The bad idea

cat

When an unsuspecting virgin, like Jane, buys a hipster condo for $400,000 with 5% down that mom gave her, bankers smile. Life is good. The profits will continue.

In Canada any real estate bought with less than a 20% down payment is considered ‘high-ratio,’ and must be insured against jinglemail. That’s the famous phrase coined at the height of the American real estate jam when defaulting property owners would simply put their keys in an envelope and mail it back to the banker. Then plunging real estate values were his problem.

Being a civilized people, we Canadians have taken a different approach. After letting people without any money buy absurdly expensive homes, we require the lender to be insured against the owner taking a walk. That insurance is provided by the government agency known as CMHC, which is backstopped by the taxpayers and now controls 70% of all the mortgages in Canada.

The lender then passes the cost of that insurance on to the buyers. Now Jane has to ask her mom not only for the 5% down, but 2.75% of the mortgage amount for the insurance to cover the bank (not her). In this instance, that would be about $10,500. Of course, mom will refuse because it’s a lot easier to just add tet amount to the mortgage – which is what 99% of borrowers do.

The mortgage, of course, is amortized over 25 years. If Janey were to own the condo that long, she’d pay back about twice the premium, although the bank only paid it once to CMHC. Now multiple this by roughly 100,000 transactions a year, and you can see why the banks love CMHC. If Jane moves on after three years and sells the condo to a new hipster, then another CMHC premium is generated.

So, letting people buy properties with huge leverage and little cash not only keeps the market alive, it also helps inflate real estate prices at the same time it transfers the risk for this (after all, prices don’t rise forever) squarely on the taxpayer. That’s us. These days we’re on the hook for about $560 billion in outstanding mortgages, most of them high-ratio, which simply means ‘high risk.’ Or, in technical terms, ‘holy crap.’

By the way, $560 billion is almost twice what CHMC insured just a few years ago, and not much less than Canada’s total current national debt of about $605 billion. There’s absolutely no doubt federal mortgage insurance has turned a housing boom into a gaseous mama of a bubble by removing risk from lenders. That’s why cashless young Janey can borrow funds at exactly the same rate as the 50-year-old putting 75% down. All she need do is add the CMHC premium to the mortgage principal.

Now the government is worried. F & the Peckerettes, the same guys who helped create this housing Hindenburg when they brought in 0% down payments (before thinking better of it a year later), are recoiling at the monster they’ve unleashed. Days ago the feds announced that starting in three weeks CMHC will have to pay the government a 3.25% ‘risk fee’ on all of the insurance it writes for people like Jane.

Guess what that’s for? Yup, you’re right – to build a fund which will protect taxpayers when the housing market slides into its inevitable correction, and default rates rise. The move is expected to generate about $50 million a year, and also raise mortgage costs by about a tenth of a point.

And there’s more. On Friday the new-and-improved F told reporters CMHC “has become something more grand, I think, than it was intended to be.” Duh. The agency was created after WW2 to help soldiers buy houses. Now it subsidizes and protects massive banks against the risks of a blubbery real estate dirigible it created, by jeopardizing the public. Very smart.

Even the erudite dudes at the International Monetary Fund has this one figured out. They’ve been urging Ottawa to offload a lot of this risk onto private lenders, because everybody (except the people living in this delusional country) expects the Canadian housing market to pfft.

New guidelines for mortgage insurance are being drafted now by the regulator, but probably won’t come into effect for a year. In the meantime, the feds are praying the real estate market does not swoon under the weight of record personal debt, coming increases in fixed-rate mortgages, tens of thousands of new condos and a comatose economy.

Of course, in a regular country run by people who cared about the future, taxpayers would not be subsidizing children without savings who expect nicer houses than their parents ever had, or banks that already earn a billion every 90 days. Then houses might cost what they should.

But it’s not.  Jane votes. So does her mom.

199 comments ↓

#1 CrackHead Conservatives on 12.08.13 at 6:26 pm

Crackservative F on Friday told reporters CMHC “has become something more grand, I think, than it was intended to be.”

You stupid silver spoon crackservative have ruined the economy. The GTA is littered with “for lease” signs as mom and pop close down. Even big companies are saying bye bye you crack smoking Canadians we will go pay USA workers 50% less. Good job you CRACK head Crackservatives back stopping $600,000,000,000.00 of the taxpayers money. That is so conservative…lol more like CRACKservative.

#2 Raven on 12.08.13 at 6:30 pm

CMHC a program run way beyond its mandate!

Why wouldn’t the underwriter of our mortgages to us not set the total market at what has been the long term average for homeownership to income?

Obviously a lot of people have fudged income or down payments sources. The numbers in income to average house prices show an impossible imbalance.

Interference in Capitol markets and rate manipulation can condence spending into a shorter time frame and play itself out painfully through gut wrenching deleveraging.

“When I can look life in the eyes, grown calm and very coldly wise, life will have given me the truth, and taken in exchange ……..my youth.

#3 Shawn on 12.08.13 at 6:30 pm

HOW TO LOWER CMHC’s risk

CMHC is at risk if borrowers can’t pay their mortgages.

That will be widespread only if:

1. There are widespread job losses, or

2. Renewals are at much higher interest rates.

The government has many programs to prevent the first and has had good success.

As to the second, it’s easy to take that risk away.

Simply encourage a system where mortgage rates can be locked in at today’s low rates for 25 years. Banks can’t directly offer that since they fund mortgages to a good extent with short-term deposits.

With securitization, investors are perfectly willing to take the interest rate risk. They may not want to take the default risk so CMHC may have to keep that. But such risk will then only come from job loss not interest spikes as homeowners would be able to lock in.

It may require that mortgages no longer become open after five years.

People should only lock in for 25 years when interest rates are low like now (unless it includes the ability to get a lower rate if rates fall which is still the system in the U.S.).

I do not necessarily espouse the U.S. solution which allows all mortgages to be effectively open for renegotiation at all times. That is okay if the investors will agree to such nonsense but we can’t let CMHC hold that risk.

Simple solution. What is F waiting for?

Even today when the U.S mortgage system has apparently been fixed, Americans can get 30 year locked in rates at rates about the same or lower than our five year rates. AND they are free to pay off the mortgage anytime they want!! It may be that investors are the one’s taking all of the interest rate risk. Canada must and should study the good aspect of the American system.

Simply pointing out that the American system failed in 2007 is not an adequate response. It may be that a great system got a out of control in 2007 that does not mean it is not a great system at heart.

#4 unbalanced on 12.08.13 at 6:35 pm

Bubble, bubble were in trouble!

#5 KommyKim on 12.08.13 at 6:41 pm

New guidelines for mortgage insurance are being drafted now by the regulator, but probably won’t come into effect for a year.

So can we expect another stampede to buy a house before the rules change?
One last gasp (we hope) as the gasbag continues to inflate?

#6 Herf on 12.08.13 at 6:47 pm

Is “new-and-improved F” sort of like the new “new-and-improved” Coke (i.e. Coke Zero (“0”))? i.e. “F-0”? (Along that train of thought, is an “F-0” the same (or worse) than an “F-“?).

#7 Chickenlittle on 12.08.13 at 7:07 pm

Crackhead Conservatives?

What about that Justin Trudeau?
Now there’s a gas bag almost as big as the housing market.

Do you really and truly think JT would make better decisions?

#8 pinstripe on 12.08.13 at 7:14 pm

Q. Who is the smart one?

A. The person who purchased a house with the minimum amount of money possible to close a deal. The consequence for this person is minimum with no risk whatsoever.

F and the peckerettes are able to reward the spenders and punish the savers. There are more votes from the spenders.

#9 Godth on 12.08.13 at 7:17 pm

Enough of this doomer nonsense. The debt has to keep doubling or this whole game is kaput. C’mon Canadians get out there and spend like there’s no tomorrow, borrow until you burst and then borrow some more. We need to save our way of life, our financial system demands it. This is a call to action! Spend, spend and spend some more. Just imagine how good the GDP will look!

#10 pinstripe on 12.08.13 at 7:18 pm

#7 Chickenlittle….

Do you really and truly think JT would make better decisions?

———————————————————–

Nope. Same strings different puppet.

#11 Bottoms_Up on 12.08.13 at 7:20 pm

If we had stayed with 25% downpayments, 25 year amortizations, and qualifying people based on their credit worthiness, real estate might be about 1/2 the value it is now. Ownership rates might be around 60%….the size of LoCs would also be much less….homeowners wouldn’t feel and be quite as ‘rich’…the economy would have faired worse over the past 10-15 years…..but we’d be in a much more stable environment then we are in now.

#12 T.O. Bubble Boy on 12.08.13 at 7:26 pm

@ #7 Chickenlittle on 12.08.13 at 7:07 pm
Crackhead Conservatives?

What about that Justin Trudeau?
Now there’s a gas bag almost as big as the housing market.

Do you really and truly think JT would make better decisions?
——————————–

I would hope that he delegated to people who seem to know what they are doing, like Paul Martin / David Dodge for Chretien.

F’s biggest problem is that he’s just winging it, and seems to be in a constant flurry trying to cover up past mistakes with new ones.

#13 recharts on 12.08.13 at 7:38 pm

I did not realize that the new post is already here

#162 recharts on 12.08.13 at 7:31 pm
#157 T.O. Bubble Boy on 12.08.13 at 5:29 pm
@ #147 recharts on 12.08.13 at 1:52 pm
#139 T.O. Bubble Boy on 12.08.13 at 11:23 am
There is nothing to be gained and much to be lost by placing barriers to foreign investment in Canada. — Garth

Agreed…

Any particular reason for that?
————————————

In general, if your economy is seen as protectionist/government-controlled, less of the world will want to do business with you.

In my opinion, the natural resources “crutch” has limited Canada’s ability to create sustained, meaningful companies on a global scale. Yes, we’ve created Blackberry and Nortel and Lulu Lemon and the Big 5 banks and Thomson-Reuters, but where does Canada LEAD the world? Yoga Pants? Mortgage Lending?

At the very least, the Canadian Government should be *CLEAR* on our protectionist policies. Maybe we want to protect water and oil — that’s fine, but stop pretending that we’re open for business in those areas.

I can see how the Norway model would be a great idea for Canada (nationalizing oil, and investing the proceeds), but you have to be “all in” on that type of movement… the one-off decision making that allows Nexen to be sold to China but vetos every other investment is just silly.

Hold on hold on ! I think you lost it.
What do the above have to do with restricting foreign investors from speculating on the RE market ????
If I am not wrong that is exactly what I was saying above. Fence them in regards to RE, them buy ‘a house’ (not houses) after they invested in other sectors…

#14 Joseph R. on 12.08.13 at 7:39 pm

Someone, the other day, was complaining about Garth’s lack of cat pics. I hope you are happy now!

#15 Steven on 12.08.13 at 7:47 pm

That insurance is provided by the government agency known as CMHC, which is backstopped by the taxpayers and now controls 70% of all the mortgages in Canada.

This is why radiation monitoring in canada is shut down and or kept secret. If real estate is radioactive it ain’t worth jack and the CMHC and the government takes a loss along with the rest of the real estate cultists.

It is all about money and power! Maintaining public ignorance is good for politics and business.

#16 Chickenlittle on 12.08.13 at 7:54 pm

#12 TO Bubble Boy:

Hopefully JT has cranial capacity to figure that out. He just seems to live in an alternate universe.

#17 Chickenlittle on 12.08.13 at 7:54 pm

*has the

#18 Canadian Watchdog on 12.08.13 at 7:55 pm

The $560B is a misnormer. Canada's MBS market has grown significantly over the last few years, now accounting for a whopping $399B on top of CMHC's $560B. MBS guarantees is a program and liability of the Government of Canada, although it is booked on CMHC's balance sheet, it gives CMHC the right to say "that's not our liability", when CMHC is still the government. At least in the public's view.

$559,800,000,000 – CMHC Mortgage Insurance-in-force $559,800,000,000
$399,000,000,000 – Government of Canada (CMHC) Guarantees-in-force
$309,650,000,000 – Genworth Insurance-in-force (only 90%)
Taxpayer backed liabilities: ~$1,268,450,000,000

How many times can one be duped over and over again?

A higher premium? Sure, just like F charged Genworth (General Electric really) a higher premium last year — in exchange — Genworth would receive a $50B IIF limit increase and have all  collateral held in the Canada Guarantee Fund returned (to pay for the premium?). In other words, taxpayers earned a few extra beeps in exchange for a even more liabilities and holding, well, nothing on collateral.

Nothing will change. This is all political posturing to look prudent before elections.

#19 Robert on 12.08.13 at 7:58 pm

This whole charade was cooked up by Harper and Flaherty to goose the economy so they could win a majority (which they did). With the connivance of Carney, the Canadian housing market was transformed into a property Ponzi, nothing more. With CMHC as a Judas goat they pimped our economy using excess credit and loose lending. Conservative, hah.

#20 Shawn on 12.08.13 at 8:03 pm

REALLY?

Pinstripe at number 8 said:

A. The person who purchased a house with the minimum amount of money possible to close a deal. The consequence for this person is minimum with no risk whatsoever.

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

Right because it’s not like the borrower on the hook for the entire mortgage is it? Oh yeah, it IS like that.

Contrary to what seems to be the view on this web site, the financial risk is in proportion to the full value of the house, not to the mortgage and not to the equity.

We don’t have jingle mail in Canada, not without bankruptcy at least.

I know if I lose $200k on a house, I lose $200k. For me the risk does not really change at all if I have a low down payment versus no mortgage (100% down payment). I am on the hook for $200k either way.

It does not and it never did matter (to your risk) how much equity you have in real estate. As long as you are on the hook for the full mortgage your risk is proportional to how much house asset value you have.

You cannot lower your risk on a million dollar house purchase by making a small down payment. Not without jingle mail.

#21 Wide Awake Voter on 12.08.13 at 8:09 pm

#7 Chickenlittle on 12.08.13 at 7:07 pm Crackhead Conservatives?

What about that Justin Trudeau?
Now there’s a gas bag almost as big as the housing market.

Do you really and truly think JT would make better decisions?
++++++++++++++++++++++++++++++

Better than Mulcair. He wants to sign Canada up to giving $$BILLIONSS in “Climate Reparations” to corrupt pinhead Third World Dictators, the UN and eco-commie groups.

Why? Because the Industrial Revolution started in England in 1758.

I’m sure that on Planet NDP and on Planet Green Party that makes wondrous sense, but in the real world? Not so much.

#22 happity on 12.08.13 at 8:12 pm

Chmc debt load is pfft next to the hundreds of trillions of interest rate derivatives that have no regulation and are off balance sheet.

These derivatives are Vegas style bets on guess what, mortgages of course among others.

When mortgages can’t be paid, what happens to the derivatives? They collapse along with the institutions holding them. Why?

Because the collateral, the tangible asset, has been leveraged into insignificance.

So who’s really gonna pay for cleanup?

#23 Mark on 12.08.13 at 8:18 pm

Most financial people, if they were told of what CMHC does without telling them that its actually CMHC, would call the loans they guarantee, “subprime loans”. After all, the loans themselves are so crappy in quality that they’re not eligible to go onto banks’ balance sheets as prime assets.

Yet when you use this line of facts around the Realtor crowd, they basically go ape-shit, as though one has committed a sort of cardinal sin, of pointing out that most buyers these days are so un-creditworthy, judged to be so risky by Canada’s banking system, that the lenders refuse to have anything to do with them without the government’s subprime mortgage insurance.

Every so often, there’s a Realtor, or, heaven forbid, a Conservative MP who has the audacity to claim that CMHC actually is a tax on Canadian homebuyers. Quite the opposite, it is a giant subsidy! After all, no other industry in Canada has $900B of loan guarantees against its subprime debt. The real question is how much will this cost to bail out? $100B? $200B? Most government loan guarantees are ultimately exercised at least to some extent.

#24 Derek R on 12.08.13 at 8:19 pm

Okay, that was weird. I just went into a candy store in Canmore, AB and found a notice on the till saying “We accept BitCoin”. Guess it is a currency after all.

#25 Mark on 12.08.13 at 8:21 pm

#11, “the economy would have faired worse over the past 10-15 years”

I disagree. The excesses of the tech bubble would have been liquidated, and capital would have been available to build up sectors that were naturally worthy of economic merit. Some of this would have been housing. But some of this would have been in other sectors. The housing bubble, largely induced by the CMHC’s $900B of loan guarantees, has certainly helped Canadians working in the FIRE sector, but it has left many Canadians with no nexus to the FIRE sector with very weak job prospects and generally a relatively weak economy.

#26 Smoking Man on 12.08.13 at 8:26 pm

#21 Wide Awake Voter on 12.08.13 at 8:09 pm

You get a 10 tonight…. Perfect

#27 bentoverandpayingmytaxes on 12.08.13 at 8:28 pm

I think they’re hoping that ‘the jinglemail’ will be merely a continuum of the slow steady trickle of bankruptcis that already exists. But won’t this trickle become a deluge with rising unemployment and increased taxes?

The turgid language of government has confused the citizens….as always….thats why none of the IMF’s warnings are ever heeded. Isn’t thats what happened when Manitoba went tits up in the 80’s and Martin Liberals had to offload the national debt onto the provinces in order to ‘balance the budget’?

Todays National debt is the amount amassed since then….the real threat to taxpayers is the provincial, city and municipal debts that will cause user rates and prop taxes to blast stratospheric if interest rates go up and local bonds to sink below junk. Is this why we have to fund new infrastructure with new taxes and why we can’t sell new debt to strangers into the market for dams and bridges…are we the dumb money?

I got my 2-1 split at TD Bank this past week…..the banks have been smart to offload the risky CHMC debt onto the gullible taxpayer…..they have spent the profits wisely buying south of the border…..which is why I will buy more bank stock after the split in January…..TD Bank is what I’d consider as a well balanced and liquid portfolio……1800% over 20 years…plus the dividend….why buy anything else.

Of course thats simplistic….but lok at the increasing cold weather on the east coast to induce traders who primarily live ther to bid up oil and gas prices….stocks will follow….. I’ve been buying and collecting big dividends for several years along the bottom…..foolish me to buy low eh? Al Gore and global warming…really….what the hell were you thinking?

#28 Jingleballs on 12.08.13 at 8:33 pm

So if I’m underwater and insured by CMHC can I just walk and let the bank collect the insurance? If yes, why would anyone ever put any more than 5% down?

The bank is insured. You are uninsured. If you walk, you will be sued. — Garth

#29 AisA on 12.08.13 at 8:41 pm

Some of Y’all don’t quite get it yet… praying for a dip and all so you can jump in… Let it ride man, let it ride. I hope prices never come down. At this rate I already kiss my rent check before I drop it in the deposit box.

The alternative? Like I said, I give my rent check away with a kiss at these prices.

#30 Godth on 12.08.13 at 8:52 pm

#18 Canadian Watchdog
Good work. Now we have a target number to double on our debt drive. C’mon pigple, we can do it – consume on credit! We can go higher, the Dutch are beating us – the Dutch! We liberated them and now they’re making us look like pu$$ies! Go Canada Go!
#21 Wide Awake Voter
Don’t be such a crepehanger. We need a pay to pollute scheme so only the largest corporations can afford to pollute. They’ll lift the third world up by creating jobs you ding-dong. As a big plus a whole new financial market will be created. Think of the leverage man! My portfolio will explode!

#31 Daisy Mae on 12.08.13 at 8:52 pm

#2 Raven: “When I can look life in the eyes, grown calm and very coldly wise, life will have given me the truth, and taken in exchange ……..my youth.”

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

Beautiful. Thanks!

And what a blog, Garth — forwarded this to all my contacts ’cause they need to read this, dammit!

#32 NetCentric on 12.08.13 at 9:01 pm

Garth is there anything to add re how NHA Mortgage Backed Securities fit into this?

cmhc-schl.gc.ca/en/hoficlincl/mobase

#33 Bottoms_Up on 12.08.13 at 9:02 pm

#28 Jingleballs on 12.08.13 at 8:33 pm
———————————————
You see how awesome CMHC is? You have to have it with “low” down payments, you have to pay for it (twice over if added to your mortgage), yet it protects the bank and not you.

What a wonderful world we live in.

#34 Daisy Mae on 12.08.13 at 9:08 pm

#12 TO: “I would hope that he delegated to people who seem to know what they are doing, like Paul Martin…”

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

I really liked that man. He also had us in the black. What a shame….

#35 Bottoms_Up on 12.08.13 at 9:10 pm

#146 World According To Garth on 12.08.13 at 1:50 pm
———————————————————
That’s why it’s called ‘climate change’ and not ‘global warming’. Climate change is much more accurate, as some places get colder and some get warmer.

ps. the sun is going through solar cycle 24 and recently came out of a minimus of flares/sunspots…which obviously affect the weather here on earth:

http://en.wikipedia.org/wiki/Solar_cycle_24

#36 Ben on 12.08.13 at 9:11 pm

Garth – I’ve posted a few times here about the parallel with the UK. You are behind us (lucky you as the UK is ahead of the game in getting worse).

You are now at the stage where the govt knows it has to deflate the bubble but the economy is tied to the fortunes of credit creation via mortgages. So instead of pulling the rug from under buyers they try to deflate the real cost of housing whilst keeping nominal levels stagnant to avoid negative equity and a collapse in consumer confidence.

So next the state will try other ways to pump the housing market. Keeping rates low with some QE equivalent perhaps.

All this will further damage the wealth generating part of the economy as rents remain high and wealth is leeched off by the non-productive housing sector. The govt will then double down and try harder to achieve a soft landing as they will now have painted themselves into a corner. At this point they will be walking a tight-rope every day and an external event (US taper) will push up rates regardless and then: BOOM

#37 Ben on 12.08.13 at 9:12 pm

Jingleballs – you can’t walk. That’s why US housing collapsed in some states, they could walk.

In countries where you cannot walk the crash will be slower.

#38 Observer on 12.08.13 at 9:19 pm

3 Shawn on 12.08.13 at 6:30 pm
===============
Very good shawn, why don’t the government step in and allow 100 year at 1%.

You don’t think the hedge fund and all the financial institute will clue into that and borrow like heck.

Its simple Government should not be stepping in. CMHC should tell the banks they have to pay if the loans were lent out on some fraudualant premises. Or if they were preditory lender.

The people borrowing the money should not be able to default and put into work camps to pay off their debts. (children included). If they don’t like it (no soup for you!!)

#39 mark on 12.08.13 at 9:20 pm

OMG the look on that cat’s face!

#40 totalinvestor.com on 12.08.13 at 9:27 pm

#28 “The bank is insured. You are uninsured. If you walk, you will be sued.” — Garth

OK, but if you lose your job and have no assets what good will it do the bank to sue you?

#41 John Prine on 12.08.13 at 9:37 pm

#7 Chickenlittle on 12.08.13 at 7:07 pm
Crackhead Conservatives?

What about that Justin Trudeau?
Now there’s a gas bag almost as big as the housing market.

Do you really and truly think JT would make better decisions?
_____________________________________________

Justin may be better off hanging around in night clubs but he had little to do with the mess we are in now.

#42 conan on 12.08.13 at 9:38 pm

Hi Garth, Any more cat pic stories coming? Is this going to be a series? Like bad idea cat, good idea cat, awesome idea cat?

#43 Waterloo Resident on 12.08.13 at 9:42 pm

Traveling between Newmarket Ontario and Guelph Ontario I have noticed a rather HUGE increase in the number of new ‘FOR SALE’ signs. These are multi-million dollar acreages for sale, not small houses. These are places that sophisticated investors buy and they know which way the market is soon to be heading. Sort of like the ‘CANARY IN THE COAL MINE’ thing. If those guys are selling, then it’s a fair bet that soon, in 2 or 3 years time from now, the average guy will be starting to sell in mass too.

#44 Canadian Watchdog on 12.08.13 at 9:42 pm

With securitization, investors are perfectly willing to take the interest rate risk.

Only that investors are not perfectly willing to take on risk. This is an illusion stated very clearly in FSB's latest shadow banking report. To wit, Canadian and other national banks who are in desperate need of cash have now resorted to "self-securitiizing" to clear balance sheets:

Global Shadow Banking Monitoring Report 2013

The numbers for OFIs presented in sections 2 to 4 of this report include all financial assets of Structured Finance Vehicles (SFVs), regardless of who holds the securitised products. However, in a number of jurisdictions, some of these products are returned back onto the balance sheet of the bank that originally provided the asset to be securitised. This so called self-securitisation, or retained securitisation, is defined as those securitisation transactions done solely for the purpose of using the securities created as collateral with the central bank in order to obtain funding, with no intent to sell them to third-party investors. All of the securities issued by the SFV for all tranches are owned by the originating bank and remain on the bank’s balance sheet, so that third-party investors do not own any of the securities issued by the SFV. These assets should not be included in the shadow banking figure, as prudential consolidation rules consider them as banks’ own assets and as such subject to consolidated supervision and capital requirements.

An important refinement of the interconnectedness analysis undertaken in this year’s exercise was the identification and subsequent exclusion of self-securitised assets. Jurisdictions in which self-securitisation takes place were asked to provide data on the amount of banks’ retained securitisation. Six jurisdictions (Australia, Canada, Italy, Netherlands, Spain, and the UK) submitted the relevant data, showing that the amount of self-securitisation summed up to $1.2 trillion in at the end of 2012 (Exhibit 5-1).

How comfortable should Canadians feel about being on that list of countries? Very uncomfortable. Because while many hard-headed analysts keep insisting that unemployment needs to rise in order for Canada's housing market to go bust —  the Netherlands — has shown this to be untrue, simply by proving somewhat of a "chicken or the egg theory", that when housing drives nearly one quarter of your economy — the unemployment rises after all the lending schemes falter because it is the primary driver of housing!

And that folks is why CMHC and our banks won't stop lending until they lose control, with or without central banks' accommodative support.

#45 ILoveCharts on 12.08.13 at 9:42 pm

“the move is expected to generate about $50 million a year”

So… enough to deal with 50 foreclosures in Vancouver?

I think they are going to need more than that!

#46 Tripp on 12.08.13 at 9:42 pm

@#1 CrackHead Conservatives

“You stupid silver spoon crackservative have ruined the economy. ”

Like they twisted our hands to buy sawdust glorified barns we don’t need, for reasons that don’t actually matter in life, with money we don’t have.

But hey, isn’t blaming the government convenient? It makes us look less stupid and alleviates the painful cognitive dissonance…

#47 Mark on 12.08.13 at 9:43 pm

“OK, but if you lose your job and have no assets what good will it do the bank to sue you?”

Its the CMHC, not the bank that will be doing the suing in such a scenario. And the net effect of a lawsuit would be to force a defaulted borrower to file for bankruptcy. In which case, there would be an orderly liquidation of assets and the requirement of payments to be made into the Estate prior to a discharge being made. For a first time bankrupt, the requirements are fairly modest. If fraud is involved, discharge can be significantly more difficult.

Of course, practically speaking, if there is a widespread downturn and this affects a large number of Canadians, there will be political hell to pay. Which is why I personally think the Conservatives’ days are numbered. Now what a future non-Conservative government does to the banks is a complete wildcard. The NDP, for instance, have not spoken kindly of banks and bank profits.

#48 YVR on 12.08.13 at 9:50 pm

Every so often, there’s a Realtor, or, heaven forbid, a Conservative MP who has the audacity to claim that CMHC actually is a tax on Canadian homebuyers. Quite the opposite, it is a giant subsidy!
__________________________________________

The end result is more buyers increasing home prices which cost every buyer more money. The only ones who benefit from CMHC insurance are the banks, RE industry and home builders.

#49 Godth on 12.08.13 at 9:51 pm

#38 Observer

Just how poor are you? Only the poor believe debt has to be repaid. I love it! Just keep thinking that way…you are indebted to the gods-erm banks, sucker! How will you ever repay your debt to sunshine? How much for your daughter?

We need you to take on more debt as a duty to your country! Borrow and consume for tomorrow we die…

#50 Bob Rice on 12.08.13 at 10:00 pm

Quote #7 :

“Crackhead Conservatives?

What about that Justin Trudeau?
Now there’s a gas bag almost as big as the housing market.

Do you really and truly think JT would make better decisions?”

Word! Canada’s alternatives are a joke…

#51 Hollywood on 12.08.13 at 10:02 pm

You would think a lot of people have low savings when they need to borrow from parents/friends for a down payment on a house. 5% is 20,000 on a 400k house. It is not a lot of money in the whole scheme of things but “scary” if their relying on other people to be “able” to make purchase on a house. You have to wonder if their having severe stress making the monthly payments it that is the case. One thing I wish we would of corrected at the same with the USA. Canada’s time is coming. I know people rationalize on all the positives on why house prices are high and will never look straight in the mirror and say I “think” house prices are too high in Canada because of these reasons. Also, the next 10-20 years “will” be a sideways market and lower and reality will look at the housing bulls straight in the face. I find with some people you can never sway their thinking until it happens.

#52 Waterloo Resident on 12.08.13 at 10:02 pm

Here’s another tidbit of information other fellow viewers might be interested in (it can help you a lot if you have a computer):

If anyone here had Windows XP or Vista, then maybe you used a piece of free software called ‘STEADY STATE’. It allowed users to re-set the computer back to it’s original state once they turned off their computer. This way you could surf the net without fear, get as many viruses or mess up your computer settings as much as you wanted, knowing that once you turned off your computer it would simply revert BACK to it’s original state that it was at before you made all that mess.
Well, Windows-7 changed all of that since ‘Steady State’ did not work on Windows-7.

Good news; I just found some other type of ‘Freeware’ called ‘REBOOT RESTORE RX’. It does basically the same thing. I notice that now the computer takes about 3 times longer to boot up, but that’s the only negative side-effect. After everything is up and running, i can mess my computer up as much as I want and when it reboots everything is put back to it’s original state, the same way that previous ‘Steady State’ software used to do.

So now you might wonder; Where is the ON-OFF button for this thing? Ah, that took me a bit of work to find. There is a small icon in the ‘System Tray’ (in the lower-Right corner of the screen). Right click on the ‘Reboot Restore RX’ icon and you can toggle ‘off’ the program so you can make permanent changes to your computer, then toggle it back ‘On’ later so that the computer remains the same.

I did have a massive problem when I tried to recover the computer with a previously created Image of the System; Reboot restore put the computer in an endless loop and I had to use a system recovery disc to fix the mess. I have discovered that the way to prevent that problem is to simply use ‘Control panel –> Programs and Features’ to remove the ‘Reboot Restore’ before you try to recover the computer with a previously created system image.

Yes, most people probably have never used ‘Steady State’, but for the 10% of the people who have, then this news will help you a ton. So there you go, enjoy this new freeware like I’m enjoying.

#53 Bob on 12.08.13 at 10:04 pm

the picture of a creep putting a vulnernable animal in
distress is quite offensive

#54 Waterloo Resident on 12.08.13 at 10:15 pm

Oops, the site for that freeware that will do the same as the old ‘Steady State’:

http://www.horizondatasys.com/en/products_and_solutions.aspx?ProductId=18

http://reboot-restore-rx.en.lo4d.com/

http://www.techrepublic.com/blog/windows-and-office/review-reboot-restore-rx/

#55 DM in C on 12.08.13 at 10:34 pm

Jingle balls.

You can walk in AB. It’s non- recourse.

Don’t bet on it. — Garth

#56 X on 12.08.13 at 10:39 pm

I get that the banks for the sake of the economy can’t be at risk for default, in the event of the RE market turning for the worse, and defaults occur. It is tough to have sympathy for them not making as much money every quarter, but the greater good of the economy/banking system must prevail.

I don’t get why the average tax payer has to cover the costs (bailing out CMHC) for some [email protected] who bought with 5% down, b/c his mil was nagging to do so.

CMHC needs to change to protect the average tax payer, not the average home buyer. Whether it be a premium added to the going rate, or paid up front, etc…

IMO a buyer should have 10% in the game, but the RE market can’t take that at this point, which tells you something about the RE market.

#57 Smoking Man on 12.08.13 at 10:40 pm

#53 Bob on 12.08.13 at 10:04 pm

the picture of a creep putting a vulnernable animal indistress is quite offensive.

………..

Don’t let the door hit you on the way out.
No humor what so ever. What is wrong with people.

Ever hear of photo shop..

If you think that’s offensive wait till my Xmas I hate everyone post comes out.

#58 Porsche on 12.08.13 at 10:44 pm

#28 Jingleballs
So if I’m underwater and insured by CMHC can I just walk and let the bank collect the insurance? If yes, why would anyone ever put any more than 5% down?

The bank is insured. You are uninsured. If you walk, you will be sued. — Garth
……………………………………………………………………..

During the 20% interest rate crash era in the 80’s, I walked from an AHMC condo and assumed the mortgage on a house. Never missed a beat.

#59 Bob Rice on 12.08.13 at 10:47 pm

#43 – “Traveling between Newmarket Ontario and Guelph Ontario I have noticed a rather HUGE increase in the number of new ‘FOR SALE’ signs. These are multi-million dollar acreages for sale, not small houses. These are places that sophisticated investors buy and they know which way the market is soon to be heading. Sort of like the ‘CANARY IN THE COAL MINE’ thing. If those guys are selling, then it’s a fair bet that soon, in 2 or 3 years time from now, the average guy will be starting to sell in mass too.”
_________________________________________________________

I haven’t noticed that in the GTA… There’s little inventory of SFH homes in the Toronto region and that’s part of why prices are high… families in this country don’t want to live in condos and that’s all they build here…

#60 Canadian Watchdog on 12.08.13 at 11:01 pm

CAD just hit a record low against RMB at 5.74 yuan. Chart

Your CAD investment portolio has now returned 0% YTD is yuan terms. Stil confused? That's ok. So, too, where the Germans of Weinmar when they cheered rising stocks on deterioting fundamentals and the Mark losing its value.

CPI data points are turning. Inflation will be back in 2014 H1, followed by rising rents and home prices in H2.

I’m still thinking about your gold predictions. — Garth

#61 Bob on 12.08.13 at 11:03 pm

“In the meantime, the feds are praying the real estate market does not swoon under the weight of record personal debt…”
——————————————————

Maybe someone should let Poloz know that dropping the “next rate move is up” language will only inflate the gasbag further.

#62 HAWK on 12.08.13 at 11:08 pm

In a “civilized” country, the law of the land would by definition demand all colateralized loans to be “non-recourse” forcing lenders to accept risk as an inherent part of business, not put it onto the shoulders of the smallest guy.

Well I guess Alberta, still makes the cut regarding civilization, the rest of the country………….not so much.

#63 Bargains everywhere on 12.08.13 at 11:12 pm

Yes, that picture is offensive. Never pleasant to see cruelty to animals. Looks like a junior sociopath in process.

Where is the cruelty? — Garth

#64 Herb on 12.08.13 at 11:15 pm

Ah, Justin Trudeau, the Neandercons are crying havoc and have unslipped the trolls of war. You must be dangerous to their cause indeed!

#65 rosie "moving forward" in the knowledge that, "this won't end well" on 12.08.13 at 11:18 pm

#52 Waterloo Resident.

Get a Mac. You PC guys always make me laugh.

#66 Shawn on 12.08.13 at 11:19 pm

You can’t Walk from CMHC

Number 58

During the 20% interest rate crash era in the 80′s, I walked from an AHMC condo and assumed the mortgage on a house. Never missed a beat.

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

And because of that a rule was passed that allowed CMHC insured loans to be exempt from Alberta’s no resource law.

You cannot walk away from a CMHC insured loan, not even in Alberta. (Not from competitors to CMHC either).

#67 Canadian Watchdog on 12.08.13 at 11:33 pm

I’m still thinking about your gold predictions. — Garth

Actually my call was for food and Ags, 3D printer stocks and select emergin currencies this year.

Now I know why you don't have a search button on this blog.

But I do. — Garth

#68 Freedom First on 12.08.13 at 11:36 pm

Well written Garth, you nailed it! Garth, I truly hope you don’t end up crucified.

Boomer Moms. Sad, and what a pity. I have seen so many Boomer parents do to their own Jane’s what this Mom did. And the Boomers I have seen doing it, have put their own financial future at risk, with so many different variations on this theme of prolonging their kids childhood. When a person becomes an “adult” the parent(s) are to cut the apron strings. Not doing so is harmful to the parents, and their offspring. No exception.

My observation of what I see in so many homeowners today: large mortgages with all the associated costs of buying and are too many to mention, rising property taxes, rising utility bills, helocs, loc, credit card debt, 2 car families with long commutes and high gasoline costs as well as all of the other costs that go with high mileage cars, 8 year car loans at 0%, high cell phone bills as cell phones are now a necessity for this lifestyle?, fast foods/restaurants/processed ready to eat foods/daycare, maid service, rising strata fees plus another bill for maintenance of shoddy construction not covered by strata, house maintenance.

I know I left a lot of costs out, but I can only look at insanity for so long. Is everybody happy?

If you are not happy, seriously consider following Garth’s advice. Your life will be much more enjoyable with a lot less stress. Often, people can be their own worst slave driver. Looks painful. And no one has to do that to themselves. The system will bleed you to death if you let it. Always Freedom First.

#69 Catalyst on 12.08.13 at 11:37 pm

Real Estate is soo 2005, can you do a blog about digital currencies or social media bubble (snapchat etc.)

#70 conan on 12.08.13 at 11:51 pm

Re#63 I had a cat that liked water and the look on the cats face in Garth’s pic is “ok I have had my swim, now its time for some supper” Some cats are like dogs they; like the water, like the car and stay close to the ones they love.

#71 Porsche on 12.08.13 at 11:52 pm

66

You cannot walk away from a CMHC insured loan, not even in Alberta. (Not from competitors to CMHC either).
……………………………………………………………………..

Watch them walk by the droves

#72 stage1dave on 12.08.13 at 11:53 pm

“During the 20% interest rate crash era in the 80′s, I walked from an AHMC condo and assumed the mortgage on a house. Never missed a beat.”

Unfortunately, that’s no longer possible…”assumables” died in AB Feb 08. I assumed a couple back in the 90’s & both worked out great, made a bit of cash on both when I sold.

Couple other things worth noting: when I applied for financing on a property in SK several years later, I was informed that my outstanding repayment schedule (never missed one) one both properties “didn’t count” toward my credit rating !? Turns out neither of these loans were “approved” by a recognized financial institution…hahaha.

(And yes, the bankster who told me that did so with a straight face…a true believer)

All for naught, as it turned out…I got outbid. Anyway, I did notice around this time that spending someone elses’ money was carrying a ton more weight than spending your own.

Anyway, the banks aren’t worried about “responsible financial behaviour”; they’re worried about “control”. Looking back at the 80’s & 90’s, the top executives of these institutions have picked more losers than a TV executive…or an NHL scout…or both of them put together.

(I don’t watch much TV, but I have been a Flames fan for a long time…so I know something about this)

Difference being we’re all gonna pay the price for the short sighted bubble-icious financial decisions exercised by the banks at government urging. Alas, everything is unfolding as they probably hoped it would…

#73 Barry Lainof on 12.08.13 at 11:56 pm

bentoverandpayingmytaxes
“I got my 2-1 split at TD Bank this past week…..the banks have been smart to offload the risky CHMC debt onto the gullible taxpayer…..they have spent the profits wisely buying south of the border…..which is why I will buy more bank stock after the split in January…..TD Bank is what I’d consider as a well balanced and liquid portfolio……1800% over 20 years…plus the dividend….why buy anything else.”

Good luck buddy ! With the main investors into bank stocks being the large institutional investors, why would they split a stock with a share value of less than $100/share. Maybe it’s to get the retail investor to buy as the Pension Funds sell to take care of the Boomer withdrawals. Too expensive to have the banks buy back their shares fast enough and too detrimental to equity valuations if the retail investor doesn’t step up with mass selling by the institutions (with perfect timing – economy flat or on a downward path, companies laying off staff and taxes sure to go up). Keep buying that common stock. RE rising on air, politicians spending money/taxes with little results of improving the economy, banks subject to uncertain reserve limits and budding Buffets buying equities in in ideal companies like there is no risk. This will not end well.

#74 World According To Garth on 12.09.13 at 12:03 am

Climate Change has been happening since day one. It was so warm in England 1200 years ago they grew grapes year round. There has been warm and cool periods throughout milenia and it has nothing to with car exhaust.

The tax sucking govt is just using the phrase Climate Change to suck yet more tax out of the working poor so they can pay for govt worker pensions (500 billion right now). Like the RE market this ends badly. Right Herb?

————————————————————

#35 Bottoms_Up on 12.08.13 at 9:10 pm
#146 World According To Garth on 12.08.13 at 1:50 pm
———————————————————
That’s why it’s called ‘climate change’ and not ‘global warming’. Climate change is much more accurate, as some places get colder and some get warmer.

ps. the sun is going through solar cycle 24 and recently came out of a minimus of flares/sunspots…which obviously affect the weather here on earth:

http://en.wikipedia.org/wiki/Solar_cycle_24

#75 Porsche on 12.09.13 at 12:07 am

#72 stage1dave

Unfortunately, that’s no longer possible…”assumables” died in AB Feb 08. I assumed a couple back in the 90′s & both worked out great, made a bit of cash on both when I sold.

…………………………………………………………………….

Thanks for that tidbit, I was wondering what ever happened to the assumable.

But as for walking away… try and stop people if the property they bought is worth less then half the price they paid.

You’d be stupid not to.

#76 World According To Garth on 12.09.13 at 12:10 am

Yes. It’s better to be part of your pal Harper’s Military NSA society. Say I guess that’s right up your alley. But what do you care. Your living off the avails of all the WORKING people of Canada.

——————————————————-

#64 Herb on 12.08.13 at 11:15 pm
Ah, Justin Trudeau, the Neandercons are crying havoc and have unslipped the trolls of war. You must be dangerous to their cause indeed!

#77 Yuus bin Haad on 12.09.13 at 12:27 am

Caption Contest!

How about: “I … didn’t … sign up … for this.”

#78 Entrepreneur on 12.09.13 at 12:29 am

Had a cat that would jump into the bathtub full of water…wanted to join in the fun.

Banks are a business like any other business as Mark Carney has stated. A business will do almost anything to keep afloat. With the banks working with the governmnet hand-in-hand then the banks are not called a business in my eyes. I don’t know what they are called now but when one business controls and rules then all the money is going to them and not to the economy (especially when 70% own).

We are seeing what is happening in Ontario right now, not good. A business leader would want to hear the jingle in pockets so they can browse and spend. Maybe it is time to think differently or will we all be going down (drowned looking like the cat in the photo).

I agree with #25 Mark: There are other sectors besides housing. Will add that when only one sector is favoured and profits then the picture is one-sided with no room for others.

#79 Nemesis on 12.09.13 at 12:30 am

SaltyDogz, any GoodAnalyst could have told you that it was only a matter of time before WatchDog asked GT where his “G-Spot” was…

MyBad.

TeeHee!

#80 Cici on 12.09.13 at 12:47 am

#3 Shawn

Nice theory Shawn, but #1 is already happening and is probably going to get much worse. As for 25-year fixed rates, that would be a big blow to bank profits, and seeing that the financial industry is a big part of Canada’s GDP, and the economy is already teetering in a dangerously very fragile way, I doubt they are going stick that nail into the coffin. Americas banks can afford to offer long-term fixed mortgages, I doubt ours can.

#81 Cici on 12.09.13 at 12:57 am

#7 Chickenlittle

Justin’s just the poster boy, but yes, I think the people behind him could do MUCH better than the conservatives…they already have in the past (remember budget surpluses as opposed to deficits?).
Anyways, I think Harper’s going to run for the exits soon enough if he can’t find a way to contain this bubble. And look out when interest rates rise in the States (could be sooner than later) – Canada wlll have no choice but to follow suit.
If it does come to that, right before it explodes the CRACKservatives will find a way to make themselves the centre of some little scandal in order to bail, leaving this hot potato in the hands of the liberals (much like what Bush did to Obama).
Politics is so predictable…after all, people have short memories and even shorter attention spans…

#82 2CntsCdn on 12.09.13 at 1:05 am

#36 Ben
Bingo! ……. Exactly …… Bang on! The big question is …. when, how and what will trigger the un-insanity? The gov’t is trying so hard to figure a way out of this without hurting everyone (and maybe making us want to re-elect them again). But it’s an impossible situation. It’s all been let go on way too long.

#83 Tamsen on 12.09.13 at 1:10 am

“#63 Bargains everywhere on 12.08.13 at 11:12 pm Yes, that picture is offensive. Never pleasant to see cruelty to animals. Looks like a junior sociopath in process.

Where is the cruelty? — Garth”

From the look on its face (panic?) I thought maybe someone threw the cat in the water and took a pic …

#84 Tamsen on 12.09.13 at 1:13 am

… but, then again, some cats like to swim.

#85 bentoverandpayingmytaxes on 12.09.13 at 1:18 am

Re..”#73 Barry Lainof on 12.08.13 at 11:56 pm”

Would enjoy hearing your alternative strategy to equity investing dude. I’ve been at it over 40 years…many years pro. I’ve run every angle at some point….through failure and success…from dollar poor to very comfortable…to now managing risk more than money…….always listening for new ideas that no one in the past 2500 years of trade hasn’t already thought of.

I’ve heard about the world ending many times under many different circumstances….hasn’t happened yet. Mankind keeps finding a way to create equity where none seems to have existed before…..our job as investors is to look over the valley and see opportunity before it hits the front page.

PS…..if Canada’s Big Five Banks fail……there will be no such thing as money…..and being a prepper will have paid off. Until then we must oggle the macro….and climb this wall of fear….which is at this point pretty freaking high. But lets hear where you’re putting your money?

#86 Tony on 12.09.13 at 1:24 am

All this means is the banks will lose more money as rules become more stringent for a mortgage. The non-bank lending rate for todays’ mortgages is 58 percent and has been steadily climbing. The good days for Canadian banks are over.

#87 Godth on 12.09.13 at 1:26 am

#63 Bargains everywhere

Go eat your chicken dinner.
https://www.google.ca/#q=factory+farm+chickens
With ribs.
https://www.google.ca/#q=factory+farm+pork
And a side of beef.
https://www.google.ca/#q=factory+farm+cattle

Whatever else you do make sure you shaddup ‘cus you’re talking ’bout my moola son. Big returns for me.

#88 omg on 12.09.13 at 1:35 am

#18 Canadian Watchdog – yep $1.2 trillion for the amount of taxpayer exposure on insured mortgages is a big number. But hope fully the amount actually at risk is a lot smaller?

A fair bit of this must be older mortgages that would have been taken out many years ago – therefore the equity in the houses would have increased significantly. As well, a fair bit of the mortgages would have been paid down also building up equity.

Not that I am saying this is not a huge risk for the Canadian economy. Even if the at risk amount is only 1/4 of the $1.2T that’s a huge number for the federal government to manage. Its just not the whole scary $1.2T number that is at risk.

#89 JimmyAAA on 12.09.13 at 1:36 am

#71 Porsche on 12.08.13 at 11:52 pm
66

You cannot walk away from a CMHC insured loan, not even in Alberta. (Not from competitors to CMHC either).
……………………………………………………………………..

Watch them walk by the droves

====================================
Recourse, Non – recourse doesn’t matter. The insurance contract is between you and CMHC with the bank as beneficiary. There is an entire page dedicated to the indemnity clause you are about to sign. Basically if you default CMHC will pay the bank all losses suffered as a result. CMHC will then have every right to collect those losses from you.

Oh yeah – you can’t get blood from a stone right?

Well kiss any tax refunds, GST refund cheques, etc. Basically anything you expect to collect from the government you can kiss goodbye.

#90 Tony on 12.09.13 at 1:37 am

Re: #73 Barry Lainof on 12.08.13 at 11:56 pm

You made a fatal error. As stupid money is pumped into the Canadian stock exchanges pension funds are obliged to put money somewhere. They didn’t put it in gold or silver they didn’t put it in utilities with rates shocks from south of the border. They avoided base metals and tech stocks. So the pension funds made the mistake of putting the money in what was left which is the Canadian banks. They’ll regret that in due time believe you me. You’ll also regret it.

#91 JimmyAAA on 12.09.13 at 1:41 am

#34 Daisy Mae on 12.08.13 at 9:08 pm
#12 TO: “I would hope that he delegated to people who seem to know what they are doing, like Paul Martin…”

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

I really liked that man. He also had us in the black. What a shame….

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

Just imagine if he had stayed on as opposition leader after the election. Everytime F & H claimed fiscal prudence and strength in the economy. He could just say you say can do it. I did it. Try again.

#92 Blobby on 12.09.13 at 1:46 am

#40 “OK, but if you lose your job and have no assets what good will it do the bank to sue you?”

The banks will wait for a period of time for you to get back on your feet.. maybe even a decade later… Then they’ll come after you for any money lost..

#93 Not 1st on 12.09.13 at 1:56 am

The bank is insured. You are uninsured. If you walk, you will be sued. — Garth
—-
You can’t get blood from a stone. If you have to declare bankruptcy to get out that’s fine. The Americans did just that when their markets crashed. It’s gonna happen here too en mass regardless of the legal ramifications.

#94 takla on 12.09.13 at 2:04 am

there you go garth…feels better getting that out there doesn’t it.since ive been comeing to this pathetic blog it always seemed like you had gov’s back,and anyone criticizeing gov or doubting their economic program where “conspiracy theorist” or worst yet “tin hat wearer’s.I get it that tptb are trying to right the ship,but I believe they have taken on too much water {debt}and its not just personal debt but gov debt around the world that’s that’s going to all our undoing.

#95 jane24 on 12.09.13 at 2:06 am

I grow grapes in my English garden now, here on the south coast. I also grow palm trees in my sub-tropical garden, so what is your point please?

It’s called the gulf stream effect. Swot up on geography.

#96 live within your means on 12.09.13 at 2:33 am

#52 Waterloo Resident on 12.08.13 at 10:02 pm

Ever heard of Deep Freeze? I know hubby ensured it was put on all computers in schools he was responsible for years ago. Lots of kids were hackers, etc. It’s a different world when dealing with school kids as opposed to business people. I know technology has changed. I can`t keep up with it.

Last week hubby & his Mgr. had a mtg. w/one of hubby’s techs. Hubby kept 20+ cell phone msgs between he & his tech. 1 day. Long story short, Mgr. told tech that he`d better smarten up & that hubby was the most knowledgeable IT Supervisor. Hubby is responsible for the largest schools in our province.

#97 Waterloo Resident on 12.09.13 at 3:19 am

Here is how one walks away from a CMHC insured mortgage: Declare Personal Bankruptcy. It’s as simple as that.

( Cute cat in that photo, I really feel sorry for it.)

As for MAC computers: Tried one, didn’t like the way it worked, so I went back to Windows-7. However, since then I bought a 14″ HP Pavilion Chromebook (From Best Buy) and Wow, is that thing ever SWEET !

A Chromebook runs a form of Android software (Chrome OS is a form of Android) , and Android software uses a Linux Kernel (it’s a form of Linux software). And because Linus is impervious to computer viruses, so is a Chromebook. I’m slowly migrating my work away from Win-7 to my Chromebook as I find suitable apps for it.

The nice thing is that while a MacBook Pro cost around $1,100 , a 14″ Chromebook cost only $300.

Oh yes; check out what happened to Bitcoin the past few days: went to $1,200 then crashed down to $600, now back to $900 , all in just 3 days. Talk about Volatility !

(here’s the chart web site: http://bitcointicker.co/

#98 P.Bocanegra on 12.09.13 at 3:27 am

Muclair is obviously the best choice at the moment but Trudeau would still be better than what we have now. A bunch of chimps from the Calgary Zoo would be better than what we have now.

#99 Peter on 12.09.13 at 5:19 am

Hi Garth,

Not sure if I have my facts straight,

CHMC has raised a lot of money with those premiums , and since real estate has increased steadily over the last 20 yrs, the CHMC would have a nice buffer saved up for (as you have stated in previous blogs, Canadians will not be defaulting in huge numbers) any possible future defaults to cover the difference between the value less what the lender is owed , if negative. I just cannot see how any insurance provided by CHMC or Genworth would be at risk for anything purchased before 2007, with payment against principle being made over six years, reducing risk, correct?

Using your example above, assuming every buyer this year bought the exact same home/condo, with 5% down and that all were insured with CHMC , just for arguments sake, CHMC would have a billion (100,000x$10,500) dollars in premiums less expenses at CHMC , to use as payments to banks when home owners default, correct?

I do think CHMC has to make more changes about how much it will insure (eg. <mil)., but so far it has been profitable and I think homeowners are way better off saving for a down payment of 20% and saving the premium $10, 500 which can be used against principle . For those who can't , and wish to buy , it sure helps them a lot to get lower rates , I very rarely say this about anything government run, but this actually has a function and has been a success, now if they could make changes to only help first time buyers now with strict qualifying rules , and lower amounts, maybe 750 k , it would reduce tax payer risk for the coming downturn , IF and WHEN .

I own houses but have never had to pay the insurance premium , I just thought it cost too much to the buyer, and I would borrow back my deposit as the value rose, which for me it did, and only when the bank agreed.

thank you for writing the blog , always informative and a fun read

#100 SmallTownTokenBrown on 12.09.13 at 5:35 am

#74,#76

TheRoman grape line is tired and old. You’d have to be completely new to the subject to not recognize the difference between anthropogenic climate change and human caused climate change are.

The fact that you would genuinely combine the two to provide a response makes me think you know nothing about the subject.

#101 randman on 12.09.13 at 7:08 am

Whoops…posted on yesterdays blog……here they are again..
Whistler bubble boy…

Yes and yes…as a foemen property manager there , i can agree with the special assessments.

Whistler was built mostly in 70′s 80′s…poor construction methods and at the same time as the leaky condo syndrome…

I managed numerous properties there…..what I saw on the inside of most of these properties …was horrifying.

The re-piping, re-roofing and re-wiring bills that are about to come due will be catastrophic.

I know of one proper that needed complete facelift but now the insides need a re-do…none of the owners have the stomach for the bill…I ‘ve seen numerous walk aways… It is a rat’s nest….I wouldn’t touch Whistler
for the next 10 years!

#102 randman on 12.09.13 at 7:10 am

What say you Garth and Ralph?

Do you agree with Marc Faber?

Do you follow your preached mantra of buy low and sell high?

If not in gold’s case…why not?

Please straighten out a perceived hypocrisy….!

Turning to mining stocks, Faber said, “If you ask anyone, they say to buy low and sell high, but when it comes to actually investing, they buy high and sell low.” He argued that individuals tend to “Buy things that are moving…often near a top.” He said that compared to fine wines, real estate, stocks, bonds, and many commodities, gold and silver are relatively inexpensive, and “gold and mining shares in general are the only sector in the market that is very weak.” This, he suggests, may be a good time to buy such a weak market.”

http://etfdailynews.com/2013/12/04/marc-faber-world-bankers-are-going-to-bankrupt-the-world/2/

Gold, bitcoin. Dead money. — Garth

#103 randman on 12.09.13 at 7:11 am

Yeah IFaber again…
“In my view,” he said, “well to do people and people who are thinking for themselves, will continue to diversity out of paper money into physical gold.””

Nuff said

I know..it’s not a gold blog …then again, why do you keep mentioning it in your editorials? :)

#104 TurnerNation on 12.09.13 at 7:55 am

I see some learning, that the role of our 1st World governments is mind control. As they slowly move each “country” into its terminal state.

We clearly will not be a manufacturing base. The Communist countries are best for this work.
It’s going well, no property rights there.

“Hoang Anh Tuan learned over a loudspeaker that local Communist Party officials were seizing his farm in a village just outside Hanoi. A property developer wanted to build apartments on the land.
http://www.bloomberg.com/news/2013-12-08/vietnam-tightens-land-seizure-law-after-protests-southeast-asia.html

(Say, now you know why, that War of Communism).
To reduce cognitive dissonance take everything said and flip it 180.

The Phillipines was openly protesting proposed US military bases planned. No longer. Brought to their knees. Ditto Haiti (human and drug trafficking port o’ call).
For Kanada (“A strong Canada”, says H’s signs) I’m thinking resource extraction and banking haven.
All the Queen’s horses and all the Queen’s men….

#105 TurnerNation on 12.09.13 at 8:01 am

What if the banks foreclose in a few years when all sours and someone like Blackstone swoops in and buy all as rental stock? Then give our govt an equity stake then float an IPO? Brilliant.
As in USA:
http://www.blackstone.com/businesses/aam/real-estate

How smart are they? Quoting ex-Enron exec Jeffrey Skilling, in the book The Smartest People in the Room, when interviewed by McKinsey and asked how smart he is: “I’m f__king smart Sir”. He got the job.

Great plan. Sounds profitable. Remember, 1st World countries get economically bombed, 2nds and 3rds get bombed. But tell your kids, zero tolerance for violence!! wink wink.

#106 Smoking Man on 12.09.13 at 8:12 am

#98 P.Bocanegra on 12.09.13 at 3:27 am

Muclair is obviously the best choice at the moment but Trudeau would still be better than what we have now. A bunch of chimps from the Calgary Zoo would be better than what we have now.
………..

I could totally support you on this if you have a nice contract to capitalize on the climate change bull shit. But if not, your an idiot.

I hate Harpo but still vote for the party. The ulternateve will impoverish this nation.

#107 TurnerNation on 12.09.13 at 8:26 am

How is this all accomplished?

Does a soldier know what his sergeant is planning? Does a sergeant know what the General is planning? Does General know what are the bankers funding or monarch’s plans?
Is F the soldier or sergeant? What about C.

Oaths-to-men is the only way they hook ’em.

#108 maxx on 12.09.13 at 9:05 am

#15 Steven on 12.08.13 at 7:47 pm

“It is all about money and power! Maintaining public ignorance is good for politics and business.”

Great post.

When external sources (IMF, et al) decry current Canadian RE policy, it is way past high time for the public to wake up and step away from the altar of RE.

#109 pbrasseur on 12.09.13 at 9:06 am

CMHC is to Canada’s economy what EPO was to Lance Armstrong!

F at Oprah would’nt that be something?

#110 maxx on 12.09.13 at 9:17 am

#18 Canadian Watchdog on 12.08.13 at 7:55 pm

“How many times can one be duped over and over again?”

If they get re-elected, we’ll find out.

#111 jess on 12.09.13 at 9:45 am

The fraudulent use of TARP funds

===========
Quarterly Report Highlights*
– $421.2 billion – Amount spent under TARP

– $29 billion – Amount available to be spent under TARP

– $53.4 billion – Amount still owed to taxpayers under TARP

– $47.5 billion, $21 billion, $59.7 billion – Estimated cost of TARP as projected by OMB, CBO, and Treasury, respectively

Investigations
To read all about the tricks and traps – http://www.sigtarp.gov/pages/press.aspx

How about receiving bribes in a cigar box that is mailed to you on a monthly basis!

Little-Known Agency Proves That Some Bankers Aren’t Too Big to Jail – The Washington Post

#112 maxx on 12.09.13 at 9:46 am

#34 Daisy Mae on 12.08.13 at 9:08 pm

#12 TO: “I would hope that he delegated to people who seem to know what they are doing, like Paul Martin…”

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

I really liked that man. He also had us in the black. What a shame….

Ditto.

#113 Herb on 12.09.13 at 9:51 am

#76 World According to Somebody,

Jackass!

#114 dienekes on 12.09.13 at 9:54 am

That man is a hero, he brought a drowning cat to the edge of the pool, saving it from certain death.

#115 fixie guy on 12.09.13 at 9:57 am

“Of course, in a regular country run by people who cared about the future, taxpayers would not be subsidizing children without savings….”

Not to worry, they’ll end up shouldering the bill for this Conservative bank enrichment scheme. By removing risk from lenders while unprecedentedly inflating their product market, that will be its ultimate result. The only real question remaining is whether that was also the original goal.

#116 Barry Lainof on 12.09.13 at 10:06 am

#85 bentoverandpayingmytaxes on 12.09.13 at 1:18 am
Re..”#73 Barry Lainof on 12.08.13 at 11:56 pm”

Would enjoy hearing your alternative strategy to equity investing dude. I’ve been at it over 40 years…many years pro. I’ve run every angle at some point….through failure and success…from dollar poor to very comfortable…to now managing risk more than money…….always listening for new ideas that no one in the past 2500 years of trade hasn’t already thought of.

How about this, invest in yourself. 1/3 cash, income, PM;
1/3 real estate and 1/3 businesses, equity, etc.

Instead of that 1/3 in business/equity going to a bloated market – run your own business, control what you can control, get wealthy and not just rich.

Or better yet, start a foundation to give back.

Sorry if I insulted you with my previous comments. You may have the knowledge to invest – many here don’t and just jump onto the next idea that sounds good.

#117 Herb on 12.09.13 at 10:08 am

#98 P.Bocanegra,

you have just saved Confederation!

We can get rid of Harper and his apes AND keep the West in by offering to trade them for the West’s selection of monkeys from its zoos!

#118 Daisy Mae on 12.09.13 at 10:20 am

#2 Raven: “Obviously a lot of people have fudged income or down payments sources…”

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

And it was the banks and mortgage brokers who encouraged them to do this…actually told them what to do and how to do it. This is no secret.

#119 Steven on 12.09.13 at 10:23 am

Re:YVR

The end result is more buyers increasing home prices which cost every buyer more money. The only ones who benefit from CMHC insurance are the banks, RE industry and home builders.

As an out of work stair builder it is my experience that increasing house prices does not equal increased stair prices or wages for people involved in doing the work of constructing homes or the components there in. Middlemen and speculators might have done well but not the real workers. The workers would have made 15 or 20 cents on the dollar per year relative to the annual pay needed to safely buy a house with out taking foolish risks, having a working wife or indulging in polygamy . The inability or unwillingness of employers to make minimum pay an income in the 6 figure range will ultimately doom the real estate market and prices and is contributing to low or no organic population growth among caucasians. There is no income support for the current price structure of the real estate market therefore prices must implode catastrophicly and fall to a level where there is income support for prices. Like they say a chain is only as strong as the weakest link.
In my case I made $2,985.00 working on stairs this year.
The maximum house price I could afford for the average house in Canada is $8,955. That means the average house price would have to collapse to 2.2 cents on the dollar. That is a very big potential fall in price for the market to clear. The unemployed or minimum wage slaves are not going to support real estate prices at current levels and that is a fact.

#120 Daisy Mae on 12.09.13 at 10:24 am

#7 Chickenlittle: “Crackhead Conservatives? What about that Justin Trudeau? Now there’s a gas bag almost as big as the housing market.Do you really and truly think JT would make better decisions?”

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

And we have an election in 2015…and these are our choices.

#121 Rusty Venture on 12.09.13 at 10:27 am

Yeah, Paul Martin was a good dude. Funny how it can take a long time for us to forgive Cons and Republicans, (Well, except for Garth – he’s a rebel WITH a clue) but Liberals and Democrats start looking good in hindsight fairly quickly.

http://www.ideatoappster.com/meet-jean-chretien/

http://www.theonion.com/articles/i-got-what-america-needs-right-here,11356/

#122 Daisy Mae on 12.09.13 at 10:30 am

#19 Robert: “This whole charade was cooked up by Harper and Flaherty to goose the economy so they could win a majority (which they did).”

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

Well, 62% of us DID NOT vote for Harper.

#123 Ronaldo on 12.09.13 at 10:35 am

#78 – Entrepeneur

”With the banks working with the governmnet hand-in-hand then the banks are not called a business in my eyes. I don’t know what they are called now…..”

Why don’t we just call them ‘crown corporations’ …..they get to stash the cash when times are good, give themselves bonuses, etc. and when the SHTF, they run to the tax payers (the gov) to bail them out…hell of a business to be in…….That’s why you invest in them.

#124 Holy Crap Wheres The Tylenol on 12.09.13 at 10:54 am

#106 Smoking Man on 12.09.13 at 8:12 am
#98 P.Bocanegra on 12.09.13 at 3:27 am
Muclair is obviously the best choice at the moment but Trudeau would still be better than what we have now. A bunch of chimps from the Calgary Zoo would be better than what we have now.
………..
I could totally support you on this if you have a nice contract to capitalize on the climate change bull shit. But if not, your an idiot.

I hate Harpo but still vote for the party. The ulternateve will impoverish this nation.

……………………………………………………………………….

Smoking Man is correct (I can’t believe I am say this). The tree huggers that float the green party crap, the Kyoto accord, and climate change propaganda are out of touch with the question of balance! We all produce pollution every day. We do not produce the same quantities of pollution that the third world nations do. They are notoriously immoral about dumping chemicals into the atmosphere, water and land where their own huddled masses try to eek out a meager living. So why the hell would I want to sign onto giving these worst polluters a carbon tax break, a free pass card to pollute while we sit back and suck air all whilst our manufacturing base decline every day. We need the jobs here in North America not in East Asia, Africa, South America or anywhere else for god’s sakes. What we should do is put an import tax on any foreign country that has been proven to pollute with wanton disregard for the environment. Let the bastards that pollute pay the price for their own environmental disasters. I am tired of hearing about the Westerns world paying for this or that clean air, clean water, or clean land taxation system so the fat cat bastards can go suck the gravy from a trough of money generated by all of us that would never amount to a hill of beans. We all know that any money generated from any green tax would never make it to cleaning up anything! Really! Really! we are all sheep if we let anymore these tree hugger ideas hit the legislative system. Tell the Green Party and any other tree hugger to go and start an offshoot of their political party in China, India or any other nasty polluting tin pot nation. Let me know how that goes when you try to bitch in Beijing, I will send you a post card when you are in the gulag. Oh yes back to the question of balance. I don’t pollute on purpose (I don’t put nasty chemicals down the drain, or spray chemicals on my lawn). Lets be real people we all pollute but here in this part of the world we have controls, treatment and clean up procedures for unforeseen events. We do what balances out safe living and allows us to create employment. All of these climate change idiots pollute. As for the Green Party, and again any other climate change propagandists, the day you attend a conference by taking a horse and buggy, sail boat, or lets be imaginative a solar powered car, then give me a call, I’ll consider reading your propagandist crap. Probably not, I will probably put it to good use as toilet paper or through it in the fireplace. See I am recycling!

#125 Daisy Mae on 12.09.13 at 11:00 am

#63 Bargains everywhere: “Yes, that picture is offensive. Never pleasant to see cruelty to animals. Looks like a junior sociopath in process.”

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

It’s just water. The cat doesn’t LIKE it….but it’s just water.

#126 Big Brother on 12.09.13 at 11:00 am

#104 TurnerNation on 12.09.13 at 7:55 am

I see some learning, that the role of our 1st World governments is mind control. As they slowly move each “country” into its terminal state.

MKULTRA says that is our job!
We are the masters of mind control.

Check out our past projects.
http://en.wikipedia.org/wiki/Project_MKUltra

#127 economictsunami on 12.09.13 at 11:03 am

Carney has left.

Now the CEO’s of Canada’s biggest, most profitable banks are getting the golden handshake and exiting.

Things that make you go hmmm…

This from the “Stupid Things Alan Greenspan continues to say” file:

“Former Fed Chairman Alan Greenspan, at a Philly Fed conference Friday, said most asset bubbles come and go without having major economic impact. He cited the stock market crash of October 1987 which, while momentous at the time, turned out to have minimal ripples on growth. The difference in the 2007-2009 episode? High levels of bank leverage. Asked by the Journal why the Fed was so sanguine about banks’ low capital levels during his tenure, Greenspan replied, “We didn’t know enough. I hope we’ve learned.”

http://blogs.wsj.com/economics/2013/12/09/central-station-post-payrolls-take-on-taper/

#128 Infused with Opiates on 12.09.13 at 11:03 am

100 Small Town

Doesnt anthropogenic mean “caused by humans”?

#129 Ralph Cramdown on 12.09.13 at 11:04 am

#102 randman — “Do you follow your preached mantra of buy low and sell high? If not in gold’s case…why not?”

With gold, it’s harder to judge what’s low and high since it doesn’t generate income.

But we can try. Gold went from over $800 to under $300 from 1980 to 1985. That’s a 63% nominal dollar decline or ~80% inflation adjusted. Compared to an actual productive portfolio of assets, the number is even worse.

The past decade has seen an incredible rise in the median wealth and income of the two most populous and gold-crazed countries on earth, being China and India. And gold is down 30%+ from its recent peak. I think it might be time to admit that Asian peasants’ thoughts are turning from more gold jewellery to tractors, cars, an addition to the hovel, kids’ education and other capital goods or investments.

There’s no sign of capitulation in the goldbug blogosphere. I never see the big names calling for a short term short position, or even being flat. It’s still always buy, buy, buy, along with a daily fairy tale as to how the powerful manichean battle will soon end. Alexa shows their popularity hasn’t waned too much yet.

Look at the long term charts and admit that gold could well go down another 50%. Many of the dollar crash and hyperinflation gadflies have left the gold market for greener pastures, but not all of them. Since the gold market is always and everywhere in great stockpiled surplus, the marginal cost of production has little short term bearing on the market price. I’m rarely active in gold, but right now I’d be selling gold I don’t own into the rallies.

http://www.aboutinflation.com/gold-vs-inflation

http://www.bloomberg.com/news/2013-10-20/monsoon-bonanza-makes-india-s-farmers-new-target-for-tata-cars.html

#130 Daisy Mae on 12.09.13 at 11:04 am

#68 Freedom First: “Well written Garth, you nailed it! Garth, I truly hope you don’t end up crucified.”

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

Because people can’t handle the truth? Garth is not responsible for this — he is only the messenger.

#131 Daisy Mae on 12.09.13 at 11:11 am

#68 Freedom First: “….high cell phone bills as cell phones are now a necessity for this lifestyle?”

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

My costs are not much more than they were when I had a landline. And they ARE a necessity, actually. Our hospital is as large as an airport…and still growing. I see people using their cells to contact a family member at the other end: “Where are you?” Otherwise, they’d be wandering around for hours trying to find each other. This is just one example….

#132 Stickler on 12.09.13 at 11:15 am

“Of course, in a regular country run by people who cared about the future, taxpayers would not be subsidizing children without savings who expect nicer houses than their parents ever had, or banks that already earn a billion every 90 days. Then houses might cost what they should.”

Well said!

#133 recharts on 12.09.13 at 11:22 am

Gold, bitcoin. Dead money. — Garth

I beg to differ. Bitcoin is electronic money!

#134 recharts on 12.09.13 at 11:30 am

#15 Steven on 12.08.13 at 7:47 pm

“It is all about money and power! Maintaining public ignorance is good for politics and business.”

Are you implying that our host here is running a charity ?

#135 What about CMHC? on 12.09.13 at 11:43 am

Thank you for the coverage on CMHC. I am glad that as a tax-payer I own this wonderful institution that is about to lay an egg!

What do I need to do to stop the F from raising the limit beyond 600B?

#136 The American on 12.09.13 at 11:48 am

At #3: Shawn, agreed. The American banking system is truly a great system. It is often forgotten the system was jacked by the prior administration that deregulated everything. Obviously, things have changed now, and the American banking systems is without question far more prudent than the Canadian system. It’s almost as if the two countries have done complete role swaps in the past five years. People still fail to recognize the Canadian banking system will indeed be paying for its mistakes. It’s just a matter of when. It won’t look so rosey then.

#137 frank le skank on 12.09.13 at 11:53 am

#53 Bob on 12.08.13 at 10:04 pm
the picture of a creep putting a vulnernable animal in distress is quite offensive
—————————
63 Bargains everywhere on 12.08.13 at 11:12 pm
Yes, that picture is offensive. Never pleasant to see cruelty to animals. Looks like a junior sociopath in process.
—————————-

Cats are natural swimmers just like dogs – check your cats webbed feet. There’s nothing more offensive than an adult making derogatory comments about a child.

#138 Daisy Mae on 12.09.13 at 11:55 am

#106 SM: “I hate Harpo but still vote for the party. The ulternateve will impoverish this nation.”

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

Harper IS the party. And HE and his idiot cronies are presently impoverishing this nation. Or, have you noticed?

#139 Shawn on 12.09.13 at 11:57 am

Entry Requirements to the 1% Club

New data from Statistics Canada

To be part of the top 1%, top 5%, top 10% and top 50% of taxfilers in 2011, one needed to make a total income of at least $209,600, $108,300, $84,100 and $29,700 respectively. If one made less than $29,700, one would be counted as in the bottom half of taxfilers.

This is individual income not family.

This is income not wealth.

This is also only reported income, capital gains whether relaised or unrelaised on a personal residence are not counted. Unrealized capital gains on an invesment portfolio are not counted.

#140 Distorted RE winter market in TO on 12.09.13 at 12:00 pm

#5 KommyKim on 12.08.13 at 6:41 pm
New guidelines for mortgage insurance are being drafted now by the regulator, but probably won’t come into effect for a year.

So can we expect another stampede to buy a house before the rules change?
One last gasp (we hope) as the gasbag continues to inflate?

That data that I collect is indicating that prices will continue to rise for SFH in GTA while condos in TO will maintain an elevated high avg cost (unusually high because high end condos are being sold more than before)

Despite of low inventory, the avg for SFH in TO is not going up like SFH in GTA.
Condos in GTA dipped last month but they seem inclined to rebound.
I am really curious to see where this is going. I believe that F will be forced to make a move before the spring market begins, otherwise it will be too late.
Any move that he makes needs like 3 months to become effective. If he misses January then he will have to wait for Sept-Oct to see if his measures become effective. That would be one more year of unwanted price increases (if he really wants this to stop).
So ..see you in January :-)

#141 fixie guy on 12.09.13 at 12:14 pm

#138 Daisy Mae: “Harper IS the party. And HE and his idiot cronies are presently impoverishing this nation.”

To be fair, not all of it. He’s enriching some in a most excellent way. It might help to think of Harper as maintaining Canada’s rich legacy of social services but directing them towards the top 1% for a change.

#142 T.O. Bubble Boy on 12.09.13 at 12:55 pm

@ #139 Shawn on 12.09.13 at 11:57 am
Entry Requirements to the 1% Club

New data from Statistics Canada

To be part of the top 1%, top 5%, top 10% and top 50% of taxfilers in 2011, one needed to make a total income of at least $209,600, $108,300, $84,100 and $29,700 respectively. If one made less than $29,700, one would be counted as in the bottom half of taxfilers.

This is individual income not family.
….
—————————–

ok, but how much is that in Bitcoins?

The beanie baby coins rising to $925 this morning… even more volatile than a TSX Venture stock.

#143 High Plains Drifter on 12.09.13 at 12:59 pm

Canada is a bifurcated state by design but in general I am with the Turner Nation term “terminal destiny”. We know where the F.I.R.E. is, we know where the desired resources are, and if you are near to neither expect to wither. The house price hopes in Alberta rest on the idea the F.I.R.E. side is cooling so the resource side of the teeter totter is on the rise. If you are a boomer (not demographic) working the resource side gets you started, understanding the F.I.R.E. side allows you to keep the gain. Garth Turner gave a nice F.I.R.E. side chat on Dec.6. It warmed me up in the capitol of Alberta.

#144 Son of Ponzi on 12.09.13 at 1:00 pm

Jingle mail, jingle mail, jingle all the way…..

#145 What happens in Richmond Hill stays in Richmond Hill on 12.09.13 at 1:07 pm

So what happened here?

http://tinyurl.com/lc5842w MLS®: N2648871 Asking: $698,888
http://tinyurl.com/na5468s MLS®: N2648849 Asking: $1,298,888
http://tinyurl.com/pgq575x MLS®: N2648788 Asking: $698,888

number 8 everywhere ! Am I going nuts ? http://www.imdb.com/title/tt0481369/

All three of them sold on the same date. They are all next to each other (three homes in line). Same agent.

And yes ..they sold -1X unde asking.

You pick number X from the above numbers:-)

#146 Shawn on 12.09.13 at 1:14 pm

DOLLARS are King

T.O. Bubble Boy just above asks me (faciously, no dount):

ok, but how much is that in Bitcoins?

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

Ah, but there’s the rub. Bitcoins and Gold are measured in dollars and not the other way around. No one should hold their breath waiting for that to change.

#147 Serge on 12.09.13 at 1:22 pm

GTA Weekly Drop – December 8, 2013
http://gtapricedrop.blogspot.ca/2013/12/gta-weekly-drop-december-8-2013.html

#148 ponerology on 12.09.13 at 1:32 pm

I get the feeling that the current Federal government is just trying to stall the inevitable until after the 2015 election which I can’t see ending well.
Personally I think 10 years in power is plenty for any government and it should be changed (I just wish we had better choices at the Provincial level than we do here in Ontario :( ).
I’ve never understood most folks who constantly vote for the same party no matter what or because that’s how their parents voted.

#149 Derek R on 12.09.13 at 2:06 pm

#139 Shawn on 12.09.13 at 11:57 am wrote:
To be part of the top 1%, top 5%, top 10% and top 50% of taxfilers in 2011, one needed to make a total income of at least $209,600, $108,300, $84,100 and $29,700 respectively.

All very well, Shawn. But if you want to be a real 1%er you need to be in the top 1% by net worth. That top 1% by income includes quite a few negative-net-worth dead-beats with so much debt that they live pay cheque to pay cheque.

#150 Penny Henny on 12.09.13 at 2:15 pm

CMHC will have to pay the government a 3.25% ‘risk fee’ on all of the insurance it writes for people like Jane.

Guess what that’s for? Yup, you’re right – to build a fund which will protect taxpayers when the housing market slides into its inevitable correction, and default rates rise. The move is expected to generate about $50 million a year, and also raise mortgage costs by about a tenth of a point.
————————————————-

$50 million a year.
Doesn’t sound like anything to be concerned about

#151 Smoking Man on 12.09.13 at 2:21 pm

So it was Wynn yet again who killed the Leamington Heinze plant.

Apparently it’s a tree hugger tax a grab scream., Silly me and I thought it was electricity…

But hey these phyco pinko job killers don’t smoke crack, it’s all good, nothing to see here.

Attention business people, get of Ontario while you still can.

Tree hugger manual includes taking us back to stone age to save the planet.

RUN GENTS RUN

http://blogs.windsorstar.com/2013/12/06/who-really-killed-heinz/

#152 Shawn on 12.09.13 at 2:25 pm

Reach For The Top!

Derek R just above said:

All very well, Shawn. But if you want to be a real 1%er you need to be in the top 1% by net worth.

**************************************
Yes, and both top 1% income and wealth are worth striving for and are reasonably attainable.

There are about 350,000 Canadian individuals in each group and a lesser number that qualify for both.

Once you reach top 1% status you will then want to strive for top tenth of 1%

Life’s a journey. May as well set out to reach a worthwhile destination but remember to enjoy the trip always.

Not all worthwhile destinations involve money. But attaining wealth is not a bad thing and the money will get recycled eventually as we can’t take it with us. (Which is why I plan to live forever, which so far is working)

#153 Furoley on 12.09.13 at 2:26 pm

Lending, is a way to borrow YOUR future wealth and to use (or waste) it here and now.
Excessive lending is way to borrow the wealth not just yours, but of your children and grand children, and to use it here and now now by you only.

A Lot of wealth and well-being have already been stolen from our children by putting them into conditions and creating such reality / market in which they will not be able to buy any housing of the same standards they parent did using their own salaries.

They only way to stop it, to cancel all wealth transferred, is to let the market to fall. Letting today’s parent’s to lose the wealth or equity they never actually earned.

It is against of what voters want. Almost all voters would like the show to go on. Because it is like drug. Therefore it should be regulated like a drug.
If we don’t understand it now, we will understand it later through an economic crisis and social unrests we never saw before.

#154 skybluepink on 12.09.13 at 2:37 pm

Please god, this can’t happen fast enough. I’ve been trying to hold off hubby as he’s hell bent on buying a bigger home. Common sense and experience is no match for a McMansion apparently!

#155 Canadian Watchdog on 12.09.13 at 2:46 pm

#129 Ralph Cramdown

You're a smart guy Ralph, but you still suffer from currency vertigo. The way you're trying to measure value is like trying to measure something with a yard stick that is shrinking and expanding, an analogy similar to how floating exchange rates fluctuate. What western investors don't realize yet is that the CAD and USD are both declining against other currencies. This can easily be seen by looking at their trade weighted real exchange rates.

Take a look at this chart is you haven't and pay very close attention to the red line that is below the black dotted line. Chart

If you're still confused, then I can understand why you thought gold is down 30% in India.

#156 45north on 12.09.13 at 2:49 pm

Distorted RE winter market in TO: I believe that F will be forced to make a move before the spring market begins, otherwise it will be too late.

like raise the minimum downpayment to 10%? Mulcair would have a hard time arguing against such a move. Good idea.

#157 Rural Rick on 12.09.13 at 2:59 pm

#52 Waterloo Resident on 12.08.13 at 10:02 pm

Get rid of Windows. Get Linux. Ubuntu is an easy version. You can run any windows programs in Virtual Box or Wine.
Chances are you can find a Linux program that will be better then that flaky Windows stuff anyway. You can easily set up a dual boot system but I bet you will be using Linux for everything really quickly.
Did I mention it is all free.
http://www.ubuntu.com/
Liberate yourself

#158 Ronaldo on 12.09.13 at 3:14 pm

#133 recharts on 12.09.13 at 11:22 am

”Gold, bitcoin. Dead money. — Garth

I beg to differ. Bitcoin is electronic money!”

Bitcoin is something that is not required by anyone like a lot of other things out there. It is nothing more than a gigantic chain letter that will come to a disastrous end to those that are left holding them. Suckers are born every minute.

#159 sue on 12.09.13 at 3:20 pm

skybluepink
Just put your foot down! Having an overspending spouse is the quickest way to the loonie bin. I’ve been there and managed to escape. Finally found a financially literate man. YESS!

#160 sue on 12.09.13 at 3:26 pm

DerekR
You are so right. I knew a doctor who made 350K/year but had 100K in debt and no assets. (rented house and cars). I used to point to a homeless man and say “That guy has a bigger net worth than you” After all, zero is much larger than -100K..lol Trainwreck.

#161 Nemesis on 12.09.13 at 3:50 pm

Alas… not a lot ‘o Zen out there today, SaltyDogz.

Nevertheless, a curious juxtaposition of developments in NeoLiberalism’s favourite SocialLaboratory does at least afford us the opportunity to simultaneously play, “SpotTheDifference” and “ConnectTheDots”…

Here we go:

[UK Independent] – Millions of families living in poverty despite being in employment says new study

…”There are more working families living in poverty in the UK than non-working families for the first time since the birth of the welfare state, according to a new study.

A report by a development charity attributes the figures to a sustained and “unprecedented” fall in living standards that has hit UK households, in which average incomes have fallen by 8% since a peak in 2008.

As a result, around 2 million people have an income that would have been considered below the poverty line in 2008.

The Joseph Rowntree Foundation (JRF) found that according to the current definition, the figure is increasing as 500,000 more working families live below the poverty line than last year.

6.7 million families with adults in employment meet the worrying criteria compared with a combined 6.3 million of retired and unemployed families.”….

http://www.independent.co.uk/news/uk/home-news/millions-of-families-living-in-poverty-despite-being-in-employment-says-new-study-8991403.html

And as if that weren’t BadEnough the Granular is EvenGrittier:

[UK Independent] – The poorest pay the price for austerity: Workers face biggest fall in living standards since Victorian era

…”Helen Kersley, a senior economist at the think-tank, said: “Up to now it was assumed low pay was confined to the margins of the public sector. But take into account the 500,000 low-wage workers employed by outsourced service providers and you can see the problem runs a lot deeper than that.”

As squeezed local councils award contracts to the cheapest providers, these workers are often even worse off than their counterparts employed directly by the public sector. “A care worker earns only £6.44 to £7.38 per hour in the private sector compared to £9 to £11 in the public sector,” the report adds.”…

http://www.independent.co.uk/news/uk/politics/the-poorest-pay-the-price-for-austerity-workers-face-biggest-fall-in-living-standards-since-victorian-era-8991842.html

…Evidently though, all that translates into ‘MissionAccomplished’ for Blighty’sPoliticos – who are on the cusp of awarding themselves a SpankingBigBonus. JobWellDone!…

[UK Independent] – ‘Never a good time to increase MPs’ pay’: Jack Straw defends politicians’ 11% pay rise in face of public outrage

http://www.independent.co.uk/news/uk/politics/never-a-good-time-to-increase-mps-pay-jack-straw-defends-politicians-11-pay-rise-in-face-of-public-outrage-8991320.html

…MeanWhile, back in EuroLand – when it comes to ‘DoingTheBusiness’ there’s no denying that those KraftyTeutons have virtually cornered TheContinentalMarket…

[UK Independent] – Europe’s biggest brothel

…”The German town of Saarbrücken was once renowned for its fine Moselle wines, first-class cuisine and an easy going un-Teutonic way of life.

Yet the border city’s fame as a laid-back gourmet paradise is now fast being overtaken by a new and unsavoury reputation as Europe’s prostitution capital…

IN NUMBERS

400,000: Estimated number of prostitutes working in Germany

44: Number of German sex workers covered by social insurance

1,000: Estimated number of prostitutes in Saarbrucken

€4.5m: Cost of new “mega-brothel” in Saarbrucken”…

…Oh yes, speaking of ‘Bordellos’ – is it at all surprising that GlobalLeaders attending this week’s MandelaMemorium will shelter behind walls of BulletProofGlass protected by a cordon of 11,000 soldiers.

Yikes. You’d almost be tempted to think they were worried about something…

[UK Independent] – Goodbye to Nelson Mandela may be biggest send-off in history

http://www.independent.co.uk/news/world/africa/goodbye-to-nelson-mandela-may-be-biggest-sendoff-in-history-8993969.html

#162 Bottoms_Up on 12.09.13 at 3:58 pm

#74 World According To Garth on 12.09.13 at 12:03 am
——————————————————-
Hundreds of reputable and reliable scientists from around the world, with their careers on the line regarding their conclusions, have concluded that it is “extremely likely” that anthropogenic (man made) sources are causing climate change (obviously other sources affect climate change too).

Now I don’t know if you’re a scientist, but words such as “extremely likely” are rarely uttered by world-renowned scientists.

Now what information are you privvy to that would indicate they are wrong?

#163 Ralph Cramdown on 12.09.13 at 4:02 pm

#155 Canadian Watchdog

I don’t understand what a trade weighted real exchange rate is useful for. A nominal trade weighted dollar index already accounts for countries’ inflation differentials, so what does subsequently deflating by the home country’s inflator accomplish? This doesn’t look as bad:
http://research.stlouisfed.org/fred2/series/TWEXB

USD is right about where it was before the 2008 collapse, same as it was in 1997. You can see it all… The internet bubble, and the flight to quality during global bad times.

Regardless, I don’t know that I entirely see your point. Some guy in a high inflation country is getting a better nominal return on gold than I would? And a better nominal return on Canadian real estate than I would? Yeah, but you can’t feed your family with nominal returns. And he’d still likely get a better return investing in a Canadian business than low yielding real estate or gold.

While I understand the fear of inflation that drives the investment decisions of a rich person in a high-inflation country (possibly with political risk attached to home-country investments as well), or of a very rich person anywhere, I ain’t that. I can’t afford to put my wealth in a pure inflation hedge.

Interesting article on how the rich are still apparently in cash:

http://www.ft.com/cms/s/0/5bf2f33a-5e81-11e3-8621-00144feabdc0.html

#164 Raven on 12.09.13 at 4:46 pm

American Mtg System vs Canadian System

In 1982, I took out a mtg. on an income property at 19 1/2 % with 25% down for one year term! At that time we knew of how the US system had to lock in for the amortization of their mtgs ( usually 25 yrs) and thought how much better our system was.

With today’s low rates we find ourselves envious of the US system? Our “variable rate type of term system” like an actual variable rate mtg. almost always prove to be the better call!

A formula to cap CMHC ( My own simple little thought)

# of Canadian homes x average income ( region specific) x 3.5 ( historical multiple of income to price)
= Total CMHC Capitolization

I would hazard to guess without knowing the total number of houses in Canada but I would bet it is less than 1.2 ttttttrillion……

#165 JimmyAAA on 12.09.13 at 4:51 pm

#118 Daisy Mae on 12.09.13 at 10:20 am
#2 Raven: “Obviously a lot of people have fudged income or down payments sources…”

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

And it was the banks and mortgage brokers who encouraged them to do this…actually told them what to do and how to do it. This is no secret.

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

This is one of my most frustrating issues with any malfeasance committed in which a larger (usually) corporation benefits. The people in charge know what is happening. But they have willful ignorance and plausible deniability.

One strongly worded email about what is not allowed and will not be tolerated. (Not some BS values crap) And this all dies. But what really goes on is nudge, nudge, wink, wink. Because it is too vital to corporate profits. And it is everywhere whether safety standards, financial standards, or senate expense reports.

They have to teach ethics in MBA classes now. Anything you have to teach to people in their 20’s, 30’s, 40’s. It will only be knowledge, it will never be part of their internal moral compass.

#166 Shawn on 12.09.13 at 4:57 pm

How to Bet on a U.S. housing Recovery.

For bolder investors who want to bet that U.S. house prices and related will continue to rise…

TD Waterhouse has just announced it is selling a new issue, a fund called U.S. housing recovery Fund.

I don’t know who is behind the fund but the prospectus would contain that detail for those interested.

Doomers need not apply.

#167 45north on 12.09.13 at 4:59 pm

Rural Rick: Get rid of Windows. Get Linux.

Linux is a variant of unix. I’ve spent the 20 years learning unix. You can adopt linux using only the “point and click” gui but real men know and use the command line.

I’m on a mac right now.

#168 Smartalox on 12.09.13 at 5:09 pm

@DerekR #149:

So by your logic, does that mean that if I make $50k, but have $350k in investments and no debt, that I’m actually a one per center? What if those assets included a house?

#169 Love Life, Debt Free on 12.09.13 at 5:12 pm

This seems like a no brainer..

If banks are the ones who are covered by CMHC, and not the lender. Why doesn’t F make the banks pay this fee instead of the lender.

Instead of getting interest on a loan for the amount to pay for CMHC, the banks will have to spend that amount to get the high ratio mortgage.

Might be an easy way to get the banks to stop loaning as much, and reduce the costs of home ownership to the average Canadian. Yay votes!

Or will the banks simply lose too much money?
As you mentioned, roughly $10,500 * 100,000=$1.05B of loaning per year to Canadians to pay their CMHC insurance to protect their financial slavemasters. Ouch.

The banks do pay it, then they collect it from the borrower. — Garth

#170 Pete in Barrie on 12.09.13 at 5:49 pm

#122 Daisy Mae said “Well, 62% of us DID NOT vote for Harper.”

Actually only just over 24% of eligible voters in 2011 voted for the conservatives. The true winner in 2011 was the non-voters at 38.6%. So, really, the apathy party really should be in power. OK, maybe it is!

#171 Ralph Cramdown on 12.09.13 at 5:56 pm

Nemesis, you disappoint me. Two things I found quite zennish were the Toronto lawyers living off the fat of the land:

Where some of [diet] Dr. Bernstein’s investment eventually ended up — including $2.1-million that an Ontario Superior Court judge termed a “theft” — is at the centre of a thorny legal battle between Dr. Bernstein and two business partners from his Bridle Path neighbourhood

http://news.nationalpost.com/2013/12/08/successful-diet-doctor-embroiled-in-thorny-legal-battle-over-toronto-real-estate-investments/

N.B. If discussing the article and referring to ‘worthless paper,’ please specify whether you’re referring to the mortgage on the building, or the publication emanating from said building…

Also, secrets of profitable gold mining in Canada:

The six-step scam was based on a repetitive cycle of processing pure gold into scrap gold, which is, in turn, sent to a refiner to be transformed once again into pure gold, Revenu-Québec said in its explanation of the fraud at the time. “The scheme is based on bogus transactions made in order to claim input tax refunds,” the ministry said. “No actual commercial activity ever takes place… With each [cycle], fraudulent gains grow and the scheme expands using amounts received from the government.”

http://business.financialpost.com/2013/12/09/kitco-metals-among-gold-traders-facing-quebec-tax-fraud-allegations/

#172 jess on 12.09.13 at 6:19 pm

upcoding

Monday, December 9, 2013Government Intervenes in False Claims Lawsuit Against Ipc the Hospitalist Co. Inc. Alleging Overbilling of Physician Services
The government has intervened in a lawsuit against IPC The Hospitalist Co. Inc., and its subsidiaries (IPC), alleging that IPC submitted false claims to federal health care programs, the Justice Department announced today. IPC, based in North Hollywood, Calif., is one of the largest providers of hospitalist services in the United States, employing physicians and other health care providers who work in more than 1,300 facilities in 28 states. Hospitalists are physicians who work only in hospitals and other long-term care facilities, overseeing and coordinating inpatient care from admission to discharge.

The lawsuit alleges that IPC physicians sought payment for higher and more expensive levels of medical service than were actually performed – a practice commonly referred to as “upcoding.” Specifically, the lawsuit alleges that IPC encouraged its physicians to bill at the highest levels regardless of the level of service provided, trained physicians to use higher level codes and encouraged physicians with lower billing levels to “catch up” to their peer..”department of justice blog
==================

Texas’ Other Death Penalty
by Rachel Pearson

A Galveston medical student comes to grips with a healthcare system in which her patients die from treatable conditions
http://www.texasobserver.org/a-galveston-med-student-describes-life-and-death-in-the-safety-net/

http://www.propublica.org/documents/item/886161-amended-complaint-segarra-v-frbny

#173 Derek R on 12.09.13 at 6:20 pm

#168 Smartalox on 12.09.13 at 5:09 pm asked:
So by your logic, does that mean that if I make $50k, but have $350k in investments and no debt, that I’m actually a one per center? What if those assets included a house?

Sorry, Smartalox. Not even close. In the US you need more than $1.2M free and clear of debt to join that club whether you own a house or not. And some commentators say that you need much more than that. It’s pretty difficult to say exactly how much but you can Google “1% by net worth” if you want more information on the topic.

#174 Derek R on 12.09.13 at 6:27 pm

In fact it looks like the latest figures for membership in the US 1% club is north of $8M net worth.

#175 jess on 12.09.13 at 6:27 pm

mail drop box
The firm that threatened to foreclose on hundreds of struggling D.C. homeowners is a mystery: It lists no owners, no local office, no Web site….
http://www.washingtonpost.com/sf/investigative/2013/12/08/debt-collecting-machine/?hpid=z3
=============
zug
Villagers give Glencore tax to affected nations swissinfo
A wonderful gesture from a relatively small number of genuinely concerned individuals. But also, a tacit admission of collective national guilt
http://taxjustice.blogspot.ca/

http://www.swissinfo.ch/eng/specials/switzerland_magnet/Zug_locals_squeezed_out_by_rising_house_prices.html?cid=29110024
Zug’s Secrets: Switzerland’s Corporate Hideaway
By Vivienne Walt / Zug Monday, Jan. 11, 2010
Zug’s Secrets: Switzerland’s Corporate Hideaway – TIME http://content.time.com/time/magazine/article/0,9171,2040142,00.html#ixzz2n0UjU9Ty

#176 Rabbit One on 12.09.13 at 6:29 pm

Normally, if you call someone ‘HNW’ (High NetWorth) individual, you don’t count Real Estate.
(not to mention about debt in it)

It doesn’t mean you are a millionaire if you own a million dollar house in world standard.
– maybe except Canada many people fell like they are millionaires

#177 Derek R on 12.09.13 at 6:34 pm

Oops! I mean $6.8M. But who’s counting!

Baby, You’re a Rich Man

#178 TurnerNation on 12.09.13 at 6:46 pm

As I said Corporate-Communism is the best economic model. Just ask Lil’ Trudoh.
Is H taking from Pinochet’s playbook? Worked “wonders” down there…history. You forgot!?

http://www.calgaryherald.com/news/politics/Braid+Tory+laws+very+mention+union+strikes+delivers+blow+free+speech/9243464/story.html?

“But not for Alberta’s public unions. Talking is now pretty much illegal.

The mere sight of pro-strike signs at demonstrations — like the three held at the legislature in recent days — could be used to bankrupt the unions. Aggressive prosecution could lead to a virtual shutdown of union criticism of the government.”

#179 jess on 12.09.13 at 6:48 pm

nemisis
practice vs preaching

Stefaans Brümmer investigation of Jackie Selebi, who was national police commissioner in South Africa and also the head of Interpol, helped bring about Selebi’s imprisonment on corruption charges. How did you find out about the story? read more

http://www.icij.org/blog/2013/11/im-still-waiting-my-first-car-chase

#180 Rexx Rock on 12.09.13 at 6:49 pm

Cmhc bailout coming from bank deposits.Its great how the govement allows the savers to be punished.The lying ,conman politicians hate the common folks and want to enslave us with high costs of living and high taxes.

#181 prkchp on 12.09.13 at 7:01 pm

> F told reporters CMHC “has become something more grand, I think, than it was intended to be.”

Has CMHC changed or have the people changed from a war hardened, hard working bunch to a sloth-like mass of entitled douchebags?

#182 hongcouver on 12.09.13 at 7:05 pm

Even though I have a much better job than my parents did I have no delusions about owning a home, it’s never going to happen unless prices plummet 70%.

#183 Grantmi on 12.09.13 at 7:23 pm

Here comes Santa Claus…
Here Comes Santa Claus..
Right down HAM Lane…
Nothing in the stocking for ..
all these millionaires…

Home-Price Curbs Chopping 10,000 Hong Kong Agents

Worst Ahead

http://bloom.bg/1cx7pNV

Home transactions in Hong Kong will probably drop about a third from 2012 to as low as 52,000 this year, the fewest since 1996, according to Knight Frank LLP. The number may fall to 45,000 next year, said the London-based property broker.

#184 :):( Ying Yang on 12.09.13 at 7:31 pm

Hello Kitty!

#185 Canadian Watchdog on 12.09.13 at 7:37 pm

#163 Ralph Cramdown

I don’t understand what a trade weighted real exchange rate is useful for.

A trade weighted real exchange rate, or effective real exchange rate is important because it reflects rates and prices used for current account payments, i.e., the price of goods and services that we import/export. Here's a matrix showing Canada's weightings (2008-2010) to the rest of the world. The basket is updated every two years.

Now look at CNY and USD adjusted weightings over the last two decades or so:

1993-1995 CNY 2.1%, USD 71.2%
1996-1998 CNY 2.6%, USD 71.1%
1999-2001 CNY 3.6%, USD 69.9%
2002-2004 CNY 6.1%, USD 66.3%
2005-2007 CNY 9.4%, USD 61.8%
2008-2010 CNY11.9%, USD 58.4%

China and other countries are playing a larger role in our economy, and that means more inflation exposure for Canadian households and investors.

The weightings above reflect direct trade with China and does not account for USD/CNY exposure. Most of what we buy is imported from the US, of which is imported from China. Why should this matter to you? Because the majority of goods and services you buy is priced (imported) in CNY and other Asian currencies, but if your savings and investments are only based in USD and CAD, then you've got a problem. What you need are assets denominated in those rising currencies.

Regardless, I don’t know that I entirely see your point. Some guy in a high inflation country is getting a better nominal return on gold than I would?

Not just nominal, in real terms as well. Again, this has to do with how assets are calculated based in currencies and which benchmarks or quotes are used to determine market value. For example: one of the biggest mistakes made by investors is quoting gold prices in USD, and even those that do look at prices in other currencies, usually do so wrongly by taking London or Kitco spot prices and converting it to USD/XXX thinking that's country xyz's price. If you know how to calculate prices into relative terms and where to obtain proper quotes, you'd know that gold is currently trading at $1500USD in one country, $1750 in another and so on. This is why Kyle Bass says he'd rather buy gold based in Yen as opposed to USD. There's a big difference.

It's hard to explain in one post. I only understand it well because I studied currencies before investing. All I can say is that investing has drastically changed into a game of global diversification and taking advantage of price discrepancies through arbitrage. If you're trading between USD and CAD accounts thinking you're making money, you'll be a dead duck in the long run.

Think globally.

#186 jess on 12.09.13 at 7:37 pm

tax liens check out this map

http://www.washingtonpost.com/sf/investigative/2013/12/08/local-laws-do-little-to-protect-homeowners/

#187 recharts on 12.09.13 at 7:42 pm

#158 Ronaldo on 12.09.13 at 3:14 pm
#133 recharts on 12.09.13 at 11:22 am

”Gold, bitcoin. Dead money. — Garth

I beg to differ. Bitcoin is electronic money!”

Bitcoin is something that is not required by anyone like a lot of other things out there. It is nothing more than a gigantic chain letter that will come to a disastrous end to those that are left holding them. Suckers are born every minute.

In the end very few things are really required.
Don’t believe me? Ask Buddha

#188 BMO is rising the rates on 12.09.13 at 7:46 pm

http://www.cbc.ca/news/business/bmo-raises-5-year-fixed-mortgage-rates-1.2457236

#189 Freedom First on 12.09.13 at 7:47 pm

130&131 Daisy Mae

Daisy, both of your comments to me show me that you just don’t understand.

#190 Just the Facts Mam on 12.09.13 at 7:54 pm

“Now, what I want is Facts. Teach these boys and girls nothing but Facts. Facts alone are wanted in life. Plant nothing else, and root out everything else. You can only form the minds of reasoning animals upon Facts; nothing else will ever be of any service to them.”

― Charles Dickens, Hard Times

Here are the hard facts:

CMHC is just another Swindle, played on Us by the ‘Government’ and the Banks

A secure loan, with a house as collateral, is zero risk to lender, even with zero down.

It is a fact that banks can dupe people into believing that there is a risk, but there is none.

“There are two ways to be fooled. One is to believe what isn’t true; the other is to refuse to believe what is true.”

– Søren Kierkegaard

#191 Derek R on 12.09.13 at 8:05 pm

Another good link on net worth and the 1%

http://www.investmentu.com/2013/January/how-to-tell-if-you%E2%80%99re-rich.html

#192 Republic_of_Western_Canada on 12.09.13 at 8:24 pm

#175 jess

As a former resident, I can assure you the low taxes of Zug were never much of a secret, nor are the generally extreme housing costs.

The Kanton took it upon themselves to offer a cheaper alternative to rich individuals, then companies, to attract them as a means of increasing their tiny tax base. An inventive solution for a little place having not much more than a minuscule agricultural industry.

Of course rents and realestate prices would increase but those would be a small percentage of expenses for high net worth entities. And for the longest time, rent & RE was still competitive, even cheaper, than many areas in Zurich city or especially Geneva.

The people of Zug owe nothing to alleged claimants, except to now increase the local tax rate as high as would be tolerated before losing those HNW in-migrants. Then, to distribute part of that windfall to the original residents of Zug as housing subsidies and improved infrastructure.

#193 tkid on 12.09.13 at 8:32 pm

*And because Linus is impervious to computer viruses, so is a Chromebook*

Oh my freaking god. No, no, no, Linux is NOT impervious to viruses. Most virus writers do not write Linux viruses because very few people actually run a PC with Linux as the operating system.

But when the Linux-as-the-operating-system gets targetted, it typically does not get targetted by the usual script kiddie. It tends to get targetted by those who are experts in hacking and using Linux. So you aren’t targetted by someone looking for free pizza on your credit card, you get targetted by someone who will own you.

It is the same for MACs. There are viruses for MACs, but as few people run a MAC, few people write viruses for MACs.

As tablets become more and more popular, they will be targetted, and Chromebooks are no exception.

There are no excuses for not getting anti-virus software and firewalls up and running on any operating system.

Impervious. Dear gods.

#194 Republic_of_Western_Canada on 12.09.13 at 8:47 pm

#157 Rural Rick on 12.09.13 at 2:59 pm

#52 Waterloo Resident on 12.08.13 at 10:02 pm

Get rid of Windows. Get Linux.
Chances are you can find a Linux program that will be better then that flaky Windows stuff anyway.

Amen brother!
If you have to start selectively protecting or restoring system images, or tightening up and bullet-proofing your system in general, there’s a lot better stuff out there which has been developed and refined over the last 30 years than some sloppy nightmare out of Redmond called microsoft.

Check this out:
http://www.oracle.com/technetwork/server-storage/solaris11/overview/solaris11-1-1845817.html

#167 45north
Not only the command line interface, but especially shell scripts…

#195 brainsail on 12.09.13 at 8:47 pm

“Rising riches: 1 in 5 in US reaches affluence”

http://www.cnbc.com/id/101256738

#196 Nemesis on 12.09.13 at 9:26 pm

@Ralph…

Those were fascinating glimpses. ThankYou.

@Jess… I’m QuiteCertain you’ll EnjoyThisImmensely:

http://www.youtube.com/watch?v=0-lcqIuVaR8&feature=share&list=PL300A2757FB2C668A&index=2

[NoteToRalph: “ProperAction&S**t” is actually a LotOfFun. Well, to clarify… Afterwards.]

#197 Infused with Opiates on 12.09.13 at 10:13 pm

152 Shawn

“Yes, and both top 1% income and wealth are worth
striving for and are reasonably attainable.”

Yes and no. Achieving the 1% in anything worthwhile
is not easily attainable.

#198 furoley on 12.10.13 at 12:30 pm

“…CMHC will have to pay the government a 3.25% ‘risk fee’ on all of the insurance it writes for people like Jane.

Guess what that’s for? Yup, you’re right – to build a fund which will protect taxpayers when the housing market slides into its inevitable correction, and default rates rise.”

I don’t understand this.
You, CMHC, as an insurer, should have a fund for market disturbancies. This is your business and your responsibility to to have it.

But, you CMCH, is also a government body. And of course, you are in default the government will help you.
But what is the reason to take your saved cash from one YOUR pocket and put it into your other pocket.

If you were accumulating cash for rainy days in your left pocket, then how taking some money from left pocket and putting them into your right pocket would help you to increase cash you have in total?

Something is missing in this picture

#199 Paul on 12.12.13 at 9:57 am

Even scarier….. CMHC insures on multi-unit residential properties being purchased (for millions of $$ usually) by wealthy investors.

Also, banks and other FI’s long ago started insuring almost all mortgages regardless of loan to value ratios, even below 80%, in order to offload the risks even further. Rather than the homeowner paying the CMHC premium, the banks pay it themselves for the added protection. WTF?