The deluge

flood14

The devastating and historic floods which forced 75,000 people from their homes in Calgary, and decimated communities such as High River, will likely also impact those who never saw a drop of river water in their homes. Fully 15% of all listings on the Calgary market (about 700) are in the affected areas, and as much as 12% of the city’s entire housing stock could have been saturated.

Flood damage is massively expensive to repair, takes months (or years) of work and can leave an indelible stain on the psyche. Property values usually fall after such events, and areas that were once trendy and in demand – like waterfront – can become market pariahs. Right now, of course, local realtors are trying hard to mitigate the impact in one of the few cities where housing was still hot. The remarks are as cavalier and self-serving as one would expect.

“While it might stave off a bit of activity on the sales from what we originally were thinking we were going to have for the rest of the year, I don’t think it’s going to be significant,” says real estate board economist Ann-Marie Lurie. “If there are less listings on the market because some of these properties are coming off, it actually could improve pricing activity in some of the other areas. You could actually see prices really continue to grow at the rates we’ve seen. So I wouldn’t expect much change there.”

Then Calgary would be unique. Flood experience in other urban centres (like Brisbane in 2011) shows house values dropped by about 20% in affected areas, and as much as 60% for periods ranging between months and years. In fact in Brisbane (twice the population of Calgary) the average house price for the entire city – flooded or not – dipped between 10% and 30% for months after.

Other studies show that over a long period of time, there’s a flood discount, with properties that were underwater appreciating at a slower rate than those which stayed dry. On the plus side, every drywaller, electrician and plumber west of Winnipeg will have work for the next five years, as an estimated $4 billion of repair work commences.

Now, what of the storm on financial markets?

For at least two years realtor-economists have flooded this site telling us interest rates ‘can’t’ increase. Well, they did. There’s more to come. And the Bank of Canada hasn’t even started its tightening – that comes next summer.

The years-old bond rally that pushed prices up and yields down appears to be over. In six weeks US rates have surged a full 1%, with Government of Canada bonds following suit. The jump has been faster and further than almost anyone expected, and as bond investors packed the exits – trying to bail out at the top – they sideswiped other yield-producing assets like preferreds and REITs.

What comes next? Bonds continue to flounder with every piece of positive US economic news. Investors swarm in to buy things like preferreds and real estate trusts because they’re cheap and tasty. And one fact becomes increasingly clear: you’ll never again see the banks handing out long-term mortgages at 2.89%.

By the way, more hikes. Scotia’s at it again, adding another fifth of a point. Did you lock in on Monday? Hope so.

Meanwhile the collapse in bonds is making stocks look a whole lot better for those with the courage to do what 95% of the population can’t – buy stuff on the way down. The yield on US bonds, for example, is now half the dividend yield on stocks – in fact equities are offering double the average spread between the two asset classes over the past 13 years.

How come? Because things are better. Way better. Corporate profits, employment stats, consumer confidence and the housing market all underscore a steadily-improving US economy. This is exactly the reason the Fed will soon start ending its bond-buying orgy – the very news that tanked the debt market and goosed Canadian mortgage rates. It’s why stocks have fallen a mere 5% in this correction and, in a day or two, will likely nose back.

This is not a return of the financial crisis. It marks the end of it. Even collapsing gold prices are telling you that.

Now ask yourself: where are all those billions coursing out of the bond market gonna go?

Another flood. Equally untamed.

180 comments ↓

#1 Brad J Lam on 06.24.13 at 8:42 pm

fuurst, finally for a change? Anyway, Garth do you think the stock market sell-off is done? as you keep suggesting that we invest in stocks as opposed to real estate…

#2 City that smells like it sounds on 06.24.13 at 8:44 pm

Nope no mention of Regina yet.

PS, FURRRRST!!

#3 ronthecivil on 06.24.13 at 8:45 pm

I figure the reason things like stocks are going down is a lot of the people that purchased on margin are locking in their profits and paying down their debt before the rates go up.

#4 Werner Patels on 06.24.13 at 8:47 pm

I count my blessings for having sold my house in Calgary last September before moving back to Toronto. It was already difficult to “shift” it. I had put it on the market at the start of August, and according to my realtor, that was the beginning of a major slowdown. Truth be told, I only managed to sell my (six-year-old house) because the buyer had been looking specifically for my model. Then, with snow starting at Thanksgiving in October and virtually lasting through to May, and now the flood, I wouldn’t be able to sell it anymore – or at a major loss.

#5 Bobcopand on 06.24.13 at 8:53 pm

Do you ever take a vacation on the gulf side of Florida? Just saying, I’d love to pick up most the tab and pick your brains!

Vacation? Huh? — Garth

#6 Scurvy Dog on 06.24.13 at 8:54 pm

It seems that with the Chinese economy slowing down and the recent Fed announcements, a lot of money is heading for the exits and into cash… come back sweet dollars, we miss you!

#7 Labor Rate on 06.24.13 at 8:54 pm

Lets hope that a recovery truly is in place and that the labor participation rate comes up. Right now it’s still in the doldrums. As the situation improves, perversely the unemployment rate should rise before coming back down again as all those out of work try to join the labor force again to take advantage of an increase in jobs.

http://data.bls.gov/timeseries/LNS11300000

#8 Happy and Mtg Free in BC on 06.24.13 at 8:55 pm

Thanks for another great post Garth.

So happy I kept a good chunk of change on the sidelines for this correction…you told us it was coming…here it is. I have stocks that have suffered but will recover no doubt. I’m not worried. Oh what to buy, what to buy….

I have an appt with [email protected] tomorrow to cash out my kids RESP sitting in a high yield bond mutual fund. Not sure where to put that money yet but it sounds like a bond is not the place?! Maybe the North American Value mutual fund?! I really don’t want to screw this up…my kids are gonna need this money for med school!

#9 tigerbaby on 06.24.13 at 8:57 pm

> Never underestimate corporations’ creative abilities to survive any economic conditions …

creativity is for the long term … doesn’t help you when you have a $ 10M bond payment due in 2 weeks that you can’t finance due to a liquidity crisis …

#10 earlybird on 06.24.13 at 8:59 pm

Fantastic Post! The river properties have always had the RISK of flooding, but people wont forget the images of the actually event of a major flooding, and it will reflect on the price for sure. I personal thought it would be nice to live in High River, and had given it some thought, its is a great little town, now….would never happen. Calgary will rip through this disaster with flying colors!

#11 Saskatoon Land of the Living Skies After living here for five years you will call it the "Land of the Living Dead." Herd of Zombies Buying Real Estate on 06.24.13 at 9:00 pm

With the brutal reaction by investors from Ben Bernanke’s message the Real Estate Zombies are so upbeat again. In fact one of my friend who I almost convinced to rent , save and invest are now buying a house in a former swamp on what we called the new urban sprawls of Saskatoon the land of the living skies.

Because of the floods in Alberta 99% of the Zombies are convinced that in fact Saskatchewan is better.

#12 Garbage that reads like it looks on 06.24.13 at 9:06 pm

Thanks for mentioning this. It seems that the impact will be large. I’m surprised that this tragic event has not been used yet as an excuse to jack up gasoline prices all across North America.

#13 sasquatch on 06.24.13 at 9:07 pm

So what happens to a property value when the water damage is only 4 feet above the ground level. All that compressed sawdust and glue tends not to like water.

I would not be surprised if lot of the heavily flooded homes need to be torn down completely. What happens then?

#14 Smoking Man on 06.24.13 at 9:07 pm

The Spy’s that love us……

We live in a bazaaro world, Insurance companies charge crazy fee’s but they don’t pay claims. Calgary for example.

No one is up in arms, no one throwing rocks at politicians, just a few ransom protesters that show up once in a while as we all mock them when we see them downtown.

This is why I’m with the Machine, no one’s got my back, now I know what Gartho would say , get into politics, I would consider it but I now know that the NSA knows every time I visited a rub and tug via my phone, they can black mail me, I would turn into a Feinstein, a McCain , or the Horror of being a Lindsay Graham.

Sure they spy on Al Kinda. But being a self-professed master liar, I think just like them. Based on what policy’s they have in the headlines they telegraph what they listen too.

Returning Vets from the battle field they learn who’s interests they are fighting for, they get mad, it ain’t apple pie and white picket fence. NSA watches them like a hawk. Guns and Red necks, they too are pissed. The powder keg of having so many on food stamps, and so many young under or un employed.

The internet, alternative media, leaves machine guessing. The Machine and the public know MSM is a joke. News is not news, it’s an infomercial for policy.

The Machine knows that the in the USA is like a pile of dynamite sitting in the hot sun in the desert, it may never explode, but it can easily explode under the right chain of events.

NSA, DHS, White House are terrified of their own people, they need to bring Snowden in because they believe it will discourage other whistle blowers, I believe the opposite will happen. Before Obama was elected I loved him till I found out Kissinger was his primary backer. Obama is so owned.

But what is really sad is our Journalist are shamed and humiliated reporting things they know to be bold faced lies, yet if they want to eat, it’s what they got to do.

That’s why guys like Garth are my Hero’s they flipped the bird to the machine.

You’re still an ass I’m right more than you, but damn you got a bit of a streak going. I will admit that.

#15 Mikey the Realtor on 06.24.13 at 9:10 pm

#1 Brad J Lam on 06.24.13 at 8:42 pm

fuurst, finally for a change? Anyway, Garth do you think the stock market sell-off is done?

———————–

In one word, no, the robmarkets in particular the TSX will be below 10k in the next 12 months. Rates will be 1% lower as the gamblers will start packing into the bond market again like a herd in Kazakhstan. There is only one catalyst that would and could be detrimental to RE and that is jobs, rates will have no impact because they are staying low for a very very long time. You all have been warned and schooled all at the same time.

#16 T5_INCOME on 06.24.13 at 9:16 pm

Sir Turner

Bond ETF’s such as the popular XBB.TO have varying bond duration’s included in it. As yield rises and the prices declines, will the the monthly distribution of Bond funds increase ? And if so, I am guessing the amount it will increase will correspond to the duration/weighting of the bonds held ?

Thank you Sir Turner

#17 JSS on 06.24.13 at 9:17 pm

Garth – I’m currently in a five year fixed rate with RBC, at 4.39% expiring March 2014. RBC wants $4,500 to get out of it. No blending they said, and is NON-negotiable. Should I break the mortgage and pay $4,500 or wait till December 2013 when I’m free to get a hold on a new rate possibly with a new instiution.

#18 Yitzhak Rabin on 06.24.13 at 9:17 pm

On Corporate profits – Earnings per share are up because companies are issuing debt to buy back stock. Revenue growth has barely budged and staff have been cut to the bone over the last 5 years. With higher rates, there will be less share buy backs. Earnings from emerging markets have goosed US profits, they are now having many problems.

employment stats – labour force participation rate at the lowest since women started entering the workforce en masse. Unemployment rate up on last reading. Double counting of part time employees due to Obamacare mandates. Goods producing jobs continue to fall.

consumer confidence – hourly earnings down, hours worked down, large looming problem with student debt, last reading before stock and bond market drop.

the housing market – not a free market. The Fed manipulating rates, buying $45 billion a month in MBS. Ordinary Americans still priced out of market, Hedge funds the largest buyers with cheap money. Rapidly rising mortage rates will take the final air out of this corpse.

Trade deficit still high, budget deficit will surprise to the upside. Municipal debt problems, Detroit bankrupt, unfunded pension obligations, $3.5 trillion Fed balance sheet that cannot be shrunk without collapsing the economy.

Stocks will probably go up like you say, however it will take another shot of monetary heroine. Already you are seeing Fed officials backtrack or “clarify” their comments about “tapering”. Bernanke said himself they can increase QE if economic data dissapoints, which it will.

Gold – What will you say when it makes a new high?

#19 tigerbaby on 06.24.13 at 9:24 pm

> The US has 5 trillion + in US Treasury bonds held by foreigners coming home to roost as we speak …

IF and when the SHTF the US will the last one standing … and where would you put $5T anyways? into something guaranteed by the Russian or Chinese government? LOL

#20 eastvan on 06.24.13 at 9:25 pm

40% of Americans don’t have $500 in the bank.
China is slowing.
Europe is teetering.
Global warming is causing fires, floods, droughts.
Markets are as volatile as the weather.
Economic inequality is at levels not seen since 1929.

Garth: All is well (except real estate).

Actually I said the US is recovering. It is. — Garth

#21 JSS on 06.24.13 at 9:28 pm

“Now ask yourself: where are all those billions coursing out of the bond market gonna go?”

Gold? stocks?

I give up. — Garth

#22 TurnerNation on 06.24.13 at 9:28 pm

Smoking man, why not start the Ancient and Accepted Order of Blog Dogs, Long Branch.
Meeting hall: Duke Devon Lodge #1.
Newest member: Tyler Cowan – LOL

(On that note I will not join any Fraternal Society, as I will never take oaths-to-men.)

#23 Notazombie on 06.24.13 at 9:28 pm

I would like to pick your brains too Garth!

#24 TurnerNation on 06.24.13 at 9:33 pm

People are worried about their cell phone listening to you? Don’t be. What I’d use – if I were them – is the present Near Field Communication viz a viz the Doppler Effect. Radar. This is old technology.
A simple chip that sends out waves and measures their return – if any. Gives a clear picture of who/what is in the room within some field of depth. Like a weather radar. A silent sentry.

#25 eviee1973 on 06.24.13 at 9:37 pm

The mobile exploiting services are pulling into Calgary tonight, saw a convoy of disaster/restoration service vehicles with Ontario plates pulling into a hotel when out for an after dinner walk.

#26 DaleFromCalgary on 06.24.13 at 9:41 pm

#11 – High River regularly floods once or twice per decade, yet 12,000 people insist on living there.

Calgary real estate will take a dip for the particleboard McMansions in Douglasdale. On the other hand, every realtor trying to unload a house in Edgemont is going to be telling young and stupid couples “… plus, this beautiful house is 300 metres above the Bow River and will never flood”. Of course, it’s impossible to get on and out on the hill when there’s a blizzard …

Tradesmen! Heed the call! If you know how to mud drywall or lay carpets, head to southwestern Alberta. No competent journeyman from any part of Canada need be unemployed this summer.

#27 Mel on 06.24.13 at 9:45 pm

Stop telling people to go to stock market. Whoever listen to you to buy REITS are now under water. Higher interest rates are BAD for REITS. When REITS plunge
50% or more, then buy them. It is too early yet!

Stocks are not CHEAP! I will buy stocks when they plunge 50% or more. That’s when you should encourage people to buy stocks. It is too early.

I tell you where people are going to plunge their money when stocks selloff. Bond market. Why? Because higher interest rates will stop any economic recovery going forward. Higher interest rates, lower stock market prices. Next year, bonds will be a place to park your money again.

As I have said before, Bond bubble is not over yet! There will come a time when it will, this is not the time.
This is another opportunity to buy Bonds cheap.

#28 KG on 06.24.13 at 9:48 pm

@ #21:

Garth, it was a teaser.

#29 Basement dweller on 06.24.13 at 9:50 pm

Don’t know nhow BoC will be able to move the interest rate more than one percent. Commodity prices are tanking, home prices will be down and soon GDP will follow.

Mortgage rates are rising and that will be enough.

#30 JSS on 06.24.13 at 9:52 pm

21JSS on 06.24.13 at 9:28 pm
“Now ask yourself: where are all those billions coursing out of the bond market gonna go?”

Gold? stocks?

I give up. — Garth

——

You get so angry. Sometimes you’re not clear.

#31 Smoking Man on 06.24.13 at 9:52 pm

#22 TurnerNation on 06.24.13 at 9:28 pm
Smoking man, why not start the Ancient and Accepted Order of Blog Dogs, Long Branch.
Meeting hall: Duke Devon Lodge #1.
Newest member: Tyler Cowan – LOL

(On that note I will not join any Fraternal Society, as I will never take oaths-to-men.)
……………………………………

Who is Tyler Cowan?

I have my sights a bit higher, pun intended

The Church of Smoking Man….No one talks to each other

Big ass speakers,
Cases of Frontera Chardonnay

Dj sping Floyd, Cohen, Queen, Zep, Black sabit………as we all get shit faced. and let our imaginations run wild.

Am I aging myself……..

As far as Ancient and Accepted , the hand shake etc.
Been there done that like 25 years ago for a month or too.

Bunch of boring old men, memorizing and play acting another mans play.

Now if we could improvise, make up our own scripts, different plot I’m in huge…….

#32 Dean Mason on 06.24.13 at 10:02 pm

There are 2034 to 2035 provincial strip bonds that are high as 4.37% to 4.41%. Even there are 2030-2031 maturities that are 4.34% to 4.42%. These are 2.5 year highs.

Be still, my beating heart. — Garth

#33 HAWK on 06.24.13 at 10:02 pm

#20 eastvan on 06.24.13 at 9:25 pm

<<>>

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

Links please?

#34 Smoking Man on 06.24.13 at 10:09 pm

I bet Snowden was in the Cargo Hold, or jump seat, he was on the flight to Cuba.

That’s what I do if I was his handler.

#35 Smoking Man on 06.24.13 at 10:11 pm

#30 Basement dweller on 06.24.13 at 9:50 pm
Don’t know nhow BoC will be able to move the interest rate more than one percent. Commodity prices are tanking, home prices will be down and soon GDP will follow.

Mortgage rates are rising and that will be enough.
…………………………………..

You so don’t know the Canadian Herd

#36 zed on 06.24.13 at 10:13 pm

My REITs are down from 2 months ago but up big from my initial buy plus other buys when prices come down like now. Riocan and CAR are great values.
I think that with every mortgage rate increase coming, the blasé attitude about rate notices from the big banks in the past 4 years, fear will materialize. What to do, grab a rate before it is too high or a falling RE price?

#37 Butch on 06.24.13 at 10:13 pm

Wouldn’t some of those the billions coursing out of the bond market go back into bonds as yields rise?

#38 timmy on 06.24.13 at 10:13 pm

Just think of the poor saps who bought in reechman

#39 The deluge — Greater Fool – Authored by Garth Turner – The Troubled Future of Real Estate | The Affluent Boomer on 06.24.13 at 10:22 pm

[…] via The deluge — Greater Fool – Authored by Garth Turner – The Troubled Future of Real Estate. […]

#40 Led on 06.24.13 at 10:27 pm

Let’s hope so. Let’s hope this market correction in stocks ends tomorrow.

#41 AK on 06.24.13 at 10:42 pm

#25 Shawn on 06.24.13 at 9:36 pm
“NO NET MONEY HAS OR WILL COME “OUT” OF BONDS”

“All the talk about funds flow is garbage since for one to sell someone else must buy.”
——————————————————————–
Bullshit.. What about the Bonds that mature on a daily basis? Not all get replaced.

#42 Ahead of the Curve on 06.24.13 at 10:51 pm

The whole sad thing about this event in Alberta, is the preying on people’s suffering and misery by the real estate association. I can’t get past that.

What kind of genuine association that represents the interests of all buyers and sellers (or so they claim), issues a statement like that?

Instead of developing a plan to assist the people to whom they sold a house, and to what extent the disclosures were made for potential of flooding, they seem happy that there will be more buyers on the market.

A sad sad world indeed. And this is Canada, eh?

#43 Mike on 06.24.13 at 10:58 pm

An update on the “Solstice” investment condos in Guelph:

http://www.guelphmercury.com/news-story/3854378-colourful-condo-building-proposed-for-guelph-s-south-end-nearly-sold-out/

The VP of Hip Developments is claiming that the units are 80% sold including “5 in the last 30 minutes”. The free year of management services is being provided by a company owned by the realtors selling the project.

#44 snake on 06.24.13 at 10:59 pm

http://www.greaterfool.ca/2008/03/06/the-threat/#commentsWhere are we now?

• In January, sales of pre-owned homes in Canada fell 6%, or an annualized rate of more than 70%, says the Canadian Real Estate Association.
• The number of people saying they are very likely to buy a new home within the next two years has hit the lowest point in 15 years, says the Royal Bank.
• Home resales in Toronto last month crashed by 11%, says the Toronto Real Estate Board.
• The number of people trying to unload their houses has suddenly mushroomed. Listings soared to a new record in January across Canada, up 9% in a single month, says CREA.
• Meanwhile, three million families in the US now owe more on the homes than they have equity. House prices continue to collapse, and most experts think this will all go on for at least two more years.

I warned clearly last summer, and again in the autumn, that this was coming. We are on the verge of a correction in real estate values which will have implications for all. The global credit crisis which began in American residential neighbourhoods continues to fester. The Canadian financial fallout may be yet to peak. Billions more, ultimately the property of depositors and investors, will be erased. Once-valued assets will be judged nearly worthless. And everybody whose wealth became concentrated in a house will wonder how in God’s name this happened.

Trust me. You will have many to blame.
————————————————-

you been saying this for the last 5 years where is the crash that supposed to happen ?

The comment you reprinted was published on this blog in March of 2008, half a year before the global financial crisis hit with full force, and in a time far different than now. I warned of losses coming. I was correct. — Garth

#45 John on 06.24.13 at 11:24 pm

The drop in US stocks this month is pretty much cancelled by the drop in the Canadian dollar.

Is it worth paying the 5% premium to buy foreign assets right now?

#46 Keith in Calgary on 06.24.13 at 11:24 pm

Did you see who was interviewed on the news here yesterday ?

Jim Prentice, vice chair of the “red” bank, who was in Calgary to survey the damage. Interesting, eh ?

Over land flood damage is not insured, and there are some thousand or so homeowners in Calgary alone who are affected……….not counting the rest of, southern Alberta. Of course, some of those who live in Riverdale, Roxboro, and Erlton can afford to fix their homes out of pocket as several did after the 2005 floods (many were my past clients, so I am talking first hand here). The Alberta gubmint has already said it was “in talks” with insurers about this “issue”……..read this as the insurer’s are being “strong armed”……this morning I imagine the banks and Feds are more than a little concerned, as being financially underwater is a poisonous combo, when one is literally the same in the physical sense as well.

My wife and I unanimously agreed that if it was us, and we didn’t get a free dump truck of money from the gubmint, we’d walk from our mortgage and go BK. But as we’re 4th floor renters, that’s not a problem for us. The vote amongst co-workers was 3 out of 5 who’d walk away as well…….and those are professional, educated, and well paid types I should add.

On the subject of the US tonight, CNN is reporting that 76% of Americans are living paycheck to paycheck without savings…….some US recovery eh ? We all know “real recoveries” are consumer driven, and the US consumer is soooooo indebted, ou tof work or under employed, and flat broke, that the only GDP numbers they are generating are from the Bernanke effect, that is, bubbles in different sectors that move around like the computers that trade the stocks in the phony market.

Anyone with cash seeking yield should look to the currency wars that have started. FOREX is where it will be at for the next few years…….and I’ll be on the front lines……

#47 Canadian Watchdog on 06.24.13 at 11:28 pm

#41 Led

Let’s hope this market correction in stocks ends tomorrow.

There is no market when the Fed now has to dictate when a boom and correction begins. All assets are becoming correlated to the Fed's open mouth operations. They say more QE, it's risk on. They say taper, it's risk off. That's all you have to know. No seriously. 

#48 prairie dog on 06.24.13 at 11:31 pm

@#17 JSS:

The bank quoted you $4500 as a penalty. How much are you allowed to prepay each year (15%, 20% ??); and how much have you prepaid this year? If you still have room to prepay your mortgage and you are serious about jumping ship you should make the max pre-payment and then talk to them about penalty. If you are able to put down 20 or 30K (even if transferring from a credit line) you can knock that penalty down a lot and it may then be well to your advantage to pay the penalty and do the early renewal. Get pre-approved from a mortgage broker and tell the bank they can match the rate or you go elsewhere. 2.88%/5yr fixed or 3.53% 10yr fixed.
http://www.ratesupermarket.ca/mortgages/
That’s exactly what I did about 4 weeks ago: Paid the maximum pre-payment (and within a week was my anniversary date so was able to do it again) which brought my penalty down to $1900 and paid out my 5 year term with 2 years remaining which was at 5%. Now locked in for the next 5 @2.79%. The penalty will pay for itself within 6 months.

#49 JL on 06.24.13 at 11:31 pm

Garth, if you want to discuss the potential impact on pricing in Calgary why on earth are you looking at what happened to Brisbane?

Calgary had very similar flooding in 2005… What was the impact on pricing since then? Demand for Erlton, Mission, Rideau Park, etc etc… all went through the roof…

Shouldn’t you use the most similar example for comparisons??

#50 screwed on 06.24.13 at 11:32 pm

You’ve got to be kidding me. Honestly, dude. The bond market is in carnage and you’re still out there touting the “great American recovery” story.
A recovery that is 100% only feasible with cheap credit, even free credit. Bonds are in a shit storm for a number of reasons. Tapering talk being one of them. China’s hard landing after years of shadow banking another.

Now, if you would make the case for a hard landing in Canadian real estate due to a massive liquidity crunch in China and subsequent real estate liquidation across the world from Chinese investors … you’d be a champ.

Rising mortgage rates are killing the American real estate market – again. The bond carnage is making refis and debt rollovers a precarious proposition in the coming months.

NOTHING TO STIMULATE GROWTH OR KEEP A RECOVERY STORY BUILDING.

We’re screwed. Time you’d finally admit to that and start offering some advice. Buying stocks? Really? LOL

#51 Freedom First on 06.24.13 at 11:38 pm

Another danger of owning a house in Canada. Garth mentioned that flood damage is massively expensive, but I think he is too kindhearted to tell people here Canadian homeowners are SOL when it comes to flood insurance. Commercial buildings can buy it, but it is massively expensive. Just google flood insurance in Canada and there is a number of sites on all the insurance rules of Canada. I feel bad for the flood victims, but this is another clear example about what you don’t know can be very costly. Unfortunately, it is not just the young house horny crowd, it is the vast majority. This is why Garth, so often after writing an informative article, will respond to idiot comments with “I give up”.

#52 Don Cherry on 06.24.13 at 11:39 pm

As is obvious…(except to Smoking- Old cry-ogenic man)…I am a closet Black Hawks fan.

#53 Devore on 06.24.13 at 11:40 pm

#8 Happy and Mtg Free in BC

I have an appt with [email protected] tomorrow to cash out my kids RESP sitting in a high yield bond mutual fund. Not sure where to put that money yet but it sounds like a bond is not the place?!

The problem with bond FUNDS is that you don’t get to hold them to maturity, so you never receive par value, one of the main reasons to hold bonds long term.

#54 Michael F on 06.24.13 at 11:46 pm

After the flooding in Brisbane, a flood of tradesman swooped into town from all over Australia to cash in on the repair work.
Many camped for weeks that turned into months waiting for work that failed to arrive.
The insurance companies refused to green light the urgent works that were needed as they tried to wriggle out of their obligations by re-defining the definition of ‘flood’.

#55 The Canadian Patriot on 06.24.13 at 11:50 pm

The US Fed already back peddling on QE taper. That didn’t take long for their test to see how the markets would react, knowing if actually doing tapering would send all markets into a downward spiral:

http://www.marketwatch.com/story/dudley-says-fed-isnt-accommodative-enough-2013-06-24-1010311

#56 Subversive on 06.25.13 at 12:01 am

Locked in for 10 years today. Feeling good! Was supposed to meet at the bank in downtown Calgary, but, uh, that wasn’t happening. Thought to put it off a week and meet next Monday, but the banker called me to say rates on 10 year mortgages are going up 0.6% tomorrow. Signed, faxed, done! Gonna kill this thing off before renewal.

#57 The Canadian Patriot on 06.25.13 at 12:04 am

“Banks face another global financial crisis worse than 2007-8 warns the normally conservative Swiss-based Bank of International Settlements as a $10 trillion central bank bond mountain leaves them perilously exposed to higher interest rates.”

From the Bank of International Settlements – boss of central banks:

http://www.arabianmoney.net/gold-silver/2013/06/24/bis-warns-banks-dangerously-exposed-to-10tn-bond-market-crash-so-buy-gold/

#58 bob on 06.25.13 at 12:05 am

I’d be happy if you are right Garth, but I’m more in line with what the ‘smart money’ folks are saying — that the Fed are incorrectly optimistic, focusing on the headlines (e.g. unemployment #s) and not looking deeper (e.g. contrast that with employment #s). I’m more in line with Krugman
http://www.nytimes.com/2013/06/24/opinion/krugman-et-tu-bernanke.html?_r=0

Therefore, Garth, will you at least consider perhaps that economy is not recovering as the Fed would like, and regardless of whether or not they do raise rates, their credibility in assessing the situation is toast?

#59 bob on 06.25.13 at 12:11 am

You’ve dissed the gold bugs quite a bit, so I’m curious — where do you think gold is headed? Or is that an asset class you ignore completely? I mean, did you ever short the metal when it was $1900/oz? Is it worth $1200/oz? Or are you of the mindset it is ‘useless’ and worth only the true fundamentals, say $400/oz?

#60 VIVE LA FRANCE on 06.25.13 at 12:14 am

Vacation? Huh? — Garth

Forget Florida. Come to Europa.

#61 TRON on 06.25.13 at 12:23 am

The mobile exploiting services are pulling into Calgary tonight, saw a convoy of disaster/restoration service vehicles with Ontario plates pulling into a hotel when out for an after dinner walk.
———————————————————–
The police should put up roadblocks and stop people with Ontario plates. They could catch the cheating drywaller’s, thieving electricians and con men plumbers.
Don’t know what it is about them… just can’t trust people who cheer for the leafs I guess:)

#62 Gerryantics on 06.25.13 at 12:30 am

US American Economic Rennaisance here it comes !

The financial crisis is over.

The quadrillion in derivatives has just vaporized.

And rising interest rates are good for stocks.

#63 Dave on 06.25.13 at 1:11 am

Looking at the MLS today here in Calgary, and I already see several listings stating “out of the flood area” or “high and dry”. Realtors are trying to capitalize I guess.

#64 JimH on 06.25.13 at 1:29 am

#25 Shawn; #42 AK

Actually, Shawn, you’re quite right that there has to be a buyer for every seller. However, as the prices fall, the total sum of the dollars invested in those bonds falls. Many of the sellers reinvest in stocks, so the balance shifts or “flows” toward a greater sum of dollars invested in stocks.

In addition, as AK notes, maturing bonds are not (always) replaced with other bond issues when stocks (or cash) appear a more attractive option.

As a final note, in spite of recent market reactions, the powers that be have reiterated their stand to maintain supportive of the economic recovery, albeit in a somewhat less aggressive role. This translates (IMO) into a situation in which we will continue to see positive corporate cash flows and stable default rates. There will not be a tsunami of new bond issues.

The bond bubble has burst, and we will see a return to a more ‘normal’ stocks-to-bond relationship (I think).

#65 VanPerfecto on 06.25.13 at 1:39 am

What happened to the gold bugs like Jim Sinclair over at Mineset. Jim seems to be frothing at the mouth now ranting about the great comeback in gold!!! Why didn’t he predict the collapse. Calgary has no where to go but down. Land for as far as the eye can see and water logged to boot!

#66 The Prophet Elijah on 06.25.13 at 1:47 am

Looks like China is set up office in NY to sell off US debt, and invest, among other things, real estate. Wonder if this is RE in the US – if so it could be one of the reasons why US RE is had a bit of a run. Hope US citizens are learning to speak mandrin, they will be owned by China in the not to distant future:

http://www.bloomberg.com/news/2013-05-21/china-starts-unit-to-diversify-reserves-from-u-s-debt-wsj-says.html

Goldman also warning that US Treasury sell off is real:

http://www.cnbc.com/id/100779340

Won’t be long before the big Wall Street banks start dumping, further overwhelming the Fed – they will turn on each other eventually.

#67 Observer on 06.25.13 at 1:58 am

Totally agree with you Garth. Although the market fell two days in a row because of the US stopping QE. The market will start to trend upwards.

This is HUGE “bad news” for bonds and low yielding vehicles. Pressure will be on, too bad the debt load is on the heavy side, but if Government wants to raise capital, they have no other choice.

#68 Observer on 06.25.13 at 2:08 am

#13 sasquatch on 06.24.13 at 9:07 pm

So what happens to a property value when the water damage is only 4 feet above the ground level. All that compressed sawdust and glue tends not to like water.

I would not be surprised if lot of the heavily flooded homes need to be torn down completely. What happens then?
===============

Geez, I wonder if the Flood Victims are still preaching “its better to own than to buy” I sure the Renters are real sad they didn’t buy.

That is the cost of owning and BTW, imagine their insurance cost will go through the roof next year!

#69 joe on 06.25.13 at 2:10 am

Even mentioning Calgary and speculating on home prices at a time like this make you the most insensitive person on the planet. Pay day isn’t every day but in the end you will pay Garth

If I lived in Calgary I’d appreciate some opinion on what to expect. The comment is appropriate. — Garth

#70 Martin Lazi on 06.25.13 at 2:25 am

#36Smoking Man on 06.24.13 at 10:11 pm

Herds always change if you make them work harder

#71 Corban on 06.25.13 at 3:56 am

Have the in-laws here for two months. Trying to convince them not to buy in Canada and the universe blesses me with a flood. Chairman Mao loves reactors not Canadian real-estate, go uranium!

#72 Tony on 06.25.13 at 4:43 am

Re: #28 Mel on 06.24.13 at 9:45 pm

Right now is a good time to park a lot of money into the bond market especially long term bonds. We’ll see a huge rally in bonds next month as well as both gold and silver.

#73 Buy? Curious? on 06.25.13 at 4:51 am

Garth! It was a flood in the hottest real estate market in Canaduh! Can no one see the signifcance of that? Water on Fire? It’s like that Black Swan moment that author, Durka Durka Talib, has said is the unpredictable events start a chain reaction that no one could handle.

http://www.youtube.com/watch?v=O0JBfqYLa8A

#74 Nimoucha on 06.25.13 at 7:16 am

#153 JimH on 06.22.13 at 7:35 pm wrote:
Modern monetary theory (much less the practice and praxis of the same) is not at all easy to understand; it takes work and a high degree of discipline, but thankfully, not a lot of smarts. Mostly hard work, concentration and study. Yes, the old gold standard made understanding the valuation and even the function of ‘money’ (in all its vicissitudes) much easier, but that, my friend is your problem.

#169 Derek R on 06.22.13 at 9:15 pm wrote:
True. People would do well to follow your advice and learn more about this MMT stuff. It may not be the whole story but it’s a big part of it.

And in my opinion the only thing that makes it difficult is that you have to unlearn a bunch of stuff which you thought was true but isn’t. That’s harder than learning new stuff.

Sorry to refer to an old entry, but I very much want to follow these recommendations. Where do I start?

#75 AK on 06.25.13 at 7:34 am

#74 Tony on 06.25.13 at 4:43 am
“Right now is a good time to park a lot of money into the bond market especially long term bonds. We’ll see a huge rally in bonds next month as well as both gold and silver.”
——————————————————————–
Hey Tony,

You were selling Gold short up until a month or 2 ago.

Why the sudden reversal.

Have you been viewing Peter Schiff videos?

#76 Steven on 06.25.13 at 7:34 am

Garth the above picture shows the folly of paying so much for so little. When the next big ice age sets in people will get a remedial lesson. That may be sooner than people think.
When it comes to the truth first they laugh at it, then they fight it and in the end it is accepted as self evident.

#77 jess on 06.25.13 at 7:38 am

superlatives

The year 2005 was the wettest in Canada in six decades, says Environment Canada, which also cites the Alberta floods last June as the top weather event in the last 12 months.
“We had across Canada the wettest year in the past 60 years that we’ve been measuring records right across the country, particularly in the summer,” said senior climatologist David Phillips. “It was the wettest summer on record.”

http://www.cbc.ca/news/canada/story/2005/12/29/weather-records051229.html

#78 Smoking Man on 06.25.13 at 7:50 am

The ministry of obedience training is basically shutting down the competition, see this school does not take attendance, or grade it’s students, or behavior shape. It gives them skills, jobs and promotes self employment.

It does what schools where meant to. TEACH

http://www.bitmakerlabs.com
to read full story, click link

excerpt bellow

Dear Bitmakers

For the past ten months we have worked tirelessly to build Bitmaker Labs into a world-class bootcamp focused on empowering individuals like you to learn full-stack web development. We have done so out of a desire to promote programming literacy and a belief that the current education system is broken.Two weeks ago inspectors from the Ministry of Training, Colleges and Universities (MTCU) entered our offices to inform us we were under investigation for operating an unregistered private career college. The investigation was not the result of any complaint; instead, the MTCU learned about us through positive press coverage in theGlobe & Mail. We recognize it was entirely proper for the MTCU to follow up.In a passive aggressive way, wink wink

#79 jess on 06.25.13 at 7:52 am

Removing Tornado Debris Proves Pricey in Okla.

Back To News »June 23, 2013
MOORE, Okla. (AP) — The city of Moore is paying a local contractor three times what neighboring Oklahoma City is being charged by vendors from out-of-state to remove debris left over from late May’s deadly tornadoes.

The disparity comes as a surprised to Moore-based Silver Star Construction, which is charging the suburb south of Oklahoma City $80.78 per ton to clear an estimated 112,000 tons of debris left behind by storms that killed 24 and injured hundreds.

“I was shocked about how low those prices were,” Silver Star President Steve Shawn told The Oklahoman. “I just don’t understand it, honestly. … My company doesn’t operate in a deal to rip anybody off. We just don’t.”
http://www.wunderground.com/news/removing-tornado-debris-proves-pricey-okla-20130623

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

Boats have relied on the wind to travel around the world for hundreds of years, but last year was the first time that a vessel powered only by the sun completed the full circumnavigation. And now the MS Turanor PlanetSolar is on another mission: measure how climate change is affecting the Gulf Stream.

The expedition team on the 102-foot boat, comprised of scientists from the University of Geneva, will be collecting phytoplankton samples from the ocean and aerosols from the air to understand how the Gulf Stream — an ocean current in the Atlantic that moves water from the tropics to the Arctic — is responding to climate change, according to The Guardian. Because the boat is powered by 5,554 square feet of solar panels, the scientists won’t have to worry about any polluting substances that could distort the data.
World’s Largest Solar Boat Tracks Impact of Climate Change

Back To News »By: Lorraine Boissoneault
Published: June 20, 2013

Boats have relied on the wind to travel around the world for hundreds of years, but last year was the first time that a vessel powered only by the sun completed the full circumnavigation. And now the MS Turanor PlanetSolar is on another mission: measure how climate change is affecting the Gulf Stream.

The expedition team on the 102-foot boat, comprised of scientists from the University of Geneva, will be collecting phytoplankton samples from the ocean and aerosols from the air to understand how the Gulf Stream — an ocean current in the Atlantic that moves water from the tropics to the Arctic — is responding to climate change, according to The Guardian. Because the boat is powered by 5,554 square feet of solar panels, the scientists won’t have to worry about any polluting substances that could distort the data.
World’s Largest Solar Boat Tracks Impact of Climate Change

Back To News »By: Lorraine Boissoneault
Published: June 20, 2013

#80 Ralph Cramdown on 06.25.13 at 8:10 am

On modern monetary theory (MMT):

Don’t be fooled by the name; it isn’t mainstream economic thought. About the only think New Keynesians, Neoclassicals of the Chicago school and Austrians can agree on is that MMT is bunk. Not that that’s definitive proof that it IS bunk, but know you’re studying some seriously heterodox economic theory.

http://en.wikipedia.org/wiki/Chartalism#Criticisms
http://pragcap.com/the-best-of-tpc and scroll down to the section

If you start studying it and a number of things don’t make sense (I’m deliberately not using the word ‘counterintuitive’ here) you can either keep ploughing through, or throw up your hands in disgust and say “these people are nuts!” Always remember that you have that option.

#81 fancy_pants on 06.25.13 at 8:11 am

#17 JSS on 06.24.13 at 9:17 pm

Are you nuts? Rates could be lower by March 2014 for all you know.

IMO just flip to variable when you renew, problem solved. The short term rates ain’t going anywhere in a hurry.

Remember opinions are free and often worth as much. There’s my 2c. Add that to a dime and your 10c richer. good luck

The BoC will not be lowering rates. At least not here on earth. — Garth

#82 jess on 06.25.13 at 8:18 am

nameless floods

http://www.bloomberg.com/news/2013-06-06/drooling-cat-bond-investors-overlook-risk-montross-says.html

http://www.swissre.com/media/news_releases/nr_20130524_blue_danube.html

#83 Tony Right on 06.25.13 at 8:24 am

Love it when you’re right Garth! Balance, diversification, liquidity. Exactly what my Grandparents who lived through the Great Depression taught me. No wonder they went from dirt farmers to millionaires.

#84 JimH on 06.25.13 at 8:45 am

#76 Nimoucha
I strongly recommend http://pragcap.com/
The “Education” pull-down in the menu bar and the “Tools and Resources” pull-down so much good stuff that it kept me out of trouble for a long time!

There is a great deal of very lively debate in the comments section that follows every article posted and as a rule, there are also many good links posted there in the discussion.

Cullen Roche runs the site, and is a model of civility. He will also give his answer to questions. Cullen freely admits that like Adam Smith, John Maynard Keynes, Karl Marx and Wynne Godley among others, he has no formal training in economics. Perhaps this is just as well.

Another interesting perspective comes from John Mauldin http://www.mauldineconomics.com/
Subscribe and you’ll get regular emails.

Good luck!

#85 Holy Crap Wheres The Tylenol on 06.25.13 at 9:11 am

Perhaps these terrible floods in Cowtown are an act of the universe doing what fate would decide? A natural correction on prices? When these flood devalue the homes of these poor people it is really just speeding up the process that has already started. The rest of the country may not receive floods but our own deluge has started as a trickle, eventually the flood will come. I just hope the people of Cowntown can get proper compensation from the government and or the insurance companies.
P.S. Not investing in any insurance companies this year!

#86 Mikey the Realtor on 06.25.13 at 9:37 am

A new robmarket is being introduced to battle that pesky HFT diseased TSX, so they say….

The problem is nobody will be buying, the markets are all going down by at least 50% in the next couple of years as people come to their senses and realize that tangible assets are the only thing worth owning.

#87 maxx on 06.25.13 at 9:41 am

#9 tigerbaby on 06.24.13 at 8:57 pm

> Never underestimate corporations’ creative abilities to survive any economic conditions …

Provision? Robust structure? Cry me a river.

#88 Canadian Watchdog on 06.25.13 at 9:41 am

Interesting article from China.

Translated: Chinese Investment in Canada's Agricultural

"The Canadian Barn" Saskatchewan, Canada has 45% of total agricultural land, while enjoying the Canadian "bread basket" of the world. But last year, where the agricultural land prices rose an average of 10%, nearly three years rose 45%, while the Chinese immigrants populated areas, agricultural land prices soared over the past three years more than 50%. Then someone put a sign and results attributed to Chinese investors to flock to join and wantonly buy land. Full Article

Farm Credit Canada’s Spring 2013 Farmland Values Report

#89 Penny Henny on 06.25.13 at 9:54 am

less housing stock in Calgary means rents are going to skyrocket.

Doubtful. My understanding that most housing stock affected was made up of SFHs. — Garth

#90 Derek R on 06.25.13 at 10:08 am

#76 Nimoucha on 06.25.13 at 7:16 am wrote:
Where do I start?

I’ll second JimH at #86 on his Cullen Roche suggestion. Also take a look at the booklet, “Seven Deadly Innocent Frauds” which is available as a pdf on Warren Mosler’s site. L. Randall Wray has got a nice Youtube lecture, “MODERN MONEY: The way a sovereign currency works” if you prefer listening to reading.

Once you’ve got a basic idea of what the MMT folks think. you might also want to read Steve Keen’s slightly different take on money. Steve’s view is (probably) compatible with MMT but in some ways expands on it. Read the “Financial Instability” stuff in the “Essential Posts” links on his Debtwatch blog.

And #82 Ralph Cramdown on 06.25.13 at 8:10 am is right in saying that this is not mainstream economics. But that doesn’t mean it’s wrong either. Personally I find it makes a lot more sense than the mainstream view. And I speak as someone who learned the mainstream view 30 years before coming across MMT. Having said that I don’t think that MMT is the final word either but it’s a lot closer than the mainstream view. Particularly when you combine it with Steve Keen’s insight into banks.

It certainly explains why we don’t have hyperinflation right now and it also explains why Thatcher’s early 1980s monetary experiment in the UK didn’t work either.

Anyway like Ralph says, take a look and see what you think. If you think it’s out-to-lunch — well, at least you will have had some food for thought.

#91 Daisy Mae on 06.25.13 at 10:12 am

#10 Early Bird: “The river properties have always had the RISK of flooding, but people wont forget the images of the actually event of a major flooding, and it will reflect on the price for sure. I personal thought it would be nice to live in High River, and had given it some thought, its is a great little town, now….would never happen.”

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

My sons’ in-laws live in High River and have been, of course, staying in Calgary for the time being. This is going to cost, in more ways than one…

#92 Daisy Mae on 06.25.13 at 10:33 am

#21 JSS:

GARTH: “Investors swarm in to buy things like preferreds and real estate trusts because they’re cheap and tasty…”

#93 Daisy Mae on 06.25.13 at 10:37 am

“Similar to bonds, preferred stocks are rated by the major credit-rating companies. The rating for preferreds is generally lower, since preferred dividends do not carry the same guarantees as interest payments from bonds and they are junior to all creditors…”

#94 Cristian on 06.25.13 at 10:43 am

“Meanwhile the collapse in bonds is making stocks look a whole lot better for those with the courage to do what 95% of the population can’t – buy stuff on the way down.”

Have you ever heard the phrase “catching a falling knife”?
If not, google it.
You seem to be convinced that the markets are going up because the economy is doing great. Actually there are many studies that proved that the stock markets do not have much to do with how well the economy is doing.
The current boom in the stock markets was caused by the QE, and the current correction, which only God knows when it’s going to end (not in a day or two, as you seem to be convinced) is the opposite of that.
I am sure you know that, Garth, but hey, why let conscience get in your way when you peddle stocks.

Actually I do not sell stocks. Or anything else. And equities are the best leading indicator of economic activity. I know it kills you to admit America is recovering, but try to embrace it. — Garth

#95 AK on 06.25.13 at 10:46 am

#90 Mikey the Realtor on 06.25.13 at 9:37 am
“A new robmarket is being introduced to battle that pesky HFT diseased TSX, so they say….”

——————————————————————–
Hey Mikey,

What the hell is a robmarket? Is it some kind of a Realtor slang?

#96 MikeytheRealtard on 06.25.13 at 10:55 am

The nonsense keeps coming from MikeytheRealtard…just because you can “touch” a house it should be worth millions…go touch some dogshit and tell us how much its worth too….it’s gonna be comparable to Canadian home prices in about 2 years when mortgage rates are 5%….which is actually cheap, but not when idiots are buying Leslieville shitholes for $800k at 2.79% mortgages

#97 Ralph Cramdown on 06.25.13 at 10:59 am

#90 Mikey the Realtor — “[…] as people come to their senses and realize that tangible assets are the only thing worth owning.”

Mikey, can you name — off the top of your head and without looking anything up — three people or families who got seriously rich owning real estate for the long term and collecting rents?

I’m not talking about the old guy who owns a few apartment buildings and is worth $5 million, nor a developer who got rich SELLING real estate to other people, nor the local car dealership magnate who owns the land, now worth $10 million, under his five local dealerships. I’m talking about families that are worth at least $50 million and got that way through buy-and-hold real estate.

We can all name people who got rich inventing things, selling things or trading things, but I can’t name too many really rich landlords. I’m sure you can — they’re proof of your thesis.

#98 Mr. Plow on 06.25.13 at 11:02 am

I know the Edmonton market better, but Calgary a little bit…

My thoughts…

1.) New home prices will go up, a major concrete supplier for all of Alberta is still underwater, labour shortage from a lot of trades dedicating time to the rebuild, oil prices etc…

2.) Rents will go up, transient workers coming in for the jobs the rebuild will create, not to mention those who may be out of their houses waiting for them to be rebuilt or fixed.

3.) Prices in flooded areas or areas near water will drop. Prices in other areas will remain unaffected as the overall supply of product will drop.

Right now everyone is all lovey and huggy about “let’s rebuild Alberta”, but let’s not kid ourselves. Alberta is a province run by business. After the warm fuzzies have worn off, that’s what this rebuild will be about; business.

Ask anyone who lives in Slave Lake or who was part of the Slave Lake rebuild.

#99 TorontoBull on 06.25.13 at 11:06 am

“And equities are the best leading indicator of economic activity.”
you should know that there is no empirical evidence of that. The stock markets are at best a coincidence indicator…
look at the TSX for example and show me a statistically significant regression. The rise in the TSX since 2009 was associated with the boom in BRIC and not so much in Canada.

Dead wrong. — Garth

#100 Keith in Calgary on 06.25.13 at 11:12 am

If America is recovering Garth, and equity valuations are proof of that, please give us your opinion of what will occur once Bernanke stops printing $85 billion a month ?

The shock has already been somewhat absorbed. Don’t expect theatrics. — Garth

#101 Bargains everywhere on 06.25.13 at 11:13 am

#90 Mikey the Realtor on 06.25.13 at 9:37 am

Mikey, you can’t live off of your tangible asset but since I retired, I have been living quite nicely on my dividends supplemented by covered call writing. The stock market is a wonderful thing for those who invest wisely and for the long term. Listen to Garth.

#102 Old Man on 06.25.13 at 11:18 am

I have always done well with equities, and looks like the party is over for now until the next panic. Got all that I wanted including a small position in a preferred yielding about 5%, so when rates go up will buy a bit more discounted capital to average a higher yield, as this is a thin trader. Off for some shopping!

#103 :):( Ying Yang on 06.25.13 at 11:21 am

#32 Smoking Man on 06.24.13 at 9:52 pm
#22 TurnerNation on 06.24.13 at 9:28 pm
Smoking man, why not start the Ancient and Accepted Order of Blog Dogs, Long Branch.
Meeting hall: Duke Devon Lodge #1.
Newest member: Tyler Cowan – LOL
(On that note I will not join any Fraternal Society, as I will never take oaths-to-men.)
……………………………………
Who is Tyler Cowan?
I have my sights a bit higher, pun intended
The Church of Smoking Man….No one talks to each other

I do believe Smoking man is about to engage in proselytization. I’ll join if he supplies free cigarettes.
:):(

#104 Squatter on 06.25.13 at 11:26 am

#80 Smoking Man
The ministry of obedience training is basically shutting down the competition, see this school does not take attendance, or grade it’s students, or behavior shape. It gives them skills, jobs and promotes self employment.
It does what schools where meant to. TEACH
——————————————————–
If you want to learn outdated computer kills, go to the public system.
It’s a lot of work to keep up with new technologies.
Teachers with job security won’t work that much.
They are just interested in 2 things:
July and August.

#105 Nemesis on 06.25.13 at 11:28 am

@Ralph/#102…

“I’m talking about families that are worth at least $50 million and got that way through buy-and-hold real estate.” – RC

I’m feeling mischievous this morning… accordingly, how about this CheerfulChappie [the first to pop into my mind and whom I did not have to google]…

http://en.wikipedia.org/wiki/Gerald_Grosvenor,_6th_Duke_of_Westminster

#106 Nimoucha on 06.25.13 at 11:31 am

#86 JimH and #94 Derek R

Thank you very much for your recommendations. I am already very grateful to Garth for this blog and his help. Derek, I LOVED your list of “Garthicisms”, which I’ve been sending to everyone I try to direct to this website (with not much success, I am sorry to admit).

#107 Smoking Man on 06.25.13 at 11:41 am

YING YANG

proselytization, you had to make me Google it.

#108 Doug in Newfoundland on 06.25.13 at 11:57 am

Yes, this time I think I’m Newfoundland, rather than London, because the last time REITs and utilities were this cheap was in August 2011 when I was in Newfoundland. I don’t have much to say about the flooding in Alberta, other than being glad I don’t own property there, but have plenty to say about cheap liquid assets. Today (Tuesday) the markets are up, after a steep drop yesterday. It’s impossible to tell how long the volatility will last, but it will likely continue in the near future as the tug of war goes on between panic sellers (I don’t know why anybody would want to sell at such low prices) and bargain hunters who swoop in to get great deals (that I understand well).

Yesterday (Monday) the prices for REITs and utilities were at levels not seen since the correction of August 2011, as I said above. My crystal ball doesn’t work, but based on past experience by the time the kids and college students are back in school you’ll look back at the correction going on now and realize it for what it was, namely an awesome buying opportunity for REITs, preferred shares, and utilities and a good buying opportunity for other equities.

I’ll sign off now, get my hiking boots on, and make the trek to the top of Gros Morne Mountain, NL.

#109 TorontoBull on 06.25.13 at 11:57 am

“Dead wrong. — Garth”
there are many academic articles that I cannot attach due to copyright issues, but see below articles from the globe as well as mish re leading vs coincidence indicators. I know you don’t like Mish, but at least he shows you some evidence rather than dismissing without any

http://www.theglobeandmail.com/report-on-business/rob-commentary/rob-insight/the-tsx-follows-emerging-markets-not-the-g7/article6379546/
http://globaleconomicanalysis.blogspot.ca/2009/10/is-stock-market-leading-indicator.html

The stock market, more than any other factor, reflects corproate earnings. Profits are determined, more than anything else, by economic activity. Period. — Garth

#110 Canadian Watchdog on 06.25.13 at 12:05 pm

Profile of International US Home Buying Activity: NAR Report

International Sales By Country: Chart

Realtors® reported purchases from 68 countries, but five have historically accounted for the bulk of purchases; Canada (23 percent), China (12 percent), Mexico (8 percent), India (5 percent) and the United Kingdom (5 percent). These five countries accounted for approximately 53 percent of transactions, with Canada and China the fastest growing sources over the years.

#111 Old Man on 06.25.13 at 12:19 pm

I just love these thin trading preferred shares, as with 6 million outstanding nobody is selling, so some joker has an offer outstanding at $24.73 when yesterday was trading between $22.07 to $22.81. I used two discount brokers and came up with a modest position, as wanted more. :(

#112 Piccaso on 06.25.13 at 12:29 pm

Flood insurance doesn’t come with regular house insurance either. When you live on a flood plain, that’s extra insurance.

#113 Daisy Mae on 06.25.13 at 12:31 pm

#60 Bob: “…..that the Fed are incorrectly optimistic, focusing on the headlines (e.g. unemployment #s) and not looking deeper (e.g. contrast that with employment #s)….”

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

The federal government can’t afford to ‘incorrectly optimistic’ — they’re supposed to know what they’re doing.

#114 Mikey the Realtor on 06.25.13 at 12:39 pm

#102 Ralph Cramdown

The idea of an average person renting out a single condo or house and making $50 million is as absurd as the greaterfools on this blog making $50mm from investing in reits, prefereds, banks and whatever else is the flavour for the week. To make that kind of money one has to step it up several notches, multi suit resi buildings or commercial. One, two, three units will not make you crazy rich but it will give you a nice retirement.

Land has always and will always have more value then any stock out there, what would you have if another great depression took hold? land where you can grow some food or a useless stock?

The idea is that the robmarkets ( aka stock markets for the challenged, AK hope you’re paying attention) are basically funny money where nobody owns a thing, and dont tell me as a stock investor your own part of the company because you dont, hence why the Barricks of the world do as they please while shareholders have lost more then 60% of the share price and the suits at the round table paid themselves handsomely for their poor business decisions.

#115 Piccaso on 06.25.13 at 12:42 pm

#118
Flood insurance doesn’t come with regular house insurance either. When you live on a flood plain, that’s extra insurance.
…………………………………………………………………..

I’m sure the majority were mortgaged to the max too, why be any different then your average Canadian.

So what do you do? You still owe half a mil or more and have no house. I guess you declare BK and start over.

#116 Mikey the Realtor on 06.25.13 at 12:47 pm

#101 MikeytheRealtard

Ease off that wacky tobacky, comparing dog shit to RE is just plain retarded and your name fits in well with your logic…..Congratulations!!

#117 Go Stamps Go on 06.25.13 at 12:49 pm

We’ll be fine here in Calgary folks, thanks for your support.

#118 :):( Ying Yang on 06.25.13 at 12:53 pm

#113 Smoking Man on 06.25.13 at 11:41 am
YING YANG
proselytization, you had to make me Google it.

This is what they teach us at Pok Fu Lam Rd, Hong Kong! Learn English it is the way of the world. Yet I still have some difficulties reading your English. It must be code.

#119 Old Man on 06.25.13 at 12:58 pm

This Calgary scenario makes no sense to me, as the Provincial Government has known for years the potential for flooding, so why did they not address this issue? This could have been done with engineering projects as a protective measure. I owned a home once that became a nightmare with the roof leaking, and nobody could find the problem until I found some guy from Florida as a Vet from Vietnam who lived in Ontario working part-time at roofing; a hairline crack in one shingle that he found on the roof at midnight with a flashlight.

Water can cause bigtime damage that is costly, as there is nothing worse to destroy so much that needs to be repaired. In my case, as the so-called roofing pros were clueless led me to repairs over and over again without end, as when it rained everything was once again destroyed.

#120 Blacksheep on 06.25.13 at 1:11 pm

Lots O MMT discussion here today.

This is the dirty little secret the ‘system’ would
rather not share with the Cattle or even their
handlers for that matter. Blind faith in said ‘system’
is already being questioned, what consequences
would befall sovereigns in control, with a populations full awareness that tax liabilities are applied for perception / demand creation reasons, more than
the actual funding of a society?

#121 brainail on 06.25.13 at 1:13 pm

“Borrowers with poor math skills made up a higher percentage of homeowners in foreclosure during the housing bust than those who were skilled at arithmetic.”

“According to a study released Monday, math-challenged borrowers were five times more likely to default on their loans.”

http://money.cnn.com/2013/06/25/real_estate/mortgage-math/index.html?iid=HP_LN

#122 Calgary Rip Off on 06.25.13 at 1:17 pm

This blog is one of my favorites which is why I read it. Unfortunately because Garth doesnt live in Calgary he doesnt understand how it really is here.

There are no rent controls, housing costs are a rip off, and generally there are no backups in the case of an emergency. These persons affected by the flood arent being helped by flood insurance because it doesnt exist. Whether a natural disaster qualification exists to cover the costs who knows. But then again the government can help out right? And where will they get the money?

Calgary is not nice. It is very very cuthroat. Anyone moving here should realize this and come with enough money and good paying job, or dont bother. It is a New York City wanna be without the history.

Every day I live in fear and am thankful for all that I have in terms of abilities, and opportunities. Still, many of the people that live here are from the time when houses here were $180K and frankly they dont have a clue about anything. They are content to live in the past and drink beer on their porches while smoking cigarettes-morons. I dont bother talking to neighbors that are paying half of what I owe on my place. Would I help them if they needed it? Yes, absolutely, but I consider much of the mentality here severely misguided.

While this blog is a wake up call and I like it, it doesnt apply to what to do with housing in Calgary. Again, any way you look at it you are screwed if you are entering the Calgary market. Rental or buying a mortgage, it is all a horrendous rip off with people that are slow to react to what you are asking for and at best dishonest.

It is tragic that this stupid flood screwed over so many people. If any person that has any intelligence should note, “dont live near the river” is prudent. But given Calgary’s whacky real estate market somehow the houses right on the river will probably appreciate. It’s different here in Calgary: Whacked.

On the plus side as noted here, there will be much work for hardworking people such as plumbers, drywallers, and electricians.

It is truly disgusting that this flood happened and wish hope to those affected.

#123 Money for Nothing on 06.25.13 at 1:19 pm

Saw a Ted Talk yesterday with Didier Sornette claiming to have developed an algorithm to spot bubbles and predict when they’ll pop.

Has anyone heard of him or found some of his past or present predictions?

http://www.ted.com/talks/didier_sornette_how_we_can_predict_the_next_financial_crisis.html

#124 Money for Nothing on 06.25.13 at 1:27 pm

#80 Smoking Man on 06.25.13 at 7:50 am
The ministry of obedience training is basically shutting down the competition, see this school does not take attendance, or grade it’s students, or behavior shape. It gives them skills, jobs and promotes self employment.

It does what schools where meant to. TEACH

….

Who cares. If they want to grant “credits” they are governed by the Ministry of Education. If they offer a 9 week program, without granting credits, then what is stopping them from operating?

$9k sounds outrageous for such a short course that people could most likely learn for free from youtube, khan academy, …

#125 Mister Obvious on 06.25.13 at 1:45 pm

#129

“Calgary is not nice. It is very very cuthroat. “
——————

If you want ‘nice’ you should head up to Edmonton.

#126 Old Man on 06.25.13 at 1:49 pm

Is Barrick Gold the next Nortel? I never believed would see the day that the BMW of all Canadian mining would be trading at $16.91 a share which by charting is a 20 year low. They are in bigtime trouble, so RIP, it costs too much today worldwide to bring a troy ounce of gold to market, and then there is the oil market in Canada to ponder. Canada is in a bit of trouble, but fear not as Caesar knows all, and that is a joke, as Caesar has no clue.

#127 Fort Mac Flatlander on 06.25.13 at 2:12 pm

“Now ask yourself: where are all those billions coursing out of the bond market gonna go?”

Garth, correct me if I’m wrong, but unless the bond is redeemed doesn’t for every sale at a given price, there is a buyer at that price? Hence, the funds used to buy the bonds (cash) is simply changing hands and not created or destroyed?

#128 JimH on 06.25.13 at 2:16 pm

#48 Keith in Calgary

Todd Harrison, of ‘Minyanville’ fame and a guy who was trading when you were still just a glint in your father’s eye, has a wonderful expression that suits you to a “T”. It goes something like this…

“Always be humble… for if not, the market will do it for you.”

#129 dienekes on 06.25.13 at 2:18 pm

Everyone, don’t be to hard on the realtors on this blog.
If they stop posting, I will having nothing to laugh about.
And if by some miracle they turn out right, do to the rich pulling some idea out of there asses to maintain the status quo nobody saw coming, then we all look like fools.
Keep up the posts Mikey, they keep me smiling.

PS: phone any realtor in Saskatoon handling a house under 499,000.00, and they will tell you the house has been reduced in price to “blow it out”. I believe them.
I even had one realtor tell me the builders pricing on homes in the market are ridicules.

#130 Mike T. on 06.25.13 at 2:27 pm

127 Blacksheep

‘Blind faith in said ‘system’ is already being questioned’

true indeed – however I think it is very important to consider why the system is being questioned and where is the information coming from that is making people question the status quo (Alex Jones is a prime example)

TPTB play both sides of any conflict – the mantra is divide and conquor (left-right, blue-red, lib-con)

they know we are all One and the game is to make sure the populace doesn’t figure it out

anything less than a return to One will be a failure of humanity in over-coming whatever you want to call the disruptive force on Earth – today, I don’t like our chances…

#131 Ralph Cramdown on 06.25.13 at 2:33 pm

OK, Mikey the Realtor, we’ve established that you can’t name any dynastic-scale wealth generated through rents (though Nemesis seemed to. Are you sure His Grace wasn’t just a diligent saver of his army pay packets, Nem?)

Nonetheless, I think you’re doing God’s Work. Keep it up. Tell everyone you know that the stock market is a casino and a terrible place to put their money. But for Pete’s sake, aim higher. A comfortable retirement on rents from three units? I’m hoping to end up a little more comfortable than that.

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

#132 TorontoBull on 06.25.13 at 2:42 pm

“The stock market, more than any other factor, reflects corproate earnings. Profits are determined, more than anything else, by economic activity. Period. — Garth”
building permits and manufacturing activity are considered leading indicators
corporate earnings are a lagging indicator. period!

#133 Smoking Man on 06.25.13 at 2:45 pm

#125 :):( Ying Yang on 06.25.13 at 1j2:53 pm#113 Smoking Man on 06.25.13 at 11:41 am

YING YANG
proselytization, you had to make me Google it.

This is what they teach us at Pok Fu Lam Rd, Hong Kong! Learn English it is the way of the world. Yet I still have some difficulties reading your English. It must be code.

…………..

I’m the ring leader of a hidden society, I communicate with my people with subliminal expressions and deliberate mistakes, they know what I mean..

Now I have to Google Pok Fu lan rd

#134 einsturzende neubauten on 06.25.13 at 2:46 pm

comes june 2014 real estate in calgary will cost 5 % more than it costs today. the flood will not have an impact on re prices and neither will the minimal increases in interest rates. some will despair, some will rejoice (i personaly think that it does not make any sense) but that’s how it is.

#135 Smoking Man on 06.25.13 at 2:54 pm

#131 Money for Nothing on 06.25.13 at 1:27 pm

Don’t know man 4 years university to end up wash dishes,

9 k in 9 weeks with employers lining up. Sounds like a good deal to me…. So 4 years – 9 weeks earning good rate.

University is for idiots

#136 CalgaryRocks on 06.25.13 at 2:54 pm

9k sounds outrageous for such a short course that people could most likely learn for free from youtube, khan academy,

So they have 9 week long boot camps for people that want to learn how to program presumably so that they can get 80K jobs in Silicon Valley.

What a great idea. Here are some other suggested boot camp themes:

1. 9 week heart surgeon boot camp. You will be transplanting a human heart on your last week. No exams or theory. Just fun with scissors and scalpels, and other stuff that we don’t know what they are called, except that they are really, really sharp.

2. 9 week architect bootcamp. Montreal, needs a new bridge. Sounds like a match for a budding architect with 9 weeks experience.

3. 9 week electrician boot camp. No exams or stupid diplomas about complicated electric stuff. Just survive the practical part and you’re good to go.

4. 9 week lawyer boot camp. Everything is on Google now so no need to learn any lawyery mumbo jumbo. Just use Google translate

#137 FutureExpatriate on 06.25.13 at 3:09 pm

#21 – “I give up” – Garth

Now you just KNOW you were going to have to spell it out for the peeps here (including me!).

Pho-net-i-cal-ly, puh-leazzzze….

#138 Kilby on 06.25.13 at 3:30 pm

Land has always and will always have more value then any stock out there, what would you have if another great depression took hold? land where you can grow some food or a useless stock?
_______________________________________________
We could grow wheat on the balcony..40 sq. ft. should yield a bushel.

#139 jess on 06.25.13 at 3:32 pm

how about those math challenged derivatives

Who would be those lobbyists?
From the treasureisland.org

Derivatives WMD: lobbyists seeking to remove ‘burdensome’ safety catches
http://treasureislands.org/derivatives-wmd-lobbyists-seeking-to-remove-burdensome-safety-catches/

“AIG Financial products was run out of London as a branch of a French-registered bank. The U.S. Lehman Brothers Holdings guaranteed 130,000 outstanding swaps contracts from their London affiliate. Citigroup’s off-balance sheet financial instruments were launched from London and incorporated in the Cayman Islands. The two Bear Stearns hedge funds that collapsed, precipitating the firm’s failure and the taxpayer rescue, were incorporated in the Cayman Islands [TJN: and let’s not forget the role of Wild West offshore Ireland in that particular debacle]. Long Term Capital Management’s swaps were booked in a Cayman Islands affiliate (that according to Gensler, who was with Treasury at the time of their 1990s collapse, was basically a P.O. Box). And, as the name stipulates, the London Whale trades of JPMorgan Chase were in London.”

…substituted compliance’, which would exempt foreign activity from falling under a home country’s rules — just so long as the home country (in this case the U.S.) deems the foreign rules to be good enough and equivalent to its own. In other words, instead of having regulators reaching into other jurisdictions to regulate risky activities, you effectively have regulators handing out certificates of good conduct to other jurisdictions and trusting them to regulate properly.
======================
How Canada’s banks help money move in and out of tax havens
Canada’s banks have 75 subsidiaries operating offshore from Switzerland to Singapore

Reference letters “secured credit cards” advertised its accounts as “a safehold” providing “confidentiality and financial advantage.”
http://www.cbc.ca/news/business/story/2013/06/24/tax-havens-big-banks.html

#140 CalgaryRocks on 06.25.13 at 3:49 pm

#142 Smoking Man on 06.25.13 at 2:54 pm
#131 Money for Nothing on 06.25.13 at 1:27 pm

Don’t know man 4 years university to end up wash dishes,

9 k in 9 weeks with employers lining up. Sounds like a good deal to me…. So 4 years – 9 weeks earning good rate.

Did they run out of H1Bs with fake computer science diplomas down in silicon valley?

Or do even foreigners from 3rd world countries refuse to work for the modern day Sunnyvale sweat shop, err startup.

#141 Old Man on 06.25.13 at 3:56 pm

#142 Smoking Man – I agree with you within the context of 2013, but back during the late 1960’s it was normal for a son or daughter to go to University to obtain a degree or two. The social context was very different back then, as getting an education was very important for the parents who lived a hard life based on their past, and a tuition fee was just a modest $540, more or less, and the parents wanted their kids to have what they did not have called a future.

#142 Sebee on 06.25.13 at 4:03 pm

Study was done, which concluded those with poor math skills in US were more likely to be foreclosed on.

http://money.cnn.com/2013/06/25/real_estate/mortgage-math/index.html?iid=Lead

What a shocking Study result?!

#143 Keith in Calgary on 06.25.13 at 4:07 pm

Alison Redford is on the ropes politically……….within the province, and within her own party. This flood was a gift to her…………

Need any more explanation ?

#144 bill on 06.25.13 at 4:21 pm

#130 Money for Nothing on 06.25.13 at 1:19 pm :

http://www.er.ethz.ch/people/sornette
he used to have some graphs of his predictions when he was at ucla.they were very thought provoking.
couldnt find them but he is plainly on to something but
predicting the future is always a bit tough…

#145 AK on 06.25.13 at 4:23 pm

#121 Mikey the Realtor on 06.25.13 at 12:39 pm

“The idea is that the robmarkets ( aka stock markets for the challenged, AK hope you’re paying attention) are basically funny money where nobody owns a thing, and dont tell me as a stock investor your own part of the company because you dont, hence why the Barricks of the world do as they please while shareholders have lost more then 60% of the share price and the suits at the round table paid themselves handsomely for their poor business decisions.”
——————————————————————–
Hey Mikey,

You do have a good point regarding Barrick, as the company is run by a 95 year old nutbar. On the bright side though, there are many good companies that promote effective governance .

#146 :):( Ying Yang on 06.25.13 at 4:27 pm

#140 Smoking Man on 06.25.13 at 2:45 pm
#125 :):( Ying Yang on 06.25.13 at 1j2:53 pm#113 Smoking Man on 06.25.13 at 11:41 am
YING YANG proselytization, you had to make me Google it.

This is what they teach us at Pok Fu Lam Rd, Hong Kong! Learn English it is the way of the world. Yet I still have some difficulties reading your English. It must be code.

…………..

I’m the ring leader of a hidden society, I communicate with my people with subliminal expressions and deliberate mistakes, they know what I mean..
Now I have to Google Pok Fu lan rd

My motto is Sapientia et Virtus, you won’t like this though as it was gained through Faculty of Engineering
Department of Industrial and Manufacturing Systems Engineering and Department of Mechanical Engineering.
I do however imbibe, smoke and sci bo, but then you should know these vises well.

#147 erebus on 06.25.13 at 4:30 pm

it is indeed, a great time to be a calgary renter

#148 Holy Crap Where's The Tylenol on 06.25.13 at 4:31 pm

#143 CalgaryRocks on 06.25.13 at 2:54 pm

9k sounds outrageous for such a short course that people could most likely learn for free from youtube, khan academy,

So they have 9 week long boot camps for people that want to learn how to program presumably so that they can get 80K jobs in Silicon Valley.

What a great idea. Here are some other suggested boot camp themes:

1. 9 week heart surgeon boot camp. You will be transplanting a human heart on your last week. No exams or theory. Just fun with scissors and scalpels, and other stuff that we don’t know what they are called, except that they are really, really sharp.

2. 9 week architect bootcamp. Montreal, needs a new bridge. Sounds like a match for a budding architect with 9 weeks experience.

3. 9 week electrician boot camp. No exams or stupid diplomas about complicated electric stuff. Just survive the practical part and you’re good to go.

4. 9 week lawyer boot camp. Everything is on Google now so no need to learn any lawyery mumbo jumbo. Just use Google translate

What about Governmental Leader boot camp. Just be an idiot, show up once and never show up again!

#149 happy renter on 06.25.13 at 4:49 pm

Whats really happening is companies are cutting expenses and borrowing money at 0.25 to buy back their shares to make their profits and therefore make their share price go up.With interest rates going up,companies can’t borrow money to keep up this scheme.The fed has to keep the 10 year treasury under 1.8 % to hold this market up.At 2.6% and rising this will make a nice pullback in the market.
A recovery with 2% gdp ,27 million out of work,3/4 of jobs are low paying service jobs with 46 % not paying income tax.

#150 CalgaryRocks on 06.25.13 at 4:50 pm

What about Governmental Leader boot camp. Just be an idiot, show up once and never show up again!

That is a subset of the 9 week relentless ass kissing and truth avoidance boot camp given by the Canadian Pathological Liars Society.

#151 MikeytheRealtard on 06.25.13 at 4:52 pm

Another genius comment by the uneducated part time real estate agent…

“Land has always and will always have more value then any stock out there, what would you have if another great depression took hold?”

Really? Land has no drop in value during a great depression? LOL ..try again Mikey. The next time a great depression hits, go have a look at the land values in the outskirts of GTA where the corn flakes make up your walls…

#152 Dean Mason on 06.25.13 at 4:54 pm

To Mike T. #137

I have a bunch of neighbors that their families know how to milk the system at the expense of hard working people like me and others like me.They have been doing this since Trudeau years.They get every month workers compensation income tax free,child tax benefit tax free,G.S.T. and H.S.T. credits income tax free,ODSP income tax free,welfare and social assistance income tax free,free dental benefits,free medical,prescription and other health benefits all income tax free.

They have 2 or 3 cars,a house like mine,big screen T.V.’s,computers and other electronics.They smoke,drink and sit down all day at others expense.I know that is not just in one city as my friends have told me the same thing.They all live together and with all their benefits it can easily add up to $50,000 a year income tax free.They don’t pay C.P.P.,E.I.,income taxes and all the related expenses like gas,depreciation,repairs and extra maintenance of vehicles used mostly getting to and from work.

So when you talk we are all one ,it’s crap,misleading talk that those that talk that way are making money for themselves and offer no real solutions of some improvements to those paying taxes being decent law abiding citizens.People don’t take responsibility for their lives and families and all the taxed,worked,responsible people are paying the total cost.

#153 Old Man on 06.25.13 at 5:02 pm

I am sure that Mr. Turner had investors calling him worried about the crash; not to mention those in this room making fun of him. So who is getting the last laugh, and Mr. Turner must have a smile on his face, as this so-called crash was a buying opportunity, and am waiting for the next one.

#154 Wally on 06.25.13 at 5:11 pm

Garth: Other studies show that over a long period of time, there’s a flood discount, with properties that were underwater appreciating at a slower rate than those which stayed dry.
==================

Shame on you. Why pile on these victims?

#155 JustTryingToProtectEquity on 06.25.13 at 5:30 pm

You’re doing a great job Mr. Turner. But, sadly, in this blog, you have created a monster. Far too many of your own followers want things to change overnight. They want the stock market to only trend up or, better yet, they want their specific stocks to only trend up. Like the real estate virgins themselves, they want everything right now. In today’s world, far too many people believe “long term” means “two years”… tops. Those of us who have listened to you, those of us who have remained patient, have fared very well. Using your very methods, I’ve become a multi-millionaire in my 50s. And, given my very low cost of living, I never really have to work again. You’re a strong person to put up with some of the nonsense on this website. You can’t save everybody. But, believe me, you have saved many. Debt destroys people and communities. You’re a good soul. Keep up the good work.

#156 Freedom First on 06.25.13 at 5:53 pm

#58 Subversive

Congrats! Garth advised to do this, as rates are at historic low levels. It is extremely difficult for people to buy low and sell high, as evidenced in all of history, the masses always get crucified. You made a very wise decision, which means, financially speaking, you have very little to lose doing this, but if you didn’t, what you could lose could financially decimate you. Well done!

#157 sasquatch on 06.25.13 at 6:09 pm

#70 Observer on 06.25.13 at 2:08 am
Geez, I wonder if the Flood Victims are still preaching “its better to own than to buy” I sure the Renters are real sad they didn’t buy.

That is the cost of owning and BTW, imagine their insurance cost will go through the roof next year!
=====================================
I’m not even talking about that aspect. Particle board only has a 20 year life span if kept dry. After fighting off the mold, the particle board has maybe 10 years left. maybe even just 5 years before it dissolves into dust. replacing the floors and walls has to be expensive.

#158 brainsail on 06.25.13 at 6:11 pm

What will be the fate of the Keystone Xl pipeline?

http://www.cnn.com/2013/06/25/politics/obama-climate-change/index.html

#159 Spiltbongwater on 06.25.13 at 6:23 pm

I always wonder why people would want to live in a place called High River, and then are surprised a flood happens. If I lived in a city called Steep Cliff, would anyone be surprised when my house fell down the cliff?

Didn’t Al Gore warn us 6 years ago this was going to be the result? We did nothing to fight climate change, and then are surprised at all the damage as a result of it.

#160 jess on 06.25.13 at 6:39 pm

robo —-speed is money

..”Theft is getting smaller and faster, and has been for years,” one financial investigator told The Post. “Steal a penny a second and you make $864 in a day. When we look at nanosecond trading, it gets better — there are 86.4 trillion nanoseconds in a day.”

http://www.businessweek.com/articles/2012-04-23/high-speed-trading-my-laser-is-faster-than-your-laser
Cracks in the Pipeline Part Two: High Frequency Trading
http://www.demos.org/publication/cracks-pipeline-part-two-high-frequency-trading

#161 daystar on 06.25.13 at 6:40 pm

I bet RE sellers are feeling a little “swamped” in Calgary right about now, holding onto an “illiquid asset” (ok, liquid just a little lol) that just devalued on them without insurance to cover the damages.

And this in the face of now creeping higher rates from the much so needed, accurately predicted mantra forecast bond market yield ascent by this blog. A double wammy for sellers, tough break.

#162 Markus on 06.25.13 at 6:52 pm

Forget about Calgary for one second. Vancouver is on the brink of a major collapse in home prices. The entire city is poised for financial ruin. Watch as homes in Shaughnessy, Oakridge, and West Vancouver plummet from 2006/2007 highs and fully and wholly correct well under 40 percent peak. Vancouver is officially in the worst shape to sustain perceived market values as that city’s working class and industry rapidly erodes. When the incomes are simply not present to sustain Hong Kong fueled speculation for another decade you will see prices plummet into the gutter. Yes, even on Posh “Rich” real estate. If the incomes are simply not present to support Multi million dollar bull doze jobs, the prices will not just slip a little. They will rapidly erode into the gutter. Vancouver is where you send real estate money to die right now. The most grossly over priced real estate market for capricious self entitled “wealthy” people. Kiss your equity goodbye, because it’s all gone real soon. So stupid.

#163 Devore on 06.25.13 at 7:09 pm

#66 JimH

The “flow” is one of demand. Everyone knows what is meant, even poor Shawn, who insists on being a prick regardless. Must make him feel very smart.

#164 cynically on 06.25.13 at 7:13 pm

#68 The Prophet Elijah – I detect a tinge of envy in your remarks about the US. Don’t hope it comes true because Canada will have no country to protect it both financially and militarily. On the other hand you and your anti-US cohorts might just hate the yanks so much that you forget the consequences to yourselves and hope it all comes true.

#165 Smoking Man on 06.25.13 at 7:21 pm

#148 Old Man on 06.25.13 at 3:56 pm#142

Smoking Man – I agree with you within the context of 2013, but back during the late 1960′s it was normal for a son or daughter to go to University to obtain a degree or two. The social context was very different back then, as getting an education was very important for the parents who lived a hard life based on their past, and a tuition fee was just a modest $540, more or less, and the parents wanted their kids to have what they did not have called a future.

………….

Good point old man, 1960 we had no choice, but today education is a ridiculous over priced business, where information is free.

And too Calgary Rocks, 9 weeks of boot camp, to do open heart surgery, so I practice for 45 days, 8 hours a day,

I could pull it off….

#166 Bottoms_Up on 06.25.13 at 7:40 pm

There are two tragedies here:

1) the Alberta flood and flood damage in the GCA

2) Realtors using the flood damage to support rosy forecasts

#167 TurnerNation on 06.25.13 at 7:43 pm

The question now is: Which falls to its 200 day SMA first: TLT.US or SPY.US. :-)

#168 happity on 06.25.13 at 7:45 pm

The stock market, more than any other factor, reflects corproate earnings. Profits are determined, more than anything else, by economic activity. Period. — Garth

Not when corporations take out loans with the lowest interest rates in history and use that money to buy back their own stock to chase yield.

It’s just another carry trade. You are looking at the symptom and not the cause, which is dangerous, because when interest rates start to rise this this carry trade will unwind.

It’s good to know you have thought of risks that CEOs have not. I’m so pleased you are here among us. — Garth

#169 Vangirl on 06.25.13 at 8:08 pm

No need to feel too bad about Albertans losing their home equity…..Alison is going to to give them FULL compensation. Yup….better than buying insurance . I assume no deductible to pay!
http://www.canmoreleader.com/2013/06/24/province-will-pay-for-damage-toflood-affected-primary-residences

With this guarantee in place, I doubt home prices will suffer like Garth speculates.

That’s killing two birds with one stone…..now she doesn’t have to have her feet held to the fire to balance the budget.

#170 father on 06.25.13 at 8:13 pm

lol

#171 JimH on 06.25.13 at 8:16 pm

#176 Turner Nation
Hey! Rip van Winkle! That race ended ~6 weeks ago! Wereubean? Whausmokin?

#172 JimH on 06.25.13 at 8:30 pm

#176 Turner Nation
In all seriousness, I agree to a correlation between the two; until I see TLT break above, say, its 15 or better yet, 25 day MA, this bounce is suspect. AGG had a real tough time today trying to hold onto its gap up. This downtrend is still “guilty until proven innocent”!

Must confess, bought a little natgas yesterday: NBL, EQT, COG on spec. All up today, but we’ll see.

#173 Daisy Mae on 06.25.13 at 9:26 pm

#126 Old Man: “This could have been done with engineering projects as a protective measure…”

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

NOTHING controls floods on a flood plain, except dams — man-made or beaver-made.

#174 Doug in London on 06.26.13 at 10:31 am

@Splitbongwater, post #168:
One flooding event on its own isn’t necessarily an indication of climate change, however if you look at the big picture it’s not hard to see a trend. This flood is the worst ever seen in Alberta’s history, far worse than the 2005 flood. Last month there was record flooding in Germany and Czech Republic, and earlier this year record high water levels and flooding in Muskoka District. Such extreme events are becoming more common, just as climatologists predicted many years ago.

There’s some good news in it all. First, if you have construction trade experience you’ll have more work than you know what to do with if you are mobile. Second, Barack Obama has announced that his government is actually making an attempt to curb carbon emissions, despite opposition from the Republicans. It will be easier to get other countries on board to cutting carbon emissions when the United States, a big player, makes some serious effort to do so. Is it too little, too late? Only time will tell.

#175 brainsail on 06.26.13 at 11:45 am

Alberta flood plains and a $1B budget…

To you and me $1B is a lot of money but it will not be nearly enough to correct the damage.

As an Architect that years and years ago worked for a Calgary firm that designed several major commercial buildings in downtown Calgary the subject of building on a flood plain came up many times. The responses were that the City of Calgary and the commercial insurance companies were not concerned. So the high rise buildings with underground parking, emergency generators, etc. were built regardless.

Education wise, land management was one of foundation courses that I took as a student.

Major cities as we know them today, in North America as well as other parts in the world, were founded a long time when horses and boats were the sole means of transportation. Flood plains on a river meant easy access.

Flood plains were formed by nature over thousands of years of climate changes. They are nature’s way of controlling flooding. They are like rest stops to a highway. Never, ever, build on them!

Today as I try to understand what happened there I discover that several municipalities have been selling flood plain land to developers for extra profit because people are willing to pay more to be close to water. Greed!

Your Premier’s pledge to assist with funds owner’s of primary residences that were damaged is admitting guilt for the causes. $1B will not be enough.

#176 DreamingInTechnicolour on 06.26.13 at 1:46 pm

Saving $ means = Not losing $ when the housing and stock markets go south. Better to preserve capital $ than risk losing it due to market forces. Everything that goes up – ALWAYS comes down.

Some days I despair reading the comments here. Where did confidence, entrepreneurship, optimism and courage go? Are your lives so imperiled? — Garth

#177 DreamingInTechnicolour on 06.26.13 at 2:12 pm

Here is Canada’s competition for interest rates on money deposits.

At the click of a mouse, $$$ circles the globe looking for the best interest rates out there – that’s confidence, entrepreneurship, optimism and courage at work in the global economy.

http://www.tradingeconomics.com/country-list/interest-rate

A savings account in Afghanistan! 15%! Great idea. — Garth

#178 Spiltbongwater on 06.26.13 at 2:39 pm

A savings account in Afghanistan! 15%! Great idea. — Garth

If that scares you then why not go with 22% in Guinea?

#179 PeterfromCalgary on 06.26.13 at 3:35 pm

I am in Bowness Calgary and this place is a police state. The gas guy broke into my house to check my furnace and water heater. It is broke (duh) ! The state of emergency (aka Marshal law) lets him do that.

Apparently only 6 inches of basement flooding (more by the sewer pipe and furnace) separate our so called democracy from a totalitarian state.

I will never vote for Nenshi and his Nazi code inspectors again!

#180 An Cat Dubh on 06.26.13 at 7:57 pm

Didn’t Al Gore warn us 6 years ago this was going to be the result? We did nothing to fight climate change, and then are surprised at all the damage as a result of it.

Al Gore knowing anything about phony man made climate change is about as real as a labour shortage in the Okanagan.