24 pm


“Marc Faber who states, near the end of this video, that 10% (I think he was being conservative)of the US population are like the village idiots of the middle ages”.

And they formed the Tea Party.

#27 Canned Goods and Buckshot on 11.18.11 at 11:26 pm

#4 Sanity

Please lighten-up. Many readers and posters have followed this blog since it’s inception. Most posters choose humorous or tongue-in-cheek monikers.

#7 Westernman

Thanks for your concern. I take your point, but this is someone’s blog, not a CSIS operations centre, or a forward operation base.

#28 DonDWest on 11.18.11 at 11:31 pm

Oh, you better believe they’ll offer young people with that income a million dollar mansion. After all, a year ago I was offered a combined 10K of “free money” from both the federal and provincial government if I signed up for a mortgage, no questions asked. I was 28 years old at the time and recently lost my job.

I knew the prices of houses were out of whack since 2001. I have always come to view equity as false wealth. I took that 10K check and threw it into a pit fire. I refused to get sucked in; I thought I was clever. That was until I discovered that the junky bungalow that I was qualified for has increased in value by 6% this past year.

Meanwhile, my savings are eroding from a hyperinflation Garth says doesn’t exist; as I was forced to sell all of my silver back in August at around 42$ because a bear flag was staring me right in the face. Not the end of the world seeing that I bought most of the metal at 12$ a piece, but now I have nowhere to park my money.

Saving is for losers; debt is for winners. My delayed gratification was in vain. Still, I can’t bring myself to go into debt. When you’re a member of one camp for 10 years it’s difficult to jump ships.

My advice to my younger counterparts; get a good government job (you need an irrelevant university degree for entry), max out all your credit, and live the high life. Declare bankruptcy early and start over in your late 20’s as if nothing happened. . . That’s what I should have done at 21; instead I saved.

Whatever you do; don’t get stuck in the slaving private sector like me.

#29 MixedBag on 11.18.11 at 11:38 pm

It sounds like this government is trying to come up with some sexy new savings vehicle as the one that came up with the TFSA. Fail.

As for ridiculously high real estate prices:
1) It continually astounds me the prices people are willing to pay for real estate, and even worse, to get into bidding wars. Stupid is as stupid does.
2) Nothing will make my blood boil more if the CMHC has to use my tax dollars to bail out said people. Boil!

#30 The West is the..... on 11.18.11 at 11:55 pm

Wow, I make about 130K and I can buy a million dollar home. I am rich son of gun!
Vancouver has so many reasons to take a big flying belly flop on to the big puddle of emotions that real estate in the city has created. Wet dreams abound on the Rob-someone street. Has the brand Vancouver been over sold. And where is the bottom. Well back in the early to mid 90’s is was 40% less than you paid in 1988/89 after the first asian assault. Remember the money is not being made here it is being stored. Enjoy the ride…. up up and away.

#31 Bog on 11.18.11 at 11:56 pm

PRPP is just another gift for the banksters and a way to screw the small businesses.
There will come a time when the looters will get into the downtown Toronto bank buildings (some people are already outside) while Harper and F will leave the country. The other option would be for half of Canada to go back to where they came from.

#32 MarcFromOttawa on 11.19.11 at 12:01 am


#33 McLovin on 11.19.11 at 12:03 am

From the Vancouver Sun. Don’t tell DA, all his buyers in the last year have burned through their downpayment and are underwater.

“Yesterday I blogged that the real estate numbers were coming out today and that those numbers would show, according to BMO Capital Markets, that Vancouver was coming off the boil (read that blog here).

Well the numbers are out, and what I find interesting is the number of communities in the province where prices are down from a year ago. While the average price of homes in Greater Vancouver sold through MLS in October was up 8.2 per cent compared to October 2010, in Victoria prices were down 7.3 per cent, in Kootenay home prices fell 5.2 per cent, and in South Okanagan prices were 5.1 per cent lower. In fact, in total seven of the 12 regions covered by the report saw price drops.”

#34 WI BOOMER on 11.19.11 at 12:17 am

Another pension idea? Like the RRSP and TFSA and their US counterparts (the IRA, 401K or the afterr tax but no future tax due ROTH versions) have been used SOOO much??

Reports indicate only half that are eligible to contribute do so, and the average contribution is 7%. While 7% is good…if you really expect to be able to USE it for anything but a supplement to your promised Gov’t old age pension, best decide how you are going to goose it up to a more realistioc 12-15% over time.

There is no guarantee the next 35 years will yield the growth rates we had in the last 35 years. The last 10 years in the stock markets have been pretty thin.

While old age pensions are a form of generational transfer payments (the younger paying for the older) as long as our respective gummints hold increases below the inflation rates a bit, they should remain solvent for many years. Old age pensions were designed to keep old people just above the edge of poverty, NOT to provide you with the type of lifestyle you desire.

What we get in old-age is a gov’t minimum. Where you go from there is up to you.

I hope few enter retirement with ANY debt, it will make life much harder to enjoy.
Get that part-time 2nd job now, when you’re young & healthy, and save the earnings for later.

#35 Mean Gene on 11.19.11 at 12:31 am

There are some days when I am certain removing the mandatory retirement age of 65 has something to do with the house lust.

If you no longer tell a working person they must retire at a certain age, the incentive/motivation to plan for eventuality is removed, hence the housing upgrades when the nest egg should be grown.

Just about everyone thinks they will live to 100 and therefore can work as long as they want, however, disease and general wear and tear on the body is starting rear it’s ugly head, but most of us live in denial.

#36 nonplused on 11.19.11 at 12:35 am

Nice post tonight Garth. I agree with your assessment, but the question is “when?”

It is the government’s job to create new mostly useless legislation, and the bank’s job to create new mostly useless financial products, so the PRIP (Pension Rest In Peace) or whatever its called is perfect! It is a new perfectly useless law and a new perfectly useless financial product all wrapped up in one!

#37 cxcroney on 11.19.11 at 12:43 am

Why? Because they can, that’s why.

#38 Mike Rotch on 11.19.11 at 12:48 am

I wear enough tin foil to fear that this is a first step towards privatizing the CPP.

Fine, whatever, privatize it.

Just give me back every damned cent I have already put into this mess (with interest!), and let me get it to work on my own behalf right now!

Then maybe start cutting the size of the no doubt enormous bureaucracy that runs the pension plan.

Then continue by ending DB pension plans for government workers. The pay’s already fair to high vs. comparable work in the private sector, so that’s enough damned reward.

The one thing I really fear is that this is a pile of crap being dumped onto all business owner.

Looks like more paperwork, red tape, and annoyance for business owners to create something that already exists. (People can have RRSPs, and companies can contribute to group plans on behalf of employees. )

#39 dd on 11.19.11 at 1:00 am

People said China couldnt affort the metals. So wrong.

China 2011 Gold Demand Likely Rise 29% To 750 Tons
Thu Nov 17 04:10:37 2011 EST

BEIJING, Nov 17, 2011 (Dow Jones Commodities News via Comtex) —

China’s gold demand will likely rise to 800 metric tons next year, World Gold Council Far East managing director Albert Chang said Thursday.

China is the largest gold consumer in the world after India, with demand at 579.5 tons last year, according to WGC data.

(END) Dow Jones Newswires

#40 Foggy on 11.19.11 at 1:02 am

Boy how things change. In ’91 we decided to buy our first house. The price was 165K – ridiculously low by today’s standards. No bank would advance us the funds without 10% down of our own money. We had 5K in the bank. The builder (the house was a default) would give us a 2nd mortgage for the missing 12K needed – but only for a year. All very hush-hush. Anyway we moved in, paid off the 2nd and diligently paid the mortgage thereafter. All this subterfuge and juggling for a lousy 165K home.
And people today are toying with house loans of 600K and up, with no money down. Where is the fear and respect for taking on that level of debt? And with credit cards maxed at the same time…

#41 MM on 11.19.11 at 1:07 am

Hopefully somebody will say the magic word, the RE industry spell will be broken, people will wake from the comfy dreams of ever increasing house prices, they will look at each other, think about the numbers involved, and realize “this is insane, what are we doing?” and cast out the evil wizards and witches who had taken over the kingdom.

#42 Nostradamus Le Mad Vlad on 11.19.11 at 1:11 am

“. . . got the hell out of there.” — Hmmm. A dose of instant reality?

“(b) this kind of excessive, over-the-top borrowing is going on every single day in markets like this;” — If the lenders / brokers are doing this non-stop, they are no different than robo-signers in the US. Their bosses should be held liable for sucking people into the debt mire.

“. . . the Greater Fool Amazonian Harley Detail Team . . .” — What quals. are required? I have a nice hula skirt at home, which goes nicely with a belly dancing strip show at night — LMFAO’s “Sexy And I Know It” is my theme song!

“Will this solve the retirement crisis?” — Before the pension shortfalls can be addressed, sheeple’s borrowing habits have to be modified, because until it ends, this charade will continue.

Possibly doing a post on how to use a HELOC + TFSA to better one’s life — take $250K or whatever — invest it via the HELOC, use cash returns to max out TFSA and pay down debt, then learn how to use CRA’s guidelines for maximum effect, one should be able to have an adequate retirement.
#121 Beach Girl — “I do not trust the new pension plans . . .” — I don’t trust any of them nor any of their policies.

They have a vested interest in themselves only and big biz, and are a group of lying wingnuts. See #118 Disciple’s replacement for clarification.

#17 Herb — “Thank Dog we have Harper and Flaherty to save us.” — Doggammit Breh, we’re well on the way to sobriety in this age of temptresses! Dog be praised!

#13 bill gates — Bingo! CPP quietly going, and see #19 SLN — “If investment firms can ‘move money’ (right out of customer accounts) and then just declare it to be “missing” . . . — That’s what H – F are counting on, that sheeple won’t even notice the CPP is gone.
Death Imagine if the same penalty were applied to the Wall St. warmongers! Oddjobs The only way for the US and UK to help the EU is to fudge a whole bunch of numbers, and hope they come out right. It’s like watching the 6/49 numbers be drawn; Link in Libya had a gold-backed dinar, now Iraq has one. Not sure if it is backed by gold; Link in Barnhardt Capital Mgmt. — last para. is quite revealing; Child Poverty hits 32% officially, unknown unofficially; Ineptitude The super commmittee / congress could do more harm than good. Or maybe that’s what they are supposed to do; Debt “When the Eurozone comes undone, the intense exposure American banks have to European bank debt will have a huge domino effect.”; Vulture Funds becoming more commonplace; Sediment halts shipping traffic on Mississippi River.

Spat between Germany and France over the ECB; 1:15 clip Obummer AWOL as debt increased 40%; GS conquers Europe, which means it’s about to collapse; MF Global and derivatives “Money never disappears, it just changes hands.” Following that, it is removed from the system; Rising gap in economic well-being; Seething Anger The US – EU elites.
Congestion Not up the nostrils, in England; Sick The US in Asia, but only for a show of strength (illusion); Syria “This is a repeat of Libya, in which the “Rebels” are stooges for the US and Israel.” What makes this interesting is that Russia now has a presence in Syria, with their navy, and Russia Preparing.

Second warship “Territory got nothing to do with it. If the US can find a reason to declare war on China, then the US Government can stiff China for the money they borrowed, just like they did with Social Security.”; Einstein wrong? Possibly. Does he care? Nope; Blowin’ In The Wind Fukushima’s radiation.

#43 Devore on 11.19.11 at 1:14 am

#4 Sanity

You are not prepared for the zombie apocalypse.

#44 jimboy on 11.19.11 at 1:14 am

Their is no rationale for the PRPP other than increased fees for bank and financial advisors.
If the government wants to force people to save for retirement they could have increased the CPP (but then there would be no fees for banks and FAs).
If they want individuals to have the option to save then they could have increased the limits on RRSPs.
This is a continuation of the bankers influence over government reflected in programs such as the RDSP: rather than transfer money to disabled people or their families immediately the government sets up a plan that benefits the banks and FAs by requiring the investment of funds for 30 years.

#45 Mean Gene on 11.19.11 at 1:15 am

If you are looking for employers with pension plans, here is the list for BC that I would classify as meaningful.

#14 Unistar38 on 11.18.11 at 10:35 pm
A question to all,

In Canada, except the oil sands and the five or six big banks, are there any meaningful private industries?

#46 CoreyMC on 11.19.11 at 1:24 am

Good grief! Having to read that makes me sick to be Canadian. Lynne, move and save yourself from the mental illness that calls it BPOE. These people are parasites and drunk on greed.

Anyhow on another subject, just met a guy from work the other day from Chiliwack. He’s going through a divorce(One of Garth’s warnings LOL), sat down with a real-estate agent to sell his home. I don’t know the details of his mortgage, but if he listed it today it would be -60k.

Also, his assistant said that she would love to pay the mortgage that her parents have. Her dad is 72, and there is at least a 100k left on her dads mortgage. I felt like telling her that they would be dead before that happens, but I’m not a cruel man. So sad.

Help Garth the madness is all around me. There should be a hotline.

#47 OZY on 11.19.11 at 1:50 am

Stop the BLOG, Canada does not need people to think, hey is not Europe here! just a boring former far-away colony, we are still used for the for talking heads to do the thinking and we gladfully appaud.

#48 Debtfree on 11.19.11 at 1:57 am

Re pic . Always arrange your paper Before you sit and remax .

#49 tmg on 11.19.11 at 1:59 am

…so there really isn’t much difference between an RRSP and the Pooled savings plan other than who’s investing or you?

#50 WildSide on 11.19.11 at 2:31 am

This article was great and further emphasizes why Household Debt will be bad in Canada.

“How Household Debt Contributes to Unemployment”

#51 Albertagirl on 11.19.11 at 3:16 am

It’s been a few years since I’ve posted. I’ve had a kid and moved from Calgary (’07- whew) to The ‘Peg, to Edmonton. Made a whole lot, lost a little bit but just sold my big huge house in Beaumont, AB to purchase an awesome 1975 townhouse near family in Edmonton. Kids have RESP’s, we have RRSP’s, TFSA, investemnts and a brand new 37 year old townhouse. We will be mortgage free before we hit 52. Although I do’t post as often as I used too, I still read everyday and take heed. Thanks Garth. – Albertagirl

#52 Albertagirl on 11.19.11 at 3:18 am

Sorry for the errors. My 18 month old broke the “N” off my laptop.

#53 Andrew from Saskatoon on 11.19.11 at 3:19 am

“Oh yeah, as of today, I am officially throwing in the towel on trying to convince people that “investing in housing” is a bad idea. Let ‘em rot.”

Welcome to club. When friends tell me about their new first-time homes, I gleefully congratulate them and feed their egos. I then tell them that I’m still renting because I just don’t want the responsibility. Of course, in private, I will watch with maniacal laughter when the S eventually HTF and they file for bankruptcy and move back into their parent’s basements. Then I’ll sympathize with them and tell them how I angry I am at the government for allowing this to happen to them.

#54 Andrew from Saskatoon on 11.19.11 at 3:20 am

My post was in response to #16 LJ.

#55 Al on 11.19.11 at 4:54 am

RRSPs are not creditor-proof whereas the PRPP will be – good for the self employed

#56 Steve on 11.19.11 at 8:13 am

Tell Lynne and her guy to move to Fredericton, NB. Their $130,000 cash would make a good 50% down payment on a nice home (seriously!), and the unemployment rate in October was just 6%.

#57 X on 11.19.11 at 8:38 am

The PRPP needs some real changes. It doesn’t really do much for us. As stated the other plans are under used, the only difference is that it is automatic unless you opt out.

Why PP? There is no guarantee like a Pension Plan?
And how much will it really save once they figure out management fees? Just go buy an ETF.
Or why not expand one of the existing and underused plans? (RRSP, TFSA) Or make changes so people have to contribute to a RRSP?

Aside from inmoroving the potential bottom line of the insurers and banks, I fail to see how this improves retirement for Canadians.

#58 allister on 11.19.11 at 9:37 am

Garth – your article today is exactly what I posted yesterday. Some people, but not all people, do not think, plan or consider the consequnces of todays decisions.

What really p—es me off, is when they want the government to tax away the assets of those who did the right things for so many years. Or they occupy a bridge because their student loans for their DRAMA degree are due.

#59 eaglebay - Parksville on 11.19.11 at 9:40 am

#15 Jsan on 11.18.11 at 10:41 pm

Conspiracy aside you’re contradicting yourself.
How can you have regulating and common sense in the same sentence.
People are taking on these huge mortgages on their own free will. I don’t need or want the government to tell me how to run my affairs.
You can’t legislate stupidity.

#60 T.O. Bubble Boy on 11.19.11 at 9:41 am

Here is a decent RRSP vs. PPRP summary:

Or, as the Toronto Star puts it:
A pooled pension plan isn’t a pension

I take this 2nd article with a grain of salt, since it includes ridiculous opinions like this attempts to link the inability to save for retirement savings to one’s choice of whether or not to shop at Costco.

So this is it? The RPPP raison d’être, was about enabling Canadians to buy their mutual funds for less?

I have a better idea. Why not nudge Canadians to shop at Costco? You can get soy sauce in 950 milliliter jugs, 500 servings of Metamucil in one package, and four-liter containers of my 6 year-old daughter’s favorite chocolate milk syrup. If the point is for Canadians to have more cash when they retire, I think there are much more effective ways of doing that.

#61 SaggyBottomBoomer on 11.19.11 at 10:08 am

Another pumper hard at work. At least she has chosen an appropriate venue.

#62 Bench Warmer on 11.19.11 at 10:23 am

LJ -“Oh yeah, as of today, I am officially throwing in the towel on trying to convince people that “investing in housing” is a bad idea. Let ‘em rot.”

I’m with you on that one LJ. You can’t tell nobody nothing,you just have to let them crash and burn, thats the only way most people learn. When you tell them all later that you told them so they won’t believe that either. Let’em burn!
Keep up the good work Garth, there are a few of us heeding your words.

#63 The American on 11.19.11 at 10:35 am

So, it is very clear now. With the formation of the CMHC, what was supposed bot protect consumers and banks alike and drive for responsible/conservative lending “standards,” and having the tax payers fully backing it, Canada has somehow managed to alleviate its banks of and and all responsibility for practicing responsible lending practices. Ergo, the banks are wildly and recklessly shelling out dough to anyone with a pulse. Where have I heard this before? Hmmmmm.

I’ve been saying it for a while now. Canada is going to get the brunt of the RE collapse because you CAN NOT EVER leave a bank to do the responsible thing, especially if you place ZERO responsibility upon its shoulders. If you stop and think about it…. Nononono, REALLY stop and think about it…. What the hell kind of logic is it to place zero responsibility on the lender itself and then expect the outcome to be any better than what was seen in the U.S.? Damn, the public bought that b.s. hook, line, and sinker. Ironic, isn’t it?

Now, Canadians have more consumer debt than even your American cousins. This demonstrates the banks there are not conservative in the least and the people of Canada are thirsty for more of the Kool-Aid. Instead, the banks are more like a coked up Santa Clause with cash – Just ask the IMF. Canada’s fast approaching the top of its radar with considerable concern for the craziness in the way the banks are lending. This will not end well at all – No freaking way around it, especially when rates tick upward even slightly.

By comparison, this very same couple would qualify in the U.S. for a home loan of up to about $450,000, on a home bought for about $562,000, on a rate that is fixed for 30 years. This is nearly half of what the lender in Vancouver was willing to “give” them. In most U.S. markets, any home loan exceeding $417,000 is considered a “Jumbo” loan, viewed as having significantly more risk, and it receives a very large rate premium over standard rates making monthly payments more expensive for the buyer. This couple would need to put down the now-normal minimum of 20% at $112,000 (leaving them $18,000 in the bank out of the $130,000 they’ve saved). Yes, THAT is how much banks have reeled in lending and returned to normalcy. Getting the picture now?

#64 Disciple's replacement poster for this coming week while he's on vacation on 11.19.11 at 11:23 am

Hey everyone. It’s my last day here and I kinda have mixed feelings about it. I’ve definitely grown this week in how I respond to the world around me. It’s amazing how, when you’re faced with a challenge, you either rise to it or wither and die. I believe that this is Garth’s underlying message to us all.

If you missed my post from yesterday, please refer back to #118. I know that many of you were waiting for this information. Now you know who your real rulers are and when Smoking Man proclaims that you’re all tax farm debt slaves, you know what he’s talking about.

I’ll be kicking around here a bit more today. If you miss me after today, just know that I’m not that far away. After all, it was just a job I felt I had to take on.

#65 X on 11.19.11 at 11:23 am

Why doesn’t the gov’t reduce amortization periods, then we would have $ to save for retirement, rather than have greater fools buying homes they will take all of their working years to pay off.

#66 Maya on 11.19.11 at 11:40 am

Interesting piece on CBC Radio’s Metro Morning from yesterday.

Question is: when will the tide turn against these “sexy, sleek” buildings, and what will it do to the condo market in Toronto?

#67 pjwlk on 11.19.11 at 11:46 am

Those who have worked hard, been frugal, and saved all of their lives will be called upon to help take care of those who have not.

More/higher taxes and user fees are not the concern of those who have nothing to contribute or go bankrupt…

#68 eaglebay - Parksville on 11.19.11 at 11:54 am

#65 X on 11.19.11 at 11:23 am

It’s up to the consumers to reduce, select, an amortization period.
What does the government have to do with it?
Education is the key. Too bad our education system is failing us. They get an F.
Everybody wants the government to take care of every facet of their lives. That’s what’s wrong with our society.

#69 Jsan on 11.19.11 at 12:04 pm

#59 eaglebay – Parksville on 11.19.11 at 9:40 am

#15 Jsan on 11.18.11 at 10:41 pm

Conspiracy aside you’re contradicting yourself.
How can you have regulating and common sense in the same sentence.
People are taking on these huge mortgages on their own free will. I don’t need or want the government to tell me how to run my affairs.
You can’t legislate stupidity.


You are so absolutely wrong. When the government is backing these asinine mortgages with Canadian tax payer money through the CMHC than it IS GOVERNMENTS BUSINESS to tell people how to run their affairs. If these loans were coming from the banks and were not CMHC (tax payer insured) than i could care less if the banks were willing to lend a 20 year old 20 million dollars for a house, it’s their loss and not my loss as a tax payer.

You take away the CMHC and just see what unwilling lenders these banks would become. The CMHC and it’s backing of these ridiculous loans is the reason for most of this mess.

#70 Snowboid on 11.19.11 at 12:06 pm

#56 Steve on 11.19.11 at 8:13 am…

I have to agree – I think the RE in many areas of the Maritimes is under-priced.

Especially love Fredericton and all the wonderful homes along the river.

PRPP? It wouldn’t surprise me if the Cons try to wash their hands of CPP, much like the wholesale privatization of services in BC by our right-wing masters.

…on another note…

At a party with about eighty of our Phoenix neighbours last night – most who have retired in the last ten years. Many of them were also snowboids, but mainly from within the US.

When comparing investment strategies with a couple of retired CPAs – amazing how close their strategies are to ours, which of course are based on Prof. Turners’ teachings.

Sold their summer homes and rent (Washington State and Illinois), but have bought in the same area of Phoenix as us – most investments are liquid – no PMs.

Funny, though, they don’t have a clue about what is happening in the Canadian economy. They had heard Canada had no problems financially and were surprised to hear how tenuous our real estate industry is.

Gasps around the room when I mentioned the average prices of SFHs in Vancouver and Toronto.

The biggest laugh came when I told them the comparison of prices in Canada vs the US. Most had vacationed in Canada before, but when the US dollar was much higher.

Best example, 24 pack of canned beer in BC $ 42.49; pack of 30 of the same beer I picked up yesterday at a local Phoenix grocery chain $ 16.97!!

C’est la vie!!

#71 dd on 11.19.11 at 12:11 pm


Why rely on government. It is like a sickness in Canada. The government can do it. BS. The homeower can easily reduce the amort period.

#72 Jsan on 11.19.11 at 12:12 pm

“#65 X on 11.19.11 at 11:23 am

Why doesn’t the gov’t reduce amortization periods, then we would have $ to save for retirement, rather than have greater fools buying homes they will take all of their working years to pay off.”


Because the Conservatives engineered this housing Bubble and the last thing they want to do is take the trough away from the house pigs. They flat out knew what they were doing and purposely created this housing bubble in my opinion. They knew that the quickest way to artificially pump up your economy is to create “The Wealth Effect”. Home owners begin to feel they are rich because the paper value of their homes skyrocket. This spurs tons of frivolous spending and pours jet fuel on the economy. The only problem is when it ends, you have deeply, deeply in debt consumers and the inevitable crash of the inflated asset as bubble prices always come crashing back to earth.

It worked for them though, they got a Majority because of it. Now, ultra , ultra cheap interest rates is the only thing keeping this precarious house of cards standing. When they go, watch out below.

#73 Timing is Everything on 11.19.11 at 12:22 pm

#14 Unistar38
#20 Westernman
#45 Mean Gene

I’ll add to that list…

It seems, some Canadians actually ‘contribute’…even in Alberta.

#74 Okanagan Renter - No Joke on 11.19.11 at 12:29 pm

First time posting, but have lapped up present & past postings like a hungry dog. I can barely find the words to say how happy I am to have found this venue. Until now I thought I was the only one who thought the home-buying lust was our age’s financial mad cow disease.

Having just recently moved to the Central Okanagan my spouse & I immediately felt pressured to buy a home, both from co-workers and even from the very same realtor who negotiated our rental unit! A 1-bdr condo in the complex we rent at sold for a quarter of a million $! And that was in 2008! We rent a 2-bdr in the nicest part of the building (cathedral ceilings & all) for peanuts, relative to paying a mortgage on this overpriced money pit. Why are we still feeling socially pressured to buy? My spouse can’t find a job in town and from what I hear property prices have plummeted here to the tune of double digits in some parts.

My only problem is I don’t know where best to invest the cash we’re saving by not buying. Garth says that “80% of people with TFSAs have the money in the wrong place.” I’m probably one of those 80%, so where the blazes am I supposed to put my TFSAs? Most I can get is 2.3% from a credit union in Manitoba.

I will revisit this shortly. Remember, TFSAs are not for saving. — Garth

#75 shanks on 11.19.11 at 12:32 pm

on the subject of preparation:
at the risk of being labelled a doomer or prepper, i would like to suggest that as part of being prepared, it is important to have a reserve of food and water, in addition to savings and good investments. I am not talking about 50 years supply of canned goods or anything, but if you can survive for a week or a month, you could very well find yourself S.O.O.L.

For example, anyone in quebec should be able to remember the ice storm of recent years. Some people were out of power for over a month. Not so easy to get your groceries then.

Another example was a few years back when for one weekend gas in eastern ontario and western quebec got scare, due to something like a strike or a refinery shutting down or something like that. Things at the pump got a little hairy, people ready to fight over gas and trying to cut in line.

energy preparations are also important. You can get a gas generator for a couple hundred on sale, or get a few solar panels, a few batteries, and an inverter for under a grand. when you got juice enough to keep your heat on and cook your food, you will be happy you took the time.

Needless to say Garth, anyone who refers to their domicile as the bunker should have these simple and easy preparations! but a lot of people live in denial that these things could ever be necessary ever. whatever. be dependent or be independent.

at least i am not pumping physical bullion! altho that is not a bad idea, if you consider a balanced porfolio… what loss is it to get a couple of ounces of silver bars and stash them somewhere. if anything, they make nice little gifts for the kids and grand kids later on in life. Personally, i put a lot more trust in a physical thing rather than the paper representation of that thing (I still own some of the paper representation, i just dont put any trust in the validity of its representation, only what I can cash it in for).

#76 Philo S. Opher on 11.19.11 at 12:35 pm

Disciple`s replacement. You did well this week. The all wise, all knowing sage from the east, aka, Disciple will be mighty proud of you. A well deserved rest is in order.

#77 Easternman on 11.19.11 at 12:36 pm

Hey there Westernman, this is Easternman telling you that I like your rugged individualistic approach to life. Not all easterners are liberal softies.

#78 Gord Morrow on 11.19.11 at 12:47 pm

Another great post! First I want to congratulate Lynne for not buying into the “bs” that the mortgage broker was trying to sell. Too many do and that is why housing are are no longer affordable to even above average earners.

Secondly, to your point about the new Pooled Retirement Pension Plan. The last thing Canadians need is another retirement saving vehicle. I quess the politicians just do not get it. We already have options to save for retirement (TFSA and RRSP), we just are not using them.

This new plan is not mandatory nor do employers have to contribute to it. So what makes the government think that people will use the PRPP when we are using what we already have.

If the government believes we are not motivated enough to save on our own, and there seems to be plenty of data that show we are not saving to prove that at least their right about that, then make a changes to CPP so contributors can get a liveable pension from it. Afterall CPP is mandatory, so Canadian would have no choice but to actually save for retirement.

The only who will really benefit from the new PRPP are the banks and mutual fund companies.

It seems that as nation we really do not want to take control of our financial lives. I know some people may not have the knowledge or tools to save. Yet, there are many free tools available plus course etc.

I have recently advertised a 10 week course to help people transform their relationship with money ( that is to commence in Janaury 2012 and have had very little interest.

I quess it is a lot “sexier” to borrow, spend and have that over-priced house and hope for the best than it is to take control of their financial life.

#79 The thing in the basement on 11.19.11 at 12:57 pm

55 Al – you sure RRSPs are not creditor proof? I thought it varied according to province. I googled it and most of the hits are from 2008 where it looks like the move was to creditor proof them to make it more equitable with insurance investments (seg funds) and employee pension plans.

#80 T.O. Bubble Boy on 11.19.11 at 1:00 pm

The Globe and Mail features a couple with a negative net worh…

Cash in bank $1,300;
TFSA $300;
RRSP $1,800;
Residence $426,000.
Total Assets: $429,400

Mortgage $410,380
lines of credit $64,130
Total Liabilities: $474,510

Net Worth = -$45k!!!

(and $1,300 in the bank for a couple with $8k/month income!)

absolutely insane

#81 Junius on 11.19.11 at 1:13 pm

I know this story well having had a similar experience more than 2 years ago. It is shocking that it continues in the face of the US bubble burst and all that is going on in Europe. Shocking but since the Cons can only dream up this PPSA crap there is no hope until it crashes.

#82 BPOE on 11.19.11 at 1:15 pm

Awesome returns
The most expensive condo is the penthouse at 1011 West Cordova, which has been put back on the market for $28.8 million — $11 million more than it sold for last year

Read more:

#83 crazy!! on 11.19.11 at 1:22 pm

I make closo to 250K/year….everytime RE or bank tell me I can afford a mansion and try to tell me why I live in a 400K house….I tell them I will buy it when they pay for taxes, utilities, hydro and my good everyyear vacations!!..then I will buy. sooooo good to place money in other places rather than in your overvalue box….

#84 Bill Gable on 11.19.11 at 1:43 pm

75% of Canada’s GDP is tied up with our boggled American trading partners. Think we have an easy ride ahead? Check the numbers from the US Census – Mr. Turner probably had to take the Harley out for a long ride after reading some of these stats.

Scarier than Harper’s Hair.

“When the US Census Bureau this month released a new measure of poverty, meant to better count disposable income, it began altering the portrait of national need.

Perhaps the most startling differences between the old measure and the new involves data the government has not yet published, showing 51 million people with incomes less than 50 percent above the poverty line. .

That number of Americans is 76 percent higher than the official account, published in September.

All told, that places 100 million people — one in three Americans — either in poverty or in the fretful zone just above it.”

#85 Danforth on 11.19.11 at 1:49 pm

I know it sounds fascist, but if you make saving for retirement in some form of a plan _mandatory_, then by 2040 there will be no crisis. Everyone will have a nest egg!

Those who are hurt most during their earning years are the working poor.
But they are also at highest risk during retirement years in the current state of affairs.

#86 detalumis on 11.19.11 at 1:50 pm

Not sure what the point of this example is. You have a couple, one who is working in the public sector and will never have to worry about saving for retirement, with at least one set of parents that have the do-re-mi, and who make almost double the median income for a 2 person family in their geographic area and who are at the beginning of their working careers. The story should actually be why does this couple feel so-hard-done-by.

#87 martin on 11.19.11 at 1:53 pm

”when kids can buy mansions, not a chance”

this is a good one

#88 Ret on 11.19.11 at 1:54 pm

There is, no doubt, a real agenda behind PRPP’s and it has zippo to do with helping immigrants, low income workers or anyone else not on the government’s VIP list. (Sorry Garth. I checked. Not there.)

Programs like the PRPP don’t just come along because your government really cares about you and is concerned about your future welfare. Vote for me. I really, really care about you! Yeah, right.

What are the real drivers behind this? Help Canadian banks and insurance companies for sure. Restructure civil servants pension plans, who knows?

Is being encouraged to invest in Canada’s declining productivity and lagging innovation really a great way to secure your future?

Link on commenting on both factors from G&M today:

#89 Edmonton Guy Here on 11.19.11 at 2:12 pm

Does anyone know the Average SAvings Rate in the Provinces?

I know in ALberta the average saving rate used to be over25% in the boom of the 80s but heard it’s o% the last 7 years. People are getting as much into debt as the savers are saving! Isn’t that crazy!

I think it’s the bad government here-they’ve goy us on a unsustainable road… still 3.5 billion in defeciet!

#90 MarcFromOttawa on 11.19.11 at 2:14 pm

#69 Jsan

The Canadian housing bubble was engendered by CMHC government regulations combined with micro mismanagement of interest by central banks throughout the world. To imply that more government regulation is the solution at this point is insane.

Instead of creating new regulations we should be prosecuting those who created this moral hazard (*Cough MF Global cougH*) to the full extent of the law in a criminal court.

#91 DM in C on 11.19.11 at 2:15 pm

#40 Foggy…”Boy how things change. In ’91 we decided to buy our first house. The price was 165K ”

In 1999 we were 30 years old and bought our first place just outside Halifax — a great 4 bdrm bungalow on a lot that Calgary developers would stick 4 homes on. We paid $75k. At the time it was just under our 3x family income barometer. Sold a year later (job offer in another province) for $85k. It was the start of the ramp up / catch up in prices.

Fast forward to a short 12 years later…. Family income has grown exponentially and we’ve made a cross Canada move — and even though we can afford a 3x income home in Calgary – there’s no way I’m paying $500k for a house when just over 10 years ago mine was $75k. I don’t regret selling it at the time, but it’s given me great perspective into the bubble that blew in the 00’s. I know the first house we bought was under-valued, but it was going to be a home, not an investment.

People have short memories, that’s for damn sure.

#92 ballingsford on 11.19.11 at 2:26 pm

Long time follower and a believer in what Garth writes! Wife keeps yacking about buying a home instead of renting. Told her that the bubble will soon burst as I don’t want to move out to the burbs, and we’ll probably be able to buy into this nice hood when it gasses out.

Currently paying about $1100 per month for rent and parking (includes heat and lights). Checked an MLS listing for a home around $350,000 in the hood today and the monthly mortgage payments would be around $1600 – $1800. I could put more money down though if I wanted.

Add to the monthly payment; property taxes, heat lights, water and whatever the hell else needs to be bought or serviced, and it’s over 2 grand a month.

At that rate, I wouldn’t be able to continue living debt free and be able to eat prime rib and drink fine wine!


#93 Jimbo on 11.19.11 at 2:57 pm

Garth, any idea when we might expect interest rates to start going up?

Sooner than you think. — Garth

#94 T.O. Bubble Boy on 11.19.11 at 3:10 pm

@ #5 Theresa Sheridan:
This is what a million dollars will get you in Vancouver.

Well, it’s not quite $1M, but here’s an equally ridiculous $900k ONE BEDROOM house in Toronto:

#95 LS in Arbutus on 11.19.11 at 3:20 pm

BPOE – all I can is GOOD luck to this sorry sod. But obviously not too sorry, as they could afford $17.8 million in the first place. Please update us when this sells for $11 mio more than it sold for last year. It seems they didn’t get the memo!

They will be lucky to break even…. but please update us when it sells, that is, if it does.



Awesome returns
The most expensive condo is the penthouse at 1011 West Cordova, which has been put back on the market for $28.8 million — $11 million more than it sold for last year

Read more:

#96 LS in Arbutus on 11.19.11 at 3:24 pm

Here’s the $28.8 million listing!

#97 InvestorsFriend (Shawn Allen) on 11.19.11 at 3:37 pm

Garth said:

(a) there is no effective control on the mortgage industry, and we will all live to regret that;


So Garth, are you suggesting we need the GOVERNMENT to tell people how much of a mortgage they can afford. (oops we already have that). Look if people are so stupid that they think that taking the MAXIMUM allowed mortgage is what they should do then fine.

If some people want to commit financial suicide let them. And it’s a mortgage broker’s job and certainly his right to talk them into it to. It’s their job to be skeptical of the broker and every other salesman in the land. Read your Adam Smith. As Buffett has wisely put it; “Never ask the barber if you need a haircut”.

If we all take care of our own financial well being and keep the government out of things we will be collectively better off.

Some people will crash and burn. And I defend their freedom to do it.

And their freedom to smoke and over-eat too.

Government control is a slippery slope and we already well down the hill on that.

God bless freedom. God damn the nanny state that Garth appears to aspouse here.

We regulate the guts out of the investment business, right down to the dollar value people can borrow and the appropriateness of their investments. Home purchases are far larger and the leverage more extreme. Perhaps the same regulatory framework should apply, industry-imposed. — Garth

#98 InvestorsFriend (Shawn Allen) on 11.19.11 at 3:38 pm

oops that probably should be espouse…

#99 InvestorsFriend (Shawn Allen) on 11.19.11 at 3:38 pm

and should that be whoops or at least ‘oops?

#100 Two-thirds on 11.19.11 at 4:14 pm

Wow, I think as some have pointed out before, there is a Greater Fool “ghost writer.”

Structurally, a decent read. Style-wise, add more pepper. And…make the portion smaller.

No mention of the orange guy’s shorts – this cannot be Garth writing.

Maybe one of the blog dogs has been promoted? If so, who is the lucky chap/gal?

Bandit. — Garth

#101 Okanagan Renter on 11.19.11 at 4:16 pm

Dear Garth,

Just read the entry where you specifically address the kind of TFSA to open ( I should have read more previous entries before whining about not knowing what to do with my TFSAs! I was thinking of opening an account with Questrade on the advice of a friend, but a recent survey in the Globe & Mail showed Questrade at 10th place overall. Virtual Brokers came in second, but they have the lowest fees so they may get my business any day now.

ETF TFSAs here I come, and may the gods help me!

There are 240 ETFs on the TSX. Do you know the three or four to choose? — Garth

#102 Blair on 11.19.11 at 4:17 pm

I can’t see how PRPPs will help. There are already enough tools out there to prepare for retirement. Small business that are not obligated to participate WILL NOT participate.

The onus is still on individuals to prep for retirement. The problem is not lack of revenue or a high cost of living…it is excess spending, lack of financial education and reliance on sales people as experts for guidance that is to blame.

#103 shanks on 11.19.11 at 4:43 pm

hey vlad,
check out this orange delicacy!

#104 Spiltbongwater on 11.19.11 at 4:47 pm

That 28.8 million penthouse has Maintenance fee: $4,272.84. At that price why does the strata worry about a few coins. Why not just charge a cool $4,275 per month is is the $2.16 per month the breaking point on whether a deal can be made or not? For $28.8 mil that place better come with an STD free prostitute in each room.

#105 Okanagan Renter on 11.19.11 at 4:49 pm

This will probably sound hopelessly naive, but apart from the Big Six bank ETFs (RY, BMO, etc.) and the XIU funds that you recommended in the previous blog entry I’m like the proverbial blind man in a china shop.

#106 Westernman on 11.19.11 at 5:09 pm

Re: Garth’s response to Shawn Allen,
Yeah Garth, just what we need in Canada – MORE regulation…

Actually self-regulating industries which have a fiduciary responsibility to individuals pose exactly the kind of discipline we need. It’s one reason there are no Canadian Bernie Madoffs. — Garth

#107 Disciple's replacement poster for this coming week while he's on vacation on 11.19.11 at 5:21 pm

I think I’ll apply to be Garth’s ghost writer on weekends..he deserves another day off .

You accuse me of mind control, then want my pulpit? — Garth

#108 Disciple's replacement poster for this coming week while he's on vacation on 11.19.11 at 5:26 pm

#76 Philo S. Opher
thanks , I hope that he approves. Now I think I need a vacation :)

#109 jas girn on 11.19.11 at 5:29 pm

Garth, I am getting impatient about the new book. Release it already.

#110 Okanagan Renter on 11.19.11 at 5:33 pm

I found this recommendation at that cites XIU, but privileges VWO (for capital gains) for TFSA ETFs.

That said, confirming Garth’s recommendation of XIU, this is the upshot of what TaxTips says: “There is 15% withholding tax deducted from dividends paid into a TFSA from any of the above ETFs except for XIU.”


#111 Tom from Mississauga on 11.19.11 at 5:40 pm

This new pension plan is just to appear to be doing something by the Feds. No way it will actually do anything. My work has a 4% volunteer match DPSP. In reviewing the expenses on the P/L I found the DPSP expense was 2.4% of the company payroll. Went to HR because they are clearly giving accounting the wrong numbers. Interesting I found out from them that 50% of my colleagues are actually not enrolled in the plan that tops up their salary 4%. The expense is 2.4% because all the top managers(salaries) are in. I can’t believe with no top up anybody will sign up for this PRPP. No way. My company half aren’t signed up and the company doubles it.

#112 Van guy waiting on 11.19.11 at 5:42 pm

#82 BPOE on 11.19.11 at 1:15 pm
Awesome returns
The most expensive condo is the penthouse at 1011 West Cordova, which has been put back on the market for $28.8 million — $11 million more than it sold for last year

0 returns because it’s not even sold. I don’t think it will sell at that price. They will be lucky to get what they paid.

#113 The thing in the basement on 11.19.11 at 5:44 pm

84 Bill

“75% of Canada’s GDP is tied up with our boggled
American trading partners.”

Just to be clear Bill, that’s 75% of our EXPORT economy
is tied to the US. Of Canada’s total economy, exports
make up about 25-30%. So it’s somewhere around 20%

#114 Westernman on 11.19.11 at 5:50 pm

Re: Response from host at #106
See people – all this country needs to cure it’s economic ills is more government regulation and meddling…maybe higher taxes would help too. I’m sure our masters in Ottawa can arrainge this. Prosperity is just another load of government red tape and taxation away!

SROs are not government entities. — Garth

#115 jess on 11.19.11 at 5:53 pm

tech transfers
Published: August 24, 2011

#116 Canadian Watchdog on 11.19.11 at 5:55 pm

#106 @Garth

That doesn’t seem to be the case in CME’s oversight of MF Global— same applies to CMHC who regulates themselves according to OSFI’s capital requirements. As Karen Kinsley stated on record:

“Under international banking rules, if you are, as we are, a 100% government entity, you don’t have to put aside any capital.”

Full Committee Session:

Enforcing existing regulation and keeping corporate interest away from lawmakers is needed first.

#117 TurnerNation on 11.19.11 at 6:24 pm

#80T.O. Bubble Boy on 11.19.11 at 1:00 pm

They may as well declare bankruptcy now – 7 years for paying off LOCs, and that’s without kids?

And their sickening sense of entitlements: expected higher salaries and gold plated pensions to come. Regardless of earned merit or not.

All at taxpayers’ expense. Teachers, cops, city unionistas on all the gravy train.

Let’s face it, they KNOW they’ve won the equivalent of Cash For Life lottery. Toronto cops: 83k first year to start, plus O/T, plus $65/hr paid traffic duty, plus pensions, sick days, vacation, family benefits. Overfed city workers and managers; in fact nepotism was exposed as a real problem at one point.

I saw throw ’em to the Bay Street wolves and let them earn a real living.

Austerity now!!

#118 live within your means on 11.19.11 at 6:28 pm

#70 Snowboid on 11.19.11 at 12:06 pm

Was talking to DH an hour ago about driving back from Mtl at Christmas via the US so I could buy butter at $2. a lb instead of $4.+ and stock up on other grocery items that are less than half the price here & buy a bottle of Glenmorangie, DH’s favourite – prolly at half the price. Look at the price of wine in the US in comparison to Canada – ridiculous. Time to go back to making our own wine. When we bought our current home (21+ yrs ago) the previous owners put insulation in a large basement cupboard with a light bulb. We made our wine for years as well as the odd batch of beer, but we rarely drink beer now.

OT – have put bales of straw on my veggie gardens this fall to suffocate the spring weeds. Will order & start heirloom tom & other seeds from Pine Tree in Maine this winter and will start them in the basement early next spring. DH will put up hanging lights. I really miss all my home grown veggies & herbs. My dream years ago was to have greenhouse. And, if I had to live my life over, I would have become a horticulturist.

Pardon my long post.

#119 john m on 11.19.11 at 6:30 pm

$135,000 income before taxes and a $800,000 mortgage =====kraft dinner for 25years :-)

#120 live within your means on 11.19.11 at 6:39 pm

#114 Westernman on 11.19.11 at 5:50 pm
Re: Response from host at #106
See people – all this country needs to cure it’s economic ills is more government regulation and meddling…maybe higher taxes would help too. I’m sure our masters in Ottawa can arrainge this. Prosperity is just another load of government red tape

SROs are not government entities. — Garth

Hi Garth – what are SROs? Went to Investopedia and couldn’t find the term. I’m one of those boomers who is suffering from CRAFT disease.

‘Self-regulating organizations.’ Now, what’s CRAFT disease? — Garth

#121 jess on 11.19.11 at 6:40 pm

the near poor?

#122 Blaze only kush on 11.19.11 at 6:40 pm

#104 Spiltbongwater on 11.19.11 at 4:47 pm

Each room comes with hash bugs in the bong. For life lol.

#123 john m on 11.19.11 at 6:45 pm

#72 Jsan on 11.19.11 at 12:12 pm <<<<<<<<<<<< absolutley right

#124 Macrath on 11.19.11 at 6:56 pm

#110 Okanagan Renter

Vanguard should have the Canadian version of VWO trading soon ticker VEE; CDN $, no withholding tax and TFSA ready.

#125 Borrow until bnakrupt? on 11.19.11 at 7:19 pm

DonDWest #28

I think you are right. Made a mistake working and saving and watching over my money while people with no money have been able to borrow and borrow and then get in trouble and then borrow even more. The Canadian government allowed the deadbeats of Canada who borrowedone trillion dollars in mortgages. My Sister bought a house with NOTHING down in 2006. She has borrow from her HELOC many times buying a new car and reno’s on the house plus trips and spending money as if it isn’t hers(really it’s not it’s Canadian taxpayers) . She believes prices will keep on rising to keep paying for her lifestyle she can not afford. She has even admitted to me that worse case is she files for bankruptcy and all debt is wiped out. Feeling really stupid for not just borrowing stupid amounts of money. Right now I am debating how much longer this madness can go and if I should just try and borrow as much as I can ( buy) a million dollar home and ride it out. If rates go up I go bankrupt but before I do max out every credit option. I am sure tens of thousand of people are plan on doing just that. Thanks to our CONservative government who is anything but CONservatives. The only other option left is leave this stupid country and try and have a better life somewhere else. Canada is no longer a country with a future for me unless I want to borrow money I can never pay back and work and die for a house? Great life in Canada.

#126 BPOE on 11.19.11 at 7:31 pm

BPOE prices soar upward. US plummets downward. That’s why you can fill your boots in Canada. Plus CANADA is FOR SALE. the US is not. American CANADA IS FOR SALE. Think about it
By comparison, this very same couple would qualify in the U.S. for a home loan of up to about $450,000, on a home bought for about $562,000, on a rate that is fixed for 30 years. This is nearly half of what the lender in Vancouver was willing to “give” them. In most U.S. markets, any home loan exceeding $417,000 is considered a “Jumbo” loan, viewed as having significantly more risk, and it receives a very large rate premium over standard rates making monthly payments more expensive for the buyer. This couple would need to put down the now-normal minimum of 20% at $112,000 (leaving them $18,000 in the bank out of the $130,000 they’ve saved). Yes, THAT is how much banks have reeled in lending and returned to normalcy. Getting the picture now

#127 live within your means on 11.19.11 at 7:55 pm

Hi Garth – what are SROs? Went to Investopedia and couldn’t find the term. I’m one of those boomers who is suffering from CRAFT disease.

‘Self-regulating organizations.’ Now, what’s CRAFT disease? — Garth

Thanks Garth for the explanation.

CRAFT disease means ‘Can’t Remember An F’n Thing’. :-) I used the acronym on your old political blog.

#128 Gord In Vancouver on 11.19.11 at 8:03 pm

BC Civic Elections

Vancouverites – if you want to stick it people like BPOE, make sure you vote “YES” to all the Capital Plan Borrowing Questions : )

#129 TurnerNation on 11.19.11 at 8:04 pm

My guess: CRAFT = Can’t Remember A Flipping Thing?

#130 OttawaLuke on 11.19.11 at 8:08 pm

Any opinions on the MSPP’s?

#131 Daisy Mae on 11.19.11 at 8:24 pm

“Mostly, you have to ask: if we already have RRSPs, RRIFs, TFSAa, LIRAs, RDSPs and RESPs, and stupid abounds, will PRPPs change much?


No, but this is what we can expect from the ‘Cons’….more and more stupid decisions.

#132 Bottoms_Up on 11.19.11 at 8:40 pm

#101 Okanagan Renter on 11.19.11 at 4:16 pm
I have one trading account with Questrade, so far they have been great (I probably have 12-14 transactions in that account to date). Not as fancy as Tradefreedom use to be, but good enough to get the job done. And whenever I have a question they respond with clarity within a day (by email).

#133 DM IN C on 11.19.11 at 8:47 pm

CRAFT disease. Lol haven’t heard that one for awhile. Can’t remember a f$$king thing

#134 jess on 11.19.11 at 8:47 pm

interesting visual
tangled web of inter-country lending, who owes what to whom?

Advertisments on the elementary students report card.
Pizza ads on the bottom of test papers.

#135 Bottoms_Up on 11.19.11 at 8:47 pm

#86 detalumis on 11.19.11 at 1:50 pm
The point of the example is that a couple earning $130,000 should never be given $600,000, let alone $900,000. How the ‘eff’ is that couple ever going to pay that back? At $900,000 you’re talking about paying back around 2 million dollars, that is actually close to their entire lifetime take-home pay.

I know of a couple in the Ottawa area that makes around $130k. Even with a good credit rating, it was difficult for them to get $400k.

#136 Steady Eddie on 11.19.11 at 8:54 pm

I guess nobody cares bill c-51 passed…too busy waiting to buy mcmansions. It will make for a nice prison.

#137 Bottoms_Up on 11.19.11 at 9:00 pm

#60 T.O. Bubble Boy on 11.19.11 at 9:41 am
I think you miss the point of Costco.

I pay $3.95 for 4 litres of skim milk.

$23 for a huge bag of Starbucks coffee beans.

$8 for a huge brick of old cheddar cheese.

About 1/2 price for clothes, and the quality is better.

And a few weeks ago I got 3 loaves of Dempster’s whole grain bread for under $5.

You can actually save a lot of money by shopping at Costco.

#138 Behavioral Finance on 11.19.11 at 9:03 pm

Time to revisit this flick.

#139 Bottoms_Up on 11.19.11 at 9:04 pm

#45 Mean Gene on 11.19.11 at 1:15 am
Are you kidding?

Canada’s top 100 employers:

#140 Disciple's replacement poster for this coming week while he's on vacation on 11.19.11 at 9:29 pm

point’re a good sport Mr. Turner

#141 Timing is Everything on 11.19.11 at 9:29 pm

Hey everyone…pizza is a vegetable in the USA. Ya can’t make this stuff up….

#142 Timing is Everything on 11.19.11 at 9:40 pm

#134 jess said ‘Pizza ads on the bottom of test papers.’
#136 Timing is Everything

Jess, that’s ‘vegetable’ ads on the bottom of test papers.
What a system!?

#143 Humpty Dumpty on 11.19.11 at 10:29 pm

Bad planning or more like a disaster…

#144 Goldenfox on 11.19.11 at 10:30 pm

Hear Gerald Celente describe how the white shoe boys at MF Global screwed him. There is no more rule of law in the USA. Scroll half way thru to hear his tale of woe.

#145 Nemesis on 11.19.11 at 10:33 pm

“But the greatest risk is running out…” – Hon. GT

“Any man who has $10,000 left when he dies is a failure.” – Errol Flynn

#146 Interest Rates Up on 11.19.11 at 10:50 pm

Raise interest rates now. Garth kinda reminds me of Dumblledore minus the massive beard. But both have same amount of wisdom. How can Carney be so wrong. IF Mish says do it.’ Then doit

Best economist in the world

#147 SPENDITALL on 11.19.11 at 10:54 pm

Greetings from Vegas Garth
First time post
By now I’m sure the old adage Markets can stay irrational…….. has worn thin.
Here in Vegas I was told for years what a fool I was for renting and now many friends are up side down or bankrupt in multiple homes.
Currently I’m buying homes for 35-45k.

Just a bit longer and all of your years of work will prove to be true.

July- August should be fun.

#148 Goldenfox on 11.19.11 at 10:55 pm

” Garth, any idea when we might expect interest rates to start going up?

Sooner than you think. — Garth”

Don’t be so sure-JP Morgan has $600 trillion worth of derivatives and most of them are interest rate swaps. They have a choke hold on interest rates. If they ever lose control, the whole system goes down. Then you will get your hi rates, but there will be nothing left to collect from.

#149 Good to be out on 11.19.11 at 11:02 pm

#145 Nemesis on 11.19.11 at 10:33 pm
“But the greatest risk is running out…” – Hon. GT

“Any man who has $10,000 left when he dies is a failure.” – Errol Flynn.


That quote is about 100 years old…so adjusted for inflation 10 grand is probably closer to a million dollars. So yes I would say Mr. Flynn had a point!

#150 on 11.19.11 at 11:03 pm

snowboid next time compare costs for a brain scan or bypass, see how many laughs that gets.

#151 Min in Mission on 11.19.11 at 11:10 pm

A few years ago, “Awesome Lady” and I went to the bank to get pre-approved for a mortgage. I was 55. We qualified, at that time, for 750K. We bought a house for 200K. Nearly paid for now. WTheck would I do with a 750K house. We wanted a home.

#152 Nostradamus Le Mad Vlad on 11.19.11 at 11:27 pm

#103 shanks — G’day shanks. Guess all these wacky conspiracy theories different colored animals are coming outta the closet now. Like antisocial fish (such as the great white), everyone has freedom to express themselves any way they want.

So I choose a white chocolate mocha, complete with chocolate sprinkles accompanied by a double White Russian!
BTW, those 84 empty condo units sitting on First Nations land, which were to be sold off at 50% — they all sold within a few hours Saturday. A whole lotta new borrowing until it hurts.
Had a terrifying experience today. Went to the local mall and was nearly run over by zillions of shoppers looking to park their dough somewhere (my pockets would easily have absorbed all that!).

I will remember to try and avoid the mall for safety reasons. I’m too nutty to be left alone by myself!
Mtge. strikes New approach in Ireland; 6:22 clip “Newt Gingrich got paid 1.6 million from Fannie & Freddie.” Meanwhile Fannie just applied for another US$8 bln. in bailout funding; Peter, Paul and Markets Market lollapaloozas; Megabanks Circumcised Not sure whether they will like it; Removing Money or privatizing it. In any case, we don’t have it anymore; 2:26 clip EU’s unemployed youth threatened by social exclusion; Undermining OWS “I warned you the money-junkies love to play dirty!”

College Ed. is a myth; Expiry Dates We all have one, but does the EU? Free Trade isn’t free; MF crap Everyone’s suing everyone else; US Fed and 38.36% inflation with one more year of ZIRP.
Alternative Media could be severely curtailed under new US ‘net censorship laws; The Occupy Movement If it continues to get larger, a question to be asked is should martial law be brought in? So, here is a 5:41 clip of the same question being asked; Libya Another puppet, like Pinochet or the Shah or Iran, installed as head; 2:21 clip There is a reason why he is known as Obomba. Moving into the Persian Gulf. Remember those 34 US warships that set sail in Fall 2010? 2:59 clip Wasn’t Mubarak ousted for the same reason?

#153 Canadian Watchdog on 11.20.11 at 12:56 am

Good news for Toronto renters, you had lower rent this year. Bad news for you is… 2012 Ontario rent guidelines are going up.

What’s with all the kinky stuff on this blog?

#154 How best to go bankrupt? on 11.20.11 at 1:22 am

Garth some people here want to learn how best to screw over the banks and Canadian government by going into to debt. We also want to learn if the gamble doesn’t pay off how best to file for bankruptcy? Garth by educating people how to screw over the banks and government you may scare them into stopping this madness. Since working and saving money seems to be the fooling thing .

#155 Okanagan Renter on 11.20.11 at 2:16 am

#132 Bottoms_Up. That’s good to know. I haven’t signed up officially with anyone yet, but I have an application with Questrade that just needs a void cheque to be finalized. My friend also vouches for them. I guess my only beef is that Questrade’s interface looks a bit dated, but I’ve had fun trading with a pretend account.

#156 Van guy waiting on 11.20.11 at 2:19 am

Why am I banned?

You’re not. Yet. — Garth

#157 Roland on 11.20.11 at 3:29 am

What they should have done with CMHC was to cap the coverage at the national median housing price. The same cap should have applied to the primary residence capital gain exemption.

That way, CMHC would still have been able to help Canadians obtain adequate housing, without encouraging banks to lend recklessly.

There was never any good reason to offer a taxpayer-backed guarantee to very large mortgages.

As it stands now, CMHC and the capital gain exemption over-stimulates investment in housing.

These policies also benefit major metropolitan areas more than the rest of the country, and the richest provinces at the expense of the rest. I wouldn’t be surprised if the housing capital gains exemption largely negates the effect of the interprovincial transfers some people like to bitch about so much.

Another couple of things:

Re: blaming educators. How exactly could schools teach people not to be greedy? If they tried to do so, wouldn’t they catch even more hell for trying to indoctrinate kids?

Re: public sector pensions. Not all are DB. For example, support staff at UBC have just had their pension benefits partly de-indexed, while their mandatory employee contributions increased substantially. Portability has also been reduced. Bear in mind that neither UBC nor the government are liable for any shortfalls in that pension fund.

So I think it’s good to break the lazy habit of assuming that the PS workers necessarily have it much better than us.

Really the large majority of us working, taxpaying cattle are stuck on the wrong side of the fence. There is no greener grass, because feedlots don’t have any grass!

#158 Makaya on 11.20.11 at 3:59 am

Kyle Bass fear mongerer or just a bright mind that just turns out to be right?

#159 DaBull on 11.20.11 at 4:04 am

#89 Edmonton Guy Here on 11.19.11 at 2:12 pm

Does anyone know the Average SAvings Rate in the Provinces?

Yes… Household debt levels have received a lot of attention, so it might come as a surprise to know that in Alberta the official savings rate has been in excess of 10 per cent for each of the past four years, even surging to 14 per cent in 2009. This means that as Canadian economic growth is weaned off of consumer and government spending, the Alberta economy will have an easier transition.

#160 Math is Fun on 11.20.11 at 4:07 am

Garth – coudn’t help but overhear a couple in Kelowna talk about the RE market. Sounds like they are encouraged that a neighbors house finally sold (8 mo later) and that their new RE pumper said “they have a need-nothing basement” ..which I think was a good thing?!? Lol.

#161 new-era on 11.20.11 at 4:27 am

Remember this everyone

Its not how much money you have saved up when you die.

Its how much debt your able to borrow when you die.

So live it up and spend spend spend. At the end of the day you can declare bankruptcy, and hardship and have the government support you for the rest of your life.

It is every taxpaying Canadien’s duty to ensure there is no proverty in this lovely country.

#162 Beach Girl on 11.20.11 at 4:44 am

It is late, and had a great time. Quite out of form for me to be up this late.

But Guru, and I mean that in the kindest of terms. Why will interest rates be rising. Just curious.

#163 live within your means on 11.20.11 at 9:09 am

#137 Bottoms_Up on 11.19.11 at 9:00 pm
#60 T.O. Bubble Boy on 11.19.11 at 9:41 am
I think you miss the point of Costco.

You can actually save a lot of money by shopping at Costco.


Agree. I do a good portion of my grocery shopping at Costco. Yesterday I bought prescription glasses from them for about half the price I would have paid at 2 other stores.

I buy cheese at Costco – mostly imported stuff. I always have about 6 different types in the fridge. DH eats most of it. Noticed in the last mo. imported cheese has jumped considerably in price. I buy his jeans (dark brown) for $18. and he loves them. He can wear them to work. I just bought 2 more pairs ’cause I know that they won’t be restocking the same type. Asked him to please not wear the new ones until his other 2 pairs are finished. I like their return policy also.

#164 T on 11.20.11 at 9:32 am

New Era-
You should look into Canadian Bankruptcy…you cannot walk away from mortgage debt in this country.

#165 T.O. Bubble Boy on 11.20.11 at 9:45 am

@ #148 Goldenfox
Don’t be so sure-JP Morgan has $600 trillion worth of derivatives and most of them are interest rate swaps. They have a choke hold on interest rates. If they ever lose control, the whole system goes down. Then you will get your hi rates, but there will be nothing left to collect from.

Would you really be shocked if JP Morgan was caught on the wrong side of a derivative? (the lawsuits and probe into JP Morgan’s Silver manipulation is still out there)

Also – JP Morgan may see its business for interest rate swaps decline after it arranged ‘sewer debt’ based on interest rate swaps that helped drive an Jefferson County, Alabama into the largest municipal bankruptcy in U.S. history.

#166 allister on 11.20.11 at 10:33 am

To #92 ballingsford

Your home ownership estimate is low. My house is paid for but still costs $700/month.

Annually I pay

$3000 property taxes
$1000 electricity
$1000 Nat gas heat
$1000 water and sewer
$2000 fix ups and appliance replacements such as (dishwashers, frig, stove, dryer, lawnmower, snowblower, sump pump, furnace, A/C, flowers, driveway sealing, fertilizer, garbage, carpet, paint, shingles, on and on)

Don’t forget telephone and TV costs.

#167 Standard Deviation on 11.20.11 at 11:18 am

I like the idea from the Fraser institute? that suggests in order to end the pension apartheid between DB and DC. Those contributing to DC should be allowed to max out at $2 Million+ over a lifetime to bring us up to what government pensions allow. I personally would like to see that allocation go to anything within the existing framework at the sole discretion of the taxpayer.
At least that way the tax we have to fork out to support our public sector compatriots generous DB pension plans would leave less of a bad taste.

Public sector DB pensions are but one issue. Profligate spending, under-saving and investment ignorance on the part of most people is a far greater social concern. When 70% own houses and half have no savings, you can easily see the problem is us, not the system. — Garth

#168 Deano on 11.20.11 at 12:27 pm

117, Turner Nation,

It sucks when people have something doesn’t it? They shouldn’t have any more than you and you shouldn’t have to contribute to a functioning society. After all, you did it all on your own right? You’ve never been given any help from society….not schooling, roads, police protection, fire services, environmental protection, weather warnings or any type of infrastructure at all.

83k for a cop is a lot of money. You should man up and apply. Do you have the cuglione?

#169 T.O. Bubble Boy on 11.20.11 at 12:37 pm

@ #137 Bottoms_Up / #163 live within your means:

My point was not about Costco… it was that the Toronto Star article got way off track when it tried to argue that having everyone shop at Costco was a better way to fix problems with retirement plans vs. lowering fees and making government programs better.

#170 jess on 11.20.11 at 1:05 pm

..timing regarding the tomato paste calling pizza a vegetable. I have to wonder at what % is tomato:paste is actually tomato?
#165 T.O. Bubble Boy

” In Hermann’s case, his hedge fund bought, for next to nothing, the right to collect several million dollars owed by Liberia. (They grabbed the debt from a unit of what is now J.P. Morgan Chase; banks like Morgan Stanley like to hand off their dirty work.) In February 2002, Hermann’s fund then sued Liberia for the long-forgotten loan, for compounded interest and fees. Hermann filed suit the very week Liberia’s capital, Monrovia, was surrounded by warlords, with neither electricity nor water, and the government was controlled by an escaped convict from the United States, Charles Taylor, who is now imprisoned at The Hague.”
In international law, odious debt is a legal theory that holds that the national debt incurred by a regime for purposes that do not serve the best interests of the nation, should not be enforceable. Such debts are, thus, considered by this doctrine to be personal debts of the regime that incurred them and not debts of the state. In some respects, the concept is analogous to the invalidity of contracts signed under coercion.

From the Big Picture
Dissecting the big lie about the economic crisis
nov 20th Barry Ritholtz

#171 Snowboid on 11.20.11 at 1:14 pm

#118 live within your means on 11.19.11 at 6:28 pm…

Food and booze are so inexpensive here – it doesn’t make sense!

Building supplies are even less!! Savings on tile 70% same brand, colour and style!

We are off today to decide on appliances – currently 35% less (same brand and models) – same US and Canadian chain!!!

Don’t have a garden, unless you consider saguaro, barrel, stovepipe and prickly pear cacti – plus some agave and aloe vera. Neighbours have orange, lemon and grapefruit which they share with us in Feb!

Farmers’ markets here don’t compare to the ones in the Okanagan – most produce comes in from California. But the markets’ prices for most produce is 1/2 what we pay at Safeway up north!

#150 on 11.19.11 at 11:03 pm…

No kidding, the costs are astronomical here! Maybe not so much when you consider the difference in taxes, BC medical premiums, coverage vs. the cost of insurance here. But granted, still more. We pay $ 200 a month for extra insurance while we are here.

I guess I would get the same number of laughs back in BC if I mentioned how our heathcare is ‘free’!!!

#172 CrowdedElevatorfartz on 11.20.11 at 1:27 pm

@ #167 Standard Deviation
You have some interesting points but I have to agree with Garth’s rebuttal comment.
The average person ( Canadian, American,etc.) is either too lazy, too stupid or too irresponsible to save or invest in the future.
The CPP was a tiny step in the right direction. But we, as a country, are saving far, far, too inadequate a sum for retirement.
Perhaps a compulsary system such as Australia’s Superannuation scheme? ( Check out wikipedia for a quick summary). Canada needs far more money in the CPP “kitty” just to break even.
Australia, with a smaller population, has 1.3 TRILLION in the “National pension investment bank”. Not bad for a system that wasnt compulsary for everyone until the early 90’s. Anyone born before June 1961 can draw their full pension at 55. The retirement age scale increases after that.

People with take the easy route out. Unless forced to save for tomorrow….they wont.

#173 Buy Low Sell High on 11.20.11 at 1:40 pm

@154 How best to go bankrupt

Let’s suppose that some overly indebted GTA house owner (Freedom 5/40 guy/girl) does, in fact, declare bankruptcy some time in the next several years. Firstly, in Ontario they are not going to be able to walk away from their mortgage obligation. Secondly, they’re going to have to rent after losing their home. Oh, but alas, renting will prove to be an arduous task with a shot credit rating. Thirdly, any unregistered assets would need to be liquidated in order to satisfy creditors (any CA’s in bankruptcy can chime in here). The bottom line is they’re going to become a renter for a absolute minimum of 7 years. And, a renter with no credit cards!

Wouldn’t it be better to sell the house now and retain your:
1) dignity?
2) crystallized tax free principal residence capital gain? (assuming there is one)
3) un-registered financial assets?
4) credit cards?
5) personal vehicle? (if they own one)
6) marriage or other personal relationships such as family and friends?

Either way, you’re gonna be rentin’! So, why not retain all the good stuff ya got now??????

End sermon, R.I.P.

#174 Westernman on 11.20.11 at 1:48 pm

Re: your response to Turner [email protected]
Not speaking for that blogger but I must insist that he more right than wrong. Public servants are EXTREMELY inefficient and EXTREMELY overpaid. Every attempt to get these low-achieving parasites off the public life support systym of taxpayer support must be made. They are not only overpaid while they are (supposedly) productive but the actual productive people in society have to carry their worthless hides for about 30-40 years after they stop doing the little they had been doing.
I sumise by your response to #117 that you are one of these overpaid, self-entitled anchors on society… opps, I mean public servant. Here’s hoping your ranks are thinned and soon because society just can’t afford you anymore.

Please tell us which overpaid, low-achieving parasites you would like to eliminate first: doctors, teachers, soldiers or first responders. Answer clearly if you wish to post on this subject again. — Garth

#175 TurnerNation on 11.20.11 at 1:49 pm

#168Deano on 11.20.11 at 12:27 pm

Sadly I took the hard and honest route. Took me 4 years of Uni and 6+ years to get 80k. First few years no benefits (small co.), and no pension (I contribute myself).

I am both jealous of and angry at the police. Most of their time is spent on revenue generation (traffic) with the endless new laws piled upon us. And they beat skulls on G20, even arresting a uniformed TTC worker (police quote: “This isn’t Canada any more”).
If your home or car is broken in to, the do not even come out to investigate. When they get home? It’s big screen TV and beer time. It’s all a joke to them, they know the system well.

OK On 2nd though I could not live with myself if I was that lazy, so I’m glad I took the honest living route.

We pay 40%+ of our income in direct and hidden taxes (e.g. gas, booze is mostly tax).

What do we get for this, say in Toronto?
Crumbling roads and subway (yes the 1960s era stations are in horrible shape. The subways cars are circa 1970 some still in orange seats & fake wood panelling).
Our sewer system is nothing special. Infrastructure? The only new road was Hwy 407, sold by the Cons and fees have increases out of control. Isn’t it almost .25/km now?
Mayor Ford is shuttering/selling the Zoo, and is closing city programs and libraries.

Yep I’m getting my money’s worth on taxes!

#176 Herb on 11.20.11 at 1:50 pm

#167 Standard Deviation,

We come to different points of departure in our reasoning, but always miss the boat.

To build a $2M kitty for a happy retirement that will last for the duration would take an annual contribution of $50K in labour, investment or capital earnings over a working life of, say, 40 years.

Who makes the kind of money that would allow such a discretionary expenditure in Canada, and what do we do about those who do not? Sorry, but a “tough shit” mentality will exacerbate rather than solve the pension crisis.

#177 TurnerNation on 11.20.11 at 1:53 pm

City Gravy train alert! According to former Toronto mayor John Sewell (now a critic), stats show police respond to average of 1 call per shift. And they have overlapping shifts so Toronto pays for 26 hours of policing per day. How about that, the unions invented another 2 hours per day!–toronto-police-100k-club-continues-to-grow

“David Soknacki was reacting to the release of 2009 public sector salary disclosures that list 1,329 Toronto police uniform and civilian employees who last year earned more than $100,000 – a more than 30 per cent increase from the year before.

Those fattened pay cheques do not include lucrative “paid duty,” where off-duty officers, paid by private companies, earn $60 to $70 an hour to perform such duties as directing traffic around construction.”

30% increase! I bet that hit the tax increase, fast.
Sorry, I chose an honest living.

#178 Victoria on 11.20.11 at 1:59 pm

Snowboid, You are so right ….

Healthcare in Canada. My father golfed with an eye surgeon – he did his caterac operation in two weeks – my dad bought him a Big Bertha golf Club. Most of his friends were also going down to the states for surgery. They had the money. My friend’s mom needed a hip replacement (Montreal) she handed the doctor a envelope with 2 thousand dollars in it. She was in surgery in a month. I know people with money that go to the U.S. because they don’t want to wait or there are surgeries and care that we don’t have here. Belinda Stonach went to the US when she had breast cancer because she didn’t want to wait…. Friends father in TO -Leaside needed foot surgery. Got in quickly – bought the neighbour (surgeon) a TV. It is who you know.

I lived in France for 13 years – was the healthcare different. Totally. That is why we are ranked at number 35 by the WHO and France is no. 1. In Canada the powers that be never look at Europe they are just afraid to change anything because they don’t want to look like the U.S. It is not that our doctors are poor (which is not the case) but as my friend’s husband who is a GP said to Euoropean’s who moved here – it is good when you can get it.

The only two countries with this health care system are Canada and Cuba.

Anyway I am bitter – my mom died before she got her operation. She had to wait 2 1/2 years. Her death was not caused by waiting but it would have been nice to know that she could have been pain free for the last 2 years of her life. They wanted to go to the U.S. but to pay cash was too much for them.

#179 Nostradamus Le Mad Vlad on 11.20.11 at 2:03 pm

#147 SPENDITALL — “July- August should be fun.” — We’re all tough as nails people here, we handle anything that’s thrown at us. Spill the beans! What’s going down?
This is for all the pointy-haired bosses out there, who like to mess up our lives!
Dubai Diamonds Diversifying is good; Gold-backed bonds for EU? Check to see if they’re not yellow-painted tin foil hats! Super Congress Legends in their own minds; Noose tightens UK vs. Germany; Homeless in Canada, but successful in Singapore.

San Francisco Fed. Employee admits it is a private corporation which pays dividends; Greece, G7 A group of overfed fat men; 3:22 clip 2005 predictions which came true; Update on MF Global.
The Nude in the history of tart. You can’t make this stuff up, but it takes all sorts to make the world go square; Fukushima Sea of Japan and Pacific loaded with Cesium-137, and Reactor 3 Possible hydrovolcanic explosion; Libya Bad Moon Rising; Federal EU Does it mean a NWO run by Oz, Russia, China and NATO? Glacier Fraud “They forgot to mention that there was 10 times as much ice loss at that glacier prior to 1941.”; The Devil Is In The Details India and Pakistan will eventually shed themselves of the US, as will Af’stan.

1:53 clip Fishing boat off Peru, jets and a UFO goes straight into the sea. I don’t understand Peru’s language; The Fourth Reich German super-sized state; Heroin The Taliban had all but finished with the trafficking, then 9-11 happened followed by the US fake war on terror. See how the situation has deteriorated; Astronomy stuff we’re either being sucked in or spewed out, and ‘Quakes all over.

#180 on 11.20.11 at 3:08 pm

medical costs… Another area besides real estate where the us and Canada have diverged. Have fun visiting and try to avoid medical bills. One secret is the bill you get is some random number, the provider will usually settle for much less. Always negotiate.

#181 robert james on 11.20.11 at 3:16 pm

China “Smoke and Mirrors” you say..

#182 Westernman on 11.20.11 at 3:23 pm

Notice I said “ranks thinned” not eliminated. “Eliminated” is your word… not mine.

Which ranks of the low-achieving, overpaid parasites would you thin: doctors, teachers, soldiers or first responders? — Garth

#183 Mister Obvious on 11.20.11 at 3:27 pm

#149 Good to be out

“Any man who has $10,000 left when he dies is a failure.” – Errol Flynn.

That quote is about 100 years old…so adjusted for inflation 10 grand is probably closer to a million dollars. So yes I would say Mr. Flynn had a point!

Not exactly. Errol Flynn died (in Vancouver) in 1959. I don’t know when he made that quote but let’s estimate it might have been in, say, 1955. The following Bank of Canada inflation calculator shows that $10,000 CDN in 1955 dollars would have the same spending power as about $85,000 today.

A tad short of a million, but is the point still valid? I think I’d be comfortable if I knew I could possibly die with the equivalent of $85,000 in unspent wealth but perhaps not a million. (This assumes one has no heirs or else no intention of bequeathing any wealth to them)

#184 Westernman on 11.20.11 at 3:58 pm

I’d start with the vastly over-numbered and over-compensated postal employees…. I’d start right there.

Not what I asked. You wimp. — Garth

#185 Canadian Watchdog on 11.20.11 at 4:03 pm

Which insolvent bank is yours everybody?

#186 jess on 11.20.11 at 4:13 pm

vultures rule supreme
update Iceland
*Olafur Arnarson is an author and columnist at Michael Hudson is Prof. of Economics at UMKC. Gunnar Tomasson is a retired IMF advisor. 2,255 words

#187 Goldenfox on 11.20.11 at 4:25 pm

T.O. Bubble Boy on 11.20.11 at 9:45 am
Would you really be shocked if JP Morgan was caught on the wrong side of a derivative?
Yes I would because they are backstopped by the fed. As a matter of fact you could say they are the Fed. Just like Goldman Sachs is for all purposes the US treasury. 50% of US debt is rolled over every year. If the rates went to 5% it would cost them $600 billion. Rates will remain low or its game over.

#188 Bottoms_Up on 11.20.11 at 4:29 pm

#177 TurnerNation on 11.20.11 at 1:53 pm
The overlap in shifts makes sense, I can see your 911 call now:

TN: my house is being broken in to. I need a cop here ASAP!

Operator: sorry, the cop that was suppose to start his shift is late, and the guy he’s replacing has already gone home.

TN: $hit! I knew I shouldn’t have pushed for abolishing the police shift overlap….

#189 Dean-o on 11.20.11 at 5:14 pm

Turner Nation….

7 years of Uni (6 full time, 1 done over 3 years part-time)…finished 2002…still not at 80k yet. Yes, public servant. Teacher. I spent 6 years making 20-25k supply teaching and serving lattes. I’m now employed full time, why the hell should I not have decent compensation for the 13 years I spent getting here? Do you want educated, engaged and passionate teachers at the front of the class your kids sit in everyday or do you want someone who works for less? Wait, I think I know the answer. You want a race to the bottom. Go to Wal-Mart, you’ll find it there.

Westernman…could you cart your arse around in -30 degree temps all day long, lugging kilos of mail? Doubt it.

#190 Timing is Everything on 11.20.11 at 5:16 pm

#180 said – “Always negotiate.”

Kinda like in Mexico. BTW, a buddy needs some dental work done (dental implants/caps or bridge or some such)$5k or more here in Canada…Anyway, he’s going to Mexico to get the work done. –>No dental plan. He’s going there anyway, so figures he’ll ‘take a chance’.

#191 InvestorsFriend (Shawn Allen) on 11.20.11 at 5:22 pm


Absolutely true, shop at Costco to save. (But be selective, saving money on a dozen saucer-sized muffins that you really don’t need is not at all sensible).

Also Walmart. I spent a wonderful 8 hours or so this weekend readings its annual report and financials.

A truly wonderful company.

Its mission:

“We save people money so they can live better.”

Thank you Walmart.

I am proud to be a part owner of Walmart.

Its shares also look to be a bargain right now, but invest at your own risk.

#192 on 11.20.11 at 6:02 pm

#174 – Garth, I know you are being sarcastic but please do not classify Drs. in the same category as teachers being civil servants. Though GP’s can bill the government (they have no choice, extra billing is illegal) they in most cases do not receive a Government pension, and do not get paid nearly enough for the work that they do. My GP father in his late 60s will probably never be able to truly retire. Still working seeing 80-100 patients a week for the foreseeable future. A GP in NS gets paid $28 per patient, less than your hairdresser likely. No paid vacation. No paid training. Loads of responsibility. Subtract taxes, rent, admin overhead, insurance etc etc and there isn’t a lot left over. Now, THAT is pathetic.

#193 Sanity on 11.20.11 at 6:02 pm

Hi Garth,

What do you think of Adam Posen’s thoughts, in a recent Globe and Mail article, that we may be slowly moving towards a global economy where no one nation dominates and smaller crisis (versus 2008 style melt-downs) are more common?

#194 garth the bully on 11.20.11 at 6:08 pm

seriously Garth, you scold others all the time about personal attacks etc but you see fit to insult people all the time.

double standard pal.

I bet you’ll either not publish these comments, or you will with some smart-aleck putdown.

hey, it’s your bully-pulpit I guess.

if you resisted attacking people I’d have more respect for you.

that is all

Would you like your money back? Or a hug? — Garth

#195 InvestorsFriend (Shawn Allen) on 11.20.11 at 6:35 pm

Sanity at 193

Who cares which nation dominates?

And especially who cares about some guy’s opinion of it?

Rember when it comes to wars and team sports you are Team Canada.

When it comes to economics you ought not to be on Team Canada but rather Team You.

The U.S. dominates the world. In what way has that prevented individuals in other contries from getting rich? That’s right it has not.

#196 Westernman on 11.20.11 at 6:38 pm

I knew it. You are a overpaid union postal worker. Explains it all. And yes I could cart mail around in -30 temps. ANYTIME you don’t want your cushy, taxpayer subsidized, union protected job I’ll take it. YOU can go to the private sector where you will have to PRODUCE instead of sit on your arse and file grievences all day.

#197 Westernman on 11.20.11 at 6:40 pm

Remember one thing… when seconds count the police are minutes away.

#198 Westernman on 11.20.11 at 6:45 pm

In answer to your question… after the postal workers are privatized I would then turn my gaze upon government subsidized teachers unions and they would be next on the chopping block…wimp.

#199 Herb on 11.20.11 at 6:50 pm

#177 Turner Nation,

you have raised a point that has stuck in my craw since I saw my first police officer directing traffic into the parking lot of the K-Mart in Scarborough in the late ’50s, “paid duty” in the interests of commercial enterprises.

A police officer is a peace officer trained, uniformed and equipped by the public to maintain the law. That is and should be the sum total of his authority. When he is employed and paid by a private interest, he has no authority over members of the public. The exception would be in the case of someone breaking the law, in which case he has the authority – and obligation – to act as a peace officer. Directing traffic or crowd control for a commercial enterprise is not the same thing. If in the public interest, it should be paid for by the public.

No matter how lucrative, the practice of “paid duty” should never have taken hold and should be abolished. A court challenge would be in order. Any lawyers out there?

#200 Standard Deviation on 11.20.11 at 7:18 pm

Wow, this is the first time anyone has ever responded to my submissions. thanks.
Holistically I agree that as a population we have a blind spot on financial well being, just wanted to focus on the inequity in the pension situation with the post.
The Australian example is in fact mandatory and renders most small businesses in Australia uncompetitive along with a minimum wage of $18/hr, a 17% loading for holidays, and paid long service leave after 10 years; yep they pay people more not to work than to actually work!

The 2 million number is actually the equivalent of what public sector pensions receive on average so it is meant to highlight the gross inequities that currently exist in the DB / DC pension world. For me more CPP is not an option given that what I pay into the system I will never come close to receiving if I live for 40yrs beyond retirement.

Looking forward to more feedback.

Daily entertainment for me Garth, Oh, I took your advice many years and books back and have learnt my lesson on housing in a number of countries over the last 30 years

#201 um, how about neither :) on 11.20.11 at 7:30 pm

“Would you like your money back? Or a hug? — Garth”

peace, man.

ps still riding or have you put it away already?

#202 S on 11.20.11 at 7:38 pm

Deano, 189
It is just this sense of entitlement that makes Canada a backwater wimp on the world market. We are inflated right now because all the then RE money flowed into commodoties. This (and the huge RE bubble here) makes canucks think we are some kind of heavyweight. Real creativity does not thrive on entitlement, benefits, defined pension plans etc. Good teachers? What are you teaching kids? That the world owes you a living and 80K? I’d rather have the Walmart cashier instruct my kids on how to balance the books than an overpaid, cushy snivel servant.

#203 Young Old Fart on 11.20.11 at 7:39 pm

“There are 240 ETFs on the TSX. Do you know the three or four to choose? — Garth”

Care to share? I would love to know!!

#204 Dean-o on 11.20.11 at 8:22 pm

Oh lord, Westernman…re-read the post. I never said I was a postal worker. I said I was a teacher. Read the post and deal with what is written. Don’t just go off all crazy middle-aged white man on me. THINK.

#205 Westernman on 11.20.11 at 8:41 pm

Teacher,Postal worker… falls into the same catagorie…incompetent government worker paid for with the taxpayers money…don’t split hairs with me.
And by the way…what’s this white man stuff? Are you a racist as well as a lazy union member?