The changeup

makeover

When ten-year mortgages were 3.69%, I said buy. When gold was $1,923, I said sell. When US houses crashed 32%, I said go. When Toronto’s average hit $540,000 (now $503,000), I said bail.

Along the way, this pathetic blog told you mortgage rates would swell (they did, by 1%), financial markets would surge (+19.5% for the Dow this year), and the US revive (it has).

What wasn’t expected? Bonds’ summer plop, taking REIT and preferred prices down 15%. Or so many fools rushing to buy houses at inflated levels in July and August, merely to beat a rate pop. But both of these are temporary. Fixed income will recover, houses not so much.

What happens next?

As I told you last week, Wednesday’s a biggie. The world’s most important beard, Ben Bernanke, will hold a presser to announce (the betting goes) Washington will start turning off its gushing tap of stimulus spending. It’s a key moment. It signals (a) the era of crazy-cheap interest rates is over, probably for the duration of your lifetime, (b) America’s back, (c) the crapstorm of 2008-9 is finished, (d) the doomers were wrong, again and (e) those left with piles of silver bars in their root cellar will be really, really sorry.

The Fed will slowly reduce its spending because the economy is healing. It’s that simple. This is something financial markets have already digested, so there’s unlikely to be much of a reaction when Bernanke finally says what he’s hinted at for five months. Bond yields may fall a little, as I mentioned last week, and central bank interest rates won’t move. It’s why you’re best to hang on to a variable-rate mortgage for at least another year.

Once markets calm (now that Syria won’t be turned into a smoky hole), yield-hungry investors will probably gobble preferreds paying 5.5% and REITs which are even sweeter. That sizable correction for the Dow or the S&P which was on the radar six months ago is suddenly looking more remote. The debt ceiling debate in the US this fall will be as exciting as Lethbridge. And precious metals aren’t, with America and Russia all kissy, no inflation and the greenback ascending.

Those who decided to shelter their wealth in residential real estate, or gold bars, because they were afraid of the wider economy, bet wrong. Sentiment is now building that bullion could be languishing at $1,000 an ounce by this time next year, for example. Already it’s shed 22% of its value in 2013, and is 32% below its 2011 peak. Could be another 23% coming. Yikes.

As for Canadian real estate, this pathetic blog has given you all you need to know. Household debt is at a record high. Housing sales volumes are weak. New house sales have collapsed. Mortgages are up and affordability’s down. Personal finances grow weaker by the month. Economic growth has stalled. The Boomers are a mess. And real estate boards routinely fib to you, as I demonstrated last week.

The truth is that Vancouver prices have declined for 13 months. Victoria’s awash in million-dollar listings and desperate sellers. Sales in Halifax just tumbled 51% from last year, and have been eroding for 11 months. In Winnipeg, August sales were off 20% from July, proving that higher mortgage rates pulled demand forward. The Montreal resale market has flatlined while listings have ballooned 16%. In Toronto, new construction (houses, condos) is at a record high, while sales just hit a record low. The average home price – which TREB said is “up almost 5.5 per cent,” is down 7.2% from its May peak – weeks before mortgage rates bloated. And just look at true sales data in Canada’s hottest market (below, click to enlarge). Chartist Joe Campbell estimates this alone has cost Calgary realtors $50 million a year in vanished commissions.

CALGARY

As the world normalizes, expect more normal. Mortgages at 3%, houses that earn more every year than the people who own them, central banks gushing money, or inflating pieces of metal – none of that’s normal.

This will be embodied on Wednesday. But I bet your brother-in-law will miss it. Which is good. We’ll need all the greater fools we can get.

GTA

211 comments ↓

#1 TurnerNation on 09.15.13 at 6:09 pm

Hey Meester how much is your Wheestler??

Started at 1.9 million. Reduced a few times (to 1.5m); now at 1.3 million!
Thatsa whopping 31% dip.

Realtors must be in a panic.

– Flagship commercial property in Creekside.

http://www.whistlerlistings.com/commercial.php?action=details&com_id=41&com_status=Active

Teeny Leslieville Special. Only $450,000 dallas….

http://www.89Alton.com

#2 TurnerNation on 09.15.13 at 6:11 pm

Sign o’ the times:

Cheap Canadians gorging on cheaper goods:

Dollarama.

http://stockcharts.com/h-sc/ui?s=DOL.TO&p=D&yr=2&mn=0&dy=0&id=p26222868225

#3 Mike on 09.15.13 at 6:13 pm

Before and after pictures … that’s why god invented Photoshop :)

#4 Derek R on 09.15.13 at 6:15 pm

It’s always nice to know what’s going to happen next. Thanks.

#5 Randy on 09.15.13 at 6:15 pm

…great news…makes sense Garth…

#6 Victoria Real Estate Update on 09.15.13 at 6:17 pm

How weak is Victoria’s housing market? Very weak based on sales. So far this year, total single family home sales are on pace to equal 2012’s total which was the lowest total since 1982. Sales in 2012 were 30% less than the average from 1985 to 2009 and 43% less than the average from 1988 to 1992, when Greater Victoria’s population was much less than it is now.

If you have relied on the VREB’s reports as your only source of housing market information, you would be under the impression that sales are strong. You deserve to know the truth. Sales in Victoria have crashed.

Weak sales inevitably lead to price declines. Prices have already started declining in Victoria to a greater degree than most people think. Those who bought older condos near the peak of 2010 have seen their properties lose about 30% of their value. A house on Haultain Street that sold for $447.5 K in June 2010 recently sold for about $300 K (bank sale) – a 33% price drop.

Although prices have declined across the board in Greater Victoria, the big price drops are still on the way. The big price declines won’t happen until Canada’s debt-to-disposable income ratio starts to head downward. This chart shows that Canada’s ratio hasn’t started to decline yet. Why will prices fall once this ratio heads downward? It’s simple. When this ratio begins to decline, it will signal that Canadians are taking on less mortgage debt – the only thing that is supporting these bubble house prices.

The government wants this ratio to move lower. They know that too much household debt will prevent an economic recovery. The feds have taken action to make this ratio decline and are currently considering more action to make sure this happens. It is extremely high on their priority list.

This chart shows that the big price declines started to happen in the US at the end of 2007. Match the start of the big price declines in the US with the end of 2007 on this chart – the point where debt levels in the US started to move downward. This is a very important relationship to be aware of. Keeping this relationship in mind gives you a huge advantage in terms of knowing when to enter the housing market.

Why would you buy a house in Victoria right now when you know that the government’s actions will soon cause house prices to fall significantly?

Girls and guys, keep an eye on the household debt to income ratio chart. Let that ratio drop before you buy. It’s a simple plan. Renting for now is a no-brainer and it will help your financial future immensely.

Until next time – Cheers!

#7 JayBee on 09.15.13 at 6:18 pm

*Resisting urge to tell strangers that I commented on Garth’s blog before they did*

#8 FullOfFear on 09.15.13 at 6:21 pm

“America’s back”

Yes, as long as their government keeps buying their own bonds … they’re back. Central bank balance sheet, 3.6 trillion and counting.

#9 Canadian Watchdog on 09.15.13 at 6:22 pm

Bad timing Garth. Treasury futures are rallying on Summers exit as a clear indication that the next Fed chief is poised to be dovish.

Taper is off and printing presses are being shined up for QE5 as disinflation enters deflation.

You’ve been consistently wrong so far. Why change now? — Garth

#10 Anthony on 09.15.13 at 6:24 pm

May 17th, the day the market topped as reported on this blog, now illustrated 4 months later.

Time to ride the wave back down..

#11 Bob Loblaw on 09.15.13 at 6:26 pm

Boomers are a mess? 59 and 58, two incomes, home with no mortgage, kids graduated and on their way. No pensions but DIY-ing (ETFs) 750K in maxed RRSPs, LIRAs, TFSAs and non reg. On track to retire in 6 yrs. with 100k income. How’s that a mess?
Garth, I’d really like to see you back in the HofC. Would vote for you, AGAIN.

#12 T5_INCOME on 09.15.13 at 6:26 pm

I took your advice in June purchasing 1500 Rio Can units, I look forward to this rebound Sir Turner.

#13 T.O. Bubble Boy on 09.15.13 at 6:27 pm

U.S. equity futures up 1%+ for Monday… the trend continues.

#14 JG on 09.15.13 at 6:27 pm

First I guess? Great article!!

#15 dave b on 09.15.13 at 6:28 pm

in! first!
When ten-year mortgages were 3.69%, I said buy. When gold was $1,923, I said sell. When US houses crashed 32%, I said go. When Toronto’s average hit $540,000 (now $503,000), I said bail.

#16 Lala on 09.15.13 at 6:28 pm

1st of October in 2 weeks

#17 Chris in Guelph on 09.15.13 at 6:29 pm

you’re the best garth

#18 T.O. Bubble Boy on 09.15.13 at 6:29 pm

I’ll add 1 more pic to the 2 above… it is the Liberal candidate for Toronto Centre (Bob Rae’s seat):
http://www.huffingtonpost.ca/2013/09/15/toronto-centre-byelection_n_3930645.html

#19 guelphstudent on 09.15.13 at 6:30 pm

Here’s how the 10%, 15% or 20% correction in Canadian home prices will look like http://bit.ly/1dg38xp <- Graph

#20 IM in C on 09.15.13 at 6:31 pm

Don’t hold your breath. House prices in Canada will not tank, much as I would like to see them do that. No government in Canada could tolerate the kind of foreclosure rate we saw in the US

#21 TurnerNation on 09.15.13 at 6:32 pm

TLT.US daily chart possible, err, “inverted batman”.
Toe the line.

#22 Suede on 09.15.13 at 6:33 pm

“There are no ugly women – only women who don’t spend money on makeup, hair extensions, fitted clothes, plastic surgery etc…”

-Suede’s wife

Garth, you forgot to mention that Obama is announcing a new Fed Chairman next week. I didn’t see a posting on their ‘Careers’ section though.

http://www.federalreserve.gov/careers/default.htm

#23 Exilled on 09.15.13 at 6:34 pm

Mr Turner : Only if it’s a kick start!!

#24 Dr. Wanker on 09.15.13 at 6:37 pm

Early today Garth. Those house horny virgins will pay big time for this experiment.

#25 John on 09.15.13 at 6:38 pm

What is the source of data you provided?

As usual, I made it up. — Garth

#26 Ret on 09.15.13 at 6:39 pm

A feeding frenzy of gluttony on Dundas just west of Sixth Line in Oakville today at the Mattamy/Remington Homes site. Appointments only for the pre-qualified although I saw some by-pass the security guy by climbing the clay ditches. It was a spectacle for sure.

#27 T.O. Bubble Boy on 09.15.13 at 6:41 pm

18 foot wide lot, $1M.

what bubble?

http://www.realtor.ca/propertyDetails.aspx?propertyId=13539766&PidKey=-1921168355

#28 nancy on 09.15.13 at 6:43 pm

I don’t know if Richmond BC prices are any normal indicator, but prices for detached homes are at an all-time high. Still bidding wars on land value from developers. Could this be the peak before the drop? Or is this just another new high? With more highs to come? 2011 was a steal looking back.

#29 Cy on 09.15.13 at 6:45 pm

First?

#30 snake on 09.15.13 at 6:46 pm

This is what I called a changeup

http://imgur.com/a/ynkv8?gallery

#31 Retete on 09.15.13 at 6:46 pm

I kind of feel there will be no tapering on wednesday. If not, i am not sure what kind of excuse they will give. I hope they will taper though…we will see!!!

#32 father on 09.15.13 at 6:46 pm

the more the greater fools the greater the fall AND I’M FIRST

#33 Mr. Reality on 09.15.13 at 6:47 pm

http://confoundedinterest.wordpress.com/

The US recovery depends on housing just like our economy. Woops that’s done. See above.

Mr. R.

#34 Castaway on 09.15.13 at 6:48 pm

Early post Garth. Look forward to Bernake’s Wed press conf.

#35 T.O. Bubble Boy on 09.15.13 at 6:54 pm

20ft wide semi, $900k.

what bubble?

http://www.realtor.ca/propertyDetails.aspx?propertyId=13217793&PidKey=-587074594

#36 PermaBear on 09.15.13 at 6:56 pm

All the blog dogs are watching the Manning Bowl.

#37 East Van on 09.15.13 at 7:01 pm

FREE CONDO!

http://www.cbc.ca/news/canada/british-columbia/north-van-condo-seeks-buyers-in-volatile-market-1.1854876

#38 Cici on 09.15.13 at 7:02 pm

1st?

So many For Sale signs.

My boyfriend and I have a new car game; a more up-to-date variation on “yellow buggy” : He or she who is first to yell “À vendre” or “For Sale” for each point spotted while driving scores the point, and the points are tallied until we arrive home. Highest score wins the game.
LMAO

#39 Cici on 09.15.13 at 7:04 pm

Oops: For each “sign” spotted.

I’m pretty sure this game is going to become a new national pastime over the years to come :-)

#40 Nosty the Impaler on 09.15.13 at 7:05 pm

“As the world normalizes, expect more normal. But both of these are temporary.” — There is only fluctuation (change) in this world, no such thing as normal. Everything is temporary, nothing lasts forever.

#193 Donald Trump on 09.15.13 at 9:53 am, #211 eddy and #226 Canadian Watchdog — “In a few weeks, they will hold ceremonies for the morons who followed orders and took out countries who tried to be sovereign nation republics ,not be beholden to central domestic banks beholden to central foreign banks and be examples to others.”

Syria, Iran and Russia are three countries with public non-profit central banks, as was Libya and a few others. Why on earth would Assad be so stupid as to kill his own people, and invite the west to topple him? The US (who placed Pinochet in power) regularly does it. The current çharade with Syria is just that — doublespeak of a ceasefire is talk, and talk is cheap.

You might be interested in this and this. “Pay special attention to the part about Ecuador at 2:50, where Ecuador was forced to purchase some of the US “Toxic Assets” (failed mortgage bundles and derivatives) in order to be allowed to export bananas to the US. This is another reminder that US foreign policy is being driven by the bankers.” wrh.com, or how the US shares its so-called wealth with others.

#41 espressobob on 09.15.13 at 7:24 pm

I only wish there was more cash in the accounts to snap up more pref’s, REIT’s & bonds! Better get back to work.

#42 cj on 09.15.13 at 7:26 pm

whoever this Campbell dude is….if your a chartist then you would read that chart as the bottom is in for Calgary real estate….higher lows and through resistance…..giddy up!

$108 crude, nat gas rising, employment surging, mass immigration….you continue to be wrong about calgary….amen to that!

#43 randy hansen on 09.15.13 at 7:28 pm

Your certainly full of yourself. Whats your track record since you were kicked out of elected office ? Whats your take on the market in Edmonton ?…..WAIT…….don’t answer that……….the world will stop consuming oil and we are all doomed !!! The only thing worse than the Guru himself………are those heads who wag with him…….

That was cogent. — Garth

#44 AK on 09.15.13 at 7:30 pm

“(b) America’s back”
====================================
It sure is.

I just returned from Las Vegas. Cranes are popping up again, bumper to bumper trafic, sidewalks and casinos were jammed.

#45 Ralph Cramdown on 09.15.13 at 7:30 pm

Unusual for Fed operations, you’ll be able to watch this one live:
http://goo.gl/1f2xMX

#46 snake on 09.15.13 at 7:37 pm

Calgary House Prices: What $5 Million Will Buy (PHOTOS)

http://www.huffingtonpost.ca/2013/09/15/calgary-house-prices_n_3902465.html

#47 snake on 09.15.13 at 7:48 pm

The Best Economies In The World

http://www.huffingtonpost.com/2013/09/15/best-economies-world_n_3930839.html

#48 Brian Ripley on 09.15.13 at 7:58 pm

There does appear to be some evidence of a strengthening US$ relative to the CAD. I also include in my chart, U.S. and CAD wages: http://www.chpc.biz/2/post/2013/09/inflation-not-hyper.html

Since 2012 it does look like a shift has taken place and inflation remains benign. If this trend of a rising US$ continues, I think Canadian real estate will correct as the perception of value changes.

#49 espressobob on 09.15.13 at 7:59 pm

#44 randy hansen

I’m thinking ‘uneducated cretin’! Maybe on the wrong blog? Try Sprott instead.

#50 Jimmy on 09.15.13 at 8:07 pm

LA is for the newlywed and the nearly dead.

That’s Lethbridge, Alberta for you eastern creeps and bums.

#51 Daisy Mae on 09.15.13 at 8:08 pm

#3 Mike: “Before and after pictures … that’s why god invented Photoshop :)”

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

That, and professional make-up artists, hair stylists…and air-brushing.

#52 Aon on 09.15.13 at 8:11 pm

But lethbridge is fantastic. Every setember 10000 young naive coeds descend on the city for the first time away from daddy.

#53 Uwinsome on 09.15.13 at 8:11 pm

Larry Summers out:

http://www.cnbc.com/id/101035340

#54 Musty Basement Dweller on 09.15.13 at 8:12 pm

#44 randy hansen on 09.15.13 at 7:28 pm
A little bitter are you Randy ? Realtor? House poor and trapped? Make sure you don’t blame others for your own stupid eh.

#55 Godth on 09.15.13 at 8:13 pm

Do we have a problem?
http://www.youtube.com/watch?v=ww_z6Teynow

What story are we telling ourselves?
http://www.youtube.com/watch?v=JKHUaNAxsTg

#56 I'm stupid on 09.15.13 at 8:18 pm

I just don’t understand why so many people come here to bash you. Is it because they can’t read or just don’t understand what your saying? I’m going to simplify what you talk about night in and night out.

1. Diversify
2. Diversify
3. Diversify
4. Diversify
5. Diversify

It’s that simple. No one can predict with 100% certainty what the future holds. With diversification you spread the risk around to minimize losses.
Imagine buying a home in Detroit circa 2005 and you spent all your money doing it.

Now imagine you spent 30% to own that home
40% fixed income
30% equities

Of the 2 examples who wins?

Sure you can get lucky and invest in the best performing asset but you could also win the lottery. The question is are you prepared to plan based on winning the lottery?

#57 Smudgekin on 09.15.13 at 8:21 pm

The world’s most important beard, Ben Bernanke,

Whoa! Some hint of jealousy there Garth…

US recovery isn’t bringing back the middle class jobs. Robotic hardware & software do not consumers make but 3rd world jobs take.

Putin’s smarter than Obama. He’s turned the table turned on Syria. We see the Deliverance ears armchair interviewed like Margaret Atwood.

#58 Today's thoughts on 09.15.13 at 8:21 pm

@ret… Funny. My friends camped out for two days for te last release. Tell me they will make $200k. More bidding wars today in Mineola and two 2.5 million dollar houses sold in lorne park. I genuinely see no end in sight. There are many people out looking/buying with their realtors. Family money from the Middle East from what I see. At least in the “hot” neighborhoods in Mississauga this wont end. Lots of people moving out further to oakville/Burlington. Can’t blame them I guess the neighborhoods are changing rapidly. Home building is fast pace in the “hot” neighborhoods. Let’s see what Wednesday brings. Garth’s blog is the therapy required to stay in my paid for house and continue throwing money at the retirement investments and to decrease this house horniness.

#59 Musty Basement Dweller on 09.15.13 at 8:23 pm

#51 Jimmy on 09.15.13 at 8:07 pm
LA is for the newlywed and the nearly dead.

That’s Lethbridge, Alberta for you eastern creeps and bums.
≠===========
Lol. Love your pairing of creeps and bums. Being from the island (Vancouver) I feel left out though.

Oh yeah do people actually do that? I mean retire in a place like Lethbridge?

#60 Smoking Man on 09.15.13 at 8:25 pm

Along the way, this pathetic blog told you mortgage rates would swell (they did, by 1%), financial markets would surge (+19.5% for the Dow this year), and the US revive (it has).
……………………………………………….
It certainly did. good call.

The BS stat machine in the USA is now paying off after about a year of fudging the numbers.
Self-fulfilling prophecy is making ground.

Home Depot finally has a good 1/4

#61 aprilNewwest on 09.15.13 at 8:34 pm

#11 Bob Loblaw – No one said ALL boomers are in a mess. It only takes a certain % to bring the rest down.

#62 Daisy Mae on 09.15.13 at 8:38 pm

#44 randy Hansen: “Your certainly full of yourself. Whats your track record since you were kicked out of elected office ? Whats your take on the market in Edmonton ?…..WAIT…….don’t answer that……….the world will stop consuming oil and we are all doomed !!! The only thing worse than the Guru himself………are those heads who wag with him…….

That was cogent. — Garth”

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

‘cogent’ — compelling, convincing.

You gotta get a grip, Randy, and try to relax….

#63 Nemesis on 09.15.13 at 8:39 pm

Hmmm… I’ll see your ChangeUp and raise you a LongBottom, AuldPol…

http://www.independent.co.uk/arts-entertainment/tv/features/life-after-harry-potter-look-whats-happened-to-neville-longbottom–its-magic-8816927.html

As for the rest? AWeekIsALongTime… in politics, or strife.

We’ll see.

#64 Keith in Calgary on 09.15.13 at 8:41 pm

It seems that no one wants to step up and take credit for the “emerging US recovery”…..bullshit…..cough……harrumph….cough, cough…….

Larry Summers just announced that he doesn’t want Bernanke’s job….Yellen ain’t yelling for it….nor is anyone else stepping up……..hmmmm. I wonder what they know ? Why, it’s probably the same thing that I do………that the US is screwed, blued, and tattooed.

Summers knows he is a political liability. And a bad choice. — Garth

#65 NotAGreaterFool on 09.15.13 at 8:44 pm

And in other news: Lawrence H. Summers, the former Treasury secretary and a top contender for Federal Reserve chairman, told President Obama that he didn’t want to be considered for the job.

He knew he would never be confirmed. — Garth

#66 Bobby on 09.15.13 at 8:46 pm

For # 6, I certainly can agree that. The market is on the decline in Victoria. Spoke to [email protected] the other day about a prospective mortgage. She said the mortgage business was dead. Said many clients who had their homes up for sale have seen little or no action and even fewer offers.
Lots of homes sitting on the market forever.
Who really believes what the realtor organizations say anyways. You just have to take a look around yourself.

#67 Family Man on 09.15.13 at 8:50 pm

Just don’t buy in Toronto and you’ll be fine.

#68 Fed-up on 09.15.13 at 8:51 pm

@ #20 IM in C on 09.15.13 at 6:31 pm
Don’t hold your breath. House prices in Canada will not tank, much as I would like to see them do that. No government in Canada could tolerate the kind of foreclosure rate we saw in the US

—————————————————————————-

If that’s true why did the market in Canada tank so hard in the 90’s?
The government has intervened enough, let the market correct itself already.

#69 TurnerNation on 09.15.13 at 8:56 pm

Reading latest Atlantic Business magazine – hard copy (I like handling dead, bleached trees) – featuring Lunenburg as front story. Claiming, young ‘are being priced out’ of local RE.

http://www.atlanticbusinessmagazine.ca/cover/no-love-for-lunenburg/

#70 Obvious Truth on 09.15.13 at 9:00 pm

Props to Garth. A lot of good calls. He plays with an open hand.

It comes back to # 57 I’m stupid.

You always win being diversified but you rarely hit home runs. I’m the long run you don’t need 4baggers. Rebalancing is like taking a base on balls or scoring on a passed ball. Take what the other team gives you.

You can beat 90% of the mutual funds out there for free. My eight year old looks at sector charts and knows when to harvest an when to plant.

Agree on housing. Its boring. Numbers don’t lie. House prices will fall sharply from the small down from here. Remember in the US the realtors and bankers faked it from 05 to 07.

By the way did people rebalance this summer. Buy some sectors that were slammed. Metals, industrials, bonds and emerging markets ( oh my ). Or did the cnbc talking heads scare you. If you did you get rewarded tomorrow.

Hawks out, doves in, investors win!

#71 NotAGreaterFool on 09.15.13 at 9:03 pm

Anybody have any insight as to what September 2013 sales data is looking like half way through month? Primarily interested in Toronto.

#72 Bob Rice on 09.15.13 at 9:04 pm

http://www.theglobeandmail.com/report-on-business/five-years-after-financial-crisis-bc-resort-town-whistler-still-reeling/article14328894/

#73 Smoking Man on 09.15.13 at 9:07 pm

Re Canada benchmark bonds. and my bondomitor

2Y Slightly over sold
5Y Massively over sold
10Y Just about right
30Y Under Sold

Bet accordingly.

#74 John Dowin on 09.15.13 at 9:13 pm

As I told you last week, Wednesday’s a biggie. The world’s most important beard, Ben Bernanke, will hold a presser to announce (the betting goes) Washington will start turning off its gushing tap of stimulus spending. It’s a key moment. It signals (a) the era of crazy-cheap interest rates is over, probably for the duration of your lifetime, (b) America’s back, (c) the crapstorm of 2008-9 is finished, (d) the doomers were wrong, again and (e) those left with piles of silver bars in their root cellar will be really, really sorry.
……………………………………….

I question that now, specially after Larry Summers withdrew his candidacy for Fed Chairman.

With this long term tapering is highly unlikely as only he had the guts and determination to limit QE.

Even if we see tapering it would be quickly reversed and yes, we might prove doomers correct with the coming very high inflation.

Short term bonds might correct down, so interest rates might retract temporarily but in long term… Oh Boy, we are facing huge inflationary problems.

Hardly. Worry about deflation. — Garth

#75 John W Foster on 09.15.13 at 9:13 pm

#26

Yeah, that was a bit crazy! The crazier thing is that they all had a $40/50K down payment burning a hole in their pocket. Oh well, we’ll need the tax money to pay for the new hospital. I hope they have an ulcer specialist…

#76 John Dowin on 09.15.13 at 9:16 pm

He knew he would never be confirmed. — Garth
……………………………..

Larry Summers was the top contended with overwhelming majority of the votes. He was just about to be announces as the next Fed Chairmen before Syria
blew it out. He had Obama’s unconditional support.

He withdrew because he knew they would never let him limit QE. Volker’s moment missed. Tight the belts and pass the popcorn.

Dem senators would not support him. Quit reading gold sites. Trash talk. — Garth

#77 John Dowin on 09.15.13 at 9:18 pm

Hardly. Worry about deflation. — Garth
……………………………………………..
Why would anyone worry about deflation? Would not you money be worth more? Let the banks worry about it, I frankly don’t care.

I would certainly love to see gas and coffee at 0.50 again.

Deflation is far more destructive than inflation. — Garth

#78 Shawn on 09.15.13 at 9:20 pm

Boomers

95% of boomers give the rest a bad name.

#79 johnny d on 09.15.13 at 9:21 pm

So what of the Canadian Dollar in all this? Should I rush and trade for greenbacks, buy as much of the horizons USD etf (DLR) as I can? Or just wait and be confident that any RE correction here in Canada will be one of true prices in Canadian dollars and not a major shift in currency by 25% or so but RE prices stay the same…?

#80 John Dowin on 09.15.13 at 9:23 pm

On gold going down:

I agree that it might go to 1000. If it does it would be the buying opportunity of a lifetime.

Like gas going back to 0.20.

#81 TRT on 09.15.13 at 9:24 pm

Summers has withdrawn from FED Boss race.

All tat money printed will eventually speed up and find its way into Main Street!

Wow!

Inflation is on its way. $500,000 houses will be worth $1,500,000 in 15 years time! But the Dow might be at 100,000.

Leverage the coming inflation era! Buy a house?? Only 5% down.

#82 Today's thoughts on 09.15.13 at 9:26 pm

#76 John. Can’t say they all had a hole burning in their pocket but they did have a home equity line of credit that they used… Lots of speculators!

#83 i love libraries on 09.15.13 at 9:32 pm

20ft wide semi, $900k.

what bubble?

Reminds me, my cousin just spent 850k of the banks’ $ for a renovated semi near downtown Calgary. Under 30, high school drop out. Now I know how stupid he really is.

#84 Nemesis on 09.15.13 at 9:38 pm

@TurnerNation/#70

ThankYou for that SpectacularLink…

Sociologically speaking, OpenSource doesn’t get any better than that.

Aside: I too enjoy ‘DeadTrees’ reading… although, regrettably, I so seldom practice it these days… notwithstanding my philanthropy in aid of a VegasStartUp trying to revive the best of ‘OldSchoolJournalism’ [WithJokes].

Yikes! Hopefully, that wasn’t “PompousDrivel”

TeeHee!

#85 Mister Obvious on 09.15.13 at 9:48 pm

#80 Shawn

“95% of boomers give the rest a bad name.”
—————-

Now that’s funny!! Did you make that up?

#86 Freedom First on 09.15.13 at 9:48 pm

Garth, enjoyed your post today. Got me thinking how it really shows if someone was to have been following your %’s in asset allocation of: fixed income/age ratio, cash, RE/age ratio, and equities/age ratio, with regular re-balancing, they would be sleeping very well every night. Add, my favorite personal touch of “no debt”, and life is “always” free of financial worries, unless, of course is a princess and or one of the entitled.

My own take: keep it simple. follow the investing formula. Be over weighted in any asset, be it a house or gold, and you are a fool. No exception. None. Ever.

#87 Smoking Man on 09.15.13 at 9:49 pm

I love the pics

yes obviously gartho has worked in media

the ugly one on the left hottie on the right.

We read from left to right so we all asume the chic went from a mutt to a hottie.

if hots was on the left and mutt on the right

You dogs would have a different preception of the meaning.

Zohan my Isrealy buddy dident get it. he reads right to left.

#88 No Taper on 09.15.13 at 9:52 pm

I’ll take the other side of the taper bet sir.

#89 i love libraries on 09.15.13 at 9:54 pm

Cogent.

I am a university graduate and have to admit I had to look it up. I learned something new today – thanks

#90 Victoria on 09.15.13 at 10:04 pm

8th of October, 2012, Garth. I remember it perfectly – your post on how everything will change in just 100 days, and the RE market will be very different, and something along the lines of “even your mother-in-law will finally understand”. Well, it is different now. RE is 5% higher than last year! And before you say it – yes, RE went down from May. As usual, every year.

That day, last October, I said this: “Finally, mortgage rates will be rising. No, we don’t need a Bank of Canada upchuck to boost the price of a home loan. The bond market can do that all on its own, and will.” And it did. Which perfectly explains the dead cat bounce. — Garth

#91 Dan on 09.15.13 at 10:07 pm

Gold in August 2011 was far, far less in “bubble” territory than pockets of Canadian are real estate today.

Call it a bubble if behaves like it did in the late 1970s again – a REAL speculative mania, drenched in euphoria.

#92 Basil Fawlty on 09.15.13 at 10:07 pm

It appears that the US is heading for the same financial problems that occured in 2008. This is the result of high debt levels, the massive increase in the Feds balance sheet ($800B to 3.7T in 5 yrs), ongoing monthly credit creation and low interest rates. These factors are creating a repeat of the bond, stock and real estate bubbles.
In regards to precious metals, the Chinese continue to purchase 100 tons per month through 2013. I guess they are ignoring the calls for $1000 gold, or maybe just prudently practicing dollar cost averaging like other cute little investors.
Mortgage refinancing is down in the US and BofA, JP
Morgan and Wells Fargo are all laying off mortgage staff. In addition, 36% of US auto loans are subprime.

Meanwhile, the imperfect but nascent recovery continues. — Garth

#93 Victoria on 09.15.13 at 10:12 pm

To “I love libraries”:
Only time will show who the stupid one is, my friend. I have a school drop-out brother-in-law too. President of a very successful cleaning company since 25, owns a large house with huge equity and small mortgage, wife and 3 kids before 35. Me? Libraries lover like you, dear, and yet, without my husband, a renovator, would be a poor basement dweller, subsiding on a minimum wage, with all my academic snobbery.

#94 Larry Laffer on 09.15.13 at 10:16 pm

@John Dowin #77
“Why would anyone worry about deflation?”

If you have a lot of debt, inflation will lower the cost of your debt over time. Deflation will do the exact opposite. Unfortunately, a lot of individuals, corporations and governments have a lot of debts these days. Maybe you would appreciate some deflation, and I would too, but the big guys certainly wouldn’t. They won’t let it happen. A larger QE would likely kill any deflation at first sign.

#95 aardvark phartz on 09.15.13 at 10:18 pm

…worry about deflation.”

Really? Assume that one had no long term debt. What would a 5% deflation factor for 2 years do to the economy? Wages? Demand for goods, loans etc?
Smoking Man’s vision?

Just Curious?

Read history. — Garth

#96 JimH on 09.15.13 at 10:38 pm

Why I’m Bullish on the American economy (and why you should be, too).

This past March I traveled from Kansas City, MO down the I-35 corridor through the “old” oil fields of south Kansas and Noble, Payne and Logan counties in Oklahoma. The RV Parks around Guthrie, OK were full to the brim with workers’ trucks and trailers as they were working on the revitalization and expansion of the huge oilfields in the area; a region about the size of Vancouver Island.
We saw the same bustling activity as we traveled on through Oklahoma and Texas. Recession? Bite me! The oil & gas resurgence is just another outstanding example of America’s formidable resilience and outstanding ability at innovation.
The myopic stupidity of the doomers and gloomers prevents them from seeing past QE to the real forces now driving the economic expansion and re-industrialization of huge parts of America.
1. Underlying America’s revitalization of the oil and gas sector is the increasing demand for energy. A few years ago, we saw oil prices at >$140/bbl and natural gas climbing past $10. In the meantime, energy demand has increased, but more importantly for the US economy, we have seen a dramatic increase in domestic supply. America has now overtaken Russia as the world’s largest gas producer. As supply has gone up, so prices have gone down.
2. Lower gas prices coupled with rising demand have been the catalyst for the rejuvenation of the steel industry. Oil and gas exploration and development requires a huge quantity of steel for tubes, pipes, towers and other support structures. This demand has driven significant growth in steel manufacturing and fabricating throughout the country.
What’s more, steel plants run on gas — a drop in per-BTU price lowers plant operation costs and expands revenue margins.
In large part because of the economic benefits of expanded natural gas production, American steel companies have invested over $1.5 billion in recent years to increase production capacity and reopen plants that were once deemed uneconomical in an industry that just a short time ago was literally “on the ropes”.
3. Other energy-intensive industries like manufacturing, agriculture, and petrochemical production have also benefited enormously from expansions in American natural gas production.
4. The transportation sector, notably railways and trucking and the equipment manufacturing industries that service them have been steadily growing post 2009. ROI in the trucking industry is up 33% this year, rail up over 22%, equipment manufacturing up over 30%.
5. Housing is slowly recovering and retail is coming back. Yes, growth is far from meteoric, but the trend is unmistakably higher.
6. Investors world-wide clearly recognize the tremendous value opportunities of American real assets like housing, infrastructure and stocks; US markets clearly reflect this simple fact.

But of course, there will be those who will ignore all these signs and continue to bleat the same mindless chants of rigged numbers, an economy dependent on QE, the insanity of fiat currencies, and the financial Armageddon awaiting us just around the corner that they have been chanting since the fall of 2008. Being wrong never starts out as a state of mind, but to some, it certainly ends up that way; they are prisoners of their own self-deception.

Since March 2009, the Russell 2000 is up about 200%; the NASDQ is up about 190%; the S&P 500 up about 150%; the DOW is up about 132%.

Having clearly missed the opportunity of a lifetime, perhaps it’s time for the doomers, preppies, gold bugs and nay-sayers to take a reality check and simply admit that their convictions have been costly. I know how hard it is to admit that the markets are far smarter than you are, but that’s the way it is for all the rest of us, too!

For those that remain unconvinced, best you follow the example of the doomer-preppy “smart money”. Those “wise men” are unloading the the gold & silver and are already well ahead of you in hoarding ammo, jerky and pinto beans.

#97 takla on 09.15.13 at 10:38 pm

shawn #79……doomers this doomers that,come on buddy those of us that don’t always agree with the polititians and payed gov economists outlook deserve better .I appreciate you probably have some skin in their game but do your homework.Lets see how the markets sell off if there is a taper and how the ptb scramble after the fact

#98 i love libraries on 09.15.13 at 10:38 pm

I just checked my RBC precious metals fund that I bought into 3 months ago and find that it made 11.9% last month alone and averaged 3% over the same period.

I also bought into the US index fund at the same time so as not to be a gold bug, but it lost .6% during the same month.

What gives that precious metals are doing so well lately?

Syria. Now off the table. — Garth

#99 jp izza on 09.15.13 at 10:40 pm

“Deflation is far more destructive than inflation. — Garth”

Really? There have been countless countries destroyed by high and hyper inflationary episodes.

You know what is strange about the Keynesian schooled types like Garth is?

Somehow deflation is destructive YET can they come up with one country, one Bob? ONE Bob, in history that has imploded via Deflation.

So Garth, the challenge is made, name ONE country in history that has imploded due to deflation (the purchasing power of money increasing over time).

Come on now; Name One

Answere:

#100 Derek R on 09.15.13 at 10:45 pm

#96 aardvark phartz on 09.15.13 at 10:18 pm wrote:
Really? Assume that one had no long term debt.

Okay, so that shows us what would happen for 1% of the population. Now for the other 99%, let’s assume that one had lots of long-term debt. What would a 5% deflation factor for 2 years do to the economy?

#101 Smoking Man on 09.15.13 at 10:46 pm

Garth my delete from yesterday was DELETE
Upper case caps.

It was nasty of a word but someone invented it.

My quire as to how words are invented was legitimate.

I gave you a hypothetical analysis on how a particular word was invented.

Truth is I wanted to give herb a heart attack, but have a slight recollection of asking for a delete in spite of me being 12 or 20 Yeager’s deep.

Bendoverable is one that I just invented, teaching number 3 how to sell.

Perhaps next time you can have a pic of a mutt, male on the right, and me on the left.

I don’t want end up being a decomposing live corps in a nursing home. It’s not logical to me.

#102 JimH on 09.15.13 at 10:48 pm

#96 aardvark phartz
“… What would a 5% deflation factor for 2 years do to the economy? Wages? Demand for goods, loans etc?”
=====================================
Ignoring the fact that you’ve never heard of “The Great Depression”, I would love to hear your grand solution for halting your innocent 5% deflation rate. (hint: you might just want to mimic Ben ‘the bearded clam’ Bernanke… only on steroids)
Inflation is relatively easy to avert and even reverse compared to the downward vortex, “death spiral” of deflation.

#103 Joseph R. on 09.15.13 at 10:50 pm

#12 T5_INCOME on 09.15.13 at 6:26 pm

“I took your advice in June purchasing 1500 Rio Can units, I look forward to this rebound Sir Turner.”

You bought them yield, right?

#104 Joseph R. on 09.15.13 at 10:52 pm

*for yield, right?

#105 Arse on 09.15.13 at 10:54 pm

My guess is that the real estate and Stock Market bubbles would continue to inflate till 2016.

#106 Canadian Watchdog on 09.15.13 at 10:57 pm

#79 Shawn

Money is based on trust not Gold so doomers said, it’s worthless so they avoided accumulating it. Sadly they avoided accumulating wealth as well, confusing wealth that is measured in dollars with paper dollars themselves.

Perhaps if you devoted a little more time to educate yourself on what gold and silver products to buy, as you do with the companies you invest in, you would of learned and been invested in gold and silver products that are still beating stocks to date.

How a 1/10th Gold American Eagle coin is beating stocks.

Stocks pay dividends, coins pay premiums, and guys like you remind me of this guy in 1990.

CME's Terry Duffy "I think coins have more value then anything else." Link

#107 Mark on 09.15.13 at 11:00 pm

What to do where homes are expensive, and rents are even worse?

#108 Siva on 09.15.13 at 11:01 pm

“He knew he would never be confirmed. — Garth”

Is it because of the Harvard thing?

#109 Derek R on 09.15.13 at 11:14 pm

#99 jp izza on 09.15.13 at 10:40 pm wrote:
So Garth, the challenge is made, name ONE country in history that has imploded due to deflation (the purchasing power of money increasing over time).

Come on now; Name One

Answer: Here’s one and it’s a biggie. The Roman Empire.

#110 Obvious Truth on 09.15.13 at 11:21 pm

John and the Aardvark

Garthbis right again deflation has crept in during past few months. Check out TIPS.

Whole system is based on inflation.

There’s nothing wrong with real inflation because wages follow. Ask them boomers about 10 % raises. A million dollars for a boomer should be chump change.

Governments desperately need it. Thus all the stimulus. They know inflation will pay for it. The writing is on the wall.

Investors and true homeowners can make a lot of money during these times and taxes can stay low as we inflate debt away.

Do we really want higher taxes and cuts in medical and education services? How bout nowhere to make money?Those are what really cost. ThatsSaving 50 cents on your coffee isn’t important. Besides you can already make coffee for less.

Inflation. Figure out how to profit from it. Start your research now. Likely a year or two away. Would like to see 10 year retest or give us the reverse dandruff. Important to watch US dollar for low retest or new low. That would be he path of maximum frustration.

Highly leveraged individuals with bad timing and no ten year rate. It’s gonna hurt. Just imagine the water cooler talk amongst the property virgins.

” that can’t be my new rate. I’m calling customer service”

Shouldn’t their boomer parents know better or does Viagra cause memory loss?

#111 T.O. RENTER on 09.15.13 at 11:22 pm

Always keeping it real!

The advice you provide is priceless. Thank you

#112 Canadian Watchdog on 09.15.13 at 11:43 pm

Policies like this is what will eventually unlease the inflation beast: California lawmakers vote to raise minimum wage to $10 an hour by 2016

Don't worry about governments and corporations not spending. The people will eventually beg or strike for it.

#113 jp izza on 09.15.13 at 11:53 pm

#111 Derek R on 09.15.13 at 11:14 pm

The Roman Empire? Not the case at all, Rome devalued and had devalued particularly near the end when they could not pay for all the public pensions accumulated and government fiscal mismanagement.

Rome did not collapse because of deflation but from fiscal mismanagement in part from all the promises the government had in public obligations, civil strife, high taxation (fiscal problems), over extended army (again public obligations), political instability, disease and on.

Rome falls (Western) 476AD.

An example of devaluation (inflationary in its act whereby the purchasing power of original money is debased): Emperor Caracalla took the Denari which was 95% silver, reduced it to 50% and by the end of the 3rd Century AD it was down to 1/10th of 1%.

That is debasement, which is inflationary; not deflation.

Caracalla did it because revenue from taxes was not enough to support the army and the government obligations.

Familiar trend here?

Eventually Caracalla, at the very end of the debasement scheme, couldn’t even pay for the zinc and aluminum they were making the coins from and ended up punching holes in the coins looking like little doughnuts.

There is no evidence whatsoever that Rome fell because of deflation, next.

So back to my challenge to all the Keynesian whom blindly bow down to the alter of inflation (and debasement as there is hardly a distinguishing characteristic as both obtain the goal of devaluing),

Name one country that has economically collapsed due to Deflation, ONE, and no one can give irrefutable evidence historically of this happening.

Again I give the challenge, give one example where a country has completely collapsed economically due to Deflation;

Answer:

#114 Devore on 09.15.13 at 11:54 pm

#66 NotAGreaterFool

And in other news: Lawrence H. Summers, the former Treasury secretary and a top contender for Federal Reserve chairman, told President Obama that he didn’t want to be considered for the job.

You guys are such tools. Because Summers needs to issue a press release to give Obama a message. Theater and sockpuppets.

#115 broadway skytrain on 09.15.13 at 11:56 pm

east van teardown – org ask 1.6, 1 wk later reduced 1.4, one more week SOLD
ths madness continues

http://beta.realtor.ca/propertyDetails.aspx?PropertyId=13548034

#116 don on 09.15.13 at 11:56 pm

Garth I am sorry but deflation during the depression actually did help the poor and punish the rich. Its true wages dropped but costs dropped even more. The life expectancy of the poor actually went up as did good protein consumption ie. good meat became cheap. The rich on the other hand had their phony fortunes decimated. I agree with what Canadian watchdog once said. Deflation is the cure.

You are wrong. — Garth

#117 jp izza on 09.16.13 at 12:26 am

#118 don on 09.15.13 at 11:56 pm

I am not convinced deflation is the cure, what is the cure is capitalism. In that capitalism to properly function as a self correcting system which allows bankruptcy to remove the debts. This in turn has Capital flow to the more responsible and productive where they deploy and manage that capital correctly.

We are not letting the debts be removed because central banks and governments keep intervening with the de-leveraging process when they should let the bankruptcies occur. Hence the slow growth for what could end up being several years and even perhaps decades to come, but I highly doubt we get that far before an economic crisis occurs.

The inflationary goal should target ZERO not one or two or some other made up number. There should and must be an inflation rate of zero, of course that is only my opinion.

A zero inflation rate would be very difficult if not near impossible but it is far better than a 2%-4% target as your savings actually keep their purchasing power for the most part over time.

Garth is from the government, the class whom produce nothing nor export nothing, they only take resources from the private sector.

Sorry Garth, I really mean no offense.

The government has been borrowing these enormous amounts without any intention of ever paying it all back.

It should and must be law that governments can never borrow but in only one case. That case being in defense of an aggressor in an act of war where the country needs to borrow to defend itself.

Otherwise, government should and must be banned from ever borrowing period. There should never be government pensions.

There also should and must never be anyone in government for more than 2 to 4 years, after which they go back to the private sector.

Taxation should and must be kept more locally like in Switzerland.

Finally, we need a real democracy and not a Republic (which is a Representative democracy) like we have now.

There are so very many things I cannot name them all without this turning into a book. Our long term current structure it is for certain doomed to fail in the future, just look at the future fiscal liabilities.

It’s incredible grown ups cannot see the obvious failures forthcoming. Yes they may be years away but the math simply does not lie.

#118 JimH on 09.16.13 at 12:33 am

#115 jp izza
“…Again I give the challenge, give one example where a country has completely collapsed economically due to Deflation…”
====================================
What an incredibly stupid challenge! Runaway inflation/deflation may or may not result in the collapse of a COUNTRY; but they almost certainly result in the profound disruption and destruction of lives, the elimination of choices and options for vast numbers of citizens, and the impossible to estimate cost of the destruction of human dreams and sense of self worth.

Deflation and inflation run in cycles. Both can be handled by relatively stable economies, although deflation has proven to be much more difficult to reverse than inflation.

But in your overwhelming arrogance, you totally miss the main point in all this, do you not?

My parents managed to crawl out of the deflationary spiral of the 1930’s in rural Saskatchewan and over the next 60 years managed to reconstruct and salvage their lives. My grandparents were not so fortunate, as they were out of time, you see.

Climb down from your ivory tower, man! Sure, Canada survived the destructive vortex of the great depression. Many Canadians did not. You want to see economies and communities destroyed by deflation???

Google “Saskatchewan ghost towns”, fool! (You really are an asshat… sorry, Garth!)

#119 JimH on 09.16.13 at 12:43 am

#118 don
“Garth I am sorry but deflation during the depression actually did help the poor and punish the rich. Its true wages dropped but costs dropped even more. The life expectancy of the poor actually went up as did good protein consumption ie. good meat became cheap. The rich on the other hand had their phony fortunes decimated. I agree with what Canadian watchdog once said. Deflation is the cure.

You are wrong. — Garth
====================================
Jesus! Did you guys come down with the last rain?

Have you any concept of what runaway deflation entails?
Cure? You have to be kidding us!

Many survived the last great deflation by being able to raise eggs and a cow or two to pay off the doctor, the bank and the taxman. How many chickens can you raise? How many cows?

#120 aardvark phartz on 09.16.13 at 12:49 am

Deflation can be caused by an improvement in productivity.

Deflation can be caused by a reduction in the money supply (cue the QE reductions).

So, where is deflation?

#121 JimH on 09.16.13 at 12:54 am

For what it’s worth, Larry Summers experienced a great epiphany. It finally dawned on him what the majority of Americans already knew; that he was really part of the problem!

#122 devore on 09.16.13 at 1:10 am

#98 JimH

I used to be something of a gold nut once upon a time, although not a doomer. Seduced by the shiny, I guess. As of 2 years and 1 month ago, when I sold nearly all my physical and paper gold, right near the peak it turned out. When I see charts going hockey stick, reason prevails. Some timing, eh? I find it endlessly amusing how gold nuts will deride governments and central banks for everything they do, except when they buy gold. Not sell, just buy. Definitely seems curious, if a bit schizophrenic.

It is easy to get wrapped up in doomish themes. Makes one feel the urgency and import of one’s actions. Simple problems, simple steps, simple outcome. You’re in control.

Certain economic theories predict certain outcomes and dictate certain remedies. But they are theories, not manuals. As all religions do, they also claim to be the one true. No laws of economics have been suspended, because there are no laws of economics. At best, conventions and common understandings. Those relying on immutable laws and rigid outcomes will face many disappointments.

What is going on today is what has happened in every recession and crisis. Counter-cyclical policy until the economy digs itself out. No laws, no certainties, no guarantees. The response is proportional to the magnitude of the problems faced.

Meanwhile, the forest is composed of many trees. As Garth and others point out, things are improving and life goes on. New industries rise up as others decline. New opportunities open up as some doors close. For every few steps forward there is one step back. What else is new?

Don’t lose sight of the big picture by focusing exclusively on a couple odd looking trees. Lots of other plants in this jungle, and even some innocuous green shoots managed to sneak their way in while you were distracted.

#123 young & foolish on 09.16.13 at 1:13 am

Poor Boombers …. they used to be the Golden Boys/Girls … now they are comic fodder for those awaiting their turn to be in the spotlight of ridicule.

#124 Donald Trump on 09.16.13 at 1:24 am

#40 Nosty the Impaler on 09.15.13 at 7:05 pm

Suicide among US veterans 22 per day, 3 times national rate: Report

http://www.presstv.com/detail/2013/02/01/286701/22-us-veterans-commit-suicide-daily/

etc. etc.

Or perhaps GOOGLE U.S. General Smedly Butler and his book “War is a Racket”…

“Military men are just dumb, stupid animals to be used as pawns in foreign policy.”
― Henry Kissinger

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

ALL wars are BANKERs Wars

#125 scibidubadebumbado on 09.16.13 at 1:33 am

#37 East Van on 09.15.13 at 7:01 pm
FREE CONDO!
________________________________
East Van must be a realtor.
Sucking everyone into reading his ad with his BAIT AND SWITCH routine.
Garth you should have deleted this ad.

#126 Derek R on 09.16.13 at 1:53 am

#115 jp izza on 09.15.13 at 11:53 pm wrote:
Eventually Caracalla, at the very end of the debasement scheme, couldn’t even pay for the zinc and aluminum they were making the coins from and ended up punching holes in the coins looking like little doughnuts.

Aluminium, eh? You’re seriously suggesting that the Romans used aluminium to make coins? You are aware that aluminium was first produced in the early 19th century and was at that time more expensive than gold, aren’t you?

Because if you think that the Romans could make aluminium, I don’t see why I should expect anything else that you wrote to be correct.

My answer stands.

Answer: The Roman Empire

#127 young & foolish on 09.16.13 at 1:57 am

“What to do where homes are expensive, and rents are even worse?”

Ahhh yes, we’ve heard this lament often used as a base for launching pro-buy arguments. Also, from small town folk who always seem to have a hard time with big city prices/rents (to them, all city properties look like “dumps” and city people are “suckers”).

#128 jimmy on 09.16.13 at 2:20 am

A home Garthworthy:

http://www.realtor.ca/propertyDetails.aspx?propertyId=13263003&PidKey=855503689

“enjoy the soothing sounds of the water flowing in the background”

#129 Tony on 09.16.13 at 2:32 am

Re: #98 JimH on 09.15.13 at 10:38 pm

Do the obvious instead, check the major malls in all the cities in America. Get the message America is dead and buried i’ve checked all the major malls in almost all the American cities very recently.

#130 USA to keep rates ultra low on 09.16.13 at 4:08 am

from “Stocks & bonds rally, dollar dips as Summers steps aside” at http://ca.reuters.com/articlePrint?articleId=CABRE96S00E20130916:

“Markets had perceived Summers as less wedded to aggressive policies such as quantitative easing and more likely to scale it back quicker than the more dovish Yellen, who is currently second in command at the Fed.

“Short-term interest rates are going to remain at zero for longer than you ever would have imagined,” should Yellen get the chair, said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ.

It was even possible a first rate rise could be pushed out into 2016, rather than 2015 as currently planned, he said. Going by Yellen’s past speeches, she would likely make getting the jobless rate down a priority.”

#131 Buy? Curious? on 09.16.13 at 4:10 am

Hey Garth! So you’re saying wait until February 2014 to buy a few ounces of gold? Right on! And people assume I come here to meet ladies. FOOLS! Hahaha!

Where did I say to buy gold? — Garth

#132 Derek R on 09.16.13 at 4:24 am

#118 don on 09.15.13 at 11:56 pm wrote
I am sorry but deflation during the depression actually did help the poor and punish the rich. Its true wages dropped but costs dropped even more

It helped the poor that had no debt; it punished the rich that had a lot of debt; it punished the poor that had a lot of debt and it helped the rich that had no debt.

In short if you had a lot of debt you were out of luck. Deflation was going to get you.

That’s why your (great-)grandmother hated debt so much.

#133 Steven on 09.16.13 at 7:18 am

The precious metal prices are manipulated by banks and short sellers to make government debt paper and currency look better than it is and therefore the price of gold and silver is false. As for interest rates the Libor scandal proved that interest rates are manipulated and therefore false. The entire financial system is manipulated and therefore false. Gold or silver in hand however is very real no matter what you say and except for thieves there is no counter party risk.
Before sanity and honesty can be restored the political and financial world as you know it Garth has got to go!

When your bad investments tank, they are ‘manipulated’ by the banks. Very credible. — Garth

#134 brett on 09.16.13 at 7:47 am

Not sure I buy what your selling Garth. Us GDP to debt continues to soar.

http://en.wikipedia.org/wiki/File:U.S._National_Debt_-_Dollars_and_Relative_to_GDP.png

Since when does injecting printed money @ record levels = sound economics?

Us recover or not, this is only a temporary spike before another round of trouble.

I wouldnt recommend dropping my life savings in metals, but its a good idea to have some physical lying around for a rainy day.

It rained. Gold melted. — Garth

#135 Victor V on 09.16.13 at 8:03 am

Toronto Trump tower: Hotel-condo owner goes auction route

http://www.thestar.com/business/real_estate/2013/09/16/toronto_trump_tower_hotelcondo_owner_goes_auction_route.html

After watching listings for about a dozen similar units in the beleaguered luxury project languish on the MLS for more than a year without a single taker, the owner of the 12th-floor suite — himself a veteran realtor — has turned to Ritchies Auctioneers.

The unusual event, slated for Sept. 22 in the sumptuous ballroom of the Trump International Hotel & Tower, is expected to generate buzz among the world’s wealthy…

…The 11 Trump suites currently listed on MLS don’t include about 20 others that Talon itself is still trying to sell. One of those — a 19th-floor unit similar to the one being auctioned — is listed by Talon at $1.6 million.

Khan wouldn’t disclose the minimum bid that’s been set for the suite up for auction, other than to say it’s about 30 per cent less than what Talon asking for its unit. It’s expected to be a largely online auction, with international interest from China, India and the Middle East.

Should the suite actually sell, it could have a major impact on the units up for sale by both Talon and other Trump owners. It would establish, for the first time, a real market value for condo units generally seen as wildly overpriced for the Toronto market.

#136 Pr on 09.16.13 at 8:13 am

The prices are still to high, and growing, the danger of the situation for every family going in this market with 5% cash down, 10% cash minimum.

#137 Love this Blog on 09.16.13 at 8:26 am

Thanks for doing this blog Garth, I can always count on good info from you

#138 BR 05 on 09.16.13 at 8:40 am

Hey Garth –

That’s an interesting graph of sales in the Calgary RE Market. I drew a line from Aug/02 through Nov/07 to July/12 and it is a nice, straight downtrend line, but there does appear to be a break upwards this past spring, just past Feb/13. Thoughts?

#139 World Traveller on 09.16.13 at 8:50 am

#35 T.O. Bubble Boy on 09.15.13 at 6:54 pm

***

dude, you’re depressing me.

#140 World Traveller on 09.16.13 at 9:06 am

Garth, I thought you were the most important bearded one.

#141 Garth is Right on Deflation on 09.16.13 at 9:07 am

All you lovers of deflation need a reality check. Read up on deflationary bouts in your history books. The real easy one was the Great Depression. Prices collapsed 90% and the soup lines filled up. You seem to think the economy still hums along and everyone still keeps their job and the lower prices bring prosperity to all. Not! Unemployment skyrockets and a lot of good lower prices did for the masses that lined the soup lines during the Great Depression. The wonderful gold standard touted by some as a golden era of prosperity is also pure insanity. The history of the gold standard was of depressions and massive deflation. It was only good for the wealthy in society who had loads of money which only increased and allowed them to scoop up bargains while the masses went hungry.

#142 Buy? Curious? on 09.16.13 at 9:07 am

#133 Buy? Curious? on 09.16.13 at 4:10 am
Hey Garth! So you’re saying wait until February 2014 to buy a few ounces of gold? Right on! And people assume I come here to meet ladies. FOOLS! Hahaha!

Where did I say to buy gold? — Garth

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

You said with your eyes.

I’m kidding.

But not about the gold call. If gold drops below $1kUSD, wouldn’t that be a good time to pick up a few bricks? Obviously a small holding of AU (The symbol on the periodic table. OMG I just used something they taught me high school! LOL) can’t be that bad can it?

And my high school teachers thought I’d grow up to be a loser.

http://www.youtube.com/watch?v=NnsKzmQG06k

#143 Koshy Alex on 09.16.13 at 9:09 am

#98 JimH on 09.15.13 at 10:38 pm

Could you also please explain why the US Fed can’t stop QE and let the US economy show its true strength :))

#144 JimH on 09.16.13 at 9:31 am

#131 Tony
“… check the major malls in all the cities in America. Get the message America is dead and buried i’ve checked all the major malls in almost all the American cities very recently.”
====================================
Tony, Tony Tony; you’re really being silly here.

Back in the early 1990’s, “Factory Outlet Malls” were all the rage and were giving the traditional department stores fits. The skeletons of that experiment now dot the landscape beside many Interstates.

In a similar vein, many of the large early malls of the 1950’s and 60’s have been long closed and most have been re-developed into something else.

Retail has always been a tough game, and is once again in a state of flux. Traditional brick & mortar department store-type retailers are taking it on the chin from the huge increase in e-commerce and the big discounters. Also, ‘new’ retailers like Cabela’s and Bass Pro Shops are doing great and expanding like crazy as they continue to grow their business and create new product lines.

For the first decade of this century, America built way too many malls (along with too many houses and condos). Some of these monstrosities are going under or have already done so, taking Circuit City, Comp USA, and many retail stars of the 1990’s down with them. As one who hates malls in general and considers them a blight on the landscape, I say “good riddance”!

On the other hand, most of America’s largest malls are thriving, and have seen vacancy rates gradually fall from the Q1 2010 highs. If anything, we are seeing signs of consolidation and concentration.

Tony, to use an outmoded retail vehicle that is even now consolidating and evolving as a measure of the health of the US economy seems just a tad too superficial and single-minded, wouldn’t you say?

After all, we wouldn’t dream of using your harebrained postings as a clear sign of the sad demise of objective critical thinking in North America or as solid evidence of the total failure of our educational institutions now would we?

#145 HogtownIndebted on 09.16.13 at 9:41 am

#137 Victor V

I noticed that story as well. Some of this is really jaw-droppingly bad:

“…the 950-square-foot hotel suite”

“only 50 buyers of 261 hotel-condo units actually take possession well over a year after the landmark project opened.”

““For an auction to work, you have to be dealing with something like art or collectibles, where there is limited supply and high demand,” says Toronto realtor Simon Giannini, who has tried auctions in the past. “That’s not the Toronto condo market.” ”

” the only kitchen facilities are the pricey mini-bar offerings.”

“One window of the tastefully decorated corner unit offers a bird’s-eye view of the Bay-Adelaide Centre construction site. The other looks out on the ventilation system of ScotiaPlaza.”

To summarize:

-a truly small space

-no evidence of current or likely future demand apart from the ‘ego’ driven or ‘bargain hunting risk takers’ as the auctioneer acknowledges

-no kitchen, so no real liveability to speak of for an actual resident

-horrific view of the industrial side of downtown reality, and no sunrises or sunsets or lake views to speak of

$1.6 million, as per Talon? or $1 million as suggested by the auctioneers?

What would YOU pay for this?

#146 Spirit of the West on 09.16.13 at 9:46 am

To Jimmy, #51

“LA is for the newlywed and the nearly dead. That’s Lethbridge, Alberta for you eastern creeps and bums.”

With a top-ranked university plus an excellent college, jobs galore, $200,000 houses and both the Rockies and Calgary close by, Lethbridge is actually full of young people and it’s a happening place.

With respect to eastern creeps and bums, I have found that the people that say things like that are usually bucolic hicks have never been east of Alberta.

Most Albertans I know are well-travelled, educated and cosmopolitan — and they welcome the rest of our neighbors from across Canada.

It is true that Lethbridge is attracting increasing numbers of retiring boomers from Edmonton and Calgary who enjoy a smaller city, warmer weather and lower costs.

Any Albertan who hasn’t visited the rest of Canada is impoverished.

#147 HogtownIndebted on 09.16.13 at 9:46 am

Ok Blog Dawgs – a contest for all of us!

Announcing –

THE TRUMP TOWER GREATER FOOL AUCTION POOL

Let’s have our own auction pool; Garth can decide on the prize for whoever comes closest to the final winning bid price.

(Amazon spa time, dinner with Brad Lamb, a free motorcycle ride to port Dover next June 13 – the prize is only limited by your imagination, Garth)

I will open things: based on the poor aesthetics of the unit, but hopeful for greater fools down the road who might want to buy, I think a winning bid will be close to…

$489,000

What’s your guess?

#148 JimH on 09.16.13 at 9:53 am

#145 Koshy Alex
“Could you also please explain why the US Fed can’t stop QE and let the US economy show its true strength :))”
==================================
Who says they can’t begin to taper? Sure you’re not overestimating the impact of QE?

You don’t get out much, do you? Google “Fed tapering”; you’ll get lots of varied opinions! In the meanwhile, let’s wait for Wednesday, okay?

You have no interest in my opinions; I, on the other hand, would love to read your explanation of exactly why QE hasn’t resulted in hyperinflation.

#149 PJ on 09.16.13 at 9:56 am

As interest rates go up, economy goes down. Same goes for the US. QE was the equivalent of keeping a dead guy alive for the past 6 years. Tickle tapering (I just love that term) would be the equivalent of gradually reduce life support to see if the dead body will continue to breathe on its own. The economy recovered artificially but has no sound fundamentals to be sustainable. Give me trillions of borrowed dollars and I’ll show you a good time too. I disagree with the school of thought of a diversified portfolio in a Federal Reserve managed stock market, but to each his own. Garth, if the Roman empire is to be quoted, what made the Roman currency eventually become completely worthless? Cheers, PJ

#150 Sebee on 09.16.13 at 9:59 am

Will income growth help and save us? Not if we follow the American trends – as we usually tend to.

>
In the wake of the Great Recession, millions of middle-class people are being pinched by stagnating incomes and the increased cost of living. America’s median household income has dropped by more than $4,000 since 2000, after adjusting for inflation, and the typical trappings of middle-class life are slipping out of financial reach for many families.

http://money.cnn.com/2013/03/05/news/economy/middle-class-wages/index.html?iid=EL

#151 Musty Basement Dweller on 09.16.13 at 10:09 am

#146 JimH on 09.16.13 at 9:31 am
Nice. Factual but gently stinging response and entertaining reading. Thanks for the chuckle.

#152 Holy Crap Wheres The Tylenol on 09.16.13 at 10:19 am

#126 Donald Trump on 09.16.13 at 1:24 am
#40 Nosty the Impaler on 09.15.13 at 7:05 pm
Suicide among US veterans 22 per day, 3 times national rate: Report
http://www.presstv.com/detail/2013/02/01/286701/22-us-veterans-commit-suicide-daily/
etc. etc.
Or perhaps GOOGLE U.S. General Smedly Butler and his book “War is a Racket”…
“Military men are just dumb, stupid animals to be used as pawns in foreign policy.”
― Henry Kissinger
================================
ALL wars are BANKERs Wars

It’s true in the sense that only the rich can profit off of war. They can manipulate and contrive profit out of conflict. As for those of us who have to carry the weight of doing battle for the War Pigs that is another story. My parents moved to the United States during the Vietnam War and even as a Canadian I was eligible for the draft in the 1960’s. I was in university and was therefore spared the draft until I graduated. After graduation I joined the USAF and thought at least I can choose my military career. I also thought I would be spared the crap a lot of my friends went through who became enlisted men (grunts) for field duty. Some of my best friends died overseas in a very unpopular and confusing war, but what was worse were the ones who made it home and then committed suicide or slowly killed themselves with alcohol and drugs. War is hell and it is painless for those of us who have never been touched by it to converse so blatantly and give their opinion. Henry Kissenger was an idiot for making a statement like that. I would dare anyone to go stand side by side with a military person in the field. It takes a hell of a lot of guts to knowingly be in harms way and not take flight or run like hell. Unfortunately we have wars and until someone can come up with a method of eliminating them then we need military men. When I moved back to Canada I didn’t realize how many Canadians actually volunteered for the Vietnam War. 35000 men willingly joined. Canadian companies made billions during this war helping support the war machine.
BTW I was transferred to Da Nang 6252d Tactical Wing so I guess I was one of the dumb, stupid animals. The USAF did add to my career portfolio and helped me to get where I am today.

#153 Daisy Mae on 09.16.13 at 10:22 am

#115 jp izza: “Rome did not collapse because of deflation but from fiscal mismanagement in part from all the promises the government had in public obligations, civil strife, high taxation (fiscal problems), over extended army (again public obligations), political instability….”

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

So…you’re saying ‘we never learn’ and ‘nothing ever changes’?

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

#154 Daisy Mae on 09.16.13 at 10:33 am

JimH, you’re good.

#155 Frustrated on 09.16.13 at 10:37 am

Hi Garth, Would it be a good idea to buy some US dollar before Wed ? Thank you

#156 Canadian Watchdog on 09.16.13 at 10:41 am

Home sales and new projects feel the pinch of regulatory policies

In the lowrise market, builders can’t sell what doesn’t exist. The introduction of regional intensification policies in the mid-2000s dramatically reduced the potential for construction of future lowrise homes across the GTA. As a result, supplies of available new lowrise homes hit a near-record low level of 7,553 at the end of July — a third of the lowrise homes available on the market a decade ago.

That limited supply and increased development complexity has also helped to hike the price of a new lowrise home to a record-high $645,854. The price difference between a lowrise home and highrise home is now at a record high of $214,924.

Brought to you by the people who lobbied for land restrictions in order to offer real value to homebuyers.

#157 Ralph Cramdown on 09.16.13 at 10:45 am

To the people who moan about banks offering spending analysis on the monthly credit card statements (‘snooping’):

Here’s CIBC on their quarterly earnings call, discussing mortgage retention strategies:

“We’ve set up a retention team that’s focused on just that, retention. We introduced … somewhat advanced analytics that look at the price sensitivity of clients based on the data we have available to us, and that’s informed things such as when we call clients. So if you’re identified as a price-sensitive client, our retention team calls you earlier, prior to your renewal date. And if you’re less price-sensitive, our thinking is you’re probably not thinking about it, so we’ll call you later.”

You bet they’re using your credit card info to decide how competitive a rate they have to offer you on your mortgage. This is what you’re up against. Big data is figuring out what you like and how much you’d likely be willing to pay for it. If you’re one of those consumers who thinks that the magic of the marketplace is going to keep prices low for you because everyone gets the same price, think again.

Source: http://www.canadianmortgagetrends.com/canadian_mortgage_trends/2013/09/q3-2013-bank-earnings-mortgage-morsels-.html

#158 pbrasseur on 09.16.13 at 10:46 am

@ Frustrated “Hi Garth, Would it be a good idea to buy some US dollar before Wed ? Thank you”

It’s never a good idea to speculate on currencies, interest rates or commodity prices.

In fact it’s never a good idea to speculate on anything.

#159 Crap on 09.16.13 at 10:53 am

You said sell gold when it was $800. Just because you conveniently change doesn’t mean you are right. This is a problem with the old people. They forget what they said in the past and they say something else later on and they proclaim, told you long back and see I am right.

My consistent advice has been to rebalance. Harvest the highs – something most metalheads seem incapable of. You too, I guess. — Garth

#160 Canadian Watchdog on 09.16.13 at 11:17 am

#159 Ralph Cramdown

Big Data Analysis: The Next Frontier

Banks, insurers and big corporations have been building profiles on everybody. From what you buy to what you search in Google; everything you do is recorded, stored and shared by big brother.

Real privacy means oversight

This rare disclosure offers a glimpse at CSEC’s intimate partnership with one of the world’s most powerful intelligence agencies – and serves as a reminder that Canadians shouldn’t be complacent, or look down at Americans for allowing the NSA so much unsupervised power. CSEC is part of the so-called “Five Eyes” signals intelligence alliance, stretching back to the Second World War, so it’s difficult to believe that the latest revelation is the only one of its kind. What else has CSEC been doing that Canadians should be worried about?

You wanted a cashless society to help you build fiat wealth? Now you lost your privacy rights.

#161 lawboy on 09.16.13 at 11:23 am

Hmmm….I could swear I saw this property for sale in the early spring:

http://www.realtor.ca/propertyDetails.aspx?propertyId=13625431&PidKey=-1348557056

#162 Derek R on 09.16.13 at 11:38 am

#151 PJ on 09.16.13 at 9:56 am asked:
Garth, if the Roman empire is to be quoted, what made the Roman currency eventually become completely worthless?

A good question which I will be delighted to answer.

Roman currency never became completely worthless since it always had some silver or gold content. Even after the Roman Empire was history, Roman coins were still in circulation and in use for many years. Even today Roman coins have some value, partly because of their collectibility and partly because of their precious metal content.

I thought you only accepted ducats. — Garth

#163 World Traveller on 09.16.13 at 11:49 am

#158 Canadian Watchdog on 09.16.13 at 10:41 am

Don’t worry, soon we’ll have the pleasure of living in condos that are this size:

http://inhabitat.com/chinese-human-rights-group-releases-shocking-aerial-photos-of-hong-kongs-locker-sized-apartments/

(and still pay $500+ a square foot in T.O.

#164 happity on 09.16.13 at 11:51 am

“As the world normalises…”

And this is the rub, the world is so far from normal and moving into a financial reality it has never been before.

That’s what tapering is about. The shift back. Try to keep up. — Garth

#165 happity on 09.16.13 at 11:59 am

The s&p 500 as an indication of us economic health is false.

Most of those companies have been buying back stocks and paying dividends because interest rates have been so low for so long. But their revenues have not really gone up.

Take IBM for example…

Over 70% of S&P companies just beat profit expectations. Over 50% beat revenue targets. I know this kills you, but the US is recovering. — Garth

#166 calgaryPhantom on 09.16.13 at 11:59 am

The information you provided in this blog is useful. But the tone of this blog encourages market timing.

#167 happity on 09.16.13 at 12:07 pm

Big Ben bailed out the banks, and still is by buying 45 billion every month or toxic real estate paper from them.

The money never reached the little people, and consumers are 70% of the economy.

Banks don’t create wealth for an economy, they sacked the wealth from the economy. So how will tapering make things normal?

Garth you keep failing how to factor in 440 trillion in interest rate derivatives…

#168 I am looking for hourly updates on CA gov. bond yields on 09.16.13 at 12:08 pm

I am looking for a source for “live” like data on Canadian government bond yields. I am interested in the 5 years bonds because they relate to mortgage rates.
Are these published just at the end of the day? It seems that I can’t find a source for more frequent updates (something like hourly or every 30 minutes) ?

Could anybody help me with a link please ?

#169 Don Derc on 09.16.13 at 12:23 pm

Well Garth, as I see a lot I ususally agree with, I disagree with – b) america’s back. Or was that a typo and it should have read “america’s broke”? The stats, showing the usa economy is 10 per cent higher over rock bottom is nothing to get excited about. 40 states still operate at a deficit annually and carry heavy debt they cannot mathematically pay back in this generation. The same for Cdn feds, provincial and municiple gov’ts – Quebec is $225 billion in debt n’est pas?!? Wanna guess Ontario’s?

Canada is broke, usa is broke, EU is broke. The greater fool that we so deparately seek is like the middle class – dwindling significantly in numbers. When the BOC rate and unemployment rate is a full point higher in 2015, well, you can do the math.

You need to think about the black swans – jobs (or lack thereof), China and India. They are gonna bite us all in the keester. The last five years of financial (quantitative) easing is the appetizer – the full course meal is about to be served.

#170 Ralph Cramdown on 09.16.13 at 12:24 pm

#162 Canadian Watchdog — “You wanted a cashless society to help you build fiat wealth? Now you lost your privacy rights.”

I don’t know what you’re on about, Watchdog, but the last time the government admitted we had any privacy rights was when it promised it wouldn’t steam open our domestic mail. Governments have considered each new method of communication to be less entitled to privacy. Telegraphs? Nix. Telephones? The judge said since the phone company knows who you’re dialling, you have no expectation of privacy in that regard, but that the government needs an ex-parte warrant if it actually wants to listen to the call. Analog cellphones? Scanner receivers were illegal for civilians to possess, but legal for law enforcement. By the time we got to email and digital cellular, governments realized they needed to be proactive in tapping everything at interchange points and mandating that telecom equipment be designed to facilitate tapping in the first place (see CALEA 1994). This was all LONG before 9/11.

So don’t tell me what I wanted or when I got it. I’ve just figured out that it’s easier and less conspicuous to work in the system rather than trying to fight it; I’ll leave that to the young broke kids who have less to lose.

Regardless, every fifth-columnist ought to know that blending in is the key. Fight the system by obviously encrypting stuff and paying cash for everything, and Big Data is going to put a big red “warrants further investigation” tag on your ass.

#171 Koshy Alex on 09.16.13 at 12:28 pm

#150 JimH on 09.16.13 at 9:53 am

JimH, thanks for your reply, something from the GM’s recent story on 2008 crisis

http://www.theglobeandmail.com/report-on-business/the-financial-crash/article14257785/

and this is what one of the Canadian bank CEO had to say about QE

Quantitative easing is the nuclear weapon of monetary policy . . . I wouldn’t go for it.

Louis Vachon CEO, National Bank of Canada
we don’t know what the side effects of it long term, I wouldn’t go for it

It’s definitely not the end of financial crises. I think there will be more. Will we see something as bad, and as socially impacting as we saw in ’08? I think the odds are very, very low of that occurring again… in the next few decades. From my lips to God’s ears on that one.

“From my lips to God’s ears on that one” since my english is not as good as yours I had to google to find out what it meant,

“The original, literal meaning of the saying indicates that the speaker wishes that whatever the addressee has just said will be heard by God and answered”

After that I too joined him in his prayers !!

“You don’t get out much, do you? ”

Yes I do, to work for a bank in Canada

#172 happity on 09.16.13 at 12:45 pm

Beating a revenue target is just that, assuming revenue targets always rise is what will kill an investor.

Now you are boring. — Garth

#173 Pr on 09.16.13 at 12:54 pm

When the FED had to said no to Germany for their gold, it was a act of war, so they (fed) tempered with a deal of many many to years to give them back their gold. The manipulation, to keep things a certain way, is getting obvious. Let’s hope your right, and everything will back to normal.

#174 Old Man on 09.16.13 at 12:54 pm

I will give my humble opinion on the interpretation on the above noted caption and photo. It’s called a transformation or makeover, and the one on the left will give to the Smoking Man, as am taking the one on the right – oh yes!

#175 John Dowin on 09.16.13 at 12:55 pm

Deflation is not a problem by itselt. It can be manifestation of a problem, like in the case of the great depression when credit was allowed to first boom and then to contract.

Inflation these days is a hidden tax, regulation of the credit is the key to a successful economy. There is no economy cycle, there is credit cycle.

Fractional Reserve Banking needs to mature and be restricted. It is the reason for the boom and bust cycles.

The current banking on world wild scale is a joke.
It lives, grows by inflation like a cancer.

#176 broadway skytrain on 09.16.13 at 12:57 pm

live video of the costa concordia s l o w l y rising from the water at uk telegraph now.

fun stuff

#177 happity on 09.16.13 at 1:03 pm

Now you are boring. — Garth

Nah, saying interest rates will rise for years like waiting for Godot is boring.

#178 Victoria - the Original on 09.16.13 at 1:58 pm

Victoria Real Estate Update,

Hi! I have the client listing service and I see so many homes over $1 million for sale and they are just sitting and sitting.

I wonder why so many people have selling $1 million and above. Leaving Victoria, Divorce, downsizing, can’t make payments???? I wonder what the deal is.

#179 NorthOf49 on 09.16.13 at 2:07 pm

Hey Hamilton, what’s going on? Where are all of those Toronto people ready to buy up Hamilton?

http://www.thespec.com/news-story/3850173-toronto-media-waking-up-to-hamilton-s-real-estate-boom/

“Sold on YOU” states the realtor (see 2nd page):
http://www.ourhomesmagazine.com/admin/includes/doc_view.php?ID=4458‎

Doesn’t look like they’re sold on anybody:

http://www.realtor.ca/PropertyDetails.aspx?&PropertyId=12462975 – now reduced $200,000

http://www.realtor.ca/PropertyDetails.aspx?&PropertyId=12857601 – now reduced $80,000

And Garth’s favourite Hamilton house mentioned last November:
http://www.greaterfool.ca/2012/11/23/horny-in-hamilton/

Was $899,997, now $699,997 but was recently delisted:
http://property.trovit.ca/garth-hamilton

Hey Toronto, wherefore art thou?

#180 Anthony on 09.16.13 at 2:20 pm

A few of people saying deflation is a good thing. The prices of housing and other essentials would go down and our wages up!

However, if I had mortgage debt. I would sure hope the real value of that debt doesn’t go up! (due to deflation)

Happily, I don’t have any debt or own real estate. Good luck to those who do.

#181 TorontoBull on 09.16.13 at 2:35 pm

@170
http://www.marketwatch.com/investing/bond/tmbmkca-05y?countryCode=bx

#182 bill on 09.16.13 at 2:51 pm

during the thirties ,deflation was so good for the price of things that my grandfather pulled any nails found in scrap wood and carefully straightened them out and put them in various empty coffee cans for later use…
he was far from alone in doing this.

#183 KG on 09.16.13 at 3:13 pm

From today’s star:
http://www.thestar.com/business/personal_finance/2013/04/27/why_canadians_are_stuck_in_a_low_interest_rate_trap.html

– If you have a mortgage, you may want to lock in for five years and enjoy the security.
– If you owe lots of money, it’s a good time to pay it down

Do their reporters take your blog and just flip the message ?

#184 KG on 09.16.13 at 3:16 pm

Ignore my previous message. It is an old article from Apr.

#185 HDJ on 09.16.13 at 3:25 pm

In your previous blog (The Bounce) you disagreed with Murray’s opinions about renting verses purchasing – he gave arguments against renting. However, let’s not ignore or discount the financial advantage of having purchased years ago instead of renting. In many neighbourhoods a $30,000 home purchased in 1970 may now be worth a million. That was one hell of a good tax free investment. And the next 40 years? Who knows for sure. But I’d bet on another significant increase in property values. Renters beware.

What a tired argument from inflationary times. No wonder everybody hates Boomers. — Garth

#186 Donald Trump on 09.16.13 at 3:39 pm

#187 HDJ on 09.16.13 at 3:25 pm

In many neighbourhoods a $30,000 home purchased in 1970 may now be worth a million.
=================================

Yeah, and the Justins (Trudeau and Bieber ) weren’t around yet…ah the good old days

#187 Spiltbongwater on 09.16.13 at 3:44 pm

Once markets calm (now that Syria won’t be turned into a smoky hole), _Garth

Lol John Kerry, The Kenyan born President Obama, as well as our own John Baird are complete buffoons when it comes to foreign policy. They sabre rattle their swords, then bend over and take it from Russia. If there words were so strong, they would back them up with some muscle, but twist and turn like the spineless wimps they are. Hillary is 5 times the man that John Kerry will ever be.

You mean they didn’t call you?! — Garth

#188 FATHER on 09.16.13 at 3:49 pm

cheapest 5 year bank mortgage today is 3.69

#189 Old Man on 09.16.13 at 3:51 pm

#187 HDJ – I know of no home in Toronto in 1970 that could have been purchased for $30,000 that is worth $1 million today. In many neighbourhoods? Name me one and show me some examples, as need to be educated here just a bit.

#190 2CentsCdn on 09.16.13 at 3:54 pm

#184 bill “straightening bent nails in tough times”

Fat chance these days …. but you’ve given me an idea ….. seeing how no one actually does anything any more …. once things get really tough in Canada …. I’ll start a business of straightening and sorting nails FOR people in tough times and charging them. Once it’s socially cool to be “roughing it” .. they’ll find the money somewhere to join in. And for their basement kids (under 32 :) …. I’ll get some programmers together and invent a virtual nail straightening game … so they can get the feeling of roughing it too.

#191 Old Man on 09.16.13 at 4:20 pm

I keep going to the wrong room lol, so here are the stats in Toronto with MLS for the average home sales prices between 1970 and 2012. In 1970 it was $29,429 and in 2012 it was $479,301, so where are these homes that were bought in 1970 for $30,000 that are now selling for $1 million in various neighbourhoods? Do tell #187 HDJ.

#192 Ralph Cramdown on 09.16.13 at 4:37 pm

#187 HDJ — “That was one hell of a good tax free investment. And the next 40 years? Who knows for sure. But I’d bet on another significant increase in property values.”

Me too. And an increase in the price of gold as well. But where I live and in my currency, neither price goes up linearly — they’re cyclical. Call me a market timer, but I think I want to buy when I can feel confident of positive real returns at five years, not just forty. You could have bought pretty much any car Detroit was selling forty years ago, preserved it in a dry barn, and earned a positive return.

The test isn’t whether it went up, but whether it went up more than the other stuff.

#193 Ralph Cramdown on 09.16.13 at 4:54 pm

#192 2CentsCdn — #184 bill “straightening bent nails in tough times” […] Fat chance these days …. but you’ve given me an idea ….. seeing how no one actually does anything any more […]”

Where I live, the rich/poor divide is characterized by rich people who don’t find it economical to return refundable containers, preferring instead to put them in the recycling, and poor people who find it a profitable use of their time to arbitrage this difference.

I thought bill’s observation was spot on, having spent last spring emptying out a relative’s home in preparation for sale. Large quantities of glass jars, elastic bands, scraps of cloth, biscuit tins etc etc, and smaller quantities of everything else under the sun (bedpans, spectacles and dentures from the deceased, pieces of string too short to save, etc.) You can classify these people as pathological hoarders or normal depending on when they were born. People who think deflation — whether cause or symptom — is relatively harmless are morons.

#194 Evangeline on 09.16.13 at 5:32 pm

#173 “…and this is what one of the Canadian bank CEO had to say about QE..’Quantitative easing is the nuclear weapon of monetary policy . . . I wouldn’t go for it.'”

A few weeks ago on a video, a TD economist said that the effects of the federal reserve’s unprecedented bond buying program (in terms of quantity) was “uncharted territory”. That statement sure caught my attention.

#195 Mr. Monday Night on 09.16.13 at 5:45 pm

#187 HDJ on 09.16.13 at 3:25 pm

“…a $30,000 home purchased in 1970 may now be worth a million.”

———————————————

So are you suggesting that all things equal, a house bought today for a million will be worth thirty million in 2056?

Can’t wait to see what jobs and salaries look like in a few years to correspond with some of the rosy predictions that housing will go up forever!

#196 Macho Man Randy Savage on 09.16.13 at 5:49 pm

CREA’s monthy stats are more golden than Russell Oliver’s finest jewelry.

Any blog dog realtors that can confirm or deny that multiple postings of the same house lead to multiple sales being recorded in CREA’s books?

#197 HD on 09.16.13 at 5:57 pm

#73 Shawn on 09.13.13 at 11:20 pm

[…]I spent $7500 for a high quality diamond ring at Costco last November[…]

Wife got the diamond ring for Christmas (replacing puny one from 20 years ago) and appreciated it. Who said diamonds don’t pay dividends? […]

I am not married so pardon my ignorance in the matter.

Need help to understand the way some things seem to work.

The diamond ring has no practical purpose (unless I’m missing something). In the anecdote detailed above, it seems to suggest that the goal of the diamond is to make one happy.

For instance:

If the diamond is worth $1 = Not happy

If the diamond is worth $20 000 = Extremely happy

Somewhere in the middle would be some variations of happiness/disappointment.

Is that right?

Still doesn’t make sense to me.

I guess there has to be a proportion component to this.

If my net worth is $5 million for example and I offer a $2000 diamond to my better half. She/He would be most likely unhappy because I could have afforded a much more expensive diamond.

Can someone shed some light on this? (I am serious and not trolling)

Best,

HD

#198 Evangeline on 09.16.13 at 6:15 pm

#118 “Deflation is the cure.”

Get back to us when your bank takes a holiday.

#199 ponerology on 09.16.13 at 6:19 pm

deflation? Germany 1930-1932. The fine citizens of the Weimar Republic must have enjoyed it(?)

I guess supply driven deflation isn’t necessarily bad. But I don’t think that’s the kind of “deflation” we are talking about here..

#200 Mister Obvious on 09.16.13 at 6:47 pm

#195 Ralph Cramdown

“You can classify these people as pathological hoarders or normal depending on when they were born.”
————————-

Hoarder territory is where entire rooms have not been entered for years because there’s too much stuff crammed inside to allow the door to swing in.

That is a sad pathological condition which does not depend upon birth date. I know of several cases.

#201 Ray13 on 09.16.13 at 6:56 pm

I would say a lot of the houses in the boundaries of the old City of Toronto have probably gone from under $30,00 to the million mark. I know from family experience that a house built and sold in South Leaside for $4,000 in 1940 had increased to $12,000 in 1952 and to $65,000 in 1976. My relative said that it was worth around the $30,000 mark in 1970. Similar bungalows for sale around $900,000.
And the markup on houses in Leslievile and other downtown places is a lot more in the past 40 years.

Four decades of post-WW2 inflation. If you think that’s coming again, you need help. — Garth

#202 market capitulation on 09.16.13 at 6:59 pm

Personally I don’t think you should put your money in the stock market, right now it has had a tremendous run and that is ONLY because interest rates have been 0% for the last 5 years in the US. Historical speaking it has never been that low for that long ever!!!

Banks have had cheap money, which means hedge funds have had cheap money, therefore wealthier investors have been able to leverage themselves into the markets and that has pushed them up. It has NOT been the general population boosting up the markets. I agree that the FED will continue with some form of QE for a while. So I think the market will creep along, but I would stay away from the market, because there is greater risk to the downside. Eventually the markets will realize that the too big to fail banks are really not that healthy, that they are being backed by federal subsidies. The banks are floating thanks to cheap money by the FED, I don’t think Garth appreciates this fact.

All government interventions coming out of Washington and the FED, are suppressing gold and will continue to bring it down, or keep it contained, for the foreseeable future. Eventually the laws of economics can’t be defied forever and there will be a huge correction in the upside for gold.

Can you conspiracy theorists just scurry back to your gold blogs? — Garth

#203 Donald Trump on 09.16.13 at 7:41 pm

#192 2CentsCdn — #184 bill “straightening bent nails in tough times” […] Fat chance these days …. but you’ve given me an idea ….. seeing how no one actually does anything any more […]“

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

Actually, times are so tough people cannot even afford hammers!

http://www.liveleak.com/view?i=707_1379011796

#204 Stew on 09.16.13 at 7:54 pm

Canadian billionaire predicts end of US Dollar as world’s reserve currency
https://www.youtube.com/watch?v=nX7J8-VTG08

Dispute this..

#205 Victor V on 09.16.13 at 8:13 pm

#201 HD

The diamond industry suggests men use 2 months salary as a guideline for this purchase.

http://science.howstuffworks.com/environmental/earth/geology/diamond5.htm

#206 FATHER on 09.16.13 at 8:15 pm

US will and alway’s will be world’s reserve currency

#207 JimH on 09.16.13 at 11:24 pm

#210 FATHER
“US will and alway’s will be world’s reserve currency”
===================================
Not for always, no… but at least for the foreseeable future…

#208 TurnerNation on 09.17.13 at 8:30 am

#201 HD – I bet Smoking man could show you how to get better utility for that investment. Short term vs. long term fun. Trade swing.

#208 Stew I dropped by that Resource Show @ Sheraton for something to do on lunch. A sea of greybeards and a ton of penny stock booths.
While sane people were working.

#209 bill on 09.17.13 at 10:10 pm

#195 Ralph Cramdown on 09.16.13 at 4:54 pm
My grandfather and mother lived to see fatter times.
however they lived like a pair of scotch crofters till the end.

#210 bill on 09.17.13 at 10:13 pm

on a lighter note:

http://www.youtube.com/watch?v=Xe1a1wHxTyo

#211 No Taper on 09.18.13 at 8:07 pm

“As I told you last week, Wednesday’s a biggie. The world’s most important beard, Ben Bernanke, will hold a presser to announce (the betting goes) Washington will start turning off its gushing tap of stimulus spending. It’s a key moment. It signals (a) the era of crazy-cheap interest rates is over, probably for the duration of your lifetime, (b) America’s back, (c) the crapstorm of 2008-9 is finished, (d) the doomers were wrong, again and (e) those left with piles of silver bars in their root cellar will be really, really sorry.”

Sorry mate. Better luck next time. There is no recovery, and the Fed knows it. Schiff was dead right yet again. You are leading your countrymen in the wrong direction; the US is in a serious state which will get worse as the Fed is backed into a corner.

What a load of drama queens on here tonight — Garth