It’s back

wash

When Best Buy punted 900 workers a month ago and Sears tossed 700 more overboard the D thing came back. Since then, lousy house sales, crashing gold and silver prices, and this week’s economic news have confirmed it. You should worry more about deflation than inflation.

I understand this confuses a lot of people who plot the price of a Big Mac, worry about insurance premiums or spend Sundays driving their Kias between No Frills and Costco to save forty cents on Cottonelle. Yeah, I know it irritates those who think when central bankers print money and buy back bond billions it’ll destroy paper money, making their yellow rocks more valuable. And it sure makes a lie out of what ReMax spews with the kind of report I referenced yesterday, because the years of appreciating real estate are over. At least for a generation.

But look at the latest. The Bank of Canada has a target rate for inflation of between 1% and 3%. Guess where it is now? Yes, just 0.5%. It’s the lowest since back in 2009, when we were swapping squirrel recipes. Already the central bank has slashed its estimate for economy growth to just 1% which, if the economy were a guy named Jimmy, would put him in a coma.

Now look at what consumers are doing. Not much. Retail sales in December, when we’re all supposed to be ape over Christmas shopping, fell 2.1% from November. That is a disaster, and explains why companies like Best Buy and Sears are gutting. Sales at electronics stores crashed by more than 12%, while car sales tanked 6.5%. The retail biz in general is the worst it’s been since (guess…) 2009.

“We had been looking for a decline, but nothing on the order of that,” says BMO economist Doug Porter. “And of course December just happens to be the most important month of the year for retailers. So obviously what had been a so-so year for retailers ended with a thud in December.”

Why?

Well, scroll down to the end of yesterday’s pathetic blog post and look at the chart. Yes, the one showing house prices doubling in the past decade while incomes improved by less than a third. How could people bid up real estate so dramatically when incomes were crawling? Simple. They borrowed the rest. So now we have more debt than brains.

It was only a matter of time before debt servicing costs reached a point where people stopped doing stuff, like going to Best Buy and picking up an iPhone5. They also stopped shopping for bigger houses, and buying so many cars. How could any of this be a surprise?

For the past four years governments have done everything but give money away trying to rekindle the economy. The Bank of Canada dropped interest rates to ridiculous levels. Ottawa spent billions buying mortgages from the big banks. The feds dished out tax credits so people could build decks and install hot tubs. Thanks to cascading tax revenues and stimulus spending, Canada went from a budget surplus to an historic deficit, and whaled the national debt. CHMC alone tripled its liability, in effect subsidizing real estate by $600 billion.

All of this was done to fight the one thing no living politician here today has confronted: deflation. And after that unprecedented investment, the economy is barely growing while asset prices have started to retreat. The unemployment rate is stuck over 7%, with Toronto as bad as Chicago (8.3%). Even Alberta, smug and delusional, is sinking into deficit.

In contrast, US household and corporate debt has been reduced, the housing market is rebounding after a 34% haircut, stock markets are smoking and despite that country’s well-publicized troubles, consumer confidence and spending are on the rise. This makes me happy for all the people who took my advice two years ago to sell Canada and buy America, both in terms of houses and liquid assets.

In case it’s not obvious yet, a country wrestling with near-deflation is not one where an inflated property market can survive. Deflation (in asset values, not the price of hockey tickets) means real estate values inexorably decrease, but debt does not. Equity falls and those people foolish enough to keep their bulk of their net worth in their houses, get less wealthy in a hurry.

This reality will be masked from most people for a long time. Yesterday I showed how a big real estate company attempts to sway public opinion, suggesting real estate gains will continue. Banks do it too. Like Bank of Montreal, with a new report claiming houses are affordable “in three-quarters of the country.” The exceptions are Vancouver and Toronto, and even there the risk of declines is “minimal, as long as interest rates remain low.”

Translation: people can afford houses because they’re offered, and accept, massive mortgages. From the bank.

The best possible defence against a world without growth is liquidity. The worst possible strategy is debt. Your choice.

260 comments ↓

#1 guelphstudent on 02.22.13 at 9:56 pm

So much for wealth effect with rising housing prices. Now if the houses cost a third leaa, maybe people would still be buying iPhone 5s

#2 Lilyflor on 02.22.13 at 10:01 pm

Finding this blog was god sent, not only for the real estate info, but for the economic info as well. Have learned so much

#3 Cash-is-King on 02.22.13 at 10:02 pm

So sad and so true…

#4 William Bell on 02.22.13 at 10:03 pm

First ?!

Thanks Garth as always !

#5 tim on 02.22.13 at 10:03 pm

US Markets have done well this past few months, but I wouldn’t have a US weighting of more than 25-30 percent regardless of the type of security or etf.

#6 Spiltbongwater on 02.22.13 at 10:06 pm

Should I lock in my mortgage now before interest rates go up in the next year?

#7 LongLiveTrudeau on 02.22.13 at 10:06 pm

Excessive monetary policy abuse is no replacement for fiscal reforms. There is too much a gap or imbalance in the tax code in both Canada and the US and once that is fixed only then will real (not imaginary) growth occur….

#8 beefcake on 02.22.13 at 10:10 pm

I notice that they are dropping several indicators used in the CPI Index starting next month, making it difficult to see the month-month trends (i.e. negative inflation).

#9 Nemesis on 02.22.13 at 10:10 pm

Well, OldPol… On the BrighterSide, we have at least been spared the ignominy of wasting our Toonies on F-35s…

I’m a ‘tad’ concerned about the helicopters proposed to replace the stalwart SeaKings, though…

http://tinyurl.com/b6d5qxu

#10 mortgagebrokeron on 02.22.13 at 10:10 pm

Deflation, how can one take advantage of it? and who are the winners?

#11 Toronto CA on 02.22.13 at 10:11 pm

So why is this happening? Why is the economy barely growing despite all the nearly free money, which should encourage businesses and consumers alike to borrow and spend and grow the economy?

I suppose it’s partly because the consumers have borrowed and spent on Real Estate rather than goods and services; but surely that RE spending grew the FIRE/construction businesses? And businesses are just hoarding cash despite the lowest corporate tax rates in decades?

Have we just reached a point where 4% growth is unsustainable in Canada, despite all the stimulus? Or will we not see growth beyond 2% until people deleverage all this debt they’ve taken on in the last 10 years?

A lot of rhetorical questions here. I’m starting to doubt we’ll see rate hikes until early 2015 at this point. March 1st the 2012 GDP numbers come out, 1.6% growth for 2012 is my bet. What do you think it will be Garth, lower than 2%?

#12 frythedevil on 02.22.13 at 10:13 pm

I agree Deflation is around the corner as you can see things slowing down in Vancouver. Retail stores around Kits are closing, people are losing their jobs. Construction counts for about 20% of gdp in british columbia and bc has just been downgraded by Moody’s. Unfortunately people are like sheep ( herd mentality), they seem oblivious to what is coming down the pipe. Keep your net worth liquid and reap the benefits in a few years.

#13 prairie person on 02.22.13 at 10:16 pm

Nope, your blog isn’t a waste of time. It’s just like all the warnings about earthquake preparedness on the West Coast. Only a small percentage of people actually do something about it. You are up against a massive PR machine with greed and, lately, desperation, as their drivers. They’ll lie, manipulate, deceive, do anything necessary to keep the money flowing. Greed and ethics are mutually exclusive. How powerful is this propaganda machine? Friends of mine, in spite of the fact that a condo development company hasn’t been able to sell a single unit has just made an offer on a condo that is less than 500 square feet. This in the boonies of Manitoba. If they want to sell, they’ll be up against the developer trying to sell all the other units. House prices have gone up for so long that people look at the past, not the present or the future, and make decisions. This blog and some others that are not controlled by the propaganda machine are valuable. Just because there are lifeboats doesn’t mean that people will believe the ship is sinking, especially if they’re told on the intercom that everything is fine. At least, not until the water is up around their knees. Having said that, I saw a lot of sold signs around Victoria today.

#14 Tripp on 02.22.13 at 10:19 pm

“Bank of Montreal, with a new report claiming houses are affordable in three-quarters of the country.”

I belive they were talking about area, not population…

#15 Henry on 02.22.13 at 10:23 pm

Groceries sure as hell aren’t deflating. Every month it seems like prices are hiked up.

#16 espressobob on 02.22.13 at 10:30 pm

Since Canada is about 4% of the world economy, why on earth do we think It’s the center of the universe? Better to invest global with emphasis on US & Emerging Markets, NO?

#17 Ted Noakes on 02.22.13 at 10:30 pm

Umm, just speculating here…we avoided the worst of the recession felt in the US, but typically we lag in behind the US. Our engine doesn’t get going until theirs does.

So, could it be that this year will look bad, similar to what happened in the US last year? And after things pick up in the US (which your data suggests they are) that things will start to pick up here?

I think it is not quite in step to compare use the fortunes of Sears and Best Buy as indicators of why things in CANADA aren’t doing well. These are American companies! Their primary markets are the States, not here!

And yes one might respond that they are doing poorly and that I am contradicting myself. But are they doing well because of a general economic turn down, or are they doing poorly for the same reasons that Blockbuster was doing poorly then went bankrupt….they are just bad business models.

You are crossing your wires here.

#18 Ralph Cramdown on 02.22.13 at 10:34 pm

“Deflation, how can one take advantage of it? and who are the winners?”

It’s like a bear market in everything. And, like any bear market, the winner is the person who loses the least.

It should be interesting to see how far central banks go to fight it.

#19 DocInWaitingRoom on 02.22.13 at 10:35 pm

Good update and summary to what I have been reading a lot lately. I can only sum in it up further by saying the US had a housing crash where people got burned recently. Free money there now goes to the markets and other places, not housing as much as here. Most people I guess learned their lesson. Here in Canada most people I have talked to seem to think not only we are different but our housing will go up forever, and that homes are a great investment. Sweat Equity on a depreciating asset? Its like me renovating my Highlander Hybrid to add some granite dashboards in there to give it some value when I decide to sell it after 10 years. Sure it will give me 200% returns according to the DIY channel and HGTV.

Money here (free, printed or other) is all going into housing, renovations, financials and realtors. 20-25% of our GDP and economy is based on the housing/renovations/construction/insurance/financial sector all dealing with homes.

One person that I read said it nicely. Our current government has destroyed our countries economy and future by throwing all our weight behind the tar pits and housing, instead of getting our smart educated young people innovating and creating. I don’t see things going down well at all from here. My family is waiting to be able to finally buy a place that isn’t priced 5X more than a similar place in the US.

#20 Joe on 02.22.13 at 10:40 pm

Good post, thanks Garth.

Now the only missing piece of the puzzle is to understand why prices of e.g. groceries are skyrocketing in Canada all the while everything else tangible appears to go down. It is confusing, yes, so it would be great to hear your take on why this is happening.

And no, I’m not a “metalhead”, just someone who wants to understand the market on a high level before making his investments. :)

#21 Chaddywack on 02.22.13 at 10:50 pm

The collapse of speculative asset classes, under a fiat monetary system with low productivity growth…….the question is…..are we heading there?

#22 Foggy on 02.22.13 at 10:54 pm

I can’t believe the official inflation rate is 0.5%
Two of the largest components of anybody’s budget is food and gasoline. I would guess the prices at my local Sobey’s is up 10% compared to a year ago. Individual items don’t inch up 2 or 3% – they jump 10%. I’ve seen nothing stay flat or go down. Where in Canada is food and produce going down? Or gasoline?
Something doesn’t jive…

#23 not 1st on 02.22.13 at 10:55 pm

Deflation, how can one take advantage of it? and who are the winners?

Buy farmland, build an underground shelter and store your gold bars down there with your canned beans and army rations.

Actually it is the opposite. — Garth

#24 T.O. Bubble Boy on 02.22.13 at 10:58 pm

@ #10 mortgagebrokeron on 02.22.13 at 10:10 pm
Deflation, how can one take advantage of it? and who are the winners?
_________________

The winners are the ones with $$$ and no debt. Dollars become more valuable with deflation, because they buy more assets. $500k mortgages (debt) on McMansions (deflating asset) are a bad idea.

#25 Shawn Allen on 02.22.13 at 10:58 pm

RETAIL SALES

Retail sales were down or weak in dollars in December, but what about in terms of unit quantities?

Perhaps more was sold but at lower prices. Sales were everywhere in December. Entire malls seemed to average 50% off.

Retailers cut prices and people expect same store sales to go up in dollars?

#26 a prairie dawg on 02.22.13 at 11:00 pm

That’s cheap for cleaning up your seniors. lol

#27 DocInWaitingRoom on 02.22.13 at 11:03 pm

Our country values the housing market and these homes more than education, innovation, and creation. Here are the goods of our economic boom: http://www.crackshackormansion.com/ Got a good laugh, but I am sure the purchasers are crying right about now.

#28 Chickenlittle on 02.22.13 at 11:04 pm

Ted Noakes:
I think it is not quite in step to compare use the fortunes of Sears and Best Buy as indicators of why things in CANADA aren’t doing well. These are American companies! Their primary markets are the States, not here!

Ok, but if no one is shopping there, then it doesnt matter if its an American company or not: no one wants their stuff.
Remember Kmart (my question marks arent working and neither are my apostrophies. sorry).
Remember the CFL expanding to the States…Just because it didnt do well in the US, does not mean it doesnt do well here in Canada.

#29 NOTHING SURPRISES on 02.22.13 at 11:04 pm

In contrast, US household and corporate debt has been reduced, the housing market is rebounding after a 34% haircut, stock markets are smoking and despite that country’s well-publicized troubles, consumer confidence and spending are on the rise. This makes me happy for all the people who took my advice two years ago to sell Canada and buy America, both in terms of houses and liquid assets.- Garth
___________________________________________

Look back on this statement in late 2013 into 2014.
I believe you will find:
Housing sales up in the U.S. then another slide of 20-30%.
Car sales down.
Deficit up.
Unemployment up.

You said that last year. — Garth

#30 NAGA on 02.22.13 at 11:08 pm

CMHC forecast for 2013 lower housing starts and sales – but prices up 1% National.

I did predict ZERO real growth for 2013 – which I think is somewhat deflationary…and wait as the price of oil and natural gas gets reset based on production form North America – shale – rather than imports…..possibly $50/barrel not impossible.

In this scenario I also pointed out that interest rates will not go higher anytime soon and that history will show that the decade of 2010-2020 = 1920-1930.

I am not that concerned about Best Buy, Sears, Canadian Tire, Loblaws etc laying off as they are preparing for Target and they will be hiring – so the real question is how much will consumer tighten up on spending.

Also everything I have read about car sales is that most of the biggies are up and have been doing higher year over year sales since 2008/09 and so are total sales in NA but have not seen the split for Canada vs US.

While residential RE will be slowing there is a huge back order in heavy construction – in GTA hard to predict what will happen post commonwealth games as major infrastructure being built….and both Provincial, Regional and Municipal Govts horny on spending on transporation infrastructure as they are not concerned about debt – they also read this blog and have figured out that printing money gets votes – ask Mr Monti after next monday election results in Italy….

#31 Gabriel on 02.22.13 at 11:09 pm

Garth, you are wrong in saying that: “For the past four years governments have done everything but give money away trying to rekindle the economy.”

We were living in the US in 2009 when the government gave us (Canadian citizens) $600 to spend as we please, to rekindle the economy. How long before F starts doing the same thing here?

#32 george on 02.22.13 at 11:09 pm

On television, in interviews and in meetings with investors, executives of the biggest U.S. banks –notably JPMorgan Chase & Co. Chief Executive Jamie Dimon — make the case that size is a competitive advantage. It helps them lower costs and vie for customers on an international scale. Limiting it, they warn, would impair profitability and weaken the country’s position in global finance.

So what if we told you that, by our calculations, the largest U.S. banks aren’t really profitable at all? What if the billions of dollars they allegedly earn for their shareholders were almost entirely a gift from U.S. taxpayers?

http://www.bloomberg.com/news/2013-02-20/why-should-taxpayers-give-big-banks-83-billion-a-year-.html

#33 will on 02.22.13 at 11:17 pm

To Henry #15. The reason grocery prices are going up is because of that drought in the US last year.

#34 phinny on 02.22.13 at 11:19 pm

So, like today when I bought a piece of equipment for my little business at 15% discount- and I got a free lunch and trip to Toronto for it.

That’s deflation. My old man tells me about the inflation of the 80’s- when you couldn’t get a piece of steel pipe or equipment parts. When you couldn’t get a reliable supplier because everything (money, material…etc) was moving so fast.

This doesn’t seem like that.

#35 eddy on 02.22.13 at 11:20 pm

Today I got a letter from RBC saying that my Ally high interest savings account would soon be non existant- because They bought Ally. Can you believe it? The Royal Stank of Canada just got stinkier
‘ooh ooh that smell, can you smell that smell?’

re inflation

i just found some old rock concert ticket stubbs from
1971-73, the average price for Maple Leaf Gardens shows (Dylan, The Band, Neil Young etc.) was $6.50
Today that wouldnt even cover the HST on the ticket

#36 Dwide Schrude on 02.22.13 at 11:21 pm

I make decent money. I have a solid non-reg savings well invested, I have a blue chip RRSP generating cash and today my TFSA crested 34K for the first time. Also, I own more than half of my (ahem) condo.

My concern is that while I clearly save well, I can’t bring myself to spend a dime on the things that may actually drive the economy. Shoes are $300 for a man? A crappy suit is $500 off the rack? A base model car at the Auto Show this week is 25K??? How the hell is the average Canadian bringing home $1800 net per paycheque supposed to afford that sort of thing? No wonder Best Buy is going bankrupt. Lower your prices to something resembling reality, stop deluding yourself into thinking people are insecure enough to go into hock for your crap and maybe we can get the economy humming again.

Anyone else agree? Are niceties too expensive?

#37 len on 02.22.13 at 11:22 pm

Hi all,

it is hard to believe that inflation is that low. I wonder if they do the hedonic substitution thing here as they do in the States? I guess I can always hedonicaly switch to the food bank.

I think the better description than deflation would be stagflation: increases in things we need and so are inelastic (food, gas) and decrease in things we want (houses, cars)?

#38 Waterloo Resident on 02.22.13 at 11:23 pm

Don’t worry, the Canadian consumer will ROCK again !
Just take a look at the German confidence numbers:

http://www.bloomberg.com/news/2013-02-22/oil-fluctuates-as-german-confidence-gains-u-s-supplies.html

Along with increasing German confidence, so will Canadian confidence rise, and that will than float our housing market and our consumer spending too, as our Canadian confidence will rise to match the German’s confidence readings.

#39 Garth the marth on 02.22.13 at 11:26 pm

i own alot of td bank common. what should i do? I ve had it for years. 400k worth. sell it?

I do not fear for the banks, but make sure you are diversified. Holding one stock isn’t. — Garth

#40 DocInWaitingRoom on 02.22.13 at 11:37 pm

I would tread carefully in both housing and the markets where Canadians are over leveraged and the US is over leveraged.

Both are not economically sound, gains are not following fundamentals, especially when we hit a new high on the sp500, however food stamps are at an all time high in the US, consumer confidence is very low, Walmart email leaked shows they are having major issues despite being goliaths, and most of the gains in the SP500 are following QE movements from the FED. When you add in a net deleveraging and net selling during pensions/401k for boomers the fan is going to be hit by plenty of open bowels….

#41 Tamsen on 02.22.13 at 11:38 pm

Very true, groceries are going up. Paid over $6 for organic celery the other day in Vancouver – couldn’t believe the price until I looked at the receipt …

#42 Jeff in Victoria on 02.22.13 at 11:38 pm

#13 ‘I saw a lot of sold signs around Victoria today.’

I’m not seeing a great abundance of new ‘Sold’ signs in Victoria but the ones I am seeing are staying up for an inordinately long time. The couple of realtors I know are saying still pretty dead but if priced aggressively, it will sell, people are still looking to buy.

#43 [email protected] on 02.22.13 at 11:41 pm

Just putting pieces together from your book and previous posts – does this mean buy bonds and defensive equities in Canada’s deflation and buy diversified American equities in America’s growth?

#44 Rob on 02.22.13 at 11:44 pm

#39
I would sell some to lock in profit. Keep those profits in cash and wait for stocks to go on sale. S&P 500 index is already at the top levels before 2008.

#45 Retired Boomer - WI on 02.22.13 at 11:45 pm

Amazing, DEBT can hurt you. Who would have thought?
30 yr mortgages have been a staple for years here in the U.S. yet only a boob took THAT long to pay one off.

Car payments, same thing. Yeah, having owned 19 new cars in my life, I never went more than 36 months on a car, and always paid it early. (Disclosure: I drove 50,000+ miles a year, so 3 yrs the car was dead anyway). Today i buy used, its usually a better deal.

Credit Cards? I use them virtually every day. Never carry a balance, why should I? I can’t earn anywhere near their interest rates, so why give them the juice? Convenience only!

Yeah, cash is good. Quality equities are even better. I don’t mind Bonds when they pay me to own them. REITS are good. Simple index funds are good for those with little investing knowledge.
Steer away from metals & commodities unless you know the future.

Keep it simple, relaxed, you’ll likely live longer. Nobody knows what tomorrow might bring, but the unencumbered can react to virtually anything, like reading this blog!
Live well & enjoy your time on this gas bag.

#46 Dr. WAYNE on 02.22.13 at 11:47 pm

#4 William Bell on 02.22.13 at 10:03 pm

First ?!

=========================

You … an A$$HOLE ?! … Yes!!! … and #4 at that. Your ‘a$$holeness’ abilities/skills have to be honed a bit better to compete with the professional posterior orifices who, like yourself, frequent this hallowed blog simply for emotional ‘self gratification’ in achieving the pinnacle of greatness (in your own eyes), i.e., posting (dare I say it … ), first (note: I didn’t put quotes around it/didn’t capitalize, didn’t misspell … all aimed at making my utterance of such a blasphemous word less conspicuous).

#47 AprilNewwest on 02.22.13 at 11:47 pm

#17 – You don’t have a clue…….

#48 bill on 02.22.13 at 11:58 pm

#9 Nemesis on 02.22.13 at 10:10 pm
that guy looked like he was flipping the ‘bird….

#49 JSS on 02.22.13 at 11:59 pm

I love Kia!

http://www.kiacanada.ca

#50 Bottoms_Up on 02.23.13 at 12:00 am

I understand this confuses a lot of people who plot the price of a Big Mac, worry about insurance premiums or spend Sundays driving their Kias between No Frills and Costco to save forty cents on Cottonelle.
—————————————————–
LMFAO…Garth you do have a way with words. Nice dig on the Big Mac index too.

#51 Canadian Watchdog on 02.23.13 at 12:01 am

 

#20 Joe

Now the only missing piece of the puzzle is to understand why prices of e.g. groceries are skyrocketing in Canada all the while everything else tangible appears to go down. It is confusing, yes, so it would be great to hear your take on why this is happening.

Nothing confusing about it. I've analyzed the CPI thoroughly (as manipulated and understated as it is) and noticed one major trend: prices in discretionary items (flat screens, clothing, recreational, etc.) are declining, while mandatory spending (education, food, child care, home costs, etc.) are rising, fast. What this means is Canadians are becoming poorer and using a greater portion of their incomes on everyday living expenses, not luxury items. The average Canadian spends about 14-16% of their income on food. This will rise significantly over the next five years to 20-25% as emerging markets begin to consume global commodities due to higher currency appreciation (greater purchasing power).

Americans and Canadians are starting to feel what the rest of world feels when they send inflation abroad. Now it's coming back. 

Headline and core CPI is to make muppets feel like they're beating the market. That's called inflation expectations in central bank world; the difference between reality and what people believe the price is or will be.

For the eco-nerds curious to know how StatsCan 'guesses' prices every month, watch this video

#52 25Alpha on 02.23.13 at 12:04 am

Deflation is a good thing. Prices of things drop.

Sort of like how when the canadian dollar rises or falls. it’s never going to make everyone happy either way.

But for me, damn i love deflation!

#53 nonplused on 02.23.13 at 12:04 am

We might have some deflation but I have every confidence the central banks can fix that sooner or later. They’ll keep trying until they cause some other problem.

The real problem I think at least longer term is what are we going to do about social security (CPP & OAS in Canada). Yes sure there is supposed to be a big fund or whatever but all of that money was “invested” in government bonds and the government spent every bit of the money. Nothing was “saved”. For every dollor CPP has to pay out (above receipts) the government will have to sell another bond.

I repeat, every penny that was collected via taxes and CPP contributions has been spent, and there still was a deficit many years. There is nothing saved. There is no trust fund. When it comes time to put all the boomers on CPP, the government will have to raise all of the money through taxes and borrowing in real time. Given that the boomers will be retiring so much before they are expected to die and will collect on average for more than 20 years, it’s hard to see how this will work.

When CPP was created, people retired at 65 and that was also the average life expectancy. There were something like 7 workers for every retirie. The retiries might on average live another 15 years and many of them had already died. Fast forward to today and we will shortly have on retirie for every 3 workers, and the retiries will live another 20 years on average. And nothing has been saved! Nothing! Government bonds are not savings when the government buys them from itself.

#54 Bottoms_Up on 02.23.13 at 12:05 am

#36 Dwide Schrude on 02.22.13 at 11:21 pm
————————————————
Totally agree. But ask yourself why are all those things that expensive? They’re that expensive because many people have access to a lot of money (HELOCs, unsecured LOCs). Imagine if we all had to pay cash for things what the prices would be. Our standard of living would probably be significantly lower, but you’d be able to buy your suit off the rack for $50!

#55 NOTHING SURPRISES on 02.23.13 at 12:07 am

#28

You said that last year. — Garth
________________________________

Just following your lead repeating.
Actually, I said it more recently then last year.

Fully agree with your continuous urging to be liquid.
I would not purchase in America right now…..better prices down the road if my predictions happen.

#56 GoldnSilver on 02.23.13 at 12:08 am

US housing may be rebounding, but it is not from sound economic conditions from reports I have been reading. The sunshine states and vacation states are showing greater existing home sales due to offshore or non US citizens buying. Fully 37% of the sales are from investors who do not plan on living in the homes. They may not even rent them out. Many of the buyes are purchasing 1-3 homes. 75% of these buyers are buying as many as 10 homes in places like Pheonix and Las Vegas. This is not an economic miracle story from the average American consumer. Also another piece of data to keep in mind is that in the US a home that goes into foreclosure is counted as a sale, due to title transfer. I say the good news story coming out of the US is typical BS propaganda to keep the wheels greased and the ponzi scheme going. I wouldn’t put a nickel into US Real Estate. First of all reasons, if I did get lucky to have a capital gain from buying down there , I would be blessed with having to pay capital gains tax in both countries, Canada as secondary property and US as standard law. Great Investment. Not!!!
But if my analysis is correct I say this is a technical rebound and probably dumb money. It will be short lived and after 2015 US real estate is going to tank. How much? I say at least 40% decline from a short lived 6% rise.

#57 NOTHING SURPRISES on 02.23.13 at 12:09 am

#29 not #28.

#58 n1tro on 02.23.13 at 12:14 am

We are going into a period of asset deflation. Governments know this and as a tactic to combat this, the Feds initiated the Quantitative Easing (QE) program. QE works by making sure there is a certain amount of inflation in the economy. The risk with QE includes working too well (based on the amount of stimulus) leading to too much inflation. One has to ask if 3 rounds of QE is going to have a detrimental effect on future prices.

#59 Tom from Mississauga on 02.23.13 at 12:15 am

Lots of reports and broadcasts in the Fall about paying debt. In December, I guess people actually did.

#60 Mithan on 02.23.13 at 12:18 am

In Regina it is different. Rumour is that people were lined up today to purchase condos in harbour landing.

I’ll post a link if it shows up in the paper tomorrow.

#61 Mister Obvious on 02.23.13 at 12:20 am

#35 eddie

“i just found some old rock concert ticket stubbs from 1971-73, the average price for Maple Leaf Gardens shows (Dylan, The Band, Neil Young etc.) was $6.50 Today that wouldnt even cover the HST on the ticket”

———————————–
I can go one better. The first rock band to play at Vancouver’s newly built Pacific Coliseum in 1968 was The Doors. Festival seating price: $2.75

We thought we were being seriously gouged.

#62 Listen up pay attention on 02.23.13 at 12:24 am

I’ve finally gotten rid of the two most disagreeable individuals on this blog. You know, Dr A-hole and AK. I haven’t read a comment by either in over two months and never will again. How? I just quickly scroll past any hint of doctor or AK or a-hole etc. Don’t encourage them with any recognition. Make them invisible as I have and maybe they will both go away. Here’s your first chance to practice! … am I 64th? Bwahaha, goodbye forever you two losers.

#63 Opium on 02.23.13 at 12:38 am

Garth… this blog is as addictive as opium, and the addictive ingredient is your wisdom and knowledge.

What would they do this time to fight deflation? Would they once again repeat their tricks; easing and pumping to kick the can down the road?

#64 Blacksheep on 02.23.13 at 1:01 am

“Equity falls and those people foolish enough to keep their bulk of their net worth in their houses”-Garth

“The best possible defence against a world without growth is liquidity. The worst possible strategy is debt. Your choice.”-Garth
———————————————————-
Sound advise Garth.
Lets bottom line this.

If you cannot accept the potential loss of equity, sell your house. If you follow Garth’s formula of 90 minus and don’t like the math, sell your house.

Get liquid, clear debt. O.K.

This does not mean, reduce the rate at which your paying off your mortgage and/or use home equity in the hopes of weak gains on investment spread, because as long as your name is on title, you are still locked into the equity loss Garth warns of.

You don’t want your own little, perfect Storm: Keep
the house but take equity $ to invest and…the housing market tanks and then your investments tank.

take care
Blacksheep

#65 Roy on 02.23.13 at 1:01 am

I don’t know where the realty industry keeps getting their numbers from justifying house price stability.

The 2013 GDP numbers I see globally are the following:

Canada: 2012 Q4 (annualized) 0.5% and contracting, 2013: sub 1% growth or recession

US: sub 1% or recession

UK: triple-dip recession, Moody’s downgraded

Eurozone: IMF forecast recession for entire 17-nation region, 5 or 6 countries in depression

Japan: recession

China: 5 – 6%, under stimulus

India: 3%, decelerating

Brazil: recession

Going into the 5th year of emergency interest rate policies doling out cheap cash and this is the outcome: an Epic Fail.

Where does anyone think growth is going to come from to sustain current RE markets based on this situation….

#66 Inglorious Investor on 02.23.13 at 1:27 am

Deflation is when the supply of money/credit shrinks relative to goods and services. A condition of declining home prices, in and of itself, is not deflation.

However, when an economy is massively over-indebted, all that is required to drive asset prices lower is a slow-down in the rate of growth of the money/credit supply, not an actual decline in the supply itself. This is because, as Garth points out, home prices have been rising primarily because of cheap credit. In order to sustain this growth, the supply of credit must continue to expand at a faster and faster rate. It’s the classic debt trap that is built into the very heart of our monetary system.

If we look to the United States, Europe and elsewhere, we see economies that, if left to market forces, would be experiencing massive deflation. But this natural deflation is being counterbalanced by unprecedented monetary inflation in the banking system. Were it not for this money, such as the 85 billion dollars of monthly asset purchases by the Fed, the banking system would experience a bout of spiralling debt deflation that would destroy the entire system.

What is stoping this insane monetary inflation from creating even more consumer price inflation than it already is, is a collapse in the velocity of money, as people, businesses and banks try to preserve capital. High unemployment is also helping to suppress price inflation, but it’s not entirely successful, as people who need to buy things, like food and gas, to live know all too well.

We tend to think of inflation as a ‘global’ phenomenon––i.e. the price of everything goes up. But in real terms that’s not the case. Some prices rise faster than others. While some actually have gone down in real terms over the years. Goods affected by technologically driven productivity tend to have slowly deflating real prices; while goods and services with a large labour component tend to have rising real prices. Goods that depend heavily on credit, such as homes, rise the fastest.

For anyone who does not understand why this is all happening, the underlying problem is basically this: as a society we’ve spent far too much of our future wealth over last thirty years or so on non-productive things. This was done thru ever increasing debt. But we’ve reached the point where we can no longer sustain this debt. The result is a growing sovereign wealth crisis that can end very badly a number of different ways.

The only real (peaceful) way out is to have very high growth in real wealth. But one wonders if all the potential real wealth in the world would be enough. Until this can happen, if ever, the danger for the average person is that in order to sustain the debt we already have as a society, governments will increasingly go after the wealth that currently exists. They do this via monetary inflation, which transfers wealth, and more and higher taxes. The creditors are demanding to be paid.

#67 Jordy on 02.23.13 at 1:29 am

Mmmmm squirrel, used to toast mine over a campfire, kind of like weiners with crispy little legs.

#68 Blasé on 02.23.13 at 1:34 am

#60 : I would have never guessed that Regina has a harbour :)

#69 Nostradamus Le Mad Vlad on 02.23.13 at 1:37 am


“Retail sales in December, when we’re all supposed to be ape over Christmas shopping, fell 2.1% from November.” — So much for H and F’s Action Plan. It just blew up in their faces.

“So now we have more debt than brains.” — Accurate. Who will bail them out? They put themselves in a hole, they can dig themselves out.

#21 Chaddywack — “. . . the question is…..are we heading there?” — Good but unanswerable question, as no one knows where this is heading.
*
JPM’s London Gold Vault found; Spain – Iran “More and more nations are ignoring the US sanctions.” wrh.com but US Fed is the fifth-largest country in the world; India Tens of mlns. strike, not a peep from the m$m; Moody’s Blues UK loses AAA rating (not that it matters much), Banxters pay up 14%, workers up 3,7% but look who bailed Banxters out; Gas Prices Rising until Easter? Using Judo to defeat the globalists; Baby Boomers In defense of us; Cdn. Friday links; Coal New discovery sans pollution; Edible Print Ad Evolution? 1:17 clip Lockheed’s F-35 — costly and flawed.
*
Hanford Leaking tanks. Like everything else, they’re old; UN (Agenda 21, NWO) Eco-dictatorship called for by US scientists; A dog called Wonky Walks on his knuckles; Instant Healing? It appears to happen, and MSG and Aspartame Contributing to the dumbing-down of people? Driving in Glue Snow would be a little better; Invading Aliens Not quite; Freezing Britain Courtesy Russia; 3:49 clip One mln. mothers against gun control; Independent Media, not alternative media. The M$m is a dead loss; John Kerry and A Sack of Shit Who is more intelligent? Pic is good and CC “Temperatures are so cold in the Arctic, that they are almost off-scale.”; 2:37 clip Homeowner did the right thing; Vatican Gay official probe, but Nonsense! Balderdash! Nothing like that going on here!

#70 Gunboat denier on 02.23.13 at 1:46 am

53 Nonplused – here is a link to the CPPIB financials. It looks quite diversified

http://www.cppib.ca/Results/Financial_Highlights/

#71 Joey on 02.23.13 at 1:55 am

Dr. Wayne,

I live for your (almost daily) finely crafted literary executions of those lovingly known as furrssters. They are truly an enjoyable treat.

Garth, thanks for the idea about squirrel meat. I actually know how to snare squirrels with a piece of fine wire so this may come in handy. I was getting worried recently when you mentioned cat food, that stuff just isn’t cheap in B.C.

#72 DreamingInTechnicolour on 02.23.13 at 1:56 am

The cost of groceries and goods found at stores go up when gas prices rise – because of the increases in fuel costs for distribution /trucking

#73 Small Town Steve on 02.23.13 at 2:00 am

So during this deflationary period do we switch from a 40/60 mix to a 50/50 mix for our ETF’s?

#74 johng on 02.23.13 at 2:11 am

Some info on food prices: looking like all categories went up except vegetables!

http://www.google.ca/url?sa=t&source=web&cd=1&ved=0CC8QFjAA&url=http%3A%2F%2Fwww.uoguelph.ca%2Fcpa%2FFood-Index-2013.pdf&ei=E1ooUdLMHcyLqQGG9IC4Cg&usg=AFQjCNGxAXom8QGASfKgDH_IhKl97FQWBw

And now for what really makes the Manitoba economy run:

http://www.winnipegfreepress.com/opinion/westview/getting-past-manitobas-zombie-economy-81861992.html?device=mobile

That’s different!
J.

#75 John Prine on 02.23.13 at 2:27 am

Today I got a letter from RBC saying that my Ally high interest savings account would soon be non existant- because They bought Ally. Can you believe it? The Royal Stank of Canada just got stinkier
——————————————————————–
Join a credit union that has profit sharing and free use of all other credit unions bank machines with no charges..Big banks need a message sent……..

#76 Jim on 02.23.13 at 2:30 am

Are u sure they are not paid actors? Who would line up outside in -20 celcius unless they are paid.

#77 Sade on 02.23.13 at 2:31 am

6 Dr. WAYNE on 02.22.13 at 11:47 pm
#4 William Bell on 02.22.13 at 10:03 pm

First ?!

=========================

You … an A$$HOLE ?! … Yes!!! … and #4 at that. Your ‘a$$holeness’ abilities/skills have to be honed a bit better to compete with the professional posterior orifices
_______________________________________________

Gay is OK, we are all cosmopolitan here

#78 bbrodriguez on 02.23.13 at 2:34 am

Garth, last I heard the CMHC ceiling was 600B, and they were getting close to that. Any idea where they are with that now?

#79 Aussie Roy on 02.23.13 at 2:38 am

Aussie Update

Australian oil find the largest in 50 years.

Has “RE Experts” claiming, even if our house prices are a bubble expect it to grow larger not burst.

SOUTH Australia is sitting on oil potentially worth more than $20 trillion, independent reports claim – enough to turn Australia into a self-sufficient fuel producer.

Brisbane company Linc Energy yesterday released two reports, based on drilling and seismic exploration, estimating the amount of oil in the as yet untapped Arckaringa Basin surrounding Coober Pedy ranging from 3.5 billion to 233 billion barrels of oil.

At 233 billion barrels, this one new discovery could contain more oil than countries like Venezuala 211b, Canada 175b and compares with Saudi Arabias 263b.

Even more exciting are the number of promising locations around Australia which are still to be explored.

http://www.adelaidenow.com.au/news/south-australia/trillion-shale-oil-find-surrounding-coober-pedy-can-fuel-australia/story-e6frea83-1226560401043

http://www.cooberpedy.sa.gov.au/page.aspx?u=191

#80 Dr. Hoof-Hearted on 02.23.13 at 2:41 am

#181 Nostradamus Le Mad Vlad on 02.22.13 at 7:54 pm

“Major food companies throughout America/UK actually pay a Jewish Tax amounting to hundreds of million of dollars per year in order to receive protection.” Extortion par excellence?
================================

Its also in Canada……GOOGLE the numerous different logos….they appear on many products….check your “Coca Cola cans”….etc

http://www.davidicke.com/forum/showthread.php?t=110655

It is a scam.

#81 It’s back — Greater Fool – Authored by Garth Turner – The Troubled Future of Real Estate | The Affluent Boomer™ on 02.23.13 at 2:45 am

[…] via It’s back — Greater Fool – Authored by Garth Turner – The Troubled Future of Real Estate. […]

#82 Canuck Abroad on 02.23.13 at 3:25 am

Garth, you say we individually should worry about deflation but you don’t really say why. Yes, politicians and central bankers are always banging on about deflation (the horror! the horror!) but that is only because countries are loaded up with debt. So the debt doesn’t deflate and everything else does. Poor banksters. But why on earth should we fear deflation as you say? Personally, it can’t deflate fast enough for me. Let it deflate. I have been debt free, liquid, and renting for years. Don’t really care if the entire edifice collapses. Now you are going to reply how dumb that is but you will still not explain why deflation is bad for me, because it’s not.

#83 Buy? Curious? on 02.23.13 at 3:43 am

Sometimes, I wish I was a journalist turned senator so I could claim extra expenses to feed my ego.

#84 Buy? Curious? on 02.23.13 at 3:44 am

Duffy and Walin, you go with yo bad selves! Like 50cent said get rich or die trying.

#85 JustTryingToProtectEquity on 02.23.13 at 3:56 am

We sit on millions of dollars, conservatively invested and well diversified on both the TSX and the Dow. My wife and I still own a home, but we sold our home in Bloor West (in Toronto) last June.

Mr. Turner, we can never thank you enough for your words of wisdom, your forewarning. We felt that something was wrong in the housing market, we sensed that people were taking on too much debt, in the form of mortgages, second mortgages and lines of credit….and we somehow , SOMEHOW…happened upon this wonderful blog.

We’re renting now… and sleeping peacefully… night after night. In the same neighbourhood where we sold our home.

Thank you sir. My kids and future grandkids thank you too. You helped us see the light.

#86 Seriously? on 02.23.13 at 4:04 am

This is what happens when crazy people are allowed to steer the ship.

When you say “iceberg” they think you said “high as a bird” and then they announce “never mind the birds, full speed ahead”.

Later they will say that they didn’t see the icebergs because they were on the look-out for birds.

Seriously

#87 Burnaby Boy on 02.23.13 at 4:11 am

With the move to abolish Christmas (I mean the holidays) gaining momentum we should be happy that December sales are down.

#88 Mic D'angelo on 02.23.13 at 4:22 am

Today,my 6.50% average bond yield I am currently getting in my vast number of individual government bonds because that I hold them to maturity. I bought some of my best government bonds in 1994,1995,1996,1997,1998 with bond yields at 9.612%,8.863%,8.411%,7.656%,7.332% to 6.13%. Bond yields are much lower now but inflation was much higher back than at least 2.80% to 3.10%.

The most recent strip bond I bought for my TFSA was yielded 3.8712% . This is the lowest bond yield I bought below 4.00% but it’s still a very small portion of my total investments with 275 individual bonds,strips (Canadian,provincial) I bought over the last 19.5 years.

Even during before the most recent stock market declines from 2000,2001,2002,2003,2004,2005,2006 and after which started in late 2007,I bought my highest yielding bonds which was about 41% of all my longer term government bonds and strips in 2008,2009,2010,2011,2012,2013 in this particular order 6.623%,6.443%,6.523%,6.587%,6.398%6.435%%,6.33%,6.223%,6.13%,5.977%,5.887%,5.776%,5.677%,5.497%,5.3661%,5.25%,5.231%,5,176%4.763%,4.604%,4.753%,4.556%,4.321%,4.21%,4.445%,4.9017%%,4.7551%,4.645%,4.434%,4.581%,4.332%,4.871%,4.136%,4.556%,5.116%,4.2214%,4.436%,4.665%,4.452%,4.071%,4.311%,4.991%,5.032%,4.72%,4.442%,4.199%.

I would of bought more these bonds when interest rates were higher but my monthly cashflow came in over the last 19.5 years. Basically, my goal was to achieve an overall highest possible average bond yield to maturity by buying,holding them until maturity and having a group of staggered bonds maturing at different years. The only way to do this is not try to time the bond market but buy the highest possible bond yield on the yield curve within reasonable term structure of interest rates at each point in time.

There are few times in history if any that you know there will be higher interest rates and by how much and by how long it will last. Deflation or inflation, you need more income, rising interest rates or using the compound interest method with your investments to grow your portfolio and not run out of money but actually have more money than you will ever need. So far, I have reached my goal and it’s working well.

I believe bond yields will only go up or down by 0.30% to 0.60% over the next 3 to 5 years. The 3.8712% 23.5 year strip bond will not reach more than 4.4712%. After 5 to 8 years I could see 2009,2010 levels of bond yields of 4.75% to 5.25% but not much higher this by 2020. I will continue to buy the highest yield government bonds,strips to keep my portfolio’s overall average government bond yield as high as possible and if I’m right I should be able to still achieve a 6.00% to 7.00% overall average bond yield for my total investments.

I don’t care about bond price fluctuations as I only care about reinvesting interest income I don’t need and keeping my overall bond yield highest as possible.

#89 HD on 02.23.13 at 4:22 am

#45Retired Boomer – WI on 02.22.13 at 11:45 pm

Great post.

Best,

HD

#90 bubu on 02.23.13 at 4:44 am

Perfect lyrics from the 70’s for these days, somehow this song has been stuck in my head lately.

Wall Street Shuffle
10 CC

Do the Wall Street shuffle
Hear the money rustle
Watch the greenbacks tumble
Feel the Sterling crumble

You buy and sell
You wheel and deal
But you’re living on instinct
You get a tip
You follow it
And you make a big killing

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

#91 Victoria Real Estate Update on 02.23.13 at 5:02 am

Hello again Victoria readers. I’m a Victoria girl who is here to share what I’ve learned about the housing market in Victoria with you.

We are so relieved that we did not buy 2-3 years ago. If we had done so, we would now be in a situation of negative equity with years of price declines on the way for Victoria. This is the situation so many of our friends are in and they are not happy about it. They are completely stressed out. Their realtors told them that house prices only go up, so they bought.

Garth was the main reason that we did not buy 2-3 years ago. We know that he also warned Canadians about the housing market crash that happened in Victoria and the rest of Canada in 2008-2009. Prices in Victoria dropped by 15% in about 8 months and would have continued down much more if it hadn’t been for the unprecedented, emergency intervention that turned the housing market around at that time. This time there will be no such intervention.

When the US housing market was at its peak in late 2005, realtors and real estate boards there told everyone that prices would go higher. David Lereah was the chief economist at the National Association of Realtors at the peak of the US housing bubble. In December 2005 it was obvious that the US housing market was due for a major correction, as Canada is now. He attempted to minimize the severity of the situation by saying, “We are really on track for a soft landing. There are no balloons popping.”

Robert Shiller, a famous American economist, accurately predicted the US housing bust. He recently commented on the Canadian housing bubble by saying, “I worry that what is happening in Canada is kind of a slow-motion version of what happened in the US”.

In terms of predicting housing market corrections in Canada, Garth is Canada’s version of Robert Shiller, in our opinion.

There is no reason that house prices in Victoria will remain in bubble territory. Victoria experienced a 147% increase in house prices, at peak, compared to the year 2000. Similarly, Los Angeles experienced a 175% increase compared to 2000 prices. People in Los Angeles didn’t think their market could crash either, but it did.

This house in Los Angeles was once valued at $420 K. It’s value dropped all the way down to $150 K at one point. Victoria will experience its own major price correction. It has already started.

Girls, there is no good reason to buy right now when house prices in Victoria will be much lower in 1.5-2 years. It will be a short wait and it will be well worth it. Guys, be smart and hold off from buying right now. Save money by renting like we are. Each month that prices go down your financial future will get even brighter.

Until next time – cheers!

#92 Jane24 on 02.23.13 at 5:24 am

Another factor is that us baby boomers are no longer buying stuff, we already have it all. We are getting rid of stuff to downsize. Plus of course when all a young couple can afford is a shoebox condo, they don’t need that much stuff either.

Probably better for the planet but there is not enough demand to keep all those retail big boxes going. Plus the direction will be down in terms of demographic retail demand for a long time to come.

#93 Bigwhiffa on 02.23.13 at 5:47 am

Why buy gold or silver?

Well, we have all seen stocks and companies crash and burn to zero but in all of recorded human history gold and silver has always been worth something.

Don’t get me wrong here. I’m not saying to go out and buy as much as you can. What I am saying is that everyone should have some physical metals (coins/bars) allocated in their portfolio. 5% to 10% is recommended. It’s your hedge in a reckless casino style system.

As an example, our money’s value is based on foreign exchange markets which trade +/- $2 trillion per day. That is 100 times more than global stock markets combined. Only 2% reflects the movement of goods and services. 2%! The rest of the 98% is purely speculative i.e. casino time for the big boys. That is why things like foreign exchange crises took place in Asia in the 90’s. It’s a model that has been in place since the Industrial Age!

At the end of the day having a small percentage of my portfolio hedged in precious metals is a form of insurance. It helps me sleep at night knowing that if something were to happen, at least I will have the ability to provide for my family.

You could do few things more useless for you family than collect yellow rocks that cannot be used to buy anything. — Garth

#94 Devore on 02.23.13 at 7:34 am

#17 Ted Noakes

I think it is not quite in step to compare use the fortunes of Sears and Best Buy as indicators of why things in CANADA aren’t doing well. These are American companies! Their primary markets are the States, not here!

So if the US is doing so poorly, and Canada so well, why are they closing stores and laying people off in Canada? Or maybe you haven’t thought this through.

#95 Devore on 02.23.13 at 7:42 am

#25 Shawn Allen

Retailers cut prices and people expect same store sales to go up in dollars?

Perhaps they’ll make it up on volume, like the dot coms.

#96 Sean on 02.23.13 at 7:49 am

Harbour Landing… in Regina?!? Did that make anyone else chuckle?

#97 economictsunami on 02.23.13 at 8:16 am

Debt, deflation, demographics and now deleveraging. (At least for those that have yet to get authentically serious about balance sheet repair.)

As an aside:

While pulling into Central Station (Montreal) this week, I didn’t notice as many sky cranes as The Big Smoke but signs of over building continue to be quite clear.

Surrounding The Bell Centre, the parking lot across the street is staked out for a rather large glass box make over; as site prep to the east appears to be readied.

Oh well, at least Old Montreal has maintained it’s charm and character. Condo fever there, while not as overtly evident (built through conversions above the shops and galleries) nevertheless, also appears to be just as over done…

#98 Squad on 02.23.13 at 8:31 am

# 22

I agree, I can’t believe the price of food these days. In N.S. I’ve seen prices suddenly leap up 10% on a product overnight (dairy for one). I’ve adapted the way I shop to buy what’s on sale, rather than “what do we fancy for tonight”!

I’m not sure, but I don’t think they include these items when they calculate CPI. Maybe someone can enlighten here. If they don’t, then why not?

# 36

Yes, $500 for shoes! We talk about the cost of items in Canada these days and how expensive a lot of things have become. We have this one shoe shop here that sells shoes for $200 and up (in a small Nova Scotia town). How they stay in business, I have to wonder. The time I was in there looking around with a stunned look on my face, I did notice, however, that most of the shoppers were all in the clearance section.

#99 Chester on 02.23.13 at 8:36 am

It would just seem to be common sense that real estate and big box store numbers were based on 4 kids born in a family, went to 1.7 kids in a family and is headed below 1. Also when you can order on line and get it the next day why drive into the city? Expect lots of big box stores to disappear and unsold houses. It doesn’t look good for the next generation unless they are willing to accept a lot less.

#100 maxx on 02.23.13 at 8:39 am

#11 Toronto CA on 02.22.13 at 10:11 pm

So why is this happening?

Deleveraging is (finally) beginning to take hold at a grass roots level, and if this carries on, people will end up fixing government-induced economic damage.

In addition to that, many WITH money are guarding it very carefully. Two reasons: one, interest rates are unsustainably low and provide less to live on to those (imho) who deserve to benefit for their good saving habits, and they’ll be damned if suppressed interest rates decimate their wealth. I for one will continue to reduce spending until rates are raised. Two, you can get almost anything you want second hand, very often with better quality and no tax. There is so much that you can do for next to nothing or free by simply looking around. This is the save-wave of the future.

#101 Dennis on 02.23.13 at 8:43 am

The answer can be summed up in one word ‘frugal’. People need to lower their expectations, spend less, save more, invest more and learn to be happy with what they’ve got. A couple generations ago, people understood this. Life is hard and it sure ain’t fair – two world wars and a depression taught previous generations that. Now it’s our turn to learn some cold hard facts.

#102 sue on 02.23.13 at 8:43 am

#41 I’m with you. $4.99/lb for organic peppers and they’re half rotten..lol I have had to be more selective..like buy organic spinach (a MUST) but buy cantaloupe/pineapple non organic bc of their thick skins.

The cost of eating healthy is so ridiculous that I’m caving and buying some crap bc it’s cheap.

#103 Toon Town Boomer on 02.23.13 at 9:00 am

“The best possible defence against a world without growth is liquidity. The worst possible strategy is debt. Your choice.”

Ain’t that the truth!

#104 Ralph Cramdown on 02.23.13 at 9:01 am

“Harbour Landing… in Regina?”

What, you’d have called it Slough View? A little marketing goes a long way.

#105 Stickler on 02.23.13 at 9:15 am

Stagflation (A condition of slow economic growth and relatively high unemployment – a time of stagnation – accompanied by a rise in prices, or inflation.)

Falling values for expensive items that require credit (houses, cars), and rising values for necessities: food, utilities.

Welcome to your future.

#106 Berty on 02.23.13 at 9:30 am

#90 bubu on 02.23.13 at 4:44 am–thanks for the great memories with your wall street shuffle post!

#107 Stickler on 02.23.13 at 9:46 am

Re Kosher if you are interested…you are paying for it. Funny nobody knows about this…

Kosher Certification Agency Toronto
http://www.cor.ca/

COR is the kosher certification trademark used by the Kashruth Council of Canada, the largest kosher certification agency in Canada, recognized globally as a leader in kosher certification. COR has been servicing the Canadian food industry for over 60 years and now certifies 70,000 products at approximately 1000 facilities across Canada and around the world.

Canada’s Kosher Certifier and the Beth Din of Montreal
http://www.mk.ca/

BC Kosher:
http://bckosher.org/

#108 bigrider on 02.23.13 at 10:13 am

Garth ,your thoughts on the syndicated mortgage offerings by the firm , Fortress Capital.

They are sucking money up in the GTA like nobodys business.

Guarantees against real projects by the likes of Lamb Developments and Empire communities . Promises of 24 to 36 month turn arounds at 8% per annum and a 12% bonus to boot upon completion !

The fact that they have had strong reults feeds the frenzy I’m sure.

I am sure you have run against this as a financial planner.

Your thoughts? Anyone else?

#109 neo on 02.23.13 at 10:28 am

At #78bbrodriguez on 02.23.13 at 2:34 am
Garth, last I heard the CMHC ceiling was 600B, and they were getting close to that. Any idea where they are with that now?

They have enough room to get through the Spring season. After that something has to give.

#110 reader on 02.23.13 at 10:31 am

Inflation at 0.5% – Huh? And people believe that, no?

During the summer of 2008 a baril of oil was $150, the USD/CAD was 1.06, and a liter of gas was $1.40 over here in Montreal.

Now, just over three years later, a baril of oil is $93, USD/CAD is 1.02, and a liter of gas is 1.49.

So, a liter of gas costs now more than when a baril of oil was 60% more expensive.

#111 T.O. Bubble Boy on 02.23.13 at 10:34 am

@ #70 Gunboat denier on 02.23.13 at 1:46 am
53 Nonplused – here is a link to the CPPIB financials. It looks quite diversified

http://www.cppib.ca/Results/Financial_Highlights/
————–

Wow – lots of Canadian equities there, including $11M (now $0.00) in Poseidon Concepts, the latest Sino-Forest-esque scam of a company!!!

Apparently none of us young’uns will be relying on CPP in retirement.

#112 T.O. Bubble Boy on 02.23.13 at 10:36 am

Wow – I didn’t even notice the “$16M” investment in Sino-Forest itself… $27M of our collective retirement down the drain with those 2 holdings.

#113 polecat on 02.23.13 at 10:38 am

#99, Have to agree, stores seem very slow, I know personally if I don’t have cash I do not buy. And at that just necessities. Taxes and cost of living is crazy here in N.S. I make decent money but between electricity and fuel and food you have to watch the dollars. I have seen people buying 20 dollars worth of scracth tickets with a credit card, scary.Have paid off a bunch of debt and don’t plan on taking on any for a long time. Funny thing is you don’t really miss buying a bunch of useless crap on credit then throwing it out a few years later or an overpriced house with monster taxes. Pretyy liberating really
.

#114 Buy? Curious? on 02.23.13 at 10:41 am

“I’ve got 99 posters but a Smoking Man ain’t one!”

#115 Pr on 02.23.13 at 11:01 am

The main stream media start to soud like the old communist propaganda. The Internet is a blessing. All the data are their, just look. Real estate in Canada as been manipulate to the max. With your money!

#116 INTERESTING TIMES on 02.23.13 at 11:21 am

Too Late the 50% RE Crash has started and this time the Ponzi government cannot save you HGTV Virgins!!!!

A very hard landing is coming for many, make sure you protect yourself!!! Big Negative Feedback Loop coming to Canada’s Economy Soon.

Look at LINKS below and learn my HGTV Virgins!!!!

HGTV Virgins get out there and start low balling these realtors by 50 percent. Don’t waste your time going to open houses when you could just sit on the MLS and low ball these used car salespeople by email. Get out there and get your revenge. Show them that you are not as stupid as the show portrays you!

– Europe already in recession/depression, Japan and US right behind them with anemic growth.

– Jobs being lost everywhere and the Canadian economy is slowing down. Watch and read the news in the business section and learn about the layoffs happening every day my virgins. Educate yourself!

– Austerity starting already in Canada. Many in government jobs will be bye, bye. Federal gov’t firing 20,000 alone in Canada. All gov’t jobs under attack.

– Manufacturing jobs have moved to Asia and back to the US. Canadians can’t compete with the New America where the factory worker now makes $12.00 to $15.00 an hour, with no benefits and new Union Breaking Laws in many States. The New US can now buy a nice home for $100,000K-$200,000K. You are so screwed in Canada!

– Big Bad Alberta is in big danger now. They cannot compete now in the global marketplace with their overpriced Oil and are losing money on every sale now. They are being taken to the cleaners. Not good for our economy. I guess this is why President Harper & CON government have started throwing a lot of money back into Ontario Car Plants. I guess they realized there mistakes that you can’t only have a 1 trick pony called Alberta Oil but need a diversified economy. Poor management on their end and more job losses to come.

– 70% of CDN living pay cheque to pay cheque and have no savings and over 70% have no pensions

– 60% of boomers 60 years and older entering retirement in a lot of debt. Also, a lot of these boomer fools co-signed for their kids $800,000 Mc Mansions. The banksters will wipe the floor clean with both the kids and parents after this 50% RE Crash when they both lose their homes!

– Empty condos being built everywhere and will be going for 50% off soon. HGTV Virgins will be crushed!!! Many HGTV Virgins are going bankrupt at Trump Towers, what happened to RE only goes up? Many in the Construction Trades will be soon unemployed. They have already started calling begging for any kind of work. I feel sorry for them as it will be tough times for them and their families. The only thing Canada had for the last 10 years was construction jobs and now these jobs will be going bye, bye as well. At the same time over the last 10 years all our good manufacturing jobs were going overseas.

– Empty homes all over the MLS, can you say power of sales have started, soon 50% off will be coming to Canada

– For lease signs everywhere in business districts and commercial areas, I guess business has moved out of Canada

– Canadians are 164% in debt! More than the US, Ireland, Spain, and UK when they had there RE Crash.

– Over 8 months of dropping RE sales. Next thing to drop will be prices by 50%.

– Over 70% of mortgages in Canada are 5% or 0 down CHMC mortgages. Can you say high risk and backed by the taxpayer. When this baby blows up kiss your social services good bye. This is what the in action plan looks like. We supported our banks with free taxpayer dollars to give out loans to people with no money creating a RE Ponzi scheme 10 times bigger than the US, Spain, Ireland etc. Even Brother Carney is bailing out of Canada and going to the UK after his poor policies of 1% rates have enslaved Canadians with unrepayable debt at record levels “What a Rock Star”. See you later fools he will be saying.

– And remember a home is only worth what a buyer will pay.

– The realtards, brokers, banksters and builders are in full out panic mode. They have already enslaved 70% of Canadians with RE Debt and there is no more FREE Money to give to the other 30% HGTV Virgins.
The 50% crash is here my virgins. Get out there and start low balling as the time is now for your revenge. Don’t sign up for bank slavery like the other 70% of the HGTV Virgins in Canada. They are screwed for life now as they were sold the Kool-Aid by the RE industry!
Get out there and start Low Balling by 50% as you have the Power Now.

Too Read Globe & Mail Articles for free delete your browsing history and read 10 articles for free each time.

http://www.theglobeandmail.com/report-on-business/economy/economy-lab/dismal-retail-numbers-dont-bode-well-for-broader-economy/article8966829/?utm_source=Shared+Article+Sent+to+User&utm_medium=E-mail:+Newsletters+/+E-Blasts

http://www.theglobeandmail.com/report-on-business/economy/canadian-economy-gets-double-blow-on-inflation-retail-trade/article8963688/?utm_source=Shared+Article+Sent+to+User&utm_medium=E-mail:+Newsletters+/+E-Blasts

http://www.theglobeandmail.com/report-on-business/international-business/european-business/moodys-downgrades-britains-top-grade-credit-rating/article8982471/?utm_source=Shared+Article+Sent+to+User&utm_medium=E-mail:+Newsletters+/+E-Blasts

http://www.theglobeandmail.com/life/home-and-garden/real-estate/some-vancouver-workers-have-been-priced-right-out-of-the-country/article8970952/?utm_source=Shared+Article+Sent+to+User&utm_medium=E-mail:+Newsletters+/+E-Blasts

http://business.financialpost.com/2013/02/22/eurozone-economy-to-shrink-again-as-unemployment-climbs/

http://www.theglobeandmail.com/report-on-business/international-business/european-business/crisis-forces-greeks-to-skimp-on-traditional-weddings-funerals/article8949182/?utm_source=Shared+Article+Sent+to+User&utm_medium=E-mail:+Newsletters+/+E-Blasts

http://www.theglobeandmail.com/news/british-columbia/senior-manager-resigns-after-vancouver-condo-marketing-fiasco/article8952772/?utm_source=Shared+Article+Sent+to+User&utm_medium=E-mail:+Newsletters+/+E-Blasts

http://www.theglobeandmail.com/report-on-business/economy/shaky-oil-markets-have-alberta-deficit-growing-faster-than-expected/article8824895/

http://www.theglobeandmail.com/news/politics/provinces-grim-outlook-clouds-flahertys-fiscal-forecast/article8875640/

http://business.financialpost.com/2013/02/19/wholesale-sales-down-0-9-in-surprise-decline/

http://business.financialpost.com/2013/02/19/on-the-edge-of-bankruptcy-detroit-focuses-on-salvaging-what-it-still-has/

#117 The Prophet Elijah on 02.23.13 at 11:22 am

Housing starts in January fall 8.25 in the US. Sounds like the dead cat bounce is over, harvest your gains while you can:

http://articles.marketwatch.com/2013-02-20/economy/37188508_1_rate-marketwatch-structures

#118 The Prophet Elijah on 02.23.13 at 11:27 am

“As Mark Carney steps aside from his role at the Bank of Canada to undertake all manner of easy money in the UK, we thought a reflection on the ‘stealth’ QE that he has been engaged with, very much under the radar, in the US’ neighbor-to-the-north was worthwhile.”

http://www.zerohedge.com/news/2013-01-28/mark-carney-leaves-canada-stealth-qe-rising-fastest-pace-2009

Shrinking economy and increased liquidity = stagflation the 1970’s phenomenon. Look at the chart of gold during this period, why would you want to buy depreciating hard assets like land. Gold the only real money will be the ONLY place to go.

The difference between now and the 70’s is that debt is so absurd in the western world that a new monetary system will have to be created, the US knows this and keep QE going until it can’t – it’s the only tool in the drawer they have.

#119 DonDWest on 02.23.13 at 11:31 am

All this talk of austerity, cutting back, frugality, etc. So Canada is supposed to go the path of Greece?! Make no mistake, there are people who have made a planned fortune at your misfortune who are laughing behind the curtain. What do you do in response? Accept your lot, put your head down, act “civil”, etc. What a nation of wimps! Stockholm syndrome!

Maybe I’m just selfish, but rather than contemplate generational austerity, is there any reason why we can’t just cut the heads off the parasites who caused this mess in the first place (like they did in Iceland)?

#120 Grim Reaper/Crypt Speculator on 02.23.13 at 11:53 am

Today’s Joke…(.besides Dr Wayne.)

A Louisiana farmer has a large pond on his farm.
One day he goes out to pick a bunch of apples.

As he approaches the pond, we hears a lot of splashing and giggling.

Then he notices five lovely young ladies skinny dipping. On the shore he sees a pile of their clothes.

He makes some noise to get their attention. They stay low in the water so he can’t see their naked bodies.

One the the ladies says…we are NOT coming out , so that you can stare at our nude bodies.

The Farmer replies:

” No no ladies, not to worry, that is not my intention.

I just came here to feed my alligator.”

#121 Smoking Man on 02.23.13 at 12:06 pm

Vlad

Let out a word yesterday lol

What I ment to say

If Vlad Turner Nation, or Beach Girl did not like me, that would bug me.

Was dissing Dr what ever.

I guys know I love ya.

#122 Smoking Man on 02.23.13 at 12:07 pm

What hang over can’t even type. Shit

#123 Gord In Vancouver on 02.23.13 at 12:10 pm

The Vancouver Pumpathon continues…..

Buying a first house was never so appealing

Read more: http://www.vancouversun.com/entertainment/Buying+first+house+never+appealing/8007126/story.html#ixzz2LjtJN1u9

http://www.vancouversun.com/entertainment/Buying+first+house+never+appealing/8007126/story.html

#124 Min in Mission on 02.23.13 at 12:17 pm

#100 – Dennis; Too bloody true!!

I am fortunate that I still have both of my parents. They lived through the Depression, Dad “rode the rails”, both in WW II, both not highly educated, both hard workers.

Dad has been retired now for longer than he ever worked.

They taught us to be realistic.

When “Awesome Lady” and I bought our home, thanks to Garth I had learned that 3.5 X earnings was what to aim for, we purchased @ 2.0 X earnings.

We have since paid for the house, and, have managed a decent life.

People consistently get mixed up between “needs” and “wants”. So much of our “needs” are really just “wants”.

#125 Ogopogo on 02.23.13 at 12:17 pm

Check out the latest minutes from the strata council at my condo (where I ecstatically rent, for those new to the blog):

“Motion: To Present a By-Law Amending the current allowable rental of four (4) to nine (9)”.

Guess why? As I have so lovingly tracked here on the blog, the extant units are simply not selling and have sat empty and forlorn for over a year, some much longer.

This is the “healthy” Kelowna market delusional DA kept trying to bamboozle everyone about.

Again, thanks Garth for your guidance and financial wisdom in these gassy times we live in.

I sleep like a baby knowing my fully diversified, liquid portfolio and luxury condo unit give me freedom, prosperity and above all, peace of mind.

#126 Gunboat denier on 02.23.13 at 12:22 pm

110 TOBB – so thats $11M of over $12B in canadian equities of over $160B total holdings. Yes, let’s fire them all, and we expect them to get every one of a few
hundred canadian stocks perfectly correct.

#127 Gunboat denier on 02.23.13 at 12:22 pm

91 Victoria – you really need some new material

#128 Ralph Cramdown on 02.23.13 at 12:30 pm

syndicated mortgage offerings by the firm , Fortress Capital.

Good luck with that, future bagholder. A $6MM mortgage against $1MM of unserviced land won’t do you much good. Here’s what two minutes of sleuthing turns up. fortressrealcapital.com registered by one Vince Petrozza of Richmond Hill. Here’s what the OSC said in 2011:
Petrozza

(l) Petrozza shall resign all positions he holds as a director or officer, and for 15 years shall be prohibited from becoming or acting as a director or officer of any:

(a) registrant under the Securities Act;

(b) investment fund manager; or

(c) issuer that distributes securities under a prospectus or prospectus exemption under the Securities Act

except Petrozza will be permitted to become, or act as or continue to act as a director or officer of:

A) any issuer that distributes, issues or trades in Mortgage Instruments; or

B) any Closely Held Private Company;

http://www.osc.gov.on.ca/en/Proceedings_set_20111215_phoenix-credit.htm

#129 AK on 02.23.13 at 12:38 pm

#29 NOTHING SURPRISES on 02.22.13 at 11:04 pm
Look back on this statement in late 2013 into 2014.
I believe you will find:
Housing sales up in the U.S. then another slide of 20-30%.
Car sales down.
Deficit up.
Unemployment up.
——————————————————————-

Noted. I am curious as to how you come up with your BS predictions.

I know some that use a proverbial dartboard. Oh yeah, and the charts, ofcourse. How could I leave that one out.

#130 Inglorious Investor on 02.23.13 at 1:10 pm

When Ally starting offering their HISA, their rate was significantly higher than HISAs at other banks. I figured it was really just a teaser rate designed to attract capital, and that it would not last. M&A in the banking industry certainly doesn’t help, as I’m sure they would all love to shut these HISAs down and get you to pay THEM to borrow your money. Remember, it it looks too good to be true, it probably is.

#131 HogtownIndebted on 02.23.13 at 1:19 pm

Considering all the other news of late, a rather ominous piece is in today’s Toronto Star.

Up to half of workers in the area are in what is defined as precarious employment.

Banks are already tough on mortgage loans to people whose main income is self employment or who have less than two years history with one employer. Lots of folks have fallen into self employment only out of necessity or have only been able to go from contract to contract. Even people previously thought of as in the middle class, says this article.

What does this say about where the oxygen might come from for future real estate market momentum in the GTA?

http://www.thestar.com/news/gta/2013/02/23/half_of_gta_and_hamilton_workers_in_precarious_jobs.html

#132 DON on 02.23.13 at 1:34 pm

@#36 Dwide Schrude

I agree with you.

I have stopped upgrading, buying along time ago. I don’t need material stuff only things that make me money or save me money.

People were taught to specialize in the last 20 years, and they most took it to heart and can’t even change their oil in their cars.

#133 AACI Okanagan on 02.23.13 at 1:46 pm

because the years of appreciating real estate are over. At least for a generation.-Garth
——————————————————————-
A generation is a long time Garth (25 years) , yet the US real estate is showing signs of recovery (according to you) just after just 6-7 years…I guess it is different here..

#134 bill on 02.23.13 at 1:48 pm

”Re Kosher if you are interested…you are paying for it. Funny nobody knows about this…”

possibly because the vast majority of Canadians could not care less.

#135 Daisy Mae on 02.23.13 at 2:05 pm

#52 25Alpha:

QUOTE: “A general decline in prices, often caused by a reduction in the supply of money or credit. Deflation can be caused also by a decrease in government, personal or investment spending. The opposite of inflation, deflation has the side effect of increased unemployment since there is a lower level of demand in the economy, which can lead to an economic depression. Central banks attempt to stop severe deflation, along with severe inflation, in an attempt to keep the excessive drop in prices to a minimum.

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

How can deflation be a good thing?

#136 Sade on 02.23.13 at 2:10 pm

Anyone else agree? Are niceties too expensive?

After a month in California and Arizona our eyes were really opened to how much Canadians are being ripped off by manufacturers, distributors and retailers, no wonder Wal Mart and Target like Canada, we are willing to pay 30% more for everything, some things more, like Chivas Regal for $19.95 and $10.49 for J. Lohr Cabernet Sauvignon. Driving, we paid between seventy eight and ninety two cents for fuel.

#137 Snowboid on 02.23.13 at 2:12 pm

#56 GoldnSilver on 02.23.13 at 12:08 am…

Not sure why you include Phoenix in your figures, maybe you are a RE agent that doesn’t have to deal with facts?

While about 30% of sales in Maricopa county went to investors last year (source: ASU), only 3.9% of total sales (not just investors) were sold to foreigners.

Total Canadian purchases are only 4% of total ‘out-of-state’ sales.

Small investors (1-10 homes) are now in the minority.

By far the largest purchasers of ‘investment’ properties last year were a few US private equity firms, such as Blackstone – their purchases alone number in the thousands. This is in addition to the commercial REIT investments they made in the Phoenix area.

Even after renovations, the expected ROI on these residential rental units is 6-7%.

BTW, there are legal methods for Canadians to minimize both capital gains and estate taxes, including a ‘cross-border’ trust that means no Canadian tax on the capital gains.

Sorry, but your analysis if far from being correct.

#138 Daisy Mae on 02.23.13 at 2:32 pm

#91 Victoria RE: “….He recently commented on the Canadian housing bubble by saying, “I worry that what is happening in Canada is kind of a slow-motion version of what happened in the US”….”

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

Of course…because the feds can’t think for themselves, or do what’s best for Canadians. They simply ‘followed the herd’.

#139 Raven on 02.23.13 at 2:36 pm

Interest Rates and Triggers

Interest rates are the biggest determinant of value to income producing properties! What? Not location, income, quality of construction? No! Here is my humble opinion as to why.

In 1982, I purchased my first income producing property. With 5 year term and 25 year amortization/ 25% down, at 19% interest.

The common denominator in all income producing R.E ( weather it is rental units, strip plazas, or malls, they all have to “cover”. That means that the income they produce must “cover” all the costs and hopefully show a small profit at the end of the year, at current interest rates.

Those first buildings I purchased and later built, had to cover at the 19% interest rate. By 1987 the interest rates dropped to around 11% and I refinanced all my buildings. My mtg payments were cut almost in half and that’s when it hit me. The int. rate drop was why my buildings were now able to cover more mortgage and I sold them for almost double what I paid by the late eighties.(Straight Capitol Play, probably!)

I gave this analogy to show how the F rate reduction in 08/09 from 7.25% (5 yr term/25 yr am. to the current 3% ( 5yr term/25 yr am). This effectively increased the value (by a large multiple) of all real estate in Canada.

The first trigger, after the Fed realized the bubble it was creating, was to shorten amortization lengths, and increase down payments. This effectively added over one percent to the cost of the mtg. payments by not allowing longer terms for repayment.

The R.E. and construction industry occupy approximately 7% of GDP from the 5% norm. This 2% doesn’t seem like much but translates into close to one million jobs that could be lost when sales drop further. As we stop chasing Draft plan Approvals and stop building models we will realize that we are way over staffed and the mass layoffs will begin. That is is second and bigger trigger. Probably start mass layoffs by summer.

As a neophyte to this “inter web” blog thing I appreciate you allowing me to post my opinion Mr. turner.

JR

#140 Nukester99 on 02.23.13 at 2:42 pm

For an education on what happened during the last era of deflation (Hint, the Great Depression) and how central bankers have never been able to deal with deflation successfully read, “Lords of Finance: The Bankers Who Broke the World” by Liaquat Ahamed. I just finished reading this book and have never been more concerned about the effects of deflation. People stop spending because tomorrow things will be cheaper. No spending means massive unemployment in practically every sector. Lower tax revenues cause Governments to drastically reduce spending and the cycle gets bigger faster. It is like a massive bubble but going the opposite direction.

#141 An Importation in Quebec on 02.23.13 at 2:49 pm

Inflation is not 0.5%. They simply dropped “volatile” items like food and gas to make the CPI look right. And this fudging happened years ago. In fact, no price has really dropped. Only items that were sold at 300-500% (and even more) production cost dropped price because of slow sales. Deflation is only for a while, as long as the government is able to enforce its financial repression. Looks like hidden stagflation to me. And stacks will drop as soon as the Fed stops its QE.

#142 Doug in London on 02.23.13 at 3:07 pm

@DON, Post #132 and Dwide Schrude post #36:

Good posts, my sentiments exactly. The whole economy has evolved around reckless comsumption, buying junk we don’t need. Take that away, and it goes into painful withdrawal symptoms like a junkie. Some of us have the common sense not to get into that kind of comsumption, it appears we were way ahead of our time. I tend to, dare I say it for risk of being criticized for being politically incorrect, buy only stuff I need.

As for the part about specialization, it’s something that’s necessary in the modern world where everything is more complex than ever before. It means your skills can be obsolete faster, and periods of unemployment may be longer. That’s why, when you are making a lot of money it’s wise to save some and build your portfolio up as much as possible and yes, learn how to do more things yourself. In short, be more self reliant.

#143 Ralph Cramdown on 02.23.13 at 3:17 pm

#130 Inglorious Investor — “When Ally starting offering their HISA, their rate was significantly higher than HISAs at other banks.”

Obviously. They’d just changed their name from General Motors Acceptance Corporation in a desperate attempt to wash the stink of the parent company’s bankruptcy off. Royal only bought them for the book of auto finance loans. RBC obviously is fully supplied with enough retail idiots who’ll lend them money at near zero not to need money from people who think that 1.8% is a good deal. Garth has spent so many posts trying to tell one and all that lending a bank money at 1.8% won’t get you anywhere in life, so quit showing us all that you haven’t heard a word.

#144 T.O. Bubble Boy on 02.23.13 at 3:37 pm

@ #126 Gunboat denier on 02.23.13 at 12:22 pm
110 TOBB – so thats $11M of over $12B in canadian equities of over $160B total holdings. Yes, let’s fire them all, and we expect them to get every one of a few
hundred canadian stocks perfectly correct.
_____________________

Yes – I know it is a drop in the bucket. Whatever investments the CPP had in the Nortels and JDS Uniphases and RIMs and Yellow Medias (I could go on) of this country would have put a much bigger dent in things.

But – you’ve got to wonder, if the uber-conservative CPP was invested in these frauds, how is the average retail investor or even the average professional supposed to be avoiding them?
(all the more reason to just buy the indexes, I suppose)

#145 Pr on 02.23.13 at 3:47 pm

inflation of between 1% and 3%. Guess where it is now? Yes, just 0.5%. I dont feel like its 0.5% may be i am poorer than before.

#146 confessions of a real estate bear on 02.23.13 at 3:55 pm

If we experience defaltion like we did in the depression. The single greatest investment was cash as asset values declined horrifically and were able to be purchased for pennies on the dollar. I do think that it will happen again but you must be patient and not fall for the day to day noise of investment people talking their books. I do not think hyperinflation is possilble because the dollar denominated debt is a lot higher than the amount of “money printing” that is going on. Long term it is possible but not in the short term.

#147 Gunboat denier on 02.23.13 at 4:03 pm

144 TOBB – valid points, unfortuneatley there is no magic formula for the CPPIB. They just apply the same techniques as most investors try to – asset allocation and
diversification across sectors, indexes, countries etc. I
understand they also own manhattan offices, london
malls, infrastructure.

The CPP was originally designed as pay-as-you-go with
benefits being paid out with the premiums being paid in. That couldnt last with the boomer demographic bulge so they created this reserve fund. Seems like a good approach.

#148 confessions of a real estate bear on 02.23.13 at 4:04 pm

Response to daisy mae. Deflation on the magnitude of a depression would not need to happen if the normal recessions of the post war era had been allowed to totally and naturally clear the bad debt that was built up during the boom. Instead we have had monetary interventions that arrested the declines and left leverage in the economy. At this point the leverage is so high their is nothing that can be done to stop it.

#149 Cici on 02.23.13 at 4:07 pm

Excellent summary Garth,

You are the man!

Been trying to help condo-lusty friends delay their purchases, but it ain’t easy, they get really defensive.

One guy was trying to convince me how great a deal $1,100 was for a one bedroom condo, and was trying to talk me into doing the same instead of renting the $1,100 three-bedroom house with a finished basement and private yard that we just signed for, insisting that we were just “throwing money away” while he was going to be building wealth through “equity.”

I asked him about condo fees, closing costs and selling costs. He responded: only $50 in condo fees, already factored into the costs; closing costs had not to been factored in (oops, he’d forgot!). Oh, and selling costs? Get this: He wasn’t even aware that there were any selling costs. But he said it didn’t matter anyways, because he’d sell sell using “Duproprio” (a for-sale-by-owner outfit).

Oh boy, are we in for trouble!

The sheep are lining up for the slaughterhouse, because the shepherds have convinced them that the grass is not good or green enough, and that they are losers if they can’t afford to eat lamb. Unfortunately, the poor sheep still haven’t figured out that they’re feasting carnivorously on themselves…

This is going to be painful :-(

#150 jess on 02.23.13 at 4:07 pm

according to the latest 20 worst cities

so why build a casino in wat. region

Atlantic City, NJ
In 2010, New Jersey Gov. Chris Christie visited the gambling mecca and proclaimed: “Atlantic City is dying.” Casino revenues have been in a downward spiral, which contributed to a recent unemployment rate of 14.4%.

=
Alberta’s economy, however, began to deteriorate in the early 1980s.
-world price of oil was $44 a barrel in 1981,

summer of 1983 – 14.9 percent of Calgarians suffered unemployment. that was over 78 000 people

1986 the price unexpectedly collapsed to $10.

===
As we know,
There are known knowns.
There are things we know we know.
We also know
There are known unknowns.
That is to say
We know there are some things
We do not know.
But there are also unknown unknowns,
The ones we don’t know
We don’t know.

mailbox listings
http://www.nytimes.com/2012/07/01/business/how-delaware-thrives-as-a-corporate-tax-haven.html?pagewanted=all&_r=0

Companies Tap Pension Plans To Fund Executive Benefits – WSJ.comonline.wsj.com/article/SB121761989739205497.htmlCached
You +1’d this publicly. Undo
Aug 4, 2008 – But Intel’s contribution to the pension plan was deductible immediately. Its tax saving: $65 million in the first year. In other words, taxpayers helped finance Intel’s executive compensation. Meanwhile, the move is enabling Intel to book as much as an extra $136 million of profit over the 10 years that

#151 jess on 02.23.13 at 4:11 pm

Jobs being lost everywhere …robots

http://www.cbsnews.com/video/watch/?id=50138922n
technological unemployment –

i surely would like to see the hydro bill on one of these or are they subsidized somehow
what are the energy costs to these wireless ,heavily automated warehouses 69 robots and navigate 2football fields ?

The Watson-capable servers being deployed to hospitals and data center

#152 Cici on 02.23.13 at 4:16 pm

Oh, I forgot to mention. The guy in question is actuallyl very smart, and one of this best in his department (IT, provincial government).

But despite his brilliance, he’s horny and miserably uninformed.

But the scary part is that he’s not alone.

#153 TurnerNation on 02.23.13 at 4:30 pm

Poll: What will arrive first. Rate hikes or Garth’s next book?

#154 T.O. Bubble Boy on 02.23.13 at 4:44 pm

@ #39 Garth the marth on 02.22.13 at 11:26 pm
i own alot of td bank common. what should i do? I ve had it for years. 400k worth. sell it?

I do not fear for the banks, but make sure you are diversified. Holding one stock isn’t. — Garth
_____________________________________

Here’s a similar but different question… curious to hear thoughts on this (especially Garth’s, if he deems it worthy):

What if the $400,000 in TD stock that “Garth the marth” owns were in an Employee Stock Plan, where these are held as stock options or restricted stock units?

To try and achieve diversification, would you:

A) Just ignore the company stock for planning purposes, since it is typically restricted in various ways and is somewhat out of your control. Sell some stock/options when you want the cash, but don’t track it as an investment – basically, treat it as a bonus.

B) Dump as much company stock as possible, in order to get the $ invested in diversified portfolio. For any un-vested shares/options, always plan on dumping as soon as they vest.

C) Treat the company stock as the appropriate asset type for planning purposes, and plan the rest of your investments to balance against this holding and stay diversified, but don’t worry about dumping as much as possible to get out of a single-stock holding. Sell some stock/options when you want the cash, but don’t go to extremes to avoid holding it.

D) Buy options to hedge against the company stock holdings… e.g. buy Put options. This one isn’t always allowed, but does offer downside protection if it is possible.

E) Other strategies???

(B) Holding stock in the company you work for (unless you own the company) merely amplifies your employment risk. Sell when vested. — Garth

#155 T.O. Bubble Boy on 02.23.13 at 5:21 pm

ok… after this one, I will ignore Greater Fool until Sunday night’s post… but, this article is classic Realtor propaganda:

http://www.thestar.com/life/homes/2013/02/15/homeownership_not_about_crunching_numbers_bob_aaron.html

Gail Vaz-Oxlade gives 10 reasons why you might not be ready to buy a home, and the rebuttals are:

1) but, prices have gone up for 15 years straight!!! (and obviously an investment on a 15 year run is exactly what everyone should be buying?)

2) principal residences have no capital gains tax! (but what about the wonderful commissions and taxes to pay?)

3) homes are easy investments for ‘Ordinary Canadians’! (obviously this one is true, with 70% owning homes – but when is low barrier to entry a good thing?)

3) tenants throw their money away! (except when renting is highly subsidized by the landlord every month)

#156 Dr. Hoof-Hearted on 02.23.13 at 5:42 pm

Gov’t :

is defined as doing the same thing over and over and over and over and over and over over and over and over and over and over and over over and over and over and over and over and over over and over and over and over and over and over over and over and over and over and over and over over and over and over and over and over and over over and over and over and over and over and over over and over and over and over and over and over over and over and over and over and over and over ……to infinity and thinking they will get a different result the next time.

#157 Dr. Hoof-Hearted on 02.23.13 at 5:46 pm

Iran to Execute 4 Bankers on Fraud Charges

http://www.thetruthseeker.co.uk/?p=65912

QUOTE:

Iran’s judiciary system recently worked through the biggest banking fraud case in the nation’s history.

According to The New York Times, the outcome of the case was made official on Monday. Results were dramatic to say the least.

Judiciary spokesman Gholam-Hossein Mohseni-Ejei told reporters that four people had been officially sentenced to death on charges of corruption and “disrupting the country’s economic system.”

The guilty party was responsible for mishandling $2.6 billion of funds – using forged documents in order to receive credit from banks, permitting them to purchase state-owned companies.

QUOTE:
Economist Nouriel Roubini added his two cents on the subject, reporting to Bloomberg:

“Bankers are greedy; they’ve been greedy for the last hundreds of years…it’s not a question if they are more immoral today then they were a thousand years ago, you have to make sure they behave in ways in which you minimize those risks.”

===============================

Hey its a start !

#158 Edmontonian here on 02.23.13 at 6:00 pm

Always great reading your blog, loved all your books also. Living in a province that has had so many boom & bust cyles ( 1972, ’77, ’81 ’87 2008 and now…) I am blown away by the fact some people never learn. 3 new huge towers being built downtown Edmonton while two 4year+!towers remain over 25% empty still. Edmonton’s population in the city is still only 700,000 people, it’s 1.1 million if you include all the satellite cities.
I am finding great deals on household items, furniture & appliances with prices cheaper than the late 90’s! A new stove for $339! A 32″ flat screen brand name tv for $249.

Also, the house I sold for $ 420,000 in 2007 has had over $40,000 in renos & upgrades by the new owner & is estimated to be worth $379,000 now by the city…. And less in the near future…. I am renting this one out! Lol

#159 TurnerNation on 02.23.13 at 6:01 pm

#93Bigwhiffa

Lol. I tuned into Am640’s “Real Money” show today for all of 5 minutes. Felt dirty. I used to casually know its host, Lou Schizas, when he was still a BNN TV host. We kept bumping into each other on the retail investor/trader seminar circuit. He lead a facinating live of travel as a young man.

Anyway today’s show sounded like a paid promo for ‘Guildhall’. It had the feeling of a 4-way circuitous, jerking-motioned interaction, between host and guests.
Fancy coloured diamonds?? WTF, over.
Sinking so low.

#160 TEMPLE on 02.23.13 at 6:02 pm

#144 T.O. Bubble Boy on 02.23.13 at 3:37 pm

But – you’ve got to wonder, if the uber-conservative CPP was invested in these frauds, how is the average retail investor or even the average professional supposed to be avoiding them?

By paying attention to valuation and financials. The writing was on the wall for those companies long before they left craters in their wake.

Buying index funds doesn’t save you from craters, it just makes them harder to spot (and avoid).

TEMPLE

#161 TurnerNation on 02.23.13 at 6:09 pm

bigarider you need to google search ‘Concrete Equities’. Similar racket. Did not end well.
Where were these guys when interest rates were at 6%? Exactly.

#162 HAWK on 02.23.13 at 6:22 pm

#100 maxx on 02.23.13 at 8:39 am

==================

If you’re waiting for interest rates to rise, you’ll be waiting a long time. Debt ridden societies (govts and people) need interest rates to be low so that they can pay the interest.

Better to invest in assets (financial or real) that appreciate in value, than sit on large amounts of cash or GIC’s.

#163 JuliaS on 02.23.13 at 6:46 pm

Deflation is a net contraction of money and credit. Money, due to the nature of interest based lending always seeks contraction. Since more is always owed than issued, the moment new borrowers stop coming, the old debts begin devouring cash. Cash rises in demand as fewer people are able to get hold of it to repay personal debts with.

How can we be in a deflation with food prices rising? Well, food ain’t all there is, is it?

If the price of bread rose from $2 to $4 in 5 years and a house dropped by $100K that house just erased 50 thousand loafs of bread worth of price inflation.

#164 Gregor Samsa on 02.23.13 at 6:55 pm

http://business.financialpost.com/2013/02/22/canadas-retail-sales-plunge-most-in-three-years/

#165 Westernman on 02.23.13 at 7:28 pm

Toronto CA @ #11,
There has been no 4% growth the past and there won’t even be 2% growth for the foreseeable future – we’ll be lucky if the economy doesn’t shrink…
Try not to believe MSM B.S. – they are trying to keep a rosy face on this train wreck so the sheeple continue to spend…

#166 betamax on 02.23.13 at 7:34 pm

#17 Ted Noakes — the fact that retail sales fell across the board simply destroys your “USA/Canadian/bad business model” theory.

Think again. Think.

#167 Mic D'angelo on 02.23.13 at 7:47 pm

#116 Interesting Times

My cousin lost his higher paying union job making $50,000 a year from a auto parts manufacturer in March-2011. I told him to sell the house because housing prices will fall in the next few years.. The house was valued by a local real estate agent at $389,000. It took him and his wife 4 months to be convinced to sell the house. They sold it for $387,000 but after expenses of $25,000 a net $362,000 was in their pocket.

They asked me what they should do with the $362,000. They did not want to buy another house because they realized that the $50,000 a year job is gone forever and the best job he could find pays now $32,000.I told them to buy long term provincial bonds as I see interest rates dropping even more and it will boost their income. They invested in 4 individual bonds at an average bond yield of 4.334%. This is earning them $15,689.08 interest but paid semi-annually $7,544.54.

He told me had $42,000 in a RRSP GIC at 1.85%. I told him to take it out in July-2011 when it matured and invest it in longer term provincial strip bonds.He bought a 21 year strip at 4.491% and at maturity when he is 70 year old it will be worth $105,658.85. They had $12,400 in a savings account and I told him leave it there for now in case of a big expense occurs.

They both rent now a 1 bedroom apartment outside of Markham for $875.00 per month. They have 2 kids which are both adults making a good income of $55,000 to $70,000 a year.

I just spoke to them 2 weeks ago and they told me that they are saving $1,600 a month after all income taxes and living expenses. The last 19 months they saved just over $30,000. He had this in all their savings account at 1.45%. I told them to put $5,500 in a spousal RRSP to shift income since she has no RRSP and income and can take future RRSP income at a lower income tax rate. Also, take the $24,500 remaining put it in TFSA’s.

The spousal $5,500 RRSP was invested in a provincial strip at 3.791% for 22 years and it will be worth when she is 71 years old $12,470.27. The TFSA’s total of $24,500 were invested in 3 provincial strips at average maturity of 25 years at 3.931% and will be worth $64,238.25 income tax free.They both told me that if they can do this for at least another 12 years they will be much better off than keeping than they ever thought and keeping the house.

My cousin told me that they feel much more financially in control than if they kept the house.It was the best decision they made. They told me that if they want people to buy houses pay people a higher wage.His wage dropped from $24.00 an hour to $15.00 an hour.

#168 Mic D'angelo on 02.23.13 at 7:52 pm

Correction they will be much better off than they thought and keeping the house. Sorry I made a mistake.

#169 John on 02.23.13 at 8:30 pm

Just read Allison Griffiths comments on funds and management fees compared. She quotes no credentials on her website and there is a link to the first article from the link below for part two. Is she correct or way off(I believe the latter).
http://money.ca.msn.com/savings-debt/alison-griffiths/the-great-mutual-fund-ripoff-part-2

#170 Richard and Zeus on 02.23.13 at 8:32 pm

COR is the kosher certification trademark used by the Kashruth Council of Canada, the largest kosher certification agency in Canada, recognized globally as a leader in kosher certification. COR has been servicing the Canadian food industry for over 60 years and now certifies 70,000 products at approximately 1000 facilities across Canada and around the world.

Canada’s Kosher Certifier and the Beth Din of Montreal
http://www.mk.ca/

BC Kosher:
http://bckosher.org/
——————————-
We specifically look for COR, corn syrup and other poisons and taxes and always avoid products with them.

We buy allot of European specifically because it is not COR or GMO.

Awesome blog today….

#171 Daisy Mae on 02.23.13 at 8:42 pm

#124 Min in Mission: “People consistently get mixed up between “needs” and “wants”. So much of our “needs” are really just “wants”.

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

Yes! Thanks to Garth, I’m constantly asking myself that very question every time I enter a store! LOL And am realizing just how much we waste buying ‘wants’.

#172 jess on 02.23.13 at 8:48 pm

the village – munibonds

http://www.businessweek.com/news/2012-06-04/hidden-billionaire-morse-a-man-behind-curtain-at-villages#disqus_thread

Landsat scenes, acquired in 1984 and 2011, illustrate the growth in the community and the changes in land use patterns. Agricultural land has been replaced by over 40 golf courses, small water bodies (shown as black) have been converted to water hazards on the golf courses and some lakes have been drained to provide irrigation, and residential communities (very light tones) have grown around the golf courses. Local, state, and federal officials use the Landsat data to monitor the rate of development and the impact on resources as population changes affect land use.
==

#173 Clayton on 02.23.13 at 8:53 pm

Spoke to a realtor today about house prices in Vancouver. Asked said realtor how many places he had sold in the last two years, he said 7 total sales and all were tough. Few fell through, financing etc. There is nothing special about Vancouver. Vancouver is poised for a major collapse in house prices. Look out.

#174 claudius emperor on 02.23.13 at 8:53 pm

For the past four years governments have done everything but give money away trying to rekindle the economy. The Bank of Canada dropped interest rates to ridiculous levels. Ottawa spent billions buying mortgages from the big banks. The feds dished out tax credits so people could build decks and install hot tubs. Thanks to cascading tax revenues and stimulus spending, Canada went from a budget surplus to an historic deficit, and whaled the national debt. CHMC alone tripled its liability, in effect subsidizing real estate by $600 billion
——————————-

you sound like conspiracy theorist.

Any chance of F ending in jail?

#175 claudius emperor on 02.23.13 at 8:54 pm

CHMC alone tripled its liability, in effect subsidizing real estate by $600 billion.
————————–

How much are the CHMC liabilities?

#176 Daisy Mae on 02.23.13 at 8:57 pm

#136 Sade: “We are willing to pay 30% more for everything, some things more, like Chivas Regal for $19.95 and $10.49 for J. Lohr Cabernet Sauvignon…”

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

We’re not ‘willing’. We have no choice…unless we want to use a tank of gas to get to the states and stay — what is it now, 48 hours?

#177 Mic D'angelo on 02.23.13 at 8:58 pm

To Interesting Times #116
I forgot one last thing, he worked there for 21 years so he does have a union pension. The commuted value is $144,213.16 and it can be transferred to a LIRA or locked in RRSP. If he keeps the pension with the union it will pay $812.34 per month in 2027 when he is 65 but there is no C.P.I or any annual inflation indexation on this pension.

He asked me if he should keep it or transfer to a LIRA or locked in RRSP. The $812.34 per month/$144,213.16 commuted value =0.005632912*12=6.759494% annual payout.Also, when he dies his wife only gets only 63% or $511.77 per month*12=$6,141.29/$144,213.16
=4.25848% annual payout.

I told him that if he were to invest the $144,213.16 for 14.8 years when the union pension commences at age 65, it will be worth $243,022.66 provincial strips at 3.589% current yields. The $243,022.66 at say 3.50% invested in provincial bonds or other government bonds will yield $8,505.79 annual interest/12=$708.82 per month starting at 65 years old. Also, the spouse would get the $243,022.66 at his death versus a much lower $511.77 per month reduced union pension and no capital.

Even if you take $144,213.16 and take the $812.34 per month, it would take him 177.53 months or 14.79 years
to breakeven. Remember this is not including any interest that would accrue and he would have to live to 79.79 or almost 80 years old.I told him, my personal opinion is it’s a no brainer, the annual pension payout is not high enough and not even indexed to inflation. Also, his wife and kids would get nothing upon his death.
Take out pension and invest it yourself. He only has 60 days to decide.

#178 Daisy Mae on 02.23.13 at 9:23 pm

#148 Confessions: “Deflation on the magnitude of a depression would not need to happen if the normal recessions of the post war era had been allowed to totally and naturally clear the bad debt that was built up during the boom…”

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

So…we never need government interference. Just let the markets naturally correct. So, the present government screwed up…again, and as usual.

#179 AK on 02.23.13 at 10:01 pm

#167 Mic D’angelo on 02.23.13 at 7:47 pm

“I told him to take it out in July-2011 when it matured and invest it in longer term provincial strip bonds.He bought a 21 year strip at 4.491%”

——————————————————————

Are you serious?

#180 Montrealer on 02.23.13 at 10:04 pm

http://www.cmhc-schl.gc.ca/en/corp/nero/nere/2013/2013-02-22-0816.cfm
“CMHC’s point forecast for the average MLS® price calls for a 1 per cent gain to $367,500 in 2013 and a further 2.7 per cent gain to $377,300 in 2014.”
They are smoking good stuff over there…

#181 blase on 02.23.13 at 10:07 pm

Mic D’Angelo

Coke yields nearly 3% dividend. They have increased their dividend for something like 40 straight years. Coke’s return on equity is 28%. Don’t you think that’s a bit better investment than investing in governments who only know how to go into debt?

#182 Freebird on 02.23.13 at 10:20 pm

Out of curiosity I did some surfing on strip bonds and found this short article on Cdn gov. strip bonds:

http://www.everythingzoomer.com/buying-strip-bonds/

And here are links for two articles on taxes paid by non-U.S. residents when selling U.S. properties. I believe there is also a law being proposed (or was) to change the tax structure for U.S. properties owned/sold by non-residents but didn’t look that up:

http://www.agtax.ca/us-canada-taxes/income-from-us-property-sales/

http://www.milliondollarjourney.com/canadians-buying-property-in-florida-the-tax-issues.htm

I’m sure there are many other really good articles and sources. These are just three that seemed good for those who are interested.

#183 AisA on 02.23.13 at 10:28 pm

Inflation rates not taking into consideration food and energy costs are not inflation rates. They are fairy tale lullaby’s for an economy completely off the rails. End of story.

Capitalism was murdered by bailouts. I pray it’s essence can re-emerge from the ashes of the fascism we pretend is something called a mixed economy.

#184 AK on 02.23.13 at 10:37 pm

#177 Mic D’angelo on 02.23.13 at 8:58 pm

“The $243,022.66 at say 3.50% invested in provincial bonds or other government bonds will yield $8,505.79 annual interest/12=$708.82 per month starting at 65 years old.”
——————————————————————

Are you charging for your financial advise?

I hope not. He has lost his way. — Garth

#185 claudius emperor on 02.23.13 at 10:55 pm

0.5 % inflation?

This is funnier than my joke on PMs the other day that was suppost to be the funniest think ever written on this blog.

#186 claudius emperor on 02.23.13 at 10:57 pm

supposed, darn that keyboard

#187 claudius emperor on 02.23.13 at 11:03 pm

You could do few things more useless for you family than collect yellow rocks that cannot be used to buy anything. — Garth
——————————-
You are conveniently forgetting jewellery.

#188 Inglorious Investor on 02.23.13 at 11:22 pm

#143 Ralph Cramdown on 02.23.13 at 3:17 pm

Not sure why you felt the need for such an indignant response. I was merely adding to #35 Edddy’s comment. When did I advice anyone to put money into a HISA? Have a drink. Have some sex. Relax. It’s all good.

#189 Alberta Lad on 02.23.13 at 11:56 pm

I don’t know what’s more obnoxious. The porcine Senator Duffy giving back a fraction and then wondering where his next meal will come from (lol) … or those useless Quebec language police trying to ban Italian words on the menu of an Italian restaurant in Quebec.

Alta needs a pipeline to St Johns NB but it has to go thru Quebec, good luck with that. Maybe we’ll cancel our transfer payments to Quebec if they refuse … same dollars either way.

#190 UkeeSoul on 02.24.13 at 12:03 am

Down in California on vacation and things seem to be moving along nicely. In Ventura alone within blocks of each other there are two shiny new real estate offices under construction and several houses being built or renovated. Lots of trades buzzing about and heard two contractors out surfing talking about how busy they were and hardly had time to get out in the water. Santa Barbera shopping district was over flowing with people loaded down with shopping bags of new swag. Couldnt move at disneyland. LA bustling. Would have been nice to buy something down here two years ago for sure. Too late now apparently.

#191 Canadian Watchdog on 02.24.13 at 12:08 am

#187 claudius emperor

You are conveniently forgetting jewellery.

Jewellery up 47% from 2008; highest gain in CPI basket; second is water, up 39%.

#192 Nostradamus Le Mad Vlad on 02.24.13 at 12:12 am


From the UK Colliewobblers — Thomas Cook Holidays listing some guests’ genuine complaints during the last season regarding their foreign holiday.

1. “I think it should be explained in the brochure that the local store does not sell proper biscuits like custard creams or ginger nuts.”

2. “It’s lazy of the local shopkeepers to close in the afternoons. I often needed to buy things during ‘siesta’ time — this should be banned.”

3. “On my holiday to Goa in India , I was disgusted to find that almost every restaurant served curry. I don’t like spicy food at all.”

4. “We booked an excursion to a water park but no-one told us we had to bring our swimming trunks and towels.”

7. “The beach was too sandy.”

8. “We found the sand was not like the sand in the brochure. Your brochure shows the sand as yellow but it was white.”

9. “Topless sunbathing on the beach should be banned. The holiday was ruined as my husband spent all day looking at other women.”

11. “No one told us there would be fish in the sea. The children were startled.”

12. “There was no egg slicer in the apartment…”

13. “We went on holiday to Spain and had a problem with the taxi drivers as they were all Spanish.”

14. “The roads were uneven…”

15. “It took us nine hours to fly home from Jamaica to England, but it only took the Americans three hours to get home.”

16. “I compared the size of our one-bedroom apartment to our friends’ three-bedroom apartment and ours was significantly smaller…”

17. “The brochure stated: ‘No hairdressers at the accommodation’. We’re trainee hairdressers — will we be OK staying there?”

18. “There are too many Spanish people. The receptionist speaks Spanish. The food is Spanish. Too many foreigners now live abroad.”

19. “We had to queue outside with no air conditioning.”

20. “It is your duty as a tour operator to advise us of noisy or unruly guests before we travel.”

21. “I was bitten by a mosquito, no one said they could bite.”

22. “My fiance and I booked a twin-bedded room but we were placed in a double-bedded room. We now hold you responsible for the fact that I find myself pregnant. This would not have happened if you had put us in the room that we booked.”
*
#65 Roy — Exc. post. Puts a little more perspective on things.

#80 Dr. Hoof-Hearted and #107 Stickler — “….check your “Coca Cola cans”….etc.” — Duzzent surprise me. You’re right, it is a scam, but there’s very little anyone can do about it. Good posts.

#90 bubu — Great music!

#92 Jane24 — “. . . but there is not enough demand to keep all those retail big boxes going.” — With a declining population, methinx there will be major changes in shopping habits during the next half century, by which time none of us will be here anyway!

#119 DonDWest — “Make no mistake, there are people who have made a planned fortune at your misfortune who are laughing behind the curtain.” — Noted. See responses to #80 Dr. H-H and #107 Stickler.

#121 Smoking Man — No trouble, SMan. Hey, life’s a laugh and death’s a joke, it’s true!
*
The Great Collapse It is not financial; Ghetto Kids How the rich use the poor to get ahead; Gas / Diesel Prices High Here? See UK; Taxpayers get fleeced by the govt. and banks to the tune of US$83 bln. / yr.; Taken for a ride “Uh oh. Another ponzi scheme looks like it is biting the dust leaving thousands in the lurch:”; Wal-Mart worried? ObombaCare and Payroll tax are two starts; 43:48 doc. Hidden agenda for world govt.; Tales From The Crypt.
*
Civil War NAmerica is not the only one venturing down this path; The Daleks Remember Dr. Who? BBC Headline says it better; Farmacy (Pic) and Beans are way better than the Monsanto garbage; Spain Presently, it isn’t a good place to visit; Iran – Pakistan – US Look for the bombings in Pakistan to increase; Obomba Well whaddaya know; Monsanto The poisoning of India; Aspartame in milk? I quit 1% and went to almond milk; Vatican (Gay) Sex, (Money) Drugs and R’n’R, and The Pope and Knights of Malta “Yesterday we learned the real reason for the Pope’s resignation: The Church has been penetrated, at its highest levels, by a homosexual embezzlement ring.”

#193 Inglorious Investor on 02.24.13 at 12:42 am

#169 John on 02.23.13 at 8:30 pm

She’s correct.

But keep in mind she’s talking about commissions, not management fees. Management fees are a whole other issue.

One game that MF salespeople like to play in order to generate commissions is to move your money in and out of funds on the pretence that the new fund is anticipated to perform better or because your risk tolerance may have changed. Every time you invest in a new fund, there’s a commission, unless your advisor agrees to waive it.

Also, by moving your money into new funds, the redemption schedule keeps getting reset. And any new contributions you make to an extent fund are put on a new redemption schedule. So if you make regular, annual contributions, not matter how long you hold a fund, you will always incur a redemption cost when you redeem the fund.

#194 claudius emperor on 02.24.13 at 12:42 am

191Canadian Watchdog
—————–
What I meant is that we are forgetting the use of PMs in the jewellery.

#195 vangrrl on 02.24.13 at 12:45 am

Dennis #101:
Indeed. My mum was a post WW2 child growing up in Malta which was nearly wiped off the map… not an easy childhood. I remember her commenting on how wasteful she thought people were- in the ’70s! Frugality was drilled into me and serves me well now. Freedom and peace come with wanting and consuming less ;)

#196 Inglorious Investor on 02.24.13 at 12:52 am

#163 JuliaS on 02.23.13 at 6:46 pm

I believe what you are referring to is the velocity of money. Velocity does not play a role in inflation or deflation, but it does definitely have an effect on prices.

Declining home prices is not deflation, though it can be caused by deflation.

What actually determines the market price of any good or service is supply and demand. Changes in price are determined by relative changes in supply and demand. That’s why some goods actually decline in price over time even when the CPI is rising.

The amount of money in circulation does tend to influence aggregate demand, but it’s only one variable, and its impact on price will vary depending on the good or service in question.

#197 Bill Gable on 02.24.13 at 1:15 am

It was billed as China’s Dubai: a cluster of sail-shaped skyscrapers on a man-made island surrounded by tropical sea, the epitome of an unprecedented property boom that transformed skylines across the country.

But prices on Phoenix Island, off the palm-tree lined streets of the resort city of Sanya, have plummeted in recent months, exposing the hidden fragilities of China’s growing but sometimes unbalanced economy.

A “seven star” hotel is under construction on the wave-lapped oval, which the provincial tourism authority proclaims as a “fierce competitor” for the title of “eighth wonder of the modern world”.

But the island stands quiet aside from a few orange-jacketed cleaning staff, with undisturbed seaside swimming pools reflecting rows of pristine white towers, and a row of Porsches one of the few signs of habitation.

Chinese manufacturers once snapped up its luxury apartments, but with profits falling as a result of the global downturn many owners need to offload properties urgently and raise cash to repay business loans, estate agents said.

Now apartments on Phoenix Island which reached the dizzying heights of 150,000 yuan per square metre ($2,200 per square foot) in 2010 are on offer for just 70,000 yuan, said Sun Zhe, a local estate agent.

“I just got a call from a businessman desperate to sell,” Sun told AFP, brandishing his mobile phone as he whizzed over a bridge to the futuristic development on a electric golf cart.

“Whether it’s toys or clothes, the export market is bad… property owners need capital quickly, and want to sell their apartments right away,” he said. “They are really feeling the effect of the financial crisis.”

Link: http://tinyurl.com/b2bcdtd

#198 Holy Crap Where's The Tylenol on 02.24.13 at 2:44 am

Mark my words a war is coming! If one of the despots of these Alibaba camel parking lot nations doesn’t start something with Israel, the Kim Jong Kardashian will. This will solve all of our financial issues! Buy into armament manufacturers soon.
BTW just returned from Southern California , if the economy has tanked Americans sure hide it well. They are spending money quite freely! The other small note to watch out for is I noticed quite a few start up companies doing work that was previously jobbed out to China. My US contacts told me slowly manufacturing is creeping back onshore!

#199 Mic D'angelo on 02.24.13 at 6:07 am

To AK#179,184 and Blase #181. Even Garth does not tell you to buy individual stocks so I don’t care if it’s Coke, McDonalds, Bre-X , Nortel , Polaroid,A.T.&T etc. If individual stocks are such a great investment than why doesn’t all the CEO’s and president’s of companies own only their own company stock and keep it until they are deceased.

As for buying long term government bonds, you still think that we are in the 1970’s,1980’s,1990’s that we will see 8%,9%,10%,11%,12% until 19.50% interest rates,bond yields. You guys are dreaming and as for financial advice, I do my own research and all the so called experts kept telling me the last 19 years that interest rates would rise and government bond yields would rise to 8%,9%,10%,11% etc. were wrong 100%.
Actually, the opposite happened, they dropped by 5%-6% from 9.60% to 3.90%.

The economists or so called experts, analysts that have 3 or 4 economic or financial degrees that they think that they have more insight than me or other individual investors with 19 years of experience is a joke.They are all guessing and don’t have any clue about financial markets(BOND MARKET) more than most of us.

The advice is from my 19 years of my own experience,mistakes and research. They wanted a passive steady stream of safe income. I was not going to tell them that 6%,7%,8% was a sure thing every year for the next 25 years.I presented the investments and they liked them. I’m not going to do a Madoff on them guaranteeing a 1% monthly return with no risk. I am a straight up guy.

If you read the last of Garth’s post IT’S BACK Mic D’angelo #88 I explained the goal here is to get the highest overall average bond yields over a long period of time and timing the bond market is a dangerous and costly guessing game. I achieved so far a 6.50% on a $1,569,000 bond portfolio so just about $102,000 of interest income a year.The peak of interest rates and bond yields is 5.25% and it will not last long.

I and my wife hold all our bonds to maturity so all we care about is the income and compounding interest that grows on our investments. We don’t acre about the price of our government bonds because we will not need to sell them.Good luck trying to get 7%,8%,9% for the next 20-25 years.

#200 Mic D'angelo on 02.24.13 at 6:10 am

Correction # we don’t care about the price of our government bonds because we will not need to sell them.
TYPO!

#201 Mic D'angelo on 02.24.13 at 6:15 am

To AK #179,184 I am not charging anyone for my advice or financial opinion. It’s my cousin and I don’t profit from others especially from family.

#202 maxx on 02.24.13 at 8:52 am

#178 Daisy Mae on 02.23.13 at 9:23 pm

Yup.
Now calculate the difference between what you’ve been paid on your savings (in GICs for example) and what you would have been paid at normal interest rates for each and every year since, say, 2001, and that is what you’ve unwillingly contributed to help prop up those sorry excuses for banks. Imagine the aggregate spending power in the real economy.
So next time you see your bank statement and the fees you’ve been charged, add those on top of all of the lost interest.
IMHO, they’re not “too big to fail” and “we’re not in this together”. End of.

#203 maxx on 02.24.13 at 9:13 am

#162 HAWK on 02.23.13 at 6:22 pm

I understand, but at the same time, I’m not convinced that the west will dictate the direction of the world economy in the years and decades to come. Not by a long shot. We don’t hold all the wealth, we don’t hold a candle population-wise, we’re not smarter than the rest of the world, and for that reason I believe that cash instruments are invaluable. There will be huge buying opportunities, but I don’t see them quite yet. Why do you think so many corporations are sitting on mountains of cash?
As for equity, there are great buys out there and I do invest in them, but extremely carefully.

The MSM continuously drivels on about the economy improving- nope! People have been made poor by having been stripped of a decent economy just over a decade ago by way of being saddled with debt. You’re correct on the slow road back to normal interest rates.

#204 Chopper on 02.24.13 at 9:18 am

“This makes me happy for all the people who took my advice two years ago to sell Canada and buy America, both in terms of houses and liquid assets.”

I didn’t know about your blog Garth when I sold my house in June of 2011 and bought a Vacation Villa in Orlando.

Before I did I asked my RE agent who sold my house what I wanted to do and she was negative about the whole idea, saying everybody is doin it and that it wasen’t a good idea. Now I know the reason she was saying that, she wanted me to buy another house here so she could get another commission and didn’t really cared about me. BTW she is no longer my RE agent, she turned out to be a fake.

The Villa was a Bank owned property and got it for a big discount. Bought it a year ago Feb 2012, and already have 55K equity in it. 2800sq ft 4beds, 3baths, pool overlooking a lake in a gated community.

I just went with my gut feeling after reading and much thought.

I am renting right now and waiting and watching before buying here again, your blog has helped me a lot to make the right decisions. I was anxious to buy again but after reading your blog and others I believe that now is not the right time to buy here in Canada.

Thanks for your candid advice.

#205 maxx on 02.24.13 at 9:26 am

#136 Sade on 02.23.13 at 2:10 pm

Totally agree. Spent 5 weeks in the southern states and lived like royalty. Cannot believe the extent to which we are being flayed alive here.
Next winter, we’re stocking up on tons of supplies and Canadian retail can visit Hades.

#206 Stickler on 02.24.13 at 9:58 am

@ #192 Nostradamus Le Mad Vlad on 02.24.13 at 12:12 am

“No one told us there would be fish in the sea. The children were startled.”

Thats too funny!

#207 Stickler on 02.24.13 at 10:00 am

@ #195 vangrrl on 02.24.13 at 12:45 am
“Freedom and peace come with wanting and consuming less ;)”

Nice!

#208 Anonymous on 02.24.13 at 10:03 am

@Nostradamus the mad vlad #192

Those complaints were hilarious. As someone who has worked customer service in the tourist industry, I can tell you I am not surprised. A big chunk of the public is extremely entitled, stupid, and rude. Canadians are some of the worst too. It can be really hard not to bite your tongue when you’re dealing with people like this. Instead you have to listen to these ridiculous complaints and act all sympathetic, “oh I understand your concerns, I am sorry my company didn’t meet your expectations…blah blah blah…barf!” It’s all rehearsed lines when you hear that from customer service staff.

#209 ClaudiusEmperor on 02.24.13 at 10:05 am

#196Inglorious Investor on 02.24.13 at 12:52 am

I believe what you are referring to is the velocity of money. Velocity does not play a role in inflation or deflation, but it does definitely have an effect on prices
—————————————
Velocity of money is major factor impacting prices and influencing inflation/deflation.
Current velocity of money is historically low. Obnce it goes to its historical average watch out.

#210 Ralph Cramdown on 02.24.13 at 10:11 am

#197 maxx — “Now calculate the difference between what you’ve been paid on your savings (in GICs for example) and what you would have been paid at normal interest rates for each and every year since, say, 2001, and that is what you’ve unwillingly contributed to help prop up those sorry excuses for banks.”

http://observationsandnotes.blogspot.ca/2010/11/100-years-of-bond-interest-rate-history.html

Point to the chart and show me ‘normal.’ Even ‘average’ would obviously depend greatly on where you choose to start. Unless you’re a life insurance company, nobody’s got a gun to your head saying you have to invest in investment grade debt — the choice is all yours.

#211 COW MAN on 02.24.13 at 10:11 am

# 199 Mic D’angelo

Do you have any insight on convertible debentures? Thanks

#212 live within your means on 02.24.13 at 11:18 am

#98 Squad on 02.23.13 at 8:31 am

Many years ago I used to shop in boutiques & bought expensive shoes/purses, etc. but only when they were on sale. I always believed in buying quality, non ‘trendy’ stuff. I still wear some of those clothes. Few years ago I gave one my 25 YO purses to a niece. She obviously loved it as it was well used when I last saw her. Also gave one to my sis in Mtl. last summer. She was thrilled. It was purchased in France & my MIL insisted she pay for it. Saw a purse, by the same maker, in a Frankfurt Duty Free store 2 yrs ago. They were asking +400EU for it.

As I’m a retired boomer I need very little + hate shopping now.

As we’ll be doing quite a bit of travelling, only money we’ll spend in the EU this year is for food/restaurants, motels, etc. Diesel is 1.560 EU/litre today & I think the French govt. plans on increasing the taxes for gas/diesel.

#213 Dr. Hoof-Hearted on 02.24.13 at 11:36 am

#192 Nostradamus Le Mad Vlad on 02.24.13 at 12:12 am

#80 Dr. Hoof-Hearted and #107 Stickler — “….check your “Coca Cola cans”….etc.” — Duzzent surprise me. You’re right, it is a scam, but there’s very little anyone can do about it. Good posts.

===================================

Well..actually I am lining up to do something. This tax has apparently been around since the 1940’s. It was instituted as a means for rabbis to make money . Their congregation makes up about 2% of the population yet tens of millions are raked in.

Every time I pick up an item I look for one of the many different labels. Its even on my dishwash soap.

I don’t see why 98% of the population should make an involuntary contribution to another group.

Can you image the protest if any other group tried this?

#214 live within your means on 02.24.13 at 11:45 am

#100 maxx on 02.23.13 at 8:39 am
Two, you can get almost anything you want second hand, very often with better quality and no tax.
……………….

I give used item quarterly to Big Brothers & Big Sisters who then sell it to Value Village. The other year I dropped off a lot of stuff to Sally Ann – some I had to take inside. So, for once thought I’d look around. I found a beautiful housecoat that I picked up for $7.00. I know lots of people that shop at 2nd hand stores. It’s a Sat. hobby of a SIL & they’re by no means needy. She’s picked up some Ralph Lauren shirts for hubby for two bucks which he still wears.

#215 blase on 02.24.13 at 11:53 am

Mic D’Angelo:

Why not buy preferreds, or a basket of preferreds? You get the benefit of a lower tax treatment, a higher yield, and very low risk. As Warren Buffett says, if yields go up on bonds, your bonds become wallpaper. The lower the yield and the longer your expiration date, the more risk you are exposing yourself to. Meanwhile, Coke is yielding 2.7% with a Return on Equity of 28% and a Profit Margin of 19%. Do you think the young people of India, China, Indonesia, Brazil, Africa and Russia are going to not enjoy drinking Coke? Who do you think will grow your money better and offer a better return on equity, Coke or the Government of Canada? Just saying.

#216 Basil Fawlty on 02.24.13 at 11:58 am

QE quickly explained, or the rationale for a families purchase of “rocks”.

http://www.youtube.com/watch?feature=player_embedded&v=j2AvU2cfXRk

We live in money. Not rocks. You are protecting yourself against nothing. — Garth

#217 live within your means on 02.24.13 at 12:08 pm

#102 sue on 02.23.13 at 8:43 am
#41 I’m with you. $4.99/lb for organic peppers and they’re half rotten..lol I have had to be more selective..like buy organic spinach (a MUST) but buy cantaloupe/pineapple non organic bc of their thick skins.

The cost of eating healthy is so ridiculous that I’m caving and buying some crap bc it’s cheap.
…………………..

I don’t buy organic often. My beef is with the cost of potatoes. Hubby really only likes Yukon Gold or yellow fleshed ones. Last bag I bought was around $6.00 for 5 lbs. I keep them (& onions) in a metal wire basket in his unheated workshop. Within a week they’re half rotten. So, I bought Russets for a little less. Same thing happened with them. Last week I called the distributor in NB. To make a long story short, turns out the problem is with Sobeys & Loblaws who buy too much quantity at a time, they are not kept in cold storage instore & then keep them on the shelves too long. Both stores did not want the distributors to put a ‘best before’ date on the tags. Chap told me that might change in 6+ mos. I had a long conversation with him & really learned a lot about how they process them, etc. He’s sending me a coupon for another bag, but that’s not why I called. A sis has had the same experience with rotten potatoes.

#218 AK on 02.24.13 at 12:12 pm

#199 Mic D’angelo on 02.24.13 at 6:07 am

“Even Garth does not tell you to buy individual stocks so I don’t care if it’s Coke, McDonalds, Bre-X , Nortel , Polaroid,A.T.&T etc.

The advice is from my 19 years of my own experience,mistakes and research. They wanted a passive steady stream of safe income.”
——————————————————————–

So you don’t believe in a diversification strategy?

#219 ozy - 5y mortgage at 2.79% on 02.24.13 at 12:28 pm

Believe it or not- 5y mortgage at 2.79%, how much for a 5 y GIC ?????

People elect govt that forces people to buy, nice really nice.
The victims: the one who did not buy in the past & the one that bought at the peak (next year).

#220 live within your means on 02.24.13 at 12:40 pm

#110 reader on 02.23.13 at 10:31 am
Inflation at 0.5% – Huh? And people believe that, no?

During the summer of 2008 a baril of oil was $150, the USD/CAD was 1.06, and a liter of gas was $1.40 over here in Montreal.

Now, just over three years later, a baril of oil is $93, USD/CAD is 1.02, and a liter of gas is 1.49.

So, a liter of gas costs now more than when a baril of oil was 60% more expensive.
………………………

Correct me, anyone, if I’m wrong, but I think food & gas prices, among other items, were excluded from the CPI index many years ago. The US did the same thing before Cda, IIRC.

Our gas prices went up to $1.45 this week. Mtl. for many years has been more expensive. Cheapest prices years ago were in Ottawa. Go figure. So many refineries in Cda. have closed down – less competition, plus add on provincial taxes.

#221 brainsail on 02.24.13 at 12:42 pm

#217 live within your means on 02.24.13 at 12:08 pm

“I keep them (& onions) in a metal wire basket in his unheated workshop. Within a week they’re half rotten.”

This might help…

http://www.stilltasty.com/articles/view/32

“Quick Tip: Don’t Store Potatoes Near Onions”

“Potatoes and onions may taste great together in hash browns. But when it comes storing them raw, you need to keep them well apart. ”

“The reason is that onions and potatoes can both give off gases that will cause the other to spoil faster. So to prevent your spuds and onions from rotting too quickly, keep them separate and store each in a cool, dry, well-ventilated place.”

#222 Ralph Cramdown on 02.24.13 at 12:43 pm

#213 Dr. Hoof-Hearted — “I don’t see why 98% of the population should make an involuntary contribution to another group.”

I don’t think the word ‘involuntary’ means what you think it does. Don’t like it? Don’t buy it! Think you’re not alone in thinking this way? Start your own label! I’d suggest calling it “Hoof-Hearted in the Can” brand.

I’ve got more bad news for you. Every time you buy something with this ® mark, you’re paying an ‘involuntary’ ‘tax’ to a shadowy global group known only as….. LAWYERS! BwaaaaHaHaHaHaHaHaHaaaaaa.

#223 live within your means on 02.24.13 at 12:49 pm

#120 Grim Reaper/Crypt Speculator on 02.23.13 at 11:53 am

Loved it.
……………………….
My joke:

A Baptist pastor was presenting a children’s sermon. During the sermon, he asked the children if they knew what the resurrection was. Now, asking questions during children’s sermons is crucial, but at the same time, asking children questions in front of a congregation can also be very dangerous.

Having asked the children if they knew the meaning of the resurrection, a little boy raised his hand……..
The pastor called on him and the little boy said, “I know that if you have a resurrection that lasts more than four hours you are supposed to call the doctor.”

It took over ten minutes for the congregation to settle down enough for the service to continue.

#224 Oceanside on 02.24.13 at 1:04 pm

200 DON on 02.23.13 at 1:12 pm
@#198 bubu on 02.23.13 at 12:17 am

It applies to the entire Vancouver Island.
———————————————————————
The last 4 weeks sales in Qualicum Beach are normal, very close to last 3 years, 2009 was the only bad January/February. That being said, nearly all the sales are in the low to mid $300′s. The good ones that are priced right are selling quickly. There are a few waterfront places with asking prices of $600K that have no action. So the vendors that want to sell have lowered there prices, will be interesting to see what happens when the big flood of listings show up in March and April.

#225 The Prophet Elijah on 02.24.13 at 1:12 pm

For those that think the US is in recovery here is an article that articulates it well. The general belief in Alberta is oil is selling well under premium because their biggest buyer (USA) is building their own supplies and no longer need Canuck oil. However, the real reasons are:

(1) continued shrinkage of US industrial activity,
(2) a reduction in vehicle miles traveled, and
(3) recessionary influences (likely related to high oil prices) on businesses, leading to job layoffs and less fuel use.

http://www.theoildrum.com/node/9811

And BTW reason 3 is due to devaluation of the US dollar internationally.

#226 Piccaso on 02.24.13 at 1:21 pm

Ha Ha… he should have spray painted her horse too!!

http://screen.yahoo.com/husband-gets-revenge-084500815.html

#227 Dr. Hoof-Hearted on 02.24.13 at 1:39 pm

#222 Ralph Cramdown on 02.24.13 at 12:43 pm

No..there are brands with no labels…but it is difficult.

(I know my friend Mr Bin Laden will be pissed. )

However, if you consume too many of the products with those labels, you have this overwhelming desire to become a NYC banker and/or Hollywood producer.

Everything else? I-S a tax, especially of one’s patience.

#228 Dr. Hoof-Hearted on 02.24.13 at 1:49 pm

Honourable Ann Bressington Exposes UN Agenda 21 Club of Rome Population Control World Government

Published on Feb 16, 2013

https://www.youtube.com/watch?feature=player_embedded&v=gJ8f4RxGbP8

( approx. 20 min )

The Honourable Ann Bressington exposes the hidden agenda of the Club of Rome, UN Agenda 21, population control and world government. She gives a frank assessment of what has happened up until now and history and suggests some solutions for averting our enslavement.

This video was recorded as an introduction for Lord Monckton’s trip to South Australia February 2013. His presentation is called “Carbon tax, climate scam, Agenda 21: can democracy survive all three? Lord Monckton does due diligence”.

You can find a summary of the content of this video at: http://defeatingnwo.blogspot.com.au/2

=====================================

Good Speech !!!!

The context is Humans= the New Cash Crop…..People don’t realize we are being slowly herded like animals…

We are being set up to be dependent(less independent) and then have the rug pulled out from under us .

#229 AK on 02.24.13 at 1:57 pm

#225 The Prophet Elijah on 02.24.13 at 1:12 pm

“For those that think the US is in recovery here is an article that articulates it well. The general belief in Alberta is oil is selling well under premium because their biggest buyer (USA) is building their own supplies and no longer need Canuck oil.”

——————————————————————–
Strange. Somebody has been buying the Canuck Oil.

The companies mentioned in this article will not agree with you.

http://seekingalpha.com/article/1209871-these-refiners-are-profiting-from-u-s-oil-boom?source=yahoo

Consensus of 20 analysts polled by Thomson Reuters is that VLO will report a 226% rise in earnings per share this quarter. That follows a 2,250% EPS spike reported on Jan. 29, 2013.

#230 eddy on 02.24.13 at 2:21 pm

@stickler, kosher is not a tax (for example per unit), it’s more like a ‘tribute’ to a specific religious group.U forgot the biggest symbol, which is U in a circle, it means union of rabbis, it’s on everything. Virtually all Milk, coffee, so if you want to eat you can’t avoid it. The symbols are like hieroglyphs and the ‘government’ has refused every consumer request for clear labeling

#231 TurnerNation on 02.24.13 at 2:24 pm

Unless that pipeline goes through, Alberta will be busted.

I’m not a “righty” but those protesting “lefties” surely enjoy piped natural gas into their homes, and piped gasoline into cars. Wretched pipelines!

Would they rather oil is shipped by train – which will surely derail from time to time? All that oil swimming blackly down a mountainside’s undulating humps.

#232 LP on 02.24.13 at 2:36 pm

#223live within your means on 02.24.13 at 12:49 pm

True story…

Years ago while present at the service in a Baptist church, my husband and I watched the minister try to illustrate the concept of an instantaeous occurrence. He was dressed in a white robe with voluminous sleeves. All of a sudden he thrust his arm skywards, shouted out and, with flash paper, caused a blinding white light lasting no more than a few seconds.

There was a moment or two of silence when from among the children seated on the floor around him, one little cherub clearly exclaimed, “How the hell did you do that?!”

#233 Doug in London on 02.24.13 at 2:45 pm

@Basil Fawlty, post #216:
If you absolutely MUST invest in rocks, make sure you invest in ones that contain uranium or potash, as both of those are still cheap these days. Don’t wait too long, as the prices are gradually going up. Last but not least, keep it a small part of your total portfolio. Now where have heard that idea before?

#234 Joe on 02.24.13 at 2:56 pm

@ #217 live within your means
We stopped buying potatoes at the supermarket. They taste like sawdust and as you say, rot within a week or two. Instead we now pick them up only at the local farmers’ market. A world of a difference in taste and they last much longer.

#235 Oceanside on 02.24.13 at 3:14 pm

Parksville/Qualicum Beach

Including all rural areas. Feb 1st to today (24th) There have been 55 completed sales of which 5 were over $500,000. The majority under $400,000.

#236 bill on 02.24.13 at 3:49 pm

”It was instituted as a means for rabbis to make money .”
not quite.
if you wish to sell a food labeled ‘kosher’ [ for what ever reason] you have to prepare and make it from the beginning to the end of the manufacturing process according to the kosher rules laid down many years ago ….
you have to follow a certain sequence of events that lead to being ‘kosher’. this is not a ‘free’ process.
most food manufacturers know that this is an extremely high standard of cleanliness in the food making process and it is difficult to achieve.
I would assume that anybody who’s company achieved this standard ,would be quite rightly proud.
I would contrast this with ground beef from various places about north america that were contaminated by e coli/salmonella/listeria .
why do I have this funny feeling they were not ‘kosher’?

#237 Daisy Mae on 02.24.13 at 3:50 pm

#205 Maxx: “Cannot believe the extent to which we are being flayed alive here. Next winter, we’re stocking up on tons of supplies and Canadian retail can visit Hades.”

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

That’s why I never pay full price for anything — ‘full price’ is over-priced.

#238 Mic D'angelo on 02.24.13 at 4:13 pm

To #211 COW MAN
Convertible debentures are are hybrid or combined stocks,(equities) and debt(bonds). They are preferred shares but you don’t get the dividend tax treatment.
The problem with them is that if a company does not want to pay you interest anymore or the original convertible debenture to an investor you are out of luck.

The company or corporation will give you or issue shares from the company and you don’t have a bond or debenture anymore.they are not government backed or guaranteed like a province, country. They are more risky than government bonds and do pay higher interest rates but you can view them more like corporate bonds either investment grade or junk bonds.

Usually companies that issue convertible debentures can’t get credit or issue bonds through the regular manner the bond market,stock market and other financial markets,commercial paper,corporate bond issues.You know I only am comfortable with government bonds,today provincial because of the higher yields with not much more risk than Canadian
bonds.

This is just my opinion so do your research, due diligence, and make your own financial decisions.I just explained in my other posts what I done and worked well for me over the last 19 years.

You have no idea what convertible debentures are. Stop giving advice. — Garth

#239 Mic D'angelo on 02.24.13 at 4:17 pm

Correction they are like preferred shares but you don’t get the dividend tax treatment.

#240 maxx on 02.24.13 at 4:30 pm

#214 live within your means on 02.24.13 at 11:45 am

Coool!
How about a Hermes Constance Elan for 2.99? Or a Chanel sapphire lambskin flap with gunmetal chain (serial number included).. for 24.99? They’re out there!

Luxury at better than bargain basement- at less than the tax. Gotta luv it!

#241 Small Town Steve on 02.24.13 at 5:08 pm

http://www.youtube.com/watch?v=rPILhiTJv7E

How is this for unsustainable real estate divorced from capitalism? It is almost like China is attempting to prove how central based planning is superior! A condo there is over 300k. Amortization is 40% down and balance repayable in 2 years. Average income being 6k/year. So much for HAM!

#242 Mic D'angelo on 02.24.13 at 5:09 pm

Garth, convertible debentures are called convertible because you or most of the time the issuer can convert the bond or debenture to stock,shares or equity in the company. This is fact and if anyone does not believe me research it for yourselves.

Convertible bonds,debentures are not the same as plain corporate bonds where they have an obligation to pay interest and principal backed the company or corporation’s balance sheet and earnings.Convertible debentures/bonds are hybrid investments having debt/equity features.I know what I am talking about.

Debentures are a different form of debt that is unsecured backed by no collateral like inventory,account receivables,land,property,etc.So, convertible debentures are less secure than regular convertible bonds.

Give it up. — Garth

#243 Dr. Hoof-Hearted on 02.24.13 at 5:12 pm

#231 TurnerNation on 02.24.13 at 2:24 pm

Unless that pipeline goes through, Alberta will be busted.

I’m not a “righty” but those protesting “lefties” surely enjoy piped natural gas into their homes, and piped gasoline into cars.

==================================

I think we should create Leftie Land:

First we do is ask…”who over is a leftie put up your right hand”.

Then we ship them off to the Province of Trudeau, let them build a kibbutz…..

They can wear standard Che Guevarra T -shirts and Berets. They can tax and regulate each other, and a 2 channel universe..CBC or PBS.

No cars..only bikes. Solar power only.

I give em maybe 2 weeks

#244 Mark W on 02.24.13 at 5:18 pm

http://www.theprovince.com/news/Gangsters+growth+turning+Kelowna+into+paradise+lost/8005211/story.html

Kelowna BC. “Gangsters and growth turning Kelowna into a paradise lost”

#245 Bargains everywhere on 02.24.13 at 5:21 pm

#170 Richard and Zeus on 02.23.13 at 8:32 pm

Your anti-semitism is showing. Disgusting and has no place on this blog.

#246 Mic D'angelo on 02.24.13 at 5:31 pm

To Blase #215, AK #218

The point I was making was that with equities Garth says to buy a basket or group of stocks through ETF’s not individual shares like Apple. I keep saying the same point , I buy government bonds for the cashflow or interest that I want and need and get an average overall highest bond yield using the law of averages. I will not tell people to try to market time the bond market.It is a dangerous and costly guessing game.

Blase, I don’t care about the price fluctuations or market value of my government bonds. I keep saying I hold all my bonds to maturity. I am not a speculator or trader.The purpose of owing bonds for me is the interest income as a passive safe steady stream of income and using strips to my advantage of compound interest especially using TFSA’s , RRSP’s to a certain limit.

I guess you guys don’t know how bonds work. If interest rates rise all fixed rate bonds some more and some less decline in price or market value. The opposite is true, if interest rates fall all fixed rate bonds some more and some less decline in price or market value.The longer the term, the more prices change up or down. Strip bonds are more volatile because interest and principal are compounded and there is no semi-annual coupon paid.

Finally, the interest rates I Mentioned are not short term interest rates set by central banks like the Bank of Canada but bond yields in the bond market from 1 to 30 year maturities.

Stop taking about bond prices like it’s stocks. It is not the same.All bonds held to maturity have a certain fixed value no matter what happens to interest rates.Blase you have no idea how bonds work and stop believing everything Warren Buffet says. He is not a small investor so what he does will not work for everyone else.

#247 Mic D'angelo on 02.24.13 at 5:44 pm

Garth, I know how all type of investments generally work. I am confident in what I am saying. You said only 1% of Canadian households have $1,000,000 or more in financial assets. We are in this category. The average household income is about $71,000 to $73,000 in Canada.

My wife and I, have an household income of $122,000 C.P.P., some Old Age pension, interest income. I am not touting my horn but I know we are way better off than most Canadians. We have no debts of any type and we our investments grow at least $60,000 today but with compound interest it’s much more.

Garth, A.K., Blase do what you think is right for you. I’m just sharing my view points and what worked for me.One thing is for sure, I can’t stand all the people that are irresponsible and don’t save because they are like children that don’t want to grow up and be adults for their family and themselves.Think what ever you like but we more than exceeded our financial and other goals in life.This is all that matters.

#248 Mic D'angelo on 02.24.13 at 5:56 pm

Ozy #219 5 yr, mortgage at 2.79%

ICICI Bank of Canada is paying 2.85% for a 5 year GIC. Their 5 year TFSA’s,RRSP’s pay even better at 3.15%. Please don’t be like most Canadians, please shop around for interest rates of all types. Home Trust Company is paying 2.45%+0.25% bonus interest rate until March-31-2013 so 2.70% 5 year GIC. I would only buy a 5 year GIC if I knew that I would need the money in 5 years. I match all my investments with when I would need the money and the interest rate spread between different terms.

It all depends when you need the money and income requirement needs. If you are looking for growing your money faster provincial strips yield between 3.35% 10 years, 3.60% for 14 years,3.71% for 17 years and 20 years+ 3.87%. All bonds must be held to maturity.

#249 Beach Girl on 02.24.13 at 6:12 pm

Just going to start reading this wonderful insight.

Smokin Man, you could never F**me up. Love ya.

Oh, you still really like me, Oscar BS night. (something like that] I cannot tolerate this shite. Sally Out of the Park said that. I really liked the girl in the duck outfit. Bjork or I am a Dork. That screams, I don’t care. Right show? I would not watch any of that crap. Thought she was cool though. I would wear that.

Speaking of crap, and I like CBC. Who watches Murduck Mysteries? Serious. I pay for this content.

I am going to end this post before I get deleted.

Before I leave. Kevin O’Leary, that is him being nice. Imagine him at a party. Awesome.

#250 robert james on 02.24.13 at 6:13 pm

#244 Mark.. Geezers,Gangsters and Grow-ops.. the 3 G s of BC

#251 AK on 02.24.13 at 6:13 pm

#246 Mic D’angelo on 02.24.13 at 5:31 pm

“To Blase #215, AK #218

I guess you guys don’t know how bonds work.”
——————————————————————

Mic, we do know how Bonds work, that’s why we are asking, why don’t you diversify your portfolio?

#252 EIT on 02.24.13 at 6:16 pm

The only way to secure a great future is by being awesome, you’re welcome

#253 AK on 02.24.13 at 6:24 pm

For Mic D’angelo

Definition of ‘Convertible Debenture’

A type of loan issued by a company that can be converted into stock by the holder and, under certain circumstances, the issuer of the bond. By adding the convertibility option the issuer pays a lower interest rate on the loan compared to if there was no option to convert. These instruments are used by companies to obtain the capital they need to grow or maintain the business.

Convertible debentures are different from convertible bonds because debentures are unsecured; in the event of bankruptcy the debentures would be paid after other fixed income holders. The convertible feature is factored into the calculation of the diluted per-share metrics as if the debentures had been converted. Therefore, a higher share count reduces metrics such as earnings per share, which is referred to as dilution.

#254 Snowboid on 02.24.13 at 6:32 pm

#205 maxx on 02.24.13 at 9:26 am and
#136 Sade on 02.23.13 at 2:10 pm…

I agree, as I have mentioned before, the costs of spending six months in Phoenix (owned home) and six months in Kelowna (rented condo) costs us about $ 1300 more annually than when we lived in Victoria (owned home).

The cost of living in Phoenix is on average 35% less than BC. Some items essential to my retirement lifestyle are much less. For example, yesterday I picked up a case of my favourite beer for $ .67 per can. Not so likely to buy the same in BC at $ 1.86 each!

Premium fuel, however, is now $ 1 a litre – but I see Kelowna is up as well to $ 1.45 per litre!

#255 Beach Girl on 02.24.13 at 6:36 pm

Everyone hates the Boomer. I am one.

Do I care for your lifestyle. Not in the least. I grew up with everything. And it got better. Hot Days in the Summer. Beach Boys?

Was reading the Saturday Toronto Star, today. Apparently 50 percent of the population from Oshawa to Hamilton, not even mentioning northern climes, do not have secure positions in society. Is this going to improve, no.

It is a shame, nonetheless. But alot of my generation thought the train would keep rolling. I was brought up by European parents who had seen the worst. Was braced for this. They reminded me every day. Every day. Not a repeat, truth.

#256 Asse on 02.24.13 at 7:59 pm

CPI – Government marketing tool to justify economic policy. How would the public react if inflation was stated to be 5% and the government wasn’t doing a damm thing about it?

#257 Daisy Mae on 02.24.13 at 8:21 pm

#217 Live within your means: “A sis has had the same experience with rotten potatoes.”

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

That’s because they’ve been around for awhile — last years crop. They can’t last forever….

#258 Musty Basement Dweller Wannabe on 02.25.13 at 6:21 am

Someone raised a good point about raccoons. They are very plentiful on the west coast, particularly in the ground zero city of Vancouver. A nice raccoon stew after days of Puss N Boots cereal might be a real treat.

And on Vancouver Island there are lots of those little deer but I don ‘t know the legalities of hunting those.

I envision myself discussing these things and maybe even trading a few recipes with my boomer buds at Tim Hortons in a few years when we have our daily outing from the musty basement.

#259 Musty Basement Dweller Wannabe on 02.25.13 at 6:27 am

I forgot to mention I have actually eaten boiled squirrel meat when I was on a survival course in Northern BC about 30 years ago. I caught it with my own snare that we made as part of the course. It was delicious, mind you we hadn’t eaten for a few days. It tasted like chicken.

#260 spaceman on 02.25.13 at 1:49 pm

#36 Dwide Schrude

100% agree, i don’t have an iphone, i drive a 91 Toyota, my credit card company pays me to use their card. You dont’ need a $25,000 car, you don’t need to spend $60 a month on the latest smart phone gadget, you don’t need cable and a 300 inch screen TV.

I am a lousy consumer, if everyone was as stingy as me, this economy would be toast. but every dollar I don’t spend gets “Invested”

RESP, TFSA, RRSP, Piano Lessons…. wtf? And yes I have a mortgage. but that is not an investment. its a place to live.

I think people are getting wiser, or going bankrupt, one of the 2. Americans are getting a lot of education, but they have come thru for the most part, have decreased borrowing (due to forclosure mostly) and now asset prices are creeping up.

We don’t need all this shit…

Live Well Within Your Means…