The final thread

John Chin phoned me. He’s the get-rich-now guy from Orlando who tours Canadian hotel ballrooms telling people here how to snap up US properties. You may recall I called him a shill and forbade you to attend his events.

“I was very disappointed by that,” he said, unnecessarily. “I read what you wrote and I definitely think we need to talk. Like you, I’m just trying to educate people.” His seminar is called, “How to Succeed in Today’s Best US Emerging Markets” (the capitalization is crucial), and portrays American cities as “high-performing emerging markets”, like they’re Mumbai or Chonquing. In any case I agreed to meet Chin, and will give you an unvarnished report.

This was mildly interesting because brazen, opinionated, cheesy guys fascinate me (I have no idea why), and since lots of people are thinking the US market has hit bottom. This happens as two key things occur: more profits and jobs, and insane interest rates. In case you spend time self-flagellating on doomer web sites and haven’t heard the news, 68% of major public companies in the US (and 55% in Canada) beat expectations for first-quarter earnings.

This is big. It’s one reason 2008’s not coming back. Why gold shed 16% and silver crashed 40%. Why stock market corrections lately last about three days. And why jobs and confidence have been inching higher monthly. In 74 of 146 urban markets, housing prices have actually increased. Yeah, things still suck for the 28% of households whose mortgages are worth more than their homes and the six million more expected to join them over the coming sixty months.

But, a bottom is forming. No wonder. Mortgage rates are at all-time lows, with the average at 3.83%.  That’s for a fixed loan, the cost of which will remain constant for 30 years – no renewals, ever – and the interest is deductible from taxable income. The combination of low prices (US homes cost about 85% less than ones here) and cheap money has made real estate the most affordable in recorded American history.

To get to this point has taken numbing events. The worst financial crisis in 80 years. The collapse of merchant banks. Twenty million families’ equity wiped out. More foreclosures than during the Great Depression. A trillion dollars in bailout money. People unemployed and on food stamps who thought they were middle-class, immune from failure. Almost 19,000,000 vacant homes – enough to house all Canadians. In total, $6 trillion in real estate value was destroyed, leaving mortgages towering over the homes they were placed on.

This was a financial cleansing of epic proportion. A national enema, an experience so profound that six years after it began, real estate still terrifies people. And while the worst of the price crash may be over, it’s unlikely 2005 levels will return until the Boomers’ children’s children start buying.

In contrast, real estate here has soared past the ability of people to buy it without dropping into record debt. The average house price is almost double that to the south, in a country with an economy smaller than California’s. Individually we now owe more than Americans. We have greater interest rate risk (no 30-year loans). Taxes are higher. No mortgage deductibility. The nation is now as reliant on housing as Florida was. Seven in ten of us have a house, yet no pension. Toronto has more condos going up than every US city combined. And your mother-in-law thinks there’s absolutely nothing wrong. Except you read too many stupid blogs.

Now John Chin wants you to borrow against the equity in your inflated Canadian house and buy a few US properties, dirt cheap. He may be right about the opportunity there, but his strategy  would mean ruin here.

So let’s go to Dubai, where Matt risks certain death by tuning in to this heathen site nightly.

“Hi Garth: Great blog and I can’t wait to read the book.

“The mentality of people is fascinating to watch! I worked as a trader (stocks, derivatives etc) for several years and I saw the same thing there that we are seeing in the housing markets. The first is the belief that their investment is different. The second is the emotion that lies behind the investment that blinds them from analyzing from a pure, unbiased point of view. The final thread is the greed that drives them to hold on to a poor investment falsely believing it will continue to rise or, more common, waiting for the ‘top’ of the market – you know, because unless you wring every penny out of it you feel cheated.

“I watched more people hold onto poor stocks as they tanked, all believing they would come back with comments like dollar cost averaging is the way to (as they bought more of the same as it continued downward). People just don’t learn. The difference in the scenarios you are writing about is that these people are HIGHLY leveraged. In fact, you could not leverage yourself that highly in almost any other type of investment!!!!!! More to the point the regulators would never allow it, especially from investors that would be considered unknowledgeable. So — we head to the abyss.”

Of course, Matt has a question. He bought a one-bedroom condo in downtown Toronto five years ago ($230,000), has it rented to cover costs, and it’s now worth more ($370,000).

“Since we don’t live in the property I have been attempting to calculate whether or not we should sell now and invest our equity. As non-residents we would have to pay tax on the capital gain, but with the expectation that prices have started and will continue to decline I am wondering if that might make the most financial sense?? Any thought?”

Yup. Sell the sucker. Instead, for the same dough, get something like this. Post-abyss. Right, Chin buddy?


#1 DoomedinSask on 05.10.12 at 8:49 pm


#2 fromcampbellville on 05.10.12 at 9:06 pm

You are so predictable. Everytime the corrupt comex takes gold down you pipe up and shoot down gold and silver. The term “beat expectations” is for the uneducated fool who swallows main stream media hype and you know it. Grow a pair and start to educate people on the main stream media bullcrap and maybe you won’t have to eat as much crow when you are proven wrong in a couple of months from now.

Going to share your crow? How gracious. — Garth

#3 50% correction predictor on 05.10.12 at 9:09 pm

Derivatives. Storm is coming!

JPMorgan Hit by ‘Egregious’ Trading Loss of $2 Billion

#4 mad vancouver on 05.10.12 at 9:09 pm

One of the last affordable neighborhood in Vancouver. Lost of interest, nevertheless not much pressure on prices:
Original Price $839,000
Sale Price $750,000

original price: $799 000
sold at $770 000

original: $698,000
Sale Price $646,500

Original Price $702,000
Sale Price $635,000

Original Price $702,000
sold: $646,500

#5 Kkkkk on 05.10.12 at 9:10 pm


#6 Kkkkk on 05.10.12 at 9:10 pm


#7 Mr Buyer on 05.10.12 at 9:16 pm

Did the conversion from Canadian Dollars to Japanese yen. It was more than a little disappointing. Great the other way of course. Money earned in Japanese yen yields a nice little bonus. Of course when I returned to Canada for some time a few years ago it was almost exactly the opposite (a little less than 120 yen per Can $ then, now a little less than 80 yen per Can $). Why am I always dealing with nonsense like this? The inordinate amount of nonsense my fellow Canadians are dealing with in the form of this RE BUBBLE assures me that I am not the only one spending a good deal of time wading through nonsense.

#8 X on 05.10.12 at 9:23 pm

So the gov’t plays with mortgage amortization periods, and downpayment levels, causing a swelling housing market. However they don’t want to look like the bad guys and stop the party so they are trying to off load the responsibility to others.

Too bad they didn’t keep their hands out of the pot and just leave things as they were.

Many years down the road the gov’t will once again have to ‘fix’ retirement rules somehow or do something, to save all of the poor retirees they have created who worked their entire lives to pay off their mortgage on the inflated home they purchased. As they had no money left over to substantially save for their retirement, after being fooled into thinking a home was an investment.

#9 Smoking Man on 05.10.12 at 9:24 pm

Girls and Garnet

Some one commented on my post, why girls do so much better at school than boys.

I see it, and I certainly don’t want to start a gender war but here is the Truth.

Back in the cave man days, the men had to hunt and bring home food. The woman nursing small kids stayed in the cave and organized shit. As they accumulation carcass, bones and other stuff they probably started some form of written record keeping to know where everything was.

Now the men never wrote stuff down, but they had to be visual, remember land marks, we took a right at the tree by the lake, and a left by the buffalo shit.

Men evolved with visual stimulus so they could find their way back to the cave, woman evolved by making notes of where they had stuff and how to cook the best buffalo.

Today you don’t need to look to far for evidence that the characteristics still hold true today.

Men Visual, Woman Reading Notes.

A group of 20 year old men watching a porno can easily in 20 seconds become a great coat racks. Most woman want to puke.

Yet the best selling book is basically a porno with words, “50 shades of Grey”. I read a bit of it Boring, wifey before the first chapter was chasing me around the house for a bit of bald old Man. Unreal :)

School and the architects who designed it needed to find a unit of measure to present the achievement to the Machine,then have the teachers heads patted like the good dogs they are.

You can’t measure a mans visual genius very well, yet you can measure if a dog does a good job memorizing and regurgitating. The feminized man has a degree.

Woman are naturals at this, been doing it since the cave, they made recipes for cooking dinosaur parts. That’s why they excel at school.

And the Machine got smart about 30 years ago.It figured out how to get two labour credits for the price of one, The bounce was they got rid of mom so they can now complete own her kids mind.

They taught the woman that staying home and nurturing and educating children was for losses. They taught them that we are going to split the wage required to pay the bills into two, hence more sweat for the same loot, and tricked them the beilive that a carrier is way cooler than mother hood.

How many Carrier woman long to be home with their beautiful baby’s but will never admit it.

The educational industrial complex. Nice

As far as Gannet? too shit faced to remember what I was thinking when I started.

#10 Mr Buyer on 05.10.12 at 9:29 pm

I am seriously considering setting down roots here for the long term. Building a new house in short the whole nine yards. I have taken many steep chances in the past but believe it or not, crumbling nuclear reactors and all, the state of affairs in Canada are even more forbidding at this time. That is what it looks like from the outside looking in. It is more than a little challenging to wind up divorced here in Japan but unemployment will do it 99% of the time. Contrary to what people assert on the blog from time to time the so called zombie economy of Japan complete with horrific tsunami’s and nuclear meltdowns is shaping up to be somewhat better that the land of lakes, rivers and beautiful summers swimming in the rapids that is my country which is Canada. What the hell happened? When I left nice houses in Barhaven were 140k and we were running surpluses. Come on, this is stupid. I live scant kilometers away from 14 nuclear power stations on an active fault line and all things considered it is almost a toss up between Canada and Japan. I think Canadians have been swimming in a pot of water that has been heating up in a manner that has brought it to a near boil without them noticing it.

#11 Stupesing in Cabbagetown on 05.10.12 at 9:30 pm

Another excellent post Garth. I look forward to reading your unvarnished report.

Lots of stories in the papers today denying the existence of a housing bubble. A last ditch effort to reassure the unwashed masses and keep the debt flowing?

In reference to today’s picture, my friend’s next door neighbour vacuums his lawn with a noisy shop vac. He has driven us inside from our back deck breakfasts on many a summer’s morn to escape the deafening roar. Though his townhouse yard is no more than 50 square feet, he somehow keeps up this task for over an hour. It is tempting to walk over and unplug the damn thing, but that might cause conflict between my friend and his OCD neighbour so I don’t.

#12 Reserve Ratio on 05.10.12 at 9:35 pm

You’re right, it’s all rainbows and unicorns. Let me guess, you’re invested in stocks waiting for housing to come down. 2008 won’t happen again, Europe is contained, Canadian banks are well capitalized and immune from any contagion. Those lazy PIIGS are to blame, there was no criminal behaviour by the banks and austerity will work out just fine. There’s no underlying problem with growth as debt, this was just part of the normal buisiness cycle (albeit a large correction). MF Global didn’t happen and large corporations are our friends, they provide jobs after all.

Sleep well Garth. I have no idea where you came up with the absurdly low one trillion in bailouts though? Oh well it won’t matter peace and love is in the air, or is that Fukushima I smell?

#13 Smoking Man on 05.10.12 at 9:41 pm

This was mildly interesting because brazen, opinionated, cheesy guys fascinate me (I have no idea why),


Mirror Garth

#14 condopoor on 05.10.12 at 9:51 pm

just tell us what to do.

#15 Mr Buyer on 05.10.12 at 9:53 pm

Just to further underline the long term consequences of a real estate bubble, in my neighborhood the land was going for around $761 Canadian per square meter around 2005, we just priced a vacant lot (it is cheaper if a house sits on the land, houses depreciate like cars here) behind our house and it goes for $741 per square meter. Still falling like 2 decades after the BUBBLE burst and there are houses being built around here but I am sure it is DIFFERENT in Canada.

#16 Gandalf on 05.10.12 at 9:57 pm

There’s a well written paper on the causes of the U.S. housing implosion and it boils down to one reason only.

An entrenched belief that housing prices will continue to go up, indefinitely, by all parties involved: borrower, lender, government, etc.

That’s it, nothing else you need to know! Until that belief changes, prices will remain elevated, but once that belief is lost, watch out below!

A good read, check it out:

Oh, and #2 from campbellville, you sound like a gold bug who doesn’t like to be talked down to?

FYI, the price of gold just broke a four year uptrend on the charts! Good luck buddy!

#17 Not on the boat. on 05.10.12 at 9:59 pm

@ #13 lol. Good call.

#18 Van guy on 05.10.12 at 10:01 pm

Great post again Mr T. The Rebgv has recorded 7 straight days now of 300+ listings. This fall is the real fall. I bet my two balls that this is the beginning of the end.

What’s your thoughts on gold? It’s been hovering around 1600 for a little while now.

#19 Inglorious Investor on 05.10.12 at 10:02 pm

Mania: Part 2

Yesterday I wrote about a house in my neighbourhood that hit the market on Sunday. It listed for $399,900.

You may recall: Open house. Barbarian hordes with more bank credit than brains. Prospective buyers who could easily have sobriquets like Nicky The Nose and Tony Baggadonuts. A listing agent who makes Steve Jobs look affectionate. And a multitude of multiple offers. Oh, and the old lady certainly did NOT die IN the house.

Now, a list of ‘comparables’ supplied by my agent suggested that the property might sell for $480,000 at the upper end. Good for them. Ask low. Sell high.

Keeping in mind that ten years ago that same property would have been expensive at $275,000, I was not willing to pony up the likely selling price. And the seller held all the cards. My agent and I decided to pass.

So… that property that went on the market Sunday at a list price of $399,900 sold last night for a measly $531,600. About 33% above sanity.

I feel like the gentleman caller who shows up with a small bunch of daisies, while the other wannabes come loaded with 24 long-stems bursting from each fist, and a box of bonbons to boot.

Sigh… I hope stocks do well.

#20 Country Girl on 05.10.12 at 10:04 pm

(US homes cost about 85% more than ones here)

Is this a typo?

Yeah, fixed. — Garth

#21 Bottoms_Up on 05.10.12 at 10:18 pm

#4 mad vancouver on 05.10.12 at 9:09 pm
$650,000 and $770,000 are not affordable houses. At least not from my middle income perspective.

And Matt, you say your condo is worth more than $370,000…by selling you are in competition with thousands of other units…I would be more inclined to think you might get $350,000, or $330,000, or $310,000…unless of course your condo ‘is different’ and offers something that those thousands of condos priced in that range don’t?

#22 Can it be? on 05.10.12 at 10:20 pm

Bumped into a friend. Tells me they significantly downsized their home, with a combined higher six figure income. Less responsibilities, less headaches, with a few kids sharing rooms. One smart person… This is rare. Most people want more and this person figured it out. I admit… I dream about the dream house, when in reality the home I have is a dream for most people. This year I am trying to just be happy with what I have and be greatful for the low property taxes etc that I pay. With the money we save not having McMansion expenses we bought nice cars. I know some people will argue that is stupid… Wasting money on toys but you gotta have fun. there are good deals to be had in the automotive world these days.
To DA… This working mama is ok to leave my kids for a few hours each day and work and actually have a career. Sure there are certain days I miss the kids, but then I make up for it when I get home. In my opinion I feel like I have a fabulous life… And even if I was independently wealthy tomorrow… I would continue to work, maybe do more free work… But I think the equal parenting that my husband and I share has made fr a great combination so far. I enjoy my toys just like the boys do, and I do get a smile on my face when I get to drive off in my nice car a few days a week to work :)

#23 Bottoms_Up on 05.10.12 at 10:21 pm

#19 Inglorious Investor on 05.10.12 at 10:02 pm
Sick, just sick. Who is lending $550,000 to people stupid enough to buy a house that is worth $300,000?

#24 golem on 05.10.12 at 10:21 pm

That’s all I can take. I am going to buy a big shack Kenworth and just keep moving until housing prices fall.

#25 TaxHaven on 05.10.12 at 10:34 pm

Some “recovery”…

Why have mom’n’pop investors withdrawn money from equity mutual funds for something like 23 months in a row?

Why is there still a 10 1/2 month housing inventory?

Why are a record number on Food Stamps?

Why is revolving credit uptake still increasing?

Why is the workforce participation rate at 30-year lows?

Why is U-6 unemployment over 15%?

Why is the Federal budget deficit at record levels – and rising?

Why does it take something around $7 of stimulus to supply $1 worth of (ersatz) growth?

Why are savings rates negligible? And food & energy inflation rumbling?

And all this while (artificial) interest rates are near-zero…

Some recovery. One only a Keynesian could like.

This smacks of desperation. The governments think this is “just another recession”. They are reacting in the way they have reacted in the past – with liquidity, stimulus. But this is a solvency, a balance-sheet, issue.

They are DESPERATE, absolutely desperate, to get economic growth, real or not, to grow their way out of this. But at peak credit, flooded with money, how can there be growth? And that means more DEBT.

The only ones buying houses now are speckers and flippers. Or, as with most other investments these days, they will hold their new houses for eons and PERHAPS if lucky eke out 2 or 3%p.a. after a decade or so…

#26 Maxamillion on 05.10.12 at 10:37 pm

Be happy, there has to be more to this life than pressed corn flakes. This can’t be the reason we are here or is it?

#27 Basil Fawlty on 05.10.12 at 10:41 pm

Is it not the case that US banks are holding 10M US homes in their inventory to avoid crashing the housing market further?
Is it not the case that Americans are running out of unemployment benefits and many have given up looking for work, which takes them off the unemployment statistics and hence magically decreases those considered unemployed?
It took trillions to paper over 2008 and it will take trillions more to just keep the US economy on life support.

#28 Devore on 05.10.12 at 10:52 pm


Another quality product from a highly paid professional, as we have come to expect. Scary thing is the listing description was updated, but the unfortunate Freudian slip remains.

#29 expat_engineer on 05.10.12 at 10:56 pm

Canadian watchdog

See my post on yesterdays article.
#172 expat_engineer

#30 Narrowgate on 05.10.12 at 11:18 pm

Every day on the Toronto MLS, prices seem to go up by tens of thousands of dollars. Over last year, prices have gone up by at least one hundred thousand. The greed out there is rabid, sellers foaming at the mouth with greed. This market is so toxic. And the banks, handing out mortgages to people who cannot afford these prices, even with two people working good jobs. I really don’t get it. Strange times.

#31 John on 05.10.12 at 11:20 pm

Condopoor wrote:

“just tell us what to do.”

Maybe the story isn’t as unvarnished as it appears. Fumes certainly do impair critical thinking.

#32 Mr Gadget on 05.10.12 at 11:22 pm

#49 Tax Haven has hit the nail on the head. Reports in the media abound about how the US economy is “in recovery”. It is true that corporate profits are up but corporate HIRING is NOT. Downsizing continues. The reality on the ground is a bit different that what is spouted in the various media. Media has an agenda and that agenda is, IMHO, to get Obama re-elected. To that end, the media take is that “Happy Days Are Here Again”. I’m not a gloom-and-doomer but the rosy scenario is just not accurate. Unemployment is higher than reported, credit is harder to get than advertised, job creation is low and mostly consists of lower paying positions than those that were lost. The claim is made that inflation is low but there is a real sense in the communities that this is falsely low do to misleading methods of calculation. (You can prove ANYTHING if you jigger the numbers—and that is what’s being done.)

Is it the end of the world. IMHO, NO. But fortune favors the prepared and the people who live within their means.

People that I deal with just don’t feel that good about the situation in the US and that is reflected in repeated polls which show that 60%+ feel the country is moving in the wrong direction. In my little neck of Middle America, houses are coming on the market every day that are not selling except at fire-sale prices. Jobs are hard to come by and even those who have them are have a sense that they are still shaky.

Garth is, I believe, fundamentally right in his premises. The US is further along in the curve than Canada. You guys have a LONG way to fall before it’s stablized. It was nasty here for years and I doubt that it’s different there.

#33 Ronaldo on 05.10.12 at 11:26 pm

#27 Basil Fawlty – check this out re: unemployment.

#34 Al on 05.10.12 at 11:35 pm

After HAM and HIM (Hot Iranian Money), here comes HFM ( Hot French Money) !

#35 Mark on 05.10.12 at 11:43 pm

Garth, there is no way that US economy is doing anything but tanking in the last half of this year or 2013 at the latest. Fundamentally nothing has changed from 2008, except the government has racked up trillions more in debt.

The fed would not be keeping interest rates at zero for two more years if the economy were actually improving.

Gold and silver are down now, and Canadian house prices are still high. Those imbalances will not go on forever.

#36 Know your enemy on 05.10.12 at 11:46 pm

Ah, the joy of neoliberal/trickle-down economic policies.

#37 WaterlooResident on 05.10.12 at 11:46 pm

I sure do hope you are correct about stocks soon going to be going up, because with them falling I’m losing a lot of money.

#38 Soylent Green is People on 05.10.12 at 11:53 pm

Re ok to leave my kids for a few hours each day and work and actually have a career.

What kind of career takes only 3 hours per day 3 days a week????????


Tell me pls


#39 Canadian Watchdog on 05.11.12 at 12:06 am

#29 expat_engineer

The possibility of hyper-inflation is highly unlikely because i) QE has failed as a transmission vehicle to boost jobs and wages ii) with today’s social media and accessible information, the general public will never allow it to get that far. It’s just not practically possible.

What is more likely to occur within the next decade (or at any time) is a global accord amongst core nations that would require debt restructuring, revaluations of currencies, nationalizing insolvent banks, etc.; or the other scenario, war.

In either event, you’ll want to own some gold.

#40 Nostradamus Le Mad Vlad on 05.11.12 at 12:14 am

“And your mother-in-law thinks there’s absolutely nothing wrong.” — My MIL has been moving around in the next worlds for years. She doesn’t care what happens here.

“Except you read too many stupid blogs.” — What else is there to do?!

“So — we head to the abyss.” — Is this where John Chin lives?

“This was mildly interesting because brazen, opinionated, cheesy guys fascinate me (I have no idea why) . . .” — That’s why bloggers post here! BTW, what’s with the babe vacuuming the lawn or mowing the snow?

“But, a bottom is forming.” — Is this when a mass of boomers hit retirement age, only to find out there’s no gas left in the tank? That will be a curious time, to see how it all plays out.
Employment is picking up; China and Columbia Boosting oil ties, and Russia increasing ties with Latin and SAmerica; QE3 coming with wierd charts; Inheriting a cool million; Nowhere to Grow in the land Down Under; Student Debt The US govt is profiting; JPM’s Whale Derivatives; Retirement What is needed beyond basics; Irish Miracle? Wants vs, Needs A roof over one’s head and food are needs, A home is not an investment; Awful Recession for EZone; Somebody buy me! Are Public Pensions too generous? Bad Times for bookies; US RE First price rise for two years.

Record Number of women dropping out of workforce; Spain’s Bank Losses, and Germany’s Merkel; BoE Increasing inflation; Americans Pessimistic Goes against what Garth says; Austerity Former IMF analyst says US must embrace austerity (friend of Soros’?); Too Late for Germany to save the Euro? Cable TV shows Tanking like everything else; US$954,000Which is the better buy — a rare Ferrari or a home?
New evidence Has Jeff Rense ( been silenced? Human Consciousness is affected by solar activity, and 1:57 clip Space – solar weather plus 6:50 clip Will the sun’s poles shift on May 15-17? Oldest known Mayan calendar doesn’t end in 2012; Migraines Tea Tree Oil — a few drops — seems to be a cure; Speedfreaks New Kawasaki; India – China – Philippines I and C both have nukes, the US supplies the P; Smoking Man — This is right up your alley; IV Drips Stressful for Chinese students; Pentagon cuts achieved by cutting food stamps and the like; US Navy Missile tested (aimed for use against Russia); Eco-terrorists and govts. stealing resources; FEMA Coffins Moving to Chicago where the G-8 meets soon; River deltas pictured from above.

#41 EJ on 05.11.12 at 12:15 am

Nothing has been fixed as far as the economy goes.

*Governments and people still spending beyond their means.
*Banks still lying, committing fraud, ripping off the public
*No serious prosecutions for any of the crimes that caused the bubbles and subsequent crashes
*SEC still looking the other way on so many suspicious trades
*Europe still falling apart (see points 1 & 2)
*Responsible parties still not being forced to take the losses they should take; moral hazard continues
*Felonious inflationary monetary policies continue, destroying savings and those on fixed incomes

#42 Smoking Mans evil twin on 05.11.12 at 12:15 am…my Bro..SM…has switched to imported brewskies for breakfast..IQ…rises ..on par..with order of magnitude quasi Metric System….or dogs years….whichever gets to the hydrant….. FFFFiiiirrsSSTTT.

#43 ShockednAwed on 05.11.12 at 12:27 am

@ #33 narrowgate.
the banks are lending to these people because they don’t give a crap if they can pay or not. CMHC (you and me) are on the hook. it is fraudulent and it seems if the lenders are more aggressive as the balloon gets stretched tighter.

#44 ShockednAwed on 05.11.12 at 12:29 am

I’m tired of it. I’m a saver and getting beat up by the risk takers who willl be walking away from their mortgages that my tax dollars will have to pay for

#45 k on 05.11.12 at 12:30 am

doomedensask #1
you come across as feckless and stupid ! But you seem proud of being #1 in your mind !

#46 Mixed Bag on 05.11.12 at 12:45 am

#9 Smoking Man on 05.10.12 at 9:24 pm

That’s one theory. I was thinking, after millenia of being under man’s thumb, women have practically been bred to be subservient, hence have an easier time sitting still in class to pay attention, to follow the rules, at least, to stay out of trouble. Historically, if she were to stray from “her place”, she was shunned, hurt, or worse, unfortunately.

I’ll agree with the end of your post, how many people must secretly wish to be home with their kids. Or openly. Does it matter whether it’s mom or dad? I know I’d like to stay home if our finances allowed.

In the end, who’s going to be with you by your deathbed? Your career? Unless it was something truly satisfying like saving lives, helping people, thoughts that would comfort you …. would you be comforted by your title Project Manager, CIO, or your accomplishments as a Java developer, or a Consultant? If you put your kids in daycare, why shouldn’t they put you in eldercare (nursing home)?

But enough of that rambling on a financial blog…. yet there are financial aspects to all that too. (Thanks Garth for indulging this discussion with Batman Head).

#47 Freedom First on 05.11.12 at 12:48 am

Great post Garth!
Chin?…..I think that is the name? Anyways, his thinking that Canadians would be wise to leverage their overpriced RE for an American property reminds me of a Warren Buffett quote: “Leverage is fun on the way up, but on the way down, not so much”.
Garth, I like the way you wrote about Chin, then met with him, and then wrote about him again.:) ….takes steel gonads…….methinks those Amazons are really good for you:) ……..

#48 Kilby on 05.11.12 at 12:50 am

50% correction predictor on 05.10.12 at 9:09 pm
Derivatives. Storm is coming!

JPMorgan Hit by ‘Egregious’ Trading Loss of $2 Billion

Hang Seng down 237.75, worst in 8 months, Friday should be interesting………

#49 Wes coast on 05.11.12 at 12:53 am

#9 Smoking Man. That post was a home run! Stay at home mom’s are the most undervalued commodity the human race has ever known. Any husband that has such a wife better respect her every minute of the day.

#50 futureexpatriate on 05.11.12 at 12:55 am

Vacuum cleaners work really well on astroturf, which is, after all, outdoor carpet.

#51 Observor on 05.11.12 at 12:56 am

Smoking Man is on to something when he looks at the basic differences between men and women due to evolution.

Men have wandering eyes more so than women.

Here is why:

From time immemorial when a woman had a baby she knew with 100% certainty it was hers.

Men could not say the same. Might be his, might be child of the alpha male of the group.

Also she could have one child per year, alpha male could have as many as he could find women to impregnate. More orinary male had to beg for his chance to reproduce and needed to spread his chances around if possible.

Men were able to and were and are biologically programmed to spread their seed around as much as possible.

Every healthy woman could autiomatically have the chance to reproduce (willing men never a problem).

Men were in no way guranteed the chance to reproduce. Societal norms today of one woman per man have largely but not completely solved the problem, although it was never a problem for the alpha male

These biolgical facts explain much including male insecurity (except the rare apha male like Garth need not be insecure)

#52 Yellow Helicopter on 05.11.12 at 12:57 am

Garth, when you write that ‘7 in 10 Canadians don’t have pensions,’ are you also referring to RRSPs, etc, or only work-related pensions? It’s a sobering stat, so wanted to clarify. Thanks.

Corporate pensions. — Garth

#53 dino on 05.11.12 at 1:27 am

what a disaster will these house prices in toronto ever stop rising????

#54 puzzled on 05.11.12 at 1:36 am

Why is the future Queen vacuuming the garden?

#55 NoName on 05.11.12 at 1:37 am

INvestors favor obama over romney. Interesting read.

#56 Charles Ponzi on 05.11.12 at 3:03 am

Global debt crisis continues. I don’t see how kicking the can down the road has resolved the problem of too much debt. An old man on viagra is still an old man–although a pig with lipstick probably couldn’t care less. I wouldn’t get too excited by those “green shoots” in America.

My thoughts exactly #12 Reserve Ratio.

#57 Tony on 05.11.12 at 3:59 am!243FCFBE-0A8D-4168-9EA2-182E5850EC1B

#58 Tony on 05.11.12 at 4:07 am

Re: #3 50% correction predictor on 05.10.12 at 9:09 pm

I’m looking for about an 80 percent correction if you can call it a correction.

#59 Istronglydislikefurst on 05.11.12 at 4:49 am

I really don’t know why Garth allows that Furst guy to keep posting here. It adds no value to the blog, annoys the other readers and is completely irrelevant. What gives?

#60 gmc on 05.11.12 at 5:15 am

DELETED. Do not copy and paste 1,000-word articles here again. Link or get lost. — Garth

#61 gmc on 05.11.12 at 5:21 am

OOPs sorry for the spelling !!! too early in the morn, he a man that has been right for the last ten years that i have followed

Jim Sinclair’s Commentary

One quadrillion, one hundred and forty-four trillion dollars of OTC derivatives are still out there. Don’t believe the 700 trillion advertised by the BIS. They got that figure by changing the computer model that was at the figure I and the BIS gave you before the overhaul.

Do you recall that the Lords of Derivatives, the International Swaps and Derivatives Association, are meeting soon on the subject of interest sensitive OTC derivatives? There has to be more than Morgan with their assess in another OTC derivative sling.

JPMorgan Chase Says CIO Unit Suffered ‘Significant’ Loss

JPMorgan Chase & Co. (JPM) said it lost about $2 billion tied to synthetic credit securities after positions taken by its chief investment office were riskier than expected.

“This portfolio has proven to be riskier, more volatile and less effective as an economic hedge than the firm previously believed,” the New York-based company said today in a quarterly securities filing. JPMorgan declined 5.5 percent to $38.50 in extended trading at 4:51 p.m. in New York.


The U.S. has an unsustainable and dangerous fiscal trajectory: Rubin – Freeland File

Former Treasury Secretary Robert Rubin states that the country’s deficit will lead to some form of major duress like high inflation, a long period of very slow economic growth and, most likely, a serious financial and economic crisis. (May 10, 2012)

#62 Aussie Roy on 05.11.12 at 6:02 am

Aussie Headlines

Question from yesterdays comments.

So what has driven house prices up so much?.

It’s the DEBT stupid.

Based on analysis of advanced economies over the past three decades, housing busts preceded by larger run-ups in household debt tend to be more severe and protracted.

This is one finding presented in the International Monetary Fund, World Economic Outlook April 2012, titled Growth Resuming, Dangers Remain.

There is NO bubble in Australia !

Kohler told viewers around the country, “disturbingly, according to this chart it’s the same decline from peak at the same point of the big Japanese and American housing crashes of the early 1990′s in Japan, and 2006 to now, in the US.”

In a move that must go down as rather bold for the nation and downright upsetting for Melbourne (Australias HAM capital), last night’s Budget included the following, from PWC:

Removal of CGT discount for non-residents

The Government will remove the 50 per cent capital gains tax (CGT) discount for non-residents on capital gains accrued after 7:30pm (AEST) 8 May 2012.

#63 House on 05.11.12 at 6:36 am

One Stat you didn’t mention – 21% unemployment in the US (source John Williams ShadowStats) and what happpens in 2013 when the government cuts spending.

Don’t bet against America. You will lose. — Garth

#64 House on 05.11.12 at 6:53 am

Toyota passed GM to become the top seller of vehicles in the first quarter. Does this mean that Japan is in recovery? I think not.

Investors don’t buy Japan. They buy Toyota. To them, it’s recovery. — Garth

#65 John on 05.11.12 at 7:06 am

“Could it be?” wrote:

“To DA… This working mama is ok to leave my kids for a few hours each day and work and actually have a career. Sure there are certain days I miss the kids, but then I make up for it when I get home. In my opinion I feel like I have a fabulous life… And even if I was independently wealthy tomorrow… I would continue to work, maybe do more free work… But I think the equal parenting that my husband and I share has made fr a great combination so far. I enjoy my toys just like the boys do, and I do get a smile on my face when I get to drive off in my nice car a few days a week to work :)”

I was unable to tell if this was a man or a woman until I saw “this working mama”. Yep. That’s what feminine is in Canada. It’s pathological…a root cause of the debt problem. A muzzled society absolutely broken at all levels of basic, human dignity.

But hey…there’s money and “smart” decisions being made. Yes. Built on fantasy de-humanized social networks ( pure isolation), and Jamie Dimon’s world of derivatives. Real stable man.

You’re goddamn right it’s the best of all worlds…because unwitting kids are paying for it all. They are the emotional salve for the effect of living de-gendered and insane. They are being abandoned.

And it’s the men
( collectively) who created this vaccum. They don’t even notice what’s happening. A completely addicted
( delusional) society. It’s enough to make your head spin. Hard to believe. But it’s a reality.

Break out the muzzle, someone’s callin’ it like it is.

#66 maxx on 05.11.12 at 7:10 am

#3 50% correction predictor on 05.10.12 at 9:09 pm

Derivatives. Storm is coming!
“JPMorgan Hit by ‘Egregious’ Trading Loss of $2 Billion ”

Not surprised at all…yet another fiscal blowup in a never-ending series. Wealth managed by egos and hubris.
These fools and others like them get backstopped by hard-earned tax money because they are so-called “too big to fail” (one of the world’s biggest BS campaigns), austerity gets shoved down people’s throats and these scumbags run off to vacation at their second or third homes…in highly coveted locations.
Amazing how legitimacy is created out of racy lexicons, cuff links and suspenders.
The taxpayer base is the sector that is too big to fail! IT should have been protected by government, NOT the criminally overpaid twits ripping people off with account churning, fees and financial “product” scams.
Now, when people are trying to cope with government cut-cut-cut-cut-cutbacks and tax increases, bankster CEO’s join fawning lunch crowds to pontificate on how expensive and unsustainable social programs are……smug to the eyeballs because they and generations of their families after them will never want for anything. Rest assured, they won’t be the ones waiting months and perhaps years for critical medical treatment. Social programs ARE fully sustainable (and then some) when taxes end up in the correct pot!!
People generally don’t take their money seriously enough…..a lot of power gets left on the table every single day and the banksters lap it up.
Those who blow their wealth on debt interest only contribute to bankster and realtard power.

#67 bigrider on 05.11.12 at 7:28 am

I am certainly no ‘Bug” on any asset class, be it gold/silver, U.S RE, dividend equities etc however,

I would of thought with the extreme thrashing gold/silver equities have taken ,coupled with historically low valuations and increasing profitability of these companies,you would be recommending adding to the sector Garth?

I would have asked same question, if it were oil stocks,dividend payers, banks etc. if they were exhibiting same characteristics

No. — Garth

#68 maxx on 05.11.12 at 7:40 am

#9 Smoking Man on 05.10.12 at 9:24 pm

One of your best, Smoke.

#69 bigrider on 05.11.12 at 7:41 am

Just throwing a question/comment out there, I wonder if Eric Sprott is still a billionaire after recent drubbing on gold/silver bullion/securities.

He did say 80% of his net worth was in the category.

#70 Ralph Cramdown on 05.11.12 at 7:52 am

The possibility of hyper-inflation is highly unlikely because i) QE has failed as a transmission vehicle to boost jobs and wages ii) with today’s social media and accessible information, the general public will never allow it to get that far.

The economists whose models have worked have said that the easing didn’t go far enough, but that things would have been worse without it. The US isn’t back to full employment, but it doesn’t have 10MM desparate unemployed riding freight trains around the country, mass mobs at soup kitchens, a complete collapse of consumer credit etc, either.

And how, exactly, does social media prevent hyperinflation? Everybody gets the word and divests of their dollars just before the bottom falls out? I thought it was all about “OMG!! [starlet’s] bottom just fell out LOL!!”

I’m tired of it. I’m a saver and getting beat up by the risk takers […]

So TAKE SOME RISK. Central banks have driven risk-free returns down to zero. They’re trying to send you a message. True, most morons are ploughing borrowed money into inflated asset classes, but you don’t have to be one of them. Shoot for 5 or 6% return, and do your homework.

#71 Steve Thompson on 05.11.12 at 7:55 am

Another gem from the NP:

This much media coverage of an issue generally has a tendency to become a self-fulfilling prophesy.

#72 maxx on 05.11.12 at 8:01 am

#25 TaxHaven on 05.10.12 at 10:34 pm

Absolutely agree.
The only way government will ever make inroads to economic recovery is if they put money back into the correct hands. Those hands belong to people who know the value of money, not those who borrow for RE speculation or to live for today. Profit is shunted far too much towards corporations.
Debtors do not and never will underpin a fiscally healthy society. Increasing interest rates will not hurt business, not by a long shot….certainly no more than it’s hurting the average taxpayer. Even if interest rates stayed low forever, business would still continue it’s inexorable drive to eliminate people from it’s payrolls and produce riskier/cheaper goods for higher profit.

Thank you, Mr. Lenin. — Garth

#73 Steven Rowlandson on 05.11.12 at 8:02 am

Let me guess, the woman with the vacuum cleaner is trying to vacuum up the radio isotopes in an attempt to decontaminate her property so that its price doesn’t go to zero. Lots of luck with that one. The biggest hazzards to the real estate market are.

1. Working men not getting paid enough if they have a job.

2. Radio active fallout from Fukushima making the northern hemisphere if not the world uninhabitable.
This one is a long slow burn/ triple melt down in progress that can’t or won’t be cleaned up and can get much worse. This one is 86 time worse than Chernobyl and my be even worse than that.
Japan is tits up for all intents and purposes.

3. Zio masonic satanist governments and nations like Israel and its allies starting a war that becomes armaggedon/ NBC WW3. They are mobilizing right now to do it. NBC= Nuclear, Biological, Chemical warfare. Nations and peoples will learn the hard way the virtues of minding their own business and that is assuming they are still alive to profit from the lesson.
An attack on Syria is an attack on Irans ally, and an attack on Iran is an attack on China and that means an attack on the SCO countries including Russia. Once the nukes start flying kiss it all good bye. Real estate values won’t mean a thing ever again.

4. An ice age that can last up to 105,000 years and based on ice core records is about due. Global warming? Soon you will be praying for it.

5. An economic depression caused by excess debt and too many mc jobs that pay next to nothing relative to the cost of real estate and living. Thanks to the powers that be this will be the least of your problems.

That is why real estate will be flopped lower than radioactive whale crap before things bottom out and that is if we are lucky to be alive and still fit to live and work. For me to become a sunshine blower to make all you people feel better about the future will not change the future or remove the affore mentioned hazzards.
Like the Terminator cyborg said, ” Judgement day is enevitable”.

#74 Onemorething on 05.11.12 at 8:16 am

Almost 19,000,000 vacant homes – enough to house all Canadians. In total, $6 trillion in real estate value was destroyed, leaving mortgages towering over the homes they were placed on.

There is no stopping the next downturn in US housing by another 15-18% unless you bulldoze the inventory and open up immigration!

But this is a global crisis so who the hell is coming over to Yankeeville! OR Canuckville??

The money always returns home! Wherever that is it’s especially not good for Vancouver and TO!

#75 TOGuy on 05.11.12 at 8:17 am

Many people talk of renting when the crash happens and if you do choose to rent, be smart about it too. Don’t just rent anything, for example from “investors” who rent, those guys will be the first to go and you may find yourself on the street looking for rental at most inconvenient time (when everyone else is too). Also it would be smart not to rent based on 1yr lease as the prices of rent will probably go up drastically as the demand goes up, you may find yourself with a steep rent increase after the first year. In Ontario, if you want to rent and be best protected against coming crash, rent in a building that is older then 1991 (rent control applies only to buildings that were build before 1991, not after) and rent with 1 year contract and then month to month, as this would give you the most protection from any possible trouble. Many people don’t realize how renting works and the pitfalls of it as well. I’ve seen this many times, where you get greedy landlord and he gives you a one price initially and then increases it next year substantially because s/he knows that you don’t want to move every year…. the same when you do rent, don’t rent from a company that is involved in development as those guys will be the first to go under. If you do choose to rent in TO, be smart about it, don’t just go and rent but do your research. For those that remember 90’s and how hard it was to find a rental place, if the crash happens, it will happen again. Be smart, be protected ahead of time.

#76 Can it be? on 05.11.12 at 8:27 am

#38 who said 3 hours…? There are many careers that offer full or part time work.
#46 I know someone precisely in this situation… She is ill and both coworkers (friends), kids etc have rallied around her.
John… FYI we have no debt and a heavy savings for retirement at a young age.
Attitude is why there are problems in the world. The “man” is not the problem. Life requires money. If you have to work or choose to work… Enjoy it! Life’s short. Get to know the people you work with… You might like them. Some of you, both men and women alike dedicate so much time to this blog… Let alone social media etc… It’s the equivalent to work.
In my circle of friends, the unmarried ladies work. The majority of ladies with jobs have increasingly quit their work. The amount of debt their families have piled on is staggering. Only one appears to be living well, but it’s an illusion of debt. It’s actually sad to me that people feel so much pressure, just like the comments in this blog… That somehow they are failing their kids. Who are these people to judge… Since when is there a one size fits all. Reevaluate your options as a family and do what’s right for you. If you can so easily judge based on a post that I’ve done something wrong by being a working mama, the jokes on you. I have no doubt tha my life is the envy of many and my kids have turned out better then I coul have imagined. With us it’s not an illusion. It’s hard work and proper financial planning. Extra cash to diversify with as Garth recommends :) that’s what brought me to this blog. Family is first, a sound financial future is second. Keep working hard and pay attention to Garth.

#77 -=jwkimba=- on 05.11.12 at 8:32 am

#38 a realtor of course!!

The Orlando property Garth linked to was listed October 14 2011.. No hurry…

#78 Arse on 05.11.12 at 8:40 am

Employment increased by 58,000 in April, mostly in full-time work. This was the second consecutive month of notable gains after four months of little change. With more people searching for work, the unemployment rate increased by 0.1 percentage points to 7.3%.

Compared with 12 months earlier, employment was up 1.2% or 214,000. All of the growth over the 12 months was in full-time work, up 217,000 (+1.6%), while part-time employment was unchanged. The total number of hours worked rose 1.5% over the same period.

The employment gain in April was primarily in the goods sector, with increases in construction, manufacturing, natural resources and agriculture. Among service industries, education employment increased, while public administration declined.

Employment increased in Quebec, British Columbia, Alberta, Saskatchewan, New Brunswick, Newfoundland and Labrador, and Prince Edward Island. There was little change in the other three provinces.

In April, employment rose among people aged 25 to 54 and those aged 55 and over, while there was little change among youths.

Employment increased in April only among private sector employees. Compared with 12 months earlier, the number of private sector employees was up 2.3%, while public sector and self-employment were little changed.

#79 Rene on 05.11.12 at 8:40 am

(US homes cost about 85% less than ones here). Garth.

I think you meant that cdn homes cost 85% more than in the US. If that is the case, then it means US homes are 46% less than in Canada (100%/185% = 54%, which is 46% less). If you really meant what you wrote, that would mean a million dollar home in Canada sells for 150k in the US. Not likely, unless you’re just comparing Van to the Motor City.

#80 Kaganovich on 05.11.12 at 8:57 am

Look, Mish has yet another posting on cash, debt and net cash (the mythical sideline cash) amongst corporations:
Not much sideline cash out there.

#81 Regan on 05.11.12 at 9:00 am

Commenting on the comments – why do people like to believe that their bizarre gender stereotypes always go ‘back to the cave’ or ‘since time immemorial’ and then deliver some just-so story about why their stereotype has to be the cause. Funny thing is that when the opposite thing is true, the story that explains it is just as stereotyped. Remember when men did better in schools that girls, and it was because they were smarter? So… now that girls get better grades, suddenly we notice gender bias in education and socialization and blah blah. Any why is everyone here convinced that women are drawn to real estate so they can nest and start baking? But when men are drawn to it, it’s because they want to prove their prowess and take investment risk? Stop telling yourself made up stories, people – it blinds you to the obvious. Here’s a humourous look at the evolution of some gender ‘facts,’ put in a nicely mind-bending way:

#82 Nonno Nicola on 05.11.12 at 9:02 am

#67 and #69 Bigga Ridero

Hiya Bigga Ridero, this is a Nonno Nicola, the nonno who no needa da viagara iffa you a know a wadda I meana Bigga Ridero. Anywaya, my nipoto Tonino, he a reada a coupla booka to me dat I tink you gonna lika becausa you a sharp young fella. Dese booka dey by an autore nama Jack Schwager and dey a calla Market Wizards and New Market Wizards. In dese booka, the autore, he interviewa da best traders in da worlda. You gonna lika dese booka if you no already hava dem Bigga Ridero. You let Nonno Nicola know iffa you already hava dem.

#83 disciple on 05.11.12 at 9:04 am

Nostradamus…. Jeff Rense has recently been outed as a character played by Kenney Blumeberg, married to Alyssa Greenberg, granddaughter of Maurice Greenberg (YES of AIG). He is also the three time Academy Award Winning Cinematographer Robert Richardson.
Thus, his current silence. Also, James Corbett is a fraud. So you can now begin to see the logical and predictable Act after the unfair attack on Henry Makow due to his Fukushima report.

#73 Rowlandson… LOL, if we’re Fuku-shima-ed, who cares about house prices falling, right?

#84 Mark on 05.11.12 at 9:05 am

Garth spots the kool-aid when CREA makes it, just not when CNBC or the US government does.

Garth, I respect your commentary on real estate, but you are truly wrong if you think the US in on the road to recovery. Why is it a 20% correction in stocks is normal and healthy, but a similar correction in gold is a sign that we really don’t need the stuff anymore?

I haven’t been a reader here for long, so I don’t know what your call on gold and silver has been all along. Am I wrong to assume you saw highs at $1100, $1200, $1300, etc?

The fundamental case for owning gold and silver is the same as it’s been since the US embarked on their weak dollar strategy. Governments and consumers saddled with debt, and we have negative real interest rates. Until that changes, any economic recovery is a bubble driven illusion, and gold and silver will march much higher.

When you say don’t bet against the US, you’re saying don’t bet against the largest debtor nation in the history of the world. How can that be a winning strategy long term?

US growth is irrefutable. The metalheads got it wrong, and anyone buying in at $1,900 was a victim of unmitigated hype. — Garth

#85 Gord In Vancouver on 05.11.12 at 9:11 am

No more excuses, Bank of Canada, RAISE INTEREST RATES!

Canada adds 58,000 jobs in April

It’ll be interesting to see how Carney spins this one.

#86 The real Kip on 05.11.12 at 9:21 am

“And why jobs and confidence have been inching higher monthly”

Inching higher? How about 58,00 jobs last month on top of 82,000 the month before. Canadians are hardly on food stamps.

The Canadian economy will hold and so will real estate. There may be corrections here and there but not the American style collapse you keep talking about.

Where did I ever forecast an “American-style collapse”? Post a link, or go back to drywalling something. — Garth

#87 a fan on 05.11.12 at 9:22 am

Steven Rowlandson – why are you so against women working?

#88 Gotthardbahn on 05.11.12 at 9:24 am

Garth – The Canadian economy has consistently beat analyst’s estimates on job creation. In the last two months alone, 140K jobs have been created, the vast bulk of them full-time. These people have steady jobs and steady incomes and can afford to buy houses or condos or whatever.

As for Carney raising rates – forgetaboutit. As you pointed out recently, the Big Five have plenty of ponies in this race and will do whatever it takes to ensure Blarney leaves things as they are. Do you honestly think a money machine like the big five Canadian banks – whose profits last year were, what, 50 billion dollars or something? – will stand idly by while some senior bureaucrat in Ottawa starts raising rates? To ask the question is to answer it.

The chartered banks have zero impact n monetary policy which, by the way, tilts more towards a rate increase in light of job gains. — Garth

#89 45north on 05.11.12 at 9:27 am

ShockednAwed: I’m tired of it. I’m a saver and getting beat up by the risk takers who willl be walking away from their mortgages that my tax dollars will have to pay for

wait until you see the government programs to “keep families in their homes” total gong show

#90 Gypsy Kid on 05.11.12 at 9:31 am

Three houses in my neighborhood that are up for sale have jacked up their prices for more then $100 000 in less then a week.
Strange competition…i guess the greater fool will WANT to pay more, then less. Will that make them feel rich and somehow more important??? Like a woman carrying a $5000 Louis Vuitton purse? Such strange and dangerous times we live in.

#91 bigrider on 05.11.12 at 9:33 am

#67 Garth to Bigrider on gold silver addition- “No”

Would the principles of re-balancing from outperforming asset classes(say bonds, dividend stocks) to underperforming asset classes(gold/resource) not apply to gold as an asset class in a well diversified, balanced portfolio ?

Re-stated, if your say, 5% allocation to precious metals has now fallen to 2.5% wouldn’t bringing back to 5% not be prudent?

Strategic asset allocation says yes. Tactical asset allocation says no. — Garth

#92 expat_engineer on 05.11.12 at 9:34 am

#39 Canadian Watchdog

“The possibility of hyper-inflation is highly unlikely because ” ….

” that would require debt restructuring, revaluations of currencies, nationalizing insolvent banks, etc.”

When you do the above this is what happens…

Im not sure that the general public in the PIIGS want deflation.

Its gone too far now down a one way road. There is no way back. Maybe in the early 90s you could have done it. Not now.

The general public doesn’t have a clue what is going on and even when I try to explain it to my friends and relatives no one want to hear it. In fact some people even stop talking to me. All anyone cares about is how many houses they can buy and how much paper profit they are making on those houses.

#93 Market Bull on 05.11.12 at 9:35 am

Is Canada entering into economic recovery? April jobs report kills estimates:

You know what 70% of employed Canadians do don’t you; they buy houses.

Not when 70% already do, and accumulated record debt in the process. Are you always this facile? — Garth

#94 furst on 05.11.12 at 9:38 am


#95 Aussie Roy on 05.11.12 at 9:44 am

Aussie Headlines

“Turning Japanese”

The fear among many is that we (Australia) are another US in waiting. A massively overleveraged and deindustrialised service economy just waiting for the penny to drop. The key vulnerability is asset markets and especially house prices.

The Carmen Rhinehardt and Kenneth Rogoff book “THIS TIME IT’S DIFFERENT” is a powerful reminder that such dynamics are inescapable, enduring and deeply painful.

There are other characteristics that Australia shares with Japan in its steady and manageable melt in asset prices.

GDP per capita, for instance, has not tumbled. Rather, it has stalled.

So, in the end, can Australia’s track Japan’s golden recession or find a shallower path of correction? The first observation I’d make is that I understand the framing of this question is a bitter pill for Australia. After all, I’m leaving no scope for any outcome other than a decline in living standards, only the pace is in question.

#96 Bcc on 05.11.12 at 9:48 am

I think we have been all wrong, not about the unaffodability of canadian housing market, but about how much C & F refuse to correct things (and admit they were the one who create the bubble). Kicking the can down the road is all they want. And no one wants to be the poster boss who trigger a real correction.

Maybe the next thing they are introducing is to actually 30 years mortgage. Possible? Well maybe 15 or 20 years mortgage first, as they want to have a longer road to can kicking. I am disappoint, and learned not to underestimate how much wrong people with power can do in order to avoid being the one to blame.

#97 Bcc on 05.11.12 at 9:52 am

“Maybe the next thing they are introducing is to allow 30 years mortgage. ”

Poorly sent from an ipjone

#98 45north on 05.11.12 at 9:52 am

Mr Buyer: I am seriously considering setting down roots here for the long term.

here being Japan.

Sorry to hear of your situation. Right now the federal government is downsizing. The young people that I know are working 3 month contracts. Large portions of the civil service are in competition for their jobs.

I have the feeling that you would be better off in Canada, but you have to consider your situation carefully.

#99 bigrider on 05.11.12 at 9:54 am

Garth, you have always done a good job explaining the financial pitfalls of condo investing and having to much of one’s net worth in their principle residence. All quite obvious at this point.

What you have barely touched on is the vulnerability(assuming that there is) to those who own multi dwelling type rentals in ,say ,the C3 area of T.O just for example

I have looked at revenue streams verses cost of carry with such properties and only vulnerability I see is interest rate increases, perhaps , and maybe some repairs. However, in a low yield world, rental stream looks pretty good verses alternatives.

Just trying to remain objective here.

Other than a possible price correction, I am having a tough time assuaging my property humping associates of the vulnerability of these type RE investments.

Post some listings of cash flow-positive multi-unit properties currently for sale, taking in to account the opportunity cost of the down payment. — Garth

#100 Garth Doom on 05.11.12 at 9:54 am

You scared people away from buying “overpriced” GTA real estate which has skyrocketed since your “recommendations” and you advise the U.S. economy has hit bottom while this is still happening:

J.P. Morgan’s loss–detailed in a hastily arranged conference call late Thursday–stemmed from a large hedge position that was essentially bullish on the economy, by selling credit default swaps on an index of corporate debt.

The cost of the swaps began to rise last month, and the bank began to unwind the position at a loss

Why not hold on if the bottom was near?

To be accurate, I said a consensus is forming in the US that real estate there is forming a bottom. Just a hunch, but I think they know better than you. As for GTA housing, some day you might learn this is not an investment commodity, but an issue of deeper societal importance. High prices are not in our best interests. and speculation (as you suggest) leads to losses. Soon you will grasp this as well. — Garth

#101 dad on 05.11.12 at 10:04 am

Hahaha Garth judging by #51 you have creepy cuckold fetishists on this comment section now too!

#102 GregW, Oakville on 05.11.12 at 10:07 am

Hi Nastra, FYI, Remember Sunday is Mothers’ Day!

I just got this 1 minute video link from my Dad and he said we should see it before then. I think it’s has a criptic message? Thought others might enjoy it too.
(from ‘this hour has 22 min.’ a CBC show, via YouTube)

‘RBC retirerment vengeance’ (1min.)

#103 Smoking Man on 05.11.12 at 10:22 am


Well how do u explain. My visual prono. Woman writen porno. School equalis written

60 K jobs. Wow what’s C going to do now that the labour pool got a lot smaller. The dogs will be asking for raises.

#104 Kris on 05.11.12 at 10:24 am

Does anyone have comparative numbers on immigration into US vs. Canada?

If the US has tighter controls than us, that would explain why their housing inventory sits without demand.

Also heard (from my mortgage broker, you know it) that any foreign citizen with upwards of $500K to spend on a house can walk into Canada – Can anyone confirm if this is true, for Canada & the US?

#105 its starting .... on 05.11.12 at 10:28 am

and so it begins …

no job growth in Ontario and rate ticks up

#106 joe_blown_away_by_high_housing_costs on 05.11.12 at 10:31 am

“Bank of Canada Governor Mark Carney is in the op-ed section of the Financial Times Friday, boasting that his monetary policy framework is better than yours…Canada’s economic leaders appear to believe they have found the monetary policy equivalent of nirvana.”

Nirvana: A state of transcendant peace that comes from being liberated from material possessions.

Nirvana is an apt term in the context of Canada’s monetary policy. The bursting real estate bubble brought on by Carney’s monetary policy is surely going to liberate many Canadians from their homes and other material possessions and thereby help them reach a state of nirvana.

#107 Inglorious Investor on 05.11.12 at 10:35 am

#72 maxx on 05.11.12 at 8:01 am

You touch on some important issues in your comment. However, I think you view on some of them is somewhat inverted.

You say government should put money into the hands of the people. Well, the problem is, the process actually works the other way around. People put money into the hands of government. All government can do is redistribute the wealth. Any money the government spends into the economy comes either from current or future taxes. Central planning never works. The government should, for the most part, allow the people and free markets to decide what to do with their wealth. Government has a place for sure, but it’s not their money; it’s ours.

You say debtors do not underpin a fiscally healthy society. I assume you mean that debt is bad for society. Yes and no. It depends on how much and what type. First, let’s say that excess debt of any type is bad. But not all debt is bad. Debt used to fund consumption is generally bad. But debt can be good when used to finance innovation and other wealth generating activities. It also matters where the credit comes from. If credit comes from other people’s savings, that’s generally good. The problem arises when we get excessive bank credit created out of thin air. Because rather than deploying existing capital, bank credit is inflationary.

Lower interest rates are generally better for business than higher interest rates, but the nominal number does not matter. What matters is the relative number as compared to other rates, such as inflation. But relatively low rates are better for businesses, because lower rates free up capital for other things like equipment and labour.

In terms of labour, something troubling is definitely happening. First, labour in developed countries is competing with cheap labour in developing countries. You think China is bad for labour? Wait until Africa comes on stream in a big way. And India. The supply is almost endless. Ancient Rome also had this problem: labour costs in Rome were kept low by trained slaves. Look for governments to increase practices like prison labour. This too is designed to suppress wages.

The powers that be love this. For one thing, it means higher corporate profits. And it also helps keep price inflation in check. Allowing them to inflate the money supply even more.

But there is another trend that is bad for labour: technology. We all love technology and it has helped to increase our standard of living by making labour and production more productive and living more efficient. But technology is also reducing the need for labour. Many people are becoming redundant unfortunately, leading to a reduction in the relative need for labour. Remember the old sci-fi dream of a work-free society, where technology took care of our daily needs? Well, we’re actually on that road. The problem is, the fantasy forgot one important thing: people still need money, and you still need to get it by producing something.

While labour costs decline, the cost of living is going up. Putting entire masses of people between a rock and a hard place. So millions of us gamble in the stock markets hoping to gain off the labour of others because our own labour is no longer enough. It’s an ugly, self-reinforcing paradigm. We could be moving toward a world in which everything we need for a happy, healthy life is available to us. But few will be able to afford them. Let’s hope it does not come to pass in this way.

#108 John G. Young on 05.11.12 at 10:50 am

#174 Van grrl on 05.11.12 at 12:51 am

As always, thanks!



#109 John G. Young on 05.11.12 at 10:54 am

#82 a fan on 05.11.12 at 9:22 am

“Steven Rowlandson – why are you so against women working?”

Because he’s a “Christian”.

#110 Canadian Watchdog on 05.11.12 at 11:12 am

Toronto jobs not keeping up with population.

Unadjusted real estate employment down 6% y/y (for Canada).

Most of the job gains came from natural resources, construction and manufacturing. The F.I.R.E sector is losing stream.

#111 groovin_123 on 05.11.12 at 11:22 am

Will be interesting to see what happens in June/July when the Fed runs out of short-dated bonds to sell in order to buy up the long-end of the curve.

Without a further round of ‘QE’ I imagine the “recovery” would take a further leg down. In my opinion this is what the commodities markets are beginning to handicap, as copper/gold/silver has come off their highs and drifted.

They cannot and will not pull the life-support plug. There are few “real” buyers of long-term debt at current interest rates. Expect more currency debasement, and a re-kindling of the metals bonfire.

I also expect this to be the last kick at the monetary injection can. GET LIQUID over the next 6 months. Neither your gold, nor your interest-bearing paper instruments will hold up in 2013. It is going to be one fugly year. And real estate…?… Forget about it.

Debt is a “short” on cash. There simply isn’t enough of it to fill the black-hole of debt. One more time… live beneath your means, and get liquid. Cash will be king, and opportunity will present itself in time.

#112 The real Kip on 05.11.12 at 11:22 am

Where did I ever forecast an “American-style collapse”? Post a link, or go back to drywalling something. — Garth”

Post a link to what? The 58,000 jobs created in Canada last month? I am not your research assistant.

The Canadian economy will hold and real estate will hold with it.

I’ll take that as an admission of your hyperbole and the fact I did not make such an assertion. Pass the mud. — Garth

#113 getreal-tor on 05.11.12 at 11:24 am

Even Kurt Cobain was unable to find true Nirvana and I doubt that Mark Carney is any more successful.

#114 bigrider on 05.11.12 at 11:26 am

#99 Garth to bigrider-” Post some cash flow positive multi unit properties currently for sale….”

I can’t because there are none as shown but some of my househumping associates have been buying residential in the area and turning them into three apartment type dwellings by putting up minor drywall wall divisions, an extra bathroom when needed, shower stall etc.

In so doing, property taxes remain at current level while extra, say one or two rental streams are garnered , as opposed to just one, making for higher cash flow.

I can tell you of one example shared with me, home bought for 300k ,currently worth 500k+ ,owner is pulling in 2300 a month rent from three streams combined total 26400 a year.

Would this not suffice to cover all costs mortgage, opportunity or otherwise and, even if not cash flow positive precisely, would not the amount of mortgage paydown not suffice to make the whole endeavor worthwhile?

Just asking. Would love the ‘ammo against’ so to speak.

Sound like illegal conversions, or taxes would increase. — Garth

#115 Mark on 05.11.12 at 11:36 am

US growth is irrefutable. The metalheads got it wrong, and anyone buying in at $1,900 was a victim of unmitigated hype. — Garth

It was irrefutable in 2007 as well.

The experience of 2008-9 will not be repeated in your lifetime. — Garth

#116 Inglorious Investor on 05.11.12 at 11:36 am

“Post some listings of cash flow-positive multi-unit properties currently for sale, taking in to account the opportunity cost of the down payment. — Garth”

They don’t exist right now.

Right now investing in rental properties is pure speculation. If you think we will get very high general inflation, it can make sense with a large, healthy LTV, as long you can hold on for the long term.

But also consider the rental market. I see rental units in T.O. increasing large in the near future, and the market seems over supplied already. In a worse-case scenario, you could find yourself with costs rising much faster than rents on a property that stagnates in real terms for years. Of course if you bought even just a few years back, you won the lottery. So who knows.

#117 getreal-tor on 05.11.12 at 11:38 am

#93 Market Bull on 05.11.12 at 9:35 am

You know what 70% of employed Canadians do don’t you; they buy houses.

I’ll give you this much that, yes, Canadians will either buy or upgrade to a HortonMansion or become slumlord millionaires but it’s easy to be a bull on borrowed credit until the papa bull comes to collect.

By the way, according to the map all the hot zones for RE had decreased employment. Most gains were in construction – no surprise, builders need to start or accelerate the build to cash out. Seeing as we are also entering the summer season, how many are going to be seasonal vs full time jobs?

With all these nonsense news I might as well report on my finding on the greek debt crisis… I spotted a few greek tourists on the danforth so that must mean that the crisis is over since a few can afford to travel.

#118 Pr on 05.11.12 at 11:39 am

The high prices of real estate across Canada is getting really bad and when you hear wath the central banks and gouvernement is telling you, you have to wonder if they work for you…. are against you! One thing for sure, those prices are really bad for everyone, because its unsustainable.

#119 disciple on 05.11.12 at 11:40 am

They’re half-blaming the FaceBook IPO delay on the SEC investigation into the Instagram acquisition. That’s not the real reason… it’s because Mark Zuckerberg is a character played by Michael Jacob Greenberg. BTW, what is Ann Coulter (Zuck’s mom) up to these days?

It’s all unraveling, folks. Max Keiser (his uncle) pushing silver, it’s just a matter of time before the rest of the charlatans are implicated.

There’s a key Canadian connection to the family business of mind control. Mike Meyers plays the role of Robert Gallo, “co-discoverer” of AIDS virus, HIV. Just think of all the money that’s been made from the useless drugs and therapy since the ’80s. It seems that SNL is a key entry point for these actors into the family business… There’s big bucks to be made from this…

Here is proof that both the G20 and Occupy were FAKED.

#120 Market Bull on 05.11.12 at 11:48 am

Market Bull wrote: “You know what 70% of employed Canadians do don’t you; they buy houses.”

Not when 70% already do, and accumulated record debt in the process. Are you always this facile? — Garth


Perhaps, however it is irrefutable that there has never been a significant decline in the real estate market during periods of strong employment growth.

Nor has household debt been at this level, with mortgage regs tightening. Family income gains are running at 50% of inflation, which means significant numbers of families are falling behind on monthly cash flow. Stick with your day job. — Garth

#121 coastal on 05.11.12 at 11:57 am

“As for GTA housing, some day you might learn this is not an investment commodity, but an issue of deeper societal importance. High prices are not in our best interests. and speculation (as you suggest) leads to losses. Soon you will grasp this as well. — Garth”

This is what the young and the dumb buyers/agents don’t grasp and never will til they are down their first 10%. Higher prices are not good for local economies, they strangle spending money, cause sooner or later the HELOC and credit card tops out.

Look at downtown Victoria, developers keep throwing up these overpriced shoebox condos claiming growth, while the surrounding businesses are closing up shop in the prime areas of town. They’re losing out to the big box stores that are set up far outside the city limits or the malls which are miles away. With half of the condos empty, how does that help a local economy flourish ? All I see is more coffee shops opening to compete with the other dozens of coffee shops that can be only breaking even at best.

#122 zeeman1 on 05.11.12 at 11:58 am

#9 Smoking Man.

Great post, dude.

So, women like granite because?

#123 stickler on 05.11.12 at 12:08 pm

@ #107 Inglorious Investor
>> Nice post.

As the trend continues to shift all possible services from developed countries to the developing (even so-called professional white collar jobs like banking & insurance operations)….what can we expect but a declining standard of living in the west?

When I call for information on my, property tax, or income tax…why does that operator have to be physically in Canada?

Good in some ways for developing countries…not so much for developed.

I dont see how this trend supports ever inflating house prices in the GTA or Van.

#124 Aussie Roy on 05.11.12 at 12:19 pm

Market Bull wrote: “You know what 70% of employed Canadians do don’t you; they buy houses.”

Not when 70% already do, and accumulated record debt in the process. Are you always this facile? — Garth


Perhaps, however it is irrefutable that there has never been a significant decline in the real estate market during periods of strong employment growth.

Nor has household debt been at this level, with mortgage regs tightening. Family income gains are running at 50% of inflation, which means significant numbers of families are falling behind on monthly cash flow. Stick with your day job. — Garth

LOL, Employment here is still around 95%, your no house price decline without rising unemployment is like many theories, wishful thinking.

All that is needed for your market to decline is, a drop in the demand for debt. This might come from stagnating prices, simple unaffordability or a SNAP in the current delusional thinking that house prices only ever go up because it’s different this time.

May I suggest the following books.

Of course our host has excellent books that could help with your delusion.

#125 Inglorious Investor on 05.11.12 at 12:22 pm

#120 Market Bull on 05.11.12 at 11:48 am

Canada is indeed very vulnerable to any economic shock.

But manias have a life of their own and always go higher than anyone thinks. From what I’ve seen, we are definitely in a mania. It may not seem so because people have a great capacity to adjust to a “new normal”, but history will tell you this housing market is not normal. Look around you. Does anyone really believe that 70% of Canadian families can really afford home ownership, unless the home was bequeathed?

Many are expecting a correction. Of course it will happen, but when? And how will it unfold? A reduction in real home values could be masked by high general inflation, but how do you get high inflation with stagnant wages?

The higher housing goes relative to the rest of the economy the worse the correction will be. We are approaching the end. There may still be time to get in and make money before it’s no longer viable, but the risks are extremely high and rising.

The key is credit. If credit growth slows down, the party’s over. Or we could get a hyper-inflationary blow off, in which case those with big mortgages on properties will be the winners, as long as they can hold on through the blow off and make it to the other side.

No predictions, just scenarios.

#126 DondWest on 05.11.12 at 12:24 pm

Don’t bet against America. You will lose. — Garth

Can I bid against France?

#127 Nervous on 05.11.12 at 12:24 pm

Too much focus on Vancouver , calgary and Toronto, please provide more insight into ottawa and Halifax.

You says national decrease in residential real estate of 15 percent and 30ish percent in Vancouver, some predictions on other areas of Canada please…..

Thank you

#128 Canadian Watchdog on 05.11.12 at 12:29 pm

Watch this video explaining how Canada’s PCFMEX (Pre-Construction Futures Market Exchange) units are sold on the market from permits to final sale. Be sure not to miss the punchline at 5:00min, where he states “Assignment basically means, being able to sell the unit before it actually finishes, so you don’t have to get a mortgage.”!

This ponzi scheme is great for boosting Canada’s housing market by pulling sales from the future into current statistics and the average price, only question is, what happens when new units (in bulk) don’t sell and every Platinum, VIP et al speculator must get a mortgage at occupancy status?

Parabolic Contango.

#129 foolsrushin on 05.11.12 at 12:32 pm

My Gartho meter just give me a buy on gold. That and

1. Central Banks who have sold for years are buying. I wonder what caused them to change their collective minds all of a sudden after all gold isn’t money.

2. China is buying record amounts of gold along with Mexico, Turkey, Russia

3. Nothing has changed except for better prices.

4. Nothing goes up in a straight line forever and the fundamentals have only gotten worse as measured on a global scale.

5. How long has the Europe fiasco been going on and they haven’t been able to bury it despite the US sending them tons of money?

6. The US government surely wouldn’t trade in the gold markets to drive prices down and then buy gold while supporting the US Dollar would they?

But we should base our decisions on a few earnings reports where profits are measured through cost cutting in Canada? I can’t understand how someone who thinks RE is going to fall is pro Canadian business earnings.

I just report the facts. Corporate profits at record levels, versus your elevated fears. I know which I’d invest in. — Garth

#130 jess on 05.11.12 at 12:39 pm

orange county sink holes

on billboards as “The Sinkhole Guy.”


Florida justices to decide whether to punish ‘robo-signing’

#131 Bigrider on 05.11.12 at 12:51 pm

# 114 Garth to bigrider – ” sounds like illegal conversions or taxes would increase”

Not sure if they are legal or illegal but I can tell you they are easily getting away with it regardless.

Can I interpret your response as an admission that in the example I gave, the numbers work?

What numbers? — Garth

#132 Buy? Curious? on 05.11.12 at 1:03 pm

It pains me to say this but I think Garth is right AND Smoking Man makes a valid point. *owww!* Everything that I’m reading is point to a steep dive in home prices. People are scared that because they bought a place in the last few years, they’re doomed. They were told that real estate is a safe investment, but they’re now realising that they were lied to. They are so deep in debt with Student Loans, Credit Card debt and a huge mortgage that they feel that they’ll work all their living days servicing their debt. If I were them, I’d stop paying the debt and let the creditors try to get blood from a stone.

#133 cramar on 05.11.12 at 1:18 pm

It is hard to reconcile insanely high prices in Canadian cities like Van. & TO with insanely low prices in some areas of the U.S. What is really different between the U.S. & Canada economically? It is like both nations currently are on totally different planets!

Compare the million dollar price tags of Van. & TO to small-town Michigan for example. As the TV commercial says, “Pure Michigan!”

Here is a typical house in Madison Heights, just south of Troy. Looks like a nice small town. This house would fit in perfectly in North York or Scarbarough, yet for $54/sq. ft. you get a detached brick bungalow with concrete drive and detached garage. Appliances included, all for under sixty? Insane!

#134 TaxHaven on 05.11.12 at 1:20 pm

“The experience of 2008-9 will not be repeated in your lifetime.” — Garth

Certainly won’t! Because it’s still going on.

The same outfits are still insolvent. The same lack of demand (Keynesians) or lack of real savings (Austrians) exists. And so on.

Papered over with printed money and with demand drawn ahead from future spending. Nothing has been “fixed”, nothing has changed, no real wealth has been created…

Utterly wrong. — Garth

#135 Reserve Ratio on 05.11.12 at 1:21 pm

“Don’t bet against America. You will lose. — Garth”
There is no United States anymore, hate to be the one to break the news to you. The experiment has failed, the rule of law is dead, the republic no more, the constitution in tatters.

“Thank you, Mr. Lenin. — Garth”
Il Duce, is that you risen from the grave?

“The experience of 2008-9 will not be repeated in your lifetime. — Garth”
“The Greater Fool” – indeed

Unfortunate so many people will learn the hard way. I have no idea why you come here. — Garth

#136 Mama Bear on 05.11.12 at 1:25 pm

Intersesting video of David Rosenberg talking to the Financial Times

#137 SaggyBottomBoomer on 05.11.12 at 1:37 pm

I’m confused. What kind of kitchen is that in the picture?

#138 Van grrl on 05.11.12 at 1:41 pm

#65 John
Get a life already. A well-rounded woman living her life as she pleases in what sounds like a very healthy, equal relationship with a good man.
And you have a problem with that??
Go away already, yeesh.

#139 fancy_pants on 05.11.12 at 1:55 pm

if interest rates weren’t left at emergency levels for so long, we would all be reflecting on what went down and not forecasting such. It would have just kept falling in 2008.

instead the golden boy and his little pecker have artificially prolonged and exasperated the situation.

so the Canadian Club honours him as Canadian of the Year. um. ya. sure. Oh men of little remembrance, was Greenspan not touted as a genius in 2006 as well? sigh.

Garth, you think the morons hang out here? I’m not convinced.

#140 Blacksheep on 05.11.12 at 2:24 pm

SM # 9,

“They taught the woman that staying home and nurturing and educating children was for losses. They taught them that we are going to split the wage required to pay the bills into two, hence more sweat for the same loot, and tricked them the beilive that a carrier is way cooler than mother hood.

How many Carrier woman long to be home with their beautiful baby’s but will never admit it.

The educational industrial complex. Nice”
Very true statement.

Add to this, the impact on employment.
In 1970-80s between: The ramp up of Imported goods, automation via computers and a massive labour supply increase (more women) It’s easy to see, why we face unemployment challenges now. All this, with out even getting into outsourcing or immigration.

I believe society needs to realize we live in a finite world, with finite resources. How about we actually put some thought into, how many children we produce per couple, the long term ramifications and where this is all leading us.

I fully support women (my daughter & wife) having equal opportunities and compensation for services rendered.

Unfortunately, as SM said, ‘they’ now get two tax slaves for the price of one.

Once again, the ‘system’ fails to act in the best interest of the masses.

#141 Junius on 05.11.12 at 2:24 pm

#120 Market Bull,

You said, “Perhaps, however it is irrefutable that there has never been a significant decline in the real estate market during periods of strong employment growth.”

Are you really suggesting that we are entering a period of “strong employment growth.” Get real.

#142 John G. Young on 05.11.12 at 2:26 pm

#138 Van grrl on 05.11.12 at 1:41 pm

“#65 John
Get a life already. A well-rounded woman living her life as she pleases in what sounds like a very healthy, equal relationship with a good man.
And you have a problem with that??”

Yes, he has a problem with the “equal” part.

“Go away already, yeesh.”

Only attrition will achieve that.

#143 cramar on 05.11.12 at 2:42 pm

Worser insanity!

Location: Dearborn Heights, MI (west of Detroit)
Short Sale: $35,000! …THIRTY FIVE!!?

Can things ever get this bad here in The Great White North?

Oh yah I forgot, things will always be different here!

#144 Junius on 05.11.12 at 2:45 pm

#133 cramer,

You asked, “What is really different between the U.S. & Canada economically?”

The answer is the RE economy and the wealth effect. As prices have climbed and the share of the economy devoted to real estate has grown we have avoided the US downturn. People continued to borrow and spend as they continued to feel wealthy.

Of course, it is not sustainable because it is built on a mountain of credit and not productivity gains. Where the US is now we will soon be.

#145 TaxHaven on 05.11.12 at 2:46 pm

The U.S. will be in and out of “official” recessions for some years to come:

Lakshman Achuthan has a good track record. Where is the REAL growth in INCOMES – and the expected spending and borrowing all these governments are counting on – going to come from?

#146 Market Bull on 05.11.12 at 2:52 pm

“Nor has household debt been at this level” ~ Garth

Nominal household debt grows organically with the population and GDP. It’s a good thing.

Debt-service is the most salient issue.

And 40% of households have trouble making their monthlies (BMO survey). Stop making stuff up. It’s safer. — Garth

#147 Shane on 05.11.12 at 2:57 pm

Garth, My wife was driving on 16 ave this afternoon around 3pm,she said there was a line up of cars do to the pre-register meeting for the grand opening of the new Paradise homes location in unionville..please let this be the end of the housing market crazz!!!

#148 Yuri on 05.11.12 at 3:07 pm

Hi Garth,
I’ve been reading your blog for more than a year and told people to read you blog first before they decide to buy a property.
I’m trying to balance my portfolio including real estate and the problem that all my investments in mutual funds thgrough financial advisors are not doing well. I’d even say worse that real estate. Can you refer anyone as financial advisor in Vancover area

Email me, [email protected]. — Garth

#149 jess on 05.11.12 at 3:07 pm

By Yvonne Wenger, The Baltimore Sun

11:52 a.m. EDT, May 11, 2012
Political consultant Julius Henson was found guilty of conspiracy Friday in an Election Day 2010 robocall scandal, but jurors also found him innocent on three other counts.

After deliberating for 10 hours over three days, jurors found that he violated the law for his role in producing an automated telephone call to registered Democrats that told them to “relax” and stay home. The call was made hours before the polls closed.

Henson was working for the campaign of Republican former Gov.Robert L. Ehrlich Jr., who was trying to block the re-election of Gov. Martin O’Malley, a Democrat.

The bankers were taking out ads warning about specuation vs local developers ads to counter the bankers ads
Florida History: Fighting Northern lies with “Truth About Florida” – 1925

Florida Legislature passed laws that prohibited state income and inheritance taxes

#150 John Prine on 05.11.12 at 3:18 pm

#121 coastal on 05.11.12 at 11:57

Look at downtown Victoria, developers keep throwing up these overpriced shoebox condos claiming growth, while the surrounding businesses are closing up shop in the prime areas of town. They’re losing out to the big box stores that are set up far outside the city limits or the malls which are miles away. With half of the condos empty, how does that help a local economy flourish ? All I see is more coffee shops opening to compete with the other dozens of coffee shops that can be only breaking even at best.
Was talking to a realtor that said that there is a development on Burdett Street which advertises that a great number of units have been sold when in fact there are only a couple . The others are “agreements for sale” made by sub contractors that will never complete.

When looking at condos that vendors say are selling well, make them show you the storage locker areas, buildings with tenants usually have something in their storage, padlocked…

#151 Not 1st on 05.11.12 at 3:23 pm

Garth, if you were looking in the right places, you will find the JPM debacle just gave you an insight into the state of affairs in the U.S.A. but you trot out these corporate earnings again thinking thats proof of anything. Most of that was due to layoffs and retrenchment and multiple doses of QE. Regardless, those profits won’t be repeated in subsequent quarters if things like rates rise and the coming tax hikes in the U.S. happen and they will.

JPM is a supposed top bank with many 10s of billions in lending ability that could be using those funds to help small business or manufacturing or fund green energy or create jobs. But no, instead they use their resources to trade vapor paper derivatives and make bets. They have made so many bets their derivatives exposure is $70 trillion. If thats not telling about the future of that country I don’t know what is.

“Don’t bet on the U.S.A” I will take that bet in spades cause I know the truth about whats really going on in that country. Its the next eurozone in about 2 -5 years….guaranteed.

JPM losses are no more consequential to the world than were those of Barings. — Garth

#152 Canadian Watchdog on 05.11.12 at 3:25 pm

#70 Ralph Cramdown

“And how, exactly, does social media prevent hyperinflation?”

This is not the 1930’s where the only financial information came from The Wall Street Journal and Harvard books. More people know about central banks’ monetary policy then ever before. If another round of bailouts has to be dispersed, you’re going to see the biggest global revolt the world has ever seen.

#153 new_era on 05.11.12 at 3:30 pm

One thing to remember about real estate and debt

It brought Japan to its knees

It brought USA to its knees

It brought Spain to its knees

Looks like Europe is sinking now, its only a matter of time before the domino’s all starts tumbling down.

Also I wish the government will stop blaming Euro. Its been known in the financial charts that the F & PIIGS was going to fall. Too much debt, too little too late and government doesn’t have the stomache to address the problem.

Sound familiar Canada. your government is not addressing the problem.They are buying more time hoping something will happen to get them out of this mess were in. We’ll don’t expect the prince to come to your rescue

#154 Industrial Guy on 05.11.12 at 3:31 pm

…. And the closures just keep on coming ….. Siliken Canada closes Windsor Plant.

“University of Windsor business expert Mark Meldrum said there is simply no market for solar — period.”

It sure looks like Premier Dalton McGuinty’s green energy dream has turned into everyone’s nightmare.

More $50,000.00 little pink houses for you to buy in Windsor.

#155 Pr on 05.11.12 at 3:41 pm

Its far from over!

Ventes MLS® : plusieurs records de ventes dans la RMR de Montréal

#156 neo on 05.11.12 at 3:57 pm

“Why stock market corrections lately last about three days.” -Garth

It was six days in a row until yesterday. Red again today. Investing is about future guidance and profits and most of the S&P guidance has been neutral to weak. Profits actually peaked last quarter and will be trending down for the remainder of the year. That and the bar has been set pretty low so exceeding low expectations isn’t the same as a robust results.

Corporate profit estimates for the year are +7%. Almost 70% of firms beat the street. Once again you are embarrassing yourself. — Garth

#157 Industrial Guy on 05.11.12 at 4:13 pm

Here’s a link to Stats can’s Labour Force Survey, April 2012

It’s an interesting read. Lots of good news for Western Canada and sadly for Ontario … it’s not a great report.

Unemployment in Hamilton jumped almost 18% from the same time last year …. Of course this was before the US Steel lockout in October. It should be noted that 12,000 were added to to the workforce in the area at this same time. All those invisible unemployed rematerialized..

Good news like this drives the Canadian dollar up …. which hammers Ontario’s manufacturing sector.

Find an economist …. get a reading of the tea leaves ….

#158 wxman on 05.11.12 at 4:21 pm

I agree with much of what you say Garth but you are wrong about the economy. The entire economy is built on cheap much longer can the USA run up massive deficits and keep interest rates near zero..can you imagine what the economy would be like with normal interest rates. The economy is behaving pathetically given the massive stimulus via ZIRP and massive government borrowing. You must know that this cant continue much longer..we are heading off the cliff soon.
By the way it will be time to sell gold when everybody is talking about and everybody wants to own it. Even at 1900 last summer very few people talked about it or even owned. Compare that to the tech bubble, the real estate bubble and so on and gold was nowhere near the bubble phase..just a bit frothy and going through another one of many corrections of 30 percent during the 10 year bull market.

I give up. Somebody left the asylum door open. — Garth

#159 Blacksheep on 05.11.12 at 4:24 pm

“Utterly wrong— Garth”
Income Breakdown

The gain was paced by households earning $75,000 or more, the report showed. Confidence DECREASED for those making LESS.

I wonder what percentage of the US population, makes less than $ 75k?

Research may be a little biased.

take care

Irrelevant. Consumer spending is consumer spending. It begets jobs and growth. — Garth

#160 Market Bull on 05.11.12 at 4:34 pm

“And 40% of households have trouble making their monthlies (BMO survey). ” ~ Garth

And that’s because of excess mortgage debt?

Or because that’s just how 40% of the population rolls – no matter what house prices (or the prices of anything else for that matter) are doing.

Most of the “credit seekers” are the same people over and over again.

Oh, and P.S., most bankruptcies are renters.

#161 Blacksheep on 05.11.12 at 4:43 pm

Groovin #111,

“Without a further round of ‘QE’ I imagine the “recovery” would take a further leg down. In my opinion this is what the commodities markets are beginning to handicap, as copper/gold/silver has come off their highs and drifted.
They cannot and will not pull the life-support plug. There are few “real” buyers of long-term debt at current interest rates. Expect more currency debasement, and a re-kindling of the metals bonfire.”
SHHHH! It’s supposed to be a seekwet.

QE Three is coming post election, as this is the only stilt supporting this reanimated ‘systemic’ horse from dropping dead. The US is carrying to much debt to let rates rise much (even with MMT, the pools only so deep) and consumers have not yet come back . QE or bailout X , will happen in Europe also. Should be a great buying opp this fall.

PS: Garth, please keep up the good work, berating Gold.

take care

I do not berate PMs. This is simply not a compelling asset class at this time. — Garth

#162 foolsrushin on 05.11.12 at 4:50 pm

I just want to make sure I have this right. You can bash RE (all day long which I happen to agree with) and not be a doomer BUT…if you buy gold your a doomer!
Too many months in Government, lucky you got out before it screwed up your thinking.
Now I’m thinking if I bought preferreds and bonds Id be an optimist?

Actually I don’t bash real estate. Love it. But it’s at the top of a cycle and rife with danger. It has nothing to do with being a doomer. Gold as an asset class is 100% speculative, and therefore needs powerful reasons for an investor to eschew dividends or interest, while taking on currency risk. I do not see those reasons in a global economy which is working through liquidity and debt problems. Without the strong promise of capital gains, money in gold is dead cash that could be earning a yield. Your insult, BTW, was childish. — Garth

#163 John on 05.11.12 at 4:53 pm

Can it be? Wrote;

“I have no doubt tha my life is the envy of many and my kids have turned out better then I coul have imagined. With us it’s not an illusion. It’s hard work and proper financial planning. Extra cash to diversify with as Garth recommends :) that’s what brought me to this blog. Family is first, a sound financial future is second. Keep working hard and pay attention to Garth.”

Family. Hard work. Financial future.

I can’t see you at all…I don’t get your values. But what you are saying speaks louder than your “stated values”. Nobody at all is to blame. But the solution is led by men. A solution ( understandably) you would reject for a “50-50” Canadian Fairness Police set of ideas. Men are understandably invisible, emasculated and addicted. They don’t know either.

But, as always, the solution absolutely has to come from them. You likely simply disagree, out of hand, this idea. It’s your experience.

Your comments are 100% legitimate, and mostly delusional. Isn’t that a mirror reflection of the world economy?

#164 foolsrushin on 05.11.12 at 4:58 pm

Kind of reminds me when I went to University. Just tell them what they want to hear, not what you think even if you can justify your thoughts/position. The experience will be better for both of us. Not!

How do you spell doomer … Realist. Your cups half full for both of us.

#165 TaxHaven on 05.11.12 at 5:27 pm

“Consumer spending is consumer spending. It begets jobs and growth. — Garth”

It can give that illusion, until the next crisis – IF self-sustaining economic growth can be engineered.

There’s the essential disagreement between Garth Turner and we “doomers” and realists.

Actually, SAVINGS begets REAL jobs and growth.

And ever-increasing spending requires either ever-increasing credit uptake or printing. Spending puts the cart before the horse: you can’t spend what you haven’t saved or produced. Wealth production is not going to be what it was – not for many years. As we all can see there is little-to-no real growth happening in this economy.

PEAK DEBT has been reached.

Your view is an established Keynesian one. But what we really need is LESS senseless consumption of overpriced junk – most assuredly including housing – and to build up a pool of real savings.

Rubbish. An inflated savings rate has guaranteed Japan stays in a funk, while NA economies are 70% fueled by consumers. Spending equals jobs. Jobs create spending. That’s a lot better than spending from debt. And this is the path America is now on. — Garth

#166 Nostradamus Le Mad Vlad on 05.11.12 at 5:39 pm

Caution . . . You are on ZombieZone’s Doorstep. Enter at your peril . . . “Somebody left the asylum door open. — Garth” Shit. Too late! BTW, who’s for QE7? My investments could use a boost of a billion or two.
#76 Can it be? — “Life requires money. If you have to work or choose to work… Enjoy it! Life’s short.” — Life is short, and one only needs an adequate amount to stay debt free, pay the bills and enjoy life. Good post.

#83 disciple — Thanks for the update. Seems pieces of the puzzle are falling into place, with no mention (of course) from the m$m. The next decade or two are going to be a barrel of laughs (not)!

#126 DondWest — “Can I bid against France?” — Not a bad idea, esp. if France and Germany slap each other across the face and fisticuffs ensue.

#102 GregW, Oakville — G’day Greg, and thanks for that hilarious clip! Damned funny.

Garth recently pointed out to a poster to use excess money in TFSAs using ETF’s. If kids weren’t so pig-headed these days, rented instead of buying and using the above-method to save for a rainy day (retirement), RRSPs would be redundant, a thing of the past.

But kids like to be kids, tooting their own horn and not bothering to learn (or listen) to the mistakes we made. Life doesn’t change much, does it?

#167 John G. Young on 05.11.12 at 5:44 pm

#163 John on 05.11.12 at 4:53 pm

“”Family. Hard work. Financial future…I don’t get your values.”

Yeah, they’re really freaky and far-out.

“But the solution is led by men. A solution …you would reject for a “50-50″ Canadian Fairness Police set of ideas.”

Yeah, what’s with this “fairness” crap? Whoever decided to make “fairness” a value anyway? And everyone knows the police are supposed to maintain the status quo, not to enforce some “feminine” idea like “fairness” or “equality”.

“Men are understandably invisible, emasculated and addicted. They don’t know either.”

But not you: you’re sober, virile, have a great set, and God knows you’re not invisible.

Well guess: me too.

And I say you’re full of it.

#168 Can it be? on 05.11.12 at 5:54 pm

#163. It doesn’t matter anyways. Live your life, if your happy great, if not figure it out. I know my priorities.
@vlad. Thanks :)

#169 John G. Young on 05.11.12 at 5:56 pm

#163 John on 05.11.12 at 4:53 pm

And I saved the best for last:

“Your comments are 100% legitimate, and mostly delusional.”

Delusion: noun
Psychiatry: a fixed false belief that is resistant to reason or confrontation with actual fact, eg. a paranoid delusion.

Describes your posts perfectly.

#170 99% on 05.11.12 at 5:56 pm

Have a nice weekend Garth. You certainly earned it. Enjoy the sunshine.

#171 MrHulot on 05.11.12 at 6:05 pm

Two esteemed economists Gary Shilling and David Rosenberg are not betting on the US economy. Both are predicting recessions. Gary puts his money in long-term bonds and David recommends corporate bonds and… yes that dirty word…GOLD.

You write very well. You are very confident and very convincing but what makes you think you are right and they are wrong?

There is nothing inconsistent with a US recession and recovery. A few quarters of negative growth is a non-event. — Garth

#172 };-) aka DA on 05.11.12 at 6:47 pm


#173 P & T S on 05.11.12 at 6:58 pm

Rubbish. An inflated savings rate has guaranteed Japan stays in a funk, while NA economies are 70% fueled by consumers. Spending equals jobs. Jobs create spending. That’s a lot better than spending from debt. And this is the path America is now on. — Garth

_And where are these “jobs” being “created”?? You know, and on this wewblog, I’ll confidently assert that we ALL know, that “Increases in Corporate growth / revenue” will NOT be as a result of “creating” good, secure, WELL PAID jobs in the US of A. Just look at recent history – just where have all the “Good, Well Paid” jobs gone in the continued, Wall-Street led drive for “increased productivity” – translation – more product for less cost ?? Here’s a clue – try the “emergent” low-wage Far Eastern economies.

“Consumer spending is consumer spending. It begets jobs and growth. — Garth”

Depends whether this Consumer Spending is with real, earned, discretionary money (by implication) or via yet more debt creation (Master Card? That’ll do just fine!) Real inflation in the US is far above the “reported” value, and so the erosion of discretionary spending proceeds apace.

More debt (Government, Corporate or Individual) simply continues the process that led us to the 2008 situation. Will this debt be repayable? No-one seems to know (or even really care) however not a week goes by without the MSM Worldwide reporting more “Fiscal problems” entirely related to unpayable debt popping up everywhere.

We both REALLY HOPE things DO settle down, but we fear that they will not. One thing’s for certain, the “culture of conspicuous consumption” seems to be rapidly fading, and how that is a “good thing” for Corporate profits (e.g. Crapple sales of “the latest” I-garbage) is completely beyond me!

Maybe all these Corporations are running their own version of a Ponzi scheme – flogging increasingly cheaply-manufactured, but fasionably overpriced, products and services to each other – shades of the Dot .Com tech bubble era (and we all know just how well that fared……)

As always time will tell . . . . . .

#174 Industrial Guy on 05.11.12 at 7:06 pm

TaxHaven SAVINGS begets REAL jobs and growth?
Nope … sorry … Only if the money saved makes to someones till.
Big, fat bank accounts and no spending sounds like our present issue with corporate USA and Canada … They’re accounts are flushed with cash ….but, they’re not hiring or investing new machines or upgrading technologies.
Canada used consumer spending to goose the economy out of the last recession ….. low interest rates and lax rules which permitted families to borrowing against the paper equity of their homes kick started the economy ….. Now comes the bad part …. Debt is not wealth ….. growing GDP with increased productivity and exports is the right way to do things ….. boosting GDP by maxing out credit cards and turning your house into an ATM is the insane way ….. I’m sure future economic historians will call it Harper’s blunder…
One bank says you’re richer than you think ….. what they’re actually saying is .. we’ll show you how to take on unsustainable levels of debt and look rich …

#175 Blacksheep on 05.11.12 at 7:14 pm

“I give up. Somebody left the asylum door open. — Garth”
Like Herman said “Blame yourself”

Were like Vampires, you have to invite us into your house : )

take care

#176 mel in victoria on 05.11.12 at 7:19 pm

Mr Gandalf #16…

Could you please point out where the gold chart has broken down? Thanks very much…$GOLD&p=W&yr=11&mn=6&dy=0&id=p39582808903

#177 Daisy Mae on 05.11.12 at 7:21 pm

Whoppee! I have a ‘special invitation’ (complimentary tickets enclosed) to “make serious money with income properties!” in Aliso Viejo, California. Pre-Auction. FREE netbook computer for the first 50.

I’m just so damned excited….but I have absolutely no idea where they got my address.


#178 Daisy Mae on 05.11.12 at 7:30 pm

#46 Mixed Bag: “I’ll agree with the end of your post, how many people must secretly wish to be home with their kids. Or openly. Does it matter whether it’s mom or dad? I know I’d like to stay home if our finances allowed.”


I was a stay-at-home mom and have never regretted it for a moment. People say today that it can’t be done but I wonder….which comes first, the chicken or the egg? If we weren’t making fantastic money, then we couldn’t, and wouldn’t be, paying exhorbitant prices for, well…..everything.

#179 Daisy Mae on 05.11.12 at 7:46 pm

Further to last….

Double incomes as been great for government and business. Double the income taxes paid to all levels of governments. All that extra disposable income to spend on junk and toys and vacations — great for business, big and small. The need for daycares and Tax Preparers — job creation and more income tax collected. The feds have managed to make filing so complicated the average taxpayer is totally intimidated. We’ve been manipulated.

But has it really been great for families?

#180 Nostradamus Le Mad Vlad on 05.11.12 at 7:49 pm

#178 Daisy Mae — “I was a stay-at-home mom and have never regretted it for a moment. People say today that it can’t be done but I wonder….” — It can be done if people were living less flamboyant lifestyles. The better half left the workforce in the early ’80s, and we never missed the extra paycheque.
Canada’s Libya mission The CPC — The Art of Lying With A Majority; Profits Surge Garth is right; 80% “We saw similar drug (and alcohol) abuse patterns in the USSR just before it collapsed.”; Does Fitch matter? Italy clashes Soccer season is almost over, so replace it with something else; Using SS to pay student loans; Drachmas making a comeback; JPM losses around US$18 bln.? A strong pound or a weak dollar? Krugman and economics; 8:12 clip US infrastructure crumbling. What of spending money at home instead of fighting invisible enemies? Running Out Unemployment benefits; HSBC’s Mortgage Fraud? Quite big; Just In Time for another credit crisis or two.
Destroying Good Food Although egoPutz – Barfsville prefers the Monsanto version; Oscrewit “This latest executive order will allow the soviet socialists in our local communities through their committees to adopt and enact United Nations regulations designed to establish absolute United Nations’ control over our every resource.”; One world govt. taking shape? Canada’s Ruling Oligarchy Right here; Astaxanthin What is it? Antioxidant to slow aging; The Queen “It puts the U.K. en par with the United States, Russia, and China in how it monitors its citizens’ Web activity.” Don’t forget Kannnaduhh; Crusades #?? with nukes; Dangerous Pedestrians Ferget drunk driving, this is nasty; Philippines and Israel The US doesn’t have enough personnel for all these wars, unless the draft is bought back; Romney and Two Felonies Opens the door (if proven) to Ron Paul and thus, Jeb Bush; UN Global Governance funded by climate change nutbars? 85 Bullets used by German police last year, as compared to US cops; Smoking Man — Correct on education (at least parts of it).

#181 jess on 05.11.12 at 8:00 pm

granite education

student boomer loans

…”The majority of these debts are being imposed on young people, who have a potential 40 years of gainful employment ahead of them to pay the debt off. But a sizeable chunk of US student loan debt is held by senior citizens, many of whom are not only unemployed but unemployable. According to the New York Federal Reserve, two million US seniors age 60 and over have student loan debt, on which they owe a collective $36.5 billion; and 11.2 percent of this debt is in default. Almost a third of all student loan debt is held by people aged 40 and over and 4.2 percent is held by people over the age of 60. The total student debt is now over $1 trillion, more even than credit card debt. The sum is unsustainable and threatens to be the next debt tsunami.

Some of this debt is for loans taken out years earlier on their own schooling and some is from co-signing student loans for children or grandchildren. But much of it has been incurred by middle-aged people going back to school in the hope of finding employment in a bad job market.”

Ellen Brown

#182 wxman on 05.11.12 at 8:05 pm

I give up. Somebody left the asylum door open. — Garth

Oh boy Garth..thats all you could come up..what intellect. Maybe you could actually put together an intelligent sentence. People who respond with insults usually have no argument.

Please explain to me (the insane as you put it) Garth why we need ZIRP if the economy is doing so well. If the economy was back and good times were here then interest rates would be much higher. The central banks have backed themselves into a corner with decades of easy monetary policy creating bubble after bubble. Do you really believe the USA can sustain 1.5 trillion dollar deficits indefinitely without the rest of the world trashing the US dollar? Do you really think the Federal reserve can keep buying US treasuries year after year indefinitely? Do you really think that the popping of the largest credit bubble in history will result in a normal recession. Where are all the jobs in the USA Garth after years of massive deficit spending and zero interest rates. Everything is just wonderful Garth..CNBC said so and they are always right..

#183 TaxHaven on 05.11.12 at 8:06 pm

From TrimTabs. Stimulus spending is no longer working…

#184 Daisy Mae on 05.11.12 at 8:12 pm

#148 Yuri: “….and the problem that all my investments in mutual funds through financial advisors are not doing well…..”


Get out of Mutual Funds — fast!

#185 Einzatgruppen kanada on 05.11.12 at 8:17 pm

Manufacturing is alive & well in America today. Despite closures and layoffs. Manufacturing has never been more efficient and productive. Factory robots make America the no.1 manufacturer in the world. The down side is robots don’t earn a wage and spend like consumers.

#186 jess on 05.11.12 at 8:21 pm


For Release: 05/01/2012
FTC Wins Court Judgment Against Massive Get-Rich-Quick Infomercial Scam
Agency Alleges that Nearly One Million Consumers Lost More Than $450 Million
The Federal Trade Commission won a court judgment against the marketers of three get-rich-quick systems who deceived nearly a million consumers. As part of its ongoing efforts to stop scams that prey upon financially distressed consumers, the FTC is seeking more than $450 million in monetary relief.

On April 20, 2012, Federal District Judge Jacqueline H. Nguyen, of the U.S. District Court for the Central District of California, granted the FTC’s request for summary judgment and asked the agency and defendants to submit arguments on the appropriate remedy for the violations. The marketers are behind the infomercials for “John Beck’s Free & Clear Real Estate System,” “John Alexander’s Real Estate Riches in 14 Days,” and “Jeff Paul’s Shortcuts to Internet Millions.” The court found that the infomercials misled consumers in violation of the FTC Act, and that despite the marketers’ easy-money claims for the systems, which cost $39.95 each, nearly all the consumers who bought them lost money.

Regarding the John Beck system, the court found that the defendants falsely represented that consumers could purchase homes at tax sales in their own area for pennies on the dollar and that they could make money easily with little financial investment. The court found that the earnings claims in the John Alexander infomercial were false, and that the Jeff Paul infomercial misled consumers by creating an overall impression that “a typical consumer can easily, quickly, and ‘magically’ earn thousands of dollars per week simply by purchasing and using” the system. In contrast to the infomercials’ easy-money claims, the court found that less than one percent of consumers who purchased the systems made any profit whatsoever.

Consumers who purchased the systems were automatically enrolled in continuity programs that charged recurring fees and cost an extra $39.95 per month. The court found that the defendants failed to adequately disclose that consumers who purchased the systems would be enrolled in the continuity plans and submitted consumers’ payment information without their express informed consent, in violation of the FTC Act and the Telemarketing Sales Rule (TSR)….

#187 j shum on 05.11.12 at 8:36 pm

Just today someone asked me are you glad you didn’t buy a house, almost like they were laughing at me. I sure look like the looser now. I can’t win at money. I hope they are wrong one day It doesn’t make sense. There is a house 900 square feet 75 years old in wosely here (the good side of the bad area of town). These one stories are apparently now worth 250,000. For the same price you can buy a country house in france where they give you a nanny when you have a baby

#188 DonDWest on 05.11.12 at 8:51 pm

#181 jess

Jess, that’s absolutely a terrifying thought. People in their early 60’s taking out student loans because they can’t find a job. What’s the thinking? I did the math (early 30’s) and based on how expensive school is today; I doubt I would see a reasonable ROI within my lifespan unless I became a doctor, lawyer or accountant.

Those boomers in their 60’s should have chosen to “suck it up” and work crap jobs until age 65. To add further insult to injury, you can’t declare bankrupcy from student loans, so when the baby boomer dies their children will most likely inherit the debt (on top of whatever student loan debt the children may already have). Ouch!

There’s nothing more satanic than the religion of higher education – real estate comes in close second, but it’s second.

#189 Canadian Watchdog on 05.11.12 at 9:06 pm

#183 TaxHaven

Precisely why if the US government doesn’t stimulate the economy with another $800+ billion dollars, the economy will drop into a recession. Only issue is, at the current inflation rate another $800 billion would probably have half the effect it did in 2008, therefore to get the same boost they would have to spend more then a trillion to keep the economy afloat for another 3-5 years.

#190 jwkimba on 05.11.12 at 10:25 pm


No, a 500k house for 26,400 gross income isn’t even close to a good deal. You might net 2, maybe 3% tops. For an illegal conversion?

Now if you bought it ten years ago for 300k, sure it looks good, not great, but good NOW but no new buyer can repeat that.

Woudl you pay 500, throw in 20k more for illegal conversion for a 26,400 gross? Why?RBC preferreds are at 5.% stable as a rock and will deliver 27,500 in tax favorable income on 500k.

#191 Van grrl on 05.12.12 at 12:35 am

#9 Smking man

Holy cow- “carrier”?? Are you making up a new language?? Get an editor.

#167 John G

Well put :)

#192 HomePaw on 05.14.12 at 12:57 pm

So Garth, you are suggesting that people (like the questioner) sell their rental condos in Toronto? I am guessing you believe the capital invested elsewhere is better than the rental income?

Show me a rental condo in Toronto that’s cash-flow positive taking into consideration the opportunity cost of the equity. — Garth