Big dog

It’s a rare week when Brother Carney makes it into this blog twice. But that is just what’s happened, which must tell you something. At least, it speaks to me. The Bank of Canada governor is sending you a Christmas present, whether you want it or not.

In a speech in godless Toronto, the big dog once again warned Canadians are living beyond their means and are debt piggies. We now owe more than either the Yanks or the Brits, and look at the mess they’re in. Household debt has swollen 13% since the financial crisis, even as the world deflates and writhes. Mortgage debt has mushroomed over 7% in the past year which is, mirabile dictu, the same amount that Canadian house prices have popped.

“We might appear to prosper for a while by consuming beyond our means,” Carney said. “Markets may let us do so for longer than we should. But if we yield to this temptation, eventually, we, too, will face painful adjustments.”

This is the fiscal & monetary version of the talk my mother gave me when, as a teenager, I headed off to Army Cadet camp for the first time. Pressing three condoms into my palm, she warned me of a ‘moment of pleasure, and lifetime of pain.’ As it turned out, three was wholly inadequate.

So why is he telling us this?

Simple. He’ll be raising interest rates in 2012, and he’s letting you know why. The official reason will be because inflation has exceeded BoC targets (and it’s done so for the last 11 months), but the real reason is to stop people from being idiots. Like Sarah in yesterday’s post.

Excessive debt poses the same threat to Canada as it did to America in 2005. When real estate comprises 20% of the economy, when house lust has caused families in BC to devote nine-tenths of their income to shelter and when 80% of Toronto’s condos are being bought by speckers, Carney can ignore this no longer. The taps of cheap money will start to turn off.

Rates won’t surge, of course. The first hike will probably be just a quarter point. But it will send a powerful message, being the first among G10 countries. And it will be followed by several more. Hope you’re ready.

Just to recap: The Bank of Canada rate directly impacts chartered bank primes. So when Carney moves, up goes the cost of home equity lines of credit. Also immediately affected are variable-rate mortgages. As VRM rates rise, your monthly payment might stay the same, but the amount of interest you’re paying jumps. Bummer.

Already, as I told you last week, banks have been quietly upping the cost of their VRMs. Why not? We’re addicted. So gone are the days of the prime minus three-quarters of a point, for example.

And remember, fixed-rate mortgages are set in the bond market, which means they’re also destined to creep higher. During the mini financial panic of the last few months, investors shucked stocks and ran into the bosomy moistness of secure bonds, creating a demand that shot prices higher and yields lower. Now with Europe stabilizing. America slowly recovering (unemployment’s down to 8.6%), central banks teaming up and corporate profits at record levels, it looks like money will start flowing back into equities. Stocks up. Bond prices down. Yields higher.

And what of the argument the big dog won’t raise rates cuz it would melt down Mississauga? After all, thousands upon thousands of people have bought since 2008 with microscopic downpayments, and assumed their monthlies wouldn’t ever change. What happens to them when emergency interest rates normalize?

They take a bullet. The danger, as Carney sees it, is that piling on even more debt will simply make the situation worse. Better to force people to start deleveraging now, and create an orderly collapse. After all, it’s unsustainable that people borrow 7% more every year, and pay 7% more for the same houses, when their salaries have increased by 1.1%.

So, get a fixed-rate mortgage. Pay your HELOC off (unless it’s tax-deductible). Pull your daughter out of that Mattamy Homes lineup. Compost that condo brochure. And, post-holidays, trigger that listing you’ve been thinking about.

Or, ignore me.



#1 jasonturbo on 12.12.11 at 9:26 pm

Number 1 CLL to the moon

#2 Mr. Lahey on 12.12.11 at 9:30 pm

Hey Westernman I promise TripleNet is going to find the rig that has your tractor on it for the FASTPGFBDCParty! If we can’t we will buy you an exact replica. You do know that Mr. Carney has offered a Rolex as a prize do you not?

#3 Marc L on 12.12.11 at 9:34 pm


#4 OttawaMike on 12.12.11 at 9:37 pm

So Carney warns in his speech that 2012 will not be sunshine and lollipops.

My friend who is a senior exec at IBM tells me their economists are saying to prepare for a significant slowdown next year.

This sounds like 1990 all over again. Didn’t they raise rates then and make a bad situation worse?

I just cannot believe we will see significant pressure on rates next year with the presidential election coming along.

#5 BleacherSeats on 12.12.11 at 9:39 pm

Time for smart spekkers to bail?

Looks like the writing could be on the wall.

#6 wtf????? on 12.12.11 at 9:46 pm

Carney may be publicly backpeddling away from the ZIRP policies that have screwed CDN’s but the Cons are digging out on another front…by getting the giant sucking vacuum of our tax dollars to the third world dictators that the Liberals set up off our backs into a semblance of reality. Mr Dion…you named your dog Kyoto ….didn’t you even consider all the jobs lost here in Canada when you and the cranks in the Liberal Kingdom decided to sink this country in the name of sustainable development? All in the name of climate change……….. did you get suckered with that load of hooey.

Canada is the only country of 191 to pull out. What a proud moment. — Garth

#7 First Place on 12.12.11 at 9:55 pm

Yep First!

#8 Nemesis on 12.12.11 at 9:58 pm

“As it turned out, three was wholly inadequate.”…

Such braggadocio!

Please correct if I’m wrong, OldChap – but, back in the day, were’nt the ‘Grunts’ an exclusively all male preserve?

We SeaGulls certainly were.

Put’s a whole new spin on your Corps’ motto:

“ACER ACERPORI” – “As the Maple, so the Sapling”

Per ardua ad astra, BadBoy. ;)

#9 Ole on 12.12.11 at 9:58 pm

Pressing three condoms into my palm, she warned me of a ‘moment of pleasure, and lifetime of pain.’ As it turned out, three was wholly inadequate.

This is the first time I have questioned your honesty.

#10 T.O. Bubble Boy on 12.12.11 at 10:03 pm

So, what does all of this mean for the CDN$?

Will the rate hikes provide the typical rise against the USD? Or, will the hikes be seen as evidence that Canada isn’t so different after all, and trigger significant selling of Loonies as people realise that Flaherty, Harper, and the Cons have been lying through their teeth about Canada’s economy?

#11 Angela on 12.12.11 at 10:04 pm

Garth, what say you of the argument that rising interest rates will negatively affect the Loonie. That’s not a strong enough consideration against raising it? Is our economy (manufacturing, commodities) strong enough to handle that?

It’s going up anyway. — Garth

#12 Jack from North Van on 12.12.11 at 10:04 pm

face it folks – we are TOTALLY screwed…

#13 BC Boy on 12.12.11 at 10:05 pm

buckle up and enjoy the ride!!!

#14 Angela on 12.12.11 at 10:07 pm

Nevermind, I answered my own question:–while-other-nations-struggle-with-debt-canada-must-seize-the-day-says-carney

Apparently we’re ironclad.

“He noted that while household debt in Canada is higher than that in the U.S. — at about 150 per cent debt-to-income ratio — Canada is still much better off overall than the U.S.”

As long as we’re doing better than someone, that’s all that matters, right?!

#15 Blog Dog Carney on 12.12.11 at 10:12 pm

2 Mr L – due to some of the comments on this site, I am fearing for my safety at the FASTPGFBDCP. Is it possible to cross-reference the RSVPs vs the various “death and dismemberment” posts aimed at me?

I sure hope we find Ricky. I understand he was sighted on VI. How did he get there? Dont you have to take a very expensive boat ride? Maybe this link to highways webcams might help.

PS – regardless of wether I go in hiding, the rolex will be there!

#16 Spiltbongwater on 12.12.11 at 10:28 pm

Canada is the first country of 191 to pull out. What a proud moment. — Garth


#17 Van guy blazin kush on 12.12.11 at 10:36 pm

Why the hell did Canada get into this mess anyways? Did they not know the risks? Or was it all pure greed?

#18 not 1st on 12.12.11 at 10:37 pm

Europe stabilizing?? America recovering?? Garth, please out down the crack pipe. You are so wrong on this one and its going to be hard to watch you eat humble pie.

America’s employment rate dropped because more people stopped looking for work. And their consumer is way more tapped out that we are so there will be no corporate resurgence because companies make money when people spend. Thats over. If Carney is raising rates, the U.S. will be too and that will finish the consumer. Those corporate earnings are still the results of the TARP boondoggle where billions of garbage was taken off the corporate balance sheet and put on the public’s tab. Of course they are going to look good after that, but we will see what another couple quarters bring.

And Europe?? An inside analyst said that Europe is 3 times more leveraged than the U.S. ever was, therefore they need TARP x 3 to get out. Thats 3 trillion dollars. Until I hear them injecting that kind of capital into that basket case, I will bet on breakup. Even if they do inject big funds, its just more debt upon debt and no growth model can recover from it. They are toast.

You should heed some advice that comes back to you on your blogs and round out your world view a bit. You ain’t the only one that can read the tea leaves.

Doomers are betting on the wrong horses. — Garth

#19 Mr. Lee on 12.12.11 at 10:39 pm

Whether Mr. C raises interst rates or not at this point is not relevant. What is relevant that Candians are leveraged 150% so if rates are raised, another recessions or stagcession hits, inflation goes up, or wages remain stagnant the debt bubble will start to come apart. With it will come the panic that many have spoken of, and with panic comes irrational decisions made by the same people that are in a simular position as is the case with Sarah on yesterday’s blog.

Enjoy the show…….

#20 Canadian Watchdog on 12.12.11 at 10:45 pm

Ha Ha.. If only it were that easy to lift rates. Unfortunately, the underlying problem of it all still exists—CDS derivatives. Rates aren’t going anywhere—this is only a test.

#21 Oakville Owner on 12.12.11 at 10:45 pm


If you had a prime -.80% rate for the next 4 years would you keep it or lock in?

P.S- Well over 50% equity in the home and an amortization of 14 years with no plans to sell for the next 20 years while we raise our family.


#22 Mr. Lahey on 12.12.11 at 10:46 pm

#16 Blog Dog Carney

I understand your concern Mark and we will have Julian and Bubbles guarding you at the FASTPGFBDCParty. You must come regardless of the personal jeopardy you may be in. A promise is a promise Mr. Carney and there is no backing out now. It will be a great occasion to address why you have to raise interest rates and your act of contrition of picking up the poop of the Clydesdales in the parade will win you some sympathy from the blog dogs. The Rolex gesture is also good but I suggest you offer a second prize as well. TripleNet has told me he has found the rig but due to time constraints we are Fed Exing Westernman’s tractor to Halifax for tomorrow morning at 10 am. Triple Net thanks for doing us this huge favour and Westernman you can be relieved that your Massey Ferguson tractor is safe and sound and heading over your farm as I type in a Fed Ex plane. The bearded oracle, all knowing, all wise sage that runs this blog just got off the phone with me and he told me he has never been more excited about his debate with you Mr. Carney. He predicts the blog dogs will hoist him on their shoulders and triumphantly march him through the park after he trounces and denounces you and your interest rates policies. You are a brave soul Mr. Carney, a very brave soul for coming to this event… We will see you this weekend Mr. Carney!!

#23 Kathy on 12.12.11 at 10:48 pm

Last week in “metro” I’ve read that Carney is going to keep interest rates low(same) for the next year.It was announced as a “good news”.Is he changing his mind ?

There was no announcement. The news is better in papers you actually pay for. — Garth

#24 thinktank on 12.12.11 at 10:50 pm

I actually heard a discussion today on Mark Carneys statement on am 640 (talk radio in Toronto of all channels) with a feamale talk jock – she was quite good actually and the topic of the day was of course Mark Carneys speech. Youd be surprised (or not) at the number of Canadians who AGREE – that we are over taxed – in debt to our eyeballs and that real estate is so 2007-2009 !

In refrence to “Disciple” from yesterday’s post about directionally trading options – no worries … I have a HUGE heart – truthfully – the most easy going guy you will meet … (thats a rarity in my business ..LOL) ask and you shall receive – if you truly want to know what I do in options … ask … I will tell you exactly some of my trades/ strategies – no guarantees … but I assure your – risk management comes 1st before profits. If I can help anyone – happy to oblige ! But I stand behind what I initially said – youl will need an online brokerage account – and a “foundational” knowledge of options trading !

Great post as always Garth

#25 rosie on 12.12.11 at 10:55 pm

Beware Carney’s giving warnings. Doggy Doggy.

#26 Vulture Fun on 12.12.11 at 10:55 pm

It would be shocking if Carney tried to trigger an orderly collapse, as you suggested. Wouldn’t this be the first time since the mid 1990s that someone in power took some short-term pain for long-term stability? Do you think the Big Dog is any different than the Eurotards or The Bernanke? Wouldn’t any such action be prevented by the microchip that GS installed in his neocortex years ago? And for how many months/years have you been warning about interest rates that are going up anyway day now? It just doesn’t seem very likely, regardless of the behaviour of a generation of debt-horny flippers.

#27 Mark on 12.12.11 at 10:56 pm

mark Carney you need to shut the taps off now. people will keep on spending until they go bankrupt. either they go bankrupt now or they will go broke later racking up tens and hundreds of thusands more in debt? No one in Canada cares what you say or do. My SIL is so maxed out and trying to borrow more that i dont think they will care to go bankrupt. Also the really laugh and say you will NEVER raise interest rate. They will continue to borrow until they find a greaterfool to pay off their debted or go bust.

#28 S on 12.12.11 at 10:56 pm

Angela, higher interest rates will cause the CDN dollar to go up against the USD which hurts exporters, but it helps most consumers. It also allows companies to invest in technologies, mostly bought in the United States, at lower prices. This increases long term productivity

The BoC will also be helping pension funds and seniors get better returns on fixed investments.

These and lowering demand for borrowed money are all in line with Mr. Carney’s goals.

#29 HouseBuster on 12.12.11 at 10:59 pm

Europe stabilizing? Stocks up?

Are you hitting the eggnog early?

#30 Gord In Vancouver on 12.12.11 at 11:01 pm

Great post, Garth.

Carney’s like the drug dealer who gets his customers hooked on his merchandise and then tells them to stop using it because its bad for them.

#31 Heddok on 12.12.11 at 11:03 pm


It might be helpful if you could give us balanced investers strategic tips to take advantage of the changing interest rates over the next 24 months.

What should we be watching for in the fixed income side (both preferreds and the bond market)?

Is the new book still on track for the spring?

#32 TaxHaven on 12.12.11 at 11:04 pm

We certainly are credit addicted and blind to risk in this country. And we too are supposed to be “in a recovery”.

But all around me are sales…on groceries, fast food, clothing, everything…and especially on electronic doodads, Christmas tinsel, knickknacks and other stuff we don’t need.

But they flog the junk relentlessly. The sale – on credit – of unneeded stuff is necessary to make this economy run.

Fast food restaurants are half empty. Small businesses charge the earth for even coffee and rarely do I see a customer. Extra Foods (Loblaws) couldn’t make it and turned into a no-fills discount store. Zellers has dead flies in the window and high prices which never come down. And are ANY franchisees or owners of small businesses actually making a living income?

Or are they all just waiting for “recovery”?

The only people who have any money are government employees, government benefit recipients, resource industry workers and the retirees from those groups.

I think many mortgaged home”owners” live lives of quiet desperation. On the surface everything looks normal. The commute is busy. New cars all around. People are still driving. Radio stations and newspapers still have enough advertising to stay in business. Christmas stuff is everywhere. Every second person has a PDA, cell phone, IPad or IPod – and the monthly bills to go with them. Everything LOOKS prosperous.

But…DEBT levels? Solvency? Cash flow? Soaring overheads?

Canada is just one step away – JOB LOSSES – from an implosion. (Bring them on: let’s find out who is really swimming & who is treading credit…!)

I have real doubts about the soundness of this ‘Potemkin economy’ underneath. No matter what they say.

#33 Roial1 on 12.12.11 at 11:07 pm

Army cadet camp?????? Ipperwash maybe??
Thats close to Grand Bend isn’t it?
There was a great place to meet “Yankey” girls there.
The roller rink.
You couldn’t be reliving memories related to that could you???

If so, YUP. 3 is definitly not enough.


Thanks for bringing back a great memory.

#34 Kits on 12.12.11 at 11:12 pm

“… with Europe stabilizing”

fantastic blog … keep up the great work. Causing people to think and providing a forum to discuss ideas is a public service!

That being said, have you buried your head in the sand? European stability? Some of the leading analysts believe there is a high probability of a European Lehmanesque event occurring in the next 12 months. 2012 will be very interesting and i am not a doomer.

‘Stabilizing’ does not mean ‘stability.’ We seem to have a reading comprehension issue today. — Garth

#35 Peter Goesinya on 12.12.11 at 11:15 pm

Your Moms Awesome Garth

#36 WISEGUY on 12.12.11 at 11:15 pm

Here is Mark Carney’s speech…doesn’t look good folks!

#37 grantmi on 12.12.11 at 11:19 pm

Here’s one for you! Condo complex in Abbotsford last week.

Look closely!

#38 Canadian Watchdog on 12.12.11 at 11:21 pm

First off, understand that lifting rates to 1% would send 1 million homes into foreclosure. This was stated by the BoC and found in other institutional reports. That’s a fact.

Secondly, CMHC MBSs have been sold to investors around the world that have Credit Default Swap agreements. This is a bilateral interest premium in which the issuer/investor pays to insure the mortgages, however, being a bilateral interest rate means that in the event of payments in arrears or foreclosures, CMHC must pay a net interest spread (loss) back the issuer/investors.

Now here’s the laymen terms for those who don’t understand what CDS means.

You own a home, you pay insurance, if your house burns down you get insurance to cover losses. But in the derivatives world, everyone in the god damn world can buy insurance on YOUR home and if the house burns down, the insurer would have to pay EVERYBODY.

Now we have a serious problem because CMHC happens to be leveraged 25:1 with 12 billion in equity covering…ready.. nearly 600 billion in liabilities, meaning, a 10% housing correction will wipe out CMHC al la AIG style!!!

So if you think rates are going up, think again. Canada needs to deal with an event that hasn’t even happened yet, but has been foreseen for years.

Rates will not rise 1%, but a quarter of that to start. I am surprised at the hyperbole, coming from a chartist. — Garth

#39 Kurt on 12.12.11 at 11:21 pm

Mr. Carney’s concern is systemic risk, which rises in parallel with families taking on unsustainable debt. He’s giving people plenty of warning, but he has no choice but to pull the trigger. Too bad.

#40 neo on 12.12.11 at 11:25 pm

“Now with Europe stabilizing.”

Really. Not according to the CDS and credit markets in Europe.

“America slowly recovering (unemployment’s down to 8.6%)”.

The labour participation rate is the lowest in over 30 years. That is keeping the U3 number down or flat. Those people are still unemployed Garth. Even if you don’t count them as such. Perhaps some of them are now part of the record 46 million who rely on the government to be fed.

“central banks teaming up and corporate profits at record levels”

Funny you would put the two together since the one has faciliated the other at the detriment of the masses who are left with the inflation and subsequent lower living standards as well as lower/stagnant wage growth. But hey, at least Apple is sitting on $81 billion dollars right? That makes everyones lives better…

“it looks like money will start flowing back into equities”

We are years away from that happening with any conviction and certainly not 2012.

“Bond prices down. Yields higher.”

As long as there is a $700 trillion and counting shadow derivatives market of which the majority of the contracts are interest rate senstitive. There is no way yields can go higher in any meaningful way for a very very long time and certainly not 2012. That and the deleveraging of the consumer hasn’t even completed yet. That and the U.S. government debt will become unsustainable with normalized rates. Moreover, the volatily that will continue and worsen in 2012 and will only drive the USD higher, bond prices higher and yields lower. Any way you look at it yields higher in any meaningful way is just something you are writing to support Canadian rates rising and isn’t steeped in the reality of the situation.

Flummox all you wish. The European crisis will dissipate and become a merely boring recession. — Garth

#41 neo on 12.12.11 at 11:29 pm

#4 Ottawa

Actually bond vigilanties forced rates up in the early 90’s to 14% which was a precursor for Canada losing it’s AAA rating in 1993. Our goverment spending was out of control. This time it is our consumer spending.

Interesting that the rating was restored because of Liberal fiscal prudence. My how times have changed. == Garth

#42 chubster on 12.12.11 at 11:34 pm

hike in boc rates may not be voluntary. can also be driven by reduced appetite in the market for govt issuance

#43 Steady Eddie on 12.12.11 at 11:36 pm

Carney… increase interest rates PLEASE!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

5% is a good start….

Please stop killing savers and STOP rewarding speculators.

#44 Ken on 12.12.11 at 11:41 pm


#45 Boomer on 12.12.11 at 11:41 pm

Thanks to Mr. Lahey et al for giving all of the blog dogs a moment of comic relief amongst this very turbulent time. I hope Ricky is found safe and sound and the planned event can take place. Despite the chance to win a Rolex, sorry to say I cannot attend, I will be busy enjoying my family, the Christmas spirit and maybe a few drams od scotch. I plan on turning off BNN and taking a break form this wonderful site. Thanks Garth for your insite, advice and patience with the “Sarah’s, DA’s, Disciples etc” that you endure. See you in 2012, Merry Christmas and a Happy, healthy New Year. BTW, if you do go to see Mr. Lahey we would love to see pictures of you on your Harley then doing a right proper jig!

#46 SLN on 12.12.11 at 11:49 pm

Three things about the Carney speech that irk me:

He is seting the stage for future blame by restating the opinion that regular Canadian consumers are the root of the debt problem. This is ridiculous – if it weren’t for people spending like mad this whole economy would have tanked years and years ago.

The phrase he used to characterize the state of corporate Canada – “in rude health,” he said. I’m offended that he spoke so cryptically so that in a sound bite the person who wants to believe our corporations are in bad financial shape is free to interpret that phrase in just that way. The opposite appears to be true, as Carney says: “and corporate leverage is currently at a record low ”

Then, as if unwilling to make the obvious connection between the fact that Canadians have turned to credit to make up for the shortfall between their incomes and expenses and the fact that corporations are fat with cash, he chides the latter for not being more PRODUCTIVE!!! More productive? Sure, I guess, if that means opening more factories and hiring more people.. bbut usually that just means evading taxes and cutting jobs.

Pardon me, but it sounds like he’s telling the corporations to cut expenses (mostly labour costs) at the same time as he’s telling average Canadians to stop putting things on credit! Carney might want to check out the cost of living in this dreamland he’s created and suggest instead that these corporations start spreading the wealth by paying their people better & reinvesting their profits inside the Great White North.


oh yeah. and one or two things from your post bothered me too, Garth. I can’t be the only one who had to re-read the words “And now with Europe stabilizing.” Surely you can’t mean that.

#47 Pat on 12.12.11 at 11:58 pm

How can you possibly increase the interest rates when increasing them would slow down economy? Carney has said that before and during these fragile times increasing interest rates its like a catch 22. If you increase interest rates you slow down economy by curtailing spending and that is something nobody in a wants to see. Carney in his speech is asking businesses to step up if consumers pull back. Now that’s a joke. We should remember corporations are only interested in profits and nobody will be ” stepping up ” if profits can’t be seen on the horizon. 30 years ago a family could buy a house on one income, today they can barely afford it with two incomes. My disposable income is less than my parents disposable income.
Myself I can’t see a bigger correction in the housing market than the one that has already happened, but will have to wait and see how things will unfold.

Better to slow down now than crash later. Surely the US taught us something. — Garth

#48 Heart of the World on 12.13.11 at 12:04 am


‘Now with Europe stabilizing. America slowly recovering (unemployment’s down to 8.6%), central banks teaming up and corporate profits at record levels, it looks like money will start flowing back into equities.’

Europe stabilising? Did I miss something?

Apparently. — Garth

#49 Soylent Green is People on 12.13.11 at 12:20 am


#50 nonplused on 12.13.11 at 12:31 am

Oh I won’t ignore you Garth. You’re advice is mostly spot on. (Except the part about rising taxes. Rates may rise, receipts will not.)

We did finally buy a house though. Move in tomorrow. But I tried my level best to follow the Garthman’s advice here too, nice neighbourhood (exclusive actually), great house that suites us to a tee, stale listing already marked down 30% from the original day-dream, hit ‘em with a lowball offer next to no conditions. I let the agents talk me back up $40,000, which I regret, but my wife was crying she like the place so much. But in the end I think I got it at replacement cost and it’s less than 40% of my net worth at 43 years old.

I know it’ll be 10 years at least before I can get out at what I paid, but you only live once. And my wife and I broke the place in over the new pool table today! That’s worth something.

Your mother’s 3 condoms were merely to get you thinking in the right way, not to subsidize your philandering ways, my dear friend. But thanks for sharing and bragging. That’s why I felt free to as well.

As for Hot Air Mark, the horse is long out of the barn. He should have been making such speeches in 2005 -2006. Nothing he or anyone else can say or do will help us now.

#51 Brad on 12.13.11 at 12:32 am

Praise be brother Carney! Good on you for being so prudent. Wouldnt want a real estate bubble to develop here now would we?

#52 Close Call Westerner on 12.13.11 at 12:56 am

Just SOLD our place in Surrey BC. PHEW… Will be renting while watching from the sidelines. My only question is will it be a horror flick or a docile drama? Either way I’m counting my blessings. Keep up the fight Garth! have appreciated your blog.

#53 Nostradamus Le Mad Vlad on 12.13.11 at 1:00 am

“Pressing three condoms into my palm, whether you want it or not she warned me of a ‘moment of pleasure, will face painful adjustments and lifetime of pain’ and create an orderly collapse. Hope you’re ready.”

At last you’ve said the ‘c’ word, Garth. Guess those who are ready, or preparing themselves accordingly, are those who live well within, or below their means. Generally speaking, collapses are not that orderly (see Lehman Bros.).

“We now owe more than either the Yanks or the Brits, and look at the mess they’re in.” — Yes! We’re #1, and they’re not! Kannaduhh is the best example of How To Screw Up One’s Entire Life!
59:14 clip Cycle change from west to east. “Hope for the best but brace yourselves for the worst.”; Did JPM
crash MF Global to avert COMEX failure, Euro derivatives implosion? and MF derivatives; Euro Monetary Failure (EMF) Doomed from the start; QE might not work. Not much does work; Swiss govt. prepares for Euro collapse; Not so hot Egypt ‘konomee worse than expected; Luck of the draw Janitor worth millions?

Global growth grinds to a halt (increase war talk); Hell, the UK won; Mon dieu, Sarkozy! Bear Soup; Money Supply Update It’s still there, but we don’t have a fair share of it; The Myth of big cash on the sidelines; Sino-Forest admits default; Gold Standard Make your own; Quitting Why are execs. leaving Twitter? One graphic All you need to know; Soros No matter what, he makes money and lots of it; Most misunderstood asset (chart of the day); BIS and hyperinflationary depression.
Fukushima Reactor 4 not doing so well; Nuke knowhow price for China, Russia and Iran; Oshutup with your incessant, petulant demands; New Gas Find “Well, THAT does it: INVADE NOW!!!!” – Official Tel Aviv/White House souses —; Iran Guess who? Iran Finders keepers; Chinese – UK firms cease ops. in Syria; Faux TV “2011 Study Finds Fox News Actually Makes People Dumber.”; Two min. clip Ron Paul stump speech; Tunisia Another US puppet installed; 2012 Marmadukegeddon Redux and the Mayans; Smashing Central Asia Part III.

Organic Gardening 101 Starting one; NATO in Iraq The ‘konomee not the only thing on the verge of collapse; Japan Seems men and women are avoiding each other; Poverty in Europe Top 20 places; Verizon “Martial Law Comes To Your Cellphone… “

#54 Tony on 12.13.11 at 1:09 am

Outlook Financial just dropped their GIC rates one tenth of a point across the board today. Looks like rates are headed lower.

Outlook Financial? — Garth

#55 RM in Oakville on 12.13.11 at 1:13 am


Canada was never going to come close to meeting its “obligations” under Kyoto. The Liberal govt that signed us on saw to that since for years they did nothing but talk, no results. Harper is just ending the charade, and good for him. Kyoto was a sham from the jump. The science is far from settled and the IPCC has been discredited all over the place. So good riddance to Kyoto.

Climate change deniers are so amusing and useful. Like Chia pets. — Garth

#56 Crash Callaway on 12.13.11 at 1:23 am

“In a speech in godless Toronto, the big dog once again warned Canadians are living beyond their means and are debt piggies”

Funny how it was Carney in cahoots with F that made the daily trek out to the barnyard to toss buckets of slop (inducements and schemes) into the trough.
And now that most of the oinkers have gorged themselves beyond belief Carney’s using pig latin to describe the accident scene.

Give us a break Carney.

Rule #1 little piggies… it’s always your bacon on the menu.

#57 Cristian on 12.13.11 at 1:28 am

“Now with Europe stabilizing, America slowly recovering (unemployment’s down to 8.6%), central banks teaming up and corporate profits at record levels”…

Wow… Europe stabilizing… And where is all that debt gone? Or is it?…
America slowly recovering… Of course! What better proof would you morons out there want than one down-tick in unemployment after a long series of up-ticks? Isn’t that enough for you???!! I mean, one would have to be an idiot not to see that this is the true light, this is the end of the tunnel? Or is it?…
Central banks teaming up… To do what? To decrease the rate at which they give each other fiat money? Oh, I see, maybe THAT’S gonna make all the debt go away. Maybe someone should tell Mark Carney that he could make all of the Canadians’ debt go away by simply decreasing the rate at which they borrow money. Just press the EASY button, get some easy money and all your worries are gone! Or are they?…

Like I said, Garth, you should stick to what you know and makes sense… But thanks for making me laugh today. Again.

How’s that gold working out for you? — Garth

#58 oslec on 12.13.11 at 1:53 am

GT probably waited until there was a strong demand for the condoms and sold them for a tidy profit… LOL :=)

#59 rory on 12.13.11 at 2:02 am

Garth … sarcasm on, sarcasm off …I get confused whether it is on or off … so this “America slowly recovering (unemployment’s down to 8.6%),” …WTF?? … are you drinking the Kool-Aid again … it was smoke and mirrors …the % rate improved because more unemployed slide off the roles and were not counted …nothing changed. No improvement …nada.

Plus this – “Canada is the only country of 191 to pull out. What a proud moment. — Garth”

And I thought you were a contrarian, hog riding, gas guzzling Hummer driver, world travelling cynic …how wrong I am…who knew (sarcasm off).

Kyoto dead – good. Let us actually get to something that is real and doable that will require real sacrifice by all which is …gasp basically giving it all up. Most really don’t get this part. I am in if all agree… ops is that not the problem….Rory out.

#60 MDQ on 12.13.11 at 2:37 am

Garth, I have a question for you and your followers. What is the best instrument to ‘safely’ invest a small amount of US dollars. I am not expecting 15% return nor a mere 1%

Thanks for all your hard work and for sharing it

#61 Brad in Calgary on 12.13.11 at 2:45 am

He’ll be raising interest rates in 2012

Not a chance.
You keep expecting him to do the right thing.
And we keep telling you he won’t.

#62 Derek R on 12.13.11 at 3:07 am

Sadly, I think that Garth’s right about the rate rises. I say sadly because there’s a strong correlation between decreasing amounts of new debt and unemployment. So if the rate rises work by reducing the number of new loans that will be followed pretty quickly by rising unemployment.

This is doubly sad in that there is an alternative to rate rises. An alternative which would target house loans without affecting business loans. That alternative would be to replace the Federal GST with a Federal Land Value Tax. That would have the effect of making housing more expensive but everything else less expensive. So the effect on employment would be much less than an interest rate rise. It might even reduce unemployment.

Of course that’s not under Carney’s control; Flaherty and Harper would have to implement it. So it won’t happen. Pity.

#63 Betty Danin on 12.13.11 at 3:36 am

Bond yields will always be lower than a 1,2,3 years ago. if they rise from a ultra low level. About 17 years ago government bond yields were in 9.60% range. Now just in the last month they have dropped about 0.33% to a low of 3.55% this an Ontario 2039-June-2 bond. So if they go up they are still peanuts.

A 1% rise in fixed mortgage rates would be a big, big deal. — Garth

#64 Devore on 12.13.11 at 3:40 am

#11 T.O. Bubble Boy

Will the rate hikes provide the typical rise against the USD? Or, will the hikes be seen as evidence that Canada isn’t so different after all, and trigger significant selling of Loonies as people realise that Flaherty, Harper, and the Cons have been lying through their teeth about Canada’s economy?

Eh? If the economy is so great, why keep rates low?

#65 Paul on 12.13.11 at 3:43 am

“it’s going up anyway” Garth

Are saying the loonie will get stronger? I.e against the £?

The standard is the US$, as if you didn’t know. — Garth

#66 TheRealTruth on 12.13.11 at 4:14 am

Good post.

But wouldn’t carney get CMHC to do his dirty work for him if he was serious??

Sounds like he’s just blowing hot air. Rates aren’t going anywhere in the medium term. Nor are CMHC standards. Feds main tool is population growth. Municipalities restrict growth via land use , Feds increase demand with pop growth.

#67 wtf????? on 12.13.11 at 4:53 am

Garth…point of order…..189 countries are signatories and direct financial beneficiaries of the Kyoto Scam. The current ‘law’ requires the G20 western economies to pony up 600 billion in reparations, excluding Russia, China, Brazil, USA and India. We in Canada were targeted by the global liberal movement for our apparent wealth and weak kneed gullible politicians of the time……Trudeau etc.

Saying that “189 countries are in” is just bafflegab designed to mislead the uneducated. There are 196 countries with seats at the UN……….only 20 are industralized nations subject to this ‘sustainable development tax….exclude the largest polluters of course as mentioned above.

As British authorities have pointed out by way of extensive investigations…. 100% of the aid money sloshing into third world banks is being stolen and ending up in Swiss Banks and French yachts This point was made on the floor of the UN…..much to the chagrin of the thieves who didn’t appreciate the publicity.

The ‘accord’ doesn’t place any pollution limits on China, Russia, USA, Indonesia, Thailand, Brazil etc etc etc …..because the Kyoto Accord is not a climate initiative, it is a sustainable development funding initiative disguised as a climate initiative. ….which is to be financed by ‘carbon taxes’ levied on western taxpayers.

POINT OF FACT…….the KYOTO ACCORD sends cash to third world dictators in ‘credits’ purchased by the doesn’t have anything to do with climate. Cut through the Liberal smoke and read the facts out loud.

Of course…on any day you can get Ghana, Cote D’Ivoire, Sudan, Lesotho, Nigeria , Vanuatu , Zimbabwe etc ad nauseum vote in a bloc to have an accord worth billions in aid to them passed on the floor of the UN…..DUH !!!!!!…why would they not?

But…lets not forget that there is more pollution from one days traffic in Beijing than results from an entire years work in the Canadian Oil sands. So why doesn’t China pay a dime in ‘reparations? Because the government there isn’t as weak kneed as the policy makers we had under the CDN Liberals. ….same goes for all the other industrialized countries who are not party to the Kyoto farce.

To say that Canada should not be proud of this decision is to deny the truth…….or simply an admission of ignorance. Next we’ll be hearing a clap for Bob Rae and the stupid Liberal policy of grain monopolies being ‘good for farmers’……….Good riddance to the ‘bad old days’……

#68 Scott in Gibsons on 12.13.11 at 5:04 am

The Americans are 4 years into their crisis and the Japanese are 30 years into theirs and we don’t see them raising rates to “to stop people from being idiots”. Where is the precedence for your prediction of higher rates during a crisis Garth? Central bankers have the interest rate lever hard down and are now resorting to more desperate measures like quantatative easing. They only know one cure for this disease but unfortunately it kills the patient. Why a smart guy like you would believe anything a central banker says is beyond me, maybe too many years in Ottawa? Nevermind what Carney says, watch what he DOES, which is to hold interest rates at historic lows and pray. Just another ex-Goldman guy doing God’s work!

The US and Japan now suffer from under-consumption, while we create a crisis of over-consumption. Carney knows the logic of his future action. — Garth

#69 Mr. Lahey on 12.13.11 at 6:49 am

Good morning everyone. I just got off the phone with the all knowing, all wise, mystic reader of financial tea leaves, bearded oracle who runs this blog and he has assured me that Carney will be made to look like the fool he is in his debate with Captain Garth at the FASTPGFBDCParty. Garth is in a real Xmas mood and he has told me that all blog dogs attending will receive a copy of Greater Fool and a draw will be held for a two hour Harley ride with Garth next summer! We are awaiting Westernman’s tractor via Fed Ex and we finally reached Ricky on VI. Seems he headed west instead of east after leaving Westernman’s farm. TripleNet is getting Ricky on a plane this morning and the rig will be picked up later. Damn Ricky! The bearded oracle also sent me a video of his jig dancing and let me just say, Don Messer is beaming down from heaven over this! Ron Paul showed up last night with 6 gold bars he is going to use as props in his debate with Captain Garth. Bubbles and Julian are going to try, I repeat try, to body guard Carney but I can’t guarantee that some mad blog dog attacks you Mr. Carney! There is much pent up anger amongst the blog dogs and well, frankly, anything can happen! You are a very brave man Mr. Carney for debating our all knowing, all wise, all seeing bearded oracle in front of a blood thirsty blog dog crowd! Don’t forget your prize Rolex cowboy!

#70 NOBODY on 12.13.11 at 7:28 am

“Canada is the only country of 191 to pull out. What a proud moment. — Garth”

Hope your sarcastic here. How can Canada make a difference at the expense of its future to waste $billions when it contributes to 2% of world emissions when the biggest polluters (USA, China, Russia & India) were not ratifiers. That’s basic business sense there. You Garth should at least know that much.

Not trying guarantees the result. — Garth

#71 househornyhousewife on 12.13.11 at 8:13 am


Brother Carney isn’t telling us anything we didn’t all already know and have known for years. People are over extended and are continuing to spend. No kidding.

Here’s a small nugget of wisdom though: even if interest rates go up and many cannot meet their daily needs, they will STILL continue to spend no matter how bad things get.

It really has absolutely nothing to do with how much one earns, nothing at all (the numbers are simply on a different scale that’s all). The fact that spending has gone up by 7% while earnings have only increased a measly 1% is meaningless except to confirm the obvious with numbers.

It really boils down to what kind of values our society espouses. Someone who is insecure and unhappy with themselves will always try to compensate by surrounding themselves with nice material things, no matter what the price (bankruptcy, homelessness … whatever the consequences). This driving need to compensate on the outside what they feel on the inside is akin to alcoholism and obesity from overeating.

We have an entire generation of 20 and 30 somethings who value superficial living (as well as many 40 and 50 somethings too !). To these people it is ESSENTIAL that they have that magazine image surrounding them because it is compensating for the lack of satisfaction that they feel inside. Being in debt and getting in deeper only makes that feeling worse and guess how they will try to fix it … YUP, by spending even more because this is the quickest way to feel better.

Spending habits are extremely difficult to change and have deep roots. When you are grossly overweight, it is much easier to feel better quickly by eating that entire chocolate cake, than by going on a strict diet for the few years that it will take to truly rectify the situation. Same goes for debt. When one is in a lot of debt and one is stuck in a rut of spending, it is easier to buy that next item (be it a house, car or whatever) than to go on a strict diet for years in order to pay everything off. Houses are especially addictive because they are more than just a roof over your head. They symbolize a way of life and everyone would like to pretend that their way of life is better than they can afford. How they get there (debt or savings) is irrelevent to most.

Our brethren to the south know this to be true and have, over the past few years, been taking steps to change this extremely difficult situation. Why do you think that Suzie Orman and others of her ilk are doing so well ? People in the US have finally started to turn things around by promoting frugality over recklessness. These people will soon begin to turn around their economy because after years of difficulty and the shit hitting the fan, their population is finally beginning to espouse different values. Their paycheques are still the same as before or worse but their spending isn’t and this is because they are fixing the cause of the disease as opposed to treating the symptoms. Taking the credit card away from someone will do nothing but influencing them to willingly give up the credit card … well that’s something else.

Who knows, perhaps the US will be up when we are down and they will manage to drag us out of the huge hole that we are headed into .. or at least keep us from going in as deeply as they did. It’s all in the timing isn’t it ?

Well that’s enough financial philosophy for the moment.


#72 R2D2 on 12.13.11 at 8:14 am

Acute Second Stage Hallucinatory Opinion Linked Elite

It was LEND, LEND, LEND … SPEND, SPEND, and SPEND Shameless O’Flairity and Stephen Harper.

Special investigation: How high-risk mortgages crept north … jacquie mcnish AND greg mcarthur

“Just yesterday, Finance Minister Jim Flaherty repeated the mantra that the government acted early to get rid of risky mortgages. What he and Prime Minister Stephen Harper do not explain, however, is that the expansion of zero-down, 40-year mortgages began with measures contained in the first Conservative budget in May of 2006.”

Circumstances = Mtge $725,000. Resale = $520,000.

Is underwater one word or two?

#73 House on 12.13.11 at 8:19 am

Rather than top dog a better phrase would be a mutt on a chain. You really, really don’t get this. Inflation is nowhere as low as Stats Can reports and he has done nothing. What does that tell you about 2012 or 2013 for that matter. People can’t be talked into doing the proper thing, when advertising tells them what they need and should have and that anything less would be sacrifice.

#74 Bob on 12.13.11 at 8:23 am


Good commentary on the coming monetary policy situation here in the peaceable kingdom.

On another note, still searching for a place (SFD) to live in Peel region and am flabergasted with how certain areas are still commanding multiple offers on SFD listings. The king’s ransom required to purchase some of these properties we have seen is beyond personal explanation and understanding other then the cheap availability of credit. “Free” money….

We have looked outside the GTA and there is a noticeable slow melt already going on…but the commute into Peel is a challenging trip too far.

The search continues.

#75 dd on 12.13.11 at 8:27 am

….because inflation has exceeded BoC targets….

What inflation? You said this a couple months ago. Too funny.

The US will be at zero for a couple more years. BoC will not raise their rates. Society will just have to suffer with higher inflation. It is the only way out of this mess.

PS … Inflation = expansion of the monetary supply (AKA printing money)

Eaten lately? — Garth

#76 R2D2 on 12.13.11 at 8:36 am

Guess what’s coming to dinner … SOON?

Specifics … trend from 1981 to 1985

It’s a ‘no-sweat’ proposition … Rexella and Jack love punishing forecasts.

#77 Mr. Lahey on 12.13.11 at 8:40 am

#23 Boomer

“Thanks to Mr. Lahey et al for giving all of the blog dogs a moment of comic relief amongst this very turbulent time.”

Very nice of you to say that Boomer and it has been a pleasure to bring some levity to the blog. Sorry you can’t attend the FASTPGFBDCParty but I understand family must come first. Pictures will be snapped and hopefully make their way on to this lovely blog run by our fearless bearded oracle, all knowing, all seeing financial mystic, former right honourable Garth Turner. His jig in full Scottish tartan kilt will be one for the ages! Enjoy your Christmas Boomer and have a happy and prosperous New Year!

#78 OttawaMike on 12.13.11 at 8:45 am

Re Kyoto:
The “only” 2% of world CO2 emissions figure often touted for Canada is a misnomer since we only represent .48% of Earth’s population.

Doubt the science all you want but how can limiting coal fired generation and the overall capping of hydrocarbon burning be such a bad thing?

#79 Kevin on 12.13.11 at 8:50 am

@not 1st

“America’s employment rate dropped because more people stopped looking for work.”

I never understood that argument. Who exactly are these unemployed people who simply “stop looking for work?” How do they eat? How do they pay their bills? How does a broke 30-year-old who’s been unemployed for a year simply decide to “stop looking for work?” What, does he just retire? Decide to become homeless? What? How does that work? I seriously want to know how you people envision that working.

#80 fancy_pants on 12.13.11 at 9:04 am

MC, time to get out from behind the curtain. You set the stage for a debt orgy and then wag a finger in shock when people indulge.

Go ahead governor, raise those rates already. No more lip action. We have heard your bark, now it’s time to show us your bite.

Too bad you played the kid who cried wolf too many times, even the prudent have grown tired and stopped listening.

#81 pbrasseur on 12.13.11 at 9:09 am

It’s not the first time Carney warns about debt, in fact he’s done so many times.

But he has never done anything about it.

What makes you think he will this time?

#82 fancy_pants on 12.13.11 at 9:13 am

#75 househornyhousewife on 12.13.11 at 8:13 am

good post.
I would speculate however that much of the curbed spending in the US is due to lack of financial ability rather than due to an awakening moment and a change of heart.

#83 Pr on 12.13.11 at 9:14 am

Its nothing to worry about. Its 100% a debt festivalaroud the world! At the right time, everything will start to fall, in a deflationary depression. You still have a couple of years to party.

#84 neo on 12.13.11 at 9:20 am

Flummox all you wish. The European crisis will dissipate and become a merely boring recession. — Garth

That’s what you continue not to get Garth or wish to ignore. It isn’t ME “flummoxing”. It is the credit markets. And they are smarter and wealthier than all parties involved put together including Europe and the U.S. Until their “flummoxing” subsides NOTHING has stabilized. Eventually you will figure that out when your equities reflect the stress in those markets that they are ignoring.

I get it. If Europe could survive 1945, it’ll survive this. What a morose lot on this blog. — Garth

#85 Beach Girl on 12.13.11 at 9:24 am

Is that Miss Daisy? We want royalties for that photo. Promptly.

#86 Mr. Lahey on 12.13.11 at 9:31 am

We have a situation on our hands blog dogs. I thought the misfits in the park were going to behave themselves for the FASTPGFBDParty but well as I stated earlier Ron Paul showed up with 6 gold bars to use as props in his debate with the all knowing, all wise, mystic reader of financial tea leaves, Captain Garth and well bloody Cyrus and his thugs have stolen the gold and roughed up Ron Paul in the process. We have Rosco the veternarian patching poor Paulie up but if anyone sees Cyrus and this thugs with the gold bars please get them and return them to our guest speaker Mr. Ron Paul!

#87 Ralph Cramdown on 12.13.11 at 9:33 am

As long as core inflation remains fairly low and unemployment remains fairly high, Carney isn’t going to raise rates. He’ll jump up and down, and plead for Flaherty to do something — anything! But he won’t raise rates unless inflation and unemployment tell him to, notwithstanding housing bubbles.

I explained why this is not so. BoC inflation targets have already been exceeded and we have built a consumer credit bubble. Ignoring both is not good public policy. — Garth

#88 Condo Sucker on 12.13.11 at 9:40 am

Articles like this one in today’s Toronto Star are an indication to me that the market is currently turning – and fast…–agent-sues-for-3-340-after-home-deal-goes-sour?bn=1

#89 Realitybytes on 12.13.11 at 9:52 am

I mostly skim the comments, but with all the doomers here, I’m shocked that more hasn’t been made of two recent issues…

1. Centralized European authority continues to baby step it’s way to Berlin.
2. The US senate passing legislation circumventing constitutional rights to due process.

I’m not a conspiracy theorists, but really enjoy history. Major themes take decades and sometimes centuries to play out, and they can be nearly impossible to pick out in the present or recent past, warped by our day to day worries and information overload….

But every once and a while, something jumps up and shouts. “Hey!! Pay attention!!”

9/11 was an easy one to point at on the day and say, the world has changed.

Recent events may be more subtle, but to me, no less important.

Are we paying attention??

#90 Herb on 12.13.11 at 9:59 am

Europe survived 1945 because the USA, the last man standing, poured lots of money money into it. (See

Who would be in a position to do this now?

#91 The American on 12.13.11 at 10:01 am

The Kyoto thing… Kent sure is crafty in mincing his words. Sure China, India, and the U.S. are the largest contributors to green house gases. Without question, and this should be expected. These are also the largest countries on the planet (the smallest of the three at 9 times the size of Canada), hence they will naturally be the largest contributors to greenhouse emissions.

Point? Things should be looked at on a percentage and per capita basis. When looked upon in this manner, it really uncovers where the true offenders are. Hell, United Arab Emarites, The Netherlands, Luxembourg, and Australia emit more per capita that the U.S., India, or China. Canada follows closely behind the U.S. in this category. If you look at the trend in countries that have actually improved their emissions since 1990, only a few have done so. Canada’s has actually RISEN slightly in 20 years. The U.S. has dropped nearly 10% (although the signature was never ratified). But China’s has increased over 120%, and India’s nearly 60% increase.

Additionally, when reviewing the largest consumers of energy per capita, Canada takes the cake in the G20 as the very top offender. Perhaps Kent just doesn’t want his feet being held to the fire, and he opted out. That, or he realizes the Kyoto Protocol hasn’t done much for the benefit of the globe since its inception. Kent clearly does not want to convey all the facts of the matter.

#92 Bigrider on 12.13.11 at 10:16 am

#44 Garth replies ” Flummox all you wish, Europe will become merely a boring recession”

Not what Kyle Bass of Hayman Capital seems to think. He was on BNN this morning, says not only will Europe be in a a recession 2012 but continued asset price declines both in commodity space and equities a certainty as world delevers. Japan is the next ticking time bomb of magnitude greater than Europe says he. Would be good to listen to him as he has widely outperformed 5% per annum in his hedge fund .

The world will be delevering for a decade to come and we can all expect everything we own, everything, to be worth less.

Hedge fund managers do an excellent job at leading the media (and those who listen to BNN) around by the nose. It’s called manipulation, to their benefit. — Garth

#93 R2D2 on 12.13.11 at 10:23 am

#83Kevin … No, they don’t retire. They become more desperate.

#94 Rusty1 on 12.13.11 at 10:31 am

#10 Ole. Good precautionary move on Momma Turner’s part. Usually the Cadet Instructors are issued condoms, but only so many!

#95 GregW, Oakville on 12.13.11 at 10:32 am

Hi #57 Nastra, FYI, your “global growth” link
seems to be messing with my computer. I only wanted to do it twice. :(
And thanks for the organic gardening 101 link. :)

#96 Junius on 12.13.11 at 10:33 am

#59 RM in Oakville,

You said, “The science is far from settled and the IPCC has been discredited all over the place.”

Not amongst serious scientists. It is clearly settled. Just among paid hacks and Fox News.

#97 Herb on 12.13.11 at 10:34 am

#89 Beach Girl,

is there a reason why you covered your face?

#98 shut up mark carney on 12.13.11 at 10:40 am

Shut up you good for nothing POS. Talking is all you can do? Three years you warn and yet do nothing . Many will file for bankruptcy and walk away. The only question is how much money will you allow people to borrow? Mark carney is a [email protected] of a man.

#99 dd on 12.13.11 at 10:40 am

#79dd on 12.13.11 at 8:27 am
….because inflation has exceeded BoC targets….

What inflation? You said this a couple months ago. Too funny.

Eaten lately? — Garth
Ya, that was my argument back in the early summer. I said inflation was everywhere (Euro – Britain) and it was coming to Canada. You said “this ain’t Britain.” Funny how you change your tune now.

Price inflation, asset deflation. I regret your memory loss. — Garth

#100 Junius on 12.13.11 at 10:40 am

#83 Kevin,

What is to not understand? People’s benefits run out and they are forced into poverty. How is that so difficult to comprehend? Just because you don’t WANT to believe it does not make it not true.

See below link as but one of a thousand stories on this easily available to anyone prepared to search instead of blindly ignoring reality:


#101 Mr. Lahey on 12.13.11 at 10:43 am

#96 Big Rider

Welcome back cowboy! Are you going to come to the FASTPGFBDCParty?

#102 disciple on 12.13.11 at 10:49 am

This is for you, Boomer. Enjoy your holidays…

An economy is deemed to have a double deficit if it has a current account deficit and a fiscal deficit. In effect, the economy is borrowing from foreigners in exchange for foreign-made goods. Traditional macroeconomics predicts that persistent double deficits will lead to currency devaluation/depreciation that can be severe and sudden.

BudgetDeficit = Savings + TradeDeficit − Investment.

George Soros pocketed 2 billion dollars by shorting the Pound. Essentially, he PROVED that central banks have very limited ability to either prop up a currency or stifle inflation simply by increasing interest rates.

A central bank can either control interest rates or exchange rates but not both at the same time; therefore, the only result I can see is a devaluation of the CAD, regardless of interest rate declarations by the criminal families running the BofC.

By divesting of REAL assets and investing in FINANCIAL instruments, you are essentially shorting the CAD. Let’s get to work! Like you said, Garth, a little pain now to avoid a disaster later, but this time, can we bail out the people instead of the banks? Please? Sir, can I have some more?

#103 realestatemob on 12.13.11 at 10:51 am

Great post Garth!

Now if what you say is true, does this mean this is the time to re-balance our portfolios? (ex: sell bonds, buy more equity?)

#104 Ret on 12.13.11 at 10:57 am

Garth, is that you behind that curtain? I thought so, “Big Foot.” I remember you as a teenager. Some things never change.

Your Mother would not be pleased Garth.

#105 fancy_pants on 12.13.11 at 11:16 am

#90 Mr. Lahey on 12.13.11 at 9:31 am

Captain Garth and bloody Cyrus and his thugs have stolen the gold…

pretty sure it wasn’t Garth. He has been here with me all morning preparing the float. Plus he isn’t hot for gold.

Our theme for the float this year is “Turkeys stay home for the Holidays” and our logo:
It’s in print now. Once it is prepared and attached to the float we’ll have Ollie pull it to the park.

#106 firas on 12.13.11 at 11:20 am

Well, Carney Says…….
He is beating about the bush, isn’t he? For years now spenders have been rewarded for borrowing and spending.
Why not, it’s cheap credit euphoria, obviously we needed to keep aggregate demands up. But like they say nothing is free, now we have record household debts, not to mention budget deficit and accumulating government debt. Carney is scared to raise interest rate in the current uncertain world, nothing new we all studied that in economy, but, keep warning consumers that he will raise interest rates will not rein in the consumption binge he is complaining about.
Burying your head in the ground will not solve the problem Carney, It’s time to act and raise interest rates and reward savers for a change, especially since pensions and equity values are eroding due to inflation and the cheap credit policy that have gone on for too long.

The following was on the Financial Post:

#107 not 1st on 12.13.11 at 11:23 am

Doomers are betting on the wrong horses. — Garth


Betting on mathematics is never wrong.

Like Vancouver real estate? — Garth

#108 Canadian Watchdog on 12.13.11 at 11:24 am

Rates will not rise 1%, but a quarter of that to start. I am surprised at the hyperbole, coming from a chartist. — Garth

I’m not sure about that when the total bond issuance just hit 600 billion. Canada is nearly 70% debt-to-GDP ‘without’ the forthcoming CMHC bailout. Once you price that in (depending on the size of the bailout; I estimate it will be 150-300 billion), it puts Canada at 80-90% debt to GDP.

With the housing, auto parts and oil market slowing down (which are heavily subsidized), the government will have much less revenue to pay for its debt, which is why they will issue more bonds to pay for it all.

So, even a 25 basis point move matters with that amount of leverage. It’s a vicious cycle that cannot be fixed until major debts are purged from the system.

Bonds Chart

BOC Bond Issuance

#109 Ex-Cowtown on 12.13.11 at 11:30 am

Hope your sarcastic here. How can Canada make a difference at the expense of its future to waste $billions when it contributes to 2% of world emissions when the biggest polluters (USA, China, Russia & India) were not ratifiers. That’s basic business sense there. You Garth should at least know that much.

Not trying guarantees the result. — Garth

GT, I like your comments in general, but you are so off base on Kyoto it isn’t even funny. Kyoto was never about stopping climate change. It was always about a socialistic re-distribution of wealth based on “white man’s guilt”.

And I won’t even get into the non-existent, fabricated bullied and cooked data that that thee Warmists try to slap lipstick on and call science.

Garth, you need to educate yourself about these issues before you start wringing you hands about them. The world view changed a few years ago on this and you need a serious update on your frozen views.

Climate change is real and always has been with us. However recent research shows that Man made climate change is a myth and no more real that the movie Avatar or the Three Stooges….. or David Suzuki’s pathetic attempt to extort lunch money from kids by claiming that the North Pole is melting and that Santa won’t be able to visit their house for X-mas unless they buck up.

Try to stay current G-Man!!

Dino logic. — Garth

#110 neo on 12.13.11 at 11:31 am

I get it. If Europe could survive 1945, it’ll survive this. What a morose lot on this blog. — Garth

Not 1945. Actually it will be closer to when Austria and The UK went bankrupt in the mid 30’s. Yes they survived. A global war ensued a few years later much like there will be one with Iran shortly and there will be another great wealth transfer followed by another economic expansion fueled by debt the end of this decade once this deleveraging cycle is over. Yes Garth, I understand the history. I know how these things play themselves out and I know the rinse/repeat pathology of it all. I just think your hypothesis that 2012 is going to be some renaissance is misplaced and inaccurate and as I’ve said many times. I will be proven correct and navigate through it and profit from it. Timing is everything and your clock is broken.

Tempus Fugit…

#111 not 1st on 12.13.11 at 11:33 am

#83 @kevin

I never understood that argument. Who exactly are these unemployed people who simply “stop looking for work?” How do they eat? How do they pay their bills? How does a broke 30-year-old who’s been unemployed for a year simply decide to “stop looking for work?” What, does he just retire? Decide to become homeless? What? How does that work? I seriously want to know how you people envision that working.


Some of these people have been unemployed for 36 months or more. Wouldn’t you lose your mojo after pounding the pavement that long? They have extended EI benefits from Obama, food stamps, subsidized housing, move back with family etc. They get by but they are not an active participant in society as we know it.

#112 BPOE on 12.13.11 at 11:34 am

Carney ain’t going to be raising interest rates during his term. Canadians debt load just announced today at record highs. The pros are licking their chops. Those poor poor Candians who overextended themselves might have to sell their homes at some time to the pros. This is FANTASTIC news for all the longs in the Vancouver housing market. Canadian debt level means letting go of the house to the pros. Higher interest rates would accelerated this transfer of home ownership from Candians to the Pros but Carney will not allow this to happen. Watch and learn

#113 eaglebay - Parksville on 12.13.11 at 11:37 am

#83 Kevin on 12.13.11 at 8:50 am

Good post Kevin.
And, how about all the newcomers to the labour market?
People from high schools, trade schools, universities, immigration, etc… I’m sure some of them are finding work.
Too many doomers here and the ones that say “I’m not a doomer”, duh.

#114 wtf????? on 12.13.11 at 11:37 am

The PIGS have entered a depression similar to the 1930’s according to the most recent data on unemployment and GDP. Canada and Aussie have been desperately trying to shore up a Peter Pan economy by rocking up house prices to bolster the wealth effect in spending…….the bloom is off the rose however….everybody’s broke now.

Carney says it’s all your fault for borrowing? Wasn’t the ZIRP policies that were set by the government to create spending in the first place. Ten years of ZIRP ended up creating exactly what was mathematically possible…and here we are……broke as hell. When you consume 100% and then keep borrowing you wind up with massive debts and a failing economy.

Are theses the best and brightest civil servants they tell us we need to pay the big bucks to attract? Dude…walk into any bar in town…..a drunk will make as much sense as Carney’s last poke at the consumer.

Whats next..confiscation? Woops..he called it ‘auterity’. You gotta feel sorry for the seniors though who were promised a future and then got nothing but screwed as they watched the ZIRP turn their savings into a crystalized tax grab and then into dust.

#115 Mr. Lahey on 12.13.11 at 11:45 am

#109 Fancy Pants

“pretty sure it wasn’t Garth. He has been here with me all morning preparing the float. Plus he isn’t hot for gold.”

I reread my post and I can see how you misinterpreted it. Ron Paul was getting ready for his debate with Captain Garth and I should have stated that while this was going on, Cyrus and his thugs robbed poor Ronnie of his 6 gold bars! Please Fancy Pants try to get those gold bars back. Ronnie will think we are a bunch of criminals in Sunnyvale! Rosco the veternarian has patched up Ronnie pretty well. Ronnie will be debating the all knowing, all wise, sagacious reader of the financial tea leaves Captain Garth with a patch over his right eye! Please get the gold back anyone!

#116 refinow on 12.13.11 at 11:45 am

I think Carney has it wrong raising the rate as a means to stop people from borrowing more than they should. It will only punish the majority of the existing home owners, and not the newbies entering the market.

They need to fix the problem at the source…The Mortgage Application… Not by raising rates….

I don’t think the raising of the rates is exclusively to slow housing down.

Late last week the Toronto Maple Leaf’s were sold…. to Rogers… The Leaf’s….. the most profitable franchise in the NHL… The Teacher’s Pension Fund was majority share holders prior to the sale….

Was it sold because Roger thinks it is a good investment, (Yes I do…) But why was it sold? If it was so incredibly profitable??? Why was it sold ?? Maybe the Teacher’s pension fund needed some liquidity, that in this low interest rate enviroment, that they are having trouble making payroll on a sustainable long term basis..

I think this is part of the motivation for Carney to raise rates…. Real Estate is in trouble, but so are the majority of the pension funds…. Keep rates low default on pensions….Raise rates, solve the pension problem, but then housing colapses….

I think ultimatly rates will stay exactly where they are… put still does not bode will for the pensioners.

Damned if we do and damned if we don’t..

We are so damned !!!!

#117 Joe Q. on 12.13.11 at 11:47 am

#70 TheRealTruth on 12.13.11 at 4:14 am
Good post.

But wouldn’t carney get CMHC to do his dirty work for him if he was serious??

This is a good point. I’m not sure Carney has control over the CMHC, but he has the ear of Flaherty, who does.

The current big-city housing insanity in Canada can be decoupled from BoC interest rates by changing the CMHC down-payment and/or amortization rules. Raising the minimum CMHC-insurable down-payment to 10% from the current 5% would cool the market considerably even without an increase in interest rates. Alternatively, CMHC could re-instate the mortgage insurance caps they had prior to 2003.

What say you, Garth?

I’ll tell F in the steam room today. — Garth

#118 GregW, Oakville on 12.13.11 at 11:48 am

Hi #59 RM in Oakville,
Have you looked at the local ski hill just north of us? They can’t even make snow! I think they need -6C to even make good snow at night. The rain and + temps weather forecast isn’t looking good. And they are usually open by now! Just saying.

Sure, I’d like to hear and see more science about solar output and Co2 from volcanoes, but;

The IPCC report is as good as any/maybe better, place to start looking, regarding plausible consequences. Especially if you don’t even try.

I believe not trying, is not the best gamble, to be taking for our and other life forms, on our only home we have. IMO.

A few years ago our global leaders (G8&20 come to mind) seemed more interested in being able to send ships through the North West passage year round, than on the impact to all people’s ability to grow their own good food to try and remain healthy.

I guess you get what the Corporations are pay for? Try and maximize quarterly profits and dam good long term planning for the global good of all human beings. Corporations and share holders are much more important, aren’t they? But what do I know.

#119 Daisy Mae on 12.13.11 at 11:48 am

#54NonPlused: “As for Hot Air Mark, the horse is long out of the barn. He should have been making such speeches in 2005 -2006. Nothing he or anyone else can say or do will help us now.”

.#55Brad on 12.13.11 at 12:32 am
“Praise be brother Carney! Good on you for being so prudent. Wouldnt want a real estate bubble to develop here now would we?”


I’m equally unimpressed with Carneys’ speech. After the governments recent shenanigans, what gall.

#120 Mr. Lahey on 12.13.11 at 11:49 am

#109 Fancy Pants

“Our theme for the float this year is “Turkeys stay home for the Holidays”It’s in print now. Once it is prepared and attached to the float we’ll have Ollie pull it to the park.”

Much appreciated Fancy Pants. I hope poor Ollie has recovered from Ricky’s coffee tossing incident! We are going to give Ollie some wonderful Nova Scotian barley are a reward for all his efforts in the FASTPGFBDCParty. We may even put him on the float to give his tired legs a break. Your efforts are really appreciated Fancy Pants!

#121 TorontoBull on 12.13.11 at 11:51 am

Am I having a deja vu?! I thought I read this article in 2009 and 2010 already…INHO it is more likely that in 6 months we hear economists (read mainstreet media) talk about interest rate decrease rather than increase.

The BoC will not reduce rates, — Garth

#122 eaglebay - Parksville on 12.13.11 at 11:52 am

#97 R2D2 on 12.13.11 at 10:23 am

Loser, this is one in a million.

#123 Form Man on 12.13.11 at 11:59 am

#112 BPOE

pros ? I detect a whiff of shrill desperation……..

#124 R2D2 on 12.13.11 at 12:01 pm

“Between them the EU nations own approximately 10,800 tonnes of gold worth, at current market valuations, about $583 bn or £364 bn or E435 bn – sufficient to provide collateral for a loan of say 2 Trillion Euro on a coverage basis of about 20% to 25%. While 2 Trillion Euro would not resolve all of Europe’s debt issues, it would bring them down to a very, very manageable level.”

#125 Living in AB on 12.13.11 at 12:07 pm

If Carney/ Flaherty wanted to control debt why wouldnt they focus on tightening mortgage rules vs. raising the rates.

#126 charles on 12.13.11 at 12:10 pm

Well this look like last year post. A year went by and mr carney did not increase rates. You can say the same thing over and over, for sure one day you will hit the nail.

Rates increased last year. They will increase next year. — Garth

#127 R2D2 on 12.13.11 at 12:15 pm

#120GregW, Oakville on 12.13.11 at 11:48 am

Millions of us, like yourself, share in the disappointment regarding the legacy of the current government vis global warming.

That doesn’t mean the larger majority of conscientious people have turned their backs on the problem because they don’t want their children to inherit an unmanageable mess.

#128 Canadian Watchdog on 12.13.11 at 12:16 pm

#126 R2D2

Re-hypothecating gold receivables doesn’t count.

#129 Form Man on 12.13.11 at 12:23 pm

#127 Living in AB

While tightening the rules is the correct approach, it is also referred to as regulation. Or, in Canada’s case, re-regulation. The polar opposite of everything Harper’s economic ideology represents…………on the other hand, Harper is quite comfortable regulating human rights ………..

#130 R2D2 on 12.13.11 at 12:24 pm

#130Canadian Watchdog

It’s not ‘collateral damage.’ Angela won’t accept the option at present.

#131 disciple on 12.13.11 at 12:25 pm

Kyoto? Yeah, that’s really helped us, hasn’t it? The climate is much better now, eh? People who believe such nonsense are hopeless political prisoners, or really nice guys who runs blogs and must tap into the majority consensus illusion to appear to stay relevant…

The truth is available everywhere… but you must actually be able to read and not get your info from a talking head…I know it’s hard work, but someone’s got to do it… Any volunteers? Didn’t think so…

It’s not humans that are causing climate change, it’s the climate that’s causing climate change. As usual, the big picture is ignored, and we name the wrong enemy. Carbon and carbon dioxide are such poisons that it is a wonder why all the world’s flora chose it to live off of…hmmm. And those stupid cows with their methane emissions, they’re killing us! Who are really the stupid cows? Tell me.

#132 cory on 12.13.11 at 12:27 pm

To #22

I would keep the variable rate. If the rates rise, you can always bump up the amotization to lower the payments if they become uncomfortable.

#133 R2D2 on 12.13.11 at 12:27 pm

#124eaglebay – Parksville

Mebbe so … but, then again, Highly Probable.

#134 Van guy smokin now on 12.13.11 at 12:33 pm


You do seem confident about rising rates. But that’s what you said last summer. Why are you so confident now?

Did you not read the post? — Garth

#135 Still? on 12.13.11 at 12:36 pm

#16 Blog Dog Carney

I understand your concern Mark and we will have Julian and Bubbles guarding you at the FASTPGFBDCParty

This is getting a bit old now, innit? Let’s move on.

#136 Canadian Watchdog on 12.13.11 at 12:37 pm

“If Carney/ Flaherty wanted to control debt why wouldnt they focus on tightening mortgage rules vs. raising the rates.”

People seem to be discombobulated with the roles of the BOC versus the government. It is NOT the BOC’s mandate to raise rates based on housing debt concerns—that is the responsibility of the government in which it has all the powers to regulate.

The BOC’s only mandate is monetary stabilization, that’s it. I posted last week that FX intervention would be in effect, so it happened and happen again it will.

They will devalue the CAD before raising rates. Carney’s report was warning to Ottawa.

#137 Still Waiting on 12.13.11 at 12:38 pm


While I agree with your overall views these past few years (and I would argue earlier as I recall your dire warnings in a Sun article published some time in 2006), eventually you will be correct in your assessment. The reality is that many folks, myself included have made a good little Penny on RE these past years, well better than what an Investment could have returned. Buy, hold and prosper to not make anyone rich in the Stock Market, It has become a casino. Although I’ve always respected your insightful views, I’m afraid you are beginning to loose some credibility.

In 2006 I was an MP. What were you saying about credibility? — Garth

#138 vrms on 12.13.11 at 12:52 pm

Most variable rate clients have their mortgage payments set to increase/decrease with rates. Any rate hikes by Carney are gonna make people wish they never borrowed what they did.

#139 disciple on 12.13.11 at 12:52 pm

You have on one side the Warmists and on the other the Skeptics. Count me in the latter camp. Especially when you are in a ten foot snow drift later in a few weeks.

Purely laughable was Professor Nils Axel Morner’s hilarious, crazy-Swede lecture on his experiences measuring sea-level rises in the Maldives (there hasn’t been any: whatever the Maldives president and his underwater cabinet tell you). Same also goes for Prof Svensmark: really his cosmic ray theory is gloriously compelling.
In other words there is still an enormous amount of uncertainty out there about the chaotic system which causes climate. But here’s the rub: global policy makers are acting as if there isn’t.
And the reason they’re acting as if there isn’t because, essentially, they have been hijacked by the scientists on the Warmist side who – behaving far more like political activists than dispassionate seekers after truth – have exaggerated the strength of their case, even to the point of tweaking their data and suppressing contradictory research, in order to ensure that their “correct” interpretation of reality is the one that prevails.
This was the whole point of the Climategate scandal and why it mattered. And since Climategate – as we saw from the entirely unapologetic, nay struttingly arrogant in some cases – behaviour of the Warmist scientists present absolutely zip-all has changed.

#140 debtified on 12.13.11 at 12:54 pm

Garth, why say Europe is stabilizing? On what grounds?

I know that Europe will eventually start stabilizing and will ultimately achieve stability. But it is currently not stabilizing and the form such stability actually takes is anybody’s guess.

‘Stabilizing’ does not mean ‘stability.’ We seem to have a reading comprehension issue today. — Garth

However, stabilizing does imply a path to stability. It’s not at all unreasonably for someone who can connect the dots to infer that what you are alluding to is stability.

Flummox all you wish. The European crisis will dissipate and become a merely boring recession. — Garth

Becoming a “merely boring recession” is stabilizing?

Good post overall on debt, though. Makes it clear how highly leveraged most Canadians are.

#141 Kevin on 12.13.11 at 12:56 pm

Debt to income hits 152.98%

This marks 3 business days in a row that Canadians have been warned about living beyond our means. And for anybody who reads this blog, this does not come as a surprise.

This is how the average weekly wage and total household credit growth look like year over year from 1992-2010.
And total debt has grown like this from 1971 to 2010.

In 1992, the debt to income ratio was near 82%. In 2011, we are now at 153%.

As I have said before:
# Total household debt has exploded by 135% between 2000 to 2010.
# Mortgage debt has exploded by 131% between 2000 to 2010.
# Consumer debt has exploded by 146% between 2000 to 2010.
# This is at a time when the average weekly wage increased by 30%

The only question I have is ” which is bigger, the credit bubble or housing bubble?”

#142 robert james on 12.13.11 at 12:58 pm

Get those rates up, Carney !! Might just as well begin the purge sooner than later … The fools were warned many times.. ” Pigs always get slaughtered and the Stupid always get hurt more ” – darwin

#143 debtified on 12.13.11 at 1:00 pm

Carney WILL raise the interest rate. It’s good for his banking buddies (now that the herd is stuck in the embrace of debt).

I like Garth’s call on bank preferred shares.

#144 grantmi on 12.13.11 at 1:12 pm

He’s coming boys and girls…. he’s coming!!!

Move Along! Nothing to see here!

#145 Daisy Mae on 12.13.11 at 1:14 pm

Received a corny joke this morning…..

Vocabulary Word for the day: LIQUIDITY
Definition: ‘Liquidity’ is when you look at your retirement funds…and wet your pants.

#146 eaglebay - Parksville on 12.13.11 at 1:23 pm

#133 disciple on 12.13.11 at 12:25 pm

I’m starting to like you.
The climate has been changing for millions of years.
Same with the geography. Continents have moved.
There has been many different CO2 accumulations.
Sometime more and sometime less.
Ask the dinosaurs.
Like any other life on this planet. There’s a beginning and an end. We won’t be here forever.
Overpopulation will take care of it. Problem number 1.

#147 Mr. Lahey on 12.13.11 at 1:32 pm

Westernman’s tractor has just arrived via Fed Ex. All is well that ends well!

#148 Kevin on 12.13.11 at 1:46 pm


“People’s benefits run out and they are forced into poverty. How is that so difficult to comprehend?”

Sure, but they still keep looking for work, and thus are still counted among the “unemployed” (in the US). That’s my point. The notion that the unemployment rate dropped because some large, mysterious class of unemployed people simply stopped looking for work is bogus.

People may fall off the EI benefit roles, but they’re still looking for work, and are thus still counted as “unemployed” under the US system of reporting statistics (I’m aware that the statistics are reported differently in Canada. “Not 1st” specifically referenced the US, where if you’re looking for a job, you’re counted as “unemployed,” regardless of whether or not you’re still receiving benefits).

#149 Midas on 12.13.11 at 1:57 pm

Gartman sees bear market for gold:

#150 Butch on 12.13.11 at 1:58 pm

#118 refinow

No, the people in the market right now need to be punished – it’s not our fault their greed made them buy at an inflated price level which needs to fall back into line with personal income.

#151 Bottoms_Up on 12.13.11 at 1:59 pm

#92 Condo Sucker on 12.13.11 at 9:40 am
That’s not an indication of a market turning, it’s an indication that you shouldn’t sell a home 6 months after buying it (and anger your agent in the process when you realize you lose due to all the transaction fees).

I mean, really, they said they would accept 460k, they receive an offer for 460k (seems like a pretty stable market then?), and then they back out.

#152 Dorothy on 12.13.11 at 2:06 pm

While I do believe that Mr. Carney would LIKE to raise interest rates as a way of discouraging Canadians from taking on even more debt, I don’t see how he can do so when the rest of the world is keeping their interest rates so low. Therefore, I am in the camp of those who are NOT expecting interest rates to rise any time soon.
As for real estate, anybody with half a brain can see that prices are definitely softening in most markets, so I don’t understand why that topic is even being discussed any more. The far bigger issue for most folk is the subject of employment, and whether or not they’ll still have a job this time next year.
In a country that relies so heavily on exports, I cannot see how we can continue to maintain current employment levels when the rest of the world is in an economic slump. And it’s common sense that if unemployment rises, asset prices will decline because there will be fewer people who want (or are able) to buy stuff (that includes stocks and bonds). Even those who don’t lose their jobs, will become fearful that they might lose their jobs, and consequently will also stop buying stuff. And the resulting downward spiral will be difficult, if not impossible to contain.
So I predict that Garth is right when he says asset prices will go down. But I think he’s dead wrong when he says interest rates will rise next year. I think they’ll stay right where they are until at least 2013, not because Carney wants it that way, but because he has absolutely no other choice.

#153 Beach Girl on 12.13.11 at 2:13 pm


I really could give a shit about that. All us white pansy, pussy nations bought into that crap. I personally don’t care. I guess it made us feel superior, when we had the money to do it. What a waste of time and money. Same with the gun registry.

Brown people are more sauvy, as they have had to endure bad stuff.

Chinese people cannot believe how amazingly naive we are. I am embarrassed walking through Pacific Mall, knowing they are laughing at the stupid ROUND EYES behind my back.

I might be here in 20 years, if not, so what. Really have no care for upcoming generations.

Really don’t want grandchildren.

And this is a good day.

And Herb, I would never hide my face, that would be a party. LOL.

#154 Bill Gable on 12.13.11 at 2:27 pm

Tax Haven made a few cogent points. People look to be ok – but, under the covers, the little black book is all debt.
Put on a big show, only care about the monthly payments, to heck with investing.
To those dawgs still in their 20’s – you will be shocked at how fast life zips by.

I walked by my neighboring Church last “food bank” day, and the line was huge.

Might I add one more note: if you have the means, pick a Charity and help. We all pull together when times get tough, and lemme tell ‘ya – you ain’t seen nothing yet.

When rates inch up, there will be a lot of financial basket cases.


#155 tutatrino on 12.13.11 at 2:52 pm

“Bank of Canada Governor Mark Carney warned Monday that Canadian households need to end their spending splurge, particularly on homes, because debt levels have reached 149 per cent of income, higher than in the U.S. or Britain. But the Statistics Canada numbers released Tuesday put the debt level even higher, at 150.8 per cent of income.”

meanwhile, in Saskatchewan…

Borrow on, borrow on. C doesn’t know what he’s talking about. It’s different here……… (sigh…)

#156 new_era on 12.13.11 at 3:09 pm

Interest chart from mortages and loans ( it just looks like loans are easier to get now adays in BC)

“Once again we see evidence that the suggestion that the current BC real estate market is being driven by cash-toting foreigners doesn’t jive with reality. BC is leveraged far more than any other province, a shocking finding for a province that should have very little mortgage debt….with the rampant foreign capital inflows and all…”

#157 new_era on 12.13.11 at 3:14 pm

Statistics which says it all, but what will carney do next.
The right thing or continue to kick the can down the road until we run out of road

#158 Tony on 12.13.11 at 3:15 pm

Low rates ’till mid 2013.

#159 disciple on 12.13.11 at 3:16 pm

Jason Kenney is a disgrace to Canada. He should resign immediately from his currently appointed post which first occurred on Devil’s night in 2008. His words and demeanour do nothing but create hostility, and do not at all serve the public good. What he has enacted today with the complicity of the media, is outright mind control for those who can grasp it, another step towards dis-union, dis-cord, chaos, and that great and terrible war for which his rank-and-file elite controllers yearn.

#160 new_era on 12.13.11 at 3:26 pm

BC Stats: Carney knows the trouble were in, and were alot deeper than he says it is. But what is his next move. To do something about or kick the can down the road.

I say he pulls a GreenSpan, kick it down the road until he runs out of road. Then Quit and hand the mess over to the next guy, making sure he takes care of his own future with nice pension plans and etc.

#161 Van guy blazin kush on 12.13.11 at 3:35 pm

All the people that are amortized for 35 & 40 years, do they have to take a 30 or 25 year amortization when they renew their mortgage?

#162 jess on 12.13.11 at 3:39 pm


I guess one gets tired of the man behind the curtain
as the former Salt Lake City Mayor Rocky Anderson is running for president with the newly formed Justice Party.
“We launched the Justice Party because the entire system is so corrupt,” Anderson says. “It’s so diseased. We know that the public interest is not being served by anyone in the system right now, particularly the two dominant parties who have sustained this corrupt system and who are sustained by it.”

Rubik’s Loopholes
double taxation agreements useless

European Commission has threatened to sue Britain unless it renegotiates its wrong-headed and useless tax deal with Switzerland.

…”European Commission lawyers concluded that the bilateral deal, which recovers billions of unpaid taxes in return for protecting the prized secrecy of the Swiss banking system, is in breach of European Union laws that are tougher on tax evasion…”

#163 neo on 12.13.11 at 3:45 pm

Interesting that the rating was restored because of Liberal fiscal prudence. My how times have changed. == Garth

This I agree with you Garth. As much as the “perception” is Conservatives are fiscally responsible. History tells a different story on BOTH sides of the border. It is always Liberals/Democrats that end up cleaning up Republican/Conservatives mess the past 30 years with very few exceptions Nationally not provincially/State. Well, until Obama took office that is. He has put spending into overdrive.

#164 Bigrider on 12.13.11 at 3:48 pm

Pretty depressing trying to invest in these equity and bond markets. Tough slog for sure as the theft of assets of the prudent and judicious continues.

Liquidity is key to surviving what is about to unfold over the next 5 to 10 years but thriving…very doubtful.


#165 jess on 12.13.11 at 3:50 pm

water displacement

if one lives on kiribati islands in the central tropical Pacific Ocean population exceeds just over 100000 ..
will New Zealand rent them rooms?

#166 neo on 12.13.11 at 3:55 pm

There is something poetic about a failed “Disneyland” in China and looking at an abandoned project in the middle of farm land. I guess Field of Dreams was incorrect. Or it was never built in the first place so I guess we will never know if they would have come. There is fantasy and there is reality…

#167 45north on 12.13.11 at 3:57 pm

Ottawa Mike: how can limiting coal fired generation and the overall capping of hydrocarbon burning be such a bad thing?

when my “Hydro Ottawa” bill is too high

when “Hydro Ottawa” doesn’t have enough power

I didn’t come up with “Hydro Ottawa”, I suppose it’s supposed to make the francophones feel included. They feel included everytime they get their bill.

and honestly why does it (“Hydro Ottawa”) have to have such a big customer id? It’s like 32 digits. What a bunch of morons.

#168 jess on 12.13.11 at 3:57 pm

Belgium attack: grenades thrown at bus-stop in Liège – Tuesday 13 December 2011• Four dead and dozens injured after blasts in Belgian city
• Attacker threw grenades into crowd before killing himself
• Two teenage victims ‘had just finished exams’
• Baby struggles for life in hospital

#169 Junius on 12.13.11 at 3:58 pm

#142 Kevin,

You said, “The notion that the unemployment rate dropped because some large, mysterious class of unemployed people simply stopped looking for work is bogus.”

I see your issue. I am sorry. It is in the way the statistics are kept for the unemployed. When people drop out of the system they are simply not counted as unemployed. It makes no sense.

#170 Westernman on 12.13.11 at 4:05 pm

It’s not often that I can whip up any pride at all in this pathetic, liberal socialist nanny-state called Canada but I must say that by pulling out of this giant tax scam of the Koyoto ripoff Canada finally showed it has a pair after all.
We should use them more often.

Yes, that’s a great set of glands to use making public policy. — Garth

#171 zeeman1 on 12.13.11 at 4:06 pm

#133 Disciple.


#172 Grimbot on 12.13.11 at 4:18 pm

information on the increasing debt load on Canadians…

#173 Westernman on 12.13.11 at 4:26 pm

Form Man,
Try using soap and hot water – that’s not desperation you’re smelling…

#174 george Klein on 12.13.11 at 4:33 pm

Other issues why Carney is sending out warnings.
personal debt is about to increase within 30 to 60 days.
Holiday season brings out credit card crisis and this time
consumers will be borrowing from their own assets. Job numbers, inflation and hst tax are hitting full stride. This is about to cause a major hit on our petro dollar. In other words we are in for a s h t load of hurt very quickly.
Its here. Debt crisis has hit Canada and Carney and Harper have washed their hands. They told u so.

#175 robert james on 12.13.11 at 4:35 pm

Whoa !! Just checked the price of gold.. Now I see why the gold bugs are so quiet.. They must be out buying anti-depressants or perhaps RAID..

#176 Westernman on 12.13.11 at 4:50 pm

Yes, if those glands were used more often maybe this timid little country could get itself a bigger and better seat at the table so to speak, instead of scampering around under the supper table scarfing up the meager droppings from the big boys… and a well developed set of gonads is a prerequisite to sit at the table and be taken seriously… or we can just continue to be an amusing comedy source for the world…which would be preferable?

As expected. — Garth

#177 NFN_NLN on 12.13.11 at 4:51 pm

This is the fiscal & monetary version of the talk my mother gave me when, as a teenager, I headed off to Army Cadet camp for the first time. Pressing three condoms into my palm, she warned me of a ‘moment of pleasure, and lifetime of pain.’ As it turned out, three was wholly inadequate.

Back then did they even allow girls… ahhh I get it now.

Geez Garth, save something for your memoirs.

#178 April on 12.13.11 at 4:53 pm

#141 – Still waiting. Garth was completely right about his RE forecast back in 2008. Surely you know what happened then to reflate the bubble.

#179 Westernman on 12.13.11 at 5:06 pm

I got it exactly right…didn’t I? Just. admit. it.

#180 Form Man on 12.13.11 at 5:16 pm

#177 westernman

so you agree with BPOE ? you are as deluded the famous fantasy tale of your missing tractor.

#181 thewhitenight on 12.13.11 at 5:21 pm

Can somebody take out Mr.Lahey? Seriously. If he cant be trusted to take his meds on his own, compassionate killing is the only sensible option.

#182 Angela on 12.13.11 at 5:29 pm

#30 S – The BoC will also be helping pension funds and seniors get better returns on fixed investments.

I hope so! My parents held a mortgage between about 1980 and 2000 and never got a break on interest rates. Now they’re retired and just when they need interest rates to be high on savings they’ve never been lower. I don’t know how they do it.

#183 Westernman on 12.13.11 at 5:37 pm

Form Man,
I’m not agreeing with anyone, I’m just saying that smell you are detecting might be coming from a source much closer to home, I trust you get my meaning, sir.

#184 Bill Gable on 12.13.11 at 5:40 pm

Just learned a valuable lesson – and nearly had my face re arranged, at the same time.

Standing in line at a Vancouver food store, and the two people in front of me are obviously agent and dewey eyed, gotta get a Yaletown condo, twenty something.
While they were paying $45 for an avocado sandwich, the agent was saying things like “This market is headed to the moon and your timing is perfect”…blah blah.

The checkout girl (*HUH?) chimes in that she has just put down a few shekels on a place and she was ‘going to make a TON of money’.
I waited for a lull and said “anyone of you folks know which market is the world’s most over priced for homes?”
Agent goes purple.
I say calmly – ‘it ain’t Windsor…welcome to ground zero’.
INSTANT FREEZE and agent steps this close to me and says – ‘what are you an “expert”?
‘No – just not delusional and greedy.’

He was gonna go for it – but the teller said “OK, cool it guys”.

From now on – I am going to keep my yap shut – and watch.

This guy could have eaten Mr. Turner’s Harley, without Ketchup.

It’s gonna be a fun couple of years in Vancouver.

ps. Coward that I am – I waited ’til he left and I skulked back to my rented abode and thought about what just happened.

Emotional? Real Estate? You BET.

Just like a certain bearded chap just taught us.

#185 Steven Rowlandson on 12.13.11 at 5:41 pm

As much as I hate to agree with a goldman sachs man cum governor of the bank of canada I think I must make an exception in this case. Many canadians and their so called government are spendaholic debt junkies that need a strong dose of high interest rates for a long time to prompt them to smarten up and live with in their means and preferably less than their means.
The time to restore financial sanity is long over due!

#186 Westernman on 12.13.11 at 5:58 pm

Bill Gable,
Good move – best to keep your teeth.
In regards to trying to save the idiots from themselves… WHY? Let them go down in flames!
You get to watch and laugh and laugh and laugh… the best revenge – yes?

#187 Two-thirds on 12.13.11 at 6:14 pm

When interest rates were lowered, it was done in a coordinated fashion by the G7 central banks.

But now, Canada will raise rates unilaterally?

After reading Carney’s speech from yesterday, I thought “wow, these are big words.”

Sadly, that is all that the governor has been able to deliver in the recent past. It appears that the only thing rising here is the urgency in Carney’s tone, and perhaps, his blood pressure.

#188 poco on 12.13.11 at 6:27 pm

#165 Van guy blazin kush on 12.13.11 at 3:35 pm
All the people that are amortized for 35 & 40 years, do they have to take a 30 or 25 year amortization when they renew their mortgage?

the mortgage renewal for those who took the 40 year terms back in 2006 and 2007 are in pretty good shape if they plan to continue living where they are —other than lost equity to date, and a future loss of equity (anyones guess as to how much ) their renewals at the present low mortgage rates could bring their ammortization down to 25years with a lower monthly payment than they are presently paying–
ie: 200k mortgage (2007)at 5.65% (5yr term)= $1043 mo. payment–only pay off about 8k over 5 years
renew the 192k at 4% over 25 years=$1009
3.5% over 25 years =$859
except for the horrendous interest amount the 40 and 35 year terms generate, the majority of homeowners with these mortgages coming due will not default because of high interest rates

#189 Smoking Man on 12.13.11 at 6:33 pm

The world as you know it is going in down the drain.

Been avoiding posts cause been tipped off to what’s to come, Shut down my face book and twitter. After the machine rounds up all the brown people that perhaps use the word ala akbar once in a while, the will need more reasons to get even more people so the bar will get lower and lower. Have a problem with vaccines, or teachers, believe in liberty, there is a little old man making his list and it anit Santa.

Beware blog dogs you have been warned.

Printing Money and charging interest can never be paid back in full. This model of getting labour credits before the labour has been done needs growth and mild inflation.

The Stock Markets are going to tank, jails are being built, here and terror laws resurrected Fema camps in the USA are being activated, they know the peasants will revolt and come for the masters head. Well Master aint going to throw in the towel with out a fight.

And Toronto RE absolutely no inventory.

This is getting interesting….

I’m just wondering is Garth oblivious to the signs or just being smart as it is his real name out there

I’m trying to be oblivious to you. — Garth

#190 Herb on 12.13.11 at 6:52 pm

#188 Bill Gable,

since my schnoz was not at risk, I enjoyed your experience.

#191 Spiltbongwater on 12.13.11 at 6:59 pm

Canada contributes 2% of the worlds CO2 emmissions. Surely the other countries can solve the planets carbon caused climate change with or without Canadas participation in Kyoto?

#192 Manalive on 12.13.11 at 7:05 pm

Interest rates start going up it means wages will have to rise…where’s the problem?

#193 jess on 12.13.11 at 7:07 pm


#194 Dale Blayone on 12.13.11 at 7:10 pm

“Now with Europe stabilizing.”


#195 Mark "the Talk" Carney on 12.13.11 at 7:10 pm

Canadians are spending to much money (140%)
Mark carney says ….I will raise interest rates

Canadians are spending to much money (145%)
I will raise interest rates…plesae stop spending money which you will NEVER pay back or ELSE!

Canadians spending to much money (153%)

MARK THE CLOWN CARNEY SAYS??? I will raise interest rates?

SHUT UP you stupid liar. Why are you talking? No one cares now as people are so indebt that THEY WILL GO BANKRUPT. Now the question is will they file for 500K bankruptcy or 600K next year? You stupid moron of a CLOWN.

Please just SHUT THE F UP you useless CLOWN. Time for ACTION as inflation has hit HYPER mode.

#196 Helga on 12.13.11 at 7:11 pm

Garth, while you mention Mattamy homes, our son-in-law worked for them for a while. The stories he told about the workmanship and materials in these houses!!!!!

#197 Form Man on 12.13.11 at 7:41 pm

#190 westernman

laugh away…..until you realize it is your tax dollars going to bail out CMHC when the foolish subprime buyers default……….

#198 DeanB on 12.13.11 at 8:10 pm
Read it. Yawn. — Garth
I just heard we all die. Is that true? Should I worry? — Garth

Why is so damn glib? Is he “simply” saying you can’t escape death, taxes or hypothecation.

Garth schooled us to not worry about losing money, as much as running out of money. But what worries me is our best in the world ultra conservative Canadian banks are play the same games as MF Global.

The devil is in the details, and hypthecation scares the hell out of me.

Then you are worrying about the wrong risks. — Garth

#199 Westernman on 12.13.11 at 8:10 pm

Form Man,
Don’t worry, you being a bleeding heart, neo-marxist, tax loving new age, politically correct do-gooder that you are you can pay my share because you better believe it buddy, I will spend, hide or if all else fails I will BURN my money before giving it to government to bail out idiots… believe it, pal.

#200 stevenson on 12.13.11 at 8:11 pm

There will be no major correction and the only idiots will be the ones that didn’t jump on the boat but rather off during the best opportunity in 2008. If you believe that paying rent for the past few years, have a problem with tax free income, and are in denial. Then you better off. Fact. Don’t give me the BS about carrying costs and financing blah blah blah. If you sold lately or even after a 15-20% correction(the one everyone believes is around the corner and it must be a very big corner) you will still be better off. Fact.

#201 Mr. Lahey on 12.13.11 at 8:34 pm

#185 The White Knight

“Can somebody take out Mr.Lahey? Seriously. If he cant be trusted to take his meds on his own, compassionate killing is the only sensible option.”

My, my, aren’t we a violent one White Knight. Seems quite a few blog dogs have enjoyed my posts and levity in an otherwise gloom and doom environment. Don’t worry cowboy, the FASTPGFBDParty is this weekend and then I shall call it quits. BTW, you have been removed from the invite list…

#202 jess on 12.13.11 at 8:43 pm

…”Prosecutors claimed the defendants channeled payments through conduit companies in off-shore locations including the Bahamas, British Virgin Islands, the Cayman Islands, Panama, Switzerland and Uruguay. They disguised the bribes through deceptive accounting and the use of phony consulting agreements and fraudulent invoices, the government claimed.”

#203 Form Man on 12.13.11 at 8:44 pm

#204 westernman

surely you don’t mean to say you are hiding information when filing your taxes ? that would make you a criminal, westernman……….

#204 Form Man on 12.13.11 at 8:47 pm

#204 westernman

check out the composition of your comment, you have used the word ‘you ‘ far too many times…….

#205 Onemorething on 12.13.11 at 8:53 pm

more accurately DEBT DEFLATION!

#206 grantmi on 12.13.11 at 9:12 pm

Carney giving us hope and guidance to the promise land!!!

#207 Habbit on 12.13.11 at 9:41 pm

So it takes 2 incomes now for the average familly to make ends meet. OK but the average size of a home now is twice the size as it was in 1950 and the average familly is smaller! And ya know, we have to have those holidays in Mexico the SUV,toys, and don’t forget the RV, big screen and on and on. In the 70’s the average size of a home was 1100 sq/ft now were up to 1800 sq/ft. Makes sense it costs more to live now. The value system has changed. It ain’t what we need that gets us in trouble, it’s what we want and lets try and get it with the least effort possible. Good grief.

#208 RM in Oakville on 12.13.11 at 9:51 pm

Just to be clear, I never said climate change isn’t occurring, I should have added that the science isn’t settled on the chief cause.

And Garth, I hate chia pets.

#209 disciple on 12.14.11 at 12:14 am

#150 eagles… not so fast, you may be surprised that I disagree with almost everything in your post:

The continents have not moved; instead, the earth has steadily expanded in spherical dimension, creating the illusion that the continents have drifted apart on the mantle, but if you examine the “seams” like the Ring of Fire and the Atlantic Rift, it becomes obvious what is really happening – Expansion.

There were no dinosaurs as they are currently displayed. Most of these you see in museums are fabrications using plaster and a smorgasbord of bones and fragments from large land beasts currently extant and some that were extincted during one of many global catastrophes. Cue the laughter, but guess what, I’m used to it. The truth remains.

I have recently discovered that there is no need to entertain the idea of a beginning and an end. The facts we have suggest that all has always been.

Overpopulation is pure propaganda. You could fit the whole world into the State of Texas and still have enough room for a standard family of four to own at least one acre of land.

#210 disciple on 12.14.11 at 12:26 am

What’s happened to Lindsay Lohan is tragic.

I believe she was replaced by a clone / look-alike in 2004. If you compare photos from 2002 and 2004, you can clearly see that these are two different people.

A longtime Lindsay Lohan associate says she thinks the actress may have multiple personality disorder — perhaps one reason she continues to have trouble keeping her addictions in check.

”Some of us had wondered if Lindsay was bipolar, given her mood swings, but I’m thinking it’s more than that,” said the source, who claims LiLo has on occasion called herself ”Diane” or ”Margot.”

According to the insider, Lohan has explained the odd behavior as her way of ”getting into and out of character” as an actress — ”pretending to be other people.”

#211 45north on 12.14.11 at 1:03 am

Bill Gable: welcome to ground zero

pretty funny! they (the people in line) were fair game

Kris had just finished a plumbing project, he told me that he had bought a house because he didn’t want to pay somebody else’s mortgage. I didn’t comment. Every situation is different.