Chaos

Greg Habstritt lives with his hot wife Raylene and kid in Calgary, has a home in Canmore and probably makes millions scaring the crap out of people. Especially people who have some wealth and not enough financial knowledge to know when they’re being done over. Not that he does. I have no idea. But his currency is fear.

He recently wrote this on his web site, SimpleWealth:

I hate to be the bearer of bad news .. but we have some serious economic waves headed our way (and I mean all of us, regardless of where you happen to live).
In fact, I believe the perfect economic storm is now forming — and it’s going to be MORE painful than what we lived through in 2008 and beyond.
The result is going to be what I call the Middle Class Meltdown.
The middle class is literally going to be wiped away, and we’re going to be left with the rich, and the poor.
If you do nothing, and just “hope for the best”, by default your wealth will be wiped away, stripped by inflation, government controls and chaotic financial and currency markets.

Mr. Habstritt brags about being a millionaire and once wrote a three-page book called “I am Money.” He has 148,000 people on his mailing list, sells courses and materials to them.  Here’s a standard pitch: “Stay tuned for a powerful new training I’m going to be sharing with you next week that not only helps you understand what’s really going on in the economy, but how to respond and capitalize on the chaos and turbulence.”

The common thread binding Greg Habstritt with doomers, silver web sites and gold bullion nuts is panic, confusion and dread. Oh yeah, plus chaos and turbulence. Some of them believe we’re on the cusp of a 2008-style (or worse) systemic meltdown of the financial system, while others just milk the fear and live large.

Of course, it won’t happen. Even if Greece elects a whole Parliament full of radical, unemployed garbagemen and communist-sympathizing hookers on Sunday, chucks the euro and floats into the Aegean Sea, there will be no collapse. The financial system will maintain its integrity, propped by whatever support it takes from unified central banks and coordinated monetary policy.

Europe will hold, although life in Barcelona or Athens will suck large for years to come. China is run by people smart enough to engineer a soft landing (they’re already pricked the housing bubble), as evidenced by recent moves by the People’s Bank of China. The US gains economic strength monthly, and six months from now Obama will be in his second term. Meanwhile corporate profits continue to chug along, as 70% of companies beat estimates with their latest corporate earnings.

Scary people claim stocks are overvalued and ripe for collapse, when they’re running 19% behind profits. For the first time in six decades, dividend-paying equities are handing investors bigger returns than bonds. Volatility, as measured by the VIX, was running at 79 during the 2008-9 financial crisis, and right now is at a languid 21. Interest rate increases are on hold, with the certainty hikes will be slow and measured, protecting the yield on preferred shares. Real estate investment trusts continue to churn out steady returns based on commercial rents. And investors today have a rainbow of choices – from secure bonds which pay more every time inflation rises to principal-protected notes producing hedge-fund-type growth with a 100% guarantee. Meanwhile exchange-traded funds (ETFs) have wiped away much of the volatility of owning individual stocks, while retaining full growth potential.

Risk is sorely misunderstood.

For most of us (especially women), the greatest risk is not losing money in an asset which temporarily loses value. Instead, it’s running out of money. This is where the majority of people are headed.

The news this week is that Canadian debt levels have hit a new high. This time that news is worse. We haven’t borrowed much more, but we’re earning less. Indebtedness now becomes terrifying – when a slow economy hits incomes and the one asset 70% of people own (their home) begins its slow and inevitable descent. You might have heard that real estate sales across Canada peaked in April.

Worrying about the wrong risks has driven millions of Canadians to stuff billions into bank vaults, and the orange guy’s shorts. Every day now their dwindling eggs are eroded by inflation while meager returns are snapped with tax. Fear of loss – stoked by the Habstritts and bullion floggers of the world – is leading to true loss. If you think the world’s in flames, you must believe what you read online.

And, hell, we both know better than that.

289 comments ↓

#1 george on 06.15.12 at 9:12 pm

Garth. I disagree with your statement (made in the comments section of your June 5, 2012 post) “There will be no depression”. I believe the mountain of debt we have in this country, along with our demographic time bomb (more people riding in the cart and fewer people pulling the cart) make Canada’s 2nd great depression inevitable.

According to the Bank of Canada the total household credit in Canada as of the end of April 2012 was 1613 billion $ (1.61 trillion $). Over the previous 12 month period it went up by 84.7 billion $.

According to the Bank of Canada the total business credit in Canada as of the end of April 2012 was 1328 billion $ (1.32 trillion $). Over the previous 12 month period it went up by 62.2 billion $.

According to Statistics Canada at the end of March 2012 the total government (federal, provincial, and municipal) gross debt in Canada was 1901 billion $ (1.9 trillion $). Over the previous 12 month period the total government (federal, provincial, and municipal) gross debt went up by 101 billion $. (3rd line down in the link from Statistics Canada)

Adding it all up, at the end of March 2012 the total government (federal, provincial, and municipal), business, and household debt in Canada was 4842 billion $ (4.84 trillion $), and over the previous 12 month period it went up by 247.9 billion $, (approximately because the household and business credit numbers are from the end of April 2011 to the end of April 2012 while the increase in the total government debt number is from the end of March 2011 to the end of March 2012).

Just to put this 247.9 billion $ increase in the total debt in Canada over the last 12 months into perspective, according to page 238 of the Canada 2012 Budget Document in 2012 the Federal Government is planning on spending 245.3 billion $ on program expenses.

Our system is pay as you go. Ie: All of the increasing costs due to our aging population, mainly Medicare, Old Age Security Pension, Guaranteed Income Supplement, and the Allowance Program are (supposed to be) paid for in the current year’s budget.

Number of persons aged 15 to 64 years for each person aged 65 years and over in Canada, 1956 to 2056

Population 65 years and over, Canada, Historical (1971 – 2011) and Projected (2012 – 2061) (Percent)

Debt does not create depression. — Garth

#2 pathcontrolmonk on 06.15.12 at 9:14 pm

and yet Vancouverites are still in denial as homes under $1,000,000 start to creep West of Main

#3 JSS on 06.15.12 at 9:16 pm

Greg has a beautiful wife.

She’s not scared. I rest my case. — Garth

#4 Not on the Boat on 06.15.12 at 9:17 pm

It feels like the show is starting. The light are going down. I’m just looking for my seat :)

#5 pathcontrolmonk on 06.15.12 at 9:24 pm

Garth, did you know your name is an anagram for “truth ranger”?

#6 blase on 06.15.12 at 9:29 pm

What’s the point in the long post about Greg if you don’t tell us about what he’s advocating in his financial advice? How is what he is saying any different than what you saying is going on in the housing markets of Canadian cities?

Far too vague a post Garth.

It’s not about him. The subject is risk. — Garth

#7 Dan from Richmond Hill on 06.15.12 at 9:30 pm

Garth, what does higher and higher debt create?

More payments. — Garth

#8 Pete on 06.15.12 at 9:43 pm

“The financial system will maintain its integrity, supported by whatever support it takes from unified central banks and coordinated monetary policy.”

This ‘whatever it takes’ is code for printing more money for Quantitative Easing #3, currency debasement, Trillions more in bailouts to the above mentioned financial systems, hyperinflation, etc. Therefore, the cheques for OAS, welfare, etc. will keep coming, it just won’t purchase much anymore. This does not define ‘Integrity’ for me.

#9 Jo Ralston on 06.15.12 at 9:46 pm

Kudos to pcm for the anagram, but two can play at that game. How about “Rather Grunt”? ;)

OK, kids. Knock it off. — Garth

#10 50% correction predictor on 06.15.12 at 9:50 pm

Ladies and gentlemen,

Ask yourself this question: what factors support the high real estate prices in Canada? Or, on what basis, Canadian real estate can enjoy the double valuation than the American real estate?

High productivity? Yeh right. All my colleagues look forward all day long is long weekends and vacations.

Technological prowess? Please. Name one world leading technology Company in Canada.

Low cost of labor? Maybe when the Cdn $ was at 70cents US. Now American auto workers in Alabama cost half of the Canadian auto workers.

All we have in Canada are:

School principals make $200,000.

Kindgarten teachers $100,000.

Entry level police officers $65,000 +$ 50,000 OT

Subway fair collectors make $120,000 and still want to steal.

Paper-pushing oligarchy banking execs $7 millions plus

And layers and layers of bureaucrats in city, province and federal government, all enjoying fat pensions, 30 sick days in a year.

Ladies and gentlemen,

The stage has been set.

Canadians are trapped. The debt has to be paid off, one way or another. Greater fools? HAM? Liquidition?

From now on, it is just a question of speed and depth.

The collateral damage is far greater than you all here can imagine!

Instead of asking how low it can go and trying to catch a falling knife, we should ask ourselves:

Are we ready?

Am I ready?

Are you ready?

#11 a prairie dawg on 06.15.12 at 9:53 pm

“brags about being a millionaire and once wrote a three-page book”

– — –

That’s worth the price of admission right there. lol

#12 Debtfree on 06.15.12 at 9:56 pm

The way Msm is pushing the Greek / Spain / Italy fear mongering you’d think they are going into the gold silver canned spam gig. Specially global they almost pee themselves when they mention them. Mind you it’s nice to see them not pumping flyin real estate fishing for dollars . But equally funny . So Greg is fleecing the uneducated . Well if wasn’t him it would be some one else . on a lighter note it’s awful nice of us building a bridge for the Americans for nothing . That Steve he’s real generous with our money . I wonder if his buddy and mentor Mr. Morgan is going to get anything out of it . Banana republic with no bananas . He says only a billion dollars . Is that real dollars or F35 dollars ?

#13 P & T S on 06.15.12 at 9:58 pm

Debt does not create depression. — Garth

No, but the inability to service that debt does. Perhaps you might consider the many un,- and under-employed in the US on food stamps (or “SNAP” as it’s not known), we’re pretty sure that are experiencing a Depression (whilst Wall Street seemingly parties on!)

As you have stated on many occasions – what happened (and strategies that worked) in the past may not work as well in the future. However, one certainty is that “buying high” then being forced to “sell low” cannot be anything other than wealth-destructive. When the “perceived wealth” dries up, wallets have a habit of zipping up, and so the chain of trade reliant on the “old model” of abundant (and cheap) credit falls apart.

Walking around the “less expensive” parts of Sydney NSW, you’d (not) be surprised to see many more businesses closing down. We noticed this in the Rural towns, but in the Western (“Blue-Collar”) suburbs, there’s a lot of discretionary spend trade hitting the wall. Lots of anxiety over the forthcoming “Carbon Tax” too which we suppose doesn’t exactly bouy the happiness index much (!!)

Any thoughts on this from Aussie Roy or other Antipodean contributors?? Seems despite “public opinion” in the mainstream press, the true perceptions of “those on the ground” ar very much less optimistic.

#14 Canadian Watchdog on 06.15.12 at 9:59 pm

Moody’s downgrades Nokia rating to junk status http://www.latimes.com/business/la-fi-nokia-moodys-20120616,0,3695260.story

Nokia has announced the closing of its facilities in Ulm Germany and Burnaby Canada.

Next…

#15 Layton on 06.15.12 at 10:09 pm

Debt does not create depression. — Garth

…Yes it does. Over-leveraging caused by artificially cheap credit is one of the main causes of recessions. It caused the US meltdown. And Europe. And Japan. And the Great Depression. Now China. But I’m sure you have a better explanation.

Don’t need one. Debt does not create depression. — Garth

#16 Pig without lipstick on 06.15.12 at 10:11 pm

I can stand it no further.

Your views have this inherent tension in them. On one hand you you ridicule sheeple for being ruled by their emotions and checking their intelligence at the door. On the other hand your optimistic about the future of the world economic system. Aren’t the people who run the system subject to the same human foibles as the individuals you regularly lambaste on this site. Aren’t the people who run the system as short sighted as those of us who are ruled by emotions. I just don’t understand how you can be so optimistic that the people who have failed to anticipate the implications of their policy decisions will magically make better decisions as global economic problems intensify.

It’s like you mock common people for their hubris but seem to completely reject the idea that central planners and world leaders are capable of the the same shortcomings.

Then they would not be leaders. There is zero chance central banks will allow contagion. — Garth

#17 Dan from Richmond Hill on 06.15.12 at 10:15 pm

Garth, then what creates depression ?

Deflation. — Garth

#18 Devore on 06.15.12 at 10:15 pm

After looking at Greg’s site, I am thankful the [blink] tag has been stripped from the HTML standard. Unfortunately, a wide array of offensive text styling options remain to be abused.

#19 Kaganovich on 06.15.12 at 10:18 pm

The financial system will maintain its integrity, propped by whatever support it takes from unified central banks and coordinated monetary policy.

(While it is fairly early to predict whether the financial system will maintain integrity or not, I am starting to think that its integrity rests upon the subjugation of a significant proportion of the global population who find themselves in de facto depressionary conditions as I type this.)

Europe will hold, although life in Barcelona or Athens will suck large for years to come.

(Sure it could hold, but life will suck large for more people than just those who populate Barcelona and Athens for a long time. If Europe disintegrates, life may suck large for the majority of Europeans, but perhaps for not as long though. If there is a cascade of defaults sans bailouts, life could really blow for bondholders who comprise a very small percentage of the global population. Most people with little wealth would be all for the latter scenario in my opinion.)

China is run by people smart enough to engineer a soft landing (they’re already pricked the housing bubble), as evidenced by recent moves by the People’s Bank of China.

(Michael Pettis has been making cogent arguments for China slipping into the 3% range of GDP growth in the upcoming years. Their demand for Canadian commodities will most assuredly wane as their main export markets (Europe and USA) remain weak. Perhaps their landing will be softer than the doomier predictions, but I think the soft/hard controversy deflects form the more important issue at hand, soft or hard for whom?)

#20 capi casso on 06.15.12 at 10:20 pm

your freind is right garth and your right about being wrong again .. pumping corporations that make profits by outsourcing work to slave countrys is not exactly something good for us the middle class .. garth your just wrong >.

#21 A Fan in Van on 06.15.12 at 10:26 pm

Doesn’t the inability to get credit also lead to depression?

#22 A Fan in Van on 06.15.12 at 10:29 pm

My favor Garth Turner anagram is “grant R.E. hurt”.

#23 Dan from Richmond Hill on 06.15.12 at 10:30 pm

Garth, if house prices will drop, as most of us anticipate (15% as starting point as you mention), will we have deflation ?

Possibly, but mild deflation is not such a bad thing – if contained. — Garth

#24 mid-Ontario on 06.15.12 at 10:32 pm

After reading all the doom and gloom in the comments tonight, I’d better switch to “SimpleWealth” for a pick-me-up.
CREA is on record calling for higher house prices in 2013 and 1014. Thus far, they have been bang on. No sense in going against CREA.

#25 Debtfree on 06.15.12 at 10:33 pm

Geez depression . Causes were tightened money supply due to bank failure . Over supply of goods and under consumption combined with isolationism of production through tariffs and taxes . The world is too interconnected to have a depression . far too many players then eighty years ago . Besides with all the fear mongering driving gold silver and spam production . How can we get an economic melt down with all the mining and pig farming.

#26 Canned Goods and Buckshot on 06.15.12 at 10:35 pm

#16 Pig without lipstick

You deserve a big smooch for that post. Great questions. How the heck is all the debt going to be repaid?

#27 ANONYMOUS on 06.15.12 at 10:40 pm

I hate all this doom and gloom reporting, and all the fear that idiots here have.

Listen: don’t worry, your home is going to go up in value, and your stocks are going to go up in value, and your job is safe, and you will not die in your sleep or have the sky fall on your head tomorrow.

Just relax and enjoy life knowing that both the stock market and the housing market will both be going up 6% to 10% per year for as far as the eye can see.

If you don’t have any money invested in stocks and you don’t have a house, then go ahead and borrow 100% on a $10-Million dollar pad and you will be guaranteed to see its value go up 6% per year, just the same as stocks are going up 6% per year. Don’t worry, it will give you wrinkles !

(smile) !

#28 MarcFromOttawa on 06.15.12 at 10:41 pm

TwentyFIIRSST

#29 Mr Reality on 06.15.12 at 10:43 pm

Garth

Debt causes depressions, there is no argument. The perfect example of this is Greece. Explain to us how this statement is untrue.

Mr. R

#30 Big Al New on 06.15.12 at 10:50 pm

Garth old boy you can be as optimistic as you want but mark my words this will not end well. There is so much global tension in the air you can cut it with a knife. Someone is going to f:-) this up big time, I just don’t know if it’s the Europeans or the Japanese or our neighbors to the south. This global ponsi scheme is living on borrowed time.

#31 a prairie dawg on 06.15.12 at 10:52 pm

#26 Canned Goods and Buckshot

#16 Pig without lipstick

You deserve a big smooch for that post. Great questions. How the heck is all the debt going to be repaid?

– — –

So you both belong to the same doomer forum…

It’s time to evolve.

#32 Ralph Cramdown on 06.15.12 at 11:06 pm

How the heck is all the debt going to be repaid?

Why does the debt need to be repaid? GE doesn’t have any plans to repay all its debt, and neither does IBM or the Bank of Montreal. Poor people generally want to repay their debt before retirement, because they can’t afford to service it. Not so rich people and corporations and governments. Has there ever been a time and place in history where all the debt got repaid?

#33 Skip Breakfast on 06.15.12 at 11:09 pm

Wow. I’m gobsmacked as they say Down Under.

In response to Pig-Without-Lipstick’s comment above Garth says leaders are not capable of the the same shortcomings of humanity “because then they would not be leaders”.

I admire Garth’s curmudgeonly brevity in general, and understandably such brevity doesn’t always allow for nuanced arguments. But seriously, Garth’s statement is nothing short of absurd in this case. Unless he has something more to add to clarify his meaning.

If leaders don’t suffer our shortcomings, then how’d we wind up in this colossal mess in the first place.

Leaders instituted the Euro without instituting centralised fiscal and political authorities.

Leaders repealed the Glass Steagall act allowing banks to gamble the people’s money away with abandon.

Leaders throughout history have done much worse too. Like building death camps. Or bankrupting a country to build a palace. To name just a few.

Garth goes further still to say there is zero chance central banks will allow contagion. But we already have early contagion. Bond rates and bank withdrawals in Spain are creeping up despite best efforts of leaders so far. And so I’d say that there is some chance higher than “zero” that contagion will reach a point truly deserving that name. It might not happen. But it’s a heck of a lot riskier than zero.

#34 Auntie American on 06.15.12 at 11:14 pm

“The US gains economic strength monthly, and six months from now Obama will be in his second term.”

The US economy is going great. It’s only the people who aren’t doing so well.

#35 a prairie dawg on 06.15.12 at 11:15 pm

GT=TR

That’s profound. :)

(hat tip)

#36 North of Upper Middle on 06.15.12 at 11:15 pm

Gee Garth, you generally seem to be a pretty sharp guy. However, your faith that TPTB can somehow fashion a soft landing by inflating away mountains of debt without inflating away John and Jane Doe’s savings strikes me as incredibily optimistic.
Cascading bank and soverign failures in Europe can crash the financial system. The only hope for us is for our governments to understand that draconian austerity through balanced government budgets, where a large part of the population is badly hurt financially by job loss etc, is preferable to the continued attempt to solve a debt crisis by taking on more debt, which in the end will utterly destroy our currency and take everyone down with it.
We have hit a fiscal wall of deficit spending. The time is fast approaching when nobody will lend many western nations any more money because the interest rates offered do not match the risk of a currency failure, nor even cover the true rate of inflation.
We need to understand that we must match our government spending today to that which we can afford to pay today. Borrowing on any continuing basis is unsustainable and will eventually result in higher interest rates, higher taxes and less business activity. It is also stealing from future taxpayers who will not enjoy the standard of living provided by our gold-plated government services, paid for by their future taxes.
I don’t know what exactly could trigger a collapse, but all the pieces are in place for one. Policies of central banks are behind the current fiscal melt. It won’t take much for their attempts at a soft landing to be derailed. Perhaps the Greek or French rejection of even minimal austerity could be it, or a German determination to stop thowing good money into the sinkhole of irresponsible governments.

#37 Dave on 06.15.12 at 11:20 pm

Garth, your commitment over the last 4 years of relentlessly predicting a real estate downturn in the face of a historic bull-market run in real estate is astonishing.

I admire your resiliency.

And accuracy. — Garth

#38 Djb on 06.15.12 at 11:27 pm

Most people have not noticed but going into the Greek election and the markets have been on a tear lately..

The markets tend to be 6 months ahead and quite possibly priced in the Grexit.

As doom and gloom as MSM makes it with fear mongering, the fear is for the banks not the unemployed on the street. The best thing for Greece is to exit take a hair cut and get their sovereignty back, once again being the cheap place to go in Europe.

#39 XKR on 06.15.12 at 11:28 pm

#26 “How the heck is all the debt going to be repaid?”

It isn’t. It was never meant to be repaid, but merely serviced and refinanced over time as it grows to infinity.

#40 Tony on 06.15.12 at 11:28 pm

Greg has a fair rendition of the future but this time it will be the rich that will be wiped out leaving the poor and the new poor. The middle class never really factored into this because it’s already a given they’ll be history anyway. The smart people are 100 percent in cash the stupid people are in precious metals. A very small minority are in out of the money puts on the market indexes in future months. This will be the new wealthy in our future. The ones in cash will survive but never really had the skills to become wealthy so they’ll become the new middle class leaving very few wealthy a small middle class and the rest of the world will be eternally poor as will be all their descendants.

#41 DondWest on 06.15.12 at 11:29 pm

“Then they would not be leaders. There is zero chance central banks will allow contagion. — Garth”

Correction, they’re dictators, who are obsessed with consolidating their own power. You’re correct that the central banks won’t allow a contagion to pass. They have proven quite enough already that they’re all too willing to sacrifice everyone else for their own hide.

#42 50% correction predictor on 06.15.12 at 11:31 pm

Then they would not be leaders. There is zero chance central banks will allow contagion. — Garth

____________________________

Their “will” means nothing.

Economic cycle and the collapse of debt-fueled expansion can not be repudiated by their “will”.

But they do have the ability to choose either inflationary or deflationary collapse. I will give them that!

#43 Littleboyblue on 06.15.12 at 11:33 pm

Garth if you were Minister of Finance today, what would you be doing differently?

#44 Dd on 06.15.12 at 11:33 pm

Yr buddy at BOC disagrees with you about the Euro threat. actually he is down right pessimist. I would tend to believe his team of analyst compared your team of one.

#45 Inglorious Investor on 06.15.12 at 11:38 pm

Open rant: GDP basically comes from spending. The proximate cause of recessions and depressions is a contraction in spending. Spending contracts because either people have less money to spend or the demand for money (savings) goes up, often both. The reasons for this are numerous and inextricably linked: unemployment, interest rates, negative sentiment, etc. Today, the main cause of the current depression (and it is a depression in the US by just about any measure but GDP, thanks to central banks creating, and governments borrowing and spending funny money) is too much debt. Basically, our aggregate debt can no longer be serviced because insufficient real wealth is being generated. This has been the case for many years now. This is deflationary because when debts are retired (either via payment or default) money (which is debt) is destroyed. Today, in the real economies of much of the world, money is being destroyed at a faster rate than new money (loans) are being created. The banks cannot stand this, because their earnings (and now their survival) depend on new debt being created faster than old debts are retired. But with money in the real economy shrinking due to debt payments/defaults, and money in the banking system also shrinking due to bank runs, central banks and governments are pumping out money (debt) to compensate, so that insolvent banks can pretend they are not insolvent. They are using liquidity (and funny accounting) to mask insolvency. This is why banks dislike deflation. Mild deflation caused by higher productivity is good. Don’t confuse the two. Central banks will try to prevent contagion. This why I believe Lehman was a controlled demolition. Governments and central banks have had plenty of experience with the threat of contagion over the past two decades: LTCM, Mexico, Russia, Argentina, Asian Tigers, Insurance companies in the 90’s, S&L crisis, etc. etc. Yet they act surprised when all hell breaks loose after they let Lehman fail. Right. So central banks will print, print, print, print. It’s their only option. If the economy does not catch up, not enough real wealth will be created to collateralize all the new funny money. And most of us will be poorer. Canadians are toast. Our housing market will be in relative decline during a time of declining energy prices. A shock to the system could be catastrophic. At that time the Americans will be laughing at us for being so stupid as to follow their example, and because their economy will be expanding much faster than ours. Close rant.

#46 Observer on 06.15.12 at 11:38 pm

….never smoke in the living room. Really hard on the hepa filter.

#47 Tony on 06.15.12 at 11:38 pm

Re: #27 ANONYMOUS on 06.15.12 at 10:40 pm

Remember the bread lines from the 1930’s?
That’s what the future holds but they’ll be much less bread to go around this time. House values in the major cities in Canada will be decimated. As for stocks it’s been a long time and the second shoe never dropped from the crash of ’87. You’ll see the second shoe drop soon enough as the markets retest the ’87 lows not ’87 highs.

#48 groovin_123 on 06.15.12 at 11:42 pm

Deflation is simply a reduction in the money supply, as is inflation an increase in the money supply. Rising prices are the symptom of inflation.

Right now central banks are embarking on hugely inflationary policies to “paper over” bad debt. A juggling act.

Bad debt, defaulting on debt, collapses the money supply leading to deflation and can lead to depression if bad debt gets out of hand. Central banks will fight tooth and nail to not let this happen.

Debt can be a good thing when used to further production (think small business loans, not ferrari payments) and is not the cause of depression itself.

#49 Keith in Calgary on 06.15.12 at 11:42 pm

The question which counter balances this latest topic is………

And where would the world be WITHOUT the trillions of freshly minted paper money thrown at the markets since 2008 by various deperate governments supporting the banksters ?

Certainly not where we are today……..on terminal life support.

#50 Humpty Dumpty on 06.15.12 at 11:45 pm

Fine. You win.
But here’s a few things I would to share with you G

The global gold market is free, fair and honest.

The Comex futures market is a true, fair and perfect price discovery vehicle.

There is no demand for physical gold and/or silver in size. All of this talk about sovereign nation and central bank buying is simply a tool used to manipulate price higher.

The Federal Reserve never has, and never will, intervene in gold to manipulate and suppress price.

The bullion banks simply engage in selling forward for their mining clients.

Gold really is a barbarous relic of another time.

Fiat currency is wonderful because limitless money creation spreads wealth globally.

The Chinese are fools who mindlessly continue to accumulate dollars with no alternative but to reinvest those dollars into U.S. treasuries.

Same for the Russians.

And the Saudis.

And the Japanese.

Paul Krugman is a genius.

So is Nouriel Roubini.

So is Jeff Christian.

So is Jon Nadler.

The total debt level of the U.S. is manageable and not a problem, at all.

Economic growth will soon return the U.S. to peace and prosperity while allowing for the service of the accumulated national debt.

Barack Obama is the most intelligent and supremely qualified Chief Executive that the United States has ever had.

TARP was extraordinarily successful and actually turned a profit for the American people.

Deficits don’t matter.

Money printing and quantitative easing is perfectly fine so long as the velocity of money remains low and the printing is nothing more than balances being shifted within Primary Dealer accounts.

Transfer programs such as Social Security and Medicare are fully-funded and will always be there to provide a safety net for the elderly, the poor and the disabled.

The Federal Reserve never has, and never will, intervene in the equity, treasury and/or currency markets.

Ben Bernanke is an Einstein-level genius. We are very fortunate to have him as Fed Chairman at this critical point in history.

Silver is simply an industrial metal. Always has been, always will be.

As a byproduct of mining for other base metals, the amount of silver is infinite.

Those hoarding silver are mindless robots, fooled by internet charlatans.

Jim Sinclair is a disinformation double-agent of the Rothschild family.

Trader Dan is a mindless pumper whose sole motive is personal gain.

Andrew Maguire is a figment of Bill Murphy’s overactive imagination.

Ted Butler, Jim Willie and John Williams are scam artists who dupe the easily-frightened into paying for their over-priced and worthless analysis.

FOFOA, Keiser, VonGreyerz, Hoffman, Krieger, Embry, Russell, Pento, Schiff, Rickards, Celente, Rule, Fleckenstein, Faber, Quinn, Nielson, Naylor-Leyland, Turk, Martenson, Lira. All of them are nothing but 21st century snake-oil salesmen.

GLD is 100% backed by gold and it’s custodian has no conflicts of interest.

SLV is 100% backed by silver and it’s custodian has no conflicts of interest.

PSLV and PHYS are empty shell con games created and marketed to extract hefty NAV premiums from dupes.

Eric Sprott should be extradited to the U.S. on criminal front-running and book-pumping charges.

Mining stocks, in general, have been in a bear market since 2009 because the fundamentals are lousy.

The LBMA is a distinguished group of member firms which actively promote fair and free pricing of metal.

JPMorgan is a benevolent organization which only performs necessary investment banking services for their clients.

Goldman Sachs, Deutsche Bank, UBS, HSBC et al are similar, honest companies.

High-frequency trading helps in price discovery and provides liquidity.

The CME Group is a dispassionate facilitator of markets and clearing which stands ready to eliminate fraud and protect investors.

The CFTC is an objective and honest U.S. government agency which regulates the futures markets, always on the lookout for fraud and manipulation so that the regular investor and/or hedger can have confidence in a fair and level playing field.

http://www.scribd.com/fullscreen/95493792?access_key=key-2bukmjiiyjtzns9qcor

Lets chat in December and see where we all stand..

#51 Uptick on 06.15.12 at 11:49 pm

@ #8 Pete

Right on!

#52 Canadian Watchdog on 06.15.12 at 11:55 pm

Charts for the discussion.

Canada Surplus – Deficit http://postimage.org/image/7xo2zvvzx/
Canada Surplus – Deficit (Inflation Adjusted) http://postimage.org/image/ttok623iz/
Government Bonds Outstanding http://postimage.org/image/8bg8801bx/

The talk of deflation here is a complete fallacy. The government will print and redistribute wealth until the day Canadians start threatening their political careers. Our Government knows what needs to be done, what they don’t know is how to get re-elected once they’ve done it.

It’s your choice. Not theirs.

#53 Sydneysider on 06.15.12 at 11:58 pm

#13 P & TS

“Any thoughts on this from Aussie Roy or other Antipodean contributors?? Seems despite “public opinion” in the mainstream press, the true perceptions of “those on the ground” are very much less optimistic.”

There are many signs, both subtle and obvious, that retail businesses in Sydney are being stretched. I sense that this is because people are more cautious in terms of their spending, rather than the result of actual financial difficulties.

However, I don’t think you’d find many people in Sydney who are optimistic about the immediate economic future. For those who are paying off $0.9M houses (falling in value by 5% pa), great dangers lie ahead.

#54 Joe on 06.15.12 at 11:58 pm

It’s excessive liquidity created by central banks that pile onto certain asset classes (like housing in our case) that lead to unsustainable debt accumulation and inflation in these asset classes. That’s your bubble. Once the bubble pricks, we get deflation and usually a recession.

Btw… Keep on rocking, Garth.

#55 Not 1st on 06.16.12 at 12:05 am

“The financial system will maintain its integrity, propped by whatever support it takes from unified central banks and coordinated monetary policy”

Garth, you could have saved a lot of words and just said money printing. Lets be honest now about what this “coordinated action” really is – socializing debt.

#56 Bailing in BC on 06.16.12 at 12:12 am

Sorry Garth, I know that you have told us to cut this out but I couldn’t help myself, the best anagram of your name is “Garner truth”

As an act of contrition I offer up an anagram of my own true name – “tonsillitis wincher”. Not exactly something to put on your coat of arms.

#57 earlybird on 06.16.12 at 12:21 am

I absolutely wholeheartedly agree with the post…..before the internet, we didnt know the gory details of everything tiny event all over the world, at all seconds of the day…hence this doom all over. The economic system is in a messy transition constantly…we will all adjust and learn to survi invest accordingly

#58 Nostradamus Le Mad Vlad on 06.16.12 at 12:26 am


“Chaos with doomers, silver web sites and gold bullion nuts is panic, confusion and dread. If you think the world’s in flames, you must believe what you read online.” — Compared to the m$m, I’ll take my chances with the ‘net.

“We haven’t borrowed much more, but we’re earning less.” — Because we’re becoming a subservient, service driven society (re: $15 / hr. part time work, 25 hrs. / week with no overtime or benefits), instead of an industrial / trades workforce – society.

#7 Dan from Richmond Hill — “Garth, what does higher and higher debt create? — More payments. — Garth

Which means less freedom for citizens. Chipping away at our rights and freedoms, civil liberties, one by one. Notice what the IMF is doing to Spain further on.

Debt does not create depression. Deflation. — Garth — What (or whom) causes deflation? Once we know the answer, we blogdogs can start shooting our own economies into the stratosphere, and leave govts. behind forever!
*
Gas Prices UK vs. EU; Businesses are right to question the UK govt.’s lend / spend attitude; BC Ferries Kelowna Flightcraft did well, but the BC Ferries fiasco means it will probably be simpler to fly; Cdn. Friday links; Mitt Romney Profiting from laid-off workers; Karl Marx Credit Cards; Countrywide Financial Americans are still paying the price; Boomers shrinking inheritances; US ETFs Two sides to every story; Economic or Apple Crumble? Global Recession? No, just the ups and downs of life; 9:14 clip China buying London metal exchange; IMF (or BdBs) Pressure Spain to lower salaries, increase VAT; Gold Miners are the real deal; Start Yer Own Business.

Junk Debt New term? First Time Homebuyers Rent instead; Artificial US recovery, and Weaker Factories but Jobless rate falls More part time workers? Modern Day Depression Two charts prove it; Nokia Implodes; 14 Bank Defaults Spain and Italy are in there; Morgan Stanley Cut GDP; Living in an RV and cutting costs substantially; FB’s Post IPO brain drain; 8:43 clip See the heading and judge for yourself.
*
Daft Men and tabloids aren’t much use to anyone, but squid? Croc eat Croc world; UN, Agenda 21 and the NWO Ignore the UN’s blatherings and bleatings. They, NATO, the US and Mossad are behind the Arab Spring and causing trouble thruout the world;Venezuela and Iran Building their own drones; UK proposes ‘net archive of citizens; Gone In 60 Seconds A whole lotta things happen in one minute; Voyager One Can it take us with it? Black Death, not Black Plague or Black Knight making a comeback; Architects and Engineers Take a bow; Eating Food in China Hmmm; Tree Rings and cosmic blast about 1,200 years ago; Sex and the New World Disorder Grumpy Old Men III.

#59 Carpe Diem on 06.16.12 at 12:28 am

Irrational exuberance in stocks or property caused a good amount of the recessions and the great depression. This is part of the business cycle. When times are good, people start to get carried away. When this phases finally end, fears comes and crashes the party.

1929 stock market crash was everyone was buying stocks at crazy prices and the roaring 20’s was an awesome party … then it ended.

2001 is a good example of irrational exuberance with the tech bubble crashing.

2008 – irrational exuberance of real easte in the USA comes to an end.

2012/13 – Guess which country will get a little fearful of their favorite asset.

#60 Derek R on 06.16.12 at 12:30 am

#29 Mr Reality on 06.15.12 at 10:43 pm wrote:
Debt causes depressions, there is no argument. The perfect example of this is Greece. Explain to us how this statement is untrue.

You’re almost right, Mr R, but not quite. It’s the fall in debt (in other words the deflation just as Garth says) that causes depressions. A high level of debt in itself won’t cause a depression as long as it’s stable. I’m not going to bore everyone rigid by attempting to explain why here and I am sure that Garth isn’t either but if you want a proper detailed explanation, including real-world evidence, you need to read Steve Keen’s blog. Look for posts on the “credit accelerator” with graphs and correlations. The post “Deleveraging with a twist” is a good one to start with.

#61 daystar on 06.16.12 at 12:43 am

#29 Mr Reality on 06.15.12 at 10:43 pm

Garth has already told you that debt doesn’t cause depressions right, so what does? Think about the differences between debt that gets repaid and debt that does not, even in extreme leverage and high debt service circumstances. Garth is trying to get you to figure this out for yourself because there is much greater value for you learning this on your own.

#62 Michelle on 06.16.12 at 12:44 am

“Even if Greece elects a whole Parliament full of radical, unemployed garbagemen and communist-sympathizing hookers on Sunday, chucks the euro and floats into the Aegean Sea, there will be no collapse.”

Garth, you know how that song goes…

Hookers never, never work on a Sunday!
… but you can kiss them on a Monday :)

#63 TurnerNation on 06.16.12 at 12:45 am

Today’s photo: we get it, this weblog dislikes hardwood!

OHHHHHH. Again, this month, Toronto condo realty firm admits that:

TORONTO’s NEW CONDOS WILL NOT RENT FOR POSITIVE CASH FLOW!! Who is subsidizing whom, and why?

________________________________________
**”Even with these rental increases, carrying costs (with a 20% down payment) will exceed rents for newly completed units by 2013 (that means units bought in 2009 or later) according to CMHC. Not a good sign for investors. “**
________________________________________

http://www.remaxcondosplus.com/blog/mayjune-market-report-2012/

#64 earlybird on 06.16.12 at 12:54 am

Wholeheartedly agree!! Sooo much crappy media, delivered via internet every nano second….a thousand bizarre events a day…no wonder the doom. No matter what the financial system does, that is the sytem, its always in messy transition, always evolving and correcting..thats what its suppose to do. The reaction of 7 billion people will always adjust….and thrive. Financial Education is paramount, and people are making a killing of people’s fear and lack of knowledge. Even a depression now will look a hell of a lot better than in the past. We need to expand debt to keep it going (growth), when we reach debt saturation, the economy reacts and adjusts (shrinks), defaults cure the extremes….and life goes on…invest accordingly.

#65 obert on 06.16.12 at 1:01 am

#17Garth, then what creates depression ?

Deflation. — Garth

Garth, and what creates deflation?

#66 ozy - I like some of his statements on 06.16.12 at 1:01 am

ozy – I like some of his statements, like those seem right on truth:

The middle class is literally going to be wiped away, and we’re going to be left with the rich, and the poor.

and

If you do nothing, and just “hope for the best”, by default your wealth will be wiped away, stripped by inflation, government controls and chaotic financial and currency markets.

Read my mind baby, bring it on!!!!!!!!

#67 Arthur Fonzarelli on 06.16.12 at 1:01 am

But doesn’t this massive runup in debt servicing reduce tax dollar utilization on more productive things – or even “less unproductive” things like public sector salaries or repaving roads to nowhere – and wouldn’t excessive debt also lead to more QE and inflation and reduced purchasing power – meaning people spend less and/or have less to spend – meaning deleveraging and deflation while we stockpile canned goods and keep our meagre savings in the orange guy’s shorts as we keep watch out for the Four Horsemen?

debt – debt servicing – QE – inflation – decreased PP – shorts stuffing stagnation/stagflation – deleveraging – depression

Or maybe you’re just implying that present debt servicing levels can be managed in the countries that matter?

But why don’t we have the kind of contagion risk that we had with all those wonderfully bundled US crackshack securities? I must apologize though… I’m losing track of relative dollar values with all those zeros…I got lost at “gigajillion”…

Be gentle.

#68 victor on 06.16.12 at 1:03 am

just borrow and buy value stocks,
no need to work hard
play and party
we will be rich in 5 yrs,

#69 City Slicker on 06.16.12 at 1:07 am

Garth you talk about Greece like it’s not a big deal, and it maybe not, but it’s only the beginning and the tip of the iceberg of Europe’s fall, and the US’s predicament is not better, as a matter of fact worse.

Just listen to Peter Shiff and Nigel Farage in this short clip, and neither need an introduction I’m sure:

http://www.youtube.com/watch?v=W_F4I-pUgSE&feature=player_embedded

The only thing keeping the whole financial system going is quantatative easing, and only more QE will keep this afloat.
Your statement “Every day now their dwindling eggs are eroded by inflation while meager returns are snapped with tax”
Inflation is simply an increase in the money supply, and debasement of currency ultimatley causing prices to rise and the whole reasoning behind buying gold/silver.
And those that think inflation is 2% are blind as a bat, just look at your grocery bill in recent years.
But you hit this one right on the nail head “The financial system will maintain its integrity, propped by whatever support it takes from unified central banks and coordinated monetary policy.”

QE to infinity is as sure as death and taxes, thus so is high inflation.

#70 Layton on 06.16.12 at 1:11 am

Excessive debt = over-leveraging, accompanied by inflationg (hint: Housing bubble)

Deleveraging = reducing debt, accompanied by deflation.

#71 RayB on 06.16.12 at 1:13 am

Garth before the 1929 market crash the Perl Harbor attack or when Hitler invaded Austria no one predicted it.
I don’t believe the doomers necessarily but I will say this “we are due” for some great calamity. People are trying to predict the obvious, market crash dollar crash collapse of the world financial system. It won’t happen because it is too obvious and predictable. What is coming is something we are not able to calculate and predict it’s just the way disaster happens as disaster has its own time table and method. The method that is
least expected.

#72 earlymidlifecrisis on 06.16.12 at 1:24 am

@16- Great point!

#73 Tony on 06.16.12 at 1:41 am

@16, well said! Spectacularly insightful.

#74 Observor on 06.16.12 at 1:45 am

Winners Win and Losers Lose…

Which are you? yes you. Which?

#75 TurnerNation on 06.16.12 at 1:46 am

I see this weblog has moved from poerty into anagrams.

For real estate, what can “Turner Nation” spell?

Dear god the results as worse than expected.
(I’m a renter!!!)

– TENANT RUIN OR
(or what??)

Wait, some hope:

– A RENT I NO RUNT

– TERRA I NON NUT
(Italian for ‘I do not own land’?

– NINA RENT ROUT
(more bad news?)

– NORA RENT UNIT
(My future soul mate?)

Unfortunately, it did not spit out any REIT suggestions. Can I buy a vowel, Pat…

#76 Jo Ralston on 06.16.12 at 1:50 am

Dear Garth,

Hoping to atone for the above transgression & that you will find consolation in the knowledge that even the nomen of that most esteemed Spiritual Advisor to the Stars (of “Real”-ty), “Big” jim flaherty, contains hidden secrets revealed only to those who scry & seek:

Hi Elf, Try Jam
Jail, Fry Them!

The Universe has spoken. I’ll stop now. Regards & sincere thanks for the great blog, JR

#77 TaxHaven on 06.16.12 at 1:52 am

Not afraid of that. Who says disaster is imminent?

Just be concerned about the slow erosion of living standards. The level of personal debt necessary to maintain “rising” standards of living. The increasing redundancy of ridiculously expensive post-secondary educations. Rising long-term structural unemployment. A no-growth to slow-growth economy for as far as the eye can see. The slow insolvency of governments and their social programs, which started as long ago as the early seventies, is speeding up a tick…

You can count on continuing inflation in the stuff you need and on artificial ZIRP interest rates, which will erode any fixed income return and depress the prices of debt-dependent assets.

No, disaster will not strike overnight. But it’s like a glacier, unstoppable without the immense, necessary and unacceptable pain that comes with removing the social planning governments from economic life and restoring truly free markets.

These are historic shifts that are just beginning and the upshot is that we and the next generations will not have it as easy as did the Boomers.

There’s no easy, painless answer. (And I do like gold.)

#78 Dodged-A-Bullit-In-Alberta on 06.16.12 at 1:56 am

Greetings: Garth” The financial system will maintain its’ integrity.” I call bullshit on that statement. Integrity infers that institutions have a sense of right and wrong. We have seen in the world banking system, Canada included, this does NOT exist. The objective is, and always has been, to indebit Canadians. Read Canadian history, the Banks NEVER lose, that is why we have not had a bank failure in Canada. During the depression of the 30”s Canadian banks foreclosed on Canadian farmers, knowing full well the weather and world chaos was insurmountable for my parents generation. Canadian banks are a bunch of lying cheating bastards.This will never change. The pricks in the Harper government will continue to allow this to happen because they have no sense of right and wrong. Therein lays the rot of our society.

#79 Marco from Van on 06.16.12 at 1:57 am

Nobody here seems to be FROM Europe – I am. In fact I am from Italy and my wife is Greek. Yes, Italian & Greek passports, born there, fluent in the language, grew up there and have family there too.

We live in Van, nice place, not BPOE though, I was transferred by a multinational to run a subsidiary here, otherwise we may well be elsewhere, but don’t regret Canada at all – it is a benevolent country with much good going for it, too bad for the most it is immigrants who see than instead of the locals.

I find it very entertaining how the “new world” commentary just looks at European countries systemically clearly does not UNDERSTAND the people.

We Europeans, are living contradictions and masters at survival. We have had a contiguous history of several millennia and pretty much wrote most of the rule book modern society lives after.

We are innovative, creative and passionate. Productive when motivated (by good and bad) – but lazy when not, explorers and at the same time narrow minded and much more, but inherent survivors.

We have lived through 2 world wars with near total resets and several society changing revolutions; we have lived through tumultuous existences right on the the pegs holding the left side of iron curtain when it was drawn across the continent and formed the frontline of the cold warr with huge influential forces pulling in both directions resulting in both countries having very polarized politics.

Europeans are united when fronted with the world and fractionate when fronting each other. We’re racist and culturalist against each other within the borders of the individual countries (Look at Germany, it is a federation while as a nation it wants to become part of an even bigger one).

Our countries may well be bankrupt BUT the people are massive savers. Italy and Greece has the lowest personal debt level in the modern world (Italy that of the G8) where things like credit cards are still scorned over. They also have the fastest mortgage paybacks because people inherently buy what they CAN afford.

We do suffer from greatly inflated, self-serving and mostly corrupt governments adorned with inefficient and bureaucratic public services, but the people UNDERSTAND they are ultimately responsible for their own fate and thus rely on these as little as possible.

Consumer spending has never been huge as people are rather stingy (eg. live mostly within their means compared to the British, Americans, Canadians etc.) so a government / public services recession will have a less visible and lower impact than a consumer spending based recession would be in the UK, US or Canada.

With Mario Monti, we have shown we can dump partisanship for pragmatism, and I bet you Greece will show the same.

As drama and tragedy comes from Greece just as much as democracy did, you can easily expect to see a lot of it as Greece undertakes the jouney with much kicking and screaming (making the Vancouver riots look like a 2 year old’s birthday party), but they will get there one way or the other.

The German government under Merkel has already been very pro-actively selling the people that a united Europe is better for Germany than one in tatters (it it still its largest trading partner) and has plenty of fiscal legroom to impose a lot of change (eg. more federalism) in exchange for being the backstop.

They are deeply motivated by the collective want to shed their malevolent history and appear to become a benevolent savior.

The market has almost already priced in a revolting Greece and is expecting a lot of liquidity injection to prevent the contagion from spreading – anything less will come out ahead and I suspect be the cause of a little sell off almost as if anti-climactic if the Greeks vote in their version of Mario Monti, Antonis Samaras.

There is a lot of up-front posturing in the traditional European style where you let a guilty party sweat it to the last second before saving them, just so they feel the terror that COULD have been.

Samaras will come to power with a pragmatic mandate and there will be summer long saber rattling, leading to the ECB and Bundesbank will back off a little on the depth of austerity.

By the time we get to mid Q4, all the over reaction coupled with low summer market volumes and a US election driven slow-down will present us with another tremendous buy opportunity.

The global corporates are very efficiently offsetting their reliance on local revenues for those from China (soft landing) and other emerging markets where growth and investment is still very positive.

So there is an European’s view. Not Rosy. People will get hurt and lives disrupted, but in the end the sun rises again and lives continue…

Go be a gold bug, buy buckshot and canned goods, expect trojan meteors come falling from the skies and the world to end because Greece is having an election (don’t say that with a Chinese accent).

Me? I’m standing by with cash ready to get into some quality undervalued assets as the opportunity present itself. The volatility caused by the Greek story last year made me good money… Buy equity (and sell bonds) when all are panicking and selling, then 2-3 days later sell equities (and buy bonds) when everyone is buying as they realize it was all overblown. Rinse and repeat as long as it goes on for…

Good-Night, Buona Notte/Kalinikta…

Marco

#80 Humpty Dumpty on 06.16.12 at 2:13 am

http://www.thestar.com/opinion/letters/article/1211550–oligarchs-hijack-democracy

Freedom is just another word for got nothing left to lose….

This is especially from Me to U G……

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

Tight Lines…..

#81 Phil Indablanque on 06.16.12 at 2:14 am

Popcorn! Get yer Popcorn Here!

#82 Al on 06.16.12 at 2:30 am

Harper does not appear to be worried about a recession in Canada – he just spent a few billion of our tax dollars for a new bridge to the USA including that for the US side !

#83 Mel on 06.16.12 at 2:34 am

Okay, I agree that there is not going to be the end of the world. However, I remember you said not so long ago, that U.S. is in a slow recovery. By next year, things will be much better. Higher interest rates etc….

Well, I did not agree! There will be world wide recession by end of 2012 or early next year. By the way, I would even say that we are already falling into one right now.

Why would I purchase dividend paying equities and expose myself to loses when stocks are overpriced right now? When Dow will fall to around 7000-8000 I will be buying, this is not the time.

I am not optimistic for now. There is way too much stuff that still has not been addressed. I am patiently waiting.

#84 Freedom First on 06.16.12 at 2:51 am

Tense forum tonight Garth:)

Relax everybody:) …….The world is not ending!
The majority of the time, the only person who can screw things up for you is yourself. Keep it simple. Follow the financial principles Garth outlines in his pathetic blog six days a week, year in and year out, and you will be ok. Do things based on your own ideas that are strictly “out of your mind”, and chances are the consequences will be painful. See Garth’s archives for repeated horror stories of what happens to the financially illiterate house horny virgins. I don’t care what asset it is, having 100% of your net worth in any one thing is an idea “out of your mind”. Living payday to payday, whatever your circumstance is “out of your mind”. Operating “out of your mind” is pretty well a guarantee for the financially illiterate , that you will miss out on having “peace of mind”. The value of “peace of mind”…….priceless:) ……..Don’t throw it away.

#85 Buy? Curious? on 06.16.12 at 2:53 am

House-pocolypse will be here just in time Christmas. So shop around for bankruptcy lawyers. Until then, double down on your credit cards and use it to buy gold that you can hide at your Nana’s house. It’s only called debt if you intend to pay it back. And don’t think of stealing it either. What do you think 18% compounded interest with frivolous fees is? Thank you, Smoking Man. Drinks are on me!

#86 Canuck Abroad on 06.16.12 at 3:04 am

Very frustrating read today Garth.

Obama will be in his second term? That’s supposed to be a good thing? There’s no difference between him and Romney anyway, so exactly what difference does it make who’s running the failed state of America?

China will save the global financial system? Really? If I were China, I’d be sure to demand a nice quid pro quo, so be careful what you wish for.

And the central bankers will save us? Ughh, not again. I really wish they would stop saving us, it’s getting tiresome. The endless volatility can be nicely profitable for good traders, however for most people even if they are earning the 6% you propose, they are faced with the eventual rampant inflation that will result from central bank money printing, not to mention the higher taxes that must be levied to pay to save the [email protected] banks, which in a capitalist society would go bust.

I’m disappointed these are the best arguments you could come up with for why we should all just chill.

I realise the central bankers will save everything this weekend and never allow “another Lehman”. I also think it is a tragedy.

#87 Canuck Abroad on 06.16.12 at 3:20 am

And one more observation…I am not a gold bug by any means, but why do you bother criticising the gold bugs for wanting to hold precious metals if as you say the central bankers stand ready to print money with abandon (which is all they can do really). Gold and silver will go up along with everything else and is a perfectly good inflation hedge. They could probably get better returns with other vehicles, but I don’t see any harm in holding gold if that’s what floats your boat.

#88 Honestweights on 06.16.12 at 3:56 am

The financial system will maintain its integrity, supported by whatever support it takes from unified central banks and coordinated monetary policy.”

Hi Garth, I appreciate your views on real estate – particularly dillusional Vancouver. However, I agree with Pete # 8 regarding the above quote. Integrity is what is missing in the financial system and central bankers have proved they have none. Without the discipline of precious metals supporting fiat currency, bankers and politicians will always choose the easy way out: wreckless money printing. Of course, this equates to stealing money from the masses through inflation.
How can you possibly trust in unified central banks and coordinated monetary policy? People have to have faith in something but come on – this?

#89 daystar on 06.16.12 at 4:32 am

#1 george on 06.15.12 at 9:12 pm

The link you just provided:

http://www.statcan.gc.ca/daily-quotidien/120615/t120615b004-eng.htm

… is the first chance the average Canadian has had to look at our nation’s balance sheet numbers in 3 and 4 years (and some of these numbers are missing and don’t add up). The link below is the information Canadians have had to judge our leaders fiscal policy by ’til now. (if it can be used against you, just don’t provide it, pretty greasy) In every category, the most current numbers end in 2008 and 2009:

http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/ind01/l3_3055_3058-eng.htm?hili_govt35

There’s only one reason for this. Our Harper government wanted to keep the numbers from us because of elections during this timeframe and more specifically what the numbers say and they are ugly. For example, our governments ran up $85 billion in fresh debt, nearly 5% of GDP not allowing for currency fluxuations and that should rank us in the top 15 most present borrowing nations in the world. Its shows in the information this government has hidden from us (is anyone including Conservative voters impressed by this?) and it shows with the numbers of job cuts within statscan but most of all, it shows within what little they’ve provided in the numbers themselves.

http://www.reuters.com/article/2012/04/30/canada-budget-jobs-idUSL1E8FUEO720120430

George, the difference between gross public debt and net debt is financial assets applied against gross public debt as you already know. As an example, net debt grew by $116 billion since 08′ and gross debt grew by $281 billion, presumably because of MBS’s but federal numbers are too vague to know for sure.

As you likely also know, I give such financial assets weight in determining how the world will react to Canada’s balance sheet (well… I used to, these numbers are grossly dated and vague, its hard to substantiate their accuracy) once the U.S. feds allow bond markets to self regulate (if ever, but they say in 2 years) but I can’t find a recent breakdown. Do you know of a link that can provide the breakdown of the federal financial assets applied against gross debt to come up with net debt anywhere online? It would go a long way in determining the quality of such assets and offer clarity in determining how high interest rates might rise once the U.S. fed decides to keep rates artificially low in the U.S.

Don’t sweat it if you can’t find a link. The transparency of the Harper government is appalling to put it mildly. If corporations were this behind in reporting balance sheets, their board members would have been run off by shareholders years ago. Friggin’ sad. This is the best the Harper party can do? 08′?

http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/govt03a-eng.htm

#90 daystar on 06.16.12 at 4:40 am

Apologies, 85 billion in fresh debt for 2011.

#91 daystar on 06.16.12 at 4:50 am

#29 Mr Reality on 06.15.12 at 10:43 pm

You think debt, I think investment, Garth is likely thinking jobs and george is likely thinking currency/hyperinflation. Its all related but if unemployment goes the way of Spain, thats depression and it all boils down to the choices of our so called leaders public and private and I hate the calls they are making right here, I really do.

#92 Frustrated Kiwi on 06.16.12 at 5:25 am

#13 P&TS
In reply to your question on the mood downunder. Was just at a conference in Melbourne, where house prices have been declining for a little while, so took the opportunity to quietly sound out the mood. Most didn’t seem too worried but the colleague who had moved from Oregon commented that the feel was very similar to OR in 2007 (and I didn’t prompt that answer).

#93 Cristian on 06.16.12 at 5:29 am

“The financial system will maintain its integrity, propped by whatever support it takes from unified central banks and coordinated monetary policy.”

Really? When the EU consists of some 27 countries that all have a veto right on any measure taken?
I hope this was a joke. Or you’re on weed or something.

#94 Aussie Roy on 06.16.12 at 5:31 am

P & T S on 06.15.12 at 9:58 pm
Debt does not create depression. — Garth

Walking around the “less expensive” parts of Sydney NSW, you’d (not) be surprised to see many more businesses closing down. We noticed this in the Rural towns, but in the Western (“Blue-Collar”) suburbs, there’s a lot of discretionary spend trade hitting the wall. Lots of anxiety over the forthcoming “Carbon Tax” too which we suppose doesn’t exactly bouy the happiness index much (!!)

Any thoughts on this from Aussie Roy or other Antipodean contributors?? Seems despite “public opinion” in the mainstream press, the true perceptions of “those on the ground” are very much less optimistic.

…………………………………………………………………………..

Yes.

At the end of the day, most people aren’t stupid. Some take a little longer to see the light but what most “get” is what is happening to their family, to them. This is the reality on the ground, not what our treasurer Wayne Swan, or our PM Ms Gillard tells us what we should believe.

Really it’s no different than what Realtors tell us, what we should believe / think. Like houses only ever go up, buy now or be priced out forever and other delusional gems. Whether it’s a govt wanting to be re-elected or a realtor trying to convince you that delusional thinking is logic so they can sell you a house. Both have a huge incentive, their jobs depend on it. My amazement has always been that some people dismiss this powerful driving force, self interest. The ultimate delusion is to replace your own logic with the delusional nonsense dished out by those who depend on you believing them, no questions asked. Whether it’s a realtor or a govt wanting to get re-elected, why would we NOT expect their views to be tainted and question their vested interest views?.

Has there ever been a RE industry body anywhere in the world who has warned about a property bubble before it burst?. Not that I can find, what we get instead is “it’s a great time to buy”, there is no bubble.

How many times must this same scenario play out in countries across the globe before people realise, you believe the spin at your our peril. Not to mention the lack of consequences these bodies face when it’s obvious they were wrong (there was no bubble). Those left with the consequences are only those who believed their spin and dribble.

While we are on the subject of reality versus “spin”. Next month electricity prices rise by 18%, yes 18%. Now that is on top of the 60% rise in prices over the past 5 years. My state SA, has been given the title of the “highest power prices in the world”. Our Treasurers response, “the fundamentals of our economy are strong, the only problem is confidence”.

The current Labour govt is going to get smashed next election, in spite of the common view that the leader of the Liberal opposition is a fool.

http://www.couriermail.com.au/news/breaking-news/sa-consumers-hit-with-higher-power-prices/story-e6freonf-1226396729960

#95 Rob now in Nova Scotia on 06.16.12 at 5:35 am

Garth, I appreciate the positive spin you’ve put on the PIIGS. Try red instead of pink lipstick next time. Not a word in your bubbly outlook about the root cause: debt.

#96 Gmaz on 06.16.12 at 5:56 am

Look, I really want this to be all true, as I am in the buyer’s market right now BUT I get the TOSold report every morning and today’s was no different.
Tons of Mississauga homes selling everyday, mostly at asking or slightly above (i.e bidding wars).
Why? I don’t know but this is the data, not anecdotal information. So, I still don’t think it is slowing down, not by a long shot. IF anything, my comments should discourage people from buying, not suspecting that I am a realtor.

#97 Aussie Roy on 06.16.12 at 6:01 am

Aussie Headlines

Australias second largest mining state, is broke.

What went wrong

QUEENSLAND’S former Labor government ignored plummeting income and pushed ahead with a massive building program, while allowing the public service to grow into a money-eating monster during a five-year spending spree (STIMULUS) that sent the state broke.

A commission of audit into Queensland’s finances was yesterday blunt in its assessment of what went wrong, finding the former government was “living beyond its means” as spending outstripped revenue from 2006-07 onwards.

“living beyond its means” isn’t that what neo classical Keynesians call stimulus?.

http://www.couriermail.com.au/news/asset-sales-the-only-answer-costello/story-e6freon6-1226397178883

#98 Pr on 06.16.12 at 6:12 am

..Of course, it won’t happen… I just hope, theirs no bank run across Europe.
http://www.zerohedge.com/news/has-greek-bank-run-started

#99 David B on 06.16.12 at 6:53 am

There are now over 7 Billion people on the planet earth and growing leaps and bounds ….. there is more money than ever on the earth …. there are more rich people than ever, there are more developing countries ….. more developing economies ….. far more toys than ever and bigger toys … and yes new communication like we never dreamed off.

No country is about to fall off the planet …. so it would seem to be a matter of selection to find the best way tap into all that growth ….. anyone can run and hide …. your choice …..

#100 I'm stupid on 06.16.12 at 7:09 am

I have wrote about this before but I think it’s appropriate to write about fear again. The flaw with doomer theory is that it always assumes you will survive. Think about it for a second if society breaks down the chaos will lead to civil unrest and war. What are the odds that you or I will survive? If the probability of survival is low why should I worry about it? I can build a bunker, store food, water, gold etc but what’s the point? I’m human not a rat.

#101 John on 06.16.12 at 7:13 am

It’s unfortunate that “doomers” have blocked the exits for many. Unable or unwilling ( very understandably) to look at what’s going on, plus having “manipulative doomers with an agenda” carrying the wider discussion…makes things hard for people.

It’s now obvious that the debt-depression-deflation confusion wheel is missing some spokes and will need some attention to roll forward. The “doomer” culture can’t be part of that. The community culture must.

Everyone knows that Alan Greenspan’s world of “global economy” exists because debt is money. That’s just a fact. We’ve all temporarily increased our standard of living as the faceless system, patchworked and reactive, cheated and lurched it’s way higher. Plumped up citizenry looked the other way and consumed. And did what they were told. And invested in a sense of denial-based entitlement.

Germany got to where it is because debt is money. Debt is growth. And this is what the blocky puppet was saying yesterday:

Germany has ruled out the introduction of eurobonds, which would essentially dilute its credit rating to the advantage of the peripheral economies. And German Chancellor Angela Merkel has warned that Germany’s role in saving the eurozone is “not unlimited.”

“We must all resist the temptation to finance growth again through new debt.”

And a pin drops.

Real estate bubble discussion anyone?

#102 Sent from my iPhone on 06.16.12 at 7:17 am

Garth, Then what does printing more currency and spending more create. Along with perpetuating interest.

The question is how to deal with the world, not how to change it. Make money, don’t hide it. — Garth

#103 mid-Ontario on 06.16.12 at 7:22 am

#44 Humpty Dumpty
Brilliant!!
You nailed it just right for we 99% to understand fully why we are all so well off and why the future has never looked better!

#104 50% correction predictor on 06.16.12 at 7:28 am

#95 Gmaz

Look, I really want this to be all true, as I am in the buyer’s market right now BUT I get the TOSold report every morning and today’s was no different.
Tons of Mississauga homes selling everyday, mostly at asking or slightly above (i.e bidding wars).
Why? I don’t know but this is the data, not anecdotal information. So, I still don’t think it is slowing down, not by a long shot. IF anything, my comments should discourage people from buying, not suspecting that I am a realtor.
__________________________

Why don’t you just buy your fxxxing house and get over with it?

Nobody here is obligated to provide you anything.

#105 bigrider on 06.16.12 at 7:32 am

“China is run by people smart enough to engineer a soft landing”

Spoken like a true Keynesian.

If there is a soft landing in China, it will be the first one in history, anywhere..LOL

They already did it with housing, it appears. — Garth

#106 50% correction predictor on 06.16.12 at 7:34 am

Attention:

Central bankers mean nothing!

If their “will” mean anything, we would have all lived in Utopia!

If their “will” mean anything, we would not have to work for a living. They print, we spend!

#107 Pr on 06.16.12 at 7:36 am

“What’s going to happen with the Italians with their bond yields skyrocketing? So with each day it’s a new catastrophe. With each new catastrophe you hear the same lines from the central bankers and the politicians, ‘We have to fix this one. If we don’t fix this one, the whole world will go up in smoke.‘ So this is really serious.

Start putting the others pieces together….
“The Chinese just lowered their interest rates, along with the Australians. What’s going on in Brazil? GDP is really dropping. India is going down as well. Output in the United States is falling, but the stock market is going up. How come? Because of speculation of more stimulus.

It’s all tied together. The entire financial system is in collapse. It’s not about the Greeks, Spanish, Italians, English, Americans, the Chinese, it’s about everybody. So that’s what we’re looking at, and it all comes back to gold.

#108 Steven Rowlandson on 06.16.12 at 7:39 am

Chaos may be closer than you might think.
http://usawatchdog.com/one-on-one-with-paul-craig-roberts/

You get your news from a gold-pumping web site? — Garth

#109 Stephen on 06.16.12 at 8:11 am

#85 Canuck Abroad – I totally agree, this is a very frustrating read today.

Garth says that “For most of us (especially women), the greatest risk is not losing money in an asset which temporarily loses value. Instead, it’s running out of money. This is where the majority of people are headed.”

He also says that “Fear of loss ….. is leading to true loss.”

I don’t disagree that many people are not acquiring enough wealth to last a lifetime, and that people often do stupid things with their investments, like buying high and selling low. Or investing in a single asset. Or blindly following the crowd. But I don’t believe that this is a time for us to “chill”.

The multitude of serious problems that investors face right now is incredible. It is not a good time to relax and sit still, regardless of how well diversified your portfolio might be. Unlike Garth, I have no faith in the ability of the so-called “leaders” of the world to straighten out this mess. No one, absolutely no one, not even Garth Turner, can predict what the world will look like a year from now. I hope that things will be better. I’m trying to be positive. But at the same time, I’m not willing to base my investment decisions on hope. This is a time to be careful, and to pull back away, at least temporarily, from some types of investments. Cash is a good thing right now.

Yes Garth, I worry about the risk of running out of money in my old age. And I’m trying my best to avoid that. But I have very little faith in central bankers, Chinese leaders, Obama, or anyone else, to deal with the mess that exists at the moment. I’m not panicking. I’m not a doomed or a prepper. I’m simply being very cautious at a very difficult time. The risk of running out of money is a secondary worry at the moment.

Penny wise, pound foolish. — Garth

#110 Ralph Cramdown on 06.16.12 at 8:24 am

Why would I purchase dividend paying equities and expose myself to loses when stocks are overpriced right now? When Dow will fall to around 7000-8000 I will be buying, this is not the time.

First off, if you’re using the Dow as a yardstick, you’re doing it wrong. Second, stocks are overpriced compared to what? The spread between dividend yields and those on Treasuries has never been higher. Stay in the crowded trades and tell me how that works out for you.

Gold and silver will go up along with everything else and is a perfectly good inflation hedge.

Another crowded trade. Maybe I’ll buy some once all the TV ads and roadside gold buying stands have disappeared. Then again, maybe not. The thing about PMs is that most of the people who advocate buying appear to be certifiable loons, and I don’t know that I’m comfortable in a trade where all the buying support is coming from the loony fringe. The people who believe it’s safe are the same people who claim the market is being manipulated on a massive scale. How nuts is that?

#111 stickler on 06.16.12 at 8:34 am

Hmm…slow economic growth and relatively high unemployment – a time of stagnation – accompanied by a rise in prices; smells like stagflation in the developed countries to me.

As more jobs are lost (or exported to developing countries) & govts cut programs, the cost of living will increase. -> you have to pay for more stuff yourself.

Prices in what you need will go up, prices of what you don’t need will go down, as will wages.

The trend will continue until the standard of living equalizes throughout the globe…that means the developed countries will be lowered, and the developing countries will be higher.

The rich will stay rich, and the middle class will shrink.

#112 T.J. BONES on 06.16.12 at 8:41 am

Sir Garth: This relates most profoundly with the picture, and your blog. Last night at my daughter’s ( an Amazon ) rehearsal party, much houses cars and wives in the know and displayed, I coined the perfect discription of your blog. IT’S NOT WHAT YOU OWN, IT’S WHAT YOU RIDE! No contest.

#113 AnonGuest on 06.16.12 at 9:00 am

In modern credit-based economies:

credit begets debt, debt begets inflation, inflation begets asset bubble, bubble begets deflation, deflation begets unemployment, unemployment begets depression.

#114 John on 06.16.12 at 9:03 am

The blog is gold. Great comments and comedy and free thinking.

Daystar wrote:

“Garth has already told you that debt doesn’t cause depressions right, so what does? Think about the differences between debt that gets repaid and debt that does not, even in extreme leverage and high debt service circumstances. Garth is trying to get you to figure this out for yourself because there is much greater value for you learning this on your own.”
———

The debt aint gettin’ repaid….and what about when there aren’t even payments happening. If your answer includes the “purpose of the Bank of Canada” or other denials about central banking, you get to reach the end of the runway at 310 kilometers an hour and no lift.

It’s either about landing the plane or taking off. The other stuff isn’t relevant now.

I did learn the lesson on my own. Your comment above shows that you didn’t. How can you support your comments? I see the end of a runway fast approaching. Simply put…what are you trying to say? I think you check-mated yourself. Check around the blog today. Tons of people connecting dots. We’re all learning.

#115 Keeping the Faith on 06.16.12 at 9:10 am

#6 Blase …. You’re an IDIOT!!!

#116 Keeping the Faith on 06.16.12 at 9:15 am

#20 Capi Casso … You’re an IDIOT TOO!
… and get a real name and don’t be such a flake.

#117 Aussie Roy on 06.16.12 at 9:28 am

Aussie Headlines

So if the housing market gets in trouble, lowering interest rates will save the day, right?.

Melbourne’s auction market has posted one of its worst performances of the year despite steep cuts to interest rates.

The Real Estate Institute of Victoria said the clearance rate was 56 per cent for the 526 results reported to the group today.

But with the outcome of another 72 scheduled sales still unknown, the sales level is likely to be downgraded as the missing results are collected.

http://theage.domain.com.au/auction-market–performs-poorly-20120616-20gqp.html

#118 TurnerNation on 06.16.12 at 9:33 am

Sorry, Doomers. Summer equities market RALLY is upon us. No fear, no bad news – priced in.
Time for a low volume, and low VIX, rally! To da moon. I locked and loaded this week.

#119 MarcFromOttawa on 06.16.12 at 9:44 am

#92 Christian
I hope this was a joke. Or you’re on weed or something.

You can’t be “on weed” just like you can’t be “on alcohol”.

You either get high or get drunk or you can be like smoking man and do both.

#120 Daisy Mae on 06.16.12 at 9:48 am

Well, I hope you don’t pull that stunt in your house with your Harley, because Dorothy will NOT be impressed…

#121 Back East on 06.16.12 at 9:52 am

Instead of lending so much cash to so many who shouldn’t have been approved for it, what if government had signifigantly lowered taxes to stimulate consumer spending? So people would spend more of their money, but most personal debt issues would have been kept in check. Would it have worked?

#122 Randy on 06.16.12 at 10:19 am

The whole world has adopted the union mentality….Almost impossible to fail….Incompetence is admired and encouraged….as long as you look good and can dance around….If we need money, we just reach into somebody else’s pocket and take it….You owe us !!!

#123 Boomer on 06.16.12 at 10:30 am

I was ok with everything Garth said, until he said that 6 months from now Obama would be in his second term. That surely won’t happen.

#124 Min in Mission on 06.16.12 at 10:40 am

Debt does not create depression. — Garth

I don’t know about that!! Whenever I have to much debt, I ALWAYS feel depressed!!

#125 TurnerNation on 06.16.12 at 10:55 am

A look at North Vancouver housing:

http://www.bcbusinessonline.ca/homes-and-real-estate/the-new-north-vancouver

“But like many older, single-family-home neighbourhoods throughout Metro Vancouver, the single-family-home neighbourhoods of North Vancouver – and in particular, the District of North Vancouver – are going through a generational crisis. While developers have built high-density housing in the appealing Lonsdale Avenue corridor, the district is recognizing that the single-family homes its older residents were able to buy are out of reach for its young adults and families.”

#126 Canadian Watchdog on 06.16.12 at 11:10 am

#109 Ralph Cramdown

Does this look like a crowded trade to you? http://postimage.org/image/5v7u6eprv/

#127 zeeman on 06.16.12 at 11:17 am

at GMAZ

your are lost man…..i dont know where you are getting these stats….i also check the sold listings and i dont see any of this above asking price for sold mississauga area….there may be the odd exception but majority have started to see under asking price…
listen, i live in york region, and this area is a hot real estate area and i am already seeing listing piling up and sold homes are going for less then asking price and price adjustments occurring…so why would mississauga be different when it cant compare to richmond hill and markharm where all the ham money is spent.

#128 KingBubbles on 06.16.12 at 12:02 pm

More lipstick on the pig ….

http://money.ca.msn.com/investing/news/business-news/crea-ups-home-price-sales-activity-outlook-2

#129 a prairie dawg on 06.16.12 at 12:03 pm

#121 Randy

Good points.

Same thing in education. Lots of stories about that in the news lately too.

-a teacher suspended for giving a student a grade of 0 for uncompleted assignments

-bell curving everyone’s grades up to lift the lazy and stupid high enough to pass

-giving out gold stars just for showing up

This whole western society thing is spinning down the drain. Touchy, feeley, everybody is equal.

Except we’re not. Some people are smarter. Some people do work harder and longer. Some people do have better manners, morals, etc.

Now I’m starting to see why we’re building all those new prisons…

#130 Not 1st on 06.16.12 at 12:18 pm

I guess the nuts and bolts of the matter are that we (and our children) are going to pay for our lifestyle and our world one way or another. Whatever your mojo is; low taxes, lots of growth, big entitlements, union demands, free market, cheap energy, free education, cradle to grave care…etc.

Two ways to pay for it, taxes or inflation. I guess the powers that be decided inflation is the easier sell because nobody really complains about it.

#131 Blue Monster Lover of Meats and Vegetables on 06.16.12 at 12:38 pm

This is deflationary because when debts are retired (either via payment or default) money (which is debt) is destroyed. Today, in the real economies of much of the world, money is being destroyed at a faster rate than new money (loans) are being created.
——–
Default is not deflationary. Repayment is. When a default item must be expensed by the lender it is spending by the lender (expensed off balance sheet) and the original money remains in the marketplace. So the default itself is neutral in terms of money supply but the original loan was inflationary, it was credit expansion. But, once a bank or banks have enough bad loans they deplete their capital reserves which requires raising of new capital either honestly through the market via bonds or equity or by central bank injecttions, purchasing of bad assets off their balance sheets.

There’s no deflation, it’s all inflation, cash is trash.

#132 Canuck Abroad on 06.16.12 at 12:42 pm

109 Ralph Cramdown – Not sure I agree that gold is a crowded trade. Central banks seem to like it, and of course the loony fringe. Buy pension funds and other institutional investors hold tiny allocations if any. That said, I wouldn’t personally buy it at the moment because it’s in medium term downtrend and coming off a parabolic move, so I think there are much better opportunities. Anyone who can (or did) get it in the $1500 range will probably do okay with it IMHO.

#133 Snowboid on 06.16.12 at 12:43 pm

From the Central BC rain-forest (formerly known as the sunny Okanagan)…

I guess it’s time to pump out the subterranean bunker, dust off the gold, and barter for some fresh KD and Spam.

In the meantime, closer to the coastal land-moss, BC Ferries reports the lowest ‘ridership’ in 21 years , but according to their executives high fares aren’t the problem!

People just are using their cars anymore, so naturally they aren’t driving anywhere!

In contrast to their explanation, fares were one of our top five reasons for selling and leaving the island for good.

RE update from our old Victoria neighbourhood:

Two comparable homes listed when we sold (spring 2010) are back on the market – asking price on first is now less than our net sale proceeds, second is down $100K.

Both owners, at the time, thought us crazy to sell for what we did.

#134 Blue Monster Lover of Meats and Vegetables on 06.16.12 at 12:43 pm

Garth, I won’t argue with you about some of the statements made in you post or comments because I know it’s futile. But I’ll just say I’m certain you need to rethink your economic theory. I believe it’s seriously flawed. Not to say that you’re not making sound investments and understand how to work within the broken system we have today, but when the system fails you’ll be in for a rude surprise if you don’t anticipate what’s going to happen. Governments and central banks will be helpless to stop the panic once it starts. Unless they raise rates now and crush the economy confidence will be lost very soon. All these bailouts are criminal and damaging and the piper will be paid double or triple when the crash finally hits next. Coming soon!

#135 Blue Monster Lover of Meats and Vegetables on 06.16.12 at 12:52 pm

When I say crush the economy, I mean the fake economy that they are trying to prop up. Raising interest rates will purge all the bad investments and wasted employment, business or public sectors that are to big or not needed at all must be dismantled, to prolong the false economy will only lead to inflationary destruction of the currency.

I see no hint whatsoever that any central bank or politicians will do the right thing anytime soon , or even that any one in positions of power even understand or care to understand that they are in fact the problem.

Keep on doing the same thing they’ve always done, pretend and extend. Once the bond market figures this out we’ll see a sea change in sentiment toward government debt in North America, as well as Japan and the rest of Europe. Economic disaster is looming large!

Precious metals are the only safe haven for money when fiat currencies all collapse. Ownership in companies via stocks is also sound. Any investment in monetary instruments will be destroyed sold off and practically worthless with no purchasing power. This is worse case. Best case is the same thing but rapidly rising interest rates can stave of total collapse. But this is a big unknown. Maybe the Euro will be the survivor due to their understanding since the Wiemar republic era?

#136 Coraline on 06.16.12 at 12:53 pm

Gmaz #95: You’ve made this comment for a few days, so I thought I would go look at the Mississauga data from TOSold. Yesterday, 25 houses sold, not “tons.” Five of those were above asking, and of those, two were $100 over. The remaining 21 were below asking, ranging from $3,500 to $35,000. You are exaggerating the strength of the market.

#137 buylow on 06.16.12 at 1:00 pm

In the Abbotsford paper this week:

Spring sales heat up

The Times June 14, 2012

Warmer spring weather has heated up the local real estate market, with the Fraser Valley Real Estate Board reporting a 13 per cent increase in sales from April to May.

The board, which covers North Delta, Surrey, White Rock, Langley, Abbotsford, and Mission, recorded 1,616 sales in May, which is on par with May sales in 2011.

New listings are also up five per cent from April and up eight per cent from May last year, bringing the number of homes on the market to 10,826, also an eight per cent increase over last year.

The benchmark price for a typical single family detached home in the Fraser Valley increased 3.6 per cent in one year, from $528,900 in May 2011 to $548,000 last month. In Abbotsford the average prices in May came in at $442,718; in Mission the average price is $346,131.

Townhouse prices remained virtually the same over the past year, at $306,800, as did apartments, up slightly to $203,600 in May 2012.

See specific tables and information at fvreb.ca.

#138 jess on 06.16.12 at 1:02 pm

Debt crisis: Rich Greeks in London face tax investigation
The Greek finance ministry has said it will investigate wealthy Greeks in London for potential tax evasion as part of a wider effort to improve abysmal levels of revenue collection.

Reducing the estimated €15bn (£13.2bn) that Greeks avoid paying in tax every year is a key condition tied to country’s two bailouts, worth a combined €240 billion.

http://www.telegraph.co.uk/finance/financialcrisis/9333246/Debt-crisis-Rich-Greeks-in-London-face-tax-investigation.html

#139 Blue Monster Lover of Meats and Vegetables on 06.16.12 at 1:16 pm

#64 obert on 06.16.12 at 1:01 am

#17Garth, then what creates depression ?

Deflation. — Garth

Garth, and what creates deflation?

——
Deflation is always preceded by inflation since there has to be something to be deflated. But, today the central banks are fighting the deflation of their previous 40 years of credit expansionary bubbles, each one followed by more inflation to offset the necessary deflation, so the keep re-inflating! Now we’re in the mother of all bubbles, the government debt bubbles all over thee world. Inflation now will only destroy the currencies.

Deflation is what’s needed but we’re not getting it. Deflation happens when interest rates rise and debt is repaid. But since governments are the biggest debtors in the world the last thing they will do is raise rates on themselves. hence we’re doomed. So save yourself and buy PMs. Hell, go into debt to do it. Your debt will be wiped out by the crash. Your PMs will be safe and sound!

#140 woper_holic on 06.16.12 at 1:19 pm

@#10 50% correction predictor

Bang on. We’ve become a country full of paper pushers and public sector vampires that are sucking everyone dry.

#141 Realtors in a PANIC! on 06.16.12 at 1:19 pm

Gmaz #95

It’s obvious you are a hurting realtors trying to make up stories of a hot housing market when the facts clearly point to a falling and crashing housing market. the house of cards is falling apart but I am sure you are seeing this first hand as a realtor. Why else would a realtor like yourself post everyday on garth blog in a panic!

#142 Elizabeth on 06.16.12 at 1:25 pm

Here is a great photo for one of your next posts Garth!

http://www.facebook.com/photo.php?fbid=10150747224342328&set=a.10150678693267328.406657.512167327&type=1&ref=nf

PS…I have been cutting and pasting some of your posts for others to see..you know, trying to educate people before they make a colossal real estate mistake? Well, I got blasted by some CBC commentators in the comment section. They accused me of being you….there’s some real pieces of work out there on the internet. Thanks for telling it like it is!

#143 truth hammer on 06.16.12 at 1:29 pm

May I just say…… Bwahahahahahahahahahaaa !!!! The media reports that personal debt is at an all time high and super inflated real estate ‘values’ have hit peaks never seen in an artificially bouyed fiat bubble economy……..where people are so far in debt that they’ll never retire debt free…..where children have been suckered into serfdom by the millions….where unemplyment is really 16% if truth be told……where youth unemployment is 50% ++ from what we see on Mainstreet…… and they announce…”You’re Richer Than You Think!!”

THE NET WORTH OF CANADIANS IS THE HIGHEST OF ANYONE…….WE’RE RICH……….AND YOU CAN SPEND SPEND SPEND MY DARLINGS!!!!!

The weath effect of hyperinflation and people who can’t understand basic inflationary mathematics is apparently ‘a winning strategy’ !!!! Of course it’s all based on ‘inflato-bucks’…..none of it’s real….it’s all ‘SHAZAM MONEY’.

Bwahahahahahahahahahahahahh!!!!!

http://business.financialpost.com/2012/06/15/household-debt-continued-to-grow-in-first-quarter/

Yes it’s true…the global market will survive Greece……..The Geeks have yet to learn that ‘no austerity’ means that they still have no money to spend…………there is no possibility that another 250 billion will be poured into Greek banks for an unlimited spending spree……’just because’.

If there is another recessionary dip it is only because the sheep have run away from the loudspeakers playing wolf song from the sidelines…….perception rules the market…..you are being manipulated……fear is a powerful tool being used against you. The governments have manipulated prices in order to increase tax revenue……..but you should not forget that 100% is everything…….the government may be able to pile on debt ad infinitum…but you can’t…..it’s a zero sum game…….as in Greece the crap will hit the wall and all of this ‘Canada is safe’ crap will collapse as it has done in every other country that has tried to run debt to the moon……no matter how low rates are set….we will also run out of oxygen and fall.

But meanwhile….enjoy the laughs provided by the media along the way.

#144 Blue Monster Lover of Meats and Vegetables on 06.16.12 at 1:33 pm

#70 RayB on 06.16.12 at 1:13 am

Garth before the 1929 market crash the Perl Harbor attack or when Hitler invaded Austria no one predicted it.
I don’t believe the doomers necessarily but I will say this “we are due” for some great calamity. People are trying to predict the obvious, market crash dollar crash collapse of the world financial system. It won’t happen because it is too obvious and predictable. What is coming is something we are not able to calculate and predict it’s just the way disaster happens as disaster has its own time table and method. The method that is
least expected.
—-
I have to disagree with this. What’s obvious is true and will happen. The difference today is we have massive flows of information and freedom of ideas and expression and conversation on blogs.

The system we have is simple, governments and their central banks are all inept thieves and they’ve all been caught red handed by the public. Ignorance is no longer their shield. Their iron shields are exposed and weathered and rotting and crumbling to pieces.

This is a good thing. We need to get back to real and honest society. All this big government stealing via taxation and inflation is purely immoral. Wake up people! Dump these fools and pick-up your guns to defend freedom.

The cost of liberty is constant vigilance.

Shove your guns up your butt. — Garth

#145 Canadian Watchdog on 06.16.12 at 1:36 pm

#135 Coraline Gmaz #95

The daily data provided by TOSolds is not total sales and many times includes duplicate listings. Also the sale price to list price for homes is not reliable because a big trend this year is listings being priced below market value to attract bidding wars.

#146 gtrz4peace on 06.16.12 at 1:36 pm

#132 Snowboid

We can be the “doomer” as much as anyone! But “dust off the gold and barter”? Better to plant fruit trees and raise bees cause you can’t eat gold so in the kind of crash you guys all crave, gold will be more useless than you think.

And spam tastes horrible and is filled with chemical toxins, it qualifies as a “food like substance” – there are better alternatives for emergency food supplies, you can find them all online.

#147 MrHulot on 06.16.12 at 1:40 pm

I just don’t get it, Garth. You are dead set against large personal debt but you poo-poo huge public debt.

Don’t sweat what you can’t change. Focus on personal action. — Garth

#148 Daisy Mae on 06.16.12 at 1:48 pm

“The financial system will maintain its integrity, propped by whatever support it takes from unified central banks and coordinated monetary policy.”

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

I think Garth means the financial system itself is not to blame — it can and will maintain it’s integrity if handled correctly. It’s the dumbass decisions made by all levels of government and the big banks, that have to now do damage control and allow the financial system to operate the way it was intended.

#149 truth hammer on 06.16.12 at 1:49 pm

BTW….your mention of ‘deflation creates depression’ is not quite correct ….in fact it is a collapse in velocity creates depression. As we saw in UK, US, SP, IRL….etc etc real estate prices the engineered hyper inflation once torpedoed did not lead to depression when ‘deflation’ in ‘values’ set in.

Real estate prices in Canada are artificially high because government has sought increased revenue to lodge pole the civil service’s underfunded liability. We could not not continue to pay for their escalating demands and government engineered the market to generate more tax revenue to pay for the inflated wages and benefits.

In economics there is the principal of substitution….as we saw in the US ..people simply chose to rent rather than buy and RE fell like a brick without permanent consequence…money just went elsewhere….as you have stated the US economy is growing without RE as a contributing factor…classic example of substitution.

We would see a like evolution with a gutting of the civil service overhead in Canada……a falling RE market and a lessening of the civic service debt burden would produce net benefits to the citizen in the form of lower taxes which will logically lead to lower prices inter alia….neither would lead to deflation as both civic service wages/perks/pensions are artificially high as are RE prices compared to the needs of the market…ipso facto…both can disappear without lasting effect.

#150 randman on 06.16.12 at 1:51 pm

#49

Humpty Dumpty

Friggin beautiful man!!

Most here however have no idea who or what you’re talking about..

You can’t change many minds here

Sit tight and be right my man!

#151 Market Bull on 06.16.12 at 1:53 pm

#135 Coraline wrote:

“Yesterday, 25 houses sold, not “tons.” Five of those were above asking…”
_____________________________________________

When 20% of the deals are over the asking price, you have the very definition of a sizzling hot market, my friend.

I’ve been in the business since 1986 and most of the readers here don’t know or perhaps care to remember, what a “normal” real estate market looks like.

Stats in the GTA continue to be insane:

Two months of inventory (50% below normal)

Houses selling in three weeks on average.

Multiple offers not out of the ordinary.

….. Normal, what’s normal?

#152 TNT on 06.16.12 at 2:01 pm

Garth has stated many times and many ways that the economic environment is in trouble, the fact that most people who own house in the USA and Europe have lost a huge amount wealth is proof, deflationary gonzo by by. Or should i say not a good time to buy, buy. What i get from Garth is he is saying not to roll over and play dead there are still ways to make money, you just have to know the game, and its rules. People are still making loads of cash, good times or bad times you can’t get emotional.

#153 Debtfree on 06.16.12 at 2:06 pm

I can believe how the the posters here don’t read . The trigger for ww2 was the invasion of Poland .
Oversupply equals deflation . Ie many houses on the market ,fewer buyers drives prices lower ( deflation of house prices) . And how hard is it for the doomers to figure out that fear mongering is big business , really big business .

#154 Blacksheep on 06.16.12 at 2:08 pm

“Tons of people connecting dots. We’re all learning” – John

The cattle…are starting to see…beyond the fences.

http://www.youtube.com/watch?v=7Lwlx3GnLGs

http://www.youtube.com/watch?v=kBY6pF42I-c

take care,
Blacksheep

#155 Daisy Mae on 06.16.12 at 2:12 pm

#108 Stephen: “It is not a good time to relax and sit still…”

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

We bide our time, and wait for opportunities to present themselves.

#156 daystar on 06.16.12 at 2:16 pm

#33 Skip Breakfast on 06.15.12 at 11:09 pm

What about the leaders that didn’t build death camps and bankrupt their nation for palaces and other personal pride and greeder issues? How did the Glass Steagal act come into existence in the first place? You speak of examples of working systems and nations for that matter that are run into the ground by poor leadership. How did these nations and systems get built up to begin with? True leaders. The ones who later wreck what true leaders have inspired to build are fakes. Thats how I see it anyhoo.

#157 Roial1 on 06.16.12 at 2:18 pm

Garth, The true cause of “Depression” is what passes as words of wisdom from many of the posters at this web site.
You are NOT being understood and it shows.

Many choose not to understand. They make their own bed. — Garth

#158 Junius on 06.16.12 at 2:32 pm

Re: General Observation,

I have been following this Blog since 2009 and notice a rather distinct change in the overall tone and arguments.

2009 and 2010 was the period of denial where bears frequently came with taunts and ridicule for those who saw the pending drop in real estate values.

2011 was the year of myth support with “it is different here” being the pivot of the debate.

2012 appears to be the year of “how bad will it be” with the debate running somewhere between a long recession and total collapse.

Interesting.

#159 Marnic on 06.16.12 at 2:46 pm

Funny, Garth, you never mention the energy crunch and climate change anymore. Did they get fixed?

I forgot the birth control drug residue in trout streams, too. Damn. — Garth

#160 Snowboid on 06.16.12 at 2:49 pm

#145 gtrz4peace on 06.16.12 at 1:36 pm…

Sorry, forgot to include the sarcasm font. The value of our gold would probably equate to a couple of Spam cans (which we don’t eat) and one box of KD (which we don’t eat).

I can assure you we eat as healthy as possible, and make most of our own natural alternatives for cleaning, laundry, etc etc.

We do have an emergency kit (from our days on Vancouver Island) which we rotate food supplies, mainly canned and freeze-dried – no KD or Spam.

#161 Mark on 06.16.12 at 2:53 pm

Then they would not be leaders. There is zero chance central banks will allow contagion. — Garth

Then why do we have a housing bubble?

The leaders and their policies. So you place your faith here?

Reference was to central banks. Bubbles are manifestations of greed and speculation. — Garth

#162 Snowboid on 06.16.12 at 2:56 pm

#148 truth hammer on 06.16.12 at 1:49 pm…

What a pile of buncome!

If you aren’t a real estate agent, you should consider it – you would be very successful.

#163 Canadian Watchdog on 06.16.12 at 2:57 pm

#150 Market Bull

….. Normal, what’s normal?

Normal is when people like you don’t have to pray and beg their government to boost their net worth. You’ll be disappointed when F or C can’t do nothing for you anymore.

#164 Steven Rowlandson on 06.16.12 at 3:08 pm

You get your news from a gold-pumping web site? — Garth

Garth I get my news from many sources.

Well, there’s one you can safely ignore. — Garth

#165 TurnerNation on 06.16.12 at 3:17 pm

Ladies and Gentlemen: this weekend`s winning anagram for the words `Greater Fool` is:

FEAR LET GO OR

#166 Blacksheep on 06.16.12 at 3:39 pm

Daystar,

I see your still trying to keep the cattle complacent.

“You speak of examples of working systems and nations for that matter that are run into the ground by poor leadership. How did these nations and systems get built up to begin with? True leaders. The ones who later wreck what true leaders have inspired to build are fakes.”

Our problems are based on “poor or fake leadership”? We just need to vote in some “true leaders”? The next farmer will be different! Reminds me of: If you don’t vote, you can’t complain. or Our forefathers sacrificed so that we can, bla, bla, bla.

Total…systemic…crap.
Like Roger screamed: “Won’t get fooled again”

take care,
Blacksheep

#167 Marnic on 06.16.12 at 3:44 pm

Alan Greenspan was a leader of a well-known central bank. Enough said.

#168 Canadian Watchdog on 06.16.12 at 4:01 pm

Greater Fool Exclusive: Toronto MLS Listings (Detached Homes Only) http://postimage.org/image/dxp2efx2t/

#169 Observor on 06.16.12 at 4:13 pm

GARTH IS RIGHT

Don’t sweat what you can’t change. Focus on personal action. — Garth

Lots of posts today by people trying to understand whether the country or the world has too much debt and too much printed money. And posts about whether a depression is imminent.

Even if any of us can come to a rational understanding of such matters there is basically nothing we can do to change it. All that remains is personal action.

So, better to focus on building our own wealth with diversified investments and limiting our own debts.

Work hard and work smart and invest smart and spend wisely and I suspect you will be okay.

Enjoy today but plan for tomorrow as well.

Be a winner, not just a whiner.

#170 2centsCdn on 06.16.12 at 4:37 pm

Hey Canadian Watchdog ….. can you show one for detached homes AND condo’s? Just to show the others in Canada what’s for sale within a 10 mile radius of TO right now. Throw in some dots for down as far as Hamilton …. bucket loads for sale down that way as well.

#171 Intuitive Missus on 06.16.12 at 4:51 pm

Canadian Watchdog. Just want today I also really appreciate your data and charts. Nothing like having hard data to support a position.

It is my sense that prices in Burlington have risen more than they ought to have in the last year. Any data on prices and volumes for that market? Compared to a few years ago?

Thanks.

#172 ChickenOnTheWay on 06.16.12 at 5:09 pm

141 Elizabeth

“They accused me of being you”

It reminds me of all the dickwads on here who accuse commenters of being realtors. It gets monotonous and tedious.

#173 veteran trader on 06.16.12 at 5:13 pm

Market bull you still yapping? Your ignorance is getting louder. If you have been in the business since 1986 then you are old enough to remember interest rates at 22% in 1981. You should then know bond cycles are around 30 years peak to trough based on history. What do you think is going to happen when you have house prices at record highs when measured by all metrics and a bond market at record low yield when measured by all metrics. The bond market is king

#174 L Racine on 06.16.12 at 5:27 pm

“Then they would not be leaders. There is zero chance central banks will allow contagion. — Garth”

Now that was funny…. This is a very nice visual to give you the magnitude of the risk

http://demonocracy.info/infographics/usa/derivatives/bank_exposure.html

This is a excellent technical paper that explains how easy it is for the “central banks”, in the circumstance that are now in, to lose control of monetary policy hence the risk of contagion….

http://www.hussmanfunds.com/wmc/wmc110124.htm

And if you don’t like Hussman, how about Kyle Bass take on it…
http://kylebassblog.blogspot.com/2012/05/kyle-bass-japan-will-follow-europes.html

Really like this interview..
http://www.youtube.com/watch?v=xyzujydn2AU&feature=related

There is zero chance central banks will allow contagion. — Garth

#175 obert on 06.16.12 at 5:34 pm

Thank you Blue Monster (Omnivorous) for explaining deflation.

#176 daystar on 06.16.12 at 5:53 pm

#113 John on 06.16.12 at 9:03 am

The debt aint gettin’ repaid….and what about when there aren’t even payments happening. – John

Hi John. How’s it going? I’m fine, thanks. Canadians thought the same thing back when Mulroney was on his way out and we know what happened since. Liberal governments paid off 100 billion post Mulroney federally while inflation and GDP growth diluted debt costs and impacts. Payments? We are borrowing to make our interest payments now, its Harper’s way and when the world gets tired of it (or more accurately when the U.S. allows bond markets to self regulate), rates will go up, possibly way up and reality will set in. I can’t say future governments will handle the curent debt binge thats going on with the same competence but we have some positive history of doing so in the past through GDP growth, inflation, fiscal surplus and… some luck. If we replaced the lobbyist U.S. puppet leader we’ve got for a true Canadian PM, it would be a big step in the right direction.

Btw, the rest of what you say doesn’t make much sense to me. I keep getting over and over that you expect a world wide systemic failure if not one in Canada. Lots of doomers commenting, lots of people falling into the hype, few sources and links other than from gold pumpers and doomers hooked on their own koolaid, not much in the way of reasoned information to back it up. (too bad, its not to say reasoned information doesn’t exist, its just not being used or applied with realistic timeline scenarios should such risk scenarios play themselves out unchecked)

If you are using bloggers who attack Garths opinions (and facts! Doomers really like to avoid Garths facts) with nothing more than unsupported opinions of their own, that people are catching on to what, some kind of world systemic crash scenario, you should hold off (or at least, start looking at realistic timelines. Its not today or tomarrow or next year even with a nation like Italy leaving the Euro, that I can guarantee).

Europe as a whole has 13% unemployment and gross public debt to GDP of 87% (read it from news links, take it for what its worth). On the whole, thats not a disaster but managable, albeit recessionary numbers. No reason for major panic. If Europe can’t manage their problems as a whole, what happens?

Italy, Spain, Greece, Portugal and potentially Ireland leave the Eurozone over course of 4 or 5 years and it may well be the best thing that happens to them. These nations would have a currency reset allowing them to become much more competitive through manufacturing and trade would flourish over the medium term. Bond defaults and haircuts I think, are inevidable from the PIGGS and the best solution would be to freeze government bond values and rates to par (or as close as possible) and zero and extend maturities by 5 to 10 years ahead of default while bailing out financial’s as they are now while allowing some corporate bond sectors to take a bit of a bath. (75% haircuts with 20% interest on whats left ala Greece couldn’t even be contemplated with larger economies). Its the easiest solution as I see it should Europe choose an orderly default with PIGGS leaving the Euro and don’t think for a minute that such backup plans weren’t created before the PIGGS even joined the Euro, there’s much that the general public doesn’t know, us included and never will know except maybe through a rear view mirror.

Would PIGGS exit from the Euro freeze credit? Depending on how corporate bonds are handled, of course, somewhat but not entirely or forever and if these nations left one by one instead of all at once and handled properly, the shocks to the system would be far more managable and thats how I think it will go or should go. Would it spin the world into an 08′ slump? No, I don’t believe so, its already had the majority of its impacts at present on world consumption and the key to it all is how Europe handles Italy. The markets through fear would sell off hard but at the end of the day it still comes down to supply/demand fundamentals. I believe Italy is the world’s largest immediate economic threat (well, besides U.S. warmongers, they always have me on edge) but its managable.

http://www.cbc.ca/news/business/story/2012/04/20/f-power-shift-italy.html

If anything, as these economies turn around, like I say, PIGGS leaving the Euro, depending on how bonds are handled especially, could very well be for the best. I don’t think consumption would deflate to 08′ severity over the next few years and the reason for it is that as the Euro (in supply and value) and Europe weaken, the U.S. dollar strengthens. China won’t come in for the save like before but what really happened in 08′, lets look at this.

In 08′, commodities tanked tremendously compared to values at present. Copper was trading at what, $1.20? Base metals were chopped by half or more. Oil dipped below $28 a barrel here did it not? Hovered around the $30’s and $40’s for a while…. China was all over these low commodity valuations to build up their nation internally from highrises to rail transit through credit and trade and thats not on a whim.

I’ve got to hand it to Garth who accurately states the Chinese are not foolish with their government policy. (they have researchers reading these forums as we speak, I may get a gold star) The Chinese government rushed to build internally as commodity values tumbled and later on beginning in late 09′ through to 2011, the Chinese government engineered the end to the RE bubble through higher rates even though it took a couple years to change the paradigm. Thats right readers, Chinese monetary policy dealt with their RE bubble more than 2 years ago, its just taken this long for monetary policy to do its thing. Think about how this contrasts to doomers who run down Chinese government policy as stupid while offering no evidence to justify their arguments and the arguments that they could have used that do hold water, overbuilding, oversupply, China has a big issue there but its not entirely dumb to overbuild when supplies are cheap and rural populations are high enough to support filling these spaces over time. When on truly thinks about it, valuations have to come down for these spaces to fill… and they will.

You and I are definitely not 2 peas from the same pod John (thats good though, needed for a good debate). I keep getting that you argue our monetary systems are going to crash altogether and remain broken, that western fiat currencies will at some point become worthless. All that will happen as I see it is that the currencies of the most developed and highly indebted nations will devalue, becoming worth a lot less than they are now (over time, think decades not overnight and think money supply in relation to QE) but not worth less than toilet paper and think about what that the consequence of a falling currrency will do from trade to dilution of debt through inflation.

What I’m looking for is what a falling U.S. dollar 2016… 2017… 2018 (from government bond maturity rollovers void of a QE scenario) and beyond will do to the U.S. economy and commodities overall and if U.S. fiscal policy continues to run deficits like they are now (35, 40%) over the next few years, watch trading nations avoid using the U.S. dollar as a reserve currency (as China and Japan are beginning to right now) and the possibility of south america moving towards a unified currency led by Brazil but this comment is already far too long, I’ve given you lots to think about, cheers and have a good weekend John.

#177 John on 06.16.12 at 5:53 pm

Observer wrote the following annoying post:

“Even if any of us can come to a rational understanding of such matters there is basically nothing we can do to change it. All that remains is personal action.

So, better to focus on building our own wealth with diversified investments and limiting our own debts.”

Exactly. Personal action. That’s the whole point. So let me get this straight…after all that has been laid out a yard deep, your personal action is diversified investment and limiting debt? That’s it?

What about scope. Do you get the problem and it’s implications? Your conclusion is the entire reason for the problem we’re in. A lifetime of personal inaction and then a PLAN for personal inaction.

You have to at least want to look at reality in order to accept what you can-can’t control….in order to act responsibly.

The “personal” action you mentioned is not the main event. It’s like shutting off the gas in an earthquake. It’s hardly your plan of action.

If you don’t like or think “earthquake” is an exaggerated metaphor….lay out your reasons. If you agree with it, lay out your plan of action. If you don’t have one, great. That’s very reasonable. Most people aren’t even looking at the issues at all.

#178 Gunboat Denier on 06.16.12 at 5:55 pm

132/159 Snowboid – that all sounds pretty funny. Move to the island, then spend all your money trying to get off it! Even though its not that expensive, what was the point? And the emergency kit. Yeah you only need those on VI!

#179 Stoopid on 06.16.12 at 6:40 pm

#49 Humpty Dumpty

Luv’ed it…. Got to be in to win…. Go GATA

#180 Observor on 06.16.12 at 6:43 pm

Veteran Trader at 172 said:

you are old enough to remember interest rates at 22% in 1981. You should then know bond cycles are around 30 years peak to trough based on history.

That is, of course, a non-sequitor

A conclusion not justified by the premise

One example of interest rates falling from a high to a low in thirty years does not prove that there is a 30 year cycle. People who look for regular cycles in the market make me laugh. I simply buy what appears cheap. If it gets cheaper I tend to buy more.

Interest rates should now rise and will do so eventually.

But they could fall (10 year rates can go to 1% ala Japan). And the timing of any rise is uncertain.

Neverthe less the smart plan is to bet on a rise.

Do not touch a 30-year bond with a barge pole. If you would not want to own it for 10 years, don’t even think about owning it for even ten minutes (Buffett’s advice)

*********Trading Versus Investing**********

My average compounded return over the past 24 years is 11% with only three losing years (2008 I lost 22%, 2002 I lost 7%, 1998 I lost 8%) Best year was 2009 with a gain of 44%. Cumulative return over 24 years is 1218%. (Too bad I only put in $2,000 that first year) I am an investor not a trader. I look at financial statements and never even glance at stock price charts.

#181 Canadian Watchdog on 06.16.12 at 6:49 pm

Greater Fool Exclusive Updated: Toronto/Mississauga MLS Mapped Listings

http://postimage.org/image/3trnxpv05/

It’s hard to see in this image but the larger red dots have 2 or more listings on it.

#182 Observor on 06.16.12 at 6:55 pm

John at 176 was interested enough to compalin about my “annoying post” at 168 where I agreed with Garth that it is best to focus on personal action.

John said to me:

So let me get this straight…after all that has been laid out a yard deep, your personal action is diversified investment and limiting debt? That’s it?

Your conclusion is the entire reason for the problem we’re in. A lifetime of personal inaction and then a PLAN for personal inaction.

Well John, here is my diversified portfolio (includes my spouse):

House: $500k
Pensions $700k commuted value so far (that’s right we are both scum of the earth government workers)
Investments $1.1 million (100% equities given the pensions are our fixed income)
Cars and personal effects 100k

Debt – About $100k mostly for investments

Ages 52 and 52, Children:2 (in high school)

John, my friend, I don’t think I got here by a life of personal inaction.

As far as investments my simple “plan” has always been to simply maximise RRSP, RESP and more recently TFSA and then invest in the best equities I could find. More recently some non-registered investments. So far. it’s all worked out pretty well.

#183 your wake up call on 06.16.12 at 7:09 pm

Major Developers are saying that they do believe that there will be a slowdown coming, but yes…it is different here. Vancouver will always be in high demand and isolated from anything like the U.S. Volumes has declined, but demand will continue to prop up the prices. Don’t wait for a 50% decline, IT WILL NOT HAPPEN! At most a 10%. Don’t waste your money on rents. Buy what you can afford and settle down.

#184 Ross Thomas on 06.16.12 at 7:52 pm

Garth, I agree with most commenters about your rose-colored glasses. Of course we’re not going to see a repeat of the 1930s, but it may well rhyme. We’re seeing a global, coordinated economic slowdown, and “leaders” running round like chickens with no heads. This kind of thing hasn’t happened since the Great Depression, and private debt levels now are significantly higher than they were then.

The Chinese haven’t engineered a soft landing, they’re reinflating the housing bubble just like the govts did in Canada and Australia in 2008. See http://www.alsosprachanalyst.com/real-estate/as-the-chinese-government-gave-up-the-real-estate-market-goes-crazy.html

Their time will come. They just have “more room to manoeuvre”, as they say in the mainstream media — i.e., a slightly longer road. But history shows when the consuming countries run out of money the producing countries suffer even worse.

WRT “deflation, not debt, causes depression”, well, sure. But isn’t that rather like saying “smoking doesn’t kill you, cancer does”?

(Not a gold bug.)

#185 Daisy Mae on 06.16.12 at 7:55 pm

Marnic on 06.16.12 at 2:46 pm
Funny, Garth, you never mention the energy crunch and climate change anymore. Did they get fixed?

I forgot the birth control drug residue in trout streams, too. Damn. — Garth

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

I guess Garth can’t fix EVERYTHING…

“Damn!” is right. LOL

#186 Snowboid on 06.16.12 at 7:55 pm

177 Gunboat Denier on 06.16.12 at 5:55 pm…

It was funny, but when I told my boss I didn’t really want the transfer to Victoria, he didn’t seem to get the joke.

Needless to say, after retirement and ten years of fighting allergies, the decision was made to move back to the Okanagan.

With 10-12 trips a year off the island the costs of $ 1500 were better spent elsewhere. Driving from Kelowna to Vancouver to visit children is still less than the ferry ($ 55 in fuel each way) and doesn’t take much longer.

We only spent about $ 8000 to get off the island, including the move, legal and realtor fees.

This certainly wasn’t “…then spend all your money tying to get off it!” – on the contrary we did quite well in the end.

Nothing against the island, when the weather was nice it was very enjoyable. The costs of maintaining a home, especially close to the ocean, is more expensive – as is fuel, food, etc.

Emergency kit? Sure it will come in handy of there is a power failure here – but it was essential in Victoria (or anywhere in an earthquake zone).

#187 TimV on 06.16.12 at 7:57 pm

Hm. My post with my preferred anagram seems to have gotten lost. Those !! censors. A Greater Fool becomes: A Rate Goof. Oops!

#188 TurnerNation on 06.16.12 at 7:57 pm

Why are there no Copper of Zinc blogs, urging people to cash in their RSPs and hold coils and piles and bricks of copper and zinc at home? These are useful, valuable (and volatile) metals, in their own right.

In pre-internet days did grown adults sit huddled in coffee shops discussing in worried tones the state of repos, hyothication, derivatives, quantative easing, monetary stimulus, China’s housing situation? Of course not. They worked hard, balanced cheque books, and got on with their lives.

The internet has spawned a nation of pop-market analysts, and snake oil salesmen.

“Video killed the radio star”.
I barely recall our forum host’s sober but likable
CFTO TV business broadcasts, from the days of yore.

#189 thinker on 06.16.12 at 7:59 pm

50% correction predictor

You the taxpayer is paying all those people the high salaries – it was high when housing was low and high? What is your point? You should be complaining to the city, etc about your salary concerns. Those high salaries assuming you are right actually supports higher house prices.

#190 Mr Buyer on 06.16.12 at 7:59 pm

#27 ANONYMOUS on 06.15.12 at 10:40 pm
I hate all this doom and gloom reporting, and all the fear that idiots here have.
Just relax and enjoy life knowing that both the stock market and the housing market will both be going up 6% to 10% per year for as far as the eye can see.
…………………………………………………….
So I guess you are trying to say now is as good a time as any to buy a house. I mean 6% annual increases to infinity and beyond then the sooner I jump on then the better right? There is a little wrinkle here though. That is this real estate bubble that is collapsing. BUYER BEWARE. NOW IS NOT THE TIME TO BUY A HOUSE. SALES AND NOW PRICES ARE FALLING ACROSS CANADA.

#191 Marcus on 06.16.12 at 8:08 pm

Be wary of advice from anyone that tells you to ignore information. Scour all the information you can get your hands on ie Data mining and form your own opinion. Garth is wedded to a particular mindset that serves him well and that is fine. Others may be served by other approaches and that is just fine as well.

#192 Observor on 06.16.12 at 8:13 pm

THINGS YOU CAN’T CHANGE

An alcoholic should focus on stopping drinking, not upon trying to get liquor stores and bars closed.

Similarly, a citizen is better to focus his efforts on accumulating money rather than spending much time worrying about inflation.

No matter how much inflation we have, a $million will always be worth ten times more that $100,000.

(Besides which, despite printing of money, inflation remains low)

#193 Observor on 06.16.12 at 8:19 pm

THE EASY LIFE OF THE 50’s

Ah the ’50’s when every young man was all but guranteed a good job abnd pension for life…

Which I guess explains why there are no seniors in poverty now. They are ALL rolling in money.

And weren’t the 50’s great given that many Canadians did not have televisions and a good few did not even have indoor plumbing.

In the ’50’s we had those wonderful tiny Mom and Pop stores. We did not have to put up with mega malls and Home Depots and Walmarts and humungous Canadian Tire stores and all of their bounty that we enjoy today.

And yes Mom did not have to work. Well that is not outside the home. She just had to work almost every waking hour cooking and cleaning and mending cloths and looking after the typical four kids. Hardly broke a sweat.

The best time in history to be born was clearly today.

#194 futureexpatriate on 06.16.12 at 8:20 pm

Romney is really impressed with that little, uh, curclicue circular pattern you’ve done there with the motoring cycle in the cabin. Has no idea why, but reminds him of some chocolate goodies he promised to eat (but then of course didn’t) a couple of days ago.

#195 a prairie dawg on 06.16.12 at 8:32 pm

Cheer up folks. Tomorrow’s another day.

http://business.financialpost.com/2012/06/15/election-may-make-greek-crisis-even-worse/

#196 jess on 06.16.12 at 8:46 pm

abusive tax shelters from 1997 to 2003
BDO Admits Generating $6.5 Billion In Phony Tax Shelter Losses, Pays $50 Million
http://www.forbes.com/sites/janetnovack/2012/06/13/bdo-admits-generating-6-5-billion-in-phony-tax-shelter-losses-pays-50-million/

BDO Admits Generating $6.5 Billion In Phony Tax Shelter Losses, Pays $50 Million(14 Jun 2012)
BDO Seidman to Pay $50 Million in Deferred Prosecution (14 Jun 2012
——————————-

good discussion on dark money with Bill Moyers

virginia p.o box leading to more p.o boxes robo calls etc
http://www.motherjones.com/mojo/2012/06/monika-bauerlein-clara-jeffery-bill-moyers
=========================

and doesn’t some of this dark money end up funding election ads like money from chinese gambling

Sheldon Adelson, has been under criminal investigation for the last year by the Department of Justice and the Securities Exchange Commission for alleged bribery of foreign officials, according to corporate documents.

In a separate civil lawsuit, a former executive of the company has alleged that Adelson ordered him to keep quiet about sensitive issues at the Sands casinos on the Chinese island of Macau, including the casinos’ alleged “involvement with Chinese organized crime groups, known as Triads, connected to the junket business.” The triads — Chinese organized crime syndicates — are allegedly involved in organizing high stakes gambling junkets for wealthy Chinese travelers.”

The criminal probe of Sheldon Adelson’s casino empire
http://www.reuters.com/article/2012/02/08/us-usa-campaign-adelson-idUSTRE8172DS20120208

#197 Dan from Richmond Hill on 06.16.12 at 8:57 pm

#78Marco from Van on 06.16.12 at 1:57 am

What do you think, is there one Europe or 27 European countries, each one with its own interests ? If European Union fails, is there any chance for Europe to survive in this globalised world ?

#198 Layton on 06.16.12 at 9:00 pm

Reference was to central banks. Bubbles are manifestations of greed and speculation. — Garth

…So are healthy markets. The question is why these manifestations become erroneous all at once. The answer is central bank interest rate manipulation. …This is why we don’t buy your confidence in central banks.

Sovereign central banks set rates, they don’t manipulate them. — Garth

#199 ANONYMOUS on 06.16.12 at 9:13 pm

Yeah yeah yeah, the ‘SKY IS FALLING’, i’ve heard that one before.

The truth is that as long as interest rates stay at current lows then home prices will stay at current highs, that’s the truth. And with the Europe mess …. well…. we’ll probably have these low interest rates for another 50 years. BETYA GARTH WON’T ADMIT THAT !!!

#200 Erika on 06.16.12 at 9:22 pm

In regards to home sales in mississauga. If you look at how many homes that are selling over 700000 they are very few.

#201 daystar on 06.16.12 at 9:41 pm

#165 Blacksheep on 06.16.12 at 3:39 pm

“I see your still trying to keep the cattle complacent.” – Blacksheep

What are you, a rancher now? Not at all, just call it like I see it, sorry, the world isn’t coming to an end. I know some of our leaders outright suck rocks but to generalize them as “all bad” and “all future leaders will be bad” or “all the same” is a bit over the top.

“Our problems are based on “poor or fake leadership”? We just need to vote in some “true leaders”? The next farmer will be different! Reminds me of: If you don’t vote, you can’t complain. or Our forefathers sacrificed so that we can, bla, bla, bla. – blacksheep

If we actually tried a farmer, it might be different. “You don’t vote, you can’t complain”, these are not my words (why am I repeating myself again?) but I do heavily recall talking about the sacrifices and good will of our ancestors for good reason so I’ll say it again. I wouldn’t cheapen their efforts, you’ll be ancestor yourself some day. Pessimism isn’t a warm blanket to wrap yourself around and not something you’ll wish to be remembered for. Look at what it does to doomers who cheer anarchy and destruction as “justice” and get bummed to depression when it doesn’t come because they didn’t personally profit when it didn’t go their way.

“total systemic crap” – blacksheep

If you can come up with something better, we are all ears. The problem as I see it is not the system of democracy (which has deteriorated somewhat since Harper through the end of subsidized votes and transparency of political party contributions by organizations within and outside of Canada), its the way its practiced (like robocalls). In Canada, MP’s don’t have autonomy to express opinions and outright will of their constituents. I mean, if we collectively elect MP’s to be trained seals who tow the party line thats one thing but if we don’t, we should wake up to the reality that trained seals are what we have.

Some more advice. Try (don’t knock it til’ you’ve tried it) working within the system directly through MLA’s and MP’s (I’ve had success there at least with MLA’s with parties I oppose I might add, directly on policy. Working with an MLA to convince the Sask Party to drop nuclear power generation tops the list of policy influence and it could not have come without 2 days of pure research from myself as well as mutual blogger contributions on energy and power generation in a hosted blog at another site several years before, thats blogger power for you in practice. I posed a highly technical argument against nuclear power generation for nearly an hour with the right MLA that had Brad Wall’s ear and they mothballed their own position within 2 weeks, right down to my tactical advice with a political retreat. If they had gone through with proposed development, it would have been an easily argued 14 billion dollar boondoggle that a population just cresting a million would have had to finances so please, spare your “total systemic crap” talk for someone who doesn’t know better). If that doesn’t work, try working against the party elect through organizing with whatever opposition you feel could be a successful counter (lets hope that a lack of faith means you still try). If that doesn’t work, heed my words.

Accept the loss of your efforts (but by no means stop trying). Accept it because the loss that follows, whether its the loss of freedom, or freedom of expression or human rights, or market share of resources or simple taxpayers dollars is the loss that we, as a democracy at the very least collectively signed up to share. If the majority wants to learn through the school of hard knocks even though there are better choices, we have to respect free will, manipulated as it is for what it is. In other words, if Canadians want to be be fools and elect shitty leaders who later mute the voices of their followers and run this nation into the ground for self interests, then we should outright collectively accept the losses that we deserve until we learn to be wise through better choices. If loss is what it takes (the last resort, but…) to learn value, then thats what it takes. Lets hope that generations of having no value at all are not what follows.

#202 John on 06.16.12 at 9:50 pm

Observer wrote:

“John, my friend, I don’t think I got here by a life of personal inaction.”

That’s not the message I get. You seem invisible. Our current 50 year run up has allowed you to get away with this. You hid well.

#203 F on 06.16.12 at 9:52 pm

Nice picture…. . Your house?

#204 P & T S on 06.16.12 at 10:04 pm

There is zero chance central banks will allow contagion. — Garth

From a statistician’s viewpoint the probability of any one, or connected group of, Central Banks not “allowing” contagion must be non-zero, since there will always be at least one set of circumstances that permits this outcome.

Since the primary mechanism of intervention by Sovereign Central Banks is management of money supply (mainly via interest rate modulation), and to a lesser extent management of reserves via the Bond Market, the mechanisms for rapid and definitive action are at best limited.

The US has the BIG advantage of holding Reserve Currency Issuer status. No one else has this advantage, and so everyone else is much more exposed to the psychology of the Market (what happened and is happening locally in Housing “prices” happens internationally in Sovereign Bond “Prices” (or rather yields – a measurement of the “risk price” attached to the bond.

The Bond Market is as near to a “true” Market as we have at the moment – relatively free from interference (except that we all know that “Big US Players” have been “Playing the Market” courtesy of the TARP handouts for a while!)

Seems where there’s money to be (easily) made, corruption soon follows.

Doesn’t bode particularly well for the future.

#205 Walter Safety on 06.16.12 at 10:14 pm

Then they would not be leaders. There is zero chance central banks will allow contagion. — Garth

If they were leaders they wouldn’t be so deluded to think they can control the world economy .
If the were leaders they wouldn’t want to control they would want to serve.
If they were leaders they would spend less time with celebrities and more time with the common person .

This blog is an anarchist swamp. — Garth

#206 Nostradamus Le Mad Vlad on 06.16.12 at 10:18 pm


Was good to return to the Kelowna Farmer’s Market this a.m. Arrived early (while parking was available), bought plenty of fresh veggies, fruit then wandered around. So much better than SuperS or Safeway, ‘tho slightly more expensive. Well worth it, much better than Monsanto’s BS — 9:58 clip — Monsanto If this happens, it would be a step in the right direction, because this kinda stuff keeps appearing in the States.
*
Four Horseman of the Apocalypse Fossil Fuels, War, Central Banking and Nuclear Fission; The One Per Cent is all the economy has recovered for; Zimbabwe’s starving billionaires; 24:42 clip Europe’s economic woes. It would be curious what happens if PIIGS, plus France choose to exit the EZone, revert back to their original currencies and tell the IMF (BdBs) to take a hike. “The unthinkable looks possible: a global financial crisis reminiscent of the one in 2008: A full-blown crisis to start in Greece, quickly move to the rest of Europe and then hit the US.”; The Fourth Reich has spoken, and Provoking Tensions; John Mauldin on The Bang moment; Krugman Left or right? Central Banks “Translation: There may be such an anti-austerity landslide that the vote riggers can’t steal the election!” wrh.com; Japan’s Banxters and Fukushima; Obomba’s Economic Gaffe;
*
One Glast Time Rolling Stones to conclude at Glastonbury; Watergate Why Nixon resigned instead of being impeached; US – Israel They were successful in Libya and other places. Syria, not too sure about that; The RC Church “The mood at the Vatican is apocalyptic.” One plausible reason is that the present pope is #265 out of 266, and Atheist Priests; UK Curfew Bangor or North Korea? Tumors She will make a full recovery after they’re all gone; Tesla’s wireless electric car explained.

#207 GTA REALTORS IN A PANIC. on 06.16.12 at 10:43 pm

Realtors posting on Garth blog to tell everyone the housing market in the GTA doing well? If that were true these out of work realtors wouldn’t be here. The fact many post on Garth blog speaks volumes of their fear of the current and worsening housing market.

#208 backwardsevolution on 06.16.12 at 11:29 pm

http://www.counterpunch.org/2012/06/15/housing-market-smackdown/

#209 neo on 06.16.12 at 11:38 pm

So you think China will have a soft landing from the largest housing bubble in the history of mankind because they are run by the same “smart people” who got them in this situation in the first place? No such thing as a soft landing Garth. You of all people should know this. The Central Banks Put is the only thing that has lit a fire under stocks not any economic data which is trending badly since the start of the year.

You’re right risk is sorely understood. Credit risk that is.

#210 Mr Buyer on 06.16.12 at 11:41 pm

#198 ANONYMOUS on 06.16.12 at 9:13 pm
Yeah yeah yeah, the ‘SKY IS FALLING’, i’ve heard that one before.

The truth is that as long as interest rates stay at current lows then home prices will stay at current highs, that’s the truth.
………………………………………………………….
No. That is not the truth. Prices are falling now even with these bubble creating interest rates and you know it. BUYER BEWARE. THE BUBBLE HAS TOPPED. NOW IS NOT THE TIME TO BUY A HOUSE. SALES AND PRICES ARE FALLING ACROSS CANADA.

#211 neo on 06.16.12 at 11:42 pm

Debt does not create depression. — Garth

Deflation from deleveraging does however. That is why the U.S. Fed and Central Banks around the world have been printing and committing trillions of dollars since 2008 to avoid said deflation and continue the debt accumulation/house of cards.

#212 Mr Buyer on 06.16.12 at 11:44 pm

#190 Marcus on 06.16.12 at 8:08 pm
Be wary of advice from anyone that tells you to ignore information. Scour all the information you can get your hands on ie Data mining and form your own opinion. Garth is wedded to a particular mindset that serves him well and that is fine. Others may be served by other approaches and that is just fine as well.
………………………………………………………………
Sage advice so long as you are not trying to suggest buying a house now is a good idea because it simply is not.

#213 neo on 06.16.12 at 11:47 pm

#25Debtfree

Actually you are wrong. The interconnectness of not only the world economy but more importantly the financial institutions increases the level of contagion in the entire system instead of it being localized. You couldn’t be more incorrect.

#214 neo on 06.16.12 at 11:59 pm

#203P & T S

Credit Markets>Equity Markets. In more ways than one.

Better truth teller and gauge. Good post.

#215 Canadian Watchdog on 06.17.12 at 12:05 am

Canada Outlines Plan To Boost Bank Liquidity http://tinyurl.com/cq6wqhn

“Mr. Flaherty said Canada would take similar measures to those it took in 2008, when the bankruptcy of Lehman Brothers helped trigger a freeze in the global interbank lending market and sapped confidence among investors around the world.

Around then, the Canadian government made around C$200 billion ($196 billion) available to banks through a series of programs including buying insured pools of mortgages from banks’ balance sheets. Other measures included guaranteeing interbank lending, while the Bank of Canada injected billions of dollars into markets on a daily basis at the height of the crisis. ”

Central banks know something we don’t. Black Monday?

#216 Canadian Watchdog on 06.17.12 at 12:16 am

“There is zero chance central banks will allow contagion. — Garth”

You mean like this? http://postimage.org/image/h9gisgwlj/

#217 Taipan on 06.17.12 at 12:23 am

Comes a time in all societies where they go to kick the can down the road and they find that the road has run out.

It bounces of a billboard that is a pcture of a road disappearing into the distance and promptly hits them in the face.

At that time they suddenly wake up that there are ramifications for their actions.

I fear you are too optimistic Garth, but we agree that way to much debt is the cause

#218 BC Bring Cash on 06.17.12 at 12:50 am

Aussie Roy
It sounds like the same stimulus advisers and consultants that advised Governments all over World are now busy lobbying Govt’s. to turn on the austerity measures so the Bankters can now buy public assets pennies on the dollar. It’s amazing that money created out of thin air as debt can all of sudden be used to purchase real assets. The system is rigged and blatantly criminal.

#219 Ronaldo on 06.17.12 at 1:16 am

#5 Pathcontrolmonk – or, Return of Thrag

http://starwars.wikia.com/wiki/Thrag

#220 John on 06.17.12 at 1:38 am

Daystar wrote:

” Try (don’t knock it til’ you’ve tried it) working within the system directly through MLA’s and MP’s (I’ve had success there at least with MLA’s with parties I oppose I might add, directly on policy.”
——–
Wow, I can’t say enough about the value of the internet. There is almost no information about Canadian reality anywhere, and in this blog I feel I am totally up to date on what’s going on.

Daystar, you’re the champion of irrelevance in the “Canadian” reality. An image comes to mind. “A Driving Miss Daisy Technocract”. Burying yourself in useless machinations of the “system” isn’t taking the temperature of what’s up. You’re unplugged from the pulse.

As far as “doomers” are concerned, that too is irrelevant.

I agree that a “car crash in slow motion” is a more probable outcome. The people who’ve done all the stealing, those who won the “timing” lottery of the game ( ex. Boomers), governments, leeches and administrators of the system WILL finangle and stretch out and adapt. You’re likely right.

But at the bottom of it all is a very wide swath of real people who’d have to accept being permanently suckered. When brain dead and consuming, fine. But in your fake little complex machine ( not so impressive), derivatives glucose DOES stop arriving to that group.

Talk about that group. Talk about the “up and comers”
( kids of 15 today). How would your talk go over with them.

Exactly zero air time. It would be rightly considered nonsense.

Move to a discussion about what’s really happening. You’re out of runway.

#221 Ronaldo on 06.17.12 at 1:52 am

#39 Tony – ”The smart people are 100 percent in cash the stupid people are in precious metals.”

There are so few people invested in precious metals or even interested or that know anything about investing in precious metals, to me, makes it a laughing matter.

A total non-issue. Those who are invested in precious metals are few and far between and are in such a minority that they have little to be concerned about.

If and when even 1% of the population become interested in precious metals, I would tend to take notice. As it stands now, this topic is really a non-issue and makes me wonder why so many people get so worked up about it.

There is very little interest in the precious metals by over 99% of people. If you are invested in precious metals, you could be considered part of an elite group since you have no competition.

#222 live within your means on 06.17.12 at 3:50 am

In addition to the 400+page Omnibus bill this sickens me. –

http://www.ottawacitizen.com/news/Ottawa%2Bairport%2Bwired%2Bwith%2Bmicrophones%2BBorder%2BServices/6788759/story.html

We travel to Europe at least every 2 yrs to visit my DH’s family & friends. For many years now we fly direct to Frankfurt as it’s only a 3 hr drive from his parents’ home in France. Several years ago DH said ‘screw it, I’ll not renew my Cdn passport. He now travels on a French 10 year PP – 1 page renewal form – for the price of a 5 yr. Cdn. passport. He lines up in the EU citizen line & I go to the other line. It takes me an extra 5+ minutes. They never question me. One year we arrived back home (customs training centre) & a young Mr. Prick asked my DH all kinds of questions – where did he work, for how long, what did he do, etc., etc. My DH was travelling on a Cdn passport (he’s had dual citizenship for 30+ yrs.) The Prick had no right to ask him those questions. I was fuming inside but DH gave me the ‘stare’ so I said nothing. I should have reported the Prick.

I’m just so upset with the flagrant erosion of democracy in our country.

Pardon my rant. I’ll be 65 soon, no children, not in the greatest of health & don’t care if I live to be 70. BUT, I do care about the next generation.

#223 Steven Rowlandson on 06.17.12 at 6:27 am

You get your news from a gold-pumping web site? — Garth

Garth I get my news from many sources.

Well, there’s one you can safely ignore. — Garth

The precious metals have improved my net worth and paper assets destroyed my first life savings.
Why would I see things your way Garth except for the real estate issue?

Assets did not do those things. You did. — Garth

#224 Tony on 06.17.12 at 7:00 am

Greg stole the word “powerful” from Ed Beckley (the Beckley business seminar).

Greg should stress the bond market very, very rarely gets things wrong. It’s as simple as watching the ticker symbol TLT. Wall Street is just there to rope in all the suckers so the most amount of people can lose the most amount of money.

#225 Aussie Roy on 06.17.12 at 7:15 am

Aussie Headlines

Struggling Aussie families unable to save, says survey

MORE than five million working Australians have less than four weeks’ money to live on if they lose their job or face a financial emergency.

“The reality is that many Australians are using all their income to support themselves and their families, and find saving difficult,” Consumer Action Law Centre director Gerard Brody said yesterday.

“What this survey shows is how precariously close many of us are to financial crisis. A job loss, reduced hours or illness, in the absence of a savings safety net, will be catastrophic.

http://www.news.com.au/money/cost-of-living/struggling-families-unable-to-save/story-fnagkbpv-1226396258353

CONSUMER optimism has grown only slightly, despite another official interest rate cut, a private study shows.

“This is despite an (overall) 125-basis point reduction in the cash rate that has brought the average standard variable mortgage rate down by nearly one per cent.”

http://www.news.com.au/money/money-matters/consumer-confidence-grows-slightly-in-june/story-e6frfmd9-1226394021702

#226 Frank on 06.17.12 at 7:27 am

This post confuses me.

#227 Erika on 06.17.12 at 7:42 am

Truth is most realtors are nothing more than a bunch of self-centered, low life “professionals” that purport to be able to “add vale” so as to charge the sky-high sales commission from by convincing you to buy because “house prices will always go up” or “sell! The sky is falling!”. Either way, it is these glorified sales scums that are laughing all the way to the bank. So don’t listen to one word from them IMHO….

#228 Dividend Yield Investor on 06.17.12 at 7:59 am

The U.S. economy has not gained, but as of NOW is in a recession. U.S. profits for our S&P 500 will bottom out around $80 dollars per unit. If history is any guide stocks will trade around 10 times earnings, which will place the S&P 500 at 800. Around a 40% decline.

Why? Residential real estate continues to decline as the robo signing flap is now behind the banks and the shadow inventory is being foreclosed. This will drive down RE another 20% plus 10% as strategic defaulter’s get into the act and throw in the towel. This will mark the END of the crash portion for residential RE in the States.

This will and is reducing consumer spending to where the U.S. is in the beginning of a MILD recession.

Atlanta GA

I’ll take the other side of your trade. — Garth

#229 eaglebay - Parksville on 06.17.12 at 8:13 am

#159 Snowboid on 06.16.12 at 2:49 pm

Anybody that trades Vancouver Island for the Okanagan has a bigger problem than the ferry system.

#230 eaglebay - Parksville on 06.17.12 at 8:37 am

#217 live within your means on 06.17.12 at 3:50 am

Good rant.
Better than reading from all the losers, I mean doomers, on this blog. It’s obvious that most of them don’t have a clue.
As for the Canadian passport, it is used within Canada by most people flying within the country. Sick.
I would never use a Canadian passport to identify myself in my own country.

#231 Market Bull on 06.17.12 at 9:33 am

#162 Canadian Watchdog:

You have the remarkable abilty to compress the most words into the smallest ideas. You are nothing more than a frightened little doomer.

You put me in mind of a shiver looking for a spine to run up.

You clearly have delusions of adequacy.
_____________________________________________

“But mot of all, you are not only dull, you are the cause of dullness in others.” -Abraham Lincoln

#232 [email protected] on 06.17.12 at 10:27 am

Re: #221 Ronaldo on 06.17.12 at 1:52 am

Precious metals will return as an inflation hedge putting gold back to the 200 dollar U.S. area. Silver should fall back to 3 dollars U.S. an ounce. The precious metals will be sold off in droves as more and more countries and cities face bankruptcy.

#233 thewortsone on 06.17.12 at 10:30 am

#7

Garth, what does higher and higher debt create?

More payments. — garth

I would say it creates more debt!

#234 Burnt Norton on 06.17.12 at 10:52 am

Notes from the peanut gallery this weekend:

Daystar = cogent constructive considerations

John = cynical concrete conjecture

BTW, happy dad’s day to all

#235 50% correction predictor on 06.17.12 at 11:00 am

#231 Market Bull

#162 Canadian Watchdog:

You have the remarkable abilty to compress the most words into the smallest ideas. You are nothing more than a frightened little doomer.

You put me in mind of a shiver looking for a spine to run up.

You clearly have delusions of adequacy.
_____________________________________________

“But mot of all, you are not only dull, you are the cause of dullness in others.” -Abraham Lincoln
_________________________

Canadian Watchdog,

You have obviously touched the nerves of the Market Bull(shit)!

Soldier on, Canadian Watchdog.

#236 Stoopid on 06.17.12 at 11:08 am

#104 Bigrider

China has no social programs what so ever… Their landing will be soft compared to wealth redistribution. Benevolence is love…. Welfare is by confiscation

#237 TurnerNation on 06.17.12 at 11:11 am

Canadian Watchdog – about the coffee price increase chart you posted: people can easily save money by doing it themselves. Supermarkets still sell a gigantic can of no-name rotgut coffee for about $10. Or, pay Starbucks $4/cup.

Someone once mentioned how we’ve outsourced a basic household function to others. If I want morning cereal do I pour a bowlful for myself, or walk to the Cereal Store and order a grande venti cereal with room, low fat soy milk, for $9????

#238 John on 06.17.12 at 11:25 am

Eaglebay – Parksville wrote:

“Better than reading from all the losers, I mean doomers, on this blog. It’s obvious that most of them don’t have a clue.”
——-

The debate happening here is not going on anywhere in the mainstream. And anything outside the denial of our current situation is considered a “doomer”.

Eaglebay-Parksville, you didn’t seem to think that the following comment from Taipan was doomer..let’s have a look at it again:

“Comes a time in all societies where they go to kick the can down the road and they find that the road has run out.

It bounces of a billboard that is a pcture of a road disappearing into the distance and promptly hits them in the face.

At that time they suddenly wake up that there are ramifications for their actions.”
——–

If you do think that’s a doomer ( which I think you don’t), explain why. Try to be really specific…since you are liberally throwing out challenging comments, and it is a blog. It’s designed for you to put up or pipe down.

For me? A classic doomer would be Alex Jones…he’s like a central banker, but on the other extreme. He has delusions of grandeur and is actually dangerous. A more common doomer would be people talking on and on about precious metals, or hiding noodles in their closet.

You seem to be unclear on the concept of doomer. To me it means you want to ignore information in order to preserve a limited and poorly thought-out belief system.

So come out from behind the rock and explain your concepts, because you made a global statement about “doomers and losers”, and it’s all grey. What are you trying to say? What’s your sober ( subjective is fine of course) understanding of the deal right now?

Nobody has “the truth”, but there is a lot of information in plain view right now. Do you want to look at it? If not, your comments collapse like a house of cards.

#239 Gunboat Denier on 06.17.12 at 11:31 am

186 Snowboid – I can understand wanting to be closer or have simpler access to family, but I dont really see that as an “island” issue as in your case it could apply just as well to Prince George, Calgary or Halifax.

My retired neighbours have both kids and grandkid in the Fraser Valley. She also has all her family in Washington
State. So they probably do take the boat a dozen times a year. It doesnt seem to bother them, though they both have good pensions. I can think of others in simalar situations, so it looks to be a very personal decision.

So of your five reasons to move, we know (1) ferries and I’m guessing (2) quakes and maybe (3) weather. I’ll go out on a limb and say (4) Eaglebay (see #229) but what would 5 be?

#240 Market Bull on 06.17.12 at 11:44 am

@ #235 50% correction predictor:

“But most of all, you are not only dull, you are the cause of dullness in others.”
_____________________________________________

What could be duller than a rube that endlessly drones on about something that never comes true?

You and Buyer Beware are definitely in the running for the inglorious title of: “Most Boring.”

#241 Canadian Watchdog on 06.17.12 at 12:08 pm

#235 50% correction predictor

I’m not sure how credible his fundamental thesis on affordability is when
first time home buyers
has declined to 35% from 43% in 2007.

#237 TurnerNation

Saving isn’t cool anymore.

#242 TheBigLebowski on 06.17.12 at 12:16 pm

“Meanwhile corporate profits continue to chug along, as 70% of companies beat estimates with their latest corporate earnings.”
I guess if you call corporations making massive job cuts and revenue increasing due to inflation marking up their sales. Ya, I guess that is the new economy. If Greece leaves the Euro, they only represent 2% of the Euro GDP, but the main thing is they will set the precedent for Italy , Spain and even France who are also in a financial mess. Money printing will be the solution and eventually default. As I mentioned 4 years ago, and was mocked for it by the all knowing leader of this site, A Louvre Accord type meeting is coming . Revaluations, and devaluations among nations of their debts and currencies is now in plain view. Anyone who keeps says, “move along, nothing to see here” is either to dumb, to naive, or is a lier . Euro bonds backed by gold is already being talked about amongst nations.. Gold is plainly once again a monetary asset and reserve currency. Hegelian Dialectic is the order of the day, Thesis, Antithesis, Synthesis is how mainstream media and government get us to all agree on the same views. Garth, you’re ding a great job in that regard.

#243 Doug in London on 06.17.12 at 12:32 pm

For the most part forget the doom and gloom Greg Habstritt is trying to promote. However, if he is right about the markets getting shook up by Greece leaving the Euro then it’s time to buy, buy, buy equities (or equity funds) that pay a good dividend if that happens. if you don’t have the money, get a margin account and borrow some. If that’s not your thing have a big yard sale to get rid of junk you aren’t using and raise some money that way. Again, you should respond like the governor that gives the engine more fuel when the speed drops. Deja vu, haven’t I mentioned that before?

#244 TurnerNation on 06.17.12 at 12:41 pm

USA is #1 place in which to invest. Corporations are performing so well, throwing off cash – almost all are increasing divdends.

Henry Ford first figured it out with his $5/day wage: turn your workers into customers/consumers. They can afford to buy your goods.

USA is well becoming an open air factory work camp.

Most every citzen is encumbered with $100,000 student loan debt, or underwater with six figures of mortgage debt, or locked into double digit sub prime car loans (due to their bad credit situation), and paying $500-1000 in monthly health care premiums (indexed to inflation, natch.).

Almost 50% of each tax dollar is promptly remitted to the military complex and private or public contrators. It’s the perfect feudal profit sharing system.

God I love predatory capialism. I am funding my future retirement with it. I sleep well, while others suffer. Tent cities, underwater mortgages, $4/gallon gas, $12/hour factory workers slaving away, student loan interest (compounding).
god bless USA!?!?!??

I fully expect Harper within the next 5 years to gut our health care system, with no reduction in taxes.
I bet the corporate lobbyists are always bugging him: Steve-o, so how long you gonna remain a socialist? Let us into your country. Each citizen is worth a $500-1000/month payment to us (less deducatable and max payouts, and ‘pre-existing condition’ waivers).

What a gold mine! And Canada is untapped. For now.

#245 Snowboid on 06.17.12 at 12:42 pm

#229 eaglebay – Parksville on 06.17.12 at 8:13 am…

The ferry system was one of the top five reasons for leaving – the main reason was allergies that became unbearable.

However, financially it was a great move, as we followed the advice of Prof. Turner – in the end we are much better off than if we had sat ‘house-poor’ in our mouldy island mini-McMansion.

Instead, we pay a pittance for renting a high-end condo (compared to purchasing same) May to October – then spend the remaining months in the Valley of the Sun.

All this for not much more than it cost to live on the Island.

Not a problem as we see it!

#246 timbo on 06.17.12 at 12:53 pm

http://www.guardian.co.uk/world/greek-election-blog-2012/2012/jun/17/greek-elections-greece-polls-live

“#Greece2012 Pub Issue (opinion poll): Syriza 31-25, ND 30-25, Pasok 15-11, IndGreeks 9-6, DemLeft 9-6, KKE 7-4, GolDawn 7-4, Recreation 3-1”

But is it going to make a difference?……….

http://seekingalpha.com/article/663751-thoughts-from-the-front-line-the-bang-moment-is-here

“There is a limit to how much debt the market will be willing to tolerate. What that limit is, no one actually knows until it is reached, and then it is too late. The limit has evidently been reached now in Spain. It will soon be “now” in Italy and even France, minus serious reforms. German credit default swaps are rising every week.

But just as there is a limit to the bond market’s willingness to fund debt, there is a limit to voters’ patience and willingness to bear pain. That frustration grows when there seems to be no end in sight to the pain on the current path. But can changing course actually make things worse? The answer is, of course, yes

Hope you have your popcorn ready……

#247 TurnerNation on 06.17.12 at 1:07 pm

USA’s suffering is privitized, for profit.

Examples:

– Jail bail bond busineses.
– Payday loans
– Health care
– Sub prime car loans. Eg. paying 28% interest on a $5000 car, never becomes paid off).
– Underwater mortgages are traded for a profit (new IPOs have spring up, trading in the same).
– For profit prisons.
(And in China you apparently pay for your own execution bullet. Can USA be far behind?).

In Canada, here’s two companies with fat dividends (ok, CSF just cut theirs, but…).

CSF.TO (Cash Store Financial – think Money Mart).
EH.TO (Easyhome. Subprime furniture, appliance renting).

Disclosure: no position at this time.

#248 TurnerNation on 06.17.12 at 1:09 pm

#220John on 06.17.12 at 1:38 am

Some of your posts raise interesting – albeit garbled – ideas, trains of thought.

#249 Blue Monster Lover of Meats and Vegetables on 06.17.12 at 1:38 pm

Shove your guns up your butt. — Garth
——
If you don’t know history it is hard to appreciate the second amendment. But disarming the citizenry was the old European way to trample them. The second amendment is seriously important to keep a government in fear of the people and not vice-versa.

A government that can not trust it’s people with guns is a government that can not be trusted.

Switzerland has it right also.

To the elbow. — Garth

#250 TnT on 06.17.12 at 1:49 pm

Moody’s downgrades ING Bank of Canada due to parent company and euro issues….

Is there any danger keeping an account here other than low interest?

#251 new-era on 06.17.12 at 1:53 pm

Canadians have been walking on a tightrope since 2008

http://www.theprovince.com/business/Canadians+high+debt+loads/6795725/story.html

If all condition continue

1) lowest interest rates ever
2) housing price continue to rise beating inflation and etc
3) immigration continues to pour in
4) job creation and growth continues

Then we can continue to go on like the everready rabbit.

But thats what Bernie Maddolf said. As long as the market continues to increase, and people keep on funding his ponzi scheme then he can continue to grow.

But…. just recently housing prices are declining.
Businesses cannot afford to stay in canada, And the global economy slowing due to tighter financial conditions all over the world including China and India

So whats next for Canada? Does the ponzi scheme get exposed

#252 truth hammer on 06.17.12 at 2:08 pm

#251 BM….In Canada we have an entrenched legacy of nepotism and bureaucracy afraid of losing the dream of ever lasting gorging. Perfect example is the Liberal dinosaurs touting another Trudeau for ‘leadership’……C’mon…is this North Korea? Nepotism at it’s absurd apex. Oh yes darlings ….wouldn’t it be grand to return to the good old days…when absolute power was the Liberal domain…..let them eat cake Justin.

#253 Ralph Cramdown on 06.17.12 at 2:09 pm

Does [gold] look like a crowded trade to you?

At 1% of the value of all non-real-estate income producing assets on the planet? Yeah I think it’s crowded. So if gold doubled in price, then the value of all those other assets (in terms of the immutable GLOD) is halved? Nuts!

If gold was the wise man’s trade, gold mining stocks would be up, too. It’s purely a position for someone who thinks the world is going to end, and doesn’t care about the costs because t-bills pay nothing either. Once people crawl out from their bunkers, ‘assets’ with no income stream are going to look a lot less appealing.

#254 Observor on 06.17.12 at 2:17 pm

BOND MARKET IS SMARTER

Tony at 224 said:

Greg should stress the bond market very, very rarely gets things wrong.

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

That claim is often made…

Well one of the times the bond market got it wrong was just prior to the whole financial crisis when the bond market thought that Mortage Backed Securities in the U.S. were safe triple A investments.

Another time was the 50’s and 60’s when long term bonds failed to predict inflation and investors got crushed with very poor real returns (loss of buying power).

In the 80’s and 90’s the long-term bonds were priced to reflect high inflation. It did not happen.

Today a 30 year Canadian Goverment bond yields an extraorinarily paltry and just about all-time-low 2.4%

This will not be a good investment over the 30 years unless we have deflation.

So, I think the record is clear the bond market pretty well ALWAYS fails to predict the future.

Bond yields are set by investors, traders and governments. None of which have crystal balls.

There are successful businesses with long track records and that are still growing and that earn 10% or more ROE and that trade around book value. The chance that a basket of these businesses will fail to beat those 2.5% bonds over the next 30 years is laughably small. Over the next year or two, that is anybody’s guess but over the next ten to 30 years it’s no contest. Those bonds will trail the stocks.

#255 Toronto_CA on 06.17.12 at 2:23 pm

“Is there any danger keeping an account here other than low interest?”

Those accounts are insured by the Federal Government CDIC up to a certain amount ($100k). I wouldn’t keep a million bucks in a single account, but if you’ve got a five figure sum in an account there or even several five figure accounts you are fine.

http://www.cdic.ca/e/index.html

Nobody should feel secure because of CDIC. Pick the strongest institutions with which to bank, not the guys too cheap to have physical locations or who disappear when the power goes off. — Garth

#256 Harlee on 06.17.12 at 2:26 pm

#237 TurnerNation
You may not go to Starbucks for a cup of coffee at an exclusive price ,and I don’t go that often either, but coffeehouses have existed in the world since the 1600s and I don’t think their popularity will wane soon. It’s more than just the coffee.When I was a kid we would hang out at the local Chinese cafe with the old wooden booths and nurse a bottle of coca-cola.It was a chance to sit with my friends and BS each other,as 12 year old boys are bound to do. We grumbled when the price of pop went from 12 cents to 15 cents ! There was a time when women were banned from bars,so ice cream parlours became the place for the “fairer sex” to socialize and discuss what was on their minds then (Votes for Women !). Now all adults go to coffee shops to grumble about high taxes. It doesn’t matter to them if they pay 40 cents or $4 for a cuppa. As Mr. Spock used to say: “These earthlings are illogical”.

#257 jess on 06.17.12 at 2:32 pm

blue monster do you sell self defense insurance for the NRA?

#258 Toronto_CA on 06.17.12 at 2:52 pm

You don’t trust the CDIC, Garth? Have they ever failed to payout the $100k deposit insurance? I’m skpetical that they aren’t safe, but you’re the expert.

The G&M Financial Facelift usually sets me off but today it was a woman who lives in Vancouver, sitting on half of a $1m bubble house. She can’t sell I guess because she only owns half of it and her partner can’t buy her out, so she collects welfare (GIS) and writes that she has no income and what can she possibly do.

I sense this will be much more common and soon they won’t even have the RE bubble to give them assets:

http://www.theglobeandmail.com/globe-investor/personal-finance/portrait-of-the-artist-as-a-yield-hungry-investor/article4276645/

#259 Canadian Watchdog on 06.17.12 at 2:58 pm

#257 Observor

“So, I think the record is clear the bond market pretty well ALWAYS fails to predict the future.”

The record is clear that you have no clue what you’re talking about. Central banks have prevented yields from rising by purchasing government bonds and mortgage backed securities.

#260 Lex on 06.17.12 at 3:02 pm

Shove your guns up your butt. — Garth

Boy thats harsh

There is no room on this blog for armed insurrection. — Garth

#261 Gunboat Denier on 06.17.12 at 3:14 pm

245 Snowboid – not much you could do about the allergies, but the option to sell, then rent cheap and fly south for the winter is still available on the island. I see blogger “timing is everything” is also posting the aero
travel option.

Why did you actually move to the island in the first place?

#262 Snowboid on 06.17.12 at 3:17 pm

#254 Timing is Everything on 06.17.12 at 2:06 pm…

Actually we loved Victoria, especially being within a short walk from downtown. There wasn’t much we could do about the allergies, when even the inhalers weren’t doing the job.

I probably averaged two flights a week for over 30 years before retiring, now I find the whole routine a waste of time for short flights.

We did the walk-on passenger service several times on the ferries, but found it a bit tough when we also wanted to visit Kelowna as part of the same trip.

Bottom line, we may have stayed on the island if it weren’t for allergies, but certainly wouldn’t have felt the financial freedom we have now.

Sorry for being so notoriously off-topic!

#263 Lex on 06.17.12 at 3:21 pm

No second amendment here

#264 John on 06.17.12 at 3:40 pm

The BigLebowski wrote:

“Thesis, Antithesis, Synthesis is how mainstream media and government get us to all agree on the same views. Garth, you’re doing a great job in that regard.”
—————-

Whoa, that’s something else. But to be fair, what human view of a situation doesn’t include that. We’re limited. The idea is to try to get more relevant without protecting your interests via a mechanism of denial.

#265 Mr Buyer on 06.17.12 at 3:41 pm

#255 truth hammer on 06.17.12 at 2:08 pm
#251 BM….In Canada we have an entrenched legacy of nepotism and bureaucracy afraid of losing the dream of ever lasting gorging. Perfect example is the Liberal dinosaurs touting another Trudeau for ‘leadership’
……………………………………………..
My god man. How can you say all this nonsense with a straight face? You are seriously talking about gorging and suggesting that notion comes even close to describing any political party other than the Cons/Reform. Never mind nepotism and cronyism. This disaster of a housing bubble eclipses the sum total of all that came before and has harmed Canada in a manner that will be hard to forget for many many decades. It is in fact a horror playing out before our very eyes not some empty propaganda from the distant past. North Korea, you are disturbed, try malevolent elites akin to the types that sent us roaring from the twenties and into the dehumanization of the 30s and then look at your beloved CONS/Reform. I just now woke up from a nightmare that saw my dearly loved 5 year old drown a little boy that was tormenting him at the beach. I cannot communicate in words the bewilderment I awoke to only to stagger out to my computer and read this post. Both experiences are theater of the ABSURD to put it lightly. I can only finish this retort with a truism I came to understand at a tender age similar to that of my beautiful son’s presently, “Twinkle twinkle little star, what you say is what you are.”

#266 Mr Buyer on 06.17.12 at 4:05 pm

#240 Market Bull on 06.17.12 at 11:44 am
@ #235 50% correction predictor:

“But most of all, you are not only dull, you are the cause of dullness in others.”
_____________________________________________

What could be duller than a rube that endlessly drones on about something that never comes true?

You and Buyer Beware are definitely in the running for the inglorious title of: “Most Boring.”
………………………………………………………………..
Yet another shining example of the twinkle twinkle little star what you say is what you are insight into people. Lets see how do your posts sum up…
BUY A HOUSE, BUY A HOUSE, BUY A HOUSE, BUY A HOUSE, BUY A HOUSE, BUY A HOUSE, BUY A HOUSE, BUY A HOUSE, BUY A HOUSE, BUY A HOUSE, BUY A HOUSE, BUY A HOUSE, BUY A HOUSE, wait economic concerns, DON’T BUY THAT HOUSE, BUY THIS HOUSE FOLLOWED BY (you guessed it) BUY A HOUSE, BUY A HOUSE, BUY A HOUSE, BUY A HOUSE, BUY A HOUSE, BUY A HOUSE. Buyer beware. Half truths and omission of pertinent truths with outright misrepresentation of truth but at least you are not boring or dull. Now is not the time to buy a house. The bubble has topped. Sales are falling across Canada as well as prices.

#267 Linda Pearson on 06.17.12 at 4:06 pm

251Blue Monster Lover of Meats and Vegetables on 06.17.12 at 1:38 pm

It would be interesting to know what the framers of the United States’ 2nd amendment actually meant. Did they mean to confer the right to bear arms at will, as you seem to believe, or did they impose the obligation on citizens to bear arms in defense of their country? There’s a big difference.

Of course, in Canada, it’s a moot point since there is no amendment to the Constitution Act 1982 that applies to all citizens in all provinces. The amending formula is so convoluted as to render it almost impossible to propose an amendment that will please everyone. Maybe that’s a good thing!

#268 truth hammer on 06.17.12 at 4:18 pm

#268….Dude ..if you’re fantasy’s include kids killing one another then you have bigger issues that ‘the truth hammer’ seriously…turn yourself in !

Mean the ‘gimme gimme greeks’ have voted for the bailout party……gee…big surprise?….

http://www.bloomberg.com/news/2012-06-17/greek-parliamentary-vote-too-close-to-call-exit-poll-shows.html

It’s like saying to a junkie…no more heroin……of course they voted for the status quo…….they’ve been let off the hook so many times they think the fisherman is drunk and passed out.

Note to the Greeks……..no more money for you. Is Greece going to become Europes Quebec? Will then whine and fuss , threaten to separate when they don’t get their own way? Look at Quebec….in spite of the bailouts… a place where no one will invest…a dead society of wankers….a welfare state of cow flop concepts and zero future………welfare states have failed throughout history…ask the Chinese, Russians and Cubans…….Greece will either grow a pair…..or sink into obscurity….meaning no future for the children in a country that will attract no enterprise.

#269 Junius on 06.17.12 at 4:23 pm

#251 Blue Monster,

You said, “A government that can not trust it’s people with guns is a government that can not be trusted.”

You have a rather perverted sense of the 2nd Amendment and the historical origins.

It came from the English Civil War when Oliver Cromwell took all the guns and put down civil insurrection.

The point is not to arm the citizenry against the govt and each other but to guard against professional armies controlled by the government. Look at the preamble, “A free militia……l

#270 Snowboid on 06.17.12 at 4:23 pm

#264 Gunboat Denier on 06.17.12 at 3:14 pm…

Transferred.

#271 TurnerNation on 06.17.12 at 4:35 pm

Speaking of coffee, this week I saw name brand (Maxwell House – not the rotgut stuff), huge tin almost 900g for only $7.99, on sale at major chain.

#272 daystar on 06.17.12 at 4:47 pm

#220 John on 06.17.12 at 1:38 am

Totally off topic here, please forgive :)

Lol, I fail to see how engaging politicians regardless of stripe to successfully reverse a policy that could (well, I know would have) have been a 14 to 17 billion dollar boondoggle of mammoth proportions is an example of running out of runway, as you put it. Thats a pretty darn functional example of democracy at work and its even true! (my MLA might just get my vote next time round if I bother and I do if there’s a chance that its close)

I was lucky of course. My MLA lives across the street from me in a small town. We both hit the local coffee house to catch up on the latest buzz. The one hour chat I had with him couldn’t have taken place in a more casual setting with 2 or 3 people around that day. I was in good mental form (caffeine helps my ADD, I have to admit) and I laid it out plain to what I have to say makes a good MLA.

When we see each other from time to time in the same coffee house in the same small town there’s a knowing that passes between us, the acknowledgement of us both playing a larger part of a decision that effected government spending in the 10’s of billions. (pay attention, those of you who know me. It would have been a crown corp. Life is ironic isn’t it?)

Again, it couldn’t have been done if I hadn’t donated 2 days of pure research on the subject of energy and power generation years before. I wasn’t alone. There were a good deal of smart interactive contributors at thetyee.ca where Rafe Mair posed a question, “what do we do for energy in the future?” The area was out of his element, he humbly admitted so and asked us for our energies to see what the blogger world could come up with and it was quite a lot. The environment was a big story a few short years ago when it was relevant and we all knew the importance of finding the answers to this all important question.

I took what I had learned and contributed in those 2 days (a ton, I tell you) and with my own separate research from the mining resource sector (I invest) and prior knowledge of nuclear reactors of scale from Japanese manufacturers (long story but a follow up from years ago), I combined the intel to come up with a strong technical argument that ironically could be verified by someone my MLA knew (not to mention a strong political argument. I told him if they continue pushing nuclear power development in Sask, they risk galvanizing the left as well as environmental groups and losing the next election. If construction drags on for 7 or 8 years and goes over budget and doesn’t make money because of far more realistic competing factors such as cheap gas and coal from mild winters (like we just had) and lost efficiency pushing current through long distances to reach customers that find proven cheaper alternatives (including nuke plants of much smaller scale), they might not resurface again politically for 20 plus years and it could spill into federal support (I had to add that last bit in case the decision went higher).

My MLA (a former minister) pitched the argument to Brad Wall (this is at a time when hearings were going on in the province for public input but the Sask Party wanted this and were pushing it) and within 2 weeks it was scrubbed. They even took my advice on how to handle the PR retreat from this policy and its through the PR message they had chosen that I know of the true impact I made personally with this decision.

Now… anyone who knows my political past history would understand that this isn’t something that they would expect from me. Btw Garth, my own reputation preceeded me, my MLA was vaguely told of who I was before actually running into me, the Sask party was informed by the Harper party not much in terms of detail, just that they had a major opponent in his riding so they know where I live and who I am. (guess I made the list. Didn’t stop them from giving me a robo call, “yes, I had one too lol, I’m not making this stuff up!” its too surreal) Anyone who knows the history of my past moniker (and the lengths that were taken to remove its comments “from the record” this nation is so free) would have some idea of just how ironic this story truly is.

But I digress.

Its the power of the internet. The power of forums like this one that drive Garth to persist in guiding people away from financial ruins, from themselves, regardless of the negativity he daily encounters. And its the power of the blogger. We won’t get a gold watch. We’ll be lucky if someone buys us a cup of coffee (I get that, must have ADD sympathizers). Its not about the money. Its not for the ego (but it helps, often just to keep it in check). For many its the simple power of the greater good and in some weird fashion its how some of us leave our mark so I would really appreciate it if you quit writing off examples like this one as “irrelevant”.

In short John (ok, its never short), Democracy is a whole lot more than just voting and you can call it “irrelevant” all you want but all you are doing is setting yourself up to do nothing without ever knowing or testing what your potential is truly capable of. “brain dead and consuming”… “driving miss daisy technocrat”… isn’t that what they do, minimize to the point of irrelevancy? Be careful how you use that word. Some may consider it to be self projection.

And 15 year olds… they get the opportunity of cheap housing when they are 25. Its the generation that is priced out now, or the ones who force or forced themselves into this market with extreme leverage pressured by social environmental MIL, FIL and friend coaxed invevitable self con that find themselves later forced out… or the boomers who fail to diversify, fail to recognize risk and ride their primary investment to its inevitable conclusion with a half empty cup for retirement, these are the ones who are dearly paying and will pay later.

#273 TurnerNation on 06.17.12 at 4:48 pm

254Timing is Everything on 06.17.12 at 2:06 pm

Is anybody using Hejijet (Van Island to YVR south terminal)? I believe they offer walk-up fares as low as $80 o/w.

(Hejijet is actually publically traded on TSX Venture: symbol is HJI )

Instead of Kravitz I’ll take Jefferson Starship – Runaway. Well before my time, but when Grace Slick’s snarly vocals kick in at 1:15 it’s like nothing else. Plucky bass, swooping organ.

http://www.youtube.com/watch?v=DimjLEZsM8M

#274 daystar on 06.17.12 at 4:49 pm

#206 Nostradamus Le Mad Vlad on 06.16.12 at 10:18 pm

Monsanto… aren’t they an evil lot?

http://www.youtube.com/watch?v=K6fYRE9uoQ0&feature=related

I’m not sure we could find a greedier corporation… or one that really wants to control the world more through food supply than any other and thats why, besides corrupt officials, they get government backing. Readers should be asking why stories like this one are 100% media blacked out in Canada or anything else to do with Monsanto:

http://www.nature.com/news/monsanto-may-lose-gm-soya-royalties-throughout-brazil-1.10837

http://www.washingtonpost.com/blogs/blogpost/post/monsanto-petition-tells-obama-cease-fda-ties-to-monsanto/2012/01/30/gIQAA9dZcQ_blog.html

… and minimizing environmental stories to whats that word? Irrelevant? But I wander.

Happy fathers day all.

#275 Ronaldo on 06.17.12 at 5:17 pm

#232 [email protected] – ”Precious metals will return as an inflation hedge putting gold back to the 200 dollar U.S. area. Silver should fall back to 3 dollars U.S. an ounce. The precious metals will be sold off in droves as more and more countries and cities face bankruptcy.”

Well, Tony, I can honestly say that I am not a gold bug since I only own less than 1 oz. being in coin form received as a gift from my sons on my 65th birthday to recognize the start of my ”Golden Years”. I suspect I will be passing it on to my granddaughter some day.

I have followed the precious metals market for a good 50 years just as with Mel In Victoria has. I do however invest in silver (coin and stocks) mainly because it is an industrial metal with far ranging and growing uses, and much scarcer than gold.

If what you say is true, every single company that produces gold and silver as their primary product will shut down. Could you give me an idea of when this might happen so that I can be prepared for it. Thank you.

P.S. If the U.S. were to sell their entire 8133 tonnes, and they hold which is around 25% of the reserves, it would only cover about 4 months of their annual deficit which I believe is running at around 1.5 trillion right now. So, just a dent in the scheme of things.

#276 Gunboat Denier on 06.17.12 at 5:24 pm

265 Snowboid – I think you are right ON topic with your explanations. Sorry I forgot the transfer you noted earlier. It has been “good blog”.

#277 Canadian Watchdog on 06.17.12 at 5:35 pm

#256 Ralph Cramdown

“It’s purely a position for someone who thinks the world is going to end, and doesn’t care about the costs because t-bills pay nothing either.”

And why are bills and bonds now yielding negative or zero in real terms? Because they are paper assets that are inflating (by wrongful monetary policy) back to their intrinsic value. Zero. Where do you suppose money will flow should the Fed embark on another round of QE?

There is a great misapprehension that QE is largely responsible for bolstering main-street’s economy, when in fact, it was a direct stimulus that saved jobs and restored confidence in the system.

QE is a transmission vehicle to keep banks solvent and, with no direct stimulus injected into the economy, corporate earnings will diminish.

#278 45north on 06.17.12 at 5:36 pm

“He is not only dull himself, he is the cause of dullness in others.”

Samuel Johnson

http://seniorliving.about.com/od/agingwithattitude/a/insults.htm

and

“They never open their mouths without subtracting from the sum of human knowledge.”
– Thomas Brackett Reed

#279 Fabrega on 06.17.12 at 5:48 pm

#50 Humpty Dumpty

Excellent. Problem is much of the bloggers do not know what you are talking about.

#280 Blacksheep on 06.17.12 at 6:17 pm

Daystar,

“Accept the loss of your efforts (but by no means stop trying). Accept it because the loss that follows, whether its the loss of freedom, or freedom of expression or human rights, or market share of resources or simple taxpayers dollars is the loss that we, as a democracy at the very least collectively signed up to share.”

Very accurate description of our situation. Unfortunately, that’s far to many losses to ACCEPT In exchange for an irrelevant democratic vote, for it matters not, which way said vote goes. A Left or Right victory is of no consequence, the country still follows a path laid out, by parties above both, yet not in the best interest of the masses.

Like I said, you’re promoting systemic complacency. You got your X, now just accept your sich. I know my bitching cannot change things, but at least I type the truth and thats good enough for me.

Timing is Everything,

“I haven’t voted in 20 some years. Am I part of the problem or the solution?”

Just a realist.

take care,
Blacksheep

#281 roger greenwell on 06.17.12 at 6:28 pm

IT’S FATHERS DAY
Thanks for calling son…hope everything is going well for you in Oxnard…listen son…I’ve been reading this blog for 2 years …The Greater Fool …have derivied great entertainment day and night at all hours….could you in the position in talk to the big O.W. O at number 1 wiltshire in LA for me…he worked for it…think I’m kidding ….LOL

#282 Derek R on 06.17.12 at 7:09 pm

#275 Daystar,

Thanks. I appreciate what you did.

#283 espressobob on 06.17.12 at 7:34 pm

I wish I had a livingroom like that!

#284 eaglebay - Parksville on 06.17.12 at 7:37 pm

#238 John on 06.17.12 at 11:25 am

In any deal there are winners and losers. There are always two sides to any story.
The posters here, most of them, only see the negative of the international situation or the state of our finances. Not the positive that change might bring.
The media does speculate that Greece will default for example but not that Greece might tackle their problems.
The doomers get their information from the media. So they think that one writer has all the answers.
Read between the lines of my posts and don’t put words in my mouth.
That’s all I can write at the moment, running out of time.

#285 Snowboid on 06.17.12 at 8:01 pm

One last post before we head over to eldest son for a BBQ (weather please hold)…

#279 Timing is Everything on 06.17.12 at 5:24 pm and
#280 Gunboat Denier on 06.17.12 at 5:24 pm…

We embraced the island lifestyle and at first were happy to be transferred there – sadly the health issues got worse until it was too much.

Many days my better half was stuck indoors, wedged between the HEPA filter system and the de-humidifier.

Another reason we enjoy the dry winters down south – but it’s not perfect there, but just slightly better than Weyburn.

And it had nothing to do with Eaglebay!

#286 Dupchek on 06.18.12 at 9:58 am

Even if interest rates do not go up quickly, the same effect as the interest rates going up will be from the wages not going up to match inflation or home prices. Less money in people’s pockets, less affordability. Government is in bed with all of this, because the more home prices go up the more property taxes will go up, the more problems people have, (unemployment, welfare,etc,) the more government social services have to work. The more money the gov need to collect, it is a spiral that the gov is allowing to happen, and the people will be victims of their own gov. When gov becomes too big they loose focus and control. Enough is enough. Lower taxes and deflate the government so they focus again to the things that matter.

#287 live within your means on 06.18.12 at 11:27 am

Years ago a 20 something biker friend of my DH said he lived in a smaller place than our backyard shed.

On a lighter note:

Recently, I was diagnosed with A. A. A. D. D. – Age Activated Attention Deficit Disorder.

This is how it manifests:

I decide to water my garden. As I turn on the hose in the driveway, I look over at my car and decide that my car needs washing.

As I start toward the garage, I notice that there is mail on the porch table that I brought up from the mail box earlier.

I decide to go through the mail before I wash the car.

I lay my car keys down on the table, put the junk mail in the garbage can under the table, and notice that the can is full.

So, I decide to put the bills back on the table and take out the garbage first.

But then I think, since I’m going to be near the mailbox when I take out the garbage anyway, I may as well pay the bills first.

I take my check book off the table, and see that there is only one check left.

My extra checks are in my desk in the study, so I go inside the house to my desk where I find the can of Coke that I had been drinking.

I’m going to look for my checks, but first I need to push the Coke aside so that I don’t accidentally knock it over. I see That the Coke is getting warm, and I decide I should put it in the refrigerator to keep it cold.

As I head toward the kitchen with the Coke a vase of flowers on the counter catches my eye–they need to be watered.

I set the Coke down on the counter, and I discover my reading glasses that I’ve been searching for all morning.

I decide I better put them back on my desk, but first I’m going to water the flowers.

I set the glasses back down on the counter, fill a container with water and suddenly I spot the TV remote. Someone left it on the kitchen table.

I realize that tonight when we go to watch TV, I will be looking for the remote, but I won’t remember that it’s on the Kitchen table, so I decide to put it back in the den where it belongs, but first I’ll water the flowers.

I pour some water in the flowers, but quite a bit of it spills on the floor.

So, I set the remote back down on the table, get some towels and wipe up the spill.

Then I head down the hall trying to remember what I was planning to do.

At the end of the day: the car isn’t washed, the bills aren’t paid, there is a warm can of Coke sitting on the counter, the flowers don’t have enough water, there is still only one check in my check book, I can’t find the remote, I can’t find my glasses, and I don’t remember what I did with the car keys.

Then when I try to figure out why nothing got done today, I’m really baffled because I know I was busy all day long, and I’m really tired.

I realize this is a serious problem, and I’ll try to get some help for it.

Don’t laugh — if this isn’t you yet, your day is coming!
…………….

I know that I suffer from Age Activated Attention Deficit Disorder.

I

#288 GregW, Oakville on 06.18.12 at 7:15 pm

Hi #206 Nastra, You may enjoy these links?

How does your brain work? Amaxing visual illusion…
http://forum.triphp.com/threads/how-does-your-brain-work-amaxing-visual-illusion.3312/

The Scale of the Universe 2
http://htwins.net/scale2/?bordercolor=white

I hope your some were you can stay cool!

#289 bubble head on 06.18.12 at 8:52 pm

the theredpin.com
has changed their weekly stats reports, probably to show less volatility or the truth. Something is brewing.