The ‘guarantee’

horse

On Saturday morning the million people living in Cyprus awoke to the news their country was stealing their money. Anyone with the equivalent of $132,000 in savings, or less, would have 6.75% of it confiscated. Those with more would get a 9.9% haircut. Just like that.

As a result, people stormed the banks and queued at ATMs. Most banks closed. All ATMs stopped issuing cash. Said the Cypriot finance minister: “I wish I was not the minister to do so.”

Can you imagine waking up one weekend morning and hearing F utter the same words?

A number of people who came here over the weekend could. This fits perfectly with their conspiratorial view of a world in which nobody and nothing, including government, is trustworthy. It also supports the conviction of those who collect yellow rocks instead of financial assets, believe taxation is theft, think stock markets are rigged and hoard Cottonelle.

Cyprus isn’t Canada, of course. It’s small, inconsequential and meaningless to our daily life. Its puny banks were squished by defaulting Greek loans and the economy’s a mess. Half the money in its banks belongs to non-resident Russians, many of them reputed to be criminals. Billions more belongs to British citizens who are holidayers, military personnel or civil servants working there – but London will bail them out of this tax.

The bank grab came as a condition of a bailout from Europe and the IMF, along with higher corporate taxes, a bank restructuring and a crushing blow to bank bondholders. Because it’s called a tax, it circumvents the European Union’s bank deposit guarantee laws. “It robs smaller investors of the protection they were guaranteed,” said Sharon Bowles, chair of the Euro parliament’s economic committee. “If this were a bank, they’d be in court.”

cyprus   How bad are the finances in Cyprus? Gross government debt equals 87.26% of the economy. Hmmm. In the US that number is 107.18%. And Canada it’s 87.52%. See? No comparison!

Actually, large economies like those of the States, Canada or Britain have the capacity to absorb and grow out of debt, have far larger populations, more diversified and dynamic sources of government revenue and vibrant capital markets. So don’t compare apples and olives.

But this kind of news can’t keep folks from wondering: what protection do I have here?

For most people there are two insurance schemes protecting your money from corporate collapse. The first is provided by CDIC, the Canada Deposit Insurance Corporation. This automatically ‘protects’ deposits of up to $100,000 in certain accounts at institutions that are part of the scheme (all the major banks are included). Some provinces go farther, fully ‘insuring’ all deposits in credit unions or trust organizations which are provincially-regulated. Nice, but all provinces are currently in deficit.

Savings accounts, term deposits and GICs are covered. Bank mutual funds are not.

This sounds reassuring until you realize CDIC has but $2.4 billion in marketable securities and only $1.3 billion in equity. In contrast, the Royal Bank of Canada alone has $179 billion in personal deposits. Ooops. Good thing our banks will never falter, since Canadians have surrendered such a massive amount of money to savings accounts paying 1% and GICs spitting out 2%. Many of them have done so, swallowing a negative after-tax, after-inflation return, simply because they hate risk. So, do they know CDIC is a toothless bunny?

The second insurance scheme in Canada covers investors. The Canadian Investor Protection Fund provides $1 million in coverage per account type (non-registered and RRSPs, for example) if the company you’re dealing goes assets-up. In the case of insolvency, any assets not returned to you will be covered until you are made whole. This includes cash, stocks, bonds, funds, options, whatever.

This fund is financed not by the government, but by the investment business and currently holds $417 million in bonds as security to cover claims. For investors whose portfolios contain individual assets (like ETFs, preferred shares, bonds or stocks) that are registered in their names, your broker going broke is an inconvenience, not a loss. While you’re not protected from market declines (as with mutual funds) your securities are intact. Mutual Fund investors may be covered by the Investor Protection Corporation, also to $1 million, if their fund company fails and they live in the right province.

There you go. Those are the firewalls between you and disaster. Come to your own conclusions.

However there is no barrier between you and government. That’s why Ottawa could arbitrarily delay old-age benefits, as it did in the last budget, bring in the HST or increase personal tax rates. In Cyprus the politicians agreed to the terms of the bailout, which included the bank tax. It’s due for a vote in that island country’s legislature on Monday. The world will be watching.

Is there a lesson here?

Of course. If this is the new way countries get bailouts – by screwing citizen depositors – then pity your relatives in Spain, Portugal, Greece or Italy. Second, there could be more risk in keeping your life savings ‘safely’ in a bank vault than previously imagined. Third, never stash all your nesteggs in a single basket – diversification across asset classes and countries, for example – could someday prove critical. Fourth, don’t get too excited. Canada and the US are likely the safest places on the planet to have wealth.

But most people don’t. Worry about that.

267 comments ↓

#1 elchavo on 03.17.13 at 6:12 pm

Fourth!

#2 [email protected] on 03.17.13 at 6:13 pm

This Blog provides the best financial world news :) Thanks
Garth.

#3 AK on 03.17.13 at 6:18 pm

Anybody else here bullish on the U.S. Dollar?

http://www.moneynews.com/Markets/dollar-bull-recovery-yen/2013/03/15/id/494811

#4 unbelievable on 03.17.13 at 6:19 pm

There is not a gov’t in the world that would hesitate taxing or confiscating your hard earned money to pay their bills.
Canada does not have any more of a conscience then the others, just does not need to at this moment.
The USA had zero qualms about grabbing all gold in the last crisis.
Too believe differently would be nieve.

#5 Gary In Kelowna on 03.17.13 at 6:20 pm

Wow-Garth. You are writing early today. Heading partying for St. Patricks Day? Great column. Thanks.

#6 Victor V on 03.17.13 at 6:21 pm

February saw sales drop 15.4 per cent in the Greater Toronto Area compared with the same month last year while listings shrank 12.2 per cent. Irritation increases – especially for sellers of houses at the high end, who say prospective buyers want to negotiate a hefty discount.

http://www.theglobeandmail.com/life/home-and-garden/real-estate/one-word-to-describe-torontos-real-estate-market-it-starts-with-an-f/article9759374/

#7 chopper on 03.17.13 at 6:23 pm

I keep my cash under my mattress so I don’t have to worry about government taking it.

Worry about Christine Magee. — Garth

#8 T.O. Bubble Boy on 03.17.13 at 6:28 pm

I’m still looking at this as simply a way of the Euro leaders to weaken the currency.

Germany competes directly Japan in many industries (automobiles, for example), and can’t be happy with Japan trying to lower it.

Race to the bottom indeed.

#9 Nemesis on 03.17.13 at 6:32 pm

What is Cottenelle?

#10 BenF on 03.17.13 at 6:33 pm

Garth, sadly this is why many like property. In the UK people have been screwed by the govt again and again. I say this as a renter who hates what high house prices have done to the UK. Yet another case of govt interference distorting markets. Sigh.

#11 EIT on 03.17.13 at 6:34 pm

Nice post. This is going to be fascinating to observe.

#12 syfon on 03.17.13 at 6:35 pm

Someone else may not like that 10% haircut.
It may get interesting from now on.

#13 guelphstudent on 03.17.13 at 6:37 pm

Forgive my poor Canadian Education, but why even worry about diversification and all the other investment advice if majority of Canadians are in debt. Wouldnt paying off the debt be a priority ? At least for the younger population.

#14 Canadian Watchdog on 03.17.13 at 6:38 pm

The Financial Post – Oct 26, 1923 Link

The announcement during the run on the Dominion Bank (TD) that the Ontario government, convinced of the stability of the institution, would make a deposit of $1,500,000, was of that spectacular variety which appears to the public and was an important factor in overcoming the panic. But, of course, the province was not taking any chances. Under the Bank Act it has a preferred claim on the assets of the bank over the depositors.

We're not there yet, but we will be one day.

#15 Victoria Real Estate Update on 03.17.13 at 6:41 pm

The following Central Okanagan (Kelowna) stats are calculated using the 3-month median (from omreb.com):

SFH:

Peak (May 2008): 493 K
Current: 402 K
(-18.5%)

Since September 2012, SFH prices have declined -7.7%.

Condo:

Peak (June 2008): 273 K
Current: 206 K
(-24.6%)

Since July 2012, condo prices have declined -9.1%.

Townhouse:

Peak (September 2008): 374 K
Current: 322K
(-14%)

Since October 2012, townhouse prices have declined -7.3%.

#16 syfon on 03.17.13 at 6:44 pm

This topic will get 200+ hits
Rocks has been mention but this is not gold blog
or —– —— –:—–

#17 live within your means on 03.17.13 at 6:48 pm

#7 chopper on 03.17.13 at 6:23 pm
I keep my cash under my mattress so I don’t have to worry about government taking it.

Worry about Christine Magee. — Garth

LOL – Had to do a net search.

#18 SRV on 03.17.13 at 6:51 pm

Very proactive Mr Turner… of course storing your wealth in precious metals would be a foolish way to protect yourself because, after all this is Canada and “it’s different here!”

Oh, and you forgot to let your flock know gold and silver went vertical the minute trading resumed at 6:00 pm today.

How is sixth-tenths of 1% ‘going vertical’? — Garth

#19 Joe on 03.17.13 at 6:54 pm

Starting to sound a bit like a doomer.

#20 jess on 03.17.13 at 6:54 pm

screwing citizen depositors – how many were offshore russians?
============

Manhattan U.S. Attorney Announces Agreement With Ernst & Young LLP To Pay $123 Million To Resolve Federal Tax Shelter Fraud Investigation
EY NPA

Beginning in 1999 and ending in 2002, E&Y, in conjunction with various law firms, banks, and investment advisers, developed, marketed and implemented four tax shelter products called COBRA, CDS, CDS Add-On, and PICO. E&Y implemented these four tax shelter products for approximately 200 high net worth clients in an effort to defer, reduce, or eliminate $2 billion in aggregate tax liabilities. E&Y prepared tax returns reflecting tax losses claimed to have been derived from those tax shelter products and subsequently defended certain of its clients in connection with audits of those transactions by the IRS.

A small group within E&Y known as the Strategic Individual Solutions Group (“SISG”) was primarily responsible for supervising and coordinating the marketing, implementation and defense of E&Y’s tax shelter products. Certain SISG tax shelter products were designed to appear to the IRS to be substantive investments that had favorable tax consequences when, in reality, the products were actually designed and marketed to clients as a series of preplanned steps that would defer, reduce or eliminate their tax liabilities. The typical client participating in these shelters was primarily, if not exclusively, motivated to achieve a desired tax savings….”read more
====================================

…”Former Jenkens & Gilchrist Attorney Sentenced In Manhattan Federal Court To Eight Years In Prison For Promoting Illegal Tax Shelters That Generated Billions Of Dollars In Fraudulent Tax Losses
Between 1996 and 2004, GUERIN and other attorneys at J&G worked on the design, marketing and implementation of high-fee tax strategies for individual clients. Those strategies, or “tax shelters,” were designed to allow high-net-worth clients to eliminate, reduce, or defer taxes on significant income or gains. GUERIN and other J&G attorneys worked together with brokers from a financial institution, partners and employees of the accounting firm BDO Seidman, and other entities, in marketing and implementing the tax shelters.

Among the fraudulent tax shelters designed, marketed, and implemented by GUERIN and her co-conspirators were “Short Sales,” “Short Options Strategy” (“SOS”), “Swaps,” and “HOMER.” The Short Sale tax shelter was marketed and sold from 1994 through 1999 to at least 290 wealthy individuals, and generated at least $2.6 billion in false and fraudulent tax losses. The SOS tax shelter was marketed and sold from 1998 through 2000 to at least 550 wealthy individuals, and generated at least $3.9 billion in false and fraudulent tax losses. The Swaps tax shelter was marketed and sold in 2001 and 2002 to at least 55 wealthy individuals, and generated more than $420 million in false and fraudulent tax losses….read more

#21 Smoking Man on 03.17.13 at 6:58 pm

Why did I open a forex trading account last week.. :)

The force told me in dream….. Cha-chingaling…

#22 TurnerNation on 03.17.13 at 7:05 pm

Just logged in to check futures and currencies. Gap city.

Yep economists, bloggers and pundits worldwide are jumping onto this weblog’s bandwagon.

We have Israel’s Garthi Turnerstein,

Greece’s Gartho Turneropolous,

New Zealand’s Garth “Welly” SheepTurner,

Italy’s Gathono Turneratio,

Ireland’s Garth O’Turnerson.

Poland’s Garthoslav Tuzcyrnerzk.

India’s Gartharan Turnarantherpae.

#23 claudius emperor on 03.17.13 at 7:08 pm

Cyprus isn’t Canada, of course. It’s small, inconsequential and meaningless to our daily life.
———————
–>We will see the impact on Europe and markets next week.
—————————————-
Half the money in its banks belongs to non-resident Russians, many of them reputed to be criminals.
—————————–
–>Any proof of that? The Swiss banks are in the same category…
—————————-
Billions more belongs to British citizens who are holidayers, military personnel or civil servants working there – but London will bail them out of this tax.
—————————
–>London will bail out only the military and civil servants, not the expats that hold much more money in the banks.

#24 Condo Sucker on 03.17.13 at 7:11 pm

“Second, there could be more risk in keeping your life savings ‘safely’ in a bank vault than previously imagined.”

The irony is that metalheads stacking bars of gold and silver in their garage are probably feeling vindicated by this statement. I’m sure this was unintentional on your part Garth.

That’s their problem. You can’t buy cans of tuna (or anything else) with gold bars. — Garth

#25 Renting in Vic on 03.17.13 at 7:13 pm

For this discussion, the big difference between Cyprus and Canada is the government has no need to take the money from our bank accounts. They can just issue more, don’t even have to print it these days, and anybody with cash ends up paying “the tax.”

Worry more about the 70% of people with houses losing value. — Garth

#26 claudius emperor on 03.17.13 at 7:14 pm

The money in the Canadian banks are very safe. I agree.

#27 Boris Badenov on 03.17.13 at 7:14 pm

Half the money in its banks belongs to non-resident Russians, many of them reputed to be criminals.

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

Shhhhh Comrade…

#28 Pr on 03.17.13 at 7:22 pm

The usa banking system is insolvent. It as been like that for many years. And nothing happen. Until one day. This day should bring some fireworks.

#29 Dr. Hoof - Hearted on 03.17.13 at 7:26 pm

Euro Minister Doesn’t Rule Out Taxes on Bank Deposits Beyond Cyprus

http://www.economicpolicyjournal.com/2013/03/euro-minister-doesnt-rule-out-taxes-on.html

In a move that could set off new fears of contagion across the euro zone, anxious depositors drained cash from automated teller machines in Cyprus over the weekend, hours after European officials in Brussels required that part of a new €10 billion bailout be paid for directly from the bank accounts of ordinary savers.

The decision — a first in the three-year-old European financial crisis — raised questions about whether bank runs could be set off elsewhere in the euro zone. Jeroen Dijsselbloem, the president of the group of euro area ministers, declined Saturday to rule out taxes on depositors in countries beyond Cyprus, although he said such a measure was not currently being considered.[…]

A scheduled parliamentary vote on the plan at an emergency meeting Sunday was postponed until Monday.[…]

Although banks placed withdrawal limits of €400, or about $520, on A.T.M.’s, most had run out of cash by early evening. People around the country reacted with disbelief and anger.

etc.

#30 Joe on 03.17.13 at 7:26 pm

Re#24. You can’t buy cans of tuna or anything else with gold bars… I beg to differ I bought gold at 600 an oz and sold it at 1300 an oz for which i took paper fiat in exchange that bought me not only tuna but a chartered boat in the Cooke Islands for 5 weeks, I like my tuna fresh.

Rule: anyone using the word ‘fiat’ is questionable. — Garth

#31 jess on 03.17.13 at 7:27 pm

Government Debt and Deficits Are Not the Problem. Private Debt Is.
By Michael Hudson
(Remarks by Prof. Michael Hudson at The Atlantic’s Economy Summit, Washington DC, Wednesday, March 13, 2013)
http://neweconomicperspectives.org/2013/03/government-debt-and-deficits-are-not-the-problem-private-debt-is.html#more-4969

#32 DocInWaitingRoom on 03.17.13 at 7:35 pm

Considering CMHC has billions 600 or so of high risk loans i would say never say never. in the US it already happened via taxes and budget cuts. more is coming soon. ive been saying a market crash or Major correction is coming. Combine the bank runs with bubbles in China and elsewhere, worst exports for China in decades, increading energy costs, automation, and salary/job losses things are getting ugly.

I agree diversify income and assets a must

Funny i have tried to rent a unit for 2600. Owner trying to sell at 600k taxes 4000 and miant is 800 per month. place still on market for 1 mo no takers on rent nor sale. They bought place for 500k and must have spent another 60k plus on updates. They ate loosing large trying to flip condo…..

#33 Good authority on 03.17.13 at 7:36 pm

The world banksters are testing the waters to see the next phase of stealing money from the plebs with no consequences to themselves. If you are not afraid of what is going on these days, you head is truly buried deep in the sand.

Canada proved to the world that those inn charge can be just as disgusting as the lowest forms of government with their actions during the G20 in Toronto. There is no reason to expect any difference when the banksters come calling.

As expected,BBC mentions Cyprus, but MSM pretty quiet – no surprise there.

#34 AisA on 03.17.13 at 7:43 pm

Slice it anyway y’all want. That there be some scary going’s on.

#35 Cici on 03.17.13 at 7:43 pm

#9 Nemesis

It’s a brand of toilet paper that sells out east (Quebec and Ontario).

If your local pharmacy doesn’t carry it, you can always stock up on Royale, Cashmere, White Cloud, White Swan, or any other brand that is pillowy-soft to get you through any tough times.

After all, it’s life’s little luxuries that make all the difference.

Anyone need a marketing writer?

#36 blobby on 03.17.13 at 7:45 pm

#30 – Joe.. You sold it for cash right?

#37 Joe on 03.17.13 at 7:48 pm

#30 anyone using the term fiat currency is questionable… Fiat is the term used to describe all reserve currencies? Not sure what you are saying.

It’s called ‘money.’ — Garth

#38 CrowdedElevatorfartz on 03.17.13 at 7:52 pm

“Fiat” makes tiny little cars that drive far on gas fumes…..
Are gas fumes objectionable?
I rather like gas fumes…….

#39 raider on 03.17.13 at 7:54 pm

#23:
“–>We will see the impact on Europe and markets next week.”

It’ll be a buying opportunity. Even hard-core (and highly respected) metal-head Marc Faber was buying Spain, when he realized that last year they fell below their 2008/2009 lows.
I guess the easy said and tough to learn lesson is to detach emotions from any sort of investing.

Thanks Garth for making my St. Patrick’s day less gloomy. I guess the other half of regular readers is off at the bar, or you are failing to “moderate” comments. Cheers to you guys.

#40 The ‘guarantee’ — Greater Fool – Authored by Garth Turner – The Troubled Future of Real Estate | The Affluent Boomer™ on 03.17.13 at 7:57 pm

[…] via The ‘guarantee’ — Greater Fool – Authored by Garth Turner – The Troubled Future of Real Es…. […]

#41 Tony on 03.17.13 at 7:58 pm

Re: #3 AK on 03.17.13 at 6:18 pm

I’m decisively bearish on the U.S. dollar. At some point in time very soon the Through the Looking-Glass stories coming out of America have to come to an end and the real truth be told.

#42 Joe on 03.17.13 at 7:58 pm

#37 it’s called money… Ok I sold my gold got paper money caught tuna and ate it? I didnt mean to make it complicated. Didn’t mean to cause a fiatsco(pun)

#43 JuliaS on 03.17.13 at 8:02 pm

10% tax on deposits? You mean on accounts… where people kept their savings… tax free until the government changed its mind? Thank god we don’t have any such accounts here in this country!

#44 SRV on 03.17.13 at 8:04 pm

How is sixth-tenths of 1% ‘going vertical’? — Garth

When it happens in 5 minutes… don’t worry, you’ll catch on to the lingo after a while.

http://www.kitco.com/charts/livegold.html

Two hours later, no more vertical. — Garth

#45 Notta Sheeple on 03.17.13 at 8:04 pm

“….That’s why Ottawa could arbitrarily delay old-age benefits, as it did in the last budget……”
====================

….to help fund the John Baird/Tony Clement border-infrastructure-into-gazebo diversionary Action Plan.

Waiting with baited breath for the F’s next upcoming book of secrets to rescue the starving banksters, mortgage pimpsters, clone builders, and REALTURDSs, under the guise of stimulating the ‘fragile economy’.

#46 An Importation in Quebec on 03.17.13 at 8:05 pm

“large economies like those of the States, Canada or Britain”

Canada, with an economy made essentially of resources, financial and housing is *not* like US or Britain. Neither big, nor solid. More like a flea living out of what falls from US.

#47 claudius emperor on 03.17.13 at 8:07 pm

#40 raider ,

I made good money on Spain as well, very good.

#48 rory on 03.17.13 at 8:08 pm

GT you said: Cyprus isn’t Canada, of course. It’s small, inconsequential and meaningless to our daily life.

You know it as well, the little things turn into the big things …aka the slippery slope is what we should fear.

http://en.wikipedia.org/wiki/First_they_came

“First they came for the socialists, and I didn’t speak out because I wasn’t a socialist.
Then they came for the trade unionists, and I didn’t speak out because I wasn’t a trade unionist.
Then they came for the Jews, and I didn’t speak out because I wasn’t a Jew.
Then they came for me, and there was no one left to speak for me.”

Insert your own words to make it more yours or relevant to the EU nannycrats but you all get the point. A line in the sand may (should) have been crossed in Cyprus … IMO.

Why do you think I wrote about it? — Garth

#49 claudius emperor on 03.17.13 at 8:08 pm

that was a quick delete….
trying again:
currencies are money without the ‘store of value’ part.

#50 claudius emperor on 03.17.13 at 8:10 pm

Every delete on PMs post is making me very uncomfortable.
One starts to think why this is such a big taboo.

Maybe there is the truth after all?

You have been told before this is not a gold blog. Stop pumping. — Garth

#51 Mr Complacent on 03.17.13 at 8:11 pm

First they vaporized the value of a yen,
But I had nothing in Japan, so I did nothing,
Then they came for the Cyprus depositors
But I had no cash parked in Cyprus, so I did nothing,
Then they monetized the euro debts,
But I didn’t hold any euros, so I did nothing
Then the Canadian housing market tanked,
And when they debased the C$ in response, I wanted to shift to gold
But it was too late

And so the slide into stupidity begins. This will be a lost night. — Garth

#52 claudius emperor on 03.17.13 at 8:14 pm

You have been told before this is not a gold blog. Stop pumping. — Garth
————————
Very respectfully disagree, I am not pumping, just asking questions.
I own no gold. My PMs are bellow 10 % of my portfolio.
After all this blog is not bank deposit blogs as well.
—————————-
On all other topics: total agreement and deepest respect.

#53 Ronaldo on 03.17.13 at 8:16 pm

”Is there a lesson here?”

Keep your money out of the bank. I do, and have for years. Chequing account only to pay bills which are few.

What’s your address? — Garth

#54 Ronaldo on 03.17.13 at 8:21 pm

#9 – Nemesis –

”What is Cottenelle?”

Watched a young lady gleefully walking down the street the other day carrying 2 packs of 12. Must have been a sale at Walmart.

#55 [email protected] on 03.17.13 at 8:28 pm

The Cyprus Nashi Stashi will just cause real estate values to go up?

#56 The end is nigh on 03.17.13 at 8:32 pm

# 7.
Why stash your money anywhere else?

#57 WhoGivesAFlyingFlaherty on 03.17.13 at 8:34 pm

“Worry more about the 70% of people with houses losing value. — Garth”

Might the government prevent the bottom from falling out in case the coming months make it clear the housing market will not have a soft landing? Or would it refrain from interfering this time if a major correction were to happen? If so, why? Just curious in your insights, to help me prepare for what’s ahead!

#58 NoOneOfConsequence on 03.17.13 at 8:35 pm

How do you know who to trust? There is Garth’s blog, then reputable publications like the Vancouver Sun, who extending all kinds of outstanding advice:
http://www.vancouversun.com/business/mortgages/Tips+tricks+help+first+time+home+buyers/8103794/story.html

Pretty much lays it out right in that article: if you don’t buy a house you are a loser.

Another golden moment in Canadian journalism. — Garth

#59 MultiCulti on 03.17.13 at 8:36 pm

Garth, doesn’t money have to be a store of value ( the difference between money and currency)

Money fuels my life. That’s value. — Garth

#60 EIT on 03.17.13 at 8:38 pm

#52 claudius emperor on 03.17.13 at 8:10 pm

Trust me dude, you aint gonna win this battle. Just look at me i’m dealing with it, and I even found a way around it. This aint your house, but you can build your own. Hissy Fits don’t work, I’ve tried. Now, I just twitter whatever Garth does not approve.

#61 Ronaldo on 03.17.13 at 8:39 pm

So I wonder if Cyprus will have to put up their $720, 000,000 worth of gold in their reserves as collateral for the bailout. Seems that when the other countries like Spain had their hands out for a bailout, it was suggested by the German Chancellor that maybe they otta sell some of their gold. Will be interesting to see if the topic comes up.

#62 JO on 03.17.13 at 8:39 pm

The Cyprus action is shameful but it is important to note that Cyprus’s banks were in serious trouble for at last 3 yrs and had extravagant rates which lured in huge amounts of foreign deposits. The banking system exploded to several times the size of the tiny economy before collapsing.

Point is, it is very unlikely this will happen suddenly. If we are in a situation where loan defaults are high and rising and banks’ capital levels are low, then it becomes possible. While we will have some headaches and annoying events here, our banks are very likley going to survive without any need to tax deposits.

A far bigger worry is if our economy becomes a complete basket case and banks do become troubled, your Canadian dollar will likely be worth a lot less and therefore your GICs will essentially be taxed away through inflation over time and very slowly…this is their preferred way to confiscate your savings..whatever minimal savings you were lucky to accumulate after paying high taxes..if you become worried, keep minimal money in banks and in markets…whatever you do have make sure it is registered in your name and not held in a margin account…and buy good quality income generating RE once it drops 20 % or more which should happen in most of the country by fall 2014..our banking system should be OK for at least the next 18 months and even then, it is not likely any of them will be in serious trouble.

For now and next year or so, do not worry about the system it is fine…almost all of the risky mortgages are insured by CMHC/Genworth = taxpayers anyway….

#63 Paul on 03.17.13 at 8:40 pm

Garth, We want to buy euros and the pound for an upcoming holiday. When and where is a good time to do this?

Thanks

Euros went on sale 18 hours ago. — Garth

#64 Victoria Tea Party on 03.17.13 at 8:42 pm

CYPRUS’ BANKING DEBACLE: IT’S ALL ABOUT CONFIDENCE

By this I mean NOT having “trust” in the confidence of who knows how many banksters continue to run rampant through the EU’s banking system imposing imposts and other fiscal/monetary inconveniences on an at times addled and distressed citzenry.

Instead it is consumer confidence, EVERYWHERE.

If this can happen to Cyprus why not in YOUR country?

FOR THE CONSPIRACY NUTS…

there is plenty to chew on.

Example: is this confiscatory move to steal bank depositors’ money (it’s really a tax, their “betters” in Brussels are telling them!) a trial balloon to gauge public opinion which, if not too violent, could be employed by other sovereign entities, to “solve” their deficit and debt problems by having the citizens “participate” in cleaning up unpaid bills? I’m thinking of the US here.

I don’t think so. I believe this is a desperation move to try and prevent the ultimate collapse of the Euro experiment, of monetary union minus the all important and concomitant political union, which will never happen amongst the formerly-warring Euro-tribes.

LOTS OF BLOG ACTION…

today about the Cypriot banking catastrophe and here is part of one item from Zero Hedge, whose writer is concerned about European economic stability and joblessness:

“Guest Post: Why Europe Is Still In Peril, In Two Charts

Submitted by John Aziz of Azizonomics blog:

…If bank runs materialise across Europe next week, the unemployment situation is most likely to worsen even further. If that happens, expect more and more unemployed, underemployed and angry Europeans to start voting for increasingly radical political parties. This is suicidal. Europe needs to not only reverse the awful, stupid Cypriot haircut, but also to put fiscal consolidation on hold…and start worrying about unemployment levels.”

WILL THERE BE UNITENDED CONSEQUENCES AS…

other bloggers also worry that since so much of that Cypriot money belongs to Russia’s various bad guys, then the next European winter, if cold, could remind the Germans and French of their ancestors’ ungainly retreats from Russia in centuries past (1812 and 1943).
That possibility would arise from “unpredictable rises” in natural gas prices caused, of course, by pipeline problems and market pricing “situations.”

BUT…

the really big question is this:

The “thinkers” who proposed this idea are the same crooks and knaves who’ve been printing up trillions in euros since the GFC in 2008.

They’ve accomplished NO improvement in their citizens’ well-being.

Inspite of central bankers “work” everywhere, nothing has been resolved. The world continues on its peculiar and unchartered economic “voyage” whose destination remains a mystery.

#65 stage1dave on 03.17.13 at 8:45 pm

“And so the slide into stupidity begins. This will be a lost night”

Damn right…that’s why I invested all my money in 1959 Buicks, guitars, & vintage hockey cards.

Of course, I may be LIVING in one of these 59 Buicks if all the preceding “doomisms” take place; & if I have to stuff all my guitars in the trunk it will wipe out all my closet space, so to speak.

But at least I won’t have any heavy gold bars to lug around (which might really impact the already abysmal gas mileage) nor mortgage documents to file, which should make some room for all those graded hockey cards.

Better go clean out my bank accts tonite…hahaha…I’ll let everyone know how this works out.

#66 Just Jack on 03.17.13 at 8:46 pm

Start to worry when you see Harper standing at an ATM machine. I’m sure a lot of the Cypriot politicians moved their money before the banks were ordered to confiscate the funds.

#67 Dan from Richmond Hill on 03.17.13 at 8:47 pm

Mr. Turner, one question about this Cyprus thing: it is about 6 billion Euros, Russia, or what? Suddenly they could not find this amount of money in Europe? Because you have to admit that after that, a lot of common people will think twice before using the services of a bank and damages could be hard to estimate.

#68 Turtle on 03.17.13 at 8:48 pm

The way I see it: The government put their hand in people’s pockets and pulled 10% for their own needs. Is that what governments do?

There is nothing to worry about. Just keep in mind to save not only for yourself but for the government as well. And 10% is not as bad as 90%.

Just saying…

Or course it is difficult when you live your life on an edge in debt up to eyeballs. Find a solid ground. Garth gives us all the tools. We live in the best country. Stay strong.

#69 Ronaldo on 03.17.13 at 8:49 pm

”What’s your address? — Garth”

You’d never be able to carry it, lol.

#70 StocksRHot2013 on 03.17.13 at 8:51 pm

Can F Pull a Cyprus style move on us? Wouldn’t shock me…. Look how he taxed income trusts overnight….. Dont trust any government

#71 wallflower on 03.17.13 at 8:55 pm

Kyle Green? Mortgage broker? Author for this soi-disant ‘article’… almost unbelievable… the Sun actually permits the closing line “If you have any questions, please go to http://www.kylegreen.ca to learn more.”
OR is it possible the webmaster at Vancouver Sun is on sleepy break?

#72 MultiCulti on 03.17.13 at 9:00 pm

#72 StocksRHot2013, No F wont do that when he can order the Bank of Canada to print… They have been printing this whole time.

#73 Ralph Cramdown Ⓤ on 03.17.13 at 9:02 pm

I felt a great disturbance in the force, as if trillions in paper assets suddenly cried out in terror and got 1% cheaper. Wait, now it’s filling the gap and they’re only 1/2% cheaper… Y’know what? I think it was just a bit of gas.

#74 Nemesis on 03.17.13 at 9:03 pm

“Anyone using the word ‘fiat’ is questionable.” — Garth

I would have said Yugo… or possibly Trabant, OldPol.

Especially when we allow that there’s no NationalPride at stake in either of those brands anymore. More to the point, talk about kicking the Italians when they’re down.

OhTheShame.

#75 Freedom First on 03.17.13 at 9:04 pm

I am so glad you wrote about Cyprus, Garth. This is another important example to everyone world wide. No one knows the future and Cyprus, the GFC, and the world wide RE collapses in so many countries, are all examples of why the asset diversification Garth wisely recommends on a continual basis is critical to every ones financial well being. There is no exception. If you do not believe this, both your thinking and behavior is extremely warped.

#76 HAWK on 03.17.13 at 9:09 pm

#14 Canadian Watchdog on 03.17.13 at 6:38 pm

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

Yup the irony is that small, inconsequential, irrelevant Cyprus did what it did, under directive of the mighty, consequential, relevant European Union.

The theory of “Too Big To Fail”, may hold —–(at-least for a while)—–but “Too Small To Save” assuredly does, the hell with right and wrong.

Certainly Canada and America are not Cyprus, in size and strength, but when push comes to shove, basic instinct “is not different here”.

#77 Austrian school on 03.17.13 at 9:15 pm

http://www.youtube.com/watch?v=h3cY6_z0ceg

If by growth you mean printing currency units, I agree all debts will be repaid, as well as all social benefits. Alan Greenspan sums it up nicely in these two clips.
Also, I am in the HVAC business, and I accept all forms of barbarous relics as payment. Goolsbee’s expression in the first clip is great.

http://www.youtube.com/watch?v=HxSLtC62RG0

#78 Mr Buyer on 03.17.13 at 9:20 pm

While gold is not a daily life currency so to speak it is certainly a form of wealth storage employed by nations. It is undeniable that gold is one of the oldest means by which wealth is stored, second only to land or perhaps livestock and stored grains. The commitment to the idea that something symbolizes wealth (or some sort of negotiable currency) lies in a shared perception. The perception that land and gold symbolize wealth has proven durable over time and in a wide array of circumstances. The problem lies in the eventualities that bear out the durable nature of these perceptions. Gold would have to return to coinage to actually supplant representations of gold functioning as currency. Gold coinage has proven to be vulnerable to debasement simply through shaving gold off the coin itself (just ask Issac Newton he is the guy that brought us the little bumps on the edge of the coins in an attempt to minimize the shaving of gold and silver coins). There was also recasting or covering lead with gold as well. These are extreme measures to be sure but it would be extreme conditions that would bring gold back into actual circulation as a currency. Gold as an actual currency is likely over. Gold backed currencies are another matter but again this would mean a goodly amount of countries would have to commit to backing their currencies with gold and either purchase ever diminishing quantities on gold at ever increasing prices in order to cope with currency wars. While the simple raising of the specter of backing a currency with gold can achieve economic ends, a country such as China asymmetrically adopting a gold backed currency in a largely non-gold backed currency world would likely prove more a burden then a boon. China after all routinely devalues its currency and this would prove difficult if not impossible to do if it were a gold backed currency (unless of course the multiples are routinely changed thus rendering the currency not truly gold backed). The wear withal of gold as wealth is questionable in the extreme situations often cited as eventualities that would bring gold back to the fore. In such extreme situations food and water would likely not be exchanged for even huge amounts of gold. Our commitment to a currency, any currency would likely fail in such extreme circumstances…

#79 Rikky R. on 03.17.13 at 9:21 pm

If you figure a Cyprus event might happen here in Canada you’d be ok if you have a balanced portfolio…100 oz gold and 100 oz of $100.00 bills….stashed far from any banks…maybe in Garth’s back yard….

#80 claudius emperor on 03.17.13 at 9:23 pm

Another golden moment in Canadian journalism. — Garth

———————————
no mention of the risk.
If they were investment brokers or advisors they would be in jail.

#81 EIT on 03.17.13 at 9:23 pm

Garth, We want to buy euros and the pound for an upcoming holiday. When and where is a good time to do this?

Thanks

Euros went on sale 18 hours ago. — Garth

….
….
….
BAHAHAHAHAHAHAHAHAHAHAHAHAH

#82 Mr Buyer on 03.17.13 at 9:27 pm

Do not get me wrong, in an end of days scenario, if some guy rolled up on my place with a pocket full of gold I would happily relieve him of it by offering an ever so sight amount of surplus foodstuffs if there was no danger of word getting out to marauders that I had food, water and gold on hand otherwise…well you guys know the rest

#83 HAWK on 03.17.13 at 9:29 pm

The irony is that metalheads stacking bars of gold and silver in their garage are probably feeling vindicated by this statement.

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

LOL – You forgot “guns, gasoline, ammo, canned food and toilet paper”.

On a serious note, do you really imagine that said “metal heads” can afford large chunks of PM’s to stack up. People keep some as a long term hedge and that’s it and that’s all they can afford. The people who keep any substantial amounts are the bankers and their super rich clients. BTW – Gold is considered a Tier 1 asset by bankers, not just “metal heads”.

#84 Chris no longer in England on 03.17.13 at 9:43 pm

“Billions more belongs to British citizens who are holidayers, military personnel or civil servants working there – but London will bail them out of this tax.”

Echoing #23 claudius emperor – the holidayers are actually residents who moved out to Cyprus from the UK, taking their pension funds with them when they retired. They bought property, have their money in the local banks, and are being punished for the state of the Cypriot economy when they did nothing to create the mess and have contributed rather than receive. They moved to southern Europe because the cost of living is cheaper and they cannot afford to live on a pension in their own country. The UK government will not lift a finger to help them.

I have been in a rage since I first heard of this government-sanctioned theft yesterday. There is apparently no depths to which the EU monolith will not stoop. I hope all the banks fail, I hope the people of Europe riot and burn everything down. In fact my reaction to this news on behalf of the Cypriot people and whoever else is next in the line of fire, is so violent I am packing all my Dollar store matches right now in preparation for the inevitable disturbances I may have to cause.

My hatred of the EU knows no bounds. Mine is one pension they will not get their mitts on.

#85 Dan from Richmond Hill on 03.17.13 at 9:56 pm

Euro is going down, I suppose Germany can export now even more. Then they will come and tell us how good they are and how lazy the rest of the world is…

#86 Randman on 03.17.13 at 9:58 pm

Chris no longer…

Good for you mate..and good luck your country is on a fast track to dictatorship and a police state..the rest of us
Aren’t far behind….

So sad that so many are blinded

#87 Bury-it-in- on 03.17.13 at 10:05 pm

“Cyprus isn’t Canada, of course. It’s small, inconsequential and meaningless to our daily life.”

I’ve sometimes wondered if other economic behemoths thought the same of us.

#88 [email protected] on 03.17.13 at 10:06 pm

How do they decide whether to tax or to print more money? They say the cause is due to greek bonds and the tax is the solution to get out of the debt. I thought they would just print more money, guess the demand to pay the bill is the only choice.

#89 Chris no longer in England on 03.17.13 at 10:07 pm

euro larceny http://www.dailymail.co.uk/news/article-2294971/The-great-EU-bank-robbery-British-taxpayers-bail-victims-outrageous-raid.html

#90 Randman on 03.17.13 at 10:08 pm

You gotta watch this…

Hitler reacts to news of his Cypriot bank account haircut!

Too funny

http://www.silverdoctors.com/hitler-bails-out-cyprus/#more-23368

That is so old. — Garth

#91 Randman on 03.17.13 at 10:14 pm

A message from Dennis Gartman

“”By now I suspect that most of you have heard the news from Cyrpus over the weekend, but just in case you’ve not the Cypriot government has chosen to confiscate money from any and all accounts at any and all banks in Cyprus to pay for its banking problems…

This is astounding, and the decision was… if not fully decided in Brussels… was approved by Brussels and Berlin and Paris et al. This is unlike anything I’ve heard in my 40+ years of being in the market. This is HUGE news; this is massively bearish news for the EUR; this is massively bullish news for gold and this is THE MOST IMPORTANT BUSINESS NEWS OF THE YEAR THUS FAR. Please believe me on this; this is Europe’s “Lehman” moment.

I shall be around all day tomorrow trying to figure out what has happened here and why, but if the EUR… which closed on Friday at 1.307… does not open below 1.2900 and then continue lower, and if gold, which closed on Friday at $1590/oz does not open above $1625 and head higher I will be truly, truly stunned.”

Be prepared; Monday is going to be violent”

http://jessescrossroadscafe.blogspot.ca/

#92 rosie "moving backwards" on 03.17.13 at 10:16 pm

Something to buy with all that glittery stuff, you crazy Gollum types. Oh the precious. http://www.keepcalm-o-matic.co.uk/

#93 MarcFromOttawa on 03.17.13 at 10:19 pm

The market in Ottawa is about to crash since I just listed my condo for sale after 5 years of reading Garth’s blog.

#94 Devore on 03.17.13 at 10:47 pm

#10 BenF

Garth, sadly this is why many like property. In the UK people have been screwed by the govt again and again.

And of course nothing protects you from government avarice like a fixed address.

#95 MrHulot on 03.17.13 at 11:04 pm

Garth doesn’t this mean a change? If governments can take your money away like they did in Cyprus, aren’t you better of with hard assets like real estate and gold instead of cash?

No. Land is expropriated all the time. And nobody’s confiscating money here. Take a valium. — Garth

#96 len on 03.17.13 at 11:06 pm

“….a bank restructuring and a crushing blow to bank bondholders” really?

It wouldn’t be the forced transfer of wealth from those who earned it from their labor to banks and bondholders?

Or really just another transfer of wealth to our parasitic financial class that can also use other means like the private wealth is being expropriated via taxes to bail out core banks and bondholders

It is all about bailing out the banks and their bondholders who had made laughably risky bets and who will not take their losses because that would mean they are insolvent.

Why anyone would keep their hard earned money to be “Corzined” or othewise stolen by the financial parisitic elites is beyond me. Remove your wealth from their grasp and starve the b******s!

If you have to invest in the tangible assets like realestate or land to remove your capital – at least you are not aiding them in this despicable spectacle of outright theft. What paragons of intergrity! Gross!

Lots of people work hard, and buy ‘safe’ passive assets like bonds. You sound twisted. — Garth

#97 Paul on 03.17.13 at 11:19 pm

#94 Randman on 03.17.13 at 10:14 pm

And the bank wanted 1.37. for the euro on Friday.

#98 Nostradamus Le Mad Vlad on 03.17.13 at 11:34 pm


“A number of people who came here over the weekend could. This fits perfectly with their conspiratorial view of a world in which nobody and nothing, including government, is trustworthy.” — Trust yourself and significant other. There are far too many Bernie Madoffs, Enrons and other gasbags in this world. Greed is part of human nature, and unfortunately, many prefer to live the high life at others’ expense.

Besides, consp. theories are largely viewed as being the best and most reliable source of news, compared with the pathetic m$m.

“Half the money in its banks belongs to non-resident Russians, many of them reputed to be criminals.” — Which places them on the same level as GS, JPM and plenty of others.

Now would be an ideal time for China to bankrupt itself, and send the planet spinning into the next decade!
*
#209 Coho — “The many end up with too little in order for the few to have far too much by any reasonable measure.” — Exactly what exists now in the west, and why changes are necessary in order to re-balance life.

#216 AisA — Exc. quote. See above to Coho.

#249 Randman — “The implications among the chicken littles on this blog was that deposits here could be threatened. Absurd. — Garth” — Agree with Randman on the premise that the CPC have consistently rammed through their Omnibus bills with little or no debate. H and F are not about to play nice guys now, as they have a majority and will do whatever they want.

#272 maxx — Interesting link, but the date is was posted was Feb. 6. It may / may not be tied to #223 Axxman — “Sales peaked in April 2006 and prices started falling April 2007. If the GTA follows a similar cause-effect pattern, prices here should start to fall noticeably in the next 30 – 60 days.”

#63 Ronaldo — “So I wonder if Cyprus will have to put up their $720, 000,000 worth of gold in their reserves as collateral for the bailout. Seems that when the other countries like Spain had their hands out for a bailout, it was suggested by the German Chancellor that maybe they otta sell some of their gold.” — Of course, Libya never had a chance. Their public central bank was replaced with a US-backed private-for-profit central bank, and gold was confiscated. See how well they are doing!
*
Alaska Whether it happens is anyone’s guess; Trial Run MF Global and Cyprus. Corzine walked away scot-free, and Cyprus – England Limeys are annoyed, and Shreveport, La. has a bigger economy than Cyprus; US spending up in first five months of year; Stalin “Yesterday Senator Tom Harkin introduced S. 544, ‘a bill to require the President to develop a comprehensive national manufacturing strategy’.”; Asset Forfeiture Price of petty misdemeanors. Govts. are desperate; Disarm America thru taxation; IMF loves banks but sheeple, not so much; The most expensive jet ever buuilt; Currency War Ooohh, them words again, ‘tho it’s only talk.
*
Arthritis Don’t squat in Thailand; Getting high Junkie Ruskie bears; Eating Insects To each their own; Human Males This one is a little different; Proposition 37 There was a recount, but it was stopped. How nice for Monsanto; Sherrifs threatened by feds.; Waking Up Even Dems. are waking up to Obomba’s dictatorial powers; 4:24 clip NKorea ‘useful idiot’ for US; 2:01:50 doc. Real reason for break-up of Yugoslavia; Record CO2 increase brings fifty degree drop in temp.; Vaccines Baby girl dies hours after being given five vaccinations; China’s Drones WW3 may not need any human involvement.

#99 Walter Safety on 03.17.13 at 11:45 pm

The problem governments have in grabbing savings is that savings can move.Except the savings encouraged by governments like rrsp,pensions,and the favorite here tfsa.
Debt on the other hand can’t disappear quickly .Once governments burn through the savers money look for indexing of debt to keep the system going.
Well the scrappers were going through the neighborhood today . Tax that!

#100 Tom Vu on 03.17.13 at 11:45 pm

I hear P.E.I. and maybe Vancouver Island are next !!!

#101 Humpty Dumpty on 03.17.13 at 11:54 pm

Here comes the guarantor….

Russia will dispatch a permanent group of five to six combat ships to the Mediterranean Sea, Russian Navy chief Admiral Viktor Chirkov said. Frigates and cruisers will make up the core of the fleet

http://rt.com/news/fleet-mediterranean-russia-ships-390/

#102 Freebird on 03.18.13 at 12:01 am

While I don’t know enough about all the details to make an opinion either way on the situation in Cyprus. The new tax measures are no doubt Draconian. One point not mentioned is that from what we hear from friends in who live in Europe is many if not most of the residence of Cyprus and Greece pay very little tax and its not unusual for even professionals medical doctors to claim much less than their actual. I’m sure this would be seen as fair by those conspiratal and lack any trust for governments (not hard to understand at times) but if chronic lack of tax income becomes an accepted part of a society by both residents and government – its not hard to see how or why they were pushed (right or wrong) by those agreeing to loan them large sums of money for such terms. It also seems in places like Cyprus, Greece etc. lack of sufficient tax income was/is merely one part of what has proven crippling dysfunction and corruption. I question if those higher up in the Cyprus government are also being ‘taxed’ or conveniently (unfairly) exempt? Whats been sadly true for many (more) since 2008 is desperate people will do desperate things. My husband has friends both in Greece and England and so obviously we’ll be concerned about this all unfolds.

I wonder if the vote goes through if residents in other smaller countries like the ones Garth mentioned will be spooked and trigger some kind run on bank held money in those places and how governments of those countries would respond? But then this could say off base.

Happy St. Paddy’s day!
Cheers

#103 tim on 03.18.13 at 12:01 am

Vic Towes screws up–again
http://www.vancouversun.com/news/Public+Safety+Minister+Toews+personally+approved+Border+Security/8112338/story.html

What an inbred idiot. He fits right in in the Neo-Con party

#104 Crash Calaway on 03.18.13 at 12:08 am

Well, as they say at the toilet paper factory
“we’re behind you all the way”

At least until the toilet flushes.

People have to realize that Govts in every country are controlled by the same globalist masters.
The game is rigged
Sleep with one eye open
Learn to read between the lines of globalist agenda being force fed by the whoring media on a daily basis.

There is no state protection or guarantee regarding (wealth, health, retirement)
You march to their tune until there is nothing left to be squeezed out of you only to discover after a life lived believing in a bogus corrupt system you are as disposable as the toilet paper.
You have to wipe and save your own ass

#105 love_depends on 03.18.13 at 12:09 am

#48 I was rolling on the floor…so funny !!!
yet so true…there is NOTHING in this country.

#45 “10% tax on deposits? You mean on accounts… where people kept their savings… tax free until the government changed its mind? Thank god we don’t have any such accounts here in this country!”

You are like small kid lost in a forest …you got no clue..
and I think it is God not “god”…

#106 Investx on 03.18.13 at 12:16 am

That’s their problem. You can’t buy cans of tuna (or anything else) with gold bars. — Garth

Can you buy tuna with a preferred share?

No, because neither are money. — Garth

#107 Real Estate Tsunami on 03.18.13 at 12:18 am

Tired about Canada being compared to Cypress.
How about Germany, Austria and Switzerland!

#108 Crash Calaway on 03.18.13 at 12:19 am

Just figured out the 10% cash grab in Cyprus
It’s a new feel good tithe for everybody
Jesus is coming!

#109 AisA on 03.18.13 at 12:24 am

If money is the end all, and be all source of power on this planet… Would all the revolutionaries kindly go out and make as much of the damned stuff as possible.

….zzzzzzzzzzzzzz….

…and the world that could have been continues to turn into a hunk of spent charcoal.

#110 HD on 03.18.13 at 12:26 am

Great post today Garth.

I have a question though.

This fund is financed not by the government, but by the investment business and currently holds $417 million in bonds as security to cover claims.

Who exactly finances the fund? The banks, the mutual companies, the brokerage firms, etc?

Is the premium passed on to investors somehow?

Best,

HD


The fund is regulated by IIROC and funded by member companies from earnings. There is no premium paid by investors. — Garth

#111 raider on 03.18.13 at 12:29 am

Just a second thought there about all the scare in Cyprus. Let’s just say that all “bank” deposits get a haircut, I’m really really curious to find out what happens to people who have their money in an off-shore brokerage in Cyprus.

If I were the government and would be in need for easy money, I would pick the easy targets (i.e. cash in a bank) and not levy on investors, as their investments are only marketable at defined time-periods (i.e. when the exchange is open). Moreover, brokerages typically fall into a different regulatory body than banks in most countries (even in Canada).

If anyone knows details about Cyprus I’m dying to find out details if other asset classes, or investment portfolios are affected by this.

Just taking the perspective of a doomer here. The last entity you want to piss off in such an “unhappy” situation are investment banks (Goldman Sachs), IMF guys, and rouge hedge-funds that hid their assets in a tax heaven.

Why would anyone, who is financially sane open a savings account with a bank in Cyprus if there is more yield around in safe other investment classes?

#112 The Man From Nantucket on 03.18.13 at 12:45 am

#46 SRV on 03.17.13 at 8:04 pm
……….http://www.kitco.com/charts/livegold.html

———————–
yeah, yeah, it all looks vertical when the y axis range represents 1% of the price.

Charts can be awesome tools to prove lots of things that arent’ really true.

#113 ya right on 03.18.13 at 12:51 am

harper recently changed cpp from 65 to 67 and not a whimper from canadians. this is similar to cypress .. stealing is stealing

not sure why canadians feel we are solid. on this global titanic the middle class is sinking .. no escape .. wishful thinking cannot prevent the inevitable

#114 Michael F on 03.18.13 at 12:52 am

Imagine Garth Turner marooned on an island with Peter Schiff and Max Keiser.

#115 Ogopogo on 03.18.13 at 1:16 am

Nostradamus, that piece on the Russian bears addicted to jet fuel is just so sad. Nature is mirroring our own corruption.

As for Cyprus, if it spooks the market I’ll be cheering. Nothing like a market correction to get astute, responsible investors backing up the truck on cheap ETFs while the lemmings and doomers sell on the slightest hint of fear.

Just read through one too many goldbug/metalhead comments tonight. Why do these furry critters only come out when they smell blood in the markets? I can’t help but think that some of these lunatics would actually do cartwheels if civilization fell apart. Be careful what you wish for, tinheads. Thankfully, the apocalypse only exists in your tinfoil hatted heads.

And now for another dram of the finest oirish whiskey.

#116 Dean Mason on 03.18.13 at 1:22 am

I heard about the 6.75% bank deposit tax on the first $100,000 Euros and 9.90% bank deposit tax on all deposits over $100,000 Euros on Friday march-15-2013. The first thing that came to mind was what are the current deposit interest rates in Cyprus because everywhere I heard this news nobody mentioned this at all.

So I searched with google and found that 5 year deposit interest rates are 11.00% per annum. The interest is not paid annually but every month. Also, the Euro bank deposit guarantee is $100,000 Euros so why would anyone have more than a $100,000 per account holder in the same bank makes no sense to do this.

So lets look at this current situation, 11% simple interest over 5 years= 55.00% total interest -6.75% bank deposit tax=48.25%/5 years=9.65% per annum net simple interest paid not annully but monthly into your bank account. The last 3 major Canadian peaks in GIC interest rates were 1995 9.375% 5 year GIC National Bank, 2000 6.725% 5 year GIC Sunlife Trust, 2002 Home Trust Company 5.375% 5 year GIC.

If we take the highest 5 year GIC interest rate of 9.375% vs. 2.85% today’s highest 5 year GIC interest rate it is a annual interest rate loss of 6.525%. This is every year not like the one time 6.75% or 9.90% bank deposit tax. The main point I am making is the huge collapse in GIC interest rates and bond yields is the biggest annual tax to savers,fixed income investors and bondholders.

Remember even dividend yields follow bond yields so dividend oriented investors have suffered quite a big annual loss as well.They may have not lost an annual 6.525% interest or dividend yield but at least 4.50% to 5.00% annual lost dividend yield are hitting them today. I try to analyze the big picture in any situation at all times.

#117 Dean Mason on 03.18.13 at 1:53 am

To #99 Len the real parasites in society are the one’s that create inflation in all forms and depreciate all people’s assets like GIC’s,bonds,REIT’s,physical real estate,savings accounts,bonds of all types,preferred shares,mutual funds,index funds,common shares etc.

People work for their money and save it. If they don’t get interest,dividends,capital gains or any other type of rate of return on their savings and investments inflation depreciates or confiscates your hard earned money every year. Inflation is the core problem not banks,bondholders etc.

#118 Dean Mason on 03.18.13 at 2:03 am

To Len #99 if you put all your money into physical real estate you will get hit with all types of expenses,costs,taxes of all kinds and you will just be paying another way. The buying and selling of property will be hit with a 5%-10% total costs made of H.S.T,land transfer taxes,lawyer fees,mortgage breaking fees or other financial fees,etc. Also, annual costs to maintain the property like maintenance,repairs,property taxes,condo fees,mortgage insurance,property insurance, annual interest to carry or service the mortgage,utilities,H.S.T on all costs,expenses.

Just spend all your money and don’t save anything. This way you don’t have to pay taxes,fees etc. for banks,bondholders.

#119 observer on 03.18.13 at 2:12 am

This is interesting, someone on this blog asked about charts so I did a bit of digging.

If you look at the charts you can plainly see the US housing bubble started slowly at the end of 2005. It took several years for it to pick up steam and then boom, the collapse.

http://www.jparsons.net/housingbubble/

That is what is happening in the okanagan, you can see sales slowed prices slowly declining and now it looks like it picking up steam. But it all started several years ago.

#120 Turtle on 03.18.13 at 2:13 am

Life is not fair. It is the result of our choices. Some people keep their money in Cyprus banks, some people – somewhere else. If you have no money – you have nothing to worry about. Do not riot – it is bad.

EU wants to teach everybody a lesson. The era of bailouts is coming to an end.

#121 Shocked in awe on 03.18.13 at 2:17 am

How much are the bank ceo’s paying

#122 Stoopid Idiot on 03.18.13 at 3:12 am

It’s called ‘money.’ — Garth

If Fiat is money then Gold is Currency… no disrespect but pick one

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

And when they debased the C$ in response, I wanted to shift to gold But it was too late

And so the slide into stupidity begins. This will be a lost night. — Garth

Hahahahaha….. come on Garth, that was funny

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

Another golden moment in Canadian journalism.

— Garth

Garth…. For the love of God…. Stop using the “G” word

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

It’s sad to think that Greece’s GDP is the equivalent of the state of Alabama, Cyprus accounting for only 0.2 per cent of eurozone GDP… nada. Wait for the big boot or Spain. Cyprus is only a dress rehearsal. Of course the IMF wanted to beat them before they could pull off an Iceland. Q. E. to infinity…. Jim said that

#123 Buy? Curious? on 03.18.13 at 3:48 am

I’m taking all my savings out this morning! Then slowing converting it into gold and putting in a safe that I’m going to have installed in the basement!!!!

Argh!!!!!! I knew this day was coming!!!! There’s going to be a run on the banks that will spread around the world!

http://www.youtube.com/watch?v=lfP8__wl-_4

#124 eric grill on 03.18.13 at 4:02 am

C’mon Garth, aren’t you just a teensy bit worried?

#125 eric grill on 03.18.13 at 4:04 am

@ #22 TurnerNation

Best blog comment EVER!!!

#126 Good to be out on 03.18.13 at 4:10 am

“Cyprus isn’t Canada, of course. It’s small, inconsequential and meaningless to our daily life.”

Yes, and so was the assasination of Archduke Francis Ferdinand, another insignificant event generally considered to have been the the catalyst that sparked WW1.

#127 futureexpatriate on 03.18.13 at 4:18 am

#9 – George W. Bush’s Constitution. Mass produced and marketed.

#128 Scott in Gibsons on 03.18.13 at 4:49 am

This is so far down the thread that no one will read it so I’ll make it a personal note to you Garth. I can sense your defensiveness in this post. The paper assets you promote are 100% exposed to the type of action taken in Cyprus. Cypriot savers had a big chunk of their deposits stolen from them by thieves in the night. Gold is reacting up. There’s more bad news to come in the global economy, and more crimes to be committed. I’m playing the bet that there’s at least one good spike left in gold. Maybe $5k – $10k? Sell my gold and silver, use the money to generate a nice income by buying the paper assets that are plunging during the gold spike, or buy a nicer home in the collapsed real estate market. Of course, after a few years, everything is just fine again and life is still worth living. Not such a “doomer” plan, is it? Its somewhere between fire insurance and lotto ticket.

More despair that defensiveness, watching so many (like you) tumble to false conclusions. The ‘paper assets I promote’ are balanced, diversified and liquid, spread across the planet and every sector. They are not ‘deposits’ and not subject to any confiscation. That’s a fiction. As for gold, you are delusional. Your fear has blinded you to common sense. It’s a common affliction these days. — Garth

#129 TomOfMilton on 03.18.13 at 4:58 am

I wonder how many read those last two sentences as though they were one? Wow, how it changes the meaning. It makes my day…writing like that.

#130 Yellow Rox on 03.18.13 at 5:07 am

Very “Doomy” today Garth. I like it!

#131 Yellow Rox on 03.18.13 at 5:09 am

@ #3 AK:

Hell yeah, and have taken the appropriate measures.

#132 Buy? Curious? on 03.18.13 at 5:19 am

Garth, may I also add another point. Could this just be the start? The start of bank runs across Europe. If countries like Spain, Ireland, Portugal, Italy and even my beloved France, are nipple-deep in debt, then their population is suddenly spooked (Black Swan moment and I don’t mean Natalie Portman in a tutu!) and there’s a run on banks that are over-leveraged, could this not be the first domino to fall?

And if these banks fail, just for argument’s sake, does that mean we still have to pay back our mortgages?

http://www.youtube.com/watch?v=GA8z7f7a2Pk

#133 Small Town Steve on 03.18.13 at 6:40 am

The currency traders are having wet dreams right about now…

#134 maxx on 03.18.13 at 6:42 am

“This fits perfectly with their conspiratorial view of a world in which nobody and nothing, including government, is trustworthy.”

In light of the mess the world economy is in and the players who orchestrated it, you’ll forgive a modicum of distrust by those at the other end of the stick, many of whom invested in products other than GICs.

Not much conspiracy theory there.

#135 Raven on 03.18.13 at 7:32 am

Wasn’t there a small European country that had a bank run that caused the failure of the banking system in Europe in the thirties? Could Cypress not be the same type of catalyst? And we all thought in would be Greece?

Ancient Chinese philosopher, “May you live in interesting times”………how interesting?

The banking system will not fail. — Garth

#136 Herb on 03.18.13 at 7:49 am

#96 MarcFromOttawa,

if you’ve read Garth for five years and only listed now, you’re a little slow.

On the other hand, you might be all right this year – our fellow Ottawans are slow too. You might not get full asking and your condo might be on the market a little longer, but you’ll definitely fare better this year than next.

#137 Lost Soul on 03.18.13 at 8:00 am

“The response of the financial magazine Forbes was scathing, denouncing the “German-led group of EU officials” for “probably the single most inexplicably irresponsible decision in banking supervision in the advanced world since the 1930s.” Another Forbes columnist entitled his comment, “Welcome to Another Great Depression.” Business Insider noted the “multiple reports which indicated that Germany told Cyprus: Confiscate your depositors’ money or leave the euro zone.”

Wow its only March…wonder what Xmas will be like..haha!

#138 piazzi on 03.18.13 at 8:25 am

I live in supposedly affluent Barrhaven burb of Ottawa

something interesting has been popping these past couple of weeks at notice boards in the two locations of Fitness health club we have in the neigborhood

Recently, there has been a 2-3 offers to rend out condos and townhomes

I am not sure why this is but frequenting the clubs since they opened, it is first I see that

#139 piazzi on 03.18.13 at 8:28 am

another interesting thing in Cyprous story is the increase in corporate tax overnight from 2.5 to 12.5. That is gonna shock a few businesses

Taxes increase 2.5%, not 10%. — Garth

#140 Brunette on 03.18.13 at 8:36 am

This Cyprus stuff freaks me out a bit and makes me want to buy some silver for safekeeping. Probably easier to use silver as currency than gold. Less change needed.

Join the other fools. — Garth

#141 Brunette on 03.18.13 at 8:44 am

This freaks me out too – Cyprus red flag last summer:

http://www.naturaltherapycenter.com/blog/?p=291

#142 Steven Rowlandson on 03.18.13 at 8:52 am

Is there a lesson here?

Yes indeed there is a lesson here. Never have your strategic savings in fiat or any other form of paper or electronic form. All paper assets burn or are subject to criminal activity by governments, banks, members of the tribe and their fellow travellers. Keep your savings in portable forms of wealth that can be defended , kept more or less secret and out side of the system.
As I see it the financial and political system is in the process of going bye-bye and they are grabbing all the easy stuff on the way out.

This is why people fail. — Garth

#143 syfon on 03.18.13 at 8:55 am

The banking system will not fail
I totaly agree with that, but what will be a purchasing power of todays currency.
Even Greenspan officialy assure everybody of that.

#144 T.O. Bubble Boy on 03.18.13 at 8:59 am

@ #109 Investx on 03.18.13 at 12:16 am
That’s their problem. You can’t buy cans of tuna (or anything else) with gold bars. — Garth

Can you buy tuna with a preferred share?

No, because neither are money. — Garth
————————————–

You can buy a whole lot of Tuna with the dividends from Preferred Shares though.

It will be an interesting day when Walmart and Loblaws start taking gold bars at the register instead of Gold Credit Cards.

#145 Big Al New on 03.18.13 at 9:16 am

This is what happens when a sovereign nation gives up it’s right to it’s own currency. The USSR lasted all but 60 years the European Union and it’s common currency will be lucky to last another 5.
The Cypriots could have accomplished the same thing by devaluing it’s own currency instead they are now faced with the possibility of Bank Runs once the banks are allowed to re- open.
This may or may not be a game changer, but will have the larger economies thinking whether the decision to stay in the Euro is the correct one.
It’s all good in prosperous economic times but as the Europeans are finding out, when the shit hits the fan having Brussels dictate your economic policy is a hard pill to swallow.
Let’s see what today brings.

#146 Big Al New on 03.18.13 at 9:18 am

Gold the Viagra of doomers !!

#147 CP on 03.18.13 at 9:24 am

http://www.zerohedge.com/news/2013-03-17/could-cyprus-fiasco-occur-united-states

#148 Peacenik on 03.18.13 at 9:25 am

Canada and the US are likely the safest places on the planet to have wealth. – Garth

You mean it is different here?

Than Cyprus? — Garth

#149 TEMPLE on 03.18.13 at 9:47 am

#94 Randman on 03.17.13 at 10:14 pm

Randman, do you actually believe Gartman’s market-timing drivel? He’s an endless windbag and I hope you don’t pay for his letter. He has a spotty record and a tendency to revise his history, just like all the other market timers and talking heads. Gartman is for entertainment purposes only.

From the Gartman quote you posted:

I shall be around all day tomorrow trying to figure out what has happened here and why, but if the EUR… which closed on Friday at 1.307… does not open below 1.2900 and then continue lower, and if gold, which closed on Friday at $1590/oz does not open above $1625 and head higher I will be truly, truly stunned.”

Well, I guess he is truly, truly stunned. Unfortunately for us, he probably hasn’t been stunned into silence.

TEMPLE

#150 Brunette on 03.18.13 at 9:49 am

Big Al New: how can you call people here on doomers when what we are afraid of is ACTUALLY happening in multiple other countries around the world. Open your eyes, are you blind to the events around the world? You are the one in denial to ACTUAL events taking place. ARe the chancel low that it will happen here, likely but there’s still a chance isn’t there. Can you say that there is 0% chance of something crazy to take place in Canada? I don’t think so.

#151 45north on 03.18.13 at 9:57 am

Cyprus: au contraire – the action of the Cyprus government, European Central Bank makes the euro more valuable – I mean the bankers don’t want gold they want euros.

#152 Stickler on 03.18.13 at 10:03 am

Glad you wrote about this! This is a huge story.

The MSM tells you that they are small & don’t matter, and most of the money is dirty Russian money… so keep walking there is noting to see here.

These are not relevant points. What is relevant is that this is a massive change in behavior in the Euro zone.

I’m not worried about this in Canada, but ask yourself (if you had any money) would you leave your money in Greek, Spanish, Portugese, etc. Banks? I have to say I would not.

I gotta believe that deposits will flee to non Euro jurisdictions.

#153 Buy? Curious? on 03.18.13 at 10:05 am

Hey Garth, check out this article (or don’t) about how a house is a great way to accumulate wealth and that if you’re not in now on owning a home, you’re a loser!

http://www.nytimes.com/2013/03/15/business/younger-generations-lag-parents-in-wealth-building.html?ref=business&_r=1&

What a crock of pooey-poo-poo!

No wonder there’s a steady stream of home buyers year in, year out. You’re constantly bombarded with reasons to buy a house.

#154 RAJ on 03.18.13 at 10:15 am

Haha, Govt can only take money if you have it. With 165.5% debt, Govt has to write checks to us.
Savers are punished always. Be in debt and enjoy the world as much as you can.
The whole purpose of wealth effect is to borrow and spend. So be it.

#155 Rapier Wit on 03.18.13 at 10:20 am

So, I thought that I heard a reporter on CBC say this morning that the upcoming budget disclosure was F’s last. What’s up with that? Is this to signal a change in direction or something perhaps more political?

#156 Behavioral Finance on 03.18.13 at 10:21 am

Come on Euro. Time to rally as all the Cyprus cash moves to European banks :)

#157 pbrasseur on 03.18.13 at 10:24 am

Cyprus…

In EU scum politicians are down to stealing people’s money.

No wonder I don’t trust and dislike most politicians (sorry Garth)

And don’t think this couldn’t happen here in one form or another, being from Quebec I know better than to trust the government with individual and property rights…

#158 pbrasseur on 03.18.13 at 10:33 am

“Canada and the US are likely the safest places on the planet to have wealth.” – Garth

Right, Texas, maybe…

Canada, the country that nationalixzed large segments of the economy and implemented price and wage control, not so sure at all.

Are you aware of the recent capital gains tax saga in the PQ latest budget? That was stealing pure and simple.

Sure they backed away this time, but there is no crisis plus they are a minority… But we now know what their instincts are! Expect them to be back when times get tough (and they will).

#159 Goldfinger on 03.18.13 at 10:33 am

This is what the housing chart will look like soon. Very similar to the Gold and metals charts….

http://www.theglobeandmail.com/globe-investor/funds-and-etfs/funds/summary/?id=50507&cid=Sentry%20Investments

#160 cramar on 03.18.13 at 10:35 am

#30 Joe on 03.17.13 at 7:26 pm

Re#24. You can’t buy cans of tuna or anything else with gold bars… I beg to differ I bought gold at 600 an oz and sold it at 1300 an oz for which i took paper fiat in exchange that bought me not only tuna but a chartered boat in the Cooke Islands for 5 weeks, I like my tuna fresh.

Rule: anyone using the word ‘fiat’ is questionable. — Garth

———-

I remember when anyone driving a fiat was questionable! Way to go Joe! People have been paying for trips with gold for thousands of years.

#161 TS on 03.18.13 at 10:36 am

So, it is better don’t have too much cash in bank. As I said before, you have to buy something!

#162 Holy Crap Wheres The Tylenol on 03.18.13 at 10:42 am

Well they can’t get my assets. I keep them tucked under my mattress. Oh Crap I said that out loud!
Oh yes and another little tid bit, this could not ever happen in the USA. Could you imagine when the bank manager comes into the bank on the next business day after announcing the same Cyprus deal. You would have almost 300 millions gun owners standing there waiting patiently for the bank to open. Click, click, click…….

http://www.newyorker.com/online/blogs/johncassidy/2013/01/lets-get-the-facts-to-defeat-gun-violence.html

#163 rosie "moving backwards" on 03.18.13 at 10:59 am

Poof! Whew, that was close. Better take the precious back. http://www.marketwatch.com/story/cyprus-crisis-will-soon-blow-over-2013-03-18

#164 Phantom in Calgary on 03.18.13 at 11:05 am

Garth you must realize that a smart person is also able to screw the government too. Im very displeased with the USA, so I dont file taxes with them because I dont owe anything, I pay my taxes in full, in Canada, because at least here the taxes actually do something for people, unlike the USA. I dont believe that “just because” a person is a citizen of a country they must pay or waste time filing rather when they owe nothing. I make my own rules, and any authority that says otherwise, I dont argue with directly but instead go through an attorney. The USA allowed a person, George W., to bankrupt the whole world with an oil war(aka war criminal), allows stupid laws, and then decides arbitrarily that it can make marijuana(I dont like marijuana but alas if legalized could solve singlehandedly the debt of Canada and USA simultaneously while crushing crime) and online poker for money illegal. The land of the free eh? So I have a student loan that I owe a bunch of thousands on, I wont say how much, but they dont take out of country currency. Ooh, that’s too bad, because they wont get a cent from me. Let Obama and the taxpayers pick up the bill. The way I figure it, China owns the USA and the only reason that they havent called in the debt is USA is a trade partner. The USA is a fascist police state that I want no part of. As far as Im concerned, the USA is pathetic. Everything about it. The laws, the voting process, the economy, what is seen as important. And I was born there. It’s no wonder that some people who were not born there want to nuke it. I dont advocate violence, just passive resistance to threats, by the way. You note that all this nonsense happened it Cyprus. It could happen anywhere, at anytime, and this is why modern society is simply about learning to be a sheep-forced domestication of its members, requiring viagra of the males after they have nothing left emotionally and females to work because the men cannot or arent motivated to work for “Freedom”.

#165 Steve Hutchinson on 03.18.13 at 11:09 am

PEACHY KEEN…KEEP DRINKING THE KOOLAID
AND YOU CAN TAKE THAT STRAIGHT TO THE BANK!

This is exactly why I primarily invest in hard assets like gold and real estate. Wear your gold on you and it can’t be confiscated…unless you are robbed!

I am shutting down the gold comments. This is getting absurd. — Garth

#166 Investx on 03.18.13 at 11:13 am

Can you buy tuna with a preferred share?

No, because neither are money. — Garth

———————–

So why only bring up that argument against gold?

Because a lot of folks labour under the misconception they are hoarding ‘money’ instead of rocks. — Garth

#167 Joe Bloggs on 03.18.13 at 11:13 am

“… Canada and the US are likely the safest places on the planet to have wealth.”

LOL!!! Garth, congrats, this is the most idiotic statement from you, so far. Perhaps, you are going to mention Zimbabwe next…

#168 Daisy Mae on 03.18.13 at 11:19 am

#98MrHulot: “…aren’t you better of with hard assets like real estate and gold instead of cash?”

“No. Land is expropriated all the time.” (Garth)

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

South Africa comes to mind…

#169 Doug in London on 03.18.13 at 11:24 am

Just as I thought, this trouble in Cyprus has had only minor effects on stock markets on this side of the Atlantic, less than 1% drop. If I didn’t know of this trouble in Cyprus, there would be no obvious indication of anything wrong, just a minor pullback. As for the other side of the Atlantic, I wonder if it’s a good time to load up on cheap European equity funds?

#170 Realtor # 1 on 03.18.13 at 11:26 am

No price shock
No jump in listings
Let me guess wait till next year
(Everyone’s favourite response )

#171 Big Al New on 03.18.13 at 11:30 am

@Brunette I guess anything is possible. Do you have a backup plan for an Asteroid Strike or just a complete financial and political global meltdown?
It never fails to amaze me how a metal and not a particularly useful one can garner so much value. Do you seriously believe if what you are implying happens that a shiny piece of useless metal will save you.
I would suggest hoarding guns bullets and beans would be a better option. After all that’s what all the gold bugs anticipate, complete and total societal breakdown.

#172 Suede on 03.18.13 at 11:35 am

I just heard from an inside source that F’s budget this week will NOT contain any bank deposit seizures.

Take a deep breath.

You are all ok.

:)

#173 DocInWaitingRoom on 03.18.13 at 11:45 am

Question / Comment on renting

Found a place downtown T.O near where I will work 3 min from subway 1600+ sqft for our family of 4 not including very large balcony. Rent: 2600

The cost of the place was about 600,000 in 2006/2007 so it may be worth a lot more today. Based on mortgage, with $400 maintenance, and $350 per mo for tax plus insurance + misc. of $100 per mo. this place costs $4000 per month or so to “own”. Seems its run by a property developer so they may not have a huge mortgage but for a regular person this is an expensive place if financing. Maybe family will grow to 5 who knows so we need the space.

Is this a decent deal rent wise, we cant seem to find anything roomy for a family of 4 walking distance to our jobs in the city and near the subway and close to a high ranking school. Only thing is heating and elec is not included.

#174 Dupcheck on 03.18.13 at 11:52 am

Hi Garth,

I know it is not the point of the story.
Which part of Cyprus was it the Greek or the Turkish side?
Do they have two Governments or one?

#175 The Prophet Elijah on 03.18.13 at 11:57 am

#150 Big Al New on 03.18.13 at 9:18 am
Gold the Viagra of doomers !!
———————————————————-
You mean you don’t beleive in protection?

#176 Dupcheck on 03.18.13 at 11:57 am

Remember the Golden rule, who has the gold makes the rules. The banks have the money not the people, the people have the illusion of money in numbers and debit cards. WTF is happening. Robin Hood must came back and kick the bangsters in the nards.

#177 JOJO on 03.18.13 at 11:59 am

Well new informations from TREB:
Mid-March resales in GTA are 11.5% down, and avg.price went UP + 3.5% from last year. Listigs are up 2% from last year. Don’t watch problems in Cyprus because Canada is diferent. When USA had housing crash in 2007 till now, Canadian RE market went up 50%.

#178 Randman on 03.18.13 at 12:00 pm

Temple

I’m no fan of Gartman,but I note his alarm in an otherwise, stable investor…..

I’d be more than happy if he shut up…but for different reasons than yours

Not just because he says something you don’t like

#179 WhiteKat on 03.18.13 at 12:06 pm

USA is invading Canada’s banking system, but most Canadians haven’t got a clue and the Canadian government is letting USA do it. To learn more about the war of 2012-2013, read this article from the Vancouver Sun.

http://www.vancouversun.com/news/Compliance+with+violate+Charter/8088278/story.html

#180 Buy? Curious? on 03.18.13 at 12:07 pm

Did you see that Crypiot banks are not opening until Thursday?

Wowzers!

#181 Randman on 03.18.13 at 12:11 pm

No one here is trying to start a panic people should be aware of the ramifications and possibilities that lie ahead for all of us…it is not different here…

“All the conditions for a total disaster are in place

The really worrisome scenario is that the Cypriot bailout becomes euro-systemic – in which case the collapse of the Cypriot economy will be a sideshow. This will happen when and if depositors in troubled countries, say Italy or Spain, take notice of how fellow depositors were treated in Cyprus.

All the ingredients of a self-fulfilling crisis are now in place:

It will be individually rational to withdraw deposits from local banks to avoid the remote probability of a confiscatory tax.
As depositors learn what others do and proceed to withdraw funds, a bank run will occur.
The banking system will collapse, requiring a Cyprus-style programme that will tax whatever is left in deposits, thus justifying the withdrawals.

This would probably be the end of the euro.”

#182 Randman on 03.18.13 at 12:12 pm

Whoops…link to last post

http://pragcap.com/cyprus-the-next-blunder

#183 Snickers on 03.18.13 at 12:21 pm

If you want to withdrawal cash of any significant amount in Canada – there is a clause that states they can make you wait up to 30 days – cause the bank itself probably has a few thousand in the vault –

Garth, I gotta wonder – you claim there is $179 Billion in Royal Alone – my thoughts, if panic is stoked – very few will get anything out – it’s plain jane here –

Our entire system is build on the “belief” system – it couldn’t handle a 10% withdrawal – that’s my issue – one major issue arises – and there is no telling if or when that may happen, but if it does – look out – all those Zero’s in your account will disappear in a wink of an eye – and no one will care –

Burying some money may not seem like such a bad idea afterall.

#184 A Nightmare On Bay Street on 03.18.13 at 12:30 pm

#152 Peacenik

“Canada and the US are likely the safest places on the planet to have wealth.” – Garth

You mean it is different here?

Than Cyprus? — Garth

_______________________________

As much as I like you and I understand your arguments against Cyprus, Garth, I think that the bankers decide who win and who loose. And its a one way, from bottom to top.

Cant happen here ? Wait until they have to pick a loser. Yes, it can happen here.

#185 Victoria Tea Party on 03.18.13 at 12:32 pm

WHAT THEY SAY, WHAT THEY DO

It’s not what’s happening out on Cyprus’ streets, it’s what happening in the darkened “parking lots” of northern downtown Europe.

Sure the local peasants and their near-bust Brit ageing-boomer cohort will feel some pinch.

But the main bludgeon will be felt by The Russians.

Ah, therein lies the rub, and, naturally, the history.

You see, everything that happens in Europe happens for a reason and the foundation of that reason is, perforce, history.

And, man, is there a lot of that!
Vlad Putin doesn’t like this tax-threat one bit. So much so, that half a dozen combat Russian naval warships are being deployed toward Cyprus indefinitely, part of a major geopolitical chess board move. Consequences are unknown of course, but only a side issue for now.

But back to the main event and a question: Will the Eurocrats crack and pull back leaving only a threat of bank deposit confiscations in the Eurozone for some misty future time?

I rather think that is why markets have largely discounted the weekend’s shocking events.

The Eurocrats have bitten off more than they can chew by trying to rip-off the Russians and their ill-gotten loot, much as the Ruskies deserve such a fate.

Now, back to the metaphor of that darkened parking lot in Frankfurt.

Imagine there is some Russian “envoy” having
a quiet chat with some higher muck-a-muck from one of those nearby EU central bank-type buildings.

What might that Russian be saying?

How about this:

“Look, Comrade, at these photos my Grandpa took when he was a tourist in downtown Berlin on April 30, 1945? You can see him. He’s the one manning that artillery piece. See all those opportunities for urban renewal smoldering all around him? I understand, Comrade, that next winter will be a bitch in your land. Do you have enough natural gas stored away? No? Hmm. Call me tomorrow, Comrade…President Vlad is not very happy right now.”

#186 Gregor Samsa on 03.18.13 at 12:32 pm

Regarding the horse in the picture, the horses get trained from birth to be tethered to objects they can’t pull away from. So the horse learns at a young age to stop trying to pull away from whatever it’s tethered to. Eventually, you get to the point where you can tether the adult horse to something like a small chair and they won’t try to pull away because they think they can’t.

There’s a lesson in there, somewhere.

That’s why I used it! You win the horse. — Garth

#187 IM in C on 03.18.13 at 12:40 pm

Here’s the latest puff piece from Ms. S. Pigg:

http://www.thestar.com/business/real_estate/2013/03/18/staying_put_baby_boomers_not_selling_skewing_canadas_housing_market.html

Have to agree with her about 1 thing. The wrinklies won’t be selling soon. Don’t expect to see the big sell off for another 10-20 years. At age 60 I am the peak of the baby boom. My parents didn’t sell their house untill they were in theri early 80’s. Thats when a 65×10 foot lot became too difficult to mow, a double wide driveway too difficult to shovel, flights of stairs too difficult to assend, and repair after upgrade ceased to make sense.
IMHO the great boomer sell-off is many years away and will not be a signifigant factor in the present real estate market

#188 Smoking Man on 03.18.13 at 1:03 pm

The banksters, the thieving banksters. you dogs are hallarious.

Banksters are order takers, they make a cut when ever they buy or sell on your behalf… They don’t prop trade anymore. They charge fees..

TO categorize them as smart and evil is hilarious… Order takers that’s it.. That’s what they do

#189 Finance Confuses Me on 03.18.13 at 1:04 pm

The Toronto Star seems to be saying you are wrong, Garth.

http://www.thestar.com/business/real_estate/2013/03/18/staying_put_baby_boomers_not_selling_skewing_canadas_housing_market.html

Wait. — Garth

#190 Dorothy on 03.18.13 at 1:06 pm

I’m with those who believe that what’s happening in Cyprus is a “trial balloon” which, if “accepted” by the majority of the sheeple, will be repeated elsewhere.
All western governments are concerned about how the reduction in both consumer and corporate spending is adversley affecting their economies. And consequently, all western governments are trying to find ways to get money out of savings accounts and into the real economy. Low interest rates don’t appear to be doing the job, so maybe their hoping that this kind of direct attack on all those savings will work better.
I know many will say this sounds like a bit of a “tin foil hat” theory, and maybe it is. But given all the other previously unheard of events that have taken place since the great recession, I’m much more open to considering some of those so called “tin foil” theories than I was in the past.
I truly believe that if we, the ordinary folk, don’t want to continue to see our wealth and lifestyles eroded by the powerful few, that we’re going to have to get a lot more politically active than we’ve been to date. And we need to start making a lot more noise about policy decisions that adversely affect our lives, instead of always just accepting it like the good little “sheeple” we’ve become.

#191 Dupcheck on 03.18.13 at 1:31 pm

Stealing money from bank accounts in the form that Cyprus government is doing will have great consequences.
Crime rate will go up, disobedience and riots will follow. I guess they are testing waters with an isolated island like Cyprus. The size of it can be easily contained if riots start. Anyway it will not end well for any government.

#192 betamax on 03.18.13 at 1:41 pm

#184: “The Toronto Star seems to be saying you are wrong, Garth.”

That idiotic Scotiabank report is based on historical data, not current trends indicating what’s likely to happen next.

My parents and their generation saved all their lives and are now comfortably retired with no need to sell.

My older siblings and their generation, the boomers, haven’t saved a dime for retirement and have explicitly referred to their house as their retirement plan.

That self-serving Scotiabank report may as well claim that most retirees are likely to own horses as well as houses, because that’s what people did in 1897.

#193 CP on 03.18.13 at 1:44 pm

I’m thinking they may just want to give this particular customer his cash:

Cyprus bailout Man threatens bank with bulldozer

http://countdowntozerotime.org/2013/03/17/cyprus-shellshocked-as-savings-tax-imposed-for-eu-bailout-2billion-at-riskqueues-formed-at-cash-machines/

#194 Dr. Hoof - Hearted on 03.18.13 at 1:48 pm

Cyprus “Bank Holiday” Gets Another Extension, Bank Reopening Now Set For Thursday

http://www.zerohedge.com/news/2013-03-18/cyprus-bank-holiday-gets-another-extension-bank-reopening-now-set-thursday

What was initially a single-day Bank Holiday has now morphed into three days as the farce that is the wealth tax in Cyprus will now keep the citizenry from their money until Thursday according to the latest from the Central Bank…

*CYPRUS CENTRAL BANK SAYS BANKS TO BE CLOSED UNTIL THURSDAY: AP

Which begs the question “Which Thursday?”

#195 Tyrone Asauras on 03.18.13 at 1:51 pm

#167Big Al New
I would suggest hoarding guns bullets and beans would be a better option.

I’ve made the same point to anyone who needed to listen.

If it comes down to total system collapse lead and steel are far more precious than any other metal.

#196 Humpty Dumpty on 03.18.13 at 1:58 pm

180 Victoria Tea Party on 03.18.13 at 12:32 pm

Cypres is about to be Putinized….

http://news.sky.com/story/1066239/the-russians-are-cooking-with-gas-in-cyprus

#197 Old Man on 03.18.13 at 2:05 pm

Life is good and worry not as went to the bank today, and nobody there, and had the best of service, and as always this older woman wanted to know where I was going; said a bit of shopping. The state of the retail economy is booming, as went to the Polish store to buy product for half price, and nobody there as well. I said would be back tomorrow to buy those big heavy jars, as needed a good bag.

#198 prairie person on 03.18.13 at 2:06 pm

Rumour has it that Putin called the Pres of Cyprus and said if you agree to this raid on depositor’s money, you might as well put a German flag over your country. Could get very ugly. Imagine being the Pres of Cyprus and Germany twisting your right arm and Russia your left?

#199 Brad Evenson on 03.18.13 at 2:31 pm

Hi Garth,
Very interesting post on deposit insurance. However, it’s important to look beyond payouts when talking about protecting depositors during a large bank failure.
CDIC has many tools to deal with failures. These include:
o Assisting the sale of a troubled institution to a sound institution.
o Requiring a restructuring or sale of a bank’s assets and liabilities.
o Establishing a bridge bank to carry on the critical functions of a failed bank until it can be sold.
• Losses incurred in the resolution would be absorbed by the bank’s shareholders and creditors, consistent with their risk as investors, and not by taxpayers or insured depositors.
• CDIC losses would be recovered over time from member premiums or the sale of the failed bank’s assets.
• CDIC maintains an ex ante fund ($2.5 billion as at Feb. 15, 2013).
• CDIC has the authority under the CDIC Act to borrow from the Consolidated Revenue Fund and from the financial markets by any means, up to $19 billion (adjusted annually). CDIC can also borrow such additional funds as may be authorized by Parliament under an Appropriation Act.

#200 Old Man on 03.18.13 at 2:33 pm

Beware of buying gold or silver in Canada on the TMX that is being stored in vaults with audits and so on in Canada. The physical product on hand might just be there, but rather contracts for a delivery that an auditing firm must accept, as a faux asset yet to be delivered. How about over $billion that physically is not there in hard assets, but paper instead as a contingent asset yet to be delivered.

#201 bigrider on 03.18.13 at 2:47 pm

What I don’t get about the gold humpers is why store gold over , say, other non perishable items like axes, buckets, tools, warm leather coats etc.

I mean, I might trade my ‘canned tuna’ for an axe but not a shiny piece of useless metal.

Disclosure, I own some gold and gold equities but not much.

#202 bigrider on 03.18.13 at 2:50 pm

For all you land and RE humpers like Len at #99 that think real esttae to be safe from the grasp of Government.

How easy it is to raise property taxes by 10 fold and simply destroy the value of RE property and in essence, confiscate.

#203 Dona Collins on 03.18.13 at 2:51 pm

If it can happen in Cyprus, it can happen anywhere. It doesn’t matter where you live. Best to keep your eyes and ears open. I’d be devastated if my already-taxed money was just taken from me like that.

#204 Herb on 03.18.13 at 2:54 pm

#193 SM,

“order takers” the banks well may be, but have you checked their profits?

#205 blinded on 03.18.13 at 3:00 pm

In the USA there have been several financial institutions gone bankrupt, the latest is MF Global to the tune of $1.2 billion – the Chicago Mercantile Exchange who had 8.5 $billion on hand for the sole purpose of making clients whole made an unprecedented move and did NOT. The CME, CFTC and SEC were complicit by doing NADA.

More importantly, various large banks such as BoA had changed their own rules that upon bankruptcy derivatives holders have priority in claim above depositors. And BoA has 10x the derivatives holdings than they do all other assets combined.

The math is simple, the groundwork has been laid factually, is unprecedented and supported by judges.

Do you really think Canada is any safer when our financial system is 80% integrated with the USA?

Otherwise, Greenspan himself is on the record stating yes they can print any amount of money in perpetuity to cover all future liabilities – but at the cost of destroying purchasing power.

MF Global investors in Canada were made whole, thanks to our investor insurance. US investors were not. — Garth

#206 King Of Bzzr on 03.18.13 at 3:05 pm

The Cyprus tax is actually a good idea. It’s only 6-10% which is like, 2-3 years of inflation. Its way less than our HST. And its a one-off tax that only applies to “extra money” rather than your whole income. By launching it by surprise they ensure that all the russian criminals who have bank accounts in Cyprus will still most likely have to pay it. This is vastly different from most tax structures where the rich and the criminals always have loopholes and shelters to get out of paying their share. All in all, it’s a pretty nice solution to a very difficult problem.

#207 Sebee on 03.18.13 at 3:09 pm

The best thing to own really is debt.

I am really starting to believe it.

They will devalue the dollar to nothign by the time clock says pay. And if not, blow it the heck up! I don’t see anyone going to jail for going bankrupt. Just have asset left by the time you do it.

I think we are way past the tipping point where people have figured it out and said the heck with it.

I’m off to get a nice twin engine boat. I also see the new Range Rover is now shipping. Hopefully it has the pulling capacity.

#208 Old Man on 03.18.13 at 3:12 pm

Do not be worried about Cyprus, as they were hooped with an illegal wealth tax, and Italy will be next, but we in Canada have been hooped all along as you have all been sleeping, and am not complaining. I will give you one example, and there are dozens, as just checked my last bill for $239.00, as just had to renew my drivers licence, and my plate sticker for two years; need I say more. It is all a hidden taxation of sorts to pay the government bills, so that we in Canada can go on with entitlements, and have a good life for all; do not complain.

#209 World Traveller on 03.18.13 at 3:13 pm

#91 Chris no longer in England

Perhaps it is time for the U.K. to get those harriers warmed up and do I nice strafing run at the EU headquarters, why not? if someone tried to rob you wouldn’t you try to protect yourself? fair game, I say.

#210 Pr on 03.18.13 at 3:14 pm

The bank bailout deal was completed over the weekend. So predictable! The money you deposit and think you have at the bank , is in realty , their money , once its in the bank. No more yours once its their.

#211 Ronaldo on 03.18.13 at 3:24 pm

#174 Doug In London – it is not uncommon in regular intra day action on the TSX for the market to move up and down .5 to 1.5 % and end up the day flat. The key times are around 10:30 and 3:30 pacific time. Just for fun, check out the intraday action in the chart below and you will see what I mean. It happens with great regularity. You can even time your purchases and sales as it is so predictable. Anyway, it work for me. Keep in mind that 75% of trading is HFT so this may have something to do with it. Don`t know. Also, check out the tab price history which will show you the highs and lows for each day. You can see it there as well.

http://web.tmxmoney.com/charting.php?qm_page=20363&qm_symbol=^0000

#212 The Prophet Elijah on 03.18.13 at 3:28 pm

Sinclair – All Hell Is Breaking Loose After Cyprus Catastrophe:

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/3/18_Sinclair_-_All_Hell_Is_Breaking_Loose_After_Cyprus_Catastrophe.html

Hardly. – Garth

#213 Ronaldo on 03.18.13 at 3:28 pm

176 Big Al New –

“I would suggest hoarding guns bullets and beans would be a better option. After all that’s what all the gold bugs anticipate, complete and total societal breakdown.“

How about lead as a metal to hoard. You could make your own ammo. But if your the Lone Ranger, silver would be a better option.

#214 World Traveller on 03.18.13 at 3:34 pm

Hi Garth,

What do you think the repurcussions will be if this does end up happening, will there be a mass exodus of money out of the banks in Cyprus? or will it be forgotten within a news cycle?

#215 Ronaldo on 03.18.13 at 3:37 pm

192 IM in C –

“IMHO the great boomer sell-off is many years away and will not be a signifigant factor in the present real estate market“

Totally agree.

#216 World Traveller on 03.18.13 at 3:43 pm

Nice precipitous drop in the Euro today.

http://www.xe.com/currencycharts/?from=EUR}&to=USD

#217 Dr. Hoof - Hearted on 03.18.13 at 3:50 pm

BTW:

— Cyprus is only 300 miles form Israel..
— Israel wants to invade Iran
—Russia is an ally of Iran(and Syria)

If Russia feels the current situation in Cyprus compromises its interests….well you do the math.

#218 World Traveller on 03.18.13 at 3:55 pm

Maybe everyone needs to be as mad as this dude.

http://www.youtube.com/watch?v=YDXtHsz2q6Q&list=UUGThM-ZZBba1Zl9rU-XeR-A&index=3

#219 Kaganovich on 03.18.13 at 3:59 pm

193 SM

The banks don’t prop trade anymore?! Have you been paying any attention to the JPM questioning going on recently?

#220 Crash Calaway on 03.18.13 at 4:01 pm

Isn’t saying that Cyprus is small and insignificant and that it couldn’t happen in Canada just like the old mantra that real estate will never take a bath in Canada because we’re special.

I think the main concern should not be country size but the “trust factor” being violated.
Maybe people in Canada should be focusing on getting legislation enacted that sets in stone “concrete unbreakable rules” to keep government’s corrupt stinky fingers out of the after tax dollar accounts of it’s citizens.

Ah but this is Canada…
The asylum where lunatics don’t mind paying 3 to 4 times what a shack is worth.
Hell, I can see line ups of people standing in the cold and rain to bring that extra 10% to the doorstep of govt should a crash grab ever be enacted here.

Compliant slaves…. happy smiling slaves,
dancing to the clanging of their chains

#221 Bc boy on 03.18.13 at 4:03 pm

Even with 2 years of slow sales and rising inventory, Van east is having quite a hot spring

I don’t understand this, isn’t this suppose to be a formula for prices to decline?

#222 jess on 03.18.13 at 4:25 pm

hungry foreign currency loans

http://bilbo.economicoutlook.net/blog/?p=17645

human platform – constitutional change protest

#223 Ronaldo on 03.18.13 at 4:33 pm

The following video with Jeff Christian of CPM Group talking about what Turkish Central bank has done with regards to gold (he calls it genius) and his thoughts on it and the rehabilatation of gold as a financial and monetary basis. He does not predict any great rise in price but even says it could go back to $1400 but that is neither here nor there regarding the Turkish move.

http://www.theaureport.com/pub/video/3-18-13-gold-turkey-central-bank.html?utm_source=delivra&utm_medium=email&utm_campaign=TGR+Final+streetwise%2Dreports+03%2F18%2F2013+14%3A50%3A49

#224 unbelieveable on 03.18.13 at 4:38 pm

Wonder how many Canadian politicians have monies off shore, perhaps even in Cypress?
I recall a scandal in Canada over off shore accounts and a past prime minister being involved.
Any thoughts?
So I’ve got to agree with Garth that the best safety net for monies is a global balanced account.

#225 InvestX on 03.18.13 at 4:40 pm

Because a lot of folks labour under the misconception they are hoarding ‘money’ instead of rocks. — Garth
———-

When gold investors note the rise in gold value over the past few years are they saying that they can use it as a form of currency on their next shopping errand?

I’m far from a gold bug… believe it’s quite speculative, actually. But gold, equities and preferreds have value and can be converted to “money”.

#226 An Cat Dubh on 03.18.13 at 4:50 pm

Iceland got it right. Arrest the banksters and default on the loan. They are the ones who made the mess. Icelanders were not responsible for the majority of the debt, the same as Canadians are not responsible for govt. waste. ie bilingulaism where it is not needed.

Incroyable. — Garth

#227 brainsail on 03.18.13 at 4:52 pm

What is the difference between one country that allowed 0 down 40 year mortgages and one that gives your savings a 10% haircut? I think not much, because in the end the easy mortgages are going to cost every Canadian home owner at least 10% of the market value of their houses.

#228 JustTryingToProtectEquity on 03.18.13 at 4:55 pm

My goodness Mr. Turner, you sure are having to deal with the lunatics today.

Always know this… you have provided a tremendous service for those who have listened. You were right all along, and had Mr. Flaherty not meddled with amortizations, our housing market surely would have continued to follow the trajectory of the US market.

Instead, we are more indebted. More indebted than we have ever been.

Where the US has taken their lumps and have started the process of rebuilding their economy… we are on the cusp of the collapse.

My wife and I sold our home and are renting. We have no debt, a well diversified portfolio, a piece of land where we intend to build our retirement home and… a great deal to thank you for. We listened. You were right. Thank you.

#229 syfon on 03.18.13 at 4:55 pm

Gold bugs by hoarding gold do not contribute to just society.
They are considered unpatriotic and selfish.
My father was very patriotic, unselfish and very good saver , end up in a poor house.
He saved in a currency that devalued a lot.
We are talking about a european country that weather current financial storm better than most.

#230 Victor V on 03.18.13 at 4:59 pm

http://ca.finance.yahoo.com/news/housing-market-slowing-down-due-less-demand-tougher-201556888.html

TORONTO – Canada’s housing market is expected to continue to soften this year, as fewer people look to buy and home construction begins to slow down, according to report released Monday.

The report says housing prices are beginning to level out and home building rates are decreasing, in response to the market getting back into balance.

“We expect the reduced momentum in sales and construction will continue in 2013. High home prices and tougher mortgage financing rules are tempering demand, especially among first-time buyers,” wrote Adrienne Warren, a senior economist with Scotiabank (TSX:BNS.TO – News).

“Investors also appear more reluctant to enter the market at current valuations. An anticipated softening in the pace of job growth in Canada would reinforce the slowing.”

Softer prices and fewer buyers will lead to a large correction in prices in some housing sectors, particularly condominiums in several major centres if there is an oversupply compared to demand.

#231 Old Man on 03.18.13 at 5:18 pm

I will bet my bottom dollar that none of you know that the major bank centers in Canada like Toronto, Montreal, and Vancouver have a night team who are each assigned to an office in Asia and Europe for trading with special phone numbers while you are waiting the next day to make a trade.

#232 Smoking Man on 03.18.13 at 5:18 pm

#224 Kaganovich on 03.18.13 at 3:59 pm

Sorry was talking Canadian banks…..

#233 Pr on 03.18.13 at 5:25 pm

Cyprus. The government doing a holdup!

#234 Smoking Man on 03.18.13 at 5:27 pm

Loving this forex trading, done from my samsung, on my first two days of trading using no more than 7 k with an availability of 50 k

Up 2133 not bad, I might post my blotter to my Blog tonight, but then why should I, most of you are not interested in learning from the master, you chirp govt banks, and wish for the financial destruction of your nabours cause you don’t take risks….

I’ll think about it

#235 lutzray on 03.18.13 at 5:29 pm

Your “Canada and USA are not Cyprus” sounds a lot like “Toronto is not Vancouver” and “It’s different here”… 8-)

Listen to yourself. Seriously. — Garth

#236 The Patient on 03.18.13 at 5:36 pm

#117 Michael F wrote:

“Imagine Garth Turner marooned on an island with Peter Schiff and Max Keiser.”

Well, ok, here’s my take:

Schiff would assume he was in control and theatrically suggest that Max and Garth start hollowing out coconuts for water collection.
Keiser, ruffled by Schiff’s assumption of alpha-male status, would object and twitch that sea shell conches would suffice and require less labour.
Sir Garth, sensing an outbreak of fisticuffs between the two Yanks, would calm both men down with talk of diversification and, apologizing for his intrusion, suggest they venture inland, in search of a spring, bringing a few conches with them to collect any rainwater that may fall.

If it came to cannibalism, I think Keiser would be the squirrely first to give in. And, since Schiff seems to have the most meat on his bones, he’d definitely look the best on the rotisserie.

P.S. I really need to stop following this blog.

#237 albertaguy on 03.18.13 at 5:44 pm

Canada house decline now mainstream on BNN

http://watch.bnn.ca/the-close/the-close-march-2013/the-close-march-18-2013/#clip886931

#238 Old Man on 03.18.13 at 6:07 pm

#241 Smoking Man – wish I had a Forex Account in the last few days, but no time for all that stuff, so went with my margin account to make a trade against the Euro, as such can be done in several ways to sell it short, so went with USD/EURO combo with a factor.

#239 Vic on 03.18.13 at 6:15 pm

I feel US and Canada are probably safest anyways. USD is strongest currency in the world. Canada has so much resource everyone in the world wants a piece of it. no worries, let the rest of world keep screwing up their finance.

#240 blinded on 03.18.13 at 6:19 pm

Obama has already started discussions to freeze and take IRA’s and 401K’s in some shape or form. To each country his own, Cyprus just has its own way to freeze and confiscate savings.

Just recently Ontario teachers had to take a freeze on salary increase or a cut in retirement benefits, because there just isn’t enough tax money – Ontario is a have not province. Ontario Teacher Pension Fund issues so many bonds that so many investments have them rolled up somehow. Who cares to buy these bonds now? Do you think there is a freeze and confiscate plan for those things?

I heard they’re going to confiscate only you. Careful. – Garth

#241 prairie person on 03.18.13 at 6:21 pm

If I were going to steal someone’s money, the group I would not consider was the KGB. Stealing from the KGB?
Are they mad? Who do these bureaucrats think they are?
Their logic is that it is Russian money, that it must have been obtained illegally and that therefore, they have the right to confiscate it. Is the new rule going to be that any money earned in a manner that the EU bureaucrats do not approve of may be confiscated? High moral standards to justify theft. The Russians are the Greeks. They aren’t going to put up with being bullied by a bunch of clerks and accountants. The latest rumour is that Russia is sending a carrier to Cyprus. Yeah, a major justification for creating the EU is that would stop Europeans from having wars.

#242 prairie person on 03.18.13 at 6:22 pm

That is supposed to be “the Russians are not the Greeks”.
The not got left out.

#243 syfon on 03.18.13 at 6:24 pm

Great post today.
Keep them coming.
I enjoyed your post almost as much as chalet in
Mont Tremblant.
It is not different here , but can not put price on winter
paradise and of course a view.
Feels like a million dollars,
How do you feel?

#244 Paul on 03.18.13 at 6:35 pm

#221 World Traveller on 03.18.13 at 3:43 pm

Did you look at the 2 year chart? Nothing to get excited about today. Besides the banks still want $1.38 today.

#245 Tom Vu on 03.18.13 at 6:51 pm

If Smoking Man and Old Man (maybe Beach Girl ? ) post at the exactly the same time, what would happen ?

#246 Brunette on 03.18.13 at 7:00 pm

Ok, everyone think about this: this insignificant country (Cyprus) makes the world stock markets tumble by 1%. Imagine what a major country’s collapse would do to the markets!

The Dow was down less than one-half of one per cent. Yawn. — Garth

#247 Brunette on 03.18.13 at 7:02 pm

I have another question to anyone in the know out there. Garth has said that there are more deposits in the banks than cash floating around. What would happen if many people withdrew their cash and the banks didn’t have enough on hand to satisfy the withdrawls? Can the banks use the excuse that they don’t have the cash on hand? What would happen then?

#248 Nostradamus Le Mad Vlad on 03.18.13 at 7:08 pm

#118 Ogopogo — Not sure which is worse, Chernobyl or the jet fuel, but you are right, it is a mirror image of humanity.

#125 Stoopid Idiot — “Of course the IMF wanted to beat them before they could pull off an Iceland. Q. E. to infinity…. Jim said that.” — That’s right! Full speed ahead and damn the torpedoes! We’re on course to crush that tiny iceberg over there! (Famous last words.)

#141 Lost Soul — “Wow its only March…wonder what Xmas will be like..haha!” — With or without GW?!

#150 Big Al New — “This is what happens when a sovereign nation gives up it’s right to it’s own currency. The USSR lasted all but 60 years the European Union and it’s common currency will be lucky to last another 5.” — Well pointed out. Nothing lasts forever.

#184 WhiteKat — Is the NAU – SPP raising its ugly head again?

#188 Snickers — “. . . if panic is stoked – very few will get anything out . . .” — Sheeple are so easily frightened by next to nothing.

Referring back to the BNL’s song, “If I Had A Million Dollars”, it would be spread out in a 45-55 plan, and I would be licking my chops every time the mail carrier came around with more bank preferred payouts, REITs, dividend-paying shares, etc. but no metals. I’m too old for that volatility.

#199 Dr. Hoof – Hearted — “What was initially a single-day Bank Holiday has now morphed into three days as the farce that is the wealth tax in Cyprus will now keep the citizenry from their money until Thursday according to the latest from the Central Bank…”

Which leads to the question so eloquently put forth by #190 Victoria Tea Party — “Imagine there is some Russian “envoy” having a quiet chat with some higher muck-a-muck from one of those nearby EU central bank-type buildings.” — Yes, what is going on behind those halls in the corridors of power? Are TPTB losing some of their influence in controlling what is going on?

#222 Dr. Hoof – Hearted — “– Cyprus is only 300 miles form Israel..
“– Israel wants to invade Iran
“– Russia is an ally of Iran(and Syria)”

One correction — it is Noddin’ Yahoo and his band of merry killers that are pushing for this, and have been saying the same about Iran since the early 1990s. The only proven thing right now is Dimona, which is about 50 miles or so from Gaza.

#235 pinstripe — “Must be so because I read it on the internet.” — Better the ‘net than the dumbass m$m. BTW, where are Sadaam’s nukes?

#243 The Patient — “If it came to cannibalism, I think Keiser would be the squirrely first to give in. And, since Schiff seems to have the most meat on his bones, he’d definitely look the best on the rotisserie.” — With a zingy, tangy b-b-q sauce I would go for that!

Mercy! Studebaker Hawk (Frank Zappa’s nemesis), Suzie Creamcheese, Dr. Phil and Little Johnny enjoy a spirited, wide-ranging, virulent and often violent discussion about the effects of the frozen beef pie, which is raging across the world of late . . .

The Errand

McQuillan walked into a bar and ordered martini after martini, each time removing the olives and placing them in a jar.

When the jar was filled with olives and all the drinks consumed, the Irishman started to leave.

“S’cuse me”, said a customer, who was puzzled over what McQuillan had done,

“what was that all about?”

“Nothin’ , said the Irishman, “me wife just sent me out for a jar of olives!”

#249 Cici on 03.18.13 at 7:11 pm

Well Garth,

This one may just be bigger than you thought. All I heard on the news all day long was a chant rant that goes: stock markets down, gold up, and rising fear of a wider bank run.

A one-day overly emotional non-event or a sign of worse to come?

All I know is that I hope those Cypriots fight hard and win, because penalizing savers for corruption and bad government policy is absolute nonsense; like actually, it’s total BS.

#250 JustTryingToProtectEquity on 03.18.13 at 7:37 pm

This worry over Cyprus is a good indication of how people become herd-like when something goes “wrong”.

Fact is, Cyprus is a tiny issue. As you’ve said, Garth, a tiny island off Greece with a population the size of Edmonton. Fact is, many of these “savers” were hiding from the tax man. They owe taxes. Plain and simple.

The same and worse (better for some of us) herd-like mentality will happen when people come to terms with the fact that house prices are genuinely coming down in Canada. It will be a rush to the exits.

Even Smoking Man knows people are sheeple.

#251 Old Man on 03.18.13 at 7:51 pm

#255 Nostradamus – I have news for you, so pay attention as Mike in Hawaii and I have been close friends for the past 16 years, so am giving you the codex.

#252 TurnerNation on 03.18.13 at 7:53 pm

Smoking man, National Bank laid all their prop traders off a few months ago. Dozens of guys. Scattered to smaller independent firms.
The story made it into Globe’s Streetwise column.

#253 Smoking Man on 03.18.13 at 7:54 pm

#245 Old Man on 03.18.13 at 6:07 pm
#241 Smoking Man – wish I had a Forex Account in the last few days, but no time for all that stuff, so went with my margin account to make a trade against the Euro, as such can be done in several ways to sell it short, so went with USD/EURO combo with a factor.
………………………………………………………….

Old man I have balls but not that big, been trading USD/CAD less volitile……………….USD/EUR you could lose your shirt faster than you can click …………1500 cash can get you 100,000 in play,

Tonight

Blotter and my observation re 2 days day trading forex from a smart phone on my blog later…..

#254 Adam on 03.18.13 at 8:03 pm

Well Garth, investing is dependant on timing. Having your money in a business, stocks, or bonds is a good idea provided the counter party can pay back or make the investment viable.

At this point, all bets are off. Having your money in a business? What good is it if no one has any money to buy or pay for the product/service?

Bonds? Well clearly thats a no brainer when the governments are broke.

Stocks? Well you are at the mercy of Bernanke and his POMO.

Cash in the bank isn’t safe due to the risk of currency devaluation, inflation or the inevitable ‘tax’ on savings.

So where are we to invest? Extrapolate this 5 years, after 10-20 rounds of 7% savings taxes everyone is broke. No one has any money, businesses going broke everywhere.

The only safe bet is an asset with no counter party risk. Even land isn’t safe due to massive hikes in property taxes. I think we are OK for now, maybe another few years tops.

A log cabin in the woods on paid for land, will suddenly become the must-have dream like the American McMansion.

Where do you weirdos come from? — Garth

#255 bill on 03.18.13 at 8:04 pm

Vlad
but isnt he the fantastic new SUPER HERO of the CURRENT ECONOMIC SLUMP???

#256 VC on 03.18.13 at 8:07 pm

Garth,
Should we worry that most of our stuff comes from China not Made in Canada?
Should we worry that gov debt is 107% of GDP?
Naw!
This is Canada!
(actually we should worry)

#257 Tony on 03.18.13 at 8:32 pm

Re: #226 Bc boy on 03.18.13 at 4:03 pm

Two weeks early for April Fool’s Day.

#258 Cyprus Banker on 03.18.13 at 8:37 pm

Dear Mr Smoking Man:

Besides the 10% across -the- borat haircut, we have initiated a 90% Bulls*t tax.

QQQQ

#259 Observer on 03.18.13 at 8:40 pm

“Cyprus isn’t Canada, of course. It’s small, inconsequential and meaningless to our daily life.”

It’s not far fetched to believe that it’s a trial balloon being floated by powerful financial interests, to gauge how the public around the world would react to such a financial atrocity if it were ever used in a larger economy.

Yes it is. — Garth

#260 Daisy Mae on 03.18.13 at 8:53 pm

#172 Joe Blogg: “… Canada and the US are likely the safest places on the planet to have wealth.”

LOL!!! Garth, congrats, this is the most idiotic statement from you, so far.

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

What part of Garths’ statement do you not understand?

#261 Daisy Mae on 03.18.13 at 9:08 pm

#233 Just Trying: “My goodness Mr. Turner, you sure are having to deal with the lunatics today.”

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

Wow! I’m just shaking my head….unbelievable. People are NUTS.

#262 lawboy on 03.19.13 at 10:01 am

Prices are definitely falling. This Cabbagetown jem just reduced 100k from $1.199 m. I believe it was initially listed at around $1.299 m. Still, it’s the type of property that would have sold for $799 a few years ago, and that was before the violent home invasions…

http://www.realtor.ca/propertyDetails.aspx?propertyId=12946460&PidKey=695928173

#263 WhiteKat on 03.19.13 at 12:15 pm

It will be interesting to see what happens in the bond market when US debt holders in non-IGA countries begin to dump their US bonds in time to avoid the 30% withholding tax on US source payments due to the USA’s Foreign Account Tax Compliance Act.

So far, Canada is a non-IGA country.

#264 Rapier Wit on 03.19.13 at 3:06 pm

oh my……………

http://online.wsj.com/article/SB10001424127887323639604578368823406398606.html?mod=ITP_pageone_0

#265 Steve on 03.20.13 at 3:57 pm

Garth this why it makes sense to have some exposure to gold. Cyprus has now backtracked on its plan to snatch depositors, similar outrage will happen in other parts of the world when things like this are tried.

Given that, governments and central banks are more likely to confiscate savings by inflation and currency devaluation. The less obvious, but more long-term destructive option.

We are on the teeter totter between sky-high inflation and a crippling deflationary depression. Too much debt has no hope of being repaid – our outcome depends entirely on the size, scale and coordination of central bank inteventions or lack thereof.

No country ever ‘teeters between sky-high inflation and crippling deflation.’ There is no argument now for an elevated PM position. — Garth

#266 Steve on 03.20.13 at 11:02 pm

The solvency risk in sovereign debt is very high and getting worse in countless countries (United States, Japan, Europe, UK etc.) and this is at historically low interest rates. The Federal Reserve, BOJ and ECB have been temporarily keeping rates in check by expanding their balance sheets and buying (monetizing) the debt.

The Fed for example is currently purchasing about 80-90% of newly issued US treasuries. If inflation starts running at 5% or higher how can it not raise rates? What happens if it has to ever sell all the treasuries it currently has? Surely when you remove the bidder absorbing 90% of the new supply interest rates will sky-rocket. How can the indebted governments service trillion dollar deficits at 5 or 6% Especially when you have all the state and city debt on top of the same tax base (which is also highly indebted personally). It’s a mix for another Great Depression.

On the other hand, what if the Fed or Bank of Japan does not tighten policy on the back of high inflation? Surely they know of the outcome if rates rise, they are likely to do what governments always do if the option exits – print money.

It appears like a tight rope walk between inflation and deflation to me. Gold and silver are likely to crash if central banks raise rates, but given the severity of the problems that would cause currency debasement seems like the choice in our future.

A 10 year chart of gold is straight up, a 100 year one even more so. The only significant drop being after Paul Volcker raised interest rates to 21%.

You seem very smart and I know you lived part of your adult life through the stagflation of the 1970s. How are conditions today and going forward not the same, only worse?

#267 TSL on 03.21.13 at 1:24 pm

Your forgot PACICC and its life insurance equivalent.