Bankers

bankers1

“Do the bankers know something the rest of us don’t?”

That’s the question du jour from GreaterFool’s investigative unit hiding in the bushes among the mansions of West Vancouver, where two senior officers of one of the country’s largest banks, which shall go unnamed (RBC), have now bailed out of their multiple-million properties. Word is that both had substantial interest-free, payment-free loans from the bank (mortgages are so feudal), which makes the exit all the more interesting.

Are bankers hunkering? After all, if the clients are under financial stress, the odds are high this might percolate up the food chain. Even the most senior banker guys can see their financial cushions collapse quickly if the bank decides to chop fat in order to maintain its share price in darker times.

This brings us to you, the great unwashed, teeming, indentured, debt-infused, cashless masses. What a mess you’ve wrought.

What we know already (thanks to BMO’s scary survey of three weeks ago): 51% of Canadians have less than $10,000 in savings to cover any unforeseen expenses. Almost a fifth have less than a grand. A quarter of people live paycheque-to-paycheque. Over 40% couldn’t get by for 90 days without being paid. Shockingly, of those who earn more than $100,000, a third couldn’t survive for three months without a paycheque. In other words, they spend everything.

This is what happens when real estate erupts. It makes people crazy and eats their money. An entire nation has steadfastly refused the advice this pathetic blog has dished out for five years, and plowed its money into a single asset. The consequences of that are stark. Houses for all. No cash. Lotsa debt.

It keeps rising. Consumer indebtedness is up 6% year/year in the last three months. That’s bad enough, since every month brings a new record level. But mortgage debt’s increased in the same period by 7.5% – or six times the inflation rate. And now a new survey (Equifax) finds the wrinklies are worse off than everybody else. Debt growth among aging rockers and hippies is surpassing that of everyone else, and once again the reason is real estate. The bulk of old fart wealth is tied up in housing, with the highest home ownership rate (78%) among all population groups.

Bad, bad Boomers. So much for living on love and moonbeams and dope. Where did you go so wrong?

By the way, the increase in consumer debt in the last ninety days alone was $77 billion. Other than the mortgage portion, almost all of it was taken out at floating interest rates – HELOCs, lines of credit and personal loans, which will become more costly once the Bank of Canada pulls the trigger (and it will next year). The mortgage debt will likely renew at double the initial rate in five years.

In other words we don’t have a debt-fueled economic mess right now. But we will have a mama of one by 2018, just as millions of Boomers are forced into a retirement they can’t afford. I’ve detailed the consequences before, a scenario of increased pension and health pressures on government, at the same time many pensionless retirees realize they’ll be living on KD, just like in college, unless they punt the real estate. It’s romantic and purist to be poor when you’re young. When you wear thirsty undies, not so much.

And we already know a lot of Boomer debt is being created to support the Thing in the Basement, as up to 40% of adult children now hang around the house. Not only do they add to the overhead, but they prevent their financially-challenged parents from downsizing out of that four-bedroom McMansion. Sadly, in many cases, it will push that real estate decision into a time when property values could be less and houses grow illiquid.

So, back to the bankers.

Mortgage applications have fallen. Mortgage rates have risen by a third, choking off demand from the virgins. RRSP contributions have tumbled over the last five years. Bank brokerage and wealth management arms have realigned as fewer wise people accumulate financial assets and everyone else buys a house. Household debt levels are epic. Floods and extreme weather have messed up insurance. And the economy is grinding, which may impact commercial landing, M&A activity and corporate financings.

Will this ding the banks? Don’t count on it. Profits to be announced starting Tuesday will be fat and juicy, and banks are expected to deliver double-digit returns to investors for some time yet – the residual of a bull housing market that keeps on giving, despite being old. Besides, rising mortgage rates fluff bank spreads, even as they gut personal finances. Meanwhile the big players have expanded operations in renaissance US markets, and seriously shed overhead – a.k.a. ‘employees.’

So, you can sell the banks short if you want. Or do like the bankers do. Sell real estate instead.

Update (Tuesday am): BeeMo hits it outta the park

Scotia profits dip, but ING saves the day

RBC

147 comments ↓

#1 Dave on 08.26.13 at 7:55 pm

First!!

#2 Donald Trump on 08.26.13 at 7:55 pm

Yes Yes YESSSSSS

Nooo. Buzz off. — Garth

#3 Randy Macho Man Savage on 08.26.13 at 7:57 pm

I love reading the comments on this blog. As much as I enjoy real estate, I also am interested in investments. Are there any blogs with comments out there that are to stock investing as this one is to real estate? Thanks in advance

There are no other blogs. About anything. — Garth

#4 ILoveCharts on 08.26.13 at 7:58 pm

For Vancouver, how many people are waiting for a price drop before they enter the market? That will be a major factor in determining if we have a hard landing or a soft landing.

Is the statistic that indicates the % of households that own their own homes sufficient? We hear that the national statistic is at an all time high which is a very strong indicator that we are headed for a hard landing.

On the other hand, there appears to be a lot of anecdotal evidence to suggest that there are large numbers of people in waiting.
1) From the South China Morning Post:
“Canadian home prices up, frustrating Hongkongers waiting to buy”
http://www.scmp.com/comment/insight-opinion/article/1297937/canadian-home-prices-frustrating-hongkongers-waiting-buy

2) A growing backlog of young adults that haven’t moved out of the basement yet. This was documented by Garth last month. I would guess that in these situations, it would look like the kid is a part of the household and so this would count as a single household that owns their own home.
http://www.greaterfool.ca/2013/07/28/failure-to-launch/

3) What happens with room mates? If three professionals are splitting the rent on a house, does that count as a single household that does not own their house or as three households that do not own their house? In Vancouver, it’s not unusual for adults with jobs to get room mates and I’d suggest that this happens more often today than it did in the past (partly due to the ease of finding room mates through the internet.)

4) My own anecdotal experience also points to a backlog. I met a few people on the weekend who would own in any other city (well paid professionals,) but are renting here. My concern is that once prices go down a few %, these people will jump at the opportunity to get in while prices are down.

#5 Penny dreadful on 08.26.13 at 7:59 pm

Commercial landing??

#6 Donald Trump on 08.26.13 at 8:00 pm

That’s the question du jour from GreaterFool’s investigative unit hiding in the bushes among the mansions of West Vancouver,

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

So thats where Smoking man is…MK-ULTRA mission

Nice job…..disguised as a KIA ..blends in well in West Van

#7 Randy on 08.26.13 at 8:00 pm

Your pic tonite was the original Consumer Distributing motto…..

#8 Ferrari321 on 08.26.13 at 8:07 pm

You should probably note that bank multiples are trading near all time lows fwiw

#9 al on 08.26.13 at 8:10 pm

keeping up with the Joneses (more bailout is on the way)

http://money.cnn.com/video/news/2013/08/09/n-chinese-homebuyers.cnnmoney/index.html

#10 JUNO on 08.26.13 at 8:16 pm

If you look at the new build ventures. You’ll notice none of them are sponsored by the banks, a few years ago you can see CIBC, HSBC and ect all into the build business, but didn’t see any today as I was driving around downtown.

BTW good job Carney, we all know your a bank guy and successfully made the biggest transfer of wealth from the middle class to the Ultra rich. Now we have rich and ultrapoor

#11 Big Bear on 08.26.13 at 8:22 pm

Kevin Gilbert, a troubadour who died in his prime after getting screwed over by Sheryl Crowe and her record label said it best in this eerily prophetic song from the early nineties…

Goodness Gracious of apathy I sing, the baby boomers had it all and wasted everything… Now recess is almost over and they won’t get off the swing.

I’ve quoted but one verse from this prophetic eerie piece of music. Have a listen, this lad was 20 years ahead of us…

http://www.youtube.com/watch?v=HeT2LmDRUtY

#12 HogtownIndebted on 08.26.13 at 8:23 pm

An odd find in my mailbox today: a free copy of Toronto Life. I have not subscribed for nearly a decade.

What’s up?

Could it be the fact that the first 8 pages inside the front cover are spiffy full-colour ads for condos?

181 Davenport
Sixty Colborne
155 Redpath
Thompson Residences – King West
Fashion House – King West

It made me wonder if this was actually a magazine or a deceptive piece of junk mail, aimed at pumping up circulation to appease real estate advertisers.

The August issue delivered now, when it should be September’s? Strange.

Both monthly issues have “feature stories” on things like garage conversions, condos of the week, coolest neighbourhoods to live in, and a story on house-horny twenty-somethings comparing three properties to find the best buy (interestingly, 2/3 are now “off the market” – hmm…..)

$5.95 + HST is what I did not pay for this, apparently. How can they afford this?

I don’t think Toronto Life will be around by 2018, either.

#13 mark on 08.26.13 at 8:34 pm

What about the housing market in Dawson Creek?
Is it ready to implode?
Lots of work, and oil and gas activity up here……most say real-estate will rise some more……what ye say you experts……

Mark

#14 Toronto_CA on 08.26.13 at 8:35 pm

#4 ILoveCharts on 08.26.13 at 7:58 pm

While you think that once prices come down people will jump in, you really need to factor that once prices start to go down people will be afraid to buy in because they think if they wait further, the prices will go down even more.

The whole catching a falling knife thing. Predicting a bottom of the real estate market is tricky. Once the correction starts going strong, all bets are off.

#15 Mister Obvious on 08.26.13 at 8:35 pm

“Bad, bad Boomers. So much for living on love and moonbeams and dope. Where did you go so wrong?”
——————–

Hey! Who remembers air ferns?

Many of my hippie contemporaries believed that these miraculous plants lived and grew on air alone with no need for water, sunlight or sustenance of any kind.

They were thought to be magical plants living without benefit of photosynthesis or any other metabolic process known to science. Well… why not, eh?

To suggest they were nothing more than dead coral skeletal structures dyed green was to be a serious wet blanket. I was famous for “putting a harsh on people’s mellow” by pointing out unpopular realities.

It is any wonder then that a majority of boomers see a guy like Garth in a similar light? Clearly, the only reason housing won’t ‘air fern’ its way to ever greater heights is because of downer thinking.

So lighten up dude. Here… take a pull on this.

#16 Jimmy on 08.26.13 at 8:39 pm

DELETED

#17 larry Elford on 08.26.13 at 8:39 pm

I am no Garth Brooks, or Garth Turner for that matter, but the web site for a little bit of truth, honesty and inside tricks of the investment trade (no, not how to get rich. Those are all lies. I am talking about how NOT to be financially raped by financial professionals….) ……web site is DELETED
Thanks for all the candid comments Garth.

Here’s another one: stop promoting your site on this blog. — Garth

#18 snake on 08.26.13 at 8:44 pm

1)Behind Asian Americans’ low unemployment

http://money.cnn.com/video/news/2013/08/01/n-asian-american-unemployment-low.cnnmoney/index.html?iid=V_Taboola

2)Why Chinese are buying U.S. real estate

http://money.cnn.com/video/news/2013/08/09/n-chinese-homebuyers.cnnmoney/index.html

#19 CrowdedElevatorfartz on 08.26.13 at 8:44 pm

As Mr. Spock would say…..”fascinating”

#20 Nemesis on 08.26.13 at 8:53 pm

“Do the bankers know something the rest of us don’t?” – HonGT

Yes. In more ways than you might possibly imagine, AuldPol. Although I suspect you do.

Accordingly, here’s a BriefObjectLesson in RealPolitik for the Dogs. As it’s actually practiced.

Blame it on the Bordeaux. Or not. [RC, “Jess”, SM, WatchDog, DT, et al will indubitably ‘enjoy’ this]… Folks, it ain’t fiction/even if – at first glance – it resembles it.

CinephileNotes: Clooney&Damon brought it to life [and they choose their projects very carefully, so to speak], but CowBoyBobBaer wrote the TellAll [SeeNoEvil] on which the ScreenPlayAdaptation was based.

http://youtu.be/AwQKhvweL2A

NoteToGT: It’s always about the ‘RealEstate’. Or what’s under it. Or next to it. Pray ForgiveMe this one EditorialPeccadillo… but the DrumsAreBeating. As for, “love and moonbeams and dope”… well, it sure was fun while it lasted, weren’t it?

#21 broadway skytrain on 08.26.13 at 8:53 pm

re ; tesla

item 1.
http://finance.yahoo.com/q/bc?s=TSLA&t=5y&l=off&z=l&q=l&c=

it should come up as a LINEAR , not log, chart type. make sure to look at it in linear.

it’s just freaky

#22 Smoking Man on 08.26.13 at 9:00 pm

I can’t focus on real estate right now.

We are so close to WW3 right now, MSM all the rage about Miley Cyrus dirty dance.

Russia being severely under estimated at the moment, poutine pulls the rug under pot ash, as payback for fatty trying mob him at G8

Fatty and big bird, beating the war drums, ha we have 2 submarines that probably will sink if you took em for a spin, few f18,

Enough of the dog and pony show.

Jast ask Jerry at onex for that board seat, your going need it soon, cause your handlers have no idea how to stop the dope smoker.

Everything your handlers have done so far has backfired, cause you idiots are so dumb, I’m going to be stuck with libs running the show.

THE HORROR

#23 a prairie dawg on 08.26.13 at 9:03 pm

In hindsight, it was a great decision 10 years ago to get very serious about debt reduction. :) Only 14 easy payments left, locked in at 2.55%

Of course I didn’t get to brag about vacations I never took. Or the new cars I never bought. But I did have to listen to a lot of people who did.

And lot of people will be bitching in the years to come. No sympathy for them however. You can’t cure stupid. But you can punish it. And as you may have heard before, payback is a bitch. (probably first spoken by a banker)

#24 retired Boomer - WI on 08.26.13 at 9:05 pm

Yup, I am all for living on Jim Beam (er, moonbeams), KD, love, and dope. Back in the day, Free Love was never very “free” the dope was mostly bad, as were a ton of jobs.

Somehow we made it through to better booze, better dope, but alas, dumber young people, and tragically awful music! And you’re worried about some idiots real estate?

#25 Obvious Truth on 08.26.13 at 9:15 pm

That chart looks bad. Double top on lower volume. Could get painful.

As for Real Estate it’s more leveraged and economically sensitive than any other asset. Most owners are not financially sophisticated but Garth is doing his best. It’s Bear Market time for housing. The capitulation will take a long time.

This type of asset inflation through maximum leverage never gets a soft landing. Just hope that the social damage is limited.

#26 gladiator on 08.26.13 at 9:16 pm

Garth, the bank profits to be announced soon are based on business already done in the past. What we’re talking about here are future profits and how big they’re going to be. When the economy slows down, bank shares will be impacted, and not due to bankruptcies – CMHC will take the losses – but because a significant part of a share’s price are future expectations of a stock’s performance and they are extremely volatile. As soon as investors get wind of an imminent downturn, they will change their expectations and sell part of their holdings. This is exactly what happened in the crisis of 2008-2009, when RBC’s stock fell more than 50% from $49 to $21 per share and rose back to $55: financials played a much smaller role than expectations in these swings.
I would hold on with a nice wad of cash right now. Opportunities are on their way.

#27 Dg on 08.26.13 at 9:22 pm

I’m in the middle of oil country,and have never seen so many listings and nothing moving.Something defiantly has changed out west.Work has slowed down not as busy as it was a year ago.Lots of drilling rigs still racked,so if your coming out west for work I’d get a different plan.There is a major glut of oil right now,and we don’t have the infrastructure to move it.

#28 45north on 08.26.13 at 9:24 pm

Mark: What about the housing market in Dawson Creek?

Dawson Creek: population 11,583
http://en.wikipedia.org/wiki/Dawson_Creek

Mark you know the answer. Answer the following 3 questions true or false:

Half the people live paycheque-to-paycheque.

Less than 20% could get by for 90 days without being paid.

Even if they earn more than $100,000 Less than 20% could get by for 90 days without being paid

#29 IM in C on 08.26.13 at 9:25 pm

Garth. Right now the boomers are the recipients of one of the greatest wealth transfers of all time. It is the boomers’ – parents – , the ones that went from rags to riches, that are now passing away, and in the process passing on those tax free inheritances. This is why the bust you predict will be at best ..muted. It will be another generation before all this doom and gloom catches up to the 40 somethings out there, who are the ones running up the debts

#30 TO and GTA Stats and Sales 2013/08/26 on 08.26.13 at 9:27 pm

Increased activity in the more expensive areas of Toronto. This will skew the stats again.

TO and GTA Stats and Sales 2013/08/26

GTACondos: http://bit.ly/1cauxQS
905SFH: http://bit.ly/1cauwfM
416SFH: http://bit.ly/1cauww7

#31 Where's Germany's Gold? on 08.26.13 at 9:27 pm

Garth, could you comment this article?

http://goo.gl/eQedXh

#32 Eviee1973 on 08.26.13 at 9:28 pm

My realtor laugh of the day, in the Calgary Metro news, an article about High River flooding causing an increase in sales in surrounding area, yet a realtor is hoping people have “moral responsibility” to keep prices reasonable for the market, he feels some are listing their homes too low.

http://metronews.ca/news/edmonton/776696/flooding-fuels-real-estate-bump-around-high-river/

#33 Realist on 08.26.13 at 9:51 pm

A great posting, lots of facts and realistic. A few comments reflecting over the years:
– recall back in the early 90’s a group of friends in our early 20’s were discussing real estate in general. Prices in Edmonton for the average bungalow was approx. 125,000 while in Vancouver 250,000. Fast forward 20 years and those same house are 3-4 times those values. These last couple of decades I have seen massive transformation in real estate values. The big question being will houses be 4 times the price in the next 20 years (2033) i.e. 1.6 million in Edmonton and 4 million in Vancouver. One thing I noticed in the early 90’s you could buy a house on non-professional wages today would be very challenging.
– Also, the comment on RSP contributions in your post where the last 5 years have seen record low numbers. I recall in 1995 on a packed seminar put on by the big bank (RBC) on missing contributions could affect retirement severely. For instance an 18 year contributing every year to age 30 could amass over a million dollars at retirement, missing one year could affect that by 100 or 200k. Things have changed lots – I’m sure people in their late 30’s plus can relate to all the 10 percent plus annual returns mutual funds “supposedly” paid out in the 80’s-90’s and all the newspaper adds by the financial institutions. On that note; I worked a 6 month job for a company that paid RSP back in 2008. I came out with book value of 2100 dollars. Today it is 2200 and made 1 dollar over the last quarter. Not the most exciting return by any means. There you go the markets have performed very poorly in fact the TSX composite index is not much higher than it was back in 2000 in relative terms.

#34 wendi1 on 08.26.13 at 10:00 pm

This is not my website, and I am not even a contributor on it, but Canadian Money Forum is interesting for people looking for diverse opinions on investing.

Not quite as unfettered as the comments on this blog, but worth a peek.

#35 Ben on 08.26.13 at 10:01 pm

Whilst it’s great to see anecdotal evidence of slower sales, I’d love to see some quantitative data on Quebec, specifically Montreal. If you know stats please provide a link. Thanks!

#36 Notta Sheeple on 08.26.13 at 10:01 pm

“…..Shockingly, of those who earn more than $100,000, a third couldn’t survive for three months without a paycheque……..”
=========================

Almost blew a bite of pork tenderloin out my nose on that one.

A human being only requires a certain amount of income to live comfortably. The rest is just for showing off.

To paraphrase a famous billionaire, “I guess we’ll find out who’s swimming naked when the tide goes out.”

#37 renting sucks! on 08.26.13 at 10:07 pm

what is it with everyone hating owning a home. And every comment is like a story in length, soo long. like everyone seems to have something intelligent to spread, NOT. Everyone here are just waiting and waiting for something to happen re the housing market. Waiting for when sh%t hits the fan. All you pro renters and anti_home owners need to just stop all this. and let people do what they want. you want to rent then rent. You want to buy then buy. homes r expensive oh well. just relax and take a chill pill. ya i have an idea, im going to go on garth turner’s blog to talk about bonds, reits, investments bla bla bla. boringggg. pathetic.

#38 detalumis on 08.26.13 at 10:10 pm

“Debt growth among the 65+ set of aging rockers and hippies is surpassing that of everyone else, and once again the reason is real estate.”

Only 1.5 years worth of boomers are 65+ leaving 16.5 years of that unfortunately named demographic under that age. The peak are still under 55. I doubt this huge senior debt growth that Equifax is reporting is all because of this small group, it’s the “silent generation” I guess who is racking up the credit now.

Baby boom, 1946-1964. — Garth

#39 Donald Trump on 08.26.13 at 10:19 pm

R.E. Market parameters ?

One I watch is the “OSB” versus “Plywood ” ratio.

I am seeing more OSB used….implying builders are cutting corners (for obvious reasons).

#40 Freedom First on 08.26.13 at 10:24 pm

Being in debt, any debt, looks painful. Always has. Although it is very easy to make money off of other peoples debt, and anything else people consume. Works for everyone at every income level. Only takes creativity and patience and knowledge. Garth spoon feeds us everything on a daily basis, plus the added benefit of some of the dawgs who are kind enough to also add their expertise.
I do believe, as #26 Gladiator said, it is a good idea to have some cash available for the deals that have a good possibility of surfacing in the Canadian markets as RE drops. Patience. Diversity, liquidity, balance, cash flow, and no debt work well. Works well. Keeps one away from the 2 deadly “Carnal Financial Sins”……Fear……and Greed, which are exemplified when any assets price, goes up, or, goes down. At those times, the Herd behavior in either direction can be aggressive. There is always people who profit in either scenario. Garth is kind enough to inform us of the “unethical profiteers”……….Freedom First.

#41 Cici on 08.26.13 at 10:28 pm

#11 Big Bear

Thanks for sharing, that was great. His voice and sense of conviction really remind me of Bruce Cockburn (à la “If I had a rocket launcher”).

Also reminds me how much I miss listening to people with talent who have something to say. The only thing Kevin Gilbert didn’t predict was the state of degradation in talent on the radio, TV, and of course Internet, that future generations would be raised on. I feel incredibly sorry (and scared shitless for) my darling niece and her friends, who were spoon-fed Miley Cyrus as children, and who are now being told by big media that they should be looking up to and emulating her, i.e.: strutting around near-naked and brainless while gyrating profusely like a cracked-up porn-star while everything of beauty, depth and substance passes them by.

Kevin Gilbert is lucky to have escaped this mess. We who are inheriting it are the biggest losers of them all.

#42 Marcus on 08.26.13 at 10:29 pm

“Do the bankers know something the rest of us don’t?”

Answer: War….and they will get it.

#43 Freedom First on 08.26.13 at 10:36 pm

#37 renting sucks!

You either make your living from the RE industry or an industry directly affected by it, or, you are a fool. No exception. Please go away, or, be quiet, stay, and learn.

#44 Word of the Day on 08.26.13 at 10:51 pm

Prorogue- To suspend, to discontinue, to pospone,
to delay.

Clearly, if you don’t want to fulfill your obligations in Canada, simply Prorogue those obligations. Everybody does it. Why shouldn’t you?

Word.

#45 Smoking Man on 08.26.13 at 10:51 pm

Brought the big gun in from sudbury, son 1 the singer and killer closer, son 3, balls to the wall, can get in door do the demo, closing ratio, 10 to 1

He can’t ask for money, he can’t pressure.

Not good, seeing that everyone loves the system.

The closer will train him before he’s out to Halifax.

Love this, truth is I can do this,

Why am I faking I can’t sell

ONE stoking ego of 1
Two brother bonding.
3 I’m drinking wine, and adding chapters to the book I will never publish

#46 Mister Obvious on 08.26.13 at 11:17 pm

#37 renting sucks!

“what is it with everyone hating owning a home. “
————————-

What is it with hating a blog?

#47 Eric on 08.26.13 at 11:23 pm

Garth,
Hate to tell you but a chart without legend is meaningless.
Eric

It speaks to me. — Garth

#48 Bob Rice on 08.26.13 at 11:23 pm

How’s this going to impact/play out?

http://www.bbc.co.uk/news/business-23845905

Same as last time. — Garth

#49 Bankers — Greater Fool – Authored by Garth Turner – The Troubled Future of Real Estate | The Affluent Boomer™ on 08.26.13 at 11:31 pm

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

#50 Sideline Sitter on 08.26.13 at 11:36 pm

This brings us to you, the great unwashed, teeming, indentured, debt-infused, cashless masses. What a mess you’ve wrought.

*Ahem* Not ALL of us, Garth… some of us are debt-free and cash-rich.

#51 Taxc on 08.26.13 at 11:40 pm

Don’t invest in Montreal housing market!!!:

“This has already begun in Quebec where the condo market is feeling the impact of collapsing prices and single family homes have managed to stay in positive territory.

Hélène Bégin, senior economist with Desjardins Group, says it comes down to a supply issue which is being felt most acutely in Montreal where 30% of existing home sales come from high-rise condominiums.

“I wouldn’t say there’s been a crash as much as an adjustment of 5% to 10% that will happen in the next year. We are just seeing the beginning of it,” said Ms. Bégin.”

http://business.financialpost.com/2013/08/20/condominium-prices-falling-while-low-rise-homes-continue-to-soar/

#52 Renter_4_ever on 08.26.13 at 11:50 pm

Hi Gartho
I agree with everything you said above except interest rates will be raised by BOC next year. Seriously dude, you should be sorry for saying this for yrs. BOC will not raise interest rates before mid of 2015, at least. So please stop predicting interest rates rise, you do not need to play some fortune teller, you have already warned people enough and if they do not listen $%#% them. It is given that this crappy market cannot sustained when interest rates rise and they cannot kep the interest rates low forever. Canada’s most powerful man Michael Wise ( CPP head) have said it already, that pensions monthly payout will be hard to give to people if we keep rates this low.

#53 Nemesis on 08.27.13 at 12:11 am

“Same as last time.” — HonGarth

Hint: Don’t be so pedantic… the authentic answer is,

“Maybe.”

NoteToRetiredBoomer/WI: The state of contemporary popular music is actually what worries me the most… partially, because I used to cover that scene in the PacificNorthWest for Time [back in the Day]… Contemporaneously: QuiteDisturbing, Actually. See this film for the subtext on the current state of MusicEducation in the HomeOfTheBrave [or the MapleSyrupRepublic]:

http://youtu.be/4tQJBBY7X6I

“For all the lives he changed… the one he changed the most… was his own.”

Yes. You have to watch it all.

NoteToSM: RealTeachers… Rather like Moscrop Jr’s Mr. Wiebe. Or Mr. Hicks… Gone. ButNotForgotten. Ever.

#54 Babblemaster on 08.27.13 at 1:09 am

“Are bankers hunkering? After all, if the clients are under financial stress, the odds are high this might percolate up the food chain. Even the most senior banker guys can see their financial cushions collapse quickly if the bank decides to chop fat in order to maintain its share price in darker times.” – Garth

——————————————————–

If the US is any indicator, the banksters at the top will be just fine no matter what. The politicians will see to it.

#55 Notta Sheeple on 08.27.13 at 1:47 am

One more reason why the Globe, ever the bootlicking prostitute to the Real Estate Cartel pimps, deserves a slow death by a thousand cut subscribers:

“I don’t want to rent anymore. Should I get into the Toronto condo market right now?…….”

http://www.theglobeandmail.com/life/home-and-garden/real-estate/with-toronto-rents-spiking-condo-ownership-looks-appealing/article13912770

#56 Rural Rick on 08.27.13 at 1:58 am

Tax free inheritances will save the boomers? Hah hah
People with talent. Jeeze don’t you remember what they said about the music you listened to.
I love this place.
Seriously Garth this is the most entertaining and edifying site. Your writing sparkles as raindrops. Quenching and invigorating as it keeps the blog dogs moist.

#57 Julie on 08.27.13 at 2:04 am

Bankers are licking their chops at how much money they are going to make “issuing credit” as Garth calls it for yet another war they invented in Syria. Everyone knows that it was Al CIA Da that released the nerve gas but most people just “do what their told” not too indifferent from horny house buyers.

When will people really REALLY wake up…..?

#58 CrowdedElevatorfartz on 08.27.13 at 2:39 am

@#22 Smoking Mandible
“Everything your handlers have done so far has backfired, cause you idiots are so dumb, I’m going to be stuck with libs running the show.

THE HORROR
++++++++++++++++++++++++++++++++++++

True, very true.

Just the thought of that wheezing bobble head doll Justin Trudeau ( winner of the Lucky Sperm Club of Canada) running this country into the ground after hauling a few drags off his bong…….

The Horror.

#59 ApplePi on 08.27.13 at 4:19 am

@ #4 ILoveCharts.

You don’t need to worry about people waiting on the sidelines waiting for prices to drop.

#1 – Classic FUD about Asians wanting to buy in Vancouver
#2,#3 and #4. These people are renting or at home because they can’t AFFORD the monthly payment on a mortgage. A rate hike (and subsequent price drop) doesn’t affect the monthly payment. It only affects those who have a sizeable down payment. Their capital pays for more of the house. $60k on a $300k house = 80k on a $400k house to aboid CMHC insurance.

Most people don’t have money saved up. Their decision to rent isn’t based on the fundamentals of a place, it’s because they have a monthly payment threshold. That’s why they’re renting or have a room-mate, because they’re tied to affording a monthly payment of ‘x’ dollars. They’re thinking (foolishly) that lower prices mean lower payments. They’re mistaken.

The following have (roughly) similar payments:

$400k @ 3% = $1,893 / mo.
$360k @ 4% = $1,894 / mo.
$325k @ 5% = $1,890 / mo.
$295k @ 6% = $1,887 / mo.

Condos have gotten pretty much as small as they can.
Monthly payments have been stretched as high as they can.

Prices start to drop as people’s monthly limits are broken by the interest rate hike. It’s the same reason people will lease a vehicle instead of buying it. They can purchase a more expensive car than they can actually afford because they’re only paying off the depreciation.

Prices (and monthly payments) will likely drop over time, however if it’s interest rate hikes that spur the change, monthly payments will still be approximately the same for most people. As prices go down, no one wants to buy a falling asset, people who lost money on the way down don’t want to get burned again and stay out of the market, and an overall malaise sets in as housing related jobs evaporate.

#60 P. Wagner on 08.27.13 at 5:51 am

>>But mortgage debt’s increased in the same period

There shouldn’t be an apostrophe here.

#61 backwardsevolution on 08.27.13 at 6:21 am

38 second video showing how margin debt (leverage used to buy stocks on credit) perfectly tracks the rise and fall of the S & P 500:

http://www.bloomberg.com/video/margin-debt-deja-vu-OLtwNqReRoe_157IOye5DA.html

Viagara Falls!

#62 Beach Girl on 08.27.13 at 7:12 am

Best blog in a while. Enjoyed that.

But, just curious, as I am a Boomer who ain’t Broke. Like that too.

But giving the numbers you mentioned regarding how much money people have saved or not. What where those numbers in 1960? Just curious.

Doesn’t it all stay the same.

My father told me when I was young, people who say they don’t care about money usually have none.

And young Trudeau as a PM, if he gets in for legalizing pot, it is laughter all round. Only way to bring in the new generation to politics, I guess. It is their world now anyway. HAHA. Glad I have a European passport. But, that’s not that great either.

#63 O Canada on 08.27.13 at 7:24 am

Garth I have relished your posts for greater part of last 2 years. We likely peaked about 2 weeks. I will send you the exact day HGC hit 67 bucks. Time to harvest the rewards:
Short list
Home Capital HGC
FN First National Finance FN
Genworth MI Canada MIC
MCAN Mortgage Corporation MKP
CIBC – under review

Need more companies on this listing including
Using secondary companies I.e repossession companies, reality firms, Any ideas ???

#64 Evangeline on 08.27.13 at 7:45 am

#54 “If the US is any indicator, the banksters at the top will be just fine no matter what. The politicians will see to it.”

Because the bankers see to it that the politicians do just fine. Goldman-Sachs was Obama’s second largest campaign contributor in 2008.

#65 Evangeline on 08.27.13 at 7:54 am

#57 “When will people really REALLY wake up…..?”

I’d like someone to explain why Arabist Egyptians who are fighting Islamist Egyptians at home will purportedly align with the Islamists in Turkey to oust Assad who supported the Egyptian military takeover while being an ally of Iran which supported Morsi.

#66 Rapier Wit on 08.27.13 at 8:20 am

I gotta agree with Sideline Sitter… while the prose is stimulating, and fun to read, a few of us are OK. What is a bit shocking, however, is putting those percentages that G flings about onto some actual population numbers in different areas of the country. Those are some seriously big numbers.

Patience, I suppose, is still a virtue.

#67 Jeff in Moose Jaw on 08.27.13 at 8:27 am

“Bad, bad Boomers. So much for living on love and moonbeams and dope.”

HAHAHA – cornflakes went everywhere.
that is too funny, and true.

#68 Gotthardbahn on 08.27.13 at 8:46 am

Gee Garth – What a silly article.

Of course Canadians are broke. Ottawa and the provinces consume over 50% of everything created in the country, and that doesn’t leave much for the ‘teeming masses’ as you term us. When one considers the surtaxes and the taxes on taxes we gotta pay it is truly remarkable that we have ANY money left. Weren’t you the revenue guy at one time? You, of all people, oughta know.

#69 fixie guy on 08.27.13 at 8:54 am

“Debt growth among the 65+ set of aging rockers and hippies is surpassing that of everyone else…
Bad, bad Boomers. ”

Granted arithmetic can be tricky, but the earliest recognized birth date for Boomers is 1946. The 65+ set are not Boomers.

I know. It will get worse. — Garth

#70 Grumpy Old Guy in Toronto on 08.27.13 at 8:56 am

This debt situation is scary. My wife and I focussed on paying off all debts (and did so in 2007) but we always tried to save as much as we could for retirement. So we are mortgage free and the current value of our financial assets is more than twice what our house is worth. We made sacrifices along the way but we are now in our late 50s and we can afford to retire.

It always struck me as a mistake to spend as much on a mortgage as was allowed by the lender (in other words what we were qualified for). Even if we could pay it back, we would be stuck with most of our worth being wrapped up in a pile of bricks. What happens if no one wants to buy a pile of bricks? I believe that this idea of allocation is really important in any financial planning if for no other reason that it helps to mitigate risk. I think that real estate should be no more than 30 to 35 percent of net worth. Twenty five percent would be better.

And frankly, I think it does make more sense to rent. Let someone else assume the costs. A rough guide to cost is that for any major purchase such as a car or a house, most of the costs will occur while you own it versus what its original purchase price is. In other words, for a car, if you factor in all the operating costs, you will probably find that adding up all the finance charges, depreciation, maintenance, gas, and insurance reveals car ownership as an exercise in blood letting. And don’t get me started on motorcycles, as much as I love them.

Another problem we seem to face in this looming meltdown is that a lot of us have trouble understanding the principles of compound interest. As interest rates rise, people could find themselves paying two and three times what the initial purchase price was over the course of a 25 year amortization.

OK, enough of this. In closing, I think that Garth Turner makes a lot of sense and we are in for some rough sledding.

#71 CAPTCHA fails on 08.27.13 at 9:03 am

Garth, the CAPTCHA check you have on the website is driving me crazy. It never appears when I access from home, but always appears when I try from work, and guess what? At the beginning it work, but now it just shows a message “ERR: sock connected failed http://www.google.com could not be resolved (2: Server failure)”, so I have no access at all.

Not to mention the fact of having CAPTCHA on the RSS fee page, which is completely absurd.

Is your webmaster a Realturd reorienting his career ???

#72 gladiator on 08.27.13 at 9:19 am

OT, but it’s a priceless 2-min video.
http://www.youtube.com/watch?v=2B_SxGmSJP0

Call me krezzy, but in the last 2 years, what is happening in Canada makes the point of this video more and more evident to me: corral the sheep with cheap and easily-available debt, then you can easily control them. Ergo, “debt slaves”.

#73 Chickenlittle on 08.27.13 at 9:35 am

Re: Crowdedelevatorfartz:

I can’t stand Justin Trudeau either. Someone called him a “flim flam man” and that explains it all! The hipsters will vote him in for sure.

The guy has no substance and no idea what to do. We are so screwed if he gets in.

#74 Jeffrey on 08.27.13 at 9:35 am

I’ve worked for portfolio managers who could buy a house with their chequing account balances. The dispassionate among them rent, citing transaction costs. Those that do buy consider it a terrible investment, with exorbitant transaction costs, but it represents a tiny portion of their wealth. My family members consider real estate a great asset. None of them manage –or have– any money. I inevitably pay one of their property taxes of every two years because they have no money.

Of course I can pay, I rent. And take heat for it.

#75 maxx on 08.27.13 at 9:45 am

#4 ILoveCharts on 08.26.13 at 7:58 pm

Talk is cheap.

Many now find that RE desire erodes somewhat over time with the realization that a much better life can be had with the money and no debt.

Tragically, many have been brainwashed beyond the point of no return, and will look back at the gushing river of cash they might still have today, had they not blown it on overpriced housing.

What’s missing are the conversations with owners re carrying costs and budget-destroying mortgage increases. Not nearly as straight-forward as it used to be. Housing will always remain an attractive part of life, so long as it doesn’t choke you to death in costs.

Housing has, for many, become a fiscal harness/straightjacket. It prevents the young from becoming wealthy because most don’t realize that most wealth is created when you’re young by trashing all debt in real time and saving and growing all the money you can.

With an over-sized mortgage, precarious job security and dwindling pension schemes, the most many will end up with is a box to live in at twice (or more) the price they originally bought it for and hopefully something in the bank for KD.

#76 Old Man on 08.27.13 at 9:50 am

#57 Julie – ” Truth will come to light. Murder cannot be hid long; a man’s son may, but in the end truth will out.”

– Shakespere’s Merchant of Venice (1596)

#77 Babblemaster on 08.27.13 at 10:10 am

#55 Notta Sheeple

“One more reason why the Globe, ever the bootlicking prostitute to the Real Estate Cartel pimps, deserves a slow death by a thousand cut subscribers.”

———————————————————

I agree with you regarding the journalistic integrity of the Globe. However, the writer makes a valid point regarding the purchase of RE as follows:

“And why wouldn’t you?

Well, for one – many experts have been predicating a condo crash, but they have been doing so for the last 15 years!”

#78 randman on 08.27.13 at 10:22 am

“A human being only requires a certain amount of income to live comfortably. The rest is just for showing off.”

Well said Notta!

#79 Dean Mason on 08.27.13 at 10:33 am

The U.S. 10 year bond is 2.75% and the U.S. 30 year bond is 3.74%.U.S. yields have are falling in the ditch since Friday-August-33-2013.They were 15 basis points lower since then.Canadian yields are falling too with the 01 year at 2.62% and the 30 year at 3.08%.

The Canada 30 year was 3.21% on Friday-August-23-3013 down 13 basis points since then.

#80 BoomerGeezer on 08.27.13 at 10:35 am

#69 fixie guy

Umm….1946 plus 65 = 2011

This is 2013. (of course it feels like less if you measure in Maple Leaf victory years)

65, 66, and 67 year olds ARE boomers, the first cohort.

Check yer specs, gramps!

#81 Gilden on 08.27.13 at 10:38 am

Yes I agree with much that you say Garth regarding the housing market and appreciate all the REAL numbers you post but my husband and I are far from broke and neither is my sister and her husband, granted both families have very good salaries but all of us barely have any debt- but have beautiful homes, luxury cars, take wonderful vacations etc. We are living well, but have not lived beyond our means, which is obviously the problem of so many.

#82 Dean Mason on 08.27.13 at 10:38 am

The U.S. 10 year bond is 2.75% and the U.S. 30 year bond is 3.74%.U.S. yields have are falling in the ditch since Friday-August-33-2013.They were 15 basis points lower since then.Canadian yields are falling too with the 10 year at 2.62% and the 30 year at 3.08%.

The Canada 30 year was 3.21% on Friday-August-23-3013 down 13 basis points since then.Yields will be lower every month until the end of 2013.

#83 rosie "moving forward" in the knowledge that, "this won't end well" on 08.27.13 at 10:50 am

Once burned, twice shy, I guess. Interesting numbers on credit card, car loan and mortgage debt from the millenial crowd in the States. http://www.denverpost.com/styleheadlines/ci_23929523/credit-shy-younger-generation-stick-cash-only-policy

#84 Old Man on 08.27.13 at 11:19 am

#73 Chickenlittle – Mr. Trudeau is doing the best he can under the circumstances; just look at the mess he made for the new so-called Attorney General when a Law Professor filed charges against Peter Mackay; its called stirring the pot with no pun intended. I too love the dirt flying around, and am standby for a phone call tomorrow. :)

#85 Don Derc on 08.27.13 at 11:28 am

I guess it’s all about avoiding panic – us sheeple have been played like violins ever since NAFTA 1993. The banks and corporations know what’s good for us…and them. Too many accurate canaries in the coal mine on this blog – BUT….it will be a soft landing, or slow death – however you want to spin it. Last summer i predicted a full point increase by dec 2013 – i was right – but that’s a no brainer – here is our fututre – another full point increase in the rate by dec 2014 AND a full point increase in unemployment. Slow and steady kills the middle class. Cash is king (always was – who told you different?) and get rid of the debt. I’m 48 yrs old and i still think like my grandma when she was a war worker in the 40’s – no i don’t hoard sugar and tinfoil…just cash! Thanks to the CBC, and Global Televevision (and others – Hi Chorus), we live in an illusion. I know that sounds funny but we have been trained not to filter, or differentiate what is real (truth) and what is fake (financial advisors, gov’t, etc). You live by the american casino you die by the american casino – learn how to play the game!

#86 Avg and Med price charts for To and GTA updated -TO SFH416 lower than one year ago on 08.27.13 at 11:36 am

http://recharts.blogspot.ca/2013/08/toronto-and-gta-average-prices.html

Lots of strange things in these charts.
The last 7 days of data sets are not complete, values reliable up to August 18 2013. However these indicate a major change for Toronto SFH… apparently the average has reached the 2012 level.
However I am seeing an increased activity in the bull’s eye (the central areas, green,yellow,red on my heat maps). It seems that the sellers are rushing to the exits!

#87 Tony on 08.27.13 at 11:37 am

Re: #82 Dean Mason on 08.27.13 at 10:38 am

TBT just hit the slot machine 7’s across and is falling fast and will keep on falling month after month.

#88 calgaryPhantom on 08.27.13 at 11:43 am

Markets going down, and for the first time in last few months my REITs and Prefs are holding up well relative to the market. Hint Hint ;)

#89 Old Man on 08.27.13 at 11:46 am

Just one last comment about Mr. Trudeau, as this was a political strategy hatched by his handlers, as the red machine is in full action. There was risk, but best to get this out front now, rather than later, as all will blow away. The prize will become the Quebec vote in the next election, as the leader of the NDP is a clown, and only won with a panic vote. Stay tuned for an October surprise, and do not be shocked if Mr. Trudeau sweeps the country in the next Federal election.

#90 Mister Obvious on 08.27.13 at 11:48 am

#78 randman (re Notta)

“A human being only requires a certain amount of income to live comfortably. The rest is just for showing off.”
————————————–

To put it more correctly…

A retired human being, uncertain of how long he/she may survive requires a certain amount of capital to generate the continuing yield needed to live to whatever potential age they may achieve.

Of necessity, this will be quite in excess of what that individual will spend in their lifetime. ‘Showing off’ really does not enter into the picture.

A realistic person will begin building a nest of wealth early in life. A foolish person will say things like “I want my last check to bounce”.

Wills are what we use to return our unused excess wealth to society. If you feel your offspring don’t deserve it or should ‘get their own’, there’s still plenty of worthy charities and scientific foundations starving for funds.

#91 DON on 08.27.13 at 12:07 pm

#37 renting sucks! on 08.26.13 at 10:07 pm

what is it with everyone hating owning a home. And every comment is like a story in length, soo long. like everyone seems to have something intelligent to spread, NOT. Everyone here are just waiting and waiting for something to happen re the housing market. Waiting for when sh%t hits the fan. All you pro renters and anti_home owners need to just stop all this. and let people do what they want. you want to rent then rent. You want to buy then buy. homes r expensive oh well. just relax and take a chill pill. ya i have an idea, im going to go on garth turner’s blog to talk about bonds, reits, investments bla bla bla. boringggg. pathetic.

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

You don’t have to come to this blog, be happy with your choices and deal with the consequences. Things do not go up forever to think that is plain delusional. Nothing can stop what is about to happen in the next few years…too much downward pressure that is unstoppable. It concerns me that people jumped in for greed without a rational thought…..TOO BAD.

#92 CrowdedElevatorfartz on 08.27.13 at 12:16 pm

@#89 Old Man
“…and do not be shocked if Mr. Trudeau sweeps the country in the next Federal election…”
++++++++++++++++++++++++++++++++++++

After experiencing the upset election of Christie Clark in BC last May.
Nothing would surprise me.

Perhaps they should put their heads together to form an intelligent thought.
Unfortunately both of them have heads so big neither ones ego would allow it.

#93 fixie guy on 08.27.13 at 12:17 pm

80: “65, 66, and 67 year olds ARE boomers, the first cohort.”

Statistical distributions; how do they work? Three years is a sliver of the retirement pool and would account for an insignificant portion of the over 65 debt. As pointed out, ten years into the future – when the Boomer demographic hump hits its maximum – is a different question, but today no consolation trophy for you.

#94 Holy Crap Wheres The Tylenol on 08.27.13 at 12:22 pm

#58 CrowdedElevatorfartz on 08.27.13 at 2:39 am
@#22 Smoking Mandible
“Everything your handlers have done so far has backfired, cause you idiots are so dumb, I’m going to be stuck with libs running the show.

THE HORROR
++++++++++++++++++++++++++++++++++++

True, very true.
Just the thought of that wheezing bobble head doll Justin Trudeau ( winner of the Lucky Sperm Club of Canada) running this country into the ground after hauling a few drags off his bong…….

The Horror.

God help us like father like son?
Well at least a trip to Cuba wouldn’t require a passport if new Trudeau is like his father. It’s in their blood!
In brief, Trudeau’s philosophy and the foundation of his political actions was based on his great admiration and personal exposure to leftist individuals and movements. Fr. de Valk writes “at the London school of economics in the academic year 1947-48, Trudeau met Harold Laski, the intellectual Don of British labor socialism, whom Trudeau described as a ‘most stimulating and powerful influence’. Laski convinced him that Democratic socialism could answer the needs of society.

Trudeau visited Moscow a few times and reported favorably on Stalin’s totalitarianism in the magazine Cite Libre. He frequently expressed enthusiasm for Mao Tse Tung and China’s Communist regime, never referring to the mind-boggling number of lives that were snuffed out by that regime. He greatly admired Cuba’s marxist despot Fidel Castro and publicly hugged his friend Castro during a trip to Cuba in 1976. Trudeau’s shout of “Vive Castro!” at a large public event during the trip was broadcast around the world. Link Byfield, in a September 30, 2000 Globe and Mail column, stated Trudeau “was once overheard by reporters remarking to Fidel Castro how much quicker and easier it would be to run things the Cuban way”.

#95 Holy Crap Wheres The Tylenol on 08.27.13 at 12:28 pm

#58 CrowdedElevatorfartz on 08.27.13 at 2:39 am

Just to add a little rant

Liberals, Conservatives, New Democrats, Libertarians, Communist, lefties, Green Party, Whackos they are all cut from the same cloth! Most have never actually worked an honest day and have very little understanding of how day to day living goes on for most of us. Our political system is however, the best system we have! When we can think of another system that works better I guess we can vote on it!

#96 DON on 08.27.13 at 12:32 pm

#38 detalumis on 08.26.13 at 10:10 pm

“Debt growth among the 65+ set of aging rockers and hippies is surpassing that of everyone else, and once again the reason is real estate.”

Only 1.5 years worth of boomers are 65+ leaving 16.5 years of that unfortunately named demographic under that age. The peak are still under 55. I doubt this huge senior debt growth that Equifax is reporting is all because of this small group, it’s the “silent generation” I guess who is racking up the credit now.

Baby boom, 1946-1964. — Garth

***********

Adding to Garth’s point a simple google of stats Canada tells the following.

“Population aged 60 to 64 growing most rapidly

Of all five-year age groups, the 60 to 64 year old group experienced the fastest increase, at 29.1% (Figure 2). This suggests that population aging will accelerate in Canada in the coming years, as the large baby boom generation, those born between 1946 and 1965, reaches 65 years old. The first baby boomers reached 65 years old in 2011.”

Boomers in this age group have the most siblings as a result of the incentives after WW2.

In this day an age (google) people still ignore research.

#97 ILoveCharts on 08.27.13 at 1:06 pm

From a news1130.com article:
“Home ownership has become less affordable for the average Canadian, especially in Vancouver, as the risk of a housing slump diminishes. ”

So let me get this right…. As affordability decreases, the risk of a housing slump also diminishes?!!

#98 Herb on 08.27.13 at 1:07 pm

Reading the blog dog howlings about young Trudeau and considering their source, he will be the man of the hour in 2015.

Go get ’em, Justin!

#99 Kent on 08.27.13 at 1:21 pm

If the economy starts tanking due to mortgages and declining housing market, what effect does that have on the banks, and will they soon be cleaning out (bailing into) our savings accounts?

#100 Chickenlittle on 08.27.13 at 1:22 pm

Old Man:

OH NO!!!!! Not a Peter Mckay scandal!! What did he do? Call someone fat?
Oh the drama that is Canadian politics! Even our scandals are boring. Nothing like the Larry Craig scandal. Like when he found the polls that said he was losing popularity “hard to swallow.”
But yes, no matter what party, they all end up being the same.

#101 Donald Trump on 08.27.13 at 1:36 pm

Pentagon Prepping for ‘Large Scale Economic Breakdown’

High level government documents reveal that the Pentagon is preparing in full force for ‘large scale economic meltdown’ and massive revolt via the US public — exactly what we are criticized for doing.

Read more: http://www.storyleak.com/pentagon-prepping-large-scale-economic-breakdown/#ixzz2dByHsZ8V

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

#102 Donald Trump on 08.27.13 at 1:46 pm

#95 Holy Crap Wheres The Tylenol on 08.27.13 at 12:28 pm

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

I agree. The whole system is a scam. The politicians do nothing but what there vested interests tell them too.

People say we have democracy ! and still have no clue.
Multiculturalism negated that.

People say we have a Charter, a Constitution blah blah. Another sham and smokescreen which at the stroke of a pen can me suspended.

It’s all one big illusion.

Justin Trudeau? I recall back when he was interested in politics…and I though naaaahhhh no way would he ever go so far and be PM. The fact he has pole vaulted to his current position is not a good sign. Pappy Pierre was a disaster for Canada, yet the sheeple still can’t figure it out.

#103 Steven on 08.27.13 at 1:54 pm

And we already know a lot of Boomer debt is being created to support the Thing in the Basement, as up to 40% of adult children now hang around the house. Not only do they add to the overhead, but they prevent their financially-challenged parents from downsizing out of that four-bedroom McMansion. Sadly, in many cases, it will push that real estate decision into a time when property values could be less and houses grow illiquid.

Lets say that thing in the basement has a job. The odds are that the thing in the basement has a trade and makes 10 to 15 bucks an hour and variable hours. How the hell does such a person earn enough to go from living with their parents to being a parent and buying their first home and live in Canada at the same time?
Unless a man can earn at least a third of the price of a home every year they can not afford the luxury of getting out of the basement and doing as their parents have done. Canadian employers will not pay the wages required to enable their employees to live in canada. The only exceptions are elite professions, upper eschelon government employees and may be union workers. In the real world 1 or 2x minimum pay is maximum pay and that is not good enough.
With out change for the better there will be no real estate boom, lower birth rates and more basement dwellers and may be more tree house dwellers.
http://www.youtube.com/watch?v=6ONLyd2gmV8&feature=player_embedded

#104 2CentsCdn on 08.27.13 at 2:04 pm

#72 gladiator
Movie clip ….. “Slaves to Debt” … and … “Control Dept…. you control everything ” Great quote, a great point, and very relevant. The number of countries and individuals up to their necks in dept now are puppets on a string for the worlds banks. True freedom is lost when you are beholden to others. And you are very exposed. The screws will be turned just often enough, and just hard enough to keep the debtor alive (and able to re-pay).

#105 HDJ on 08.27.13 at 2:22 pm

“BEEMO hits it outta the park.” So, how about lowering my banking costs and increasing the interest paid on what’s in my bank account? Crooks and liars! You’re obviously diddling me.

#106 45north on 08.27.13 at 2:24 pm

Julie: Bankers are licking their chops which implies that you know them. I don’t.

Everyone knows that it was Al CIA Da that released the nerve gas I don’t.

but most people just “do what their told” not too indifferent from horny house buyers. you mean different

When will people really REALLY wake up…..? you mean when will they think like you

#107 :):( Ying Yang on 08.27.13 at 2:36 pm

#98 Herb on 08.27.13 at 1:07 pm

Reading the blog dog howlings about young Trudeau and considering their source, he will be the man of the hour in 2015.

Go get ‘em, Justin!

Justin is a Smoking Man, ya I said it a Smoking Man!
Sorry Smoking Man move over there is now a new Smoking Man called Trudeau. Oh $hit that’s what he smokes,………………….Sorry Smoking Man carry on no new Smoking men in this young Trudeau.

#108 T on 08.27.13 at 2:39 pm

As I said in previous posts.

By December the rates will be right back down as they stay in the long descending channel of 27 year decline.

DECEMBER….if you need to lock mortgage rate in, chill, you will have yet ANOTHER opportunity very soon to get a low rate.

Pretty much with the cruise missiles go off you will see the acceleration DOWN on yields.

#109 Devore on 08.27.13 at 2:43 pm

#29 IM in C

“Tax free inheritances” will make everything ok? Really? This is hilarious.

Oh, and it’s always “the greatest wealth transfer of all time” happening, as world’s population keeps growing. So I would not expect anything to be different this time either.

#110 :):( Ying Yang on 08.27.13 at 2:46 pm

2 years in the future with PM Trudeau.

(PM) Dude, so let me get this straight…………………We make marijuana legal and then we tax it!!! Amazing dude, wow is this the good stuff from BC? Wow man this is good $hit. Alright everyone were proroguing parliament for the year everyone at 24 Sussex Drive tonight, and bring pizza, lots of pizza. Parrrrrrteeeeee.

http://www.huffingtonpost.ca/2013/08/22/justin-trudeau-marijuana-mp_n_3792208.html?utm_hp_ref=canada

#111 Devore on 08.27.13 at 2:47 pm

#60 P. Wagner

>>But mortgage debt’s increased in the same period

There shouldn’t be an apostrophe here.

Yes there should be. Expand it, and read it again.

#112 Holy Crap Wheres on 08.27.13 at 2:47 pm

#102 Donald Trump on 08.27.13 at 1:46 pm

#113 Devore on 08.27.13 at 2:53 pm

#77 Babblemaster

Well, for one – many experts have been predicating a condo crash, but they have been doing so for the last 15 years!”

“Many experts”, you say? Then you won’t have trouble naming just one of them, right?

#114 Holy Crap Wheres The Tylenol on 08.27.13 at 2:56 pm

#102 Donald Trump on 08.27.13 at 1:46 pm

I am old enough to remember what our former Prime Minister did to this country. I met him in 69 and have to admit he was charismatic. Every politician since then has done the same screw ups.
Trudeau did very little good and messed up everything else. Perhaps his prodigy is better?

Official Bilingualism
Open Immigration Policies
National Energy Program (Out West they still don’t vote Liberal because of this)
Canadian Constitution
FLQ Crisis/War Measures Act

#115 [email protected] on 08.27.13 at 3:03 pm

Here’s something interesting. Fairholme Village, Canmore, Alberta. Bought a 2 bedroom condo for $147,000 during the pre-construction phase. Tracked the prices. In 2010 similar units were listing for over $300,000. Sold in 2011 for $265,000. Similar units are now listed for $239,000. 22% off the peak listing prices.

#116 Rational Optimist on 08.27.13 at 3:21 pm

82 Dean Mason on 08.27.13 at 10:38 am

“Yields will be lower every month until the end of 2013.”

I don’t think this is likely to be the case.

On “The House” on CBC Saturday morning, they had a panel of former Tory staffers weighing in on- among other things- whether Harper will opt against running next time around. Fairly silly, but there was a great moment when the former Mulroney chief of staff said something to the effect of “I don’t think Harper’d be likely to walk away from a fight with Pierre Trudeau.” Brief but heavy pause while everyone (I suppose) decided whether to correct his slip of the tongue.

#114 nailed it. Sins of the father and all that, but why risk it. Every part of the country has good reason to remember Trudeau bitterly. It’s been a number of years now, but they don’t forget War Measures in Quebec even still. Nor should anyone else forget it, or the immigration (non) system introduced by him.

#117 2CentCdn on 08.27.13 at 3:25 pm

#111 Devore (in regards to #60 P. Wagner)
Thanks guys …. now I’ll be able to sleep tonight.

#118 calgaryPhantom on 08.27.13 at 3:31 pm

Garth,

What if my Realtor does a Miley Cirus on me, in exchange of a house.

Should i expect this offer? Or should i insist on a smart car?

#119 Habs76-79 on 08.27.13 at 3:56 pm

As time marches and I grow more mature I realize more and more that people often do not seek advice, especially if said advice runs against their pure emotions. No, most people seem to search for validation from others. Having others especially family and friends validate their most often emotional consumer spending is what many people want to hear from others and thus often will succumb to.

Those who are better able to cut through pure emotional consumerism and search out logic and reason will better accept advice even if said advice hits them in their emotional wants part of their mind, will be folks who often will in the long run do better, live better and live to their life and not to others. They likely wont even bother to live to impress those who especially have zero real matter in their life, such as those proverbial Smiths and Jones.

IMO screw the proverbial, Smiths and Jones, they are probably in debt up to their eye balls, at each others throats and likely soon to be divorced anyways.

We all have made and make poor choices in life, but some poor choices can cost you a lifetime of regrets. Too bad too many do not search for real advice, but as I said look for validation from others. TOUGH LESSONS FO MANY!

#120 Donald Trump on 08.27.13 at 4:00 pm

#114 Holy Crap Wheres The Tylenol on 08.27.13 at 2:56 pm

Trudeau was a marxist. He followed the playbook. He had no intention of uniting the country, but creating divide and conquer wedges.

I have always felt very something strange happened that Trudeau lost to Clark then got into office just long enough to get rid of the BNA Act.

Since the War Measures act invoked by Trudeau we have lived under a quasi martial law whereby the Prime Minister is a dictator.

Trudeau was a phoney….some clown that stood out with his antics and certainly appealed to females. He intimidated the media with his faux intellectualism. I couldn’t recall many males that could stand him

His Son? is possibly going to be the parallel of the Bush’s legacy.
The future….has been cast in stone,..we have had a litany of Prime Ministers that are neo cons that have sold us out.

BTW re the US….ALL presidents of the US except one share the same bloodlines..all related.

#121 rosie "moving forward" in the knowledge that, "this won't end well" on 08.27.13 at 4:07 pm

#101 donald trump

This “journalist” keeps excellent company. All the true investigative journalists. http://www.dailypaul.com/282386/boston-massacre-witness-anthony-gucciardi-interviews-alastaire-stevenson-of-univ-of-mobile

#122 Donald Trump on 08.27.13 at 4:07 pm

Miley Cyrus….

Well,…..when I viewed that MTV video,… I couldn’t believe it (and I’ve seen some bizarre stuff).

Sad thing is, they build up these new young stars in some wholesome mode(ie Spears, Bieber, Cyrus etc…..)then turn them into some biker/porn star.

More programming of our youth

That’s why we must do this:
http://www.youtube.com/watch?v=rP9dlTornbM

#123 Donald Trump on 08.27.13 at 4:22 pm

Marijuana..legalize and then tax ?
How clever….

#124 Dean Mason on 08.27.13 at 4:44 pm

#116 Rational Optimist

The Canada 5 year bind is 1.84% today,it was 1.98% just on friday-August-22-2013.The Canada 10 is 2.57% and was 2.73% just 4 business days ago.The Canada 30 year was 3.21% and today is 3.04%.

The U.S. 10 year was around 2.91% and today is 2.71%.The U.S. 30 year was 3.90% and now is 3.69%.These are 20 to 21 basis point drops around 5% to 5.50% in just 4 business days.

Bond yields will go up and down but the first sign of weak economic news and other world economic problems all the followers will go into U.S. dollars,U.S. treasury bonds and there they fall again.

By the way The Dow Jones was 15,500 and today is 14,776,S&P 500 was around 1,700 and today is 1,630.This is the nervous Nellies running from U.S. equities into U.S. bonds.

#125 Timing is Everything on 08.27.13 at 4:44 pm

#18 snake

They buy everywhere…
#9 al
#18 snake

‘Love it’…

‘Wealthy Chinese snap up homes in Southern Europe as governments offer visas for buying’ – FP

http://tinyurl.com/n5jg7dl
——————————————
Reminded me of this blog. Go figure…

http://tinyurl.com/lfbq5qw

#126 espressobob on 08.27.13 at 4:46 pm

#105 HDJ

The best way to get ‘payback’ on banks is to own them, even if they are liars & crooks!

#127 Vangrrl on 08.27.13 at 4:53 pm

There’s a CBC doc on the boomers that is pretty good. I think it might have been there I heard the stat that put the numbers of that generation in perspective for me: following the war, women had, on average 4 children!!
On another note, thank you Garth for teaching me about investing. I have been for about 13 yrs, but what I’ve learned here has helped me tweak that and my investments just hit a milestone which makes me feel quite happy. In relation to many Cdns my age, I feel a bit ahead os the game – living simply, debt free, renting in coocoo crazy delusional Vangroovy ;)

#128 Shawn on 08.27.13 at 5:17 pm

MINDS SET IN STONE

Habs 76-79 says:

No, most people seem to search for validation from others. Having

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

So true, most minds are set in stone. They come here to express anger that home prices don’t fall. Or anger against other points of view. Few minds are open.

#129 Ballingsford on 08.27.13 at 5:21 pm

Hi Garth,

I’m ready to make this years RESP contribution of $2500. Should I do it in sometime in Sept or Oct?

Sept seems to be the crashing month, so I’m thinking Sept.

What do you think?

#130 Timing is Everything on 08.27.13 at 5:25 pm

#105 HDJ

“technical deficiency”. Ha! Ya right. H and F just happened to get caught.

Young ones! Get thee to a credit union, post haste.

Hidden tax on credit unions found…

‘But a recent Deloitte report found the budget implementation bill passed in the spring will effectively raise the credit unions’ tax rate to 28 per cent over the next five years. Deloitte’s report said the increase was due to a “technical deficiency” in the budget legislation and that the Finance Department was working to correct it.’

http://tinyurl.com/m7agnbf

#131 VanPerfecto on 08.27.13 at 6:21 pm

There is no reason to worry excessively about debt. When your folks pass away, the sale of the house, the inheiritance will pay off all your credit cards and credit lines. For most people debt is a non issue if your folks own a home

#132 Jarnail on 08.27.13 at 6:48 pm

Vancouver Real Estate is where you send money to die right now. That whole city is poised ripe for a major collapse in house prices. The incomes simply don’t exist to the rate of housing inflation witnessed over the past decade. Mortgage rates will rise as bond yields go up. That 2.89% rate you locked in looks great for the next 5 years until you negotiate with a Bankruptcy professional in 2018. Vancouver is the laughing stock of short and long term real estate peoples alike, and it’s why that entire city will and most certainly fail on value retention. Value erosion is the new catch phrase all across the city of Scamcouver. Don’t be scammed. Get out now. Before it’s too late.

#133 Jarnail on 08.27.13 at 6:53 pm

Oh and one more thing. Tsur Sommerville and Cameron Muir will not have jobs in 2014.

#134 espressobob on 08.27.13 at 6:54 pm

#132 VanPerfecto

Good luck with that line of thinking!

#135 Babblemaster on 08.27.13 at 6:59 pm

#113 Devore

“Many experts”, you say? Then you won’t have trouble naming just one of them, right?

———————————————

Please reread my post. I was quoting from the article in Globe article, but since you ask, Garth is one of them.

#136 Habs76-79 on 08.27.13 at 7:02 pm

VanPerfecto on 08.27.13 at 6:21 pm

There is no reason to worry excessively about debt. When your folks pass away, the sale of the house, the inheiritance will pay off all your credit cards and credit lines. For most people debt is a non issue if your folks own a home
*******************

I’m going to assume you are being sarcastic. :-)

1: Lets assume Mom & Dad owe nothing on their home when they kick the bucket. Okay, yippie for their greedy, selfish kids. Lets say the home can be sold for $500,000. (lets even say after all fees ok?) But Mom and Dad had oh say 3 kids. Each kid if the Will says so gets about $167,000. NOT BAD, NOT BAD AT ALL but if the greedy lil $hit kids were irresponsible with debt before old mom and dad dropped dead maybe these kids have 2, 3, 4 times more debt than the $167,000 inherited?

2: Old Mom & Dad wanted to enjoy or otherwise use any equity in said home maybe have oh say $250,000 borrowed against said home for oh first home repairs, and say also a big RV to drive around in as they are retired. This $250,000 will come off the top of the $500,000 the house sold for after they kicked it [the bucket] like Beckham. Now, the greedy, selfish lil $hit kids only get $250,000 to split three ways. That’s now a nice $84,000 but may be a drop in the bucket to cover these lil aholes possible indebtedness anyways.

#137 Steven on 08.27.13 at 7:31 pm

DELETED

#138 Daisy Mae on 08.27.13 at 7:57 pm

#73 ChickenLittle: “The guy has no substance and no idea what to do. We are so screwed if he gets in.”

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

I saved a comic strip depicting Justin — standing with foot on boulder, staff in hand, wearing robes, looking off in the distance….

Caption reads: “Where is he leading us?
Answer: Who cares? He’s so cute.”

We’re sooo screwed…

#139 espressobob on 08.27.13 at 8:00 pm

#120 Habs 76-79

Keeping up with the Jones is myopic at the best of times. Who the hell cares?!?! Freedom is the real issue and few get it? Enjoyed your comment.

#140 Marginal on 08.27.13 at 8:17 pm

#137 Habs76-79 on 08.27.13 at 7:02 pm

You forgot point #3

3. The Thing in the basement has lived there so long (or boomeranged back in) that they are now Old Mom and Dad’s caregiver by default. Old Mom and Dad leave everything to the Thing, because, by golly, the Thing has nowhere else to go, poor broken wing Thing. Other kids are SOL.

I’ve seen this happen twice; once to a friend’s clan and once within my own extended family.

Never depend on inheritance when it comes to your own financial plans, after all Mom and Dad can write the terms of their will however they please…..it’s their money.

#141 Habs76-79 on 08.27.13 at 8:30 pm

Marginal,

Yep, and IMO any siblings who plan for and build a life counting on any inheritance by Mom and Dad are as I said selfish, greedy lil $hits. These punk kids DESERVE NOTHING!

IMO any inheritance your parents may leave to you is a mere gift from their eventual passing.

Lord knows I’ve made money mistakes in my life but I’ve never counted on and do not count on any monies or such left to me by the death of my parents.

My mother has passed on already, I live my days still cherishing that my father is alive and I do not even consider about anything he may leave once he does pass on.

#142 Wakey wakey on 08.27.13 at 8:36 pm

Im ready for your next article. Where are you????

#143 Daisy Mae on 08.27.13 at 8:43 pm

#107 Ying Yang: “Go get ‘em, Justin!

Justin is a Smoking Man, ya I said it a Smoking Man!
Sorry Smoking Man move over there is now a new Smoking Man called Trudeau. Oh $hit that’s what he smokes,………………….Sorry Smoking Man carry on no new Smoking men in this young Trudeau.”

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

Like I said: “We’re so screwed…”

#144 Smoking Man on 08.27.13 at 8:47 pm

Tonight on this bat channel

Nemginkoms exposed…………..

#145 Mr. Monday Night on 08.27.13 at 8:50 pm

This has diminishing returns written all over it. If the kids are waiting on the parents’ inheritance to bail them out, there will be nothing left to pass on to the grandkids. Unsustainable.

I disagree that the generation ahead of the boomers being a well-off cohort. The majority of them were single-income families that were squeezed just as much as Gen X and beyond once the two-income trap became the flavour of the day. I don’t know that many octogenarians that aren’t living just well enough to get by, and I see more and more that are doing worse.

I expect nothing from my parents when they go, especially not the burden of settling their debts!

#146 willworkforpickles on 08.27.13 at 9:33 pm

Those waiting to buy in lower will ultimately choose to not buy at all for several years from now. Somewhere within that time when prices are half what they are now in most places – there will be little to no more interest in a turkey of an investment like real estate for short stint. Then the early birds will go in unnoticed and in droves for a year or so cherry picking the best deals.

#147 Stu Dent on 08.28.13 at 12:54 am

Hmm… Im at that point in life where I am beginning to try to figure out if renting or buying is better for me.

If mortgage rates rise will house prices stop growing? I am looking for a sound investment