The rock star

rock

Remember Blog Dog Mark Carney? Sure ya do. He was the central banker boss who sometimes trolled this blog, when he wasn’t crashing interest rates or wandering Canada warning people not to borrow. As head of the Bank of Canada, he worked with his buddy the finance minister (who hand-selected him for the job) to engineer a housing gasbag from the ashes of the 2008-9 meltdown. They even had a name for it: Canada’s Economic Action Plan.

It worked, sort of. Legions of people were sucked into more debt than they thought imaginable. Low rates, government mortgage insurance and voracious bankers turned real estate into an entitlement. Everybody qualified, down payment or not. House prices soared, even when incomes stifled. Canadian housing didn’t crash, as in the US, Spain or Britain. So Carney was a rock star. The first limo-riding central banker in history women actually threw underwear at.

Well, bubble accomplished, he changed gigs. He’s now in charge of the Bank of England, the first non-Brit to hold the job. What’s the bloke doing over there? Busy creating a housing bubble, of course.

First he promised everybody cheap money. Carney introduced forward guidance saying rock-bottom rates wouldn’t be raised until unemployment falls to the 7% level. That’s expected to happen in about three years.

Mortgage rates? First-time buyers who scrape up a 40% deposit can enjoy a 1.94% home loan. (The rate rises as the downpayment drops.) And now, supported by Carney, the government’s launching a new phase of its mortgage-boosting plan, letting people buy a home worth up to $1,000,000 with just 5% down. Up to 15% of the purchase price of a property will be guaranteed by London in return for a fee from the lender, based on the size of the mortgage.

Says the government: “Too many hardworking people are finding it impossible to buy their own home. Buying your first home is about far more than four walls to sleep at night. It’s somewhere to put down roots and raise a family. It’s an investment for the future.”

It’s also how you create an asset bubble, goose the economy without helping productivity, pump out short-term construction jobs, indebt the middle class and hogtie worker mobility. Just like here. And there are always consequences.

For example, more evidence the condo market – gorged on cheap money, rampant speculation and unbridled developer hyperbole – is coming apart at the seams. Even the house-humping Toronto Star is now in on the death watch, reporting on the panic sweeping through an army of flippers and speckers. Those who bought concrete skyboxes from builder plans years ago are now being forced to close deals at a time when borrowing’s a lot tougher, pre-approved mortgage deals are crumbling and condo values starting to fade.

Doesn’t this just bring a tear to your eye?

Hardest hit have been the self-employed who had pre-approvals from lenders when they bought their pre-construction units. But now, with the unit almost complete and final payments due, they are being told they need 35 to 50 per cent down, instead of just 20 per cent of the purchase price, unless they want to rely on secondary lenders offering rates that can hit double digits.

Many investors who bought units intending to flip them on completion, or rent them out for a few years, have also been shocked to find they thought they had pre-approvals, but they are no longer being honoured in the wake of tighter lending rules imposed by Ottawa.

Remember all those claims by developers like Brad Lamb that amateur investors could buy a one-bedroom condo and make 148% return? Or do it repeatedly and become a millionaire? Pffft. Gone when the schmuck is forced to put down up to half the value of the unit, wiping out the advantage of high leverage and tying up big money, earning zero. Worse, buyers can arrive to close a deal and face huge extra charges for development costs that were never anticipated when the place was bought.

Even those flippers who managed to make money on paper, and now have a new buyer, are being frozen out by banks. Most will only lend money against the original purchase price, meaning the end buyer has to cough up a big downpayment. In a marketplace crawling with condo resales, why would anyone do that?

And how’s the condo market – Mr. Carney’s real legacy – doing?

Yesterday Toronto realtors were invited to a one-day-only sale of units in a new Brad Lamb condo building in Ottawa (of all places). Dig this: buyers get up to $42,000 off. Brokers receive a 5% commission. And Lamb says anyone buying a one-bedroom unit will find it “pays 420.7% return after ten years.”

Brad already drives a Bentley. Maybe they’d like the rest of him.

SoBa--Broker-Event_02-1

138 comments ↓

#1 Bob on 10.08.13 at 8:43 pm

Yellen

http://www.cnbc.com/id/101093040

#2 Mike on 10.08.13 at 8:45 pm

I wish I had time to read your blog tonight but the ad from the Lamb was too exciting … :) Gotta go stay in the lineup!

#3 Randy Macho Man Savage on 10.08.13 at 8:46 pm

With all the turmoil in the US, and the sense that the dems and the GOP are currently miles apart, wondering what you blog dogs think about buying a volatility stock (like HVU) in the very short term? The stock market seems like a roller coaster lately and just thinking how more of the same is probably to be expected…

By the way, am I first?

#4 Derek R on 10.08.13 at 8:46 pm

The UK gave us the submarines. We gave them Mark Carney. Who will have the last laugh.

#5 AK on 10.08.13 at 8:46 pm

A Thing of beauty

#6 Catalyst on 10.08.13 at 8:49 pm

Poor brits, they will never see it coming :(

#7 Steve on 10.08.13 at 8:50 pm

Toronto Star is really chomping down on the hand who feeds today.

#8 Ben on 10.08.13 at 8:50 pm

First

#9 CrowdedElevatorfartz on 10.08.13 at 8:51 pm

Well, its the beginning of the end. Or is it the end of the beginning?
Either way, condo spec’ers and flipper’s are gonna have a hang over.

#10 Winston Churchill on 10.08.13 at 8:51 pm

“It’s an investment for the future.” — There are lies, damned lies and govt advice.

#11 TurnerNation on 10.08.13 at 8:53 pm

“guaranteed by London ”

That would be this one…the city-within-a-city. A corp.

(You know, like the separate states of Washington DC, The Vatican. ‘All Rhodes lead to Rome’…
The real power seats. I know which one covers our Kanada ideal).

http://en.wikipedia.org/wiki/City_of_London_Corporation
“The City of London Corporation, officially and legally the Mayor and Commonalty and Citizens of the City of London, is the municipal governing body of the City of London, the historic centre of London and the location of much of the UK’s financial sector.


The corporation claims to be the world’s oldest continuously elected local government body. Both businesses and residents of the City, or “Square Mile”, are entitled to vote in elections, and in addition to its functions as the local authority – analogous to those undertaken by the boroughs that administer the rest of London – it takes responsibility for supporting the financial services industry and representing its interests.[2]

Author and journalist Nicholas Shaxson argues that, in return for raising loans and finance for the British government, the City “has extracted privileges and freedoms from rules and laws to which the rest of Britain must submit” that have left the corporation “different from any other local authority”. He argues that the assistance provided to the institutions based in its jurisdiction, many of which help their rich clients with offshore tax arrangements, mean that the corporation is “a tax haven in its own right”

#12 OK Kingpin on 10.08.13 at 8:56 pm

All a matter of manipulated data, misleading figures and numbers blowing smoke in the faces of consumers.

#13 eddy on 10.08.13 at 8:58 pm

What’s the bloke doing over there?

***

“More tea M’Lord”

#14 Habitt on 10.08.13 at 8:59 pm

Hi Garth. Any comments on what the average person making the average wage in Canada, 18 bucks an hour is to do to ensure a secure retirement? Are not these the people that need the most guidance?

#15 Ronaldo on 10.08.13 at 9:03 pm

“Too many hardworking people are finding it impossible to buy their own home. Buying your first home is about far more than four walls to sleep at night. It’s somewhere to put down roots and raise a family. It’s an investment for the future.”

Compare the above by Carney to what G.W.Bush was saying in 2002 below.

ttp://www.youtube.com/watch?v=kNqQx7sjoS8

#16 Mike Leblond on 10.08.13 at 9:05 pm

The Brits could have ruled the world, but they made fundamental mistakes which will result in the anihilation of Britain as we know it:
1) They went to war against China because the Chinese government objected to Britain selling opium to and ruining its people;
2) They decided to charge a tax on its American colony without providing anything in return;
3) they put Mark Carney in charge of their central bank.

Will the blokes ever learn….

#17 Chickenlittle on 10.08.13 at 9:10 pm

Re: yesterday, #41 Victor V’s link:

Great link! I agree with good old David.

Apparently, most do not or they wouldn’t be getting such high mortgages leaving no room for savings or a “buffer” as he called it.

I don’t understand how people don’t think of this when they buy.

Here’s the link again:

http://www.theglobeandmail.com/globe-investor/investment-ideas/lets-talk-investing/20130905theglobeandmailltidavidchiltonpart01mp4/article14422961/

Common sense, eh?

#18 Chris on 10.08.13 at 9:11 pm

Advice for #14 habitt: Get a trade or get a business plan. Or marry rich. Otherwise prepare to continue your life of serfdom. Welcome to the best democracy in the world. Canada.

#19 blase on 10.08.13 at 9:12 pm

What a post today Garth. Just the idea of leverage being destroyed, plus buyers opting for pre-owned vs. new, means a guaranteed death spiral for thousands and thousands of hipsters and immigrants who decided over a micro-brew or a family gathering that a spec condo was the path to riches. These wannabe Trumps are stuck with a horrible asset that has absolutely nowhere to go but down, down, down.

#20 Smoking Man on 10.08.13 at 9:16 pm

Garth your a vindictive bugger.

What’s your beef with bald guys any way….:)

#21 Ben on 10.08.13 at 9:21 pm

Garth – real glad you are putting a bit about the UK. Lots to learn from for Canadians. You’ve noted how desperate the UK govt is to prop up prices. They are pulling out all the stops with various schemes including our own sub-prime factory. Plus loads of forbearance from state owned banks.

The thing to take away from this for Canada is the insane lengths the govt will go to to keep prices up. I fear this will happen in Canada too making the correction occur in real terms not nominal as the currency is debased. Perhaps, perhaps not. It’s still a cautionary tale.

#22 Smudgekin on 10.08.13 at 9:21 pm

Carney’s gonna have to watch his back. There are shrewd calculating bastards in the Brit civil service. Doubtless niffed by his position. Them run circles round colonial boy. Carneys’ condom – don’t doubt it. Cameron is unpopular minority windbag.

#23 KG on 10.08.13 at 9:25 pm

The title should have been The pied pipers.

#24 al on 10.08.13 at 9:30 pm

Toronto Star also reports that the number of Ontario’s minimum wage earners also doubled in the last 10 years, and a million people make $10.25 to $14.25

housing industry going to need more corrupt foreigners

#25 ripped on 10.08.13 at 9:31 pm

#3
“wondering what you blog dogs think about buying a volatility stock (like HVU) in the very short term?”

Looks like your arriving a little late to the volatility party to me.

#26 Smoking Man on 10.08.13 at 9:47 pm

8 Years Old

Future rock star, amazing!!. Beats being a bald Realtor

http://www.youtube.com/watch?v=aK3SlipAKJ4

#27 Art on 10.08.13 at 9:50 pm

My favourite quote from the article:
“This is the hardest environment I’ve seen for borrowing money in the last 10 years,” says Toronto realtor and condo developer Brad Lamb.

This while prime has been at emergency levels for 5 years straight and 5-years are below 4%. Yes, it’s soooo hard to borrow money nowadays.

#28 Carnivalcarney on 10.08.13 at 9:54 pm

Carney, I know you are reading this…say hello to the British suckers that hired you….anD…British suckers…only one thing I can say to you…if you think it is different there, it is not….the train has already left the station.

#29 ripped on 10.08.13 at 9:56 pm

Mike Holmes HGTV tonight looking at another Toronto house falling apart in 5 years. lol

#30 Serge on 10.08.13 at 9:56 pm

I started blog GTA Price Drop .GTA properties that changed their price or were re-listed under a new MLS number. http://gtapricedrop.blogspot.ca/. I Will update it weekly.Never blogged before.

#31 economictsunami on 10.08.13 at 10:03 pm

Fact filled and interesting summation, genuinely worth more then a cursory read:

Stiglitz: Five Years in Limbo…

http://www.project-syndicate.org/commentary/the-sluggish-pace-of-post-crisis-financial-reform-by-joseph-e–stiglitz

#32 John in Mtl on 10.08.13 at 10:11 pm

There’s a great article on the UK’s economic recovery plan under David Cameron today at “The Automatic Earth” website, and 3/4 of the way down the article are some very interesting tidbits of Mr Carney’s plans to reinflate the housing bubble. In fact, the bubble has already started to inflate… Poor Blokes.

http://theautomaticearth.com/Finance/gordon-gecko-moved-to-london-to-finish-where-he-left-off.html

#33 HAWK on 10.08.13 at 10:20 pm

#1 Bob on 10.08.13 at 8:43 pm

If Yellen is to be Fed Chair-“person” then there should be no default just lots more QE.

#34 Obvious Truth on 10.08.13 at 10:27 pm

Is the take away to start buying UK property now or the FTSE will suck like the TSX for the next 5 years?

Or both?

If the market is sniffing deflation right now we are in big trouble. Break 1625 and we likely take back the year. Take back the year and all the printing evaporates and balance sheet is bloated. This is why we need inflation. Without it capital may continually get destroyed while debt multiplies.

Real estate is seriously screwed without it. Maybe Carney knows something.

Yellen needs to tell us a reflation story.

Wall Street will soon tell republicans to cool it because they can’t get at Heath care. Dems aren’t flinching.

There is opportunity in all of this.

A regularly rebalanced portfolio is the easiest way to benefit.

#35 ripped on 10.08.13 at 10:28 pm

Goldman Sachs: Gold is a ‘slam dunk sell’

http://finance.yahoo.com/blogs/talking-numbers/goldman-sachs-gold-slam-dunk-sell-004851719.html

#36 Funny on 10.08.13 at 10:42 pm

Garth weren’t you asking Flaherty to “chop interest rates” back in 2007?
http://www.garth.ca/2007/11/26/sunk-in-whitby/

Bad boy, Garth, bad boy.

The prime rate in November of 2007 was 6.25%. Today it’s 3%. I think there’s a happy medium in there somewhere. — Garth

#37 Chaddywack on 10.08.13 at 10:47 pm

So when does this mayhem come to Vancouver?

Maybe there’s an endless supply of rich Mainland Chinese in yellow helicopters still? Prices are sticky here still :)

#38 Obvious Truth on 10.08.13 at 10:53 pm

#35 ripped.

Goldman loaded up on gold at the bottom. Now the largest holder of GLD.

Never listen to a Goldman call. They have their position or intentions when they make it. Those intentions are to help themselves and not you. If they make a bold call either way on something you own you should sell. You won’t know where they are positioned till it’s too late.

All hedge funds were massively wrong footed on the last fed call. Not Goldman. They feed the rhetoric and go the other way.

This shouldn’t surprise anyone. Remember 09?

#39 Basil Fawlty on 10.08.13 at 11:06 pm

“It’s also how you create an asset bubble, goose the economy without helping productivity, pump out short-term construction jobs, indebt the middle class and hogtie worker mobility. Just like here. And there are always consequences.”

Well said Garth, it is the storey of the ongoing tragedy in Western finance and the consequences are double ugly.

#40 Obvious Truth on 10.08.13 at 11:08 pm

Which central banker worked at Goldman?

Sell, sell, sell.

#41 young & foolish on 10.08.13 at 11:18 pm

“A regularly rebalanced portfolio is the easiest way to benefit.”

Yes indeed, just watch out for those trading fees, and the upcoming sluggish earnings.

Love your name. — Garth

#42 Notta Sheeple on 10.08.13 at 11:18 pm

“….Too many hardworking people are finding it impossible to buy their own home…..”
=========================

Guess the ex-pat Rock Star did his part in making that a permanent Canadian reality.

#43 MagnumMtl on 10.08.13 at 11:25 pm

Here in Mtl I heard Max Pacioretty on a radio ad flogging some condo project in our east end burbs. Two years of free condo fees he says. When I hear that I think there’s no such thing as a free lunch.

I hope he’s doing it because they’re paying him and not because he’s an investor.

#44 MEANWHILE IN EUROPA on 10.08.13 at 11:48 pm

And all the British expats here in France predict that the frenzy in RE will reach the shores of France.
The theory goes that many Brits will sell out at high prices and then buy in for much less on the main land.
A funny bunch, them Brits.

#45 Cici on 10.08.13 at 11:58 pm

#14 Habitt

Don’t know where you are in life in terms of age and retirement savings, but a good place to start is by saving 15% of your income.
If you find that too tough, try to cut down expenses: reduce housing costs by sharing your living space with roommates, cook simple and inexpensive meals at home instead of eating out, cut down on alcohol consumption, and drive an inexpensive vehicle that is durable, has good gas mileage, and is easy to maintain.

I definitely agree with the suggestions from Chris #18, although the most realistic one is definitely to come up with a business plan. If you are not making enough to meet your savings goals, you will have to supplement your income any way that you can. Mind you, life is short so try to make it fun. Do you like animals? Start a dog walking or pet setting business. Or are good at something that you love doing that you can also teach to others while having the opportunity to meet new friends and acquaintances? Start out small, do a really job, get to know your market and clients and expand when you are able to manage and meet your clients’ demands.

And, take advantage of as many free opportunities you can get your hands on: business workshops or seminars for low-income workers, start-up grants, budgeting and accounting workshops (hopefully free), etc.

Remember: If you are providing a useful and desired service, and delivering the goods at a reasonable rate while enjoying yourself and passing that joy on to clients, you should have no trouble building a successful business, even if it does take time. Oh, and try to keep overhead as low as possible while starting out, and take advantage of as many tax and other credits as possible.

Last, but not least: Quit worrying, take care of your health, and learn to enjoy and take advantage of the finest things in life, which are often free (a walk on the beach, a hike in the woods, a visit with a good friend, a marshmallow roast under the stars at a cheap campsite etc.) My point being: you don’t need waterfront to enjoy the ocean, you can get a community garden if you can’t afford property with a yard, and some of the best vacations are the cheapest (ride your bike to the ferry and go cruising around on the other side for a fantastic daytrip, etc.). Life is what you make it, and while saving IS important, a million dollars is worth nothing if you’ve never had the chance to spend or enjoy any of it before you croak.

#46 grumpy on 10.08.13 at 11:59 pm

Did the brits just come out of a housing bubble. Good riddence. The guy probably screwed me out of a retirement because he goosed house prices, then this will take the market down so I can’t make money there and I can’t make money on interest rates and I’m actually not in debt and saving. Should have joined the stupid. And when the time comes up for these people I will be using my savings to bail them out because CMHC will be screwed

The secretary at my work place now has a house. I don’t. And word on the street from people on the hunt in winnipeg – bidding wars.

#47 OwlEyes on 10.09.13 at 12:17 am

So it seems that Brad is trying to get Hot Toronto Money (HTM) to skew the Ottawa market.

Meanwhile, in Ottawa…
http://www.calgaryherald.com/news/canada/Defence+Renewal+Plan+looks+save+billion+annually/9007504/story.html

#48 meslippery on 10.09.13 at 12:41 am

Its right not to buy now. But if you bought in the late
80s at a lot less and are happy were you live.
You dont want to move and have room for the kids and
land and they will never get(well it has not happened
yet )get a job like I got with a grade 8 ed. Selling why??
They will look after me (Or my dog will eat them) when
I get old..

Family.. got to love it.

#49 Victor V on 10.09.13 at 12:41 am

PRICE DROP #3 – 110 Pricefield Road – ROSEDALE

http://themashcanada.blogspot.ca/2013/10/price-drop-3-110-pricefield-road.html

This house has been listed since April.

There is no photo of the front of the house from the listing. Is it because it looks like a mess? It is clear from the sign on the street view photo above that they did renos, but did they fix up the front?

Because they should if they haven’t.

This is a 5+1 bedroom, 5 bathroom semi on a 27.5 x 112.75 foot lot in South Rosedale just steps to Yonge street.

The first asking price was $1,879,000.

Even if this reno was perfect (which it isn’t), and the house wasn’t located right beside a transformer (which it is), that price still would have been too high. So it wasn’t a surprise when the price was dropped in June to $1,750,000.

It never sold and the price was dropped again a few weeks later to $1,695,000 which was still too high.

Then, in August, another semi on the street at 66 Pricefield was listed for $1,550,000. It was brighter, and had a better layout, but I felt it was a little bland and dated in spots. It sold for $1,625,000.

I thought perhaps this house should drop to the same price.

Yesterday, the price was dropped…

To $1,595,000.

#50 Victor V on 10.09.13 at 12:48 am

Here is the Star story:

http://www.thestar.com/business/personal_finance/spending_saving/2013/10/08/toronto_real_estate_some_condo_buyers_scrambling_to_close_deals.html

#51 Van guy on 10.09.13 at 12:50 am

And how do we really know that Mark Carney was trolling this blog?????

#52 Cristian on 10.09.13 at 1:08 am

“And Lamb says anyone buying a one-bedroom unit will find it “pays 420.7% return after ten years.”

Makes one wonder why isn’t the Lamb himself buying all those condos for himself and make all that profit…

#53 Tony on 10.09.13 at 1:13 am

Re: #3 Randy Macho Man Savage on 10.08.13 at 8:46 pm

After missing a good part of the move in the volatility index you better time the inverse one correctly.

VelocityShares Daily Inverse VIX ST ETN (XIV)

#54 Tony on 10.09.13 at 1:20 am

Re: #34 Obvious Truth on 10.08.13 at 10:27 pm

Probably neither.

#55 Freedom First on 10.09.13 at 2:29 am

Great post Garth! Although I think at least one rock star and one “whatever he is” probably wouldn’t agree with me. I like what you always say Garth, “don’t judge the man, judge the behavior”. Unethical.

Okay everybody, drive by the casinos. They are situated on expensive real estate and the parking lots are full. Next, drive by the banks. They are situated on expensive real estate, and Canadians are sitting on record amounts of debt. Next, visit Brad, right now he would for sure even drive you to the bank in his Bentley to get your mortgage signed. Are you getting the picture? And there is no victims, as we are all adults who make our own financial decisions, and will have to live with all consequences. No exception. Freedom First.

#56 Jane24 on 10.09.13 at 3:09 am

Quiet Garth you are ruining our master plan. Brought the last as soon as we heard Carney was on his way.

We own four homes here in England and cannot wait for the housing bubble!!

#57 Eating Bonbons on 10.09.13 at 3:14 am

The new tax valuations for properties on the island of Montreal are completed. (not in the mail, just viewable online) They were based on the data in July 2012 according to the site.

My small condo in Old Montreal will increase about 20%, but in fairness it had not gone up in about 8 years.

My Mom’s old house which routinely has increased over the years, will increase 40% for the 2014-2016 period. She lives on the ‘Plateau’, a demand area at the (mostly) Eastern base of Mount Royal for those less familiar with Mtl. She will effectively have a tax bill of over $500 per month to pay from her $1500 per month fixed income.
I am hoping with this increase, she may start to see there are more reasons to sell than hold, certainly in her scenario anyway.
It’s going to get ugly when the assessments go out in January. There will be many requests for re-assessment no doubt.

#58 willworkforpickles on 10.09.13 at 3:47 am

Its the end of the beginning of the beginning of the end.

#59 Obvious Truth on 10.09.13 at 6:36 am

A Wall Street journal rescue by Paul Ryan.

Nice. Maximum publicity. He’s learning. Now moderates have someone to rally around. Cue McCain.

Like I said. Too predictable.

Technically we may still have to get to 1625. Market will want to see more spending now. Doesn’t care about future entitlements that can be changed a hundred times.

A little more drama to come.

Everyone’s a winner!

#60 maxx on 10.09.13 at 7:07 am

#27 Art on 10.08.13 at 9:50 pm

“My favourite quote from the article:
“This is the hardest environment I’ve seen for borrowing money in the last 10 years,” says Toronto realtor and condo developer Brad Lamb.

This while prime has been at emergency levels for 5 years straight and 5-years are below 4%. Yes, it’s soooo hard to borrow money nowadays.”

Good point.
However, it all depends on where you borrow. Mortgage money is tightening because profit margins are slim and economic fundamentals relentlessly deteriorate. But credit cards seem to flow like water due to the ginormous interest rates and the amount of debt they ride upon.

Going forward, mortgage money will be increasingly more difficult to obtain by those with either no equity or questionable job prospects. They are in the majority.

A realtor just told us to go ahead and “low-ball with confidence” on a property.

How’s that for the state of RE? What a flip in realtor attitude and this is just the beginning.

More choice and lower prices are inevitable as there is NO economic miracle waiting in the wings.

#61 Habitt on 10.09.13 at 7:17 am

# 18 Chris. Good advise thanks. We are not owed anything. Does not change the fact that the average wage is 18 bucks.

#62 Habitt on 10.09.13 at 7:26 am

#48 Cici Thanks for taking the time to respond. I am fine thank you. I am concerned about others especially the younger folk. See #24 Have a great day eh!

#63 maxx on 10.09.13 at 7:30 am

#31 economictsunami on 10.08.13 at 10:03 pm

Thanks for sharing- excellent summation and exactly what most sense is the status quo.

#64 maxx on 10.09.13 at 7:50 am

#36 Funny on 10.08.13 at 10:42 pm

Garth weren’t you asking Flaherty to “chop interest rates” back in 2007?
http://www.garth.ca/2007/11/26/sunk-in-whitby/

Bad boy, Garth, bad boy.

The prime rate in November of 2007 was 6.25%. Today it’s 3%. I think there’s a happy medium in there somewhere. — Garth

Trouble is, the nature of the beast is that it is rarely happy with “medium”. It tinkers away continuously, in the minefield of what it assumes to be optimization.
A happy medium would no doubt be far more user friendly and thereby more productive and economically healthy. On a global scale, we are very far from even approaching that notion.

#65 TurnerNation on 10.09.13 at 8:22 am

#11 TurnerNation

They even removed Canada from their calling card. A crested link remains. But to whom…figure that out that this makes sense.

http://wpmedia.o.canada.com/2013/04/baird-business-card.jpg

#66 recharts on 10.09.13 at 8:22 am

I started blog GTA Price Drop .GTA properties that changed their price or were re-listed under a new MLS number. http://gtapricedrop.blogspot.ca/. I Will update it weekly.Never blogged before.

I was going to offer you some competition when I am done with my current work (not related to RE) but I might as well give up if you do a good job.

Here is a suggestion:
organize your records in a table, one property per line, it will be easier to read it. Sort the properties in the decreasing order of the nominal discount (that is initial price, when the property was listed for the first time minus the current price at the date when you post the update).

My plan was to publish a heat map showing how the areas are cooling off.

#67 TurnerNation on 10.09.13 at 8:23 am

#155 Canadian Watchdog

Pretty good!

#68 visorman30 on 10.09.13 at 8:34 am

Not related to the post but I thought you might find it funny: http://www.youtube.com/watch?v=M4IjTUxZORE#t=154

#69 Bob on 10.09.13 at 8:50 am

Garth, most equity markets (especially in the US) are at or near all time highs. Some believe that some fixed income investments are vulnerable to downward exposure from rising interest rates going forward.

So do you feel like this would be a good time to START a portfolio if say a boomer was to sell his property and invest the equity?

Sounds typical. Afraid to invest because things are too high. Or afraid to invest because things are declining. It’s why DIY fails. — Garth

#70 Q2 CLASS DUPLEX-DRIVE on 10.09.13 at 8:52 am

‘ …find it “pays 420.7% return after ten years.” ‘

This Lamb guy, he’s got moxie. The return isn’t 420 % or 421 %; no, it’s 420.7 %. Like, he can work it out to one decimal place. I know it’s rubbish, so does GT, but the average property virgin will be impressed by such spurious accuracy and plunge headlong into condo ownership. That’s probably the point.

#71 Ronaldo on 10.09.13 at 8:53 am

#45 Cici – best advice I’ve heard in a long time.

#72 Ralph Cramdown on 10.09.13 at 8:58 am

#64 maxx —
> The prime rate in November of 2007 was 6.25%.
> Today it’s 3%. I think there’s a happy medium in
> there somewhere. — Garth

Trouble is, the nature of the beast is that it is rarely happy with “medium”. It tinkers away continuously, in the minefield of what it assumes to be optimization.
A happy medium would no doubt be far more user friendly and thereby more productive and economically healthy. On a global scale, we are very far from even approaching that notion.

Well, it isn’t too hard to look at history to see how economies used to perform before 1977’s “dual mandate” for the Federal Reserve, or before Bretton Woods, all the way back to the gold standard, Bagehot’s ‘Lombard Street’ and all that.

My read is that we’ve definitely been getting better. Before independent central banks, tinkering and social safety nets, the boom and bust cycles were frequent and horrendous. When the Austrians talk about world-ending credit collapses, they’re quoting economists who were writing about those times.

#73 recharts on 10.09.13 at 9:06 am

@ #30 Serge

In fact your work is complementary with mine. Although I have the possibility to collect the data for GTA I found that too much work for the time that I had and I decided to postpone or never do that.

Since you are collecting and posting data ..do you mind adding a comma just after the address and before the city name?

Ex:
76 FOREST HEIGHTS BLVD Vaughan, ON L0J 1C0
should be
76 FOREST HEIGHTS BLVD, Vaughan, ON L0J 1C0

I am going to copy and paste your data and correlate with the sales data that I collect for GTA. I had no price history for GTA as I have for Toronto and for that reason I could not show which sales reports were lies
Now that you have your blog I might just use your data :-)

#74 Captain Garth is the True Rock Star! on 10.09.13 at 9:06 am

Brad Lamb is no match for the bearded mystic oracle, all knowing, all wise, all encompassing, financial prognosticator without equal, denouncer of parliamentarian peckerheads and peckerettes, Harley riding badass, bathed and protected by gorgeous and buxom Amazonian beauties, NYTimes bestselling author, financial tea lead reader without equal, fierce and tireless opponent of the real estate cartel, debunker of real estate propagandists throughout this land, lone voice of financial reason crying out in the condo zombie land of the GTA and last but certainly not least, an all round nice guy and a jolly good fellow!

#75 CrowdedElevatorfartz on 10.09.13 at 9:13 am

@#65 Turner Nation.
Sooooo, John Baird’s business card without a Canadian flag relates to the City of London how?

and Puh-leeez dont try and tell me it’s some vast ZoG conspiracy by the “elitists in power” to control everyone……that paranoid rant is getting a tad old.

#76 Nemesis on 10.09.13 at 9:14 am

In certain circles it is customary, prior to engaging new help, to conduct an heirlooms inventory before dismissing the incumbent and confirming the new arrival’s appointment…

“People had got a bit… – ah – lax, had they?”

http://youtu.be/fVl2o5Zc7Y4

#77 Doberman on 10.09.13 at 9:17 am

Garth why can’t you just accept me for who I am. I love you man.

#78 Penny Henny on 10.09.13 at 9:19 am

I imagine that this could be bad for Canadian REITs
http://www.thestar.com/business/2013/10/09/glut_in_office_space_to_hit_gta_report.html

#79 CP on 10.09.13 at 9:55 am

Any thoughts Garth?

http://freebeacon.com/general-motors-executive-warns-of-impending-auto-bubble/

#80 Daisy Mae on 10.09.13 at 10:03 am

“So Carney was a rock star.”

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

Soon the UK will tar and feather….then drive him out of town on a rail.

#81 Colonial debt slave # 123jr56lk3432j on 10.09.13 at 10:06 am

#75 CrowdedElevatorfartz on 10.09.13 at 9:13 am

@#65 Turner Nation.
Sooooo, John Baird’s business card without a Canadian flag relates to the City of London how?

and Puh-leeez dont try and tell me it’s some vast ZoG conspiracy by the “elitists in power” to control everyone……that paranoid rant is getting a tad old.

******

Dear CrowdedElevatorfartz, if that is indeed your real name.
There’s no Canadian flag on Baird’s card because he and Haarper only salute false flags.
Turner Nation is not paranoid, his observations are facts.
Here’s a link for you:

http://www.billoreilly.com/

#82 Holy Crap Wheres The Tylenol on 10.09.13 at 10:19 am

#75 Smoking Man on 10.08.13 at 7:18 am
#63 The R on 10.08.13 at 1:03 am
hey SM – does posting in an imaginary person help you cope with the stresses of real life ?.
……………….
Was waiting for someone to ask.
The dog that shows up at the tax farm is an imaginary person.
The husband coming home to his wife is an imaginary person.
The father, uncle, friend, associate is an imaginary person.
SMOKING MAN is as real as it gets………
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

Read Smoking Mans Blog yesterday. Wow is all I have to say. They say my generation took way too many mind altering drugs back in the 1960’s.
Smoking Man this is for you.

Dear Friends, Helpers Enthusiasts, Supporters, Inter-Dimensional Travelers, Intergalactic Aliens and All Sentient Beings,

I am the center of this universe
The wind of time is blowing through me
And it’s all moving relative to me,
It’s all a figment of my mind
In a world that I’ve designed
I’m charged with cosmic energy
Has the world gone mad or is it me?

I am the creator of this universe
And all that it was meant to be
So that we might learn to see
This foolishness that lives in us
And stupidity that we must suss
How to banish from our minds
If you call this living I must be blind.

#83 Iconoclast on 10.09.13 at 10:26 am

So the UK has interest rates under 2% if you have 40% down?
That actually sounds pretty reasonable, as long as it’s capped amount.
That would be a good way to help out first-time buyers, like the CMHC used to do.

In Canada, all the government needs to do at this point is to gradually reduce the CMHC limit.
Say, by $100,000 every year for the next five years. The bankers will do the rest.
If someone is buying a half-million dollar house, they shouldn’t be asking for government-subsidized insurance.
Fiddling with interest rates affects everything; the CMHC limit affects only housing.

#84 45north on 10.09.13 at 10:30 am

Hardest hit have been the self-employed who had pre-approvals from lenders when they bought their pre-construction units. But now, with the unit almost complete and final payments due, they are being told they need 35 to 50 per cent down, instead of just 20 per cent of the purchase price, unless they want to rely on secondary lenders offering rates that can hit double digits.

so they have to double down – the way I understand it is they have signed a legal contract to purchase. It’s not conditional on bank terms so the developer can keep the deposit or sue. Or both.

Obvious Truth: Never listen to a Goldman call. You won’t know where they are positioned till it’s too late.

makes sense to me

maxx: A realtor just told us to go ahead and low-ball

How’s that for the state of RE? What a flip in realtor attitude and this is just the beginning.

More choice and lower prices are inevitable

yeah, banks and CMHC are tightening credit so prices have to drop

Gas plant cancellations cost $1.1 billion

http://www.ottawasun.com/2013/10/08/oakville-gas-plant-cancellation-cost-11-billion

basically Ontario is bankrupt, what debt is at $300 billion?

“Premier Kathleen Wynne said all three parties believed the plants were improperly located, and said going forward that it’s important for government to learn from its mistakes.”

does she mean that all three parties agreed that Oakville was the wrong place for the gas plants? It’s not like they are Fukushsima. It wasn’t a mistake but a deliberate strategy on the part of the Liberal Party of Ontario. The strategy was to save seats.

#85 Mark on 10.09.13 at 10:51 am

Should we be locking in fixed mortgages right now or ride the variables?

#86 Canadian Watchdog on 10.09.13 at 11:15 am

#72 Ralph Cramdown

My read is that we’ve definitely been getting better. Before independent central banks, tinkering and social safety nets, the boom and bust cycles were frequent and horrendous.

Ahh yes, "WE", as if the other 6.6 billion people on this planet don't matter. A special chart just for you Ralph.

#87 Mark on 10.09.13 at 11:26 am

The prime rate in November of 2007 was 6.25%. Today it’s 3%. I think there’s a happy medium in there somewhere. — Garth

I see, fine then Garth, why don’t you tell us what the ideal prime rate was then, and is now. After you decide the price of money, tell us what Toyota Corollas and Honey Nut Cheerios should cost. I mean, you must know, right?

Keynesians should be called Garthians, same flawed logic, different oracle.

I think you pants are on backwards. — Garth

#88 Basil Fawlty on 10.09.13 at 11:45 am

The consequences of the low interest rate policy can clearly be seen in pension plan stress and the ability of seniors to atttain a livable income from their investments. The governments low interest rate policy, designed to stimulate the economy and keep debt payments low, is ruining the economy of seniors.

Then the Sachs Gang turn around and tell us they are strong economic managers.

#89 Ralph Cramdown on 10.09.13 at 11:50 am

#84 45north — “… basically Ontario is bankrupt …”

There seems to be some confusion by some posters here as to what the word “bankrupt” means. Unable to pay one’s debts as they fall due is the relevant definition. It has nothing to do with possibly needing to borrow more money to pay due debts. If it did, nearly every homeowner with a 5 year term mortgage on a 25 year amortization coming due would be bankrupt, as would many of the largest corporations.

If a borrower has publicly traded debt, and none of it has a credit rating of ‘D’ (for defaulted), it ain’t bankrupt.

Now some of you might think of a company or a government, “if revenues and expenses continue on current trend, eventually they’ll hit the wall.” That is true of many companies, some of which lost money or had negative cash flow last quarter or last year, yet maintain an investment grade credit rating and are still able to borrow freely and cheaply. This is because creditors (i.e. the bond market) believe that the trend won’t continue indefinitely — revenues will increase or spending decrease.

To look at the ever popular example of the USA, anyone who truly believes that it will go broke while spending 4.4% of GDP on the military and with taxation at historically low levels is basically believing it will CHOOSE to go broke. If you don’t see eye to eye with the bond market, don’t assume you’re smarter than the bond market. Or if you insist, post your trades here as you make them so we can all judge who’s winning.

#90 rss reader on 10.09.13 at 12:00 pm

Garth, please remove the CAPTCHA verification from the RSS Feeds sections. It makes not sense, that section is for robots and apps, not humans… no app will pass the CAPTCHA. People can’t read the feeds in this case. Get a better IT guy.

Please don’t delete this message, it’s like the 3rd time I try to send it.

I regret this and my webmaster is working to resolve the situation which occurs very infrequently. He sends this message:It is unfortunate that your office IP address is being flagged by some of the automated network defences that maintain high availability for GreaterFool.ca. This is a rare occurrence for the millions of visitors who read the blog. But there is a way to assist you to avoid the inconvenience in future.

Please go here and copy the IP address of your worksite computer:
http://whatismyipaddress.com

We will use that address to white-list your office location in our automated network systems as a trusted source for web queries. That should solve your inconvenience.
–Garth

#91 rss reader on 10.09.13 at 12:03 pm

Please increase the number of RSS feeds available. 4 is not even an entire week of posts. take a look around and you will see what a good average is.

a lot of mobile devices are very RSS feed friendly.

this is not negligible.

thanks in advance

#92 Ralph Cramdown on 10.09.13 at 12:09 pm

#86 Canadian Watchdog — “Ahh yes, “WE”, as if the other 6.6 billion people on this planet don’t matter. A special chart just for you Ralph.”

There’s a name for that chart, Watchdog, and it’s P-R-O-G-R-E-S-S.

You can’t have a banking crisis if you don’t have a banking system, nor a sovereign default if nobody will lend the state money, nor a currency crash if you’re not trading internationally, nor a stock market crash if you don’t have a stock market.

WE have seen a generally increasing standard of living in the last two generations, but it hasn’t held a candle to the improvements in the developing world. Just look at the change in GDP per capita or the percentage of people living on less that $2/day in China, India, Indonesia and Brazil, and you don’t even have to bother with the rest of the world. Hundreds of millions of people are far better off with longer lifespans, greater literacy, higher incomes and better health.

#93 father on 10.09.13 at 12:11 pm

BREAKING pixar is leaving vancouver with 100 jobs

#94 Ronaldo on 10.09.13 at 12:11 pm

#85 Mark – I believe you already know the answer regarding variable vs fixed. Variable has been the way to go for a good many years and I suspect they will be the way to go for a good many years to come given the situation that the economy is in.

http://www.ratehub.ca/variable-or-fixed-mortgage

#95 jess on 10.09.13 at 12:23 pm

world bank

…at the end of fiscal year 2005, china biggest borrower $11 billion in loans outstanding followed by Mexico, Indonesia, and Brazil.
http://web.worldbank.org/WBSITE/EXTERNAL/NEWS/0,,contentMDK:20610454~pagePK:34370~piPK:34424~theSitePK:4607,00.html
=================
world bank loan flipping?

http://www.forbes.com/sites/richardbehar/2012/06/27/world-bank-spins-out-of-control-corruption-dysfunction-await-new-president/4

#96 maxx on 10.09.13 at 12:24 pm

#72 Ralph Cramdown on 10.09.13 at 8:58 am

Understood, but not feeling it RC. Our current situation is far more protracted with no end in sight. Unless you believe MSM.

What to do? Put a further few generations on hold whilst tinkering and blowing on interest rate levers in order to put off paying our bills, debts and deficits?

#97 Ronaldo on 10.09.13 at 12:36 pm

#76 Nemesis – I wonder if she asked them how much of the 4600 tonnes of gold actually belongs to England. I understand about 315. They sold off several hundred tonnes years ago as Canada did. What do we have left, about 3 tonnes of the over 1000 tonnes we did have. But anyway, gold is useless according to Mr. Buffet because it just sits there and shines and does not pay dividends. Makes you wonder why they bother even mining the stuff doesn’t it?

#98 young & foolish on 10.09.13 at 12:57 pm

“Sounds typical. Afraid to invest because things are too high. Or afraid to invest because things are declining. It’s why DIY fails. — Garth”

Exactly! Most people can’t or won’t invest well on their own, so they need help. And of course, good help is hard to find, and when you find it, it’s usually expensive. Most people yearn for an understandable, and predictable cash flow, not incomprehensible assets which require management (buying, selling, rebalancing, etc.). It’s why GICs are so popular, and why so many TFSAs sit under invested. And also why so many folks buy RE as an “investment”.

#99 jj on 10.09.13 at 1:08 pm

Just a quick note about the Tea Party that Garth dismisses as nuts, when in fact, the ones he refers to are extremists which exist in every facet everywhere.

Just like Brad Lamb is an extremist for condo fanaticism.

When it comes down to it, one of the main core messages of the Tea Party is smaller government.

In Garth’s world, where he is from the government, you need to discredit with slander to support your cause.

The history of ever expanding government is absolutely crystal clear. It always ends in disaster. As private capital is “wealth transferred” elsewhere. For that matter, its not that I adhere to the Tea Party, its that I adhere to smaller government.

It is also not just smaller government but where regional and local government is where local taxes should only go, never to the Federal level.

Instead of shooting the messenger Garth, how about reading the message?

#100 rss reader on 10.09.13 at 1:10 pm

— follow-up on comment #90

First of all THANKS A LOT for your answer.

I just sent you the IP to [email protected] and also alerted our webmasters and IT personnel.

Please keep going with this blog, it’s very helpful for all Canadians.

#101 jj on 10.09.13 at 1:16 pm

“#72 Ralph Cramdown on 10.09.13 at 8:58 am”

So your take is central planning works? Good one, last I checked free market capitalism was the best way to build real wealth in society for the masses.

#102 Ralph Cramdown on 10.09.13 at 1:30 pm

#96 maxx — “What to do? Put a further few generations on hold whilst tinkering and blowing on interest rate levers in order to put off paying our bills, debts and deficits?”

We’re not “putting off” paying our debts. We’re NEVER GOING TO PAY THEM OFF. Poor people pay off their debts because they hope to one day retire at which time they’ll have substantially reduced cash flow to service debt with. Rich people, corporations and countries use debt as a tool to get richer. Look at the balance sheet of most any company, even massively profitable ones, and you’ll see debt. My family balance sheet has debt on it that I could pay off should I so choose, but I don’t. When Facebook went public, Zuckerberg bought himself a mansion… and put a mortgage on it.

If all the debt got paid off, where, exactly, would today’s coupon-clipping seniors and their pension funds invest their money?

#103 Canadian Watchdog on 10.09.13 at 1:46 pm

#92 Ralph Cramdown

WE have seen a generally increasing standard of living in the last two generations, but it hasn’t held a candle to the improvements in the developing world.

Here's some data and reading material on those poor nations: The Emerging Middle Class in Developing Countries PDF

Sure we've seen an increase in our standard of living because we've borrowed from the future and sent cash (our future earnings) to every sweat shop based in emerging markets. The hope is they will return the favor and start consuming our goods, services and resources, but that doesn't seem to be happening as export data shows, emerging and developing market consumption has stalled. Why? Because i) BRIC nations are exploiting and buying from poorer nations such as Africa and South America, as we did to them ii) we have nothing to sell them because we don't produce any they want iii) our dollar is over-valued and uncompetitive while rates are too low, allowing us to buy more goods and services from abroad. Ever notice how the price of those tools sets in your weekly Crappy Tire flyer keep declining?

The underlying problem to why we can't restore equilibria, is simply the fact that central banks have intervened in currency markets, i.e., floating exchange rates, pegging currencies. You can't have globalization with two superpowers on different exchange schemes, whereas one is on a floating rate and the other pegged with a tradable bandwidth. This is highly unstable (Mundell 1961) as global data is now beginning to show that we are actually de-globalizing.

Just look at the change in GDP per capita or the percentage of people living on less that $2/day in China, India, Indonesia and Brazil, and you don’t even have to bother with the rest of the world.

As Jim O'Neill noted on many occasions, to paraphrase: percentage is one thing, size or amount is another. Do you know how many new credit cards were issued in China in 2012 from 2011? 54 million. Canada's population is 35 million.

So where does that leave us now? What are we to do? Keep flipping houses to each other and inflating stocks hoping for a trickle down effect that's already proven to be ineffective? Eventually, at some point, central-stimuli withers away as the real economy takes its toll on incomes and profits. Now what do central banks do when rates are at ZLB?

All in all, no matter how much central banks print, market cycles will prevail, and that means more major crises ahead.

#104 Nemesis on 10.09.13 at 1:57 pm

@Ronaldo/#97…

Just between the two of us, Ronaldo – I am reliably informed that HM is still labouring under the misapprehension that it’s actually all hers… [WoeBetide any Knave of ThreadNeedleStreet’s OldLady obliged to inform her otherwise]

@Jess/PriorThread

Great paper. You may well enjoy this:

http://tinyurl.com/l7newda

#105 Bob on 10.09.13 at 1:58 pm

#98 young & foolish – “Exactly! Most people can’t or won’t invest well on their own, so they need help. And of course, good help is hard to find, and when you find it, it’s usually expensive. Most people yearn for an understandable, and predictable cash flow, not incomprehensible assets which require management (buying, selling, rebalancing, etc.). It’s why GICs are so popular, and why so many TFSAs sit under invested. And also why so many folks buy RE as an “investment”
—————————————————

My thoughts exactly. If it takes an “advisor” to make you a 6% return on your portfolio, then you have to pay 1% for advisory fees and some taxes – the amount is a lot less. Net-net it’s probably below 5% to you. Instead of a percentage of your portfolio (1%), it would make more sense if advisors only took a percentage of the gains for specific performance. Most clients would then feel OK about surrendering some money that was gained and it would be in the advisor’s interest to make a little more for their clients. I just think a better fee method would be correlated to performance or lack there of. Maybe a sliding scale fee schedule.

#106 Devore on 10.09.13 at 2:11 pm

#17 Chickenlittle

“Use common sense.”

Easy for him to say. Common sense, a precious commodity. Outside the people who know what they’re talking about, “common sense” says “buy as much house as you can afford”, where afford = how much can you borrow.

Garth says amateurs should not be doing their own investing, and he is right. But amateurs are doing that, and everything else. How does someone look after their own financial well-being, when they don’t know what they’re doing? He laughs at the Jar Lady, but the things she is teaching are truly, honestly, mind blowing revelations to the people on the show.

Of course David Chilton, Garth, and most of us know these things, we know just because the bank will lend us X amount of dollars that that’s probably not a good idea to do. It is very clear that the common sense and the obvious is neither common nor obvious.

#107 Devore on 10.09.13 at 2:17 pm

The Brits are just having their own run at The Ownership Society(tm). It will work this time, because it is different there.

#108 Buy? Curious? on 10.09.13 at 2:21 pm

Ah, Smugness. How distinctively Canadian. Here is Canada telling the UK how to do things, how cute? Awww! “You’re a big player on the world stage! Oh yes, you are!” Shouldn’t Canadians be busying themselves with Sri Lankan Human rights or Brazilian adult entertainment instead what the housing market in the UK is doing just because the Head of the Bank of England is Canadian? Talk about catty Ex’s? Is this real Housewives of Ottawa?

http://www.youtube.com/watch?v=H5eL_q-SwCU

#109 Holy Crap wheres the Tylenol on 10.09.13 at 2:24 pm

Many investors who bought units intending to flip them on completion, or rent them out for a few years, have also been shocked to find they thought they had pre-approvals, but they are no longer being honoured in the wake of tighter lending rules imposed by Ottawa.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Not only the tightened lender rules but also they better be on the watch for the CRA.
Jim Flaherty announced earlier this year that his government was taking a closer look at loopholes and tax cheats — hoping to shrink its deficit in the process.
One of the issues attracting the attention of the CRA is assignment clauses, where one person agrees to purchase a condo before it is built but ultimately sells his or her right to buy that condo before the building is even registered.
Builders usually collect a fee for that privilege but ultimately when title is registered at the land registry office the original purchaser’s name is nowhere to be found. While most builders are unlikely to voluntarily supply a list of properties in their building that were assigned, they could be forced to cough it up if they are audited by the CRA. Those people who have assigned their units to another buyer are going to be hard pressed to prove they planned to use the unit as an investment property rather just flipping — meaning the CRA is highly unlikely to allow them to count money made at the lower capital gains rate.
“If you keep assigning property then it is not capital gains, that’s trade and that’s income,” if you do it a “couple of times” and it’s income. “Of course, that’s part of what they are investigating.”
The warning to people flipping property and thinking they can get away without reporting the gain is pretty clear. “We live in the information technology age,” the CRA are not dummies. The CRA may actually start auditing builders for this info. They employ quite a few greenback trackers that are relentless. The CRA is tracking down the tax evaders as revenue drys up from the economic downturn.

#110 Ralph Cramdown on 10.09.13 at 2:41 pm

#103 Canadian Watchdog

Good points, Watchdog. Obviously, the combo of China and USA is too big to be an optimum currency area. China’s peg does look in some ways like the old mercantilism (you buy our stuff, we won’t buy yours) of 200 years ago, with the difference that China isn’t being paid in gold, but US treasury bills. If the peg can’t hold forever, I guess it won’t. Germany is doing the same thing to Greece, keeping the Deutschemark artificially low against the Drachma. Six months ago the panic was of currency wars, and a year ago it was Grexit. Six weeks ago it was emerging markets asking the Fed not to taper so fast, and this week it’s defaulters in Congress. Look on the bright side: 30 years ago it was that the Russkies were going to roll 3,000 tanks into West Germany, and NATO would respond with battlefield nukes.

What are we to do? Keep flipping houses to each other and inflating stocks hoping for a trickle down effect that’s already proven to be ineffective?

Well, I don’t know what Canada’s plan is, short of waiting for another commodity boom. Having a housing bust when trading partners are slowly recovering has to be better than busting at the same time as everyone else. We’re not going in much for industrial policy to create national champions, preferring more of a laissez-faire approach. Class warfare doesn’t seem to be in the offing judging by the tepid reaction to the Occupy movement on both sides of the Canada/US border.

#111 2CntsCdn on 10.09.13 at 2:49 pm

Of course Carney’s new UK policies and advice will sell over there ….. it hasn’t officially ended badly here yet. Dept (by country or individuals) doesn’t seem to bother policy makers … and as long as the short term is looking up … you have a job.

#112 HD on 10.09.13 at 3:09 pm

@ #106 Devore on 10.09.13 at 2:11 pm

Correcto Mundo!

Nicely put.

Best,

HD

#113 Form Man on 10.09.13 at 3:11 pm

#102 Ralph Cramdown

thanks for being a continual source of sane reason among the numerous nutjob lunatics who post comments on this blog

#114 Devore on 10.09.13 at 3:21 pm

#97 Ronaldo

Makes you wonder why they bother even mining the stuff doesn’t it?

People are willing to pay for it, hence there is demand. Econ 101. Not magic.

Before you answer with the obvious, please note I can name dozens of pointless goods and services off the top of my head that have no reason for existence other than “because people want it”.

#115 Suede on 10.09.13 at 3:52 pm

Seriously though,

What’s going on in Syria? It’s not on the news anymore so how am i supposed to be told what to think?

Oil is back to $100

#116 Westernman on 10.09.13 at 4:41 pm

Form Man @ # 113
Shouldn’t you be out at your Kelowna “site” directing your vast far flung construction empire ….
Now go ahead and tell me how important you are – hahahahaha

#117 ponerology on 10.09.13 at 4:43 pm

And here I thought pyramid schemes were supposed to be illegal…

#118 Smoking Man on 10.09.13 at 5:18 pm

#82 Holy Crap Wheres The Tylenol on 10.09.13 at 10:19 am

Read Smoking Mans Blog yesterday. Wow is all I have to say. They say my generation took way too many mind altering drugs back in the 1960′s.Smoking Man this is for you.

…….

Yes I see I had a hit last night that was you :)
Nice poem by the way.

Wish I could post more there and here but I’m exhausted, grasshopper new business, tax farm duties, book writing. It’s to much.

Hopefully I get some good rest on weekend Fri and Sat at my favorite hang out.

Got a theme for a good post.

#119 Spiltbongwater on 10.09.13 at 5:19 pm

DELETED

#120 jess on 10.09.13 at 5:44 pm

nemesis

http://givingpledge.org/

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

#121 TGM on 10.09.13 at 5:48 pm

Out of 5 homes I was looking at that were conditionally sold within the last 30 days, 3 have been put back on the market due to the buyers not getting financing, according to my agent.

The homes were sold in the $2 to $2.5 million range.

Is this some sort of epidemic? Should I offer less since my financing is rock solid?

#122 don on 10.09.13 at 5:51 pm

Hi Ralph Cramdon I think history will eventually show that central bank intervention has simply compressed and supressed risk but not removed it. We have traded more frequent debt clearings for systemic risk.

#123 Mister Obvious on 10.09.13 at 6:09 pm

#114 Devore

“…I can name dozens of pointless goods and services off the top of my head that have no reason for existence other than “because people want it”.
————–

Miley Cyrus?

#124 Mister Obvious on 10.09.13 at 6:26 pm

#105 Bob

“…it would make more sense if advisors only took a percentage of the gains for specific performance.”
————————–

No it wouldn’t. You are expecting advisors to assume risk that rightfully belongs to the investor.

You pay a good advisor to limit risk, engineer gains, and mitigate losses over the long haul.

It’s business. It’s not like a parental arrangement where you get let off the hook if things go south out in the real world.

#125 Thoughts on 10.09.13 at 6:43 pm

TGM what area are those houses in?

#126 Form Man on 10.09.13 at 6:52 pm

#116 westernman

greetings !

Indeed I am sitting in my office at the Kelowna site as I type this. It is a sunny warm day in the Okanagan and I have a spectacular view of the lake from my desk. We have no openings for you here westernman, but there is Saskatchewan……….

#127 CrowdedElevatorfartz on 10.09.13 at 7:01 pm

@#81 Colonial slave

Yes, unfortunately, that IS my name.
I come from a proud family line of Fartz ( German or germane I cant remember which).

Anywho, I cant be bothered to listen to “experts” such as Bill O’Rielly on another conspiracy theory.
There’s too many to follow.
Just tighten the tinfoil hat and deep the bunker deeper.
You’ll be ok

#128 CrowdedElevatorfartz on 10.09.13 at 7:07 pm

sorry Colonial slave …..
I meant to say “dig the bunker deeper” but the NSA hacked into my reply to try and find your address…….and it caused a spelling glitch.
The drones are circling as you read this :)

#129 TurnerNation on 10.09.13 at 7:12 pm

Crowded elevator, no I don’t believe that. Look a little higher. I believe it’s all about business and warring elite families

In today’s Bloomberg:

“Billionaire Masayoshi Son, Japan’s second-richest person, mounted an attack on the next wealthiest, Hiroshi Mikitani, wiping out a combined $4.3 billion in their companies’ market values. ”

http://www.bloomberg.com/news/2013-10-08/billionaire-son-takes-on-mikitani-s-rakuten-in-e-commerce-war.html

Imagine the above on a *worldwide* scale – it’s as if they hold fire sales now and then. Sept 11th (from House of Saud?), GFC of 2008. And sundry other wars/conflicts.
A great time to scoop up our assets for pennies on the dollar, to them.

In the end there’s no us and them. Just off the top of my head, who owns Harrods? Who was Princes Diana last dating?
Another line: Jackie Kennedy (all three Kennedy alpha males were ended – aka stop scion) married greek Onassis. Prince Phillip is Greek. Also as per Wiki one or two of his sisters married high ranking nazis.
There no us and them, only a few families, fighting.
http://en.wikipedia.org/wiki/Princess_Sophie_of_Greece_and_Denmark#First_marriage

British Empire is stronger than ever. They made new a country, in 1948 for goodness sake.

#130 TurnerNation on 10.09.13 at 7:16 pm

#90 rss reader

Stop posting from the PMO’s office then. :-p

#131 Doug in London on 10.09.13 at 7:23 pm

So now Mark the Western Fair Carney has finished sabotaging Canada’s economy, he’s now off to do the same thing all over again to The U.K. So I wonder, what terrorist organization does he work for?

You poor Brits don’t seem to know what can of worms you just opened up. That’s too bad, I took you for being smarter than that.

#132 Bob on 10.09.13 at 7:28 pm

Wow this inflated home thing is really getting serious now. Your Boomerang adult children living in your house – because they can’t afford one themselves – can’t have sex there.

http://www.theglobeandmail.com/globe-investor/investment-ideas/lets-talk-investing/20130905theglobeandmailctmchristinanewberry3houserulesforadultchildren720p3000kbpsmp4/article14709714/

#133 Canadian Watchdog on 10.09.13 at 8:06 pm

#129 TurnerNation

That’s not surprising in an economy competing to the bottom. Wait until Yellenomics meets Abenomics.

#134 CrowdedElevatorfartz on 10.09.13 at 8:35 pm

@#129 TurnerNation.
British Empire????????
Nah,
James Bamfords expose ‘The Shadow Factory” spells it alllllllllll out……..

The book was written for Colonial Slave Debt…….

#135 Westernman on 10.09.13 at 8:54 pm

Form Man @ # 126
I nailed it right on the head again, didn’t I?
If you are going to B.S. like that you have to expect to be called on it now and then…
Let me translate your statement for the layman…
You are almost horizontal in your worn out lazyboy recliner watching PGA reruns on your T.V. working on your second 12-pak and you are imagining you are in the Okanogan…

#136 Nemesis on 10.09.13 at 9:10 pm

@Jess\#120

Ah yes… ‘NoblesseOblige’, the ‘gift that just keeps on giving’. So to speak.

In actuality, it rather works like this:

http://mobile.bloomberg.com/news/2013-09-12/how-wal-mart-s-waltons-maintain-their-billionaire-fortune-taxes.html

More to the point; NiceOne! Re: “TheRaft”. Sadly, TheLouvre remains but a BucketList imperative… For now. HM did treat me to a SlapUp graduation luncheon in Boulogne-sur-Mer, however. Deauville is another story.

#137 :):( Ying Yang on 10.10.13 at 10:06 am

Smoking Man you can speed up the literary process for your book if you use the infinite monkey theorem.
My brother said since you are a programmer then you could create an algorithm and create a program to complete your book.
The infinite monkey theorem states that a monkey hitting keys at random on a typewriter keyboard for an infinite amount of time will almost surely type a given text, such as the complete works of William Shakespeare.
In this context, “almost surely” is a mathematical term with a precise meaning, and the “monkey” is not an actual monkey, but a metaphor for an abstract device that produces an endless random sequence of letters and symbols.
Hurry up we don’t have an infinite amount of time to wait for the finished product.
Just saying?

#138 Form Man on 10.10.13 at 11:05 am

#135 westernman

I guess if I were like you and had no woman, no money, no hope; I too would be an angry, petulant, tax evading hater.

Thankfully I am not.