Bad idea

Imagine a place where four in every ten families had borrowed so much that their debt was excessive. So obese, in fact, their loan and mortgages accounted for 80% of all the money everybody owned. Worse, they’d all pigged out buying the same thing, which was wobbling. And they’d amassed this mountain of debt when interest rates were cheap, and could only go higher.

Welcome to Alberta.

But you non-cowboy, metrosexual, latte-sucking coasties shouldn’t feel superior. BC is worse. The personal savings rate there is negative 8%, which means the average family spends more every year than it earns, making up the difference with a LOC or mortgage.

As you may have heard this week, the country’s bank economists are catching up to this bottom-feeding blog. CIBC economists have confirmed we’re screwed. (Our theme song.) The bank says most of this debt’s because of ‘punch drunk’ Boomers who turn out to be hornier than their boomerang kids.

This is sad. Used to be that hitting middle age meant buying a new Corvette, getting a dangly gold thing around your neck, a pointy little hat to cover the bald spot, and a buxom babe to replace the wife your children used up. That delightful social custom’s gone. Now all that useful energy is channeled into a trophy home with a new Acura sedan in front or (in Alberta), an Escalade with silvery balls.

So here’s the result: Boomers heading into retirement with fat houses and scant investments. Disposable incomes falling as wage gains are outstripped by inflation. Over a third of all households in the nation now ‘heavily indebted.’ And the place where they stuffed all this borrowed money (even the banks say) is destined to erode – their houses.

It’s exactly the conclusion I gave you four million words ago: there’s nothing sustaining higher real estate values but debt. As a financial strategy, that sucks. This will lead us into a Boomer slaughter.

Here’s how the bankers put it:

True, debt is only one side of the household’s balance sheet; the asset side also counts, and both total assets and household net worth have been climbing until the last couple of quarters. But much of the gain in total assets has been associated with rising market values for housing and land. If both mortgage debt and house price climbs are part of an unsustainable market overvaluation of housing fueled by unsustainably low mortgage rates, then the asset values could stall or even deteriorate, without a compensating change in debt outstanding.

Yep. More confirmation. When real estate values normalize and retreat to the mean, debt remains. How’s that possibly a retirement strategy?

Two boring blogs ago I said I’d given up on humanity. True statement. I’ve had it. Never again, for example, will I run for the honour of fitting my tanned and athletic bottom into a seat in the House of Commons. I’ve taken a conscious break from criss-crossing the country talking to rooms full of people looking for free advice they won’t act on. I don’t bother returning media calls unless the reporter’s hot. After all, what’s the point? I won’t change behaviours.

Most people – the vast majority – will continue down their path to financial ruin. Utterly lacking in self-control, they’ll spend unearned money chasing stuff they want, but do not need. There’s no clear plan to repay any of this borrowing. Just a vague notion things will turn out, and an ingrained sense of entitlement.

Gone are rented apartments for newlyweds. Now they need glass-sheathed condos. Vanished is the idea of a starter bung. Young families expect a better home than parents ever had. Second car a beater? Go buy new. Were it not for an ocean of available credit at historic low rates, if people had to afford what they buy, the economy would be a vapid black hole.

So this blog is not for everyone. In fact, most people will never get it. They can’t see rising house values as dangerous or falling interest rates as a warning. Debt’s so normal among people in their thirties they can’t imagine functioning without it. Students have debt. Young marrieds have debt. Families have debt. Now the grandparents are smoked.

In an economy 65%-fueled by consumer spending, this is like shooting the farm’s only milk cow. It won’t end well.

Hence my repeated calls to reduce the amount of net worth in the most dangerous of assets, your house. This also explains the need to find more diversification, and love liquidity. For most people, having the bulk of their net worth in liquid assets is the best defence against what’s coming. If you are 50 or 60 years old, it’s non-negotiable.

Remember my Rule of 90? Take your age and deduct it from that number. The result should be the percentage of net worth tied up in residential real estate. So a thirtysomething with 60% in a house is understandable. But a sixtysomething in the same boat’s in denial.

Like I said, most folks won’t listen or act. As a consequence, in a country where 70% of people have most of their money in the same thing, don’t be surprised at what happens next.

Even gilt balls won’t save you.

266 comments ↓

#1 TurnerNation on 01.26.12 at 9:57 pm

First.

#2 josef on 01.26.12 at 10:02 pm

My mom loves it when I’m first.

#3 CHANGES on 01.26.12 at 10:03 pm

Vote BC NDP they will stop this insanity

#4 Steve on 01.26.12 at 10:13 pm

I agree. Your picture tonight is a bad idea. And your depressing message sucks too. Unfortunately, it’s the truth.

#5 Marcel on 01.26.12 at 10:15 pm

Garth, I agree with most of your views, but I would like to know what you think of the couch potato investing theory of holding Index Funds and ETF’s and reorganizing them once a year to save on MER fees?

Indexers will not be happy. Leave the potato on the couch. — Garth

#6 Peter on 01.26.12 at 10:18 pm

Please explain the 1st thing I don’t get it…why do you think it mean’s anything?how old are you?

#7 Retired Boomer - WI on 01.26.12 at 10:19 pm

turner nation…..get a life

#8 Linda McAllister on 01.26.12 at 10:21 pm

After reading today blog comment I ‘clicked’ on the one “comment” and was dismayed to read ‘first’ yet again….
So sad when a juvenile comment like that is all that is said. Garth thank you for all you have done for us.. I am so deeply grateful for your advice over a year ago when we decided to invest the proceeds from the sale of our home with you. I know your sincerity and concern for the people of this great country who are going to wake up ..too late.. to be able to do anything of real merit to help themselves out of a financial disaster of mostly their own making. Thank your your blog, your wisdom, and continuing to try to educate the masses. I for one, owe you a debt of thanks.

#9 Van guy on 01.26.12 at 10:22 pm

Helmut Pastrick was on Global tonight. He said mortgage debt is good debt because it’s backed by solid assets. Snd don’t expect real estate to drop anytime soon because of low interest rates here for another 18-24 months. Is he right Garth?

#10 martin9999 on 01.26.12 at 10:22 pm

In an economy 65%-fueled by consumer spending, this is like shooting the farm’s only milk cow—

priceless

#11 RL on 01.26.12 at 10:25 pm

I suspect another reason for the buildup of debt in the older crowd is the divorce rate among older people.

People divorce, lose everything and start over.

#12 TZM on 01.26.12 at 10:25 pm

#2 get real. NDP wouldnt fix anything. ever

#13 kilby on 01.26.12 at 10:26 pm

All that and Harper announcing at Davos that pensions may be on the line. That won’t help the financially challenged that were counting the extra $525 a month at 65. May help hasten the home sell off.

#14 Mike on 01.26.12 at 10:27 pm

Garth,

Did Chinese New-Year save us yet?

#15 TurnerNation on 01.26.12 at 10:28 pm

Those who do not get the whole First thing must be Leafs fans.

This ersatz weblog is like a Dear Abby column for Boomers.
Soon to more resemble the Wailing Wall.

#16 Chaddywack on 01.26.12 at 10:28 pm

Seriously Garth, who sits around all night constantly refreshing this website just to write “First!?”

Why not have a policy of deleting all first comments that say “first?”

They would become serial killers. — Garth

#17 FTP - First Time Poster on 01.26.12 at 10:30 pm

While you may not realize it Garth, you have saved people from themselves. While the vast majority are in denial, there are a growing number of individuals who see the sage wisdom in your clear, unminced words.

Where others have failed, you have stood firm. Lets face it, you’re not going anywhere. You take joy in pulling back the curtain & revealing the Wizard. I saw the glint in your eye last time you came through Edmonton.

#18 T.O. Bubble Boy on 01.26.12 at 10:31 pm

New Acura sedan in front? That’s almost a practical choice!

#19 Renters Revenge on 01.26.12 at 10:33 pm

As horrific as that picture is, it really is suitable for this post. I’m of the same mind that the warnings are not being heard and people just don’t get that excessive debt is a bad idea. It’s too late, we’re screwed.

#20 MoneyAndWealth on 01.26.12 at 10:34 pm

Garth I’ve heard you preach out this for 3 years. When does the bottom fall out?

#21 Retired Boomer - WI on 01.26.12 at 10:35 pm

So, am I to conclude that our great neighbor to the north’s Boomer population is …how you say it…. phuqued?

What can now be done to say those far-sighted, balding, aching bags of 60’s energy? Would you say it is too LATE to sell the house? Will Canada become what the Italians call it upa us…as in toasted homes Part II?
Will it be as bad as Florida, Nevada, or mild like Indiana or Wisconsin?

Look, you aren’t totally screwed yet, might just be 1st base, or 2nd. There are still some fools there. We still got ’em and though houses slowed down it’s not like they’ve stopped making, or selling them.

What will the market look like 1-2-3 years out? Any ideas?
I would think in the world of no-to-low growth not very hot when the air comes rushing out of your house balloon, but people;e like homes VERY much, and might fight like heck to keep one. They’re not so hot on keeping the same squeeze that long, but there are great exceptions to that comment.

Not to worry, when people get hungry & cold, they will finally call their realtor, or Bankster. After all, Garh, it’s not like you didn’t try to warn them

#22 Deano on 01.26.12 at 10:35 pm

Help me understand something…if you’re in your 30’s, have a mtg but haven’t paid off much yet but almost all of your worth is in a pension and/or liquid (and no other debt)…are you screwed? I suppose if your house drops by 20% you might be hurting, but what if it’s a small mtg? Seems to me that you’re not in a bad situation in this case..but you still own a house, which seems semi-taboo ’round these parts. This seems to be a situation for a fair number of money-conscious people in their 30’s.

#23 Spiltbongwater on 01.26.12 at 10:44 pm

What sort of reporters do you return their calls Garth? Like Amanda Lang you would return her call, but Susan Ormeston you delete the call?

#24 Elmer on 01.26.12 at 10:44 pm

Oh for god’s sakes! If you’re gonna post a pic of an ass can it at least be a hot girl?

#25 T.O. Bubble Boy on 01.26.12 at 10:48 pm

So, using the “rule of 90”:

Take a 35-year-old w/ wife, 2 kids, and a house in the GTA that is $500,000 (the average house price).

If that house is mortgage-free (ya, right), the “rule of 90” would dictate that the $500,000 should represent 55% of the net worth… i.e. the household should have at least $900,000 in net worth ($400,000 in non-house assets).

Then – consider that most families fitting this profile have no more than 50% equity in the home. So, $500,000 house with a $250,000 mortgage. Using the 55% guideline, the non-house assets need to be at least $650,000.

If this mid-thirties family bought a $500,000 house right now, and put 20% down, that’s a $400,000 mortgage — and non-house assets of $800,000 to meet the “rule of 90”.

If these scenarios all seem a tad unrealistic, just think about the fact that many buyers only put 5% down (or less), and many homeowners have essentially ZERO non-house assets (or, even negative non-house assets if they’ve racked up consumer debt).

#26 TurnerNation on 01.26.12 at 10:57 pm

“I’ve taken a conscious break from criss-crossing the country talking to rooms full of people looking for free advice they won’t act on. ”

I knew it! My official GarthMania tshirt is destined to become a collectors item.

Say, is today’s picture of Beach girl’s latest flame run away? Or of Westernman running amok again – where the buffalo roam?

#27 Gypsy Kid on 01.26.12 at 10:58 pm

I’ve become fond of the “firsts!”
They used to annoy the heck outta me but they grow on you and I dont want them to go out and become “serial killers…”, so people, just ignore them.

Great post Garth. I’m just wondering when the mass have lost their common sense and have come to live off borrowed money. It really defies all logic and reason…do they sleep at night?

#28 terces on 01.26.12 at 11:05 pm

Some Observations on my trip through the great US or A.

The wise one and I are on a journey of epic proportions driving a small motor home through the US.

On a recent stop in St George Utah there was a pull out article in the local paper reporting on commercial real estate. I forgot the paper on the table in the restaurant otherwise would scan it for you all – but in summary commercial real estate is in big trouble there.

Retail is in not too bad of shape in this particular morman community, residential is in worse shape, but what stuck out was industrial multi tenant. It is this category of real estate that I was heavily invested in and recently sold. I build lease and manage and have done so for many years so am always interested in this kind of article.

Industrial multi tenant is the darling of Reits and pension funds as it has had a very solid history. Not so in St George where vacancies are now 23%.

Interesting comment in the article that much of the weakness is due to housing related business that are usually one of the underpinning tenant categories. This is exactly one of the reasons I decided to de-risk in Calgary and sell my small portfolio of multi tenant properties – over 1/3 of my tenants were home builders, contractors or somehow related to residential.

The article went on to say that there is much more weakness in commercial real estate than meets the eye as many landlords have significantly reduced rents in order to keep tenants in the buildings to at least pay the operating costs.

From what I can see St George is one of the more affluent communities – especially compared to Mesa AZ where we are now. The streets are busy, the restaurants seem to be busy, but commercial real estate has been flattened.

I’ll post more observations along the way if anyone is interested.

#29 Group Thought on 01.26.12 at 11:16 pm

Garth,

There are more than you know…who are listening.

#30 oslec on 01.26.12 at 11:17 pm

Seriously Garth, who sits around all night constantly refreshing this website just to write “First!?”

Why not have a policy of deleting all first comments that say “first?”

They would become serial killers. — Garth
_______________________________________

HAHAHAHAHA!!!! Narcissists…
You must be watching too much “Criminal Minds” GT.

#31 Smoking Man on 01.26.12 at 11:28 pm

#199 Snowboid on 01.26.12 at 10:19 pm
Saw your read dots,, ouch that’s ugly

Here are mine…. No red dots. Location Location Location.

Love it when a plan comes together

#32 Smoking Man on 01.26.12 at 11:28 pm

Snowboid you know i drink forgot to post the link here it is

http://www.realtor.ca/map.aspx?&vs=VEResidential&beds=0-0&baths=0-0&minp=0&maxp=0&trt=2#acr:false;ac:false;baths:0-0;beds:0-0;fp:false;gar:false;pmin:0;pmax:0;rmin:0;rmax:0;openh:false;pool:false;stories:0-0;buildingstyle:;buildingtypeid:;viewtypeid:;waterfront:false;forsale:true;forrent:false;orderBy:A;sortBy:1;LisStartDate:;mapZ:16;page:1;mapC:43.591208581272106, -79.53203558921815;curView:;curStyle:r;leftMin:false;rightMin:false;chkSchl:false;chkTran:false;chkPol:false;chkMed:false;chkWrk:false;chkFire:false;chkAll:false

#33 Benny Hill on 01.26.12 at 11:29 pm

the in RE top will come when there are only 10 comments
per day on this pathetic blog.

#34 Mr. Lee on 01.26.12 at 11:30 pm

“An economy that is based solely on debt is destined to fail.” Peter Schiff

All that is going on in the Western World is kicking the can down the road for the other guy to deal with. Look at the Fed yesterday, hold these rates until late 2014………who is kidding who here. The system that we know is broken, and no matter how many times you monetize it, put austerity into place and let the “too big to fails” not fail……will not solve the problem it just kicks the issue further down the road until invariably the road becomes a dead end.

#35 disciple on 01.26.12 at 11:31 pm

#27 terces… I’m interested. I once dabbled in travel writing, and I enjoy others’ observations as well. Will you be running through California?

#36 Tiffa on 01.26.12 at 11:33 pm

As usual, good points. But hours later, the only things I may consciously be able to recall from this post are Garth’s muscular butt and a set of silvery truck nuts.

Then I have succeeded. — Garth

#37 Jeff in Victoria on 01.26.12 at 11:34 pm

Great story in our local Victoria paper today, it came from Reuters so I am sure others saw it, this Irish fellow found a great use for decommissioned Euros.

http://www.timescolonist.com/news/todays-paper/Irish+artist+builds+home+euros/6054281/story.html

The whole story needs to be read, the situation Ireland found itself in sounds very familiar.

Human nature is such an interesting thing.

Many of us know people for whom real estate has been a fabulous investment over the last 30 or more years, but the fundamentals and mathematics of actually being able to afford it (wage to price ratios etc) have changed so drastically to the point that it can’t possibly continue to increase the way it has. In spite of that writing on the wall, many us choose to think that ‘it worked for everyone else all these years that it will just keep working.’

However even when we saw what happened in Ireland and US and also what is happening elsewhere as a result of easy, low interest credit, for some reason we feel that even though those same fundamentals are at play here, we can just keep on gorging on the credit and somehow will ‘dodge that same bullet’.

I guess in Canada it really ‘is different here.’

#38 cool on 01.26.12 at 11:34 pm

A comment on debt article in globe and mail.


I am a boomer and I live in a town with one of the oldest average age in Canada.

The problems are:

1. Boomers were sold, and believed, the concept of early retirement foisted by employers, finance industry and even government. My grandfathers worked until their 70s and then received a small senior’s pension. The CPP policy of offering early withdrawal, age 60, was insanity. The Plan 55 marketing is not sustainable unless you have 7 figures in cash, not real estate. Employer retirement seminars explaining to 60 years olds how they can live on less today, take early CPP plus a discounted company pension without explaining the certainty of an inflationary cycle and unexpected expenses in the last third of their life. And boomers believe it all.

2. We have had a 40 year growth curve. It ended in 2006, doesn’t matter the reasons, and we are looking at plateau, or decline, for at least a decade with little sign of great increase after that. That means those pension funds and individual savings accounts cannot project the healthy growth of previous decades. Nobody is popping 10% per year no brainer growth into their RRSP projections. It is possible but it means risk and boomers discovered in 2008 what risk means… and they are running from it.

3. Real estate, your home, is not an investment. Our town has an average house price of over $850,000 and many senior owners. BUT, when I was door to dooring as a politician the number one complaint was property taxes. To which I answered, but your house is worth more than a million bucks … the reply, that doesn’t buy groceries. I cannot count the number of RE deals I have done in the last two years involving seniors selling their RE to downsize substantially or rent. Because of 1. and 2., that RE “wealth” is being converted to cash to live and even to simplify the wills and estate process.

4. Boomers who keep their houses are using LOCs for expenses. A $100,000 assessment to a condo., a $50,000 roof and drain tile to a house, is not projected in the budgets offered by those brilliant retirement counsellors in 1., above. Car needs replacement, kids or grandkids go sideways or need help in a tough economy … line of credit. Parents pensions cannot cover all expenses or they just don’t die suddenly but live for years with a chronic health condition.

5. We must work to 70. CPP should not be available until at least 65. The big homes, multiple holidays, toys galore are gone. And the retirement plan reverts to spending your last nickel on the day you take your last breath. That theory of massive transfer of generational wealth is just that … a theory.

#39 Defrauded on 01.26.12 at 11:36 pm

I wish I could say something, anything that could change your mind Garth about what you see in your crystal Ball(s)
However, sadly, I would be wrong, because your are right.

#40 Smoking Man on 01.26.12 at 11:38 pm

Met a palistinian and a jew at the bar, each was telling each other how their own people where wrong, and bad.
The Jew bashing Isreal, The Palistinian Bashing Hamas

LMFAO

The art of plastic ( Lying) I so got to finish this book

#41 JohnG on 01.26.12 at 11:39 pm

I need clarification on the 90-age rule. When you calculate your “net worth” how do you “value” the house? Do I value it at the amount I paid, or what it is supposedly worth today if I were to sell and live in a MEC tent? I need an example I guess. Geez, I still have my 2001 copy of “the little book of financial wisdom” and “little book of real estate wisdom” I should be able to figure out the rule of 90.

#42 Cookie Monster not Fred Flintstone on 01.26.12 at 11:39 pm

So I guess I won the global warming argument? Doesn’t anyone want to fight with me? Is it settled then?

So global warming is real, it’s man made and it’s a fact.

So what are we going to do about it?

Right…. nothing… thank you, thank you, thank you.

Let the market handle it. Blue Peace!

Ron Paul 2012 or die!

#43 DoomedinSask on 01.26.12 at 11:40 pm

Garth, can you please give us your thoughts on where Saskatchewan is headed over the next 2-5 years? Thanks

#44 Ronaldo on 01.26.12 at 11:42 pm

#10 R L – ”I suspect another reason for the buildup of debt in the older crowd is the divorce rate among older people.

People divorce, lose everything and start over.”

Agree totally. One thing that is never considered in the development of a financial plan. We plan for death, illness or injury, potential job loss, loss of income to raise a family and other situations, but, for some reason, not the breakup of a marriage or relationship.

Given that about 40% of marriages end up in divorce by the 30th anniversary leads me to believe that it would be prudent to consider these statistics when putting together a financial plan. I know of many couples after divorce or separation whose financial situation turned into a disaster afterwards.

Probably many who have visited this blog can relate to this but its something that most are reluctant to talk about.

#45 Mel on 01.26.12 at 11:42 pm

Please Garth, spare my day. DO NOT, speak about Economists as if they have any integrity left in their concerns about us the little people. They have become ‘ part of the problem’ and now to cover up their stained underwear, they warn us about our sins.
Whatever!

The forever young Boomer who needs to find a ” buxon babe” to lift his diminishing ego will be left with more debt not less. By the way, you should add to ” used up by children and not so funny husband.”

#46 Matty on 01.26.12 at 11:43 pm

#10. Excellent point. I recently separated and even with a co-habitation agreement, the legal agreement I expected was cut into stone was actually all up for debate so that lawyers could rake in scads of fees and one side could “win” and the “other” lose. I think only Quebec has marraige law that sets out the terms of separation unequivocally for EVERYONE. For the rest of Canada the archaic legal sytstem is so fucking juvenille, we as a culture deserve to be royally fucked by our own stupidity. Funny how it is lawyers that write the laws and then profit from them … What a tragic scam

#47 Air on 01.26.12 at 11:44 pm

Garth,

A SEARCH box on this blog will certainly help. Is it possible to add one?

#48 Larry on 01.26.12 at 11:45 pm

Garth, I am wondering where the money has come from for the bank to lend to people who are already heavily in debt.

Any idea?

Instead of telling folks not to borrow, how about trying to convince folks not to lend?

#49 MarcFromOttawa on 01.26.12 at 11:47 pm

It seems like Garth is taking his tour to China!

#50 Cory on 01.26.12 at 11:49 pm

” talking to rooms full of people looking for free advice they won’t act on.”

So true. Just dont do it. It’s a complete waste of your time.

I don’t know why people are so worried about debt, the entire monetary system is derived and based on debt. A country can never be debt free. Ever. Neither can people.

#51 Canadian Watchdog on 01.27.12 at 12:02 am

Charts Of The Week – Employment by Sectors – Source: StatsCan

Private Sector

Retail Trade – http://i39.tinypic.com/35c3cw2.png

Finance & Insurance – http://i40.tinypic.com/1491aty.png

Manufacturing – http://i43.tinypic.com/ranf2g.png

Real Estate, Rental & Leasing – http://i43.tinypic.com/34o521h.png

Mining, Quarrying, Oil/Gas Extraction – http://i43.tinypic.com/24g7xtx.png

Construction – http://i43.tinypic.com/j9vihz.png

Accommodation & Food Services – http://i43.tinypic.com/2pryddh.png

Management of Companies & Enterprises – http://i44.tinypic.com/2wokt4m.png

Trade – http://i42.tinypic.com/20saes8.png

Public Sector

Health Care & Social Assistance – http://i42.tinypic.com/fxz0cm.png

Educational Services – http://i44.tinypic.com/2s0mx60.png

#52 Stupesing in Cabbagetown on 01.27.12 at 12:03 am

Garth, I understand how demoralized you must feel at times and I admire your tenacity. Let me tell you what this blog has meant to me.

For the last few years I have been alarmed by what I perceived to be another housing bubble.  I saw single moms at work buying houses in Brampton and Milton (why would they choose to be so far from their children?) and I wondered how they afforded  it. I listened to admin assistants talk about the condos they bought from builders plans that they intend to flip. I saw friends living lifestyles they couldn’t afford, thanks to their HELOCs. I heard all the usual hype about real estate always going up, but my gut told me that something was very wrong. You gave me the facts and figures to defend the position that there is good reason for alarm and that renting is a better choice than crushing debt.

For years I believed that I was poor. Now I realize that I’m better off than most because I have no debt and some savings. Your post the other day about Cabbagetown residents could have been written just for me because I live in that neighborhood and earn that mean income. In spite of having raised a child as a single parent – there wasn’t much left after living expenses for two people – I still managed to put aside some savings. Now, with the good information you provide on this blog I will put the indexed mutual fund RRSPs behind me and focus instead on ETFs, TFSAs, REITs and bank preferreds. God willing I will remain gainfully employed so I can build a decent nest egg and make up for lost time.

I thank you for this blog. I am sure there are many other readers who appreciate your work too.

#53 Chris on 01.27.12 at 12:04 am

Check this out. 4 years of some of the coolest photos of any blog out there…

http://www.greaterfool.ca/wp-content/uploads/

#54 Ronaldo on 01.27.12 at 12:08 am

#37 – Cool – great post.

#55 CHANGES on 01.27.12 at 12:08 am

The NDP is a place where people come together to work for a better future — one where social and economic justice are the guiding principles. As social democrats we believe in a balanced and responsible approach to government, so that people can enjoy a strong economy, healthy communities, and a clean, sustainable environment.

New Democrats work together to make sure that the needs and aspirations of ordinary people — in British Columbia and across Canada — are effectively represented in the political process.

#56 John on 01.27.12 at 12:13 am

a trophy house with a new Acura sedan in front.
————————————————
Did Acura pay you to say that? or did you just emerge from a time capsule?

Boomer car. — Garth

#57 TryingToGetOutAlive on 01.27.12 at 12:17 am

just to clarify…

i think the rule of 90 is not based on how much your house is worth – it’s based on how much equity you have in it.

ie. a 40 year old should have max 50% of his net worth in house equity and 50% in other assets.
so if he has half of a 500000 house paid off (250000 home equity) he should also have a diversified portfolio worth 250000 as well.

this means a 30 year old in the same situation is allowed to hold a smaller diversified portfolio.

a 60 year old in the same situation should have almost double the diversified portfolio.

and a 90 year old should not own real estate.

Bingo. Net worth = assets minus liabilities. Included in assets is the fair market value of the property, less mortgage debt. — Garth

#58 coastal on 01.27.12 at 12:20 am

Speaking of empty apartments, I noticed a smaller and older apartment in my area that’s not far from downtown Victoria that has three empty suites. The unusual part is that that though being older and cheaper rent than average, they usually never have a vacancy as it is one of the few apartments that allows cats.

The other odd part is, historically January is the worst month to try and find an apartment in this town and in a decent area, especially if you are a student and looking for a cheaper place that’s well run.

There is a shift going on here, and I wonder if Victoria is beginning to see the younger people leave like they did back in the 80’s and 90’s when things got stupid.

#59 Rich Renter on 01.27.12 at 12:29 am

Sometimes i have the impression your like the guy in Gran Torino.

#60 45north on 01.27.12 at 12:39 am

terces: I’ll post more observations along the way if anyone is interested.

I’m interested. I thought you are in an RV, but there is nothing in your post that says you are.

Mr. Lee: Look at the Fed yesterday, hold these rates until late 2014

look at the Fed yesterday, promise to hold these rates until 2014

DoomedinSask: where is Saskatchewan headed over the next 2-5 years?

at the stroke of 12 midnight, on December 31, 2017, Saskatchewan will be west of Manitoba and east of Alberta. It will be dark.

#61 guy from toronto on 01.27.12 at 12:45 am

in response to #27 terces on 01.26.12 at 11:05 pm….

please post what you see along the way, I’m sure many of us are curious. Have you got a solid route/itinerary or are you just improvising? Am curious about Oregon and California if you are headed there. thx in advance!

**********************************
Some Observations on my trip through the great US or A.

The wise one and I are on a journey of epic proportions driving a small motor home through the US.

#62 Carp on 01.27.12 at 12:54 am

As a home owner in Vancouver, I never could save for retirement. We sold and moved to the best big city for a family – Ottawa. Wow, we’ve not regretted that move

Bottomline, we listen to our gut (and garth) … we felt the times are changing, RE is not where we should be.

In Ottawa we rent.

At no cost, we evicted the squirrels, have a new stove, water system, and a few more “details” and my kids love the acres to play !!!

I max out my TSFA, RRSP, RESP (for 3 kids) + more because I don’t believe in home ownership (for now).

#63 Devore on 01.27.12 at 12:56 am

#8 Van guy

I think this guy is more qualified to speak on asset-based lending:

http://watch.bnn.ca/headline/december-2010/headline-december-14-2010/#clip389237

#64 Blacksheep on 01.27.12 at 1:01 am

“So I guess I won the global warming argument? Doesn’t anyone want to fight with me? Is it settled then?
So global warming is real, it’s man made and it’s a fact.
So what are we going to do about it?”
————————————–
Jack.
It’s not caused by man. Just another excuse to tax the planet.
Don’t want to argue, just say’in.

Go Ron Paul.

take care,
Blacksheep

#65 Jon B on 01.27.12 at 1:02 am

I am starting to rethink the notion that boomers who are house rich and cash poor will cash out of real estate and downsize or just rent. The reason for this is the prospect of a prolonged period of low low interest rates. All these geezers need is a HELOC pulled out from their home equity and they’ve got cheap money at the ready. I bet this is one factor that influenced today’s article in the Globe about the rise in debt among this older demographic.

#66 Freedom 55 on 01.27.12 at 1:04 am

I’ll be dead before this bubble pops.

#67 These pretzels are making me thirsty on 01.27.12 at 1:10 am

People spend money they don’t have,
To buy things they don’t need.
To impress people they don’t like

-Mr Will Smith

#68 mad vancouver on 01.27.12 at 1:12 am

I like the picture and do not mind the “first.”
Love your humour.

#69 aaci-home dog on 01.27.12 at 1:19 am

Garth…a minor point. No need to say “fair market value”…by definition, market value is just that…”fair” being redundant.

As opposed to delusional market value. — Garth

#70 The Thing in the Basement on 01.27.12 at 1:54 am

From Garths response to comment 56

Bingo. Net worth = assets minus liabilities. Included in assets is the fair market value of the property, less mortgage debt. — Garth

So a 50 yr old with a 500k house paid for and 200k
investments has 71% net worth in his house. Bad, right?
Should be no more than 40%.

Let’s say Mr 50 then borrows 250k on HELOC and buys
investments. He now has 250k home eq and same net
worth of 700k – 36% in his house. Good right?

#71 Arshes on 01.27.12 at 1:54 am

#66 These pretzels are making me thirsty on 01.27.12 at 1:10 am
People spend money they don’t have,
To buy things they don’t need.
To impress people they don’t like

-Mr Will Smith
.—————————————————–

Isn’t that from Will Rogers, not Will Smith?????

#72 Nostradamus Le Mad Vlad on 01.27.12 at 1:56 am


“. . . the country’s bank economists are catching up to this bottom-feeding blog. This is sad. This will lead us into a Boomer slaughter. Utterly lacking in self-control, if people had to afford what they buy, the economy would be a vapid black hole. In an economy 65%-fueled by consumer spending, this is like shooting the farm’s only milk cow. Even gilt balls won’t save you, and an ingrained sense of entitlement.”

Notwithstanding black holes, where does entitlement come from?

For those who feel they are entitled to something ‘just because’, then shove your sense of entitlement right up where the sun don’t shine. If there’s any left over, inheritance time which means legal fees.

A person gets back from life exactly what they put into it. If not, it comes in the next lifecycle. No one was ever born with a silver spoon in their mouths.
*
Bernanke’s Bond Buys New buying; TheBubbleBubble; 4Closures comprise 20% of home sales; Imperfect Tools to fix a busted system; Euro Default Contagion, and Soros but Greek Default won’t hurt US banks; Schilling says recession is going to happen (isn’t it already?); Rocks Between The Ears, and Still Crashing after all these years; Florida proposes using ball parks and stadiums for homeless; Soaring Costs BC had the same problem with the Winter Olympics. Now taxpayers have to pay the tab; David Cameron Looking for a fight.

Remember Grand Cayman, the Channel Islands and other tax havens? Euro vs. Dollar Shorting time; US MMFs vs. Euro, Part Deux; Paradox US QE inflation policy (?); Fracking; Look out, west China just getting started, and Dragon Unleashing the Renmibi? New Building Methods Good concept; Fish It’s not just the economy collapsing; 10:29 clip Peak Oil arriving in a decade or so.
*
Vancouver Island Forthcoming mega ‘quake? ACTA EU signs ACTA into law — ‘net censorship bill; Beer For Dogs Yes, it’s true; Ladies Here’s the front of the man; Secret Soviet flying machine; 5:15 clip Great Britain and / or England explained; Isolated Beautiful Perth and surrounding area; Abandoning big cities and go where? The Akashic Records and CERN.

#73 Mister Obvious on 01.27.12 at 2:01 am

“Garth, can you please give us your thoughts on where Saskatchewan is headed over the next 2-5 years? Thanks”
————————–

Saskatchewan will be staying right where it is.

Sorry “DoomedinSask”, I just couldn’t help myself.

#74 Don on 01.27.12 at 2:08 am

“#8 Van guy on 01.26.12 at 10:22 pm Helmut Pastrick was on Global tonight. He said mortgage debt is good debt because it’s backed by solid assets. Snd don’t expect real estate to drop anytime soon because of low interest rates here for another 18-24 months. Is he right Garth?”

Interest rates are still low in Japan and the sunny parts of the US and house prices are lower indeed. Interest rates are but one factor the other is It’s rains in Vancouver at least 8-9 mths of the year.

#75 Soylent Green is People on 01.27.12 at 2:17 am

lord I KNOW HOW YOU FEEL, TRYING TO TALK TONPEOPLE ABOUT stephen Harper last 3 years and that corporate useful idiot has been dismantling canada last 5 years, i just give uo, how did harper ger a majority, besides stealingbthose election there.s stillnthem fools votingvfor that war monger. I honestly give up too, i feel like canada gets what it deserves, you atotallyvsuck canada

U suck

U suck

Uvsuck

.
.
.
.

#76 Bobby on 01.27.12 at 2:22 am

For #64 Changes,
Fortunately, we will never see the NDP in power. They couldn’t run a hot dog stand.

#77 Freedom first on 01.27.12 at 2:24 am

Garth……thank you for sharing your knowledge so freely. It is heartwarming to hear the people who have taken to heart what you have said, and are grateful they followed your advice, and have improved their life situation so much because they did. You have done your job well:)

Unfortunately, there will always be people who will suffer grave consequences from the choices they make, because they are unaware that they are operating “Out of their Mind”, their opinion so to speak, without any knowledge base……at the same time staying close minded and refusing to seek knowledge, or to read/listen/learn. A person who refuses to seek knowledge, which can lead to wisdom, will always remain a fool. A Greater Fool.

#78 Soylent Green is People on 01.27.12 at 2:27 am

Gaza ~ earth’s largestvopen air prison
.
.
.
.
.
Why does Hair Harper love Israel so much, hmmmmmm.

Follow the money of course

Harper works for the 1% and the rest of you will wake up in a few years with no more nationalnhealth care.

Feckers!

.
.
.
.

#79 John G. Young on 01.27.12 at 2:28 am

#68 aaci-home dog:

As opposed to delusional market value. — Garth

So what should I use as the fair market value of my house — what I paid for it in 1999? Its current frothy value? Something inbetween (eg. tied to inflation)? Garth? Anyone? Thanks in advance.
I live in downtown T.O.

#80 Don on 01.27.12 at 2:29 am

“# 8 Seriously Garth, who sits around all night constantly refreshing this website just to write “First!?”

Why not have a policy of deleting all first comments that say “first?”

They would become serial killers. — Garth”

LOL – I needed the laugh – Sad and hopefully not true, but something tells me.

Everything aside, Thanks for the readings and advice Garth. Where else does one to get to share opinions and read comments from likeminded individuals and nuts. (Better to be aware of the nuts also – it’s your best defence)

Some might find this interesting, the credit card company phoned this evening, my lovely wife answered (studying to be an accountant) and I listened. She held the phone and told me they wanted to offer us a line of credit. Out of the blue – she finished by saying “Well…we are going to have to evaluate if we need this line of credit at this moment in time, my husband and I will discuss it…please feel free to call me next week and follow up. My wife told me that even the customer relations person couldn’t believe it. I’m sure were are now in their Customer Relationship Management System under the “almost sold” category in the sales funnel.

#81 Aussie Roy on 01.27.12 at 2:33 am

Aussie Update

Excellent article – Spotting a house bubble

In Australia
“Data from the ATO tells an interesting story. On aggregate, net real rental income has resulted in continuing losses starting at $966 million in 2000, and peaking at $8.8 billion in 2008. Rental income has not exceeded interest costs since 2000, let alone met the costs of maintenance, rates, agent fees, and property tax.”

http://theconversation.edu.au/housing-bubble-trouble-separating-facts-from-fiction-5007

Will the 2009 first home buyers prove to be a poison pill for the market?

Roger never should have gotten that home loan. He never should have asked for it, but the bank never should have given it to him either.

What’s far more important to determine is whether these 2008-09 first home buyers represent a potential threat to the overall property market and, more importantly, to the health of the wider economy.

Wits have dubbed them Australia’s ‘‘Ruddprime’’ buyers, who account for at least 227,000 home loans taken out over the period of lower interest rates and the Rudd government’s boosted first home owner grants.

http://smh.domain.com.au/home-investor-centre/blogs/domain-investor-centre-blog/ruddprime-20120125-1qgos.html

No Bubble, No Subprime, it’s different in the great southern land – LOL

#82 johnny5z on 01.27.12 at 2:34 am

Banks use fair make-believe value.

#83 johnny5z on 01.27.12 at 2:37 am

Re the comment that mortgage debt is good debt.

The only good debt,
is dead debt.

#84 Don on 01.27.12 at 2:56 am

#57 Coastal in regards to Victoria you are bang in your comments. The Young on Vancouver island have gone elsewhere. Tons of rentals in Victoria and more and more condo’s for rent. Just put in a low ball offer and they haven’t said no yet!

#85 Basil on 01.27.12 at 3:02 am

How does one convince the average citizen of the adverse consequences of too much debt, when the banks, central banks and governments are monetary misfits?
Interest rates were already below the rate of inflation and our financial leaders drop rates even more. This encourages the ongoing misallocation of capital into real estate and other assets. In 1978 total outstanding consumer, corporate and federal debt in the US was about $800B, it is now $55T. This is the biggest bubble in world history and it is deflating, however the powers that be keep gunning the creation of more credit to keep the economy growing. This leads to deflation and inflation at the same times, as the credit bubble expands.
Of course, people who discuss this are labelled “doomers”, “metalheads” and other derogatory, discrediting labels, which has always made me chuckle. Reality is rearing its ugly head and it is so blatantly obvious that those who ignore it just look foolish.

#86 Jordan on 01.27.12 at 3:07 am

Google news searches produced nothing, do you have a source for the BC personal savings rate?

-8% is astounding.

#87 Cookie Monster not Fred Flintstone on 01.27.12 at 3:12 am

Speaking of gilt balls, with a toupee, our prime mister Harper was making us all proud yesterday in Davos dropping econ-bombs on the Euro Marxists!

I never liked Harper until after he got his majority and now he’s really starting to grow on me. Like a rash. Someone medicate me!

My theory is maybe Harper’s so far ahead of all the idiots in this country that he comes across as a bully control freak simply because he hates pissing around with all the bleeding heart wankers. Just run rough shod over them since you can’t reason with idiots and most of Canada is idiots. Except everyone here of course!

#88 Peter on 01.27.12 at 3:43 am

I’m a first time poster but long time lurker here… great site, Garth!

But regarding the “rule of 90” clarifications, you must realize that a 50-something with $10k equity in a “$1M” house in Vancouver easily satisfies the rule, provided they have a pathetic $20k RRSP in “the orange guy’s shorts”.

I’m a 30-something with $100k saved/invested and $200k equity in Victoria, and I feel like I’m in a much better situation. But even *I’m* scared.

(Anyone want to buy my house and rent it back to me?? I’m too lazy to move!)

You failed math, right? — Garth

#89 I'll do anything for a listing on 01.27.12 at 3:55 am

Shout out to smokin man!
Hmmm, that looks like a caucasoid male in asia, can only guess another German sex tourist in China…..
Anyway, Asian in Vancouver here reporting tonite after watchin a shamelessssssss CTV clip on how the Chinese Dragon new year will cause in INCREASE in sales of Real Estate. OMFG! Then they back it up by showing a asian trash girl with a piercing – a lip ring, talking about it’s a good year to buy cause of the Chinese Zodiak.
OMFFFFG.. to top it off, they then state – with the help of her Parents!!! Here is the Shock and Awe from CTV – if it ain’t HAM it s HPM – Hot Parental Money…
Here are some more thoughts after that gagger of a new clip….
Realtors are like hotdogs – let me explain
Hotdogs = crap that they couldn’t sell if packaged in it’s natural state
Realtors = people that couldn’t make a living doing a regular job, in their natural state, they too are despised!

Ok…. Another thought, discusto Hotdog realtors……
Brad & Theo Gannon at
http://www.vanrealty.ca/
These westerners can now speak Cantonese and Mandarin..got a flyer from them this week. Let me put it another way… they want some HAM action, and they ain’t getting it from the locals. Locals are all debted out….
Come on, a FOB HAM listing a house with a white male is as likely as a Thai Bar girl wanting to marry a Thai man = it ain’t gonna happen

BTW — TRevor Linden is on a condo developers board, and is their spokesperson. OMFFFFFFFFFFFG.

#90 The Real Jimbo on 01.27.12 at 4:33 am

“This will lead us into a Boomer slaughter.”

Boomer slaughter. That’s music to my ears.

#91 TheRealTruth on 01.27.12 at 4:39 am

Prime Minister Harper is changing Old Age Security and GIS. There is word he wants to raise the retirement age to 67 gradually. He will have generational clashes on his hands if he does this.

What he should do:

1a) Leave the age of retirement for public penions at 65! Have a pot of money dedicated to OAS (increase by GDP annually) and divide that up by the number of seniors. More seniors equals lower per capita pensions. Yes, that simple and fair!! The boomers had a lifetime to prepare for this and they voted for their leaders who made the policies in the past.

or

1b) Base OAS on years residing in Canada. Say 45 years = 100%, sliding scale, 4.5 years = 10%

— Giving the under 40 generations the raw deal will not end well!!!

2) Increase residency requirement for immigrants to 20 years before they can collect OAS. At present it is 10 years BUT !!! immigrants that gained permanent residency in the past exited Canada via the US (no records kept) and came back years later when it was time to collect OAS/GIS. Enforce 20 years within country! JASON KENNEY WAS MADE AWARE OF THE FACT THAT THE MOST COMMON AGE OF IMMIGRANTS TO CANADA IS 55!! Hmmm wonder why?

3) GIS should be based on global assets and only available to people who are in financial need. Seniors on 6 month vacations every year do not need this!! As a third generation immigrant, I am disgusted by the fact that many extended relatives and many others are robbing Canada in this way. Huge houses overseas, servants, bank accounts yet they all check the little box on the federal tax return saying no assets overseas. Biggest fraud out there!! They collect GIS based on their income in Canada. How naive of Canada! Purposely?

Implement the above and the system is secure.

#92 Steven Rowlandson on 01.27.12 at 4:39 am

Vanished is the idea of a starter bung.
Absolutely! Even if there is such a thing the minimum price is obscenely beyond reach for any one that is just starting out.

#93 Canuck Abroad on 01.27.12 at 5:04 am

47 / Larry – Instead of telling folks not to borrow, how about trying to convince folks not to lend?
****
Won’t happen. Banks make money from lending. The more they lend, the more they earn.

Imagine if barbers were moved to tell their clients they should grow a beard to save cash. Imagine suggesting to cosmetic surgeons that they tell prospective clients that they don’t need a facelift, wrinkles give you character. Imagine Pusateri’s owners switching to budget food because their clientele is really just wasting money they don’t have. Now imagine the banks’ shareholders or the government telling banks they should lend less money. See how that just doesn’t work?

In the case of mortgages it’s even worse because the loans are backstopped by the CMHC so there’s no incentive to even worry about whether it wii be repaid. If the homebuyer defaults the taxpayer (that’s you) steps in and makes the bank whole.

#94 truth hammer on 01.27.12 at 5:24 am

There is a common misconception that the debt boomers are accumulating is going out the door on plasma TV’s and Escalades…both fine products mind you. In fact the average house monkey is borrrowing money to cover the monthly payment deficit in fixed operating expenses…..taxes, gas, heat..light…groceries..school fee’s , clothing…etc. are all inflating at 20++% every year and have been for the past six or seven. Now thats great if your in the tax department and see the the HST on a $10 gallon is way better than the GST on $5 gallon. So don’t expect any help from that quarter.

We all know the government is lying through theit teeth when they state that inflation is 2%.

Costs are going up…wages are flat to down…ergo….net debt is ballooning to bridge the gap. Lets not gloss over the seniors lifestyle where cat food is a Saturday night treat to those on a fixed income. Hard to believe how many seniors have to line up at the food banks these days.

Does anyone remember the ministarial comment argued against a tax reduction saying….”They’ll just spend it on popcorn and beer”. This attitude is coming from a government that has as an economy 30% of GDP in real estate development and transaction fee’s, taxes etc….while spending 30% of GDP on ‘structural expenses’……ie…supporting the country’s largest employer….the government civil servants. For those of you with basic math skills…that means there isn’t a whole lot of wriggle room left for you and me.

The reality is that most of those boomers who were once the backbone of the Canadian middle class are broke and scared witless behind closed doors that any calamity may befall them…..Seriously…anyone tried to get a job at 45 years plus? 30% of the Canadian population has no issues with anything..they are guaranteed an increase every year and will be paid a fat succulent indexed pension until death…..guess who?

#95 Beach Girl on 01.27.12 at 6:05 am

#25 TurnerNation on 01.26.12 at 10:57 pm

“I’ve taken a conscious break from criss-crossing the country talking to rooms full of people looking for free advice they won’t act on. ”

I knew it! My official GarthMania tshirt is destined to become a collectors item.

Say, is today’s picture of Beach girl’s latest flame run away?

_____

That is not my flame, we are both fit and well preserved.

I have no problem with fat boys. Quite cuddly, would have preferred a frontal shot however.

Fat boys are nicer, they have to be. Also makes me feel better.

My dog, the 2 idiots are all more in love with my flame than me. Could it be he is wealthy? They are so transparent, it is em BARE ASE ing.

Am pissed at Harpers plan, 67? I am only 54 but I want to club him over the head like a baby seal.

#96 Cow Man on 01.27.12 at 7:44 am

Senator Garth:

Your writing style is unequaled. Did you ever think of taking all of the blog entries and wrapping them in a hard cover? Then all of the Canadian Banks could buy copies, and give them out as mandatory reading for their clients. As you said no one takes free advice seriously.

#97 Ronaldo on 01.27.12 at 7:55 am

#92 Canuck Abroad – so I guess investing in bank preferreds is a “no brainer” then, right?

#98 GregW, Oakville on 01.27.12 at 8:14 am

Retirement upped to 67, income trusts, cut health care transfer payments, cut environmental standard – no need to keep people from being exposed to stuff know to cause disease – there no profit in that, what next? Daft? Thanks Steve your such an enlightened guy.

#99 Stendz on 01.27.12 at 8:19 am

Garth… Stupid question… With the extremely low borrowing rates do you suggest that people use lines of credit to buy more REITs? Preferred stocks? etc?

Not on your own. Leverage carries risk. You must manage it. — Garth

#100 Kip on 01.27.12 at 8:26 am

“Never again, for example, will I run for the honour of fitting my tanned and athletic bottom into a seat in the House of Commons.”

Thank-you for that!

For the pledge, or the bottom? — Garth

#101 House on 01.27.12 at 8:32 am

Behind every Smart Phone is a Dummy. ( Includes Jim and Mark)

#102 X on 01.27.12 at 8:36 am

The city of Toronto gets it:

http://www.moneyville.ca/article/1122265–rundown-city-owned-houses-up-for-sale

#103 Kevin on 01.27.12 at 8:47 am

Indexers will not be happy. -Garth

Indexers will get exactly the market average. Half of active investors will do worse than that. The few that barely beat the market will be sucked into the “Losers” column by fees exceeding those of index funds. Consequently, less than half of active traders will beat the indexers.

How can you ensure you’re in the “winning” group? Ah, and there’s the rub. You can’t. Newsflash: EVERYBODY wants to be in the “winners” column. But the market is a closed system. For every trade, there’s a winner and a loser. Nobody knows the secret formula to be a consistent winner. This is all explained in John Bogle’s (founder of Vanguard) book The Little Book of Common Sense Investing.

My conservative portfolio beat the market by 11% last year. Indexers were not happy. — Garth

#104 OttawaRenter on 01.27.12 at 9:01 am

–Vanished is the idea of a starter bung.

Not just the idea of one vanished, the Starter bungalow itself has disappeared. Haven’t been able to find one anywhere. A Boomer informed that its because they are all retiring and downsizing, so the price of bungalows is higher per sq. ft. than brand new shiny houses, in order to profit off all those boomers who wan’t be able to climb the stairs in their McMansions.

#105 Buyright on 01.27.12 at 9:01 am

Re #19
“Garth I’ve heard you preach out this for 3 years. When does the bottom fall out? ”

When the Gov finally grows a set and pulls CMHC out of the equation

#106 Junius on 01.27.12 at 9:03 am

Michael Hudson’s article today on Naked Capitalism is an excellent review of the how the banking industry has taken over the economy. A must read for anyone still confused as to how we got into this mess:

http://www.nakedcapitalism.com/2012/01/michael-hudson-banks-weren’t-meant-to-be-like-this.html

#107 Victor on 01.27.12 at 9:05 am

Mabe blames high dollar for 700 job cuts

CBC – 13 hours ago

In a statement, the company expressed regret for its announcement and “the negative impact this decision will have on our devoted employees.”

“We are trying to proceed with the plant closure in a way that will minimize to the greatest extent possible the negative impact on them.”

The Mabe facility occupies an entire block in east-end Montreal.

http://ca.finance.yahoo.com/news/mabe-blames-high-dollar-700-234414437.html

#108 Sky on 01.27.12 at 9:06 am

When the globalist suckhole, Harper, uses phrases straight out of the Marxist playbook – “in service of the common good”- you just know what’s coming next.

Health care rationing – check

Pension rationing – again check

The money’s going for war toys and prisons instead. Lockdown will become the retirement/healthcare choice of our future seniors. Time to convert to Islam. I hear the halal prison meals are superior.

http://news.nationalpost.com/2012/01/26/major-changes-coming-to-canadas-pension-system-harper-says-in-davos-speech/

But things aren’t so bad. We have F, who Harper calls – “the best finance minister on the planet, Jim Flaherty.” I think they need a room. Garth?

#109 Junius on 01.27.12 at 9:08 am

#90 TRT,

You said, “Prime Minister Harper is changing Old Age Security and GIS. There is word he wants to raise the retirement age to 67 gradually. He will have generational clashes on his hands if he does this.”

I am not a Harper fan but I agree with this move. In fact, he should push the age to 70.

When Social Insurance was set up in Canada and Social Insurance in the US the life expectancy of people was much less. Even FDR knew at the time that a relatively large minority would not reach even that age and those who did would generally not live long past it.

The reality is that many people can and do work until they are 70 now. It would be the right thing to do.

However I do agree with your comment above. The boomers will be howling.

#110 househornyhousewife on 01.27.12 at 9:08 am

Garth,

Excellent post today.

How do you expect the majority of the population to act responsibly if they don’t know what terms like “balance sheet” and “net worth” mean ? Most people don’t even have a monthly budget. They simply pay bills as they come through the mail .. they cannot see what’s coming beyond today.

When I speak to friends and they occasionally tell me how they run their finances at home, I am almost always flabbergasted. Many couples don’t even have a joint account to run their household. All it takes is for each person in the couple to contribute the same predetermined amount each month to a joint account and for one of them to use this to run the household expenses. How simple is that ? Not many people have this budgeted household expense account and so they constantly try to stay above water every single day. They mix discretionary spending with essential household expenses like electricity, phone, rent and food and then they run out of money to pay the latter.

If day to day expenses cannot be handled, then obviously more long term issues, such as retirement and savings will definitely be off the radar of most. Of course this is not true of everyone and many do put money aside and are well organized. But most do not. Are you really that surprised by this ? I certainly am not.

You expect too much from people, Garth.

HHHW

#111 Junius on 01.27.12 at 9:12 am

#88 I’ll do anything,

You said, “Anyway, Asian in Vancouver here reporting tonite after watchin a shamelessssssss CTV clip on how the Chinese Dragon new year will cause in INCREASE in sales of Real Estate. OMFG!”

The notion that a mythical creature will suddenly create a run on Vancouver Real Estate is actually a more likely theory than most of what BPOE and the Vancouver pumpers argue here on this Blog.

Sasquatch migration to the City is next. Don’t you know they have been hoarding gold for centuries?

#112 Kevin on 01.27.12 at 9:15 am

My conservative portfolio beat the market by 11% last year.

I believe you, and congrats, that’s a solid return. My point is simply that by definition, we cannot all be “above average.” On aggregate, there have to be an equal number of winners and losers, and there’s no way to ensure you’re consistently in the winning group. Every year is a coin-flip. You could get lucky and be in the winning group, or you could make some bad bets and trail the market that year. Next year you get to try again. Every year is independent of the previous year’s results.

Garth, if you’re claiming you somehow have the ability to achieve returns that beat the market average every year, that would be an incredible accomplishment. Nobody in the history of money anywhere ever has been able to achieve such a thing. It’s the holy grail of investing. And with the literally trillions of dollars at stake, it’s not like nobody’s trying! The simple reality is it’s an impossible task. Peter Lynch had a good run, but even Magellan had years where his investors would have been better off in an index fund. Are you smarter than Peter Lynch? John Bogle? Burton Malkiel?

‘Beating the market’ is a stupid goal. Just make money in the good years and don’t lose it in the bad ones. I’m happy with that. You should be, too. — Garth

#113 vatodeth on 01.27.12 at 9:21 am

I probably would have never bought into this bubble, but I was running out of online resources. Garth’s blog has kept my head on straight and given me great advice. I have a new direction and other options to make use of my money now

The herd is screwed. We knew that forever now. This blog is not for the masses though. It’s not because of some sort of elitism, but simply because people lack long-term objectivity and goals. It’s human nature to feast when times are good, with little regard for future drought.

#114 Pr on 01.27.12 at 9:40 am

…Like I said, most folks won’t listen or act…
Well that’s ok! I guess that’s why you don’t have a black van following you!

#115 JohnG on 01.27.12 at 9:45 am

“Bingo. Net worth = assets minus liabilities. Included in assets is the fair market value of the property, less mortgage debt. — Garth”

Ok, sort of: Let’s say I bought at $130 in 2000. Paid off in 10 years (130 doesn’t count closing costs, interest fees, blah blah blah), and also accumulated $80 in savings, $10 heloc debt…so at 36 (target 54%) I’m pretty darn close.

BUT “fair market value” if I sold today is $300. Now I’m way behind. This decade was a big run up in housing, how could I have kept pace with this anomaly?

And I still want that cottage, not some hillside encampment, for a nice getaway rec prop while the kids are young and will enjoy it.

Is it clear why I’m stumbling on this? What is the right valuation? “Fair” is not objective for me. Fair market is useless unless I move and make the house liquid (which is the whole problem we’ve been talking about – my money is in the walls!).

J

#116 Standard Deviation on 01.27.12 at 9:54 am

The law of large numbers seems to have prevailed this week Garth. It would appear that the short term gains to be solicited by our institutions through sophistry and half truths is way more profitable than protecting the national balance sheet.
Remember the majority is generally wrong – I am with you as part of the minority.

#117 Canadian Watchdog on 01.27.12 at 10:19 am

#110 Junius

A prosperous China is more reason for HAM not to come to Canada.

#118 disciple on 01.27.12 at 10:24 am

#75 Bobby on 01.27.12 at 2:22 am…”Fortunately, we will never see the NDP in power. They couldn’t run a hot dog stand.”

I agree. It would be a total improvement compared to what we have now…:)

#108 Junius…”I am not a Harper fan but I agree with this move. In fact, he should push the age to 70.”

Please tell me the REAL Junius did not just say that… if so, that’s a foolish thought. Just the opposite is morally true. The older demographic should stop working if they so choose as early as possible and spend their time enjoying the fruits of their labour and passing on wisdom to the next generation.

#111 Kevin…”On aggregate, there have to be an equal number of winners and losers”

This is not true. If you place your money in wealth-producing enterprises, you will win. If everyone did this, we would have no need for the parasitic class of bankers. It is your ignorance (mind-controlled so not totally your fault) that prevents you from realizing this. Bankers hold much power today, but if we continue to ignore them, they might go away. And no, that will not work for disciple :).

Contrary to popular misinformed opinion, the CENTRAL banking establishment is completely unnecessary. Many of the greatest leaders in history have told us just exactly this. The state can issue its own currency or debt instruments. We would borrow from each other rather than the approximately 300 bankster families who run the show, who have been sucking our wealth and labour for so damn long, like a “giant squid on the face of humanity”. Simple.

#119 Jeff McKinsey on 01.27.12 at 10:29 am

My parents and their friends (baby boomers) are insane. My parents took 6 trips last year (Caribbean and cruises) but they justify it by pointing to a couple they know who took about 10. My parents seems to be coasting by ok by living frugally otherwise (clipping coupons!). But their friends are near bankruptcy. The wife cries about how they a getting behind on paying the bills.

Meanwhile my wife and I (both gen-xer’s) manage to save about 50K per year and only take one yearly vacation to visit relatives. The idea of spending $5000 on a single week is abhorrent to me. I don’t think I am capable of having that good of a time (maybe a failing?).

Is the contrast this stark for other families out there? I’m curious to know…

#120 AlbertaGuy on 01.27.12 at 10:43 am

Garth, i think it would be a GOOD IDEA if you changed your biker look this year.

http://www.northwestcoin.ca/kilts.html

http://www.utilikilts.com/company/products/kilts/original/

#121 Daisy Mae on 01.27.12 at 10:45 am

#10 RL: “People divorce, lose everything and start over.”

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

Divorce, in many ways, is worse than the death of a spouse for that very reason.

#122 Herb on 01.27.12 at 10:55 am

Read it and weep:

http://www.ottawacitizen.com/opinion/Harper+wins+when+voters+snooze/6057393/story.html

#123 not 1st on 01.27.12 at 10:56 am

You know Harper was the only leader to stand up and tell the whole stupid world what it doesn’t want to admit, that is that banks and nations (thats you Europe & U.S.A) have way too much debt and that the entitlement programs they are promising are broke and need complete overhauls.

Even Canada’s CPP which is in pretty good shape compared to other pension plans needs an reworking or there isn’t going to be anything left for the next generations.

#124 Daisy Mae on 01.27.12 at 10:57 am

#26 GYPSY KID: “I’m just wondering when the mass have lost their common sense and have come to live off borrowed money. It really defies all logic and reason…do they sleep at night?”

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

They live off borrowed money ’cause they can. The government and the banks made it easy. And no, I suspect many now can’t sleep at night….

#125 tkid on 01.27.12 at 11:05 am

TheRealTruth, the age one collects CPP and OAS won’t be increased to 67, that’s just the PM placating the would-be seniors. They are actually aiming for 71, but in stages. If one gets CPP and OAS at 67, one will have lucked out. Forget about 55 or 61.

This is why the article about the Boomers piling on debt is so alarming. The majority of Boomers are a decade or more away from retiring, and if the retirement age is increased to 71, how much financial pain will most of them be in? If they can work to 71 it won’t be too bad, but what if they have to quit due to health reasons?

Some might call me pessimistic, but then I am Generation Y, and pessimism (a/k/a realistic) is a Generation Y characteristic.

#126 eaglebay - Parksville on 01.27.12 at 11:20 am

#83 Don on 01.27.12 at 2:56 am
“#57 Coastal in regards to Victoria you are bang in your comments. The Young on Vancouver island have gone elsewhere. Tons of rentals in Victoria and more and more condo’s for rent. Just put in a low ball offer and they haven’t said no yet!”
———-
Victoria is not Vancouver Island. Check it out.

#127 down and out on 01.27.12 at 11:21 am

A point about starter homes ,just try to get a permit to build one ,city bylaws demand many changes from a basic home like how much square footage on a lot number of bathrooms etc. So many have no choice but to buy an old fixer upper in a dying neighbourhood with no nearby shopping ,schools etc. The days of building something you can expand and grow has needs change are gone unless in a county far from urban planners.

#128 Daisy Mae on 01.27.12 at 11:25 am

#66″These pretzels are making me thirsty”

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

Have you been watching Seinfeld? LOL

#129 Junius on 01.27.12 at 11:25 am

#117 Disciple,

You said, “Please tell me the REAL Junius did not just say that… if so, that’s a foolish thought. Just the opposite is morally true. The older demographic should stop working if they so choose as early as possible and spend their time enjoying the fruits of their labour and passing on wisdom to the next generation.”

Sorry, but it is me. Not BPOE posting as me with his pet monkey.

The current group of boomers moving towards retirement has had more benefits than any other generation in the history of this country. I wish them their best with their retirement. However it makes sense that they should make some sacrifices at this point in time.

#130 eaglebay - Parksville on 01.27.12 at 11:27 am

#84 Basil on 01.27.12 at 3:02 am
“How does one convince the average citizen of the adverse consequences of too much debt, when the banks, central banks and governments are monetary misfits?”
———-
Yes, you’re a doomer.
Nobody was forced to borrow. Don’t you think that people have a mind of their own?
Don’t you think that people feel entitled to whatever.
I have savings, no debt and I rent and I’m not alone.

#131 The Thing in the Basement on 01.27.12 at 11:28 am

111 Kevin – Garth is referring to his “portfolio” while you
are referring to an equity index. Garths portfolio is a mix of asset classes which he re-balances as profits are made
and economic conditions change.

#132 disciple on 01.27.12 at 11:29 am

Today disciple feels like introducing you to some hidden history: the origin of the word AMEN. It comes from Amen-Ra the Egyptian sun-god. He was the equivalent of Zeus. Why do Christians utter this at the end of prayers? They know not what they do. They are making reference to the sun-god.

Sigmund Freud was the first person to teach us that Moses was none other than Akhenaton, of the Amenhotep (The Mummy) movie franchise. Surely, most if not all of his cultural contemporaries knew but he was a rare honest man in his time and he was promptly tortured academically after that. After publication of “Moses and Monotheism” his career and life were on a downhill trajectory, and not out of coincidence…

Akhenaton was expelled from Egypt along with the Hyksos, who were also called Hibiru or Hebrews, who migrated from Ireland! Most records of Akenaton were systematically erased from historical record to hide the fact that the people of the Exodus did not escape, they were instead booted out for their violent blood-thirsty lifestyles out of worhip of AMEN-RA.
These people then went on to start a new empire with new gods and new names. ISIS-RA-EL.

http://one-evil.org/entities_locations/location_zion.htm

#133 CrowdedElevatorfartz on 01.27.12 at 11:34 am

Actuarial studies indicate that if you retire at 55(or younger) you will ,on average, live until 82.
If you work until 65 you will die (statistically speaking) at age 67.5……..
Raising the age of retirement to 67 should just about fix ALL our CPP deficit problems :)

#134 FTP - First Time Poster on 01.27.12 at 11:35 am

#71 Nosty

There is no such thing as a “tax haven” anymore. If you want to read up on how the CRA can hunt you, google “department of finance, international tax treaty”. There are currently 90 tax treaties b/w Canada & others incl. the Cayman Islands. You can open an account, just report it.

#135 Stendz on 01.27.12 at 11:38 am

Follow up to #98
Thank you Garth. I’m thinking about working with someone who suggested it and will manage it (I hope). Of course the numbers are scary. You have any Fin. Managers in the Hamilton area?

#136 T.O. Bubble Boy on 01.27.12 at 11:45 am

That CIBC report just made my jaw hit the ground!

For those who didn’t click the link, here are some impressive data points:

1) Canada’s 153% debt-to-income number is now above the US and UK, but looks very ‘average’ when compared to some other euro countries: Denmark and the Netherlands are up in the 250% range! What the hell are they buying???

2) Since 2007, those Canadians with “heavy” (above 160%) debt levels are responsible for MORE THAN 100% of the debt growth in Canada — i.e. the broke-ass people with giant mortgages keep borrowing more and more, and the rest of us collectively reduced debt from 2007-2011.

3) The “heavy debters” (snicker) increased their debts by 18% from 2007-2011, and yet only saw assets rise by 4%. The low debters saw their assets rise by 10%, with minimal (2-3%) debt level increases. Apparently the 5% down “leverage” doesn’t actually help like realtors claim?

#137 Blacksheep on 01.27.12 at 11:47 am

Junius # 108,

“Even FDR knew at the time that a relatively large minority would not reach even that age and those who did would generally not live long past it.”
—————————————————————
Keep the slaves generating tax revenue until a significant % are about to drop dead.
To save Gov. costs? Wow, some people are well trained.
Not a Boomer, just an observation.

take care,
Blacksheep

#138 eaglebay - Parksville on 01.27.12 at 11:50 am

#94 Beach Girl on 01.27.12 at 6:05 am

I could use your help.
I’m presently trying to find a girlfriend around your age.
Companionship you know.
This question may seem a little strange but here it goes.
Is it normal for a women in her mid fifties to have her boobies, if any, laying on her tummy when she stands up?
Thanks in advance for your help.

#139 Van guy on 01.27.12 at 11:54 am

Trever and brother Jamie Linden are developers in Vancouver. It’s sad that they are also participating in massive speculation.

#140 Waterloo Resident on 01.27.12 at 12:01 pm

Hey, look at the bright side: We all still have our health and are happy :-)

#141 sam.i.am on 01.27.12 at 12:01 pm

#118 “The idea of spending $5000 on a single week is abhorrent …”

I am on the same page as you. So far have been successful resisting pleas to visit the giant rodent.

#142 New House firesale! on 01.27.12 at 12:03 pm

Garth, there’s still great value to be had. Lookie here – a brand new development, on the far outskirts of Markham in the GTA. You can have your own 35′ postage stamp cookie-cut cube of glue and wood shavings, for a mere $600k (plus at least $50k in upgrades of course). What a deal.. We should all buy one. No, more than one – make it three. These things always go up!

http://www.mattamyhomes.com/GTA/Communities/Markham/Windsong/

But seriously, just down the street, you can buy a 5-year old home which is larger for $100k less, and that includes all sorts of granite and marble. Still expensive, sure. But how do the builders get away with charging such a price difference for new vs resale? Is it priced based on the expected (extrapolated) price a year down the road when it’s built?

#143 chubster on 01.27.12 at 12:31 pm

had to snicker at title, nice charts and roadmap

http://www.zerohedge.com/news/icecap-asset-management-no-country-old-men

#144 Vigilante on 01.27.12 at 12:46 pm

Van guy on 01.25.12 at 3:47 pm
Vigilante,

Are u still going around low balling with no intention of even buying? How’s that working there For you dude?

Who said anything about not having intention to buy. I certainly do, but not for the prices they pull out of their arse.

So far , 8 realtors and one comfree list have comeback with a counter offer of atleast 10% less than the listed price. I rejected them as my offer was close to 20% less than the listed, sometimes even more. This was in the last 6 months. Anyway most don’t even accept the initial offer , but I let them hear the reasons. I have the TIME and the downpayment is growing so who cares. Its my terms or beat it.

#145 kilby on 01.27.12 at 12:47 pm

#117 Bubble Boy.

You are right about the Acura practicality. Here we have, in order.
3 series BMW
Audi A 4
Mercedes C class
Maserati
Jaguar
Aston Martin
Bentley

#146 Bill Gable on 01.27.12 at 12:48 pm

Mr. Turner – this blog and talking with you, literally saved my Family.
If people wish to ignore advice, as they will, that’s their problem.
Travelling and running yourself into the ground is no way to go.
We that appreciate your good work and generosity would be mighty sad to see this blog go.

I think you should have a TV show like “Til Debt Do Us Part” – where we send you in to explain to chosen couple how screwed they really are – but how to assuage some of the mess. Just a thought.

Take heart, sir.

Many people have become Turnerites, and are sleeping better for it.
I have tried to get some of my fiscally challenged Boomer buddies to take a look at what you have to say, but far too many are so broke, they are literally living on HELOCS.
When you explain a HELOC is a demand loan and can be called at at anytime – the shock is palpable.
Many people here even think they can walk away from Mortgage debts!

You can only try, Mr. Turner.
A lot of us listen intently and appreciate this blog immensely.
Thank you, very much for the 4 million words of warning.

Keep ’em coming.

#147 Beach Girl on 01.27.12 at 12:57 pm

#137 eaglebay – Parksville on 01.27.12 at 11:50 am

#94 Beach Girl on 01.27.12 at 6:05 am

I could use your help.
I’m presently trying to find a girlfriend around your age.
Companionship you know.
This question may seem a little strange but here it goes.
Is it normal for a women in her mid fifties to have her boobies, if any, laying on her tummy when she stands up?
Thanks in advance for your help.
____

Not to my knowledge, but I don’t swing that way. You could always pay for the required adjustment.

Is it also true that balls tend to hang looser with age? Also heard noses and ears also grow larger as well. Just curious.

#148 Alistair McLaughlin on 01.27.12 at 1:18 pm

Jeff McKinsey, you’d be surprised how many travel junkies spend every red cent, and go into debt besides, just so they can keep traveling. Worse, they look down their noses at others who are “not well-travelled”. I kid you not, I’ve had that very accusation thrown in my face as though it meant the same thing as “dropped out of school in grade 4”. It’s become the new form of snobbery, right up there with the rest of the vapid symbols of status like house, car, clothes, and expensive wine.

Don’t get me wrong. I think travel is great, and everyone should strive to do a little. But too many are taking things too far, which is one reason why airports have become such a miserable experience. Don’t worry though, the days when the masses can recklessly spend money and binge on cheap credit are quickly coming to an end. Jet-setting will once again belong exclusively to the rich. The next decade will easier for those of us who were more careful. Dare to be “boring”. In fact, embrace “boring”. You’ll be better for it.

#149 Dave on 01.27.12 at 1:23 pm

Today is Bank of Nova Scotia preferreds’ payday.

Anyone following Garths advice got a nice deposit in their trading account/bank account today. In my case, todays payment on its own is 72% of what the guy in the orange shorts would pay me for the whole YEAR for the same amount of money “invested”. Went right into my “rent” account.

Thanks Garth. TD is paying on Monday. Ka-ching!

#150 VICTORIA TEA PARTY on 01.27.12 at 1:24 pm

#88 (that) & A MINESHAFT CANARY CONVERSATION!

First to #88. Yes, it was a disgraceful (CTV Vancouver supper hour “news” show Thursday night) effort to pump a room temperature real estate market back to life. Lots of weasel words such as “may” were cast about amongst video cover footage of various time-of-the-year Chinese cultural activities.

The young chick, which the item seemed to be trying to tout as a Mainlander here on a buying binge, turned out to be a local who’ll have to lean on mummy for the bling to buy the thing!

MEANWHILE: WHAT WASHED UP ON THE SHORES OF OUR NEW AND EXPANDING GRAVEYARD OF THE PACIFIC–VICTORIA REAL ESTATE

No, it wasn’t the bones found in a boot the other day, it was a call from a genuine Victoria business community mineshaft canary!

What a treat!

BACKGROUND

Five years ago I leased an American/German/Mexican/East European/Lattee-sucking entitlement bunny/made four wheeler and last
year I paid off the damn thing.

I swear I’m gonna drive that tinplate special until it turns to roadside dust (it even has a space blanket glued to its underside separating the exhaust pipe from the gas tank)!!

NOW THE CANARY CONNECTION

So, having left the dealership (a year ago) under considerable duress — the sales manager tried, with utter futility, to get me to lease a new 2011 whatever when he knew damn well that the new 2012s were just around the corner — I swore on a stack of economic text books that I would NEVER darken their doorway again.

So far, so true.

But the CANARY, a salesman, called to try and bend my arm to break my promise. “How long do you intend to own your car?” he asked. Until Hell freezes over, I replied without using the word “Hell.”

Other similar questions followed.

Suspecting that he was phoning because business was catastrophic down at the dealership, I asked, “How’s business?”

Answer: “It’s slow.”

Translated from car dealership lingo to plain English:
“We’re done! That’s why I’m vaccuuming the neighbourhood desperately looking for clients, new, old, even expired!”

History, here, shows that there is a direct correlation to the “health” of the real estate market and the rest of the private sector.

Waiting and watching. A lot of canaries will get the shaft this year.

MEANWHILE…

Just a reminder. US GDP numbers for all of 2011 come in at 1.7 per cent, it was announced today! So the four- year average starting in 2008 is about 2 per cent. That figure does not an empire save.

And Europe keeps on, what, being Europe?

Mais Oui!

#151 Junius on 01.27.12 at 1:24 pm

#136 Blacksheep,

You said, “Keep the slaves generating tax revenue until a significant % are about to drop dead.
To save Gov. costs? Wow, some people are well trained.
Not a Boomer, just an observation.”

It is all actuarial. It is the same thing as Life Insurance policies. Of course, the alternative could have been that more money was collected earlier in life. In any event, it has to be made sustainable.

#152 Dave on 01.27.12 at 1:24 pm

Oops. TD is paying on Tuesday. ;-)

#153 Fady on 01.27.12 at 1:31 pm

Mixed messages all along, H is worried about EU and US and what’s in store for 2012, pension reforms i.e. (budget cuts), higher taxes for 2012 all seem to me like money tightening policy, i.e. people spend less and save more. C on the other hand keeps interest rates as low as they come!!!! ok he wants us continue to borrow and spend. Shouldn’t they have aligned policies? that’s at least what they taught us in economy classes years ago. Ah well maybe H and C have something else up their sleeves!!!!!!!!!!!

#154 Alistair McLaughlin on 01.27.12 at 1:36 pm

#108 Junius, you are absolutely correct. Programs like OAS were created at a time when people weren’t living nearly as long as they are today. Too many people have bought into the bank commercials, and believe that a comfortable retirement is a birthright.

Paul Martin understood 20 years ago that these programs were unsustainable. He succeeded in reforming the CPP, but backed down on changes to OAS & GIS in the face of public uproar. But even then, everyone knew the difficult decisions would have to be revisited at some point. People can scream about “jets and jails” all they want, but that doesn’t change the fundamental reality that programs initiated in the post war era no longer work with today’s demographics and longer life expectancies.

#155 eaglebay - Parksville on 01.27.12 at 1:55 pm

#144 Beach Girl on 01.27.12 at 12:57 pm

Not to my knowledge, but I don’t swing that way either.
The only difference is that hair tend to grow in odd places.
It’s Friday.

#156 Cookie Monster not Fred Flintstone on 01.27.12 at 1:58 pm

It’s not caused by man. Just another excuse to tax the planet.
Don’t want to argue, just say’in.
Go Ron Paul.
—–
Blacksheep,
Why do you say it’s not caused by man? This is what started this whole discussion for me with Nosty days ago. I don’t understand your side of the argument, please enlighten me, what are your reasons for doubting the science?

I don’t want government intervention either, or a new world order, or European/global carbon tax, but I don’t deny that the effect are real and factual.

I laugh at the Republicans who all deny global warming as a party mantra yet embrace the dogma of Christianity. Denial of reality and acceptance of the supernatural, amazing lunacy! People are idiots.

Ron Paul 2012!

#157 zeeman1 on 01.27.12 at 1:59 pm

# 77 Soylent Green is People.

Most citizens never asked for national health care, anyways. It has proven to be a good pacifier of the Canadian masses, and has drastically increased the size, expense and role of government in our lives.

#158 Basil on 01.27.12 at 2:02 pm

Eagle Bay #129
“Yes, you’re a doomer.
Nobody was forced to borrow. Don’t you think that people have a mind of their own?
Don’t you think that people feel entitled to whatever.
I have savings, no debt and I rent and I’m not alone.”
You are right some people have minds of their own. However, interest rates were just decreased to attract more borrowers. The banks are advertising lower rates to sell more loans and people will borrow. If the rates had not been kept at the lowest level in history, many people would not have qualified.
There are consequences associated with a zero interest rate policy and ongoing government monetization to purchase bonds(QE). If you chose to ignore this and label me a doomer for my public service of pointing it out to you, I would suggest you do not have a mind of your own and have been manipulated in your thinking in the same way borrowers are manipulated to purchase granite countertops in particle board shacks.

#159 SRV on 01.27.12 at 2:09 pm

“They would become serial killers. — Garth”

Surely a “Garth’s Hall of Fame” comment!

Looking forword to your take on our “Corporate Puppet’s” latest attack on the disenfranchised… OAS!

And… I know this is old news (been shamefully out of touch with local news lately) but, any thoughts on Dalton’s 3.1% rent increase to soften the HST to the poor, helpless rental corporations on the same group?
Thanks

#160 GrimWeeper on 01.27.12 at 2:11 pm

#103 OttawaRenter Some of these bungalows are affordable and portable. Could be a perfect solution for busted boomers who will be forced to downsize when drek hits the fan. http://www.tumbleweedhouses.com/

#161 Don on 01.27.12 at 2:16 pm

“eaglebay – Parksville on 01.27.12 at 11:20 am

#83 Don on 01.27.12 at 2:56 am
“#57 Coastal in regards to Victoria you are bang in your comments. The Young on Vancouver island have gone elsewhere. Tons of rentals in Victoria and more and more condo’s for rent. Just put in a low ball offer and they haven’t said no yet!”

———-
Victoria is not Vancouver Island. Check it out”
****************************************
Eagle Bay really stating the obvious,

I am well aware of Parksville and Qualicum and Nanoose area. You should educate yourself and take a look at all the rentals that recently became available in the area and prices are reverting back to the mean. take a look in the local paper and you will see. I used to rent a house there for $700 dollars. Have you notice that lack of young people in your area, exactly who will continue to supply greater fools to increase prices in your area – hardly any high paying jobs, older people moving on daily and relatives are forced to rent out or wait to sell. Have you seen the listings lately in your area or are you too busy trying to find a companion, I would suggest Plenty of fish.com

Commonsense Logic Eagle bay. Get back to me after this summer. Now Port Alberni is a better retirement area cheaper houses, but I wouldn’t advise buying withe intention to rent out.

For others eagle bay in an small patch of land on the outside of parksville, with retirement houses packed side by side.

What happens when we run out of available boomers with enough cash to purchase in that inflated area.

#162 Ogopogo on 01.27.12 at 2:19 pm

#129 eaglebay
I have savings, no debt and I rent and I’m not alone.

That’s my situation too. And I come here so as not to feel so alone when all my Gen X cohort are up to the hock (HELOC) in mortgage debt. Still, some dare to try to make me feel like a loser for renting.

I’m not one to wish harm on anyone, but I can’t help creaming my boxers a little at the thought of a RE “correction” to humble some of my more vocal RE cultist friends and acquaintances. I’m tired of smiling and patiently trying to explain why renting is wiser in this climate.

#163 Victoria on 01.27.12 at 2:23 pm

Gosh MSM is changing their tune!

http://www2.macleans.ca/2012/01/26/what-happens-when-canadas-housing-bubble-pops/

#164 Victoria on 01.27.12 at 2:24 pm

Also I read in the great Victorian News Paper the Times Colonist that there are plans for more condos and development down-town. I also posted before – towers and towers are planned for Colwood! yipee!

#165 Devil's Advocate on 01.27.12 at 2:25 pm

“After all, what’s the point? I won’t change behaviours.” – GARTH

Oh but Garth you are so wrong there. If you change the mine of but one person you make a difference and I can promise you my friend that even here on the other side of the continent you have a flock of converts. NO, certainly I am not one of those I speak of so much which is not to say with you I do not agree a number of your key points .

What I am saying my friend is; the only thing more often misunderstood than I am so often on this blog is the bible and I think the only thing misunderstood more often than the bible is you. The wing-nut Gloom and Doomers who follow and cause this to be referred to as a “pathetic” blog are everywhere and they megaphone your message amplifying to the point of irritating distortion.

You are making a difference all right Garth I just can’t say the result is in keeping with your good intentions as the Fear Mongers twist your words to suit and justify their own self destructing paralyzing inaction. Is that not as sure a road to ruin as they who adopt a positive frame of mind and exercise the initiative to act with such confidence, even though it raises them up to loftier heights from which they might fall?

No, as you say “this blog is not for everyone. Most people will never get it.” but not because of the risk of rising house values or equally dangerous falling interest rates. This blog is not for everyone because so many hear what they want to hear and your repetition for the past three years is confused for its belligerent quantity over persistent quality.

You are making a difference Garth. I see it most every week as I meet those who misquote you time and time again. I just don’t know that it is your good intent which is having as much effect as you would like to believe but rather the consequence of your misinformed messengers who spread about through the economy like a malevolent virus spreading for sure but doing more damage to themselves with each new host they infect.

Having said this I know well the rebuttal about to be launched my way. Know in advance you who will think mine a self-serving plea, this will not nearly so seriously affect my business as you believe for in any market there are always sellers who must sell and buyers who will buy.

#166 Ogopogo on 01.27.12 at 2:26 pm

#143 Bill Gable

I think you should have a TV show like “Til Debt Do Us Part” – where we send you in to explain to chosen couple how screwed they really are – but how to assuage some of the mess. Just a thought.

As a fan of TDDUP, I second the motion for Garth to star in a like-minded TV show with gusto. Though we know at least one industry that wouldn’t be lining up to sponsor the show…

I wish whats-her-face host of TDDUP would be more vocal about heavily indebted couples selling their homes or not buying in the first place. She always gets the renters to downsize, but seldom advises homeowners to do the same. It makes me wonder what interests are behind that, including the one I’ve long suspected.

#167 Kevin on 01.27.12 at 2:33 pm

@Truth Hammer:

“Does anyone remember the ministarial comment argued against a tax reduction saying, ‘They’ll just spend it on popcorn and beer’. This attitude is coming from a government…”

Wow.

Yes, actually, I do remember that comment. Only it wasn’t made by a Minister of the Government. It was made by Scott Reid, Paul Martin’s poltical advisor. And it was about Harper’s plan to send parents cheques for childcare, instead of Martin’s plan of setting up dramatically more costly national daycare program. Paul Martin lost that election, you may recall.

If you’re going to imply that the big, bad “government” is holding out on tax breaks because they think they know how to spend your money better than you do, then you should at least get your history straight. It wasn’t a tax break, it was a benefits program. And it wasn’t “the government,” it was an advisor to a party that LOST that election (that is, the guys who believe Canadians WON’T blow it on beer and popcorn won, and are currently governing, and sending out such cheques every month).

#168 pjwlk (click for glossary) on 01.27.12 at 2:43 pm

#84 Basil

“How does one convince the average citizen of the adverse consequences of too much debt, when the banks, central banks and governments are monetary misfits?”
~~~~
You can not help those who do not want to be helped.

#169 fancy_pants on 01.27.12 at 2:47 pm

Seems to be no end to the schemes, props and tricks to keep RE prices bloated. Barring some local corrections I have become a skeptic that a significant correction of national magnitude will occur anytime soon.. or later. Maybe way down the road but only if rates ever rise.

Should have upgraded back in spring ’08 when prices were fantabulous relative to now.

#170 Canadian Watchdog on 01.27.12 at 2:54 pm

Canada to impose code of conduct on credit rating agencies. http://www.theglobeandmail.com/globe-investor/canada-to-impose-code-of-conduct-on-debt-raters/article2317505/

Something is brewing with Canadian bonds and has Ottawa concerned.

#171 Westernman on 01.27.12 at 2:55 pm

DoomedinSask.,
Garth is probably too polite to tell you where Sask. is “headed” in the next couple of years…. straight back down the hole that it accidently managed to get a brief glimpse out of. As a matter of fact, Sask. never got to the the point where it was “headed” anywhere. That was just the self-serving delusion of a bunch of isolated villagers – that’s all it ever was. Sask. is like a punch drunch has been fighter who never was – it never was “headed” anywhere. Hope that little dose of reality wasn’t too much for you.
As a parting shot – to all you people who are terribly distressed at the ” first ” posts… just use the little scroll wheel on your mouse, just one little movement with your finger and it will be O.K. No need to be traumatized…

#172 Herb on 01.27.12 at 2:57 pm

Food for thought –

… all trade agreements are agreements for corporations made by their patron states. There is NO benefit to the people; the benefits go to the corporations which essentially write the agreements and treaties. This corporate governance is sold to the public as ‘a good thing’ because we have been led to believe that economic growth is essential for any successful society and that economic growth is best achieved by ensuring corporate welfare. This is why an economy is measured by corporate profit and share value (price on stock exchange) rather than health and welfare of the population.

– Brewster Kneen, “Who Pays the Harper Calls the Tune”, with observations on our current parliamenary democracy, at http://ramshorn.ca/

#173 Dorothy on 01.27.12 at 2:59 pm

I am a Boomer (age 56) who is less concerned about the value of my house than I am about the potential changes to the pension system. My house is simply a roof over my head, it doesn’t pay the bills or buy my food. But to remove a significant portion of my income once I am no longer able to work, is a matter of grave concern.

I have lived my life following the principle that if I can’t afford to pay cash, I can’t afford it. The only loans I’ve ever had were mortgage and vehicle loans, all of which were small and are now paid off. I saved as much as I could in RRSP’s, but because I didn’t live on credit most of my cash was used to pay my bills, resulting in less to save and invest.

Nevertheless, after factoring in CPP and OAS I was confident my spouse and I would have a comfortable, if not wealthy retirement. Keeping in mind that my CPP would be minimal due to years when I chose to stay home and raise my family, and that I wouldn’t be eligible to collect OAS until my husband was 4 years into retirement, we planned a larger withdrawal amount from our RSP for those first 4 years, with a lesser withdrawal in the years after I turned 65. Following that plan, we anticipated having enough funds to last until we turned 85, albeit on a very low income. But if we are forced to withdraw more from our RSP due to my not being allowed to claim OAS until 67 or later, or if we are somehow eliminated from qualifying for OAS altogether, then we will definitely end up outliving our money.

Given the state of the global economy, many of us could easily end up losing our jobs over the next few years. As Garth has pointed out, many of those of us who are over 50 may never be able to find work again (through no fault of our own). If that happens, how the hell are we supposed to save enough to make up for the shortfall created by changes to the OAS system?

Much is made on this blog of how irresponsible Boomers are the authors of their own misfortune. But how about folks like myself who DID pay their bills and save as much as they could for retirement who are now having the rug pulled out from under them by a heartless government?

It’s easy for people who are guaranteed an indexed income at age 55 (that exceeds more than most of their constituents earn) to make decisions based soley on dollar figures, while failing to see the societal pain those decisions will cause. If changes must be made, there should be enough notice given to allow people to make the necessary adjustments to their savings. And in this current economic climate that would be at LEAST 20 years notice.

However, my own feeling is that if the government is looking to save money they should start by looking at their own gold plated pension plan first. And then reconsider all that cash they want to spend on building new prisons. Next they should stop getting us involved in foreign wars, and fire MP’s such as Tony Clement who funnel tax payer funds to pork barrel projects within their own ridings!

#174 Van guy on 01.27.12 at 3:00 pm

CMCH questions

A) For example, if a person puts 15% down on a home, they need to pay CMHC. But after say their tem was 5 years and market was flat or up, this person say roughly have 20% paid off. Do they need to pay CMHC still?

B) a person puts down 20% so no need for CMHC insurance. But when it’s time to renew, the market dropped 20%. Does this person have to pay CMHC now because they lost a big chunk of equity?

#175 Diane Rizun on 01.27.12 at 3:12 pm

First, I want to thank you Garth for the information you share for us Canadians; I have not found another similar site. To other ‘savers’, I hear you. My only debt was a mortage many years ago for first home that huby and I paid off in a few years because neither of us wanted any debt. We are now 60, having lived well within our means, and, even though our invested savings earn less than we had thought, we will be ok. I hope our lifestyle has been rubbed off on our three adult children, who, so far have no debt.

In a world seemingly run on debt, it constantly amazes me how it can continue ‘kicking the can down the road’. It seems that creditors know all the tricks in our hi-tech world.

Anyway, it feels good to be healthy, growing vegetables, having a spiritual connection, and loving family. And no debt.

#176 dd on 01.27.12 at 3:35 pm

“Bernanke made it crystal clear they were going to go to some kind of quantitative easing. One of the reporters asked, ‘Do you worry that inflation may get out of control?’ The Chairman (Bernanke) responded, ‘We’re targeting 2% inflation.’”

So when the reporter asked him if inflation could get away from him, Bernanke said, ‘Yes.’ His exact words were, ‘Inflation may move away from desired levels. To me that was code for saying it will move away from desired levels.”
””””””””””””””””””””””””””””””””””””””””””””””

There you have it. The Fed wants inflation or 2%+. Your 5-6% dividends will not be enough for the long term.

#177 Dorothy on 01.27.12 at 3:35 pm

This is an interesting article about how changes to the OAS system aren’t really necessary. So if that’s true, why is the Harper Government even considering it?

http://www.theglobeandmail.com/report-on-business/economy/economy-lab/the-economists/does-harper-really-need-to-raise-the-retirement-age/article2316982/

#178 OttawaRenter on 01.27.12 at 3:40 pm

#166 pjwlk (click for glossary) on 01.27.12 at 2:43 pm

Hehe…thanks..

#179 T.J. BONES on 01.27.12 at 3:44 pm

Alistair Mclaughlin on 01.27.12 at 1:18 PM Sir Garth and Others We are not ” Boring ” We are ” Stabilized “

#180 Mississauga Renter on 01.27.12 at 3:47 pm

Garth, what do you define as the ‘market’ that you beat by 11%? It sounds like you’re confusing investment style with asset allocation. Couch potato investors can also diversify across asset classes. The iShares Dex Universe Bond Index was up 9.4% in 2011 and many passive investors held it as part of their balanced portfolios.

Your advice on passive investing is terrible and is misleading a lot of people. Reputable studies going back forever have shown the futility of active management vs. passive investing over the long term. It’s not a matter of opinion anymore. The sheer weight of evidence in favour of passive investing is overwhelming. If you did indeed beat a passive investing strategy over a one-year period, your chances of doing it over a period of 10 years are slim. Increase the time period to 20, 30, 40 years and your chances become exceedingly slim.

Your response to #111 Kevin is confused. You boast about beating the market, but then tell Kevin that is a stupid goal. And by definition, of all investors, couch potatoes come closest to getting market returns since their fees are lowest. People in actively-managed portfolios fall far short of that over the long term.

This blog has been a boon to many including myself for warning about the real estate bubble and other financial matters, but your advice on passive investing is a disservice.

Anyone interested in the passive vs. active debate can easily confirm the facts by looking up any of the following:
John Bogle, the Canadian Couch Potato blog, Burton Malkiel, William Sharpe, Larry Swedroe, Andrew Hallam to name a few.

Indexers will be unhappy. You will learn this. — Garth

#181 disciple on 01.27.12 at 3:59 pm

#154 Cookie Monster not Fred Flintstone… what science? Do you even know what you’re talking about? The aim of science is to disprove stupid theories, not the other way around, always remember that…

#182 Form Man on 01.27.12 at 4:02 pm

#163 DA

Not sure what to make of your comment, seems like a lot of nonsense. Some of us rely on facts and truth ( apparently that makes us doomers ), others ignore facts and rely on ‘gut instinct’ and ideology ( you call them optimists ) I call them them idiots ( or Harper Canservatives).
I was reflecting on your desire to remain anonymous, and thinking that was wise of you. I have several aquaintances who are prominent long-time Kelowna builders and developers. They currently have all their crews working out of town. They would be unlikely to use your services if they knew what you have been saying about them having to go out of town to work…………
Might be time to admit some facts and realities DA, you never know who you might need to do business with in the future…….
BC govt stats show Kelowna’s population increased by 575 people last year ( http://www.bcstats.gov.bc.ca ). that is less than 1 person per new home built. Might be why the housing market is tanking so badly in Kelowna.
Don’t pay attention to that though, according to you they are lined up to get in ( just can’t find a realtor I guess )……….

#183 An Cat Dubh on 01.27.12 at 4:12 pm

I heard this woman on CBC yesterday from Penticton, saying her dad said always buy real estate. She is now in negative equity and the guest said it will go up as it is a “desirable” place to live. I recently moved away from there and there are several hundred listings and lots of for rent signs there. BTW, my car is nearly 23 years old and still runs and looks(almost) like a top.

#184 EB on 01.27.12 at 4:16 pm

#171 Dorothy – We’re not supposed to be able to make ends meet. Garth has been pretty plain in his thesis on this; some of us are simply screwed at this point.

What that means in practical terms remains to be seen – dire hyperbole about cat food aside, it may mean a rethinking of some assumptions about life and lifestyle. I’ve been in the camp of some time now that communal living of some sort may become a practical necessity for many people.

Much of North America may be in for an introduction to a whole different lifestyle and set of expectations than what they were led to believe in.

#185 tkid on 01.27.12 at 4:26 pm

A better question Dorothy, is why is he bringing this up when the majority of the voting public is either retired or boomer? Is he trying to lose the next election?

He’d be better off keeping mum and then quietly clawing back CPP and OAS in increments. “Of course you’ll qualify for OAS, there are only a few exceptions …” like what was done to Unemployment Insurance.

#186 Snowboid on 01.27.12 at 4:41 pm

#171 Dorothy on 01.27.12 at 2:59 pm…

Sell…now!

#187 Devil's Advocate on 01.27.12 at 4:55 pm

Form Man

nothin’… imagine that, I’ve got nothin’ for you.

#188 Form Man on 01.27.12 at 5:07 pm

#185 DA

I’m not surprised. Logic tends to render deniers speechless………….
Enjoy your weekend DA. Remember, always tell the truth to buyers………you might get a repeat customer that way……..

#189 Ogopogo on 01.27.12 at 5:07 pm

#178 Mississauga Renter on 01.27.12 at 3:47 pm
Garth, what do you define as the ‘market’ that you beat by 11%? It sounds like you’re confusing investment style with asset allocation. Couch potato investors can also diversify across asset classes. The iShares Dex Universe Bond Index was up 9.4% in 2011 and many passive investors held it as part of their balanced portfolios.

Indexers will be unhappy. You will learn this. — Garth

This issue of indexed vs. actively-managed portfolios is also of extreme interest to me.

At the risk of incurring ridicule on this thread, I’m still holding all of my non-RRSP savings with a Manitoba credit union at 2%, BUT only because I’m in the process of aggressively educating myself before I dive into the investments. My accounts (margin, TFSA, RRSP) with Questrade are nearly set up, so now it’s just a matter of reading Money Road, as soon as I finish Andrew Hallam’s book.

Garth, perhaps you might consider addressing the index issue in a blog article at some point? Like Kevin, Mississauga Renter, and others I’m finding the index argument persuasive, but at the same time I’ve seen how your emphasis on preferreds, REITS, etc. have been bearing fruit even through tough times.

Do you also fix hard drives and do dental surgery? There is no simple way DIY investors can avoid being cannon fodder. Unless you’re happy with 2%. — Garth

#190 DoomedinSask on 01.27.12 at 5:10 pm

#169 – Westernman –

As usual not much help and full of venom. Did you get kicked out of a Saskatchewan village for being high on chromosomes or what?

Garth – I want to know if these ridiculous housing prices not reflected by the incomes are going to keep increasing in the future or take a step back in Regina and Saskatoon.

#191 reasonfirst on 01.27.12 at 5:11 pm

.#185 Devil’s Advocate

DA’s best post ever!

#192 kilby on 01.27.12 at 5:15 pm

Was speaking to a realtor in Vancouver yesterday, he said that when times were good, developers wouldn’t let them near their projects, just paid their own sales staff. Now they are dropping by offices with presents, taking realtors out to lunch etc…HA!

#193 Lead Paint on 01.27.12 at 5:16 pm

Garth my man,

Looks like it’s time to update the copyright dates on the footer, or I just might claim all this content for myself. I hear there’s a lot of HAM out there looking for cantankerous and pithy putdowns.

The reason why ‘rooms full of people’ don’t take your advice is because they are really there to see your chiselled six-pack, and perhaps an Amazon or two. Or at least half are. The other half are there to push gold and tell you you’re an idiot… but are too shy to actually go through with it once they see the abs and the Amazons.

Question – at these engagements, do about a dozen or so loser/morons try and push past each other at the door screaming “First!”? And do they realize that they really last at everything else in life?

#194 triplenet on 01.27.12 at 5:25 pm

#141 – New House Firesale
But how do the builders get away with charging such a price difference for new vs resale? Is it priced based on the expected (extrapolated) price a year down the road when it’s built?

Before you buy three homes, why don’t you find out what the land value is.
As to your latter comment – you need professional help.

#195 Cookie Monster not Fred Flintstone on 01.27.12 at 5:25 pm

#179 disciple on 01.27.12 at 3:59 pm

#154 Cookie Monster not Fred Flintstone… what science? Do you even know what you’re talking about? The aim of science is to disprove stupid theories, not the other way around, always remember that…
——
I’m talking about climate science.

The greenhouse effect theory is supported by undisputed scientific evidence. See for example the planet Venus and the explanation of its higher than expected temperature.

So the facts are,

Fact: Increased levels of atmospheric CO2 ppm increases the greenhouse effect. As does H2O and CH4.

Fact: Man’s burning of fossil fuels and destruction of forests have increased the CO2, H2O and CH4.

Conclusion: Man’s activity is warming the planet via the increasing greenhouse effect. Warmer than it otherwise would be (all other things equal).

Where’s the problem?

#196 Arshes on 01.27.12 at 5:25 pm

#171 Dorothy
I am a Boomer (age 56) who is less concerned about the value of my house than I am about the potential changes to the pension system. My house is simply a roof over my head, it doesn’t pay the bills or buy my food. But to remove a significant portion of my income once I am no longer able to work, is a matter of grave concern.
I have lived my life following the principle that if I can’t afford to pay cash, I can’t afford it. The only loans I’ve ever had were mortgage and vehicle loans, all of which were small and are now paid off. I saved as much as I could in RRSP’s, but because I didn’t live on credit most of my cash was used to pay my bills, resulting in less to save and invest.

——————————————————-
Dorothy here things to consider in regards to people and thier retirement.

1. Just because someone can afford to pay for something with cash, doesn’t mean they can afford it. People need to understand priorities when it comes to money, just because you can buy something doesn’t mean you should money has an opportunity cost, spend money here; you lose the opportunity to use it for another use.

2. Paying one’s bill is financially responsible thing to do, but doesn’t mean you will be financially ok. People assume that because they are financially responsible and are frugal, they’re retirement will be ok. But they find out they didn’t save enough or invest wisely or both.

3. If one can’t afford to retire at 65, they should consider working longer. Retiring isn’t set in stone, if you can’t afford it, work longer. Your contributions to CPP will increase your retirement income and CPP will be increased by 8.4% per year or 0.7% per month. And considering your concerns about retirement, you will probably NEED this extra money. (And is retirement really worth it, if you’re just going to live in poverty?)

4. A house isn’t just a roof over your head, esp. if you can’t afford retirement. It is also, an opportunity. You can sell and downsize, or sell and rent. They extra money can be a lifesaver for some.

5. When nearing or in retirement and you don’t have enough money to afford basics, you really need to think long and hard about your priorities. What do you really want? What do you really need? If you’re struggling, you sometimes have to give up some things in one area, to get ahead somewhere else. This is the part that is most difficult for people.
When you live very close to the edge (maybe not enough savings or not making enough money) you HAVE to really come to terms with your situation and think about what matters. You may need to give up the idea of being a home owner so you can have comfortable retirement, you may have to give up having a car to be able to own a home, and you may have to sell your house to fund your retirement.

And don’t assume that because one has enough money to be OK in retirement, that their retirement will ok. Personnally “ok” sounds like “I have enough money to live, if nothing changes in the next 10-20 years, but I’m screwed when they do.”

#197 Blacksheep on 01.27.12 at 5:30 pm

Junius # 149,

“Of course, the alternative could have been that more money was collected earlier in life. In any event, it has to be made sustainable.”
———————————————————
Of the 600 billion in Canadian National debt, what amount is actually principle? In other words, NOT accumulated interest + debt, just the PRINCIPLE amount.

About 100 billion. well what’s the other 500 billion for?

Interest to private parties.
We are not frigg’in Greece.

We are a sovereign in control of own currency, and as such, do not need to borrow one cent, from anyone. Period.
This fallacy that the government has to run it’s financial maters like household, is just deception to keep the slaves producing.
Not to mention the wealth of natural resources we give away for penny’s on the dollar.

So please explain why people, havening spent a life time contributing to this corrupt system, should have to wait, any longer to enjoy their remaining years (months?) in squalor.

take care,
Blacksheep

#198 zeeman1 on 01.27.12 at 5:30 pm

#154 Cookie Monster not Fred Flintstone.

Please don’t equate people who are skeptical of global warming with religious extremists. A true skeptic uses the Scientific Method to help sort through all the driftwood we’re bombarded with every day. The theory of global warming has not held up under scrutiny and all it’s proponents are changing their stories on a regular basis. Just after the Climategate emails were released the same scientists just happened to release a “study” that now claims all the excess CO2 is now hiding deep in the oceans. What are they going to come up with next? Real theories hold up under scrutiny and don’t have to keep changing to suit the theorist’s preferences.

#199 jess on 01.27.12 at 5:33 pm

133 FTP – First Time Poster
you need to do some more reading

UK government has been forced to release secret information about a banking collapse. It is the first time that it has been forced to name wrongdoers and those implicated in the scandal. the government could not hide behind the Data Protection Act and claim that it has to protect the identity of the culprits.

Background

After a five-year legal battle the UK government has finally released most of the Sandstorm Report on 7 September 2011. According to the Bank of England this report was the basis for the closure of BCCI in July 1991. The report was prepared by Price Waterhouse (BCCI auditors) for the Bank of England though it was never finalized. BCCI was the biggest banking fraud of the twentieth century. Some 1.4 million depositors lost $11bn. Unlike many other large corporate frauds and banking scandals the UK government did not appoint inspectors to prepare a report. No parliamentary committee has ever been given sight of the Sandstorm Report. UK legislators pass laws without knowledge of the facts or opportunity to interrogate wrongdoers.

http://visar.csustan.edu/aaba/BCCISandstormRelease.html

“Our current arrangements for the creation of trusts and the setting up of companies anonymously have created an environment which is permitting kleptocrats to move their loot around (and commit) tax evasion on a monstrous scale,” said Anthea Lawson, head of the Banks and Corruption Campaign at Global Witness, a non-government organisation which campaigns against money laundering and corruption.

Jan 27, 2012 – 15:52US tax scandal brings down Wegelin
http://www.swissinfo.ch/eng/index.html

http://taxjustice.blogspot.com/

#200 down and out on 01.27.12 at 5:34 pm

The good thing about this site is the discussion on debt that many people never get anywhere else .It is amazing talking to youth the knowledge in social issues but living within their means seems to be spending every cent and more always’ pushing the enevolope’ has one twenty something said to the other, like it was a game. I think people should look at history what happens to economys that run away from reality .Europe is a fine example ,housing in the USA another .As far as predicting when the correction takes place no one can say as each week the powers that be seem to fine a new way to stall the process ,now even talk of more easing in the states(printing money).Lets have a contest who can quess what next rabbit will be pulled out of the hat to keep the status quo. My quess is some kind of tax holiday for new buyers ,next quess anybody?

#201 VICTORIA TEA PARTY on 01.27.12 at 5:37 pm

WHAT A CROCK!

#54 “CHANGES on 01.27.12 at 12:08 am

The NDP is a place where people come together to work for a better future — one where social and economic justice are the guiding principles. As social democrats we believe in a balanced and responsible approach to government, so that people can enjoy a strong economy, healthy communities, and a clean, sustainable environment.

New Democrats work together to make sure that the needs and aspirations of ordinary people — in British Columbia and across Canada — are effectively represented in the political process.”

UTOPIA..JUST AROUND THE CORNER! PROVIDING IT’S MY BRAND OF U!

In a nutshell, the NDP is a tax and spend nightmare grouping that we here in BC remember in the 1970s and 1990s. It wasn’t pretty.

Such nonsensical socialist words as “sustainable” and “social and economic justice” are buzzwords for wanting to tax the crap out of the so-called rich.

The “rich” are, of course, a group that NDPers have had problems identifying for quite some time (those horrible corporations excepted!).

NDPers used to say that the rich were those making 40 grand a year, then 60, then 80.

THEN one fine day many years ago some NDP hack, perusing his party’s taxable income policies, discovered that if people making 80 big ones were taxed more, that meant HIM!

Therefore that was UNFAIR, so the party raised the income number. This craziness has been repeated often.

SO, beware of NDP politicians. They are in it for the money.

Take a look at some long servers in Ottawa and look at the loot the’ve got for themselves upon retirement.
Sure, they join all the rest of the House Members in this pillage.

But it’s the hypocrisy the NDP practises, that they actually care about the lesser beings who voted them in that so offends. This egregeous behavior is better called SOCIAL INJUSTICE.

NDPers do not “come together to work for a better future.” They come together to work for THEIR BETTER FUTURE!

An NDP politician begins his/her so-called “career” via membership on the NDP Electoral Farm Team, which follows a long and drawn-out “selection” process.

Typically these leaches start their long trek into publicly-funded nirvana as “community activists”.

These are buzz words for those who are otherwise unemployable because they are otherwise occupied with the far more important activity of conjuring up great thoughts so they can solve all of our problems whether we have them or not!!

Ergo, they don’t have time to pursue lesser activities, such as legal and honest wage labor for instance.

These political trollops normally start at the school board level, where sometimes a spouse is a heavily conflicted member of the teacher’s union in the same school district, and then it’s all downhill right to Ottawa.

One by one, bit by bit, these socialist elitists become rich by committing legal-financial vandalism (running for re-election for as long as possible for the prize-winning pension).

Have a nice day, #54.

BTW, from which NDP annual report did you steal that boiler plate, anyhoo?

I’ve seen that same “recycled” nonsense for each of the last 40 years!

#202 Cookie Monster not Fred Flintstone on 01.27.12 at 5:39 pm

Disciple, from Wikipedia
http://en.wikipedia.org/wiki/Global_warming

“Global warming refers to the rising average temperature of Earth’s atmosphere and oceans and its projected continuation. In the last 100 years, Earth’s average surface temperature increased by about 0.8 °C (1.4 °F) with about two thirds of the increase occurring over just the last three decades.[2] Warming of the climate system is unequivocal, and scientists are more than 90% certain most of it is caused by increasing concentrations of greenhouse gases produced by human activities such as deforestation and burning fossil fuels.[3][4][5][6] These findings are recognized by the national science academies of all the major industrialized countries.[7][A]”

#203 Canadian Watchdog on 01.27.12 at 5:40 pm

For anyone who would like like a fundamental understanding of how the western world got into this mess, I recommend to watch the following presentation/lecture by MIT’s Prof. Richard D. Wolff. He’s pretty charismatic so it isn’t a typical economics lecture, and he touches on historic key-points that reflect what’s happening today.

I’ve watched hundreds of lectures and this video explains it best in layman’s terms. Good watch for you married couples too. Enjoy. http://www.youtube.com/watch?v=CnRWTzvHlzk

#204 Mississauga Renter on 01.27.12 at 5:46 pm

#178
Indexers will be unhappy. You will learn this. — Garth

So Garth you can predict the future?
As for the well-established facts on passive vs. active mgmt., you’re claiming “It’s different this time”? Sure, whatever you say!

#187
Do you also fix hard drives and do dental surgery? There is no simple way DIY investors can avoid being cannon fodder. Unless you’re happy with 2%. — Garth

That’s ironic since a proven way to avoid being cannon fodder is to ditch active mgmt. and the fees that go with it and invest in low-cost indexes.

You’re also contradicting yourself again and advising people to try to beat the markets. What abour your advice at #111?:
#111
‘Beating the market’ is a stupid goal. Just make money in the good years and don’t lose it in the bad ones. I’m happy with that. You should be, too. — Garth

Your comments on active vs. passive investing can’t be taken seriously.

Do what you want. It’s always interesting the mess people get in doing things they don’t understand, to save money. — Garth

#205 Blacksheep on 01.27.12 at 5:47 pm

Cookie Monster not Fred Flintstone # 154,

“I laugh at the Republicans who all deny global warming as a party mantra yet embrace the dogma of Christianity. Denial of reality and acceptance of the supernatural, amazing lunacy! People are idiots.”
————————————————
I also laugh, but unfortunately it’s at you, for paying any attention, to any political party, or man made global warming, or religion, or dancing with the stars, because they all deserve equal billing.

take care,
Blacksheep

#206 triplenet on 01.27.12 at 5:48 pm

#172 Van Guy CMCH questions

A) For example, if a person puts 15% down on a home, they need to pay CMHC. But after say their tem was 5 years and market was flat or up, this person say roughly have 20% paid off. Do they need to pay CMHC still?

B) a person puts down 20% so no need for CMHC insurance. But when it’s time to renew, the market dropped 20%. Does this person have to pay CMHC now because they lost a big chunk of equity?

Answers:
A1) You wont have a 20% paydown in 5 years. With 5 years of principal paydown you may achieve a few percent vs. the 20% of total principal paydown you are thinking. This is financial math, not simple math.
A2) NO

B) No, but upon term renewal the [email protected] will shock you with an equity demand….. meaning cash.

#207 Westernman on 01.27.12 at 5:49 pm

DoomedinSask @ # 188,
What do you mean, not much help? I told you exactly what Sask. was, is, and will be – how much more helpful can anyone possibly be than to tell the truth and state the bloody obvious. The fact that you don’t want to hear the truth does not make the statement ” full of venom”. It means you want to have sunshine pounded up your rear end because your are too mentally fragile to accept reality.

#208 harden on 01.27.12 at 5:50 pm

Rent doesn’t compute for condo investors?

http://business.financialpost.com/2012/01/27/why-that-condo-rental-might-not-work/

#209 jess on 01.27.12 at 5:55 pm

RBS spends millions on lobbyists
Bailed-out bank has spent over £2.5m of British taxpayers’ money to influence US politicians

foreigners affluence …Didn’t our leader say these forces were at work in canada?

#210 Mississauga Renter on 01.27.12 at 5:56 pm

@187 Ogopogo

Asset classes can be invested in actively or passively. Whether to invest in REIT’s is an asset allocation question, not an active vs. passive investing question. There are broad Canadian REIT index ETF’s that have very low fees and are at home in passive portfolios. Check out the Canadian Couch Potato blog for articles on this topic. Hope this is helpful.

#211 DonDWest on 01.27.12 at 5:57 pm

#171 Dorothy

Don’t worry Dorothy, I’m sure if you just click your heels three times your house will be back in Kansas. And paying off a mortgage while living on OAS and CPP is a retirement plan. . .

#212 peter on 01.27.12 at 6:00 pm

LAST!!!???

#213 Cookie Monster not Fred Flintstone on 01.27.12 at 6:05 pm

#196 zeeman1

I don’t care about climate-gate. There may have been some questionable behavior by some scientists but the media was all spin. Let’s stick to the facts about what we know for sure is true. See the prior link I gave to Wikipedia.

My religion reference was nothing more than amusement regarding the Republican party’s mantras of belief in the unbelievable and rejection of selected scientific facts. Nothing extremist, rather mainstream and that’s why it’s funny.

#214 GTA Girl on 01.27.12 at 6:18 pm

My-my its like a soap opera in the comment section today. Or a old fashioned novella.

Today’s Globe Real Estate section shows all new releases of condos. They must be running out of names…Fabrik? Yes that’s the spelling.

In the resales is a his and hers condos (2) side by side in a new build condo. Asking price for both together is $8mill. Now this doesn’t include all the repos needed to make these two sepRTe units into one large one.

Nor does it mention that you can buy a few McMansions in Rosedale or a couple of Yorkville townhouses for under this amount.

Or to mention that 4 townhouses being advertised to be built out way past Ossington on QueenWest. This newbie developer hoped to sell each for $1.5 to start. All glass fronts, windows at street level are full story…so the crack addicts can watch you like fish in a bowl.

It’s just getting crazy.

But yippee, to or row is the TO Star’s RE section…where concrete, Maserati’sand fairy tales go to fester.

Am I too cynical today?

#215 GTA Girl on 01.27.12 at 6:19 pm

Have I mentioned that I hate my IPad and it’s Sybil-esque need to auto-correct?

#216 Form Man on 01.27.12 at 6:20 pm

#211 cookie monster

I agree. Dismissing scientific facts, and then expecting people to believe in the rapture ?…..only a Conservative could find the logic there………. amusing is an understatement……….

#217 Ogopogo on 01.27.12 at 6:22 pm

#187 Ogopogo
This issue of indexed vs. actively-managed portfolios is also of extreme interest to me.

Do you also fix hard drives and do dental surgery? There is no simple way DIY investors can avoid being cannon fodder. Unless you’re happy with 2%. — Garth

I see your point, Garth. One of the main problems I can already detect with passive indexing using the very data Hallam presents is that an indexed portfolio can languish in the red for years during bad stretches, while only achieving moderate gains in boom years. It’s like settling for safe mediocrity — or like dating the snaggletooth cafeteria server that will put out once in a while instead of going for the buxom principal that will ride like a bull on steroids.

Based on everything I’ve already learned in this blessed blog, Money Road should be a healthy corrective to the couch potato Hallam recommends.

#218 Van guy on 01.27.12 at 6:27 pm

#204 triplenet on 01.27.12 at 5:48 pm
————————————————-
So how about with 5% dp. After 5 years, there’s still not much equity in the home. Do you still have to pay CMHC? When would you not need to pay CMHC in this position?

#219 Ogopogo on 01.27.12 at 6:29 pm

#208 Mississauga Renter
@187 Ogopogo

Asset classes can be invested in actively or passively. Whether to invest in REIT’s is an asset allocation question, not an active vs. passive investing question. There are broad Canadian REIT index ETF’s that have very low fees and are at home in passive portfolios. Check out the Canadian Couch Potato blog for articles on this topic. Hope this is helpful.

Thanks for the tip. I’ll check out the CCP blog. I would definitely like something a bit more adventurous than Hallam’s XIN, XIU, XSP, XBB.

#220 Cookie Monster not Fred Flintstone on 01.27.12 at 6:32 pm

Zeeman1,
Regarding the oceans releasing CO2 from the cold depths upon warming is true, it’s another indisputable fact based on cold liquid solutions being able to hold higher concentrations of dissolved Co2 over warm solutions.

This is why your pop fizzes more when you pour it warm than when you pour it cold. See, scientific proof of concept every time you make a drink!

#221 AlbertaGuy on 01.27.12 at 6:46 pm

RE DIY

Successful active management is about buying good companies at good entry points with risk management techniques.

#222 triplenet on 01.27.12 at 6:59 pm

#216 Van guy
You pay CMHC insurance premium once.
…. Based on the mortgage you gave your bank. If you stick to those terms and conditions you won’t pay the CMHC insurance twice. You may be even be able to port your mortgage to your next home, not another home.
Equity loss is between you and the bank.
CMHC is the insurer – that’s all.
If you default… the CMHC will cover the banks losses.
In theory anyway.

#223 I'm stupid on 01.27.12 at 7:00 pm

#56 Tryingtogetoutalive

Thats not a problem, since you can buy a home with $5 now. So as long as you have $11 your fine. Too bad some have a net worth in the negatives.

Lol

#224 Snowboid on 01.27.12 at 7:17 pm

#199 VICTORIA TEA PARTY on 01.27.12 at 5:37 pm…

I’m not affiliated with the NDP, but have pretty good inside knowledge of their government operations in BC, and I’m afraid you are showing a fair bit of ignorance.

BC was prosperous under NDP governments (and some of the Socreds as well), but the current ‘Liberal’ regime has rewarded their corporate cronies by literally selling the public assets for pennies. The province is virtually bankrupt.

I am personal friends with a few current and past politicians, mainly NDP – and your portrayal of them is ridiculous. The ones I know are compassionate, caring, and intelligent.

Despite their past mistakes, they were the only politicians who really cared about the average person.

Your comments are certainly in line with the ‘Tea Party’ credo – but as far from reality as is possible.

Shame on you.

#225 Rene on 01.27.12 at 7:28 pm

#204. Question A: She meant when the equity reaches 20% (due to reduction of the mortgage to 80% of purchase price, assuming no fluctuation in price). I doubt many people believe you would reduce your principal by 20% through 20% of the amortization. Yes, that would be lunacy. What she didn’t understand is that the CMHC premium is not recurring, but rather an up-front fee, often added to the financed amount.

#226 Dorothy on 01.27.12 at 7:29 pm

#183 – tkid – A better question Dorothy, is why is he bringing this up when the majority of the voting public is either retired or boomer? Is he trying to lose the next election?
____________________________________
I suspect it’s arrogance. Harper thinks we’ll have all forgotten about what he did to our pension by the time the next election rolls around. But he’s wrong!

By the way, these changes won’t affect just the Boomers. They will affect everyone who is currently in the workforce. The only ones who will be unaffected are those who are already retired.

#227 Form Man on 01.27.12 at 7:34 pm

#222 Snowboid

agree. of course the BC Liberal party is liberal in name only. They are the former Social Credit party which is conservative….

#228 Dorothy on 01.27.12 at 7:38 pm

#194 – Arshes

The argument that people can just continue to work doesn’t hold much water if you happen to get laid off. Particularly if you’re already the wrong side of 60.

As for people not saving enough for retirement, my spouse and I have been saving up since we were in our twenties. But there’s a limit to how much you can save when you have bills to pay and children to raise. We saved as much as we could, and will have enough to fund a modest retirement, provided the government doesn’t move the goal posts by tinkering with the OAS.

It’s not fair to spring a sudden change to things that were factored into the retirement plan on people who are within 10 years of retirement, because that’s not enough time for people to make up for what will be lost. What makes them doing so even more reprehensible, is the fact that it isn’t even necessary.

Go follow the link in my last post (#175) and read the article from the Globe and Mail.

#229 Dorothy on 01.27.12 at 7:41 pm

#209 – DonDWest

Anyone who carries a mortgage into retirement is an idiot.

#230 Bobby on 01.27.12 at 7:47 pm

For #222 Snowboid,
Please! The NDP couldn’t run a hot dog stand. Most of their representatives are from Gov’t paid big public sector unions. They have no idea how business works as they have never had to meet a payroll. They believe business exists to provide jobs, rather than make a profit.
Just look at Mr Dix as they lead in the polls. Are against everything but have not said how they will pay.
Just like the definition of a true socialist, one who wants everything because someone else is paying.

#231 TurnerNation on 01.27.12 at 7:56 pm

Something for this distasteful weblog!!

UBS lowers outlook on Canadian insurers

Low interest rates impairing the outlook for insurers
By James Langton | January 26, 2012 10:20

UBS Securities Canada Inc. is downgrading its view on Canadian life insurers following the U.S. Federal Reserve Board’s suggestion that it will keep rates low through 2014.

In a new research report UBS has gone from a ‘buy’ to a ‘neutral’ call on the big Canadian life insurers, Manulife Financial and Sun Life Financial. And it also reduced its price target on Manulife.

UBS notes that sovereign risk, low economic growth, and global imbalances continue to undermine interest rates, which, in turn, is impairing the outlook for insurers. The Fed’s announcement that it will be maintaining interest rates at exceptionally low levels until at least late 2014, “has negative implications for our earnings and book value”, it says, adding that it expects lower interest rates and increased hedging costs to continue to negatively impact growth, earnings, capital and valuation.

“In general, we think it’s hard to value lifecos over book value given a 10-11% implied return, and asymmetric risks due to rates and markets. However, medium-term there could be more upside should rates improve or conversely downside should markets decline,” it says.

UBS adds that it continues to prefer Canadian banks to Canadian life insurers, “due to higher growth, much higher returns, much stronger capital generation, much stronger capital, and more visible EPS, with lower risk, which is much less dependent on interest rate and equity market forecasts, which remain difficult for us to project.”

However, it adds that if interest rates normalize from 2% currently to 4%, Canadian lifeco stocks could look better than banks, as bank growth slows, provisions for credit loss stabilize or increase from below normal levels, and higher rates underpin higher lifeco EPS, returns, and valuations. This could, in turn, underpin higher dividends and capital deployment, once regulatory issues become more certain, and macro concerns dissipate, it says. “However, this is not apparent today,” it notes.

#232 Nostradamus Le Mad Vlad on 01.27.12 at 8:16 pm


#77 Soylent Green is People — Accurate, and goes with #195 Blacksheep — “. . . is just deception to keep the slaves producing.”

Again, follow the money and see who controls it, as they are the ones pulling the strings. Harper couldn’t care less about Cdns. and is not here to serve us. A control freak, pure and simple. Craves attention from others while preaching lies from his pulpit.

Sorta goes with #214 Form Man — “. . . and then expecting people to believe in the rapture ?…..only a Conservative could find the logic there . . .” — Wasn’t it Harold Egbert Camping, (who, perchance, is Dilbert’s long-lost brother) and twice predicted the rapture?

With the Jehova’s Witnesses now batting 0 for 17 (or thereabouts), dinglenuts like Camping and others all predicting the apocalypse, it’s time to have these lulus certified as AAA Pure Cdn. Ham-Fisted Idiots, and locked up. The cycles are changing, that’s all. Everything is in its rightful place.

#222 Snowboid — “The province is virtually bankrupt.” — Agreed. Mike Harcourt and Jack Layton were two of the better Dippers, Glen Clark made mistakes and that cost them. Interesting that Clark now works for Jimmy Pattison.

The Libs., esp. under Gordo have suckerpunched us, and we’re paying the price now.
*
The Fourth Reich Germany formally requests Greece hand over its fiscal independence; Losing Hope The economy is not getting better; 100K military jobs going. No doubt they will be living on the streets soon; Only Two Types survive; Iran Oil War will cripple the EU (and NAmerica).
*
Grape Seed Extract kills head and neck cancer cells; Bioethicist Scrap pregnancy; Obomba Oct. 2012 is when the war games in the Persian Gulf have been rescheduled for; FF From Twitter and UTube; Libya New torture claims, courtesy NATO – US – UN – IMF; 0:58 clip Poland anti-ACTA protest, and now Ireland’s new SOPA law (all coming from TPTB or the elite); 10:06 clip Strong support for on Paul in Fla. except from CNN; Cargo Ship “It’s Iran’s fault!” — Official White Horse Souse.

#233 Onemorething on 01.27.12 at 8:16 pm

Garth, Same Sh*t different pile! I’ve got 22% net worth in RE. My number is 45%!

I plan to take this down to 10% shortly come back to 45% in 2014!

#234 VICTORIA TEA PARTY on 01.27.12 at 8:27 pm

#222 Snowboid

I, too, have a fair amount of knowledge of the way the NDP did business in BC.

And whatever you may think of the BC Liberals, their 2001 election, where voters gave them all but two seats in the BC legislature, was no cheesy right-wing coup.

It was a decision made by an electorate who witnessed the economic degradation of their economy by a succession of NDP premiers over a 10 year period.

Unlike the two main parties operating in the fascist dictatorship, that pretty much sums up our scarey “trading partners” to the south of us, political parties in this country still have more than a modicum of self-esteem and concrete differences amongst themselves, that allow voters real choices.

I just wish that more NDP candidates toiled on Main Street as opposed to Their Street, the street of left-wing dreams and way too much government nannie-isms.

Then again all parties can be accused on that. But that STILL doesn’t excuse the NDP’s dopey policies.

Less government (lower debts and deficits) and more individual liberty is needed from all parties.

Meanwhile, check out what’s happening in Europe this weekend.

It seems that Germany has a new demand for Greece: “We want to control your budget and destiny.”

Either that or no more bailouts.

Remember that socialist thought is the prevailing political disease extant in Greece and most of
Europe right now, another reason for their economic turbulence.

Thre’s too much unrepayable debt and soon horrible outcomes for the citizens more and more of whom will becoming street people with private charity being their only salvation.

You must remember that bond markets rule the world, not governments. If the bond market likes you, which means that if you are fiscally prudent, you live.

But if you live like socialist Greece; You Die.

#235 Chris L. on 01.27.12 at 8:28 pm

#118 Jeff McKinsey on 01.27.12 at 10:29 am

You sound like us. Also fellow gen X’ers. Funny, huh.

#236 Nice one on 01.27.12 at 8:59 pm

#196 zeeman1

Well said, Zeeman.

#237 FullOfFear on 01.27.12 at 9:12 pm

The ones in trouble are the ones who aren’t in debt. They are the ones who will pay for the debt when those up to their necks in debt, default. These people are playing the same game that the greeks are playing … they have no intention of paying their debt back … those of us who don’t have debt will be paying for it. We are the real losers.

#238 CHANGES on 01.27.12 at 9:26 pm

#199 VICTORIA TEA PARTY on 01.27.12 at 5:37 pm

You mad ?

Voting NDP

#239 Daisy Mae on 01.27.12 at 9:34 pm

#171 DOROTHY: “But how about folks like myself who DID pay their bills and save as much as they could for retirement who are now having the rug pulled out from under them by a heartless government?”

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

Sometimes life sucks….

#240 Daisy Mae on 01.27.12 at 9:45 pm

#1183 tkid: “Is he trying to lose the next election?”

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

Nah…he’s talking about decades. He figures he’ll be around forever…

#241 jess on 01.27.12 at 9:54 pm

kumbaya!

Tech Tally …
http://www.propublica.org/article/by-the-numbers-life-and-death-at-foxconn

#242 JohnG on 01.27.12 at 9:59 pm

I don’t know why you would want to “Index Invest” when there is little doubt we are in for a stagnant near and medium term. No doubt those books were conceived and written just after a nice run up in the market.

On the upside rest assured all the “greater forces” (gov, central banks, etc.) are all trying to kick the can as far down the road as possible. The more delays the better, until they find some reasonable solutions to some of these major issues (Euro, US, Japan, Cdn debt).

J

#243 Herb on 01.27.12 at 10:05 pm

#201 Canadian Watchdog,

great link, but the man forgot to blame the victims.

#244 truth hammer on 01.27.12 at 10:10 pm

So…it’s all been a lie. We have seen our wages hijacked by a succession of greedy administrations and the soul sucking unions who love them and now all the money is gone…… for the very people who paid into the CPP in the first place.?????? Where did all the money go?????? Spent on the greed of the civil service fat hands.

http://news.nationalpost.com/2012/01/27/what-the-stephen-harper-rethinks-retirement-funding/

You’re telling me that loaning out the revenue to provinces and cities at zero interest has turned out to be a bad idea for the taxpayers….say it ain’t so !!

If the Feds had followed a program like Garth is touting in these pages and got a 7% return on the money that was entrusted to them then the reitremnet of non DB pensioners would have been safe. Instead the lickspittle politicians blew the wad on pandering and systemic corruption to the special interest groups and the elite unionista’s.

Now…tell me why again that I am forced to contribute CPP and EI for 40 years and expect no return….except the ‘Canadian’ satisfaction of watching the eastern Liberals blow the money on foriegn aid and tear jerk parties?

#245 Devil's Advocate on 01.27.12 at 10:24 pm

BC govt stats show Kelowna’s population increased by 575 people last year ( http://www.bcstats.gov.bc.ca ). that is less than 1 person per new home built. Might be why the housing market is tanking so badly in Kelowna. – Form Man blockquote>

New homes is your industry Form Man. Mine is both new and resale. Those numbers you quote are probably why I’m not building and you are… gut instinct – you ought to try listing to it some time.

Try again buddy };-)

#246 Ex-Cowtown on 01.27.12 at 10:25 pm

Cookie Monster not Fred Flintstone on 01.27.12 at 1:58 pm

It’s not caused by man. Just another excuse to tax the planet.
Don’t want to argue, just say’in.
Go Ron Paul.
—–
Blacksheep,
Why do you say it’s not caused by man? This is what started this whole discussion for me with Nosty days ago. I don’t understand your side of the argument, please enlighten me, what are your reasons for doubting the science?

I don’t want government intervention either, or a new world order, or European/global carbon tax, but I don’t deny that the effect are real and factual.

I laugh at the Republicans who all deny global warming as a party mantra yet embrace the dogma of Christianity. Denial of reality and acceptance of the supernatural, amazing lunacy! People are idiots.

+++++++++++++++++++++++++++++++++++

What Blacksheep is trying to say in a polite way is that Global Warming is a political issue, and that is the only way in which it is Man Made.

I’d lay out data and experimental results etc. but it would be casting pearls before swine as I doubt that you’d get it, as it is science, not politics.

Cheers

#247 Devil's Advocate on 01.27.12 at 10:26 pm

BC govt stats show Kelowna’s population increased by 575 people last year ( http://www.bcstats.gov.bc.ca ). that is less than 1 person per new home built. Might be why the housing market is tanking so badly in Kelowna. – Form Man

New homes is your industry Form Man. Mine is both new and resale. Those numbers you quote are probably why I’m not building and you are… gut instinct – you ought to try listing to it some time.

Try again buddy };-)

#248 disciple on 01.27.12 at 10:55 pm

Cookie Monster: Wiki is Mossad/CIA/MI6. Always take anything on there with a grain of salt.

Start here and be free:

http://www.climategate.com/

#249 Cookie Monster not Fred Flintstone on 01.27.12 at 11:16 pm

#246 Ex-Cowtown
I’d lay out data and experimental results etc. but it would be casting pearls before swine as I doubt that you’d get it, as it is science, not politics.
——-
Lay it cowboy! I gots me good grades in scool ya know.

You ain’t gonna lay out nutin cause you ain’t got nutin to lay! Hick boy.

#250 Snowboid on 01.27.12 at 11:21 pm

#230 Bobby on 01.27.12 at 7:47 pm…

#230 Bobby on 01.27.12 at 7:47 pm…

Sorry to hear about your confusion. If you want to see real socialism, take a look at what was given away to ‘business’ by our current government.

How can you possibly call the NDP socialists because they help the average person, but not big business when they get billions of dollars in handouts.

Clueless.

#251 Snowboid on 01.27.12 at 11:32 pm

#234 VICTORIA TEA PARTY on 01.27.12 at 8:27 pm…

Brainwashed much? The statement, about how poorly the BC economy did in the ten years prior to the 2001 election, shows how little you really know.

If you think the Liberals have any regard for anyone other than their big-business cronies you are definitely well-suited to life on Fantasy Island.

Honestly, can you actually say that the wholesale sell-off of all the provincial (tax-payer owned) assets to private hands for bargain-basement prices shows any sense of business acumen?

Prior to 2001 I saw almost 20 years of reductions in the size of government, and a working balance between public servants and private sector services.

There is only so much you can reduce government before you get to the point of bunkers, guns and squirrel meat…

Oh right, that’s what you stand for — may you get all you deserve!!!

#252 Cookie Monster not Fred Flintstone on 01.28.12 at 2:34 am

#248 disciple

Disciple, you are an expletive denied idiot if I ever saw one

#253 Bobby on 01.28.12 at 3:06 am

For 251 Snowboid,
Perhaps my friend it is you that is clueless. The NDP pontificate and would like you to believe that they are for the average person, but it is quite the opposite. It is business in the private sector that creates wealth and in turn, jobs. Not government. Have a look at the credentials of many in the NDP leadership. Most have cut their teeth in government sponsored programs that rely on taxpayer dollars to continue.
Look at the teachers situation. The NDP advocates the present action that leaves the public system in disarray. The average person has no alternative but to stick with the staus quo. Those who can afford it, flock to the private school system. Private medical services proliferated under the NDP government here in BC. I could on but I doubt you will get the picture. So tell me again how the average guy is faring under the NDP. Really clueless!

#254 Cookie Monster not Fred Flintstone on 01.28.12 at 3:19 am

Ex-Cowtown, let me lay a few tidbits before you start yapping.

I graduated B.Sc. electrical engineering and work as an EE so I know electromagnetics. I know Greens theorem and Maxwell’s equations. I know math. so giver all you got bitch! I’ll destroy you.

Do you want to talk about electromagnetic radiation??? Which is what we are talking about in case you didn’t know!

Let’s rumble!

#255 vancouver2011 on 01.28.12 at 3:27 am

oh garth, why do you think we thirty somethings all want homes better than the ones our parents had? getting really tired of hearing it. we make ok money, but the job is in vancouver. a starter bung with say 1200 sq’ would be a dream. instead it’s 730 in a 50’s walk up with paper thin walls. i work friggin hard, like 70 to 85 hrs a week, which boomer can say the same when they were our age? and yet, they had it all, starter bung included.

#256 GregW, Oakville on 01.28.12 at 11:40 am

Hi #108Sky, was that room padded?!

#257 GregW, Oakville on 01.28.12 at 11:55 am

Hi #133Crowded, Thanks for that, its sound about right.
So shipping job off shore might be a good idea, for some,(sarcasm).

#258 Snowboid on 01.28.12 at 11:58 am

#253 Bobby on 01.28.12 at 3:06 am…

I have learned that arguing politics is usually unproductive.

But I repeat my previous question:

Why do you refer to the NDP as socialists, but the current governments’ giveaway to the private sector as not being ‘corporate’ socialism?

Or is that your definition of how the private sector creates wealth?

#259 Bobby on 01.28.12 at 8:47 pm

For #258 Snowboid,

Ok, I will bite. There is a sad reality that exists in today’s environment and that is the idea of the global economy. Money is very mobile and knows no borders and with it goes investment and in turns jobs. Why would a business exist in BC when a greater return on investment exists in another province or even country. Business leverages this reality to garner funds to offset their costs. Just look at the Caterpillar action in southern Ontario that is going on. I fail to see the connection to this fact to the idea of socialism.
Socialism is the redistribution of wealth by government. But what is oftentimes forgotten is that someone actually pays. What is the benefit of working hard and being successful if the vast majority of what you earn will be taxed back. Look at Greece the epitome of socialist states, it is on the verge of bankruptcy. Full retirement with benefits at age 53 where the national sport was to avoid paying any taxes. Yet, someone has to pay.
It has been my experience that those that contribute the least have the highest expectations. Go figure!

#260 MissPriss on 01.28.12 at 11:08 pm

http://www2.macleans.ca/2011/03/23/a-mortgage-monster/

Calgary saw one of the biggest run ups in real estate in the last six years. At the peak of the market home buyers had access to zero down / 40 year mortgages. This allowed them to buy over priced real estate they couldn’t really afford.
Take a look on MLS today for the area- the number of foreclosures is alarming.
The link to the article above is alarming.

Anyone have any info on what caused the collapse in the 80’s? I’d be interested to hear other perspectives.

#261 disciple on 01.28.12 at 11:44 pm

#252 Cookie Monster not Fred Flintstone…”#248 disciple

Disciple, you are an expletive denied idiot if I ever saw one”

How’s that? You have been confronted by the REAL SCIENCE in the link I provided you, and rather than READ and RESPOND accordingly, you attack me with EXPLETIVES? You lose, my friend. Have a nice life working for the government spooks…see ya…

#262 Snowboid on 01.28.12 at 11:53 pm

#259 Bobby on 01.28.12 at 8:47 pm…

Nice try, but I do believe there is no difference in redistributing wealth to the people or taking all the peoples’ wealth (as citizens of Canada and residents of BC) and redistributing it to a small number of corporate interests.

But you are right, I guess giving away the assets the people of BC used to own isn’t really socialism, it’s theft.

And you also right that taxes are high, and in reality haven’t gone down with the conservative government in BC – with increased fees and premiums brought in to compensate.

Politics has nothing to do with my anger that our province has been sold out from underneath us – all to add exceptional wealth to a few giant corporations that don’t give a hoot about our province in the first place.

You can continue to blame socialism (even though the NDP haven’t governed BC for over 10 years) or you can accept the fact that we have been totally shafted by the current government.

I moved to BC in 1973 and still love the province, but I’m not sure of the future.

Whatever happens in the next provincial election, the new government will inherit the biggest mess since we became a province some 140 years ago.

Okay, I’ve ranted enough for awhile. Busy week ahead so I promise to lay low!!!

#263 Mr Buyer on 01.29.12 at 12:51 am

Laugh as people do at the French but they turn out in sufficient numbers at election time and force “reality” to be adjusted such that the needs of the great unwashed are accomodated to a much greater degree than they would be otherwise. There is little hope for our collective well being if we remain hypnotised,. Banging pots and pans in the streets is a futile cycle in which energy is dissipated to no effect. The text “The Irony of Democracy” asserts clearly that the masses do not participate in democracy and simply allow corruption to prevail. Do not vote for anyone that does not have a reasonable plan to provide 21st century health care to the country period. We live in the age of bioinformatics, DNA, robotics and supercomputers and are being asked by the elites to accept 18th century triage and barrier protection as medical care. The scientists are paid by the elites and stand quitely as the masses accept the clearly unacceptable. Life is a fist fight to the end and most of us are behaving as if we are punching bags. Rugged individualism is largely a pipe dream, even the elite work towards their common intrest. There is no cold water in the face reason for a single Canadian to be living in duress. At the same time we must stop signing away decades of our income for such a clear nessecity such as housing. People seem to be utterly demoralized after going into debt like this and simply phone in their working life from that point forward. This has been the great challenge, releasing the people from clearly unnessecary and destructive fear for their future while maintaining their motivation to give it their best in their duties to be fulfilled while at work. Our elites do not seem to have our greater good in mind but rather seem to be wholely focused upon maintanence of the status quo. There are larger forces at work in the form of global population growth and climate change that Canadians as a whole can cope with if we work together NOW. Good luck with the coming 5 years but we are leaving an untenable situation for my kids to cope with in the future. I try to focus on the bright side of REITs and perferred shares and feel more than a little exposed when doomers are ranting but god help me I cannot seem to put the genie back in the bottle, get re-hypnotised and go back to sleep.

#264 Mr Buyer on 01.29.12 at 1:22 am

234 VICTORIA TEA PARTY…”You must remember that bond markets rule the world, not governments. If the bond market likes you, which means that if you are fiscally prudent, you live.”
……………………………………..
I think a great deal of the world’s elite are just as hyptnotised as the great unwashed. If one does not get murdered by a starving vagrant one lives. I suspect a great number of the survival of the fittest types have not ever been in a fist fight.

#265 Arshes on 01.29.12 at 1:46 am

#228 Dorothy

I think that fact that you have been saving since your twenties is fab, but did you invest properly, did you really save enough? Savings is just one part, my parents saved but didnt really invest well, they did less than ok. They thought, like many who are frugal and good savers, they thought that in itseld was good enough.

10 years is significant amount of time, if you should be making changes to ensure your retirement is ok, you should start now. Didnt you make the sacrifice to move from Vancouver to some other city so you could afford a home? And a lower of cost living? And went through many years of less than ideal living situation? Yet, making sacrifices for retirement doesnt take the same dedication?

If you know your gonna be SOL, if you lose your job, if there are gonna be changes in OAS, shouldn’t you be planning now?

Aren’t your kids out of your home? Don’t you have less expenses now? Can’t you take a part time job? Etc….

#266 Let's Hit the Links! Week #5 | Betty Kincaid on 01.30.12 at 12:16 am

[…] Garth Turner  at the Greater Fool Blog (via Financial Uproar) sounds like he’s auditioning for a job at Control Your Cash: Most people – the vast majority – will continue down their path to financial ruin. Utterly lacking in self-control, they’ll spend unearned money chasing stuff they want, but do not need. There’s no clear plan to repay any of this borrowing. Just a vague notion things will turn out, and an ingrained sense of entitlement. […]