Americans

americans modified

Wow. Those Americans are sure worried about us. Isn’t it touching?

As I told you some weeks ago, the first hard-landing, you-guys-are-so-screwed hedge fund is set to be launched shortly by Spartan Fund Management. It’s called the Libertas Real Asset Opportunities Fund, and it’s making a bet F and his social engineers will fail miserably in pulling off a soft landing, with house prices drifting casually back to a more sane level.

“I think it’s a tough slog going forward,” says portfolio manager Michael Brown. “I don’t know what rabbits the government is going to be able to pull out of their hat. It may not be a fall of 50%, but it’s got to be a fall of 30%.”

Yikes. That would mean almost everyone who bought real estate in Canada since 2009 with a small downpayment would lose 100% of their equity or end up with an air tank and flippers. By the way, the new fund is open only to accredited investors – rich people with a million in (non-real estate) assets who can afford to bet wrong.

Meanwhile Time magazine has joined the growing list of Yanks looking north, amazed to see we’ve essentially repeated all of the mistakes that led Oakies to buy McMansions and greedy bankers to fund them. And the story’s no longer just that the Canadian housing market will be pooched, but the scope of the economic damage when it occurs.

There are three things everyone points to as they wait for Canada to blow up.

First, our condo economy. Close to 8% of the entire workforce is now in the construction business. In contrast, that’s four times the number working in the oil and gas business, and about equal to the entire manufacturing sector. Actually 7% of the whole economy is related to drywall and plumbing fixtures, and about a quarter when you add in all the realtors, bankers and brokers. These kinds of numbers have never existed before.

Second, jobs. I’ve been beating on this since the latest employment numbers were published because they’re so profound in implication. In all of 2013 only 8,500 jobs per month were added. Compare that to 25,900 a month in 2012 – which was still lacklustre. So when businesses lose the confidence to hire people, how can people be so moronic as to keep on buying houses and snorffling debt?

Third, speaking of debt, as more people lose their jobs (10,000 layoffs a week in December) the escalation of borrowing is now epic. As the debt-to-income ratio edges past 164% (for the first time), we easily eclipse the American borrowing binge which preceded a real estate crash bringing prices down by 32% and hitting some neighbourhoods up to 70%.

chart

So, with debt like that what happens if the economy continues to slow and unemployment rises? Or if long-term mortgage rates increase as Fed tapering rattles the bond market? Time quotes economist Aman Asaf: “Even a modest uptick in mortgage rates will translate into much higher homeownership costs, easily outpacing any expected increase in household incomes. This will price out some prospective home buyers, reinforcing the drop back in existing home sales that is already under way.”

And under way it is. As mentioned here last week, sales have been slipping now for four months nationally, and six months in some markets. It may all be corrected by the spring rush. But maybe not. As the hard-landing advocates point out, we Canadians are building the perfect storm – those same conditions which led to shock and awe among the American middle class.

So here’s the bottom line for the Canada-bashers: housing mayhem here won’t be the same as real estate slaughter there. After all, a fat majority of our mortgages are government-insured. But with CMHC devoid of the funds to make good on any wave of defaults, and a property bust coming along with increased unemployment, the peckerettes will be severely tested. Will the deficit have to bloat again? Will we have to stop spending on necessities, like sending 200 people to Israel along the PM?

American stock-picker and newsletter-writer Moe Zulfiqar is telling his clients Canada is “facing a possibly severe economic slowdown,” and it’s time to short the loonie.

“If the Canadian economy does go through an economic slowdown, the value of the Canadian dollar could decline. American investors can profit from this by shorting such exchange-traded funds (ETFs) as CurrencyShares Canadian Dollar Trust (NYSEArca/FXC). This ETF tracks the performance of the Canadian dollar. By shorting it, investors will be able to profit when the Canadian dollar goes down in value.”

Good logic. But the loonie’s already tanked 10% in the last year and dramatically since 2014 began. How much more is there?

Nobody knows. Shorting anything is a risky strategy. Unproven hedge funds are a gamble. And government actions (like the Bank of Canada deciding to hover up dollars) can cream an investor in short order.

As you know, a hard landing is not expected, but seriously possible. More likely is a slow and relentless unwinding of markets, with sales tapering off, prices in a long-term slide, and the most recent buyers being the greatest fools. The single best strategy for most families is diversification – ensuring all of your net worth is not in one asset at one address (hence my Rule of 90). It’s assured that things like bank preferred shares, for example, will be paying you a lot more over the next five years than residential real estate. If there is a housing crash, then REITs holding big blocks of rental accommodation will be hotly in demand, giving not only a nice income stream but the potential of a capital gain. And a piddly loonie is actually good for Canadian manufacturers and exporters, and most of the TSX.

Then again, the Yanks could be idiots. It’s different here. The Albertan unicorn herds alone prove it.

202 comments ↓

#1 DR on 01.19.14 at 6:54 pm

Rich get richer

#2 TurnerNation on 01.19.14 at 6:55 pm

Big week on the blog this week.

Mon: 24yr old FortMac Welder earning $300k (1.2m liquid), seeks advice on buying a 1m duplex with his buddy.

Tues: Blithe Barrington drops by with enunciation tips.

Wed: Blithe Barrington again: a primer on cravats.

Thurs: ‘She sells Seychelles’: Tax haven selection – with Blithe Barrington.

Fri: CSNY cover band.

Sat: ‘Kicking crass and taking names’: B. Barrington on the importance of social niceties.

#3 unbalanced on 01.19.14 at 7:01 pm

As usual another great entry. This one is an eye opener.

#4 LJ on 01.19.14 at 7:05 pm

Are you making fun of my Unicorn?

#5 Pounding sand in Peachland on 01.19.14 at 7:06 pm

That’s how it is in my house

#6 Dr. Know Nothing on 01.19.14 at 7:12 pm

Sorry to read about your injury. Best of luck with the surgery and I hope you make a full and speedy recovery.

Soft or hard it is going to feel hard to most people. As for the loonie dropping in value, one has to wonder how much good that is really going to do given how hollowed out the manufacturing sector has become. The most recent big closures we’ve all heard about are really just a continuation of what started as far back as the enactment of the FTA and has been picking up steam ever since for a myriad of reasons.

#7 Shawn on 01.19.14 at 7:16 pm

Debt to Income…

No argument that real estate prices should soften in Canada…

As to the debt to income chart, one might have expected debt to income to rise as interest rates fell. It seems possible that Canada had the logical graph (debt to income rising as interest rates kept falling) because it was easier to carry more debt as interest rates fell. People “bought” (borrowed) more of what was cheap. That’s Economics 101.

It’s possible that it was the Americans who got off track and their debt to income ratios fell because of a weird house price crash caused by idiot lenders and much more sub-prime heavy system and a complete financial panic that was triggered by these things.

Quite possibly we will now see American debt to income ratios creep up towards Canada’s as opposed to the opposite. Same is happening with home prices.

It is possible. no?

I suspect debt to income ratios have been increasing for maybe 200 years as lending became more and more available to everyone. It would be interesting to see the really long-term chart.

I also suspect debt to income ratios are higher in wealthy countries compared to poor countries (which direct is the cause and effect?)

#8 Hicksville Alberta on 01.19.14 at 7:17 pm

“In all of 2013 only 8,500 jobs per month were added.”

Want to bet that of these 8,500 (net) jobs created per month on average that more than 8,500 jobs per month (net) were added to the bureaucracy at all levels including healthcare and education?

All i see around here and in reading is a continuing contraction in the private sector.

Get well Garth and my thoughts are with you.

#9 Freddy on 01.19.14 at 7:19 pm

Another blog entry of Einsteinian proportions!

– Freddy

#10 Casual Observer on 01.19.14 at 7:27 pm

Having experienced the last housing downturn in the early 90’s, I can tell you that a slow, steady multi-year decline in house prices feels like death by a thousand cuts when you are trying to sell. The whole time you feel like an idiot because poor timing has trapped you in your own home.

You might be able to ride it out, but your neighbor may not. The price you can get for your home is directly influenced by your neighbor’s financial fortitude and his patience, both of which seem to be in decreasing supply these days.

Unless you have a ton of equity, you don’t own the house, the house owns you.

#11 gladiator on 01.19.14 at 7:31 pm

“After all, a fat majority of our mortgages are government-insured.”
Will the fact that mortgages are government-insured really keep prices from falling? Me don’t think so and here’s why:
Let’s say there’s a wave of defaults and people lose their houses to the banks. Banks are not in the RE management business – they will want to get their money back ASAP, so they will lower the prices of the repossessed homes as much as they deem necessary. They don’t care how little money they will get from such sales – the government will make them whole anyway (will return the remaining amount from the outstanding mortgage amount after the sales proceeds have been received). As soon as the idea that houses are not “a sure thing” anymore goes mainstream – expect even more listings and a bit later – more defaults and power of sales. There is no gradual decline when everybody suddenly wakes up to the new paradigm and runs for the exits.

On a more positive side, this Saturday the Yorkdale mall parking lot was choke-full and even the exit ramp towards Dufferin street that leads to it was full of cars. Are people aware that the shopping season is over?

#12 ☣ ☣ ☣ recharts on 01.19.14 at 7:35 pm

Bank of America Is Actively Preparing For The Chinese January 31 Trust Default

http://www.zerohedge.com/news/2014-01-19/bank-america-actively-preparing-chinese-january-31-trust-default

The potential first default, even if it’s not CEQ1 on 1/31, would be important based on the experience of what happened to the US and Europe; the market has tended to underestimate the initial event.

yet another end of the world scenario or is this a real problem?

The Zero guy’s lights went out some time ago. — Garth

#13 father on 01.19.14 at 7:39 pm

I really missed you Garth.

#14 Blithe Barrington on 01.19.14 at 7:44 pm

#2 TurnerNation on 01.19.14 at 6:55 pm

With great sadness I will be canceling those engagements. I will be on safari in the jungle looking for an Artificer who has lost his way.

#15 Obvious Truth on 01.19.14 at 7:45 pm

I’m in the short canada by being long US camp. Much easier.

Anything you own in c$ is worth 10 less in the last few months. Including a home.

Except for gold. Humorous. It probably cost 1500 dollars to get an ounce out of Scotia.

Think I’ll call the fund for a prospectus and a read.

#16 Cow Man on 01.19.14 at 7:51 pm

Veteran Agricultural Journalist Barry Wilson writes on Canadian farm debt; 20 years 300 % increase.
Wilson has watched with fascination a wholescale change in how the federal government deals with agricultural producers, gradually scaling back Ottawa’s role in the marketplace as well as its financial support for farmers who hit rough times.

He says the buoyant markets farmers are seeing now won’t last forever, and then there will be trouble. He says a big story that is being overlooked is the amount of debt that farmers are in — $70 billion as of 2012, from $22 billion in 1993.

“So it’s risen exponentially and it’s based on really low interest rates. They’ve just been borrowing more and more, and they never pay it down,” said Wilson.

“The US average national debt level for farmers is about half of what Canada’s is comparatively, which is a huge competitive advantage for the US because they don’t have the debt-servicing charges of Canadian farmers.”

#17 visorman30 on 01.19.14 at 7:51 pm

As I recall back in the 90’s there was a time when the loonie was at 60-70 cent range. I was only in high school at the time but what differences are there between now and then that would prevent the loonie from sliding (i.e. the US economy was much stronger, etc.).

It’s not that I disagree the loonie will slide more its just that its not unprecedented and I don’t know what the differences are between then and now.

#18 InLimbo on 01.19.14 at 7:52 pm

Add to that – all of the suppliers for furnishing, faucets, siding, heating, garden gnomes, etc that you see when driving on the main highway into any city and you are talking a large part of the employer/employee make up of this country – all supplied from asia.

#19 Mike Clarinet on 01.19.14 at 7:56 pm

Garth,

Sorry to hear you took a fall.

Could you take a moment to explain preferreds to us a bit? Financial sites I have looked at have either pretended they don’t exist or presented dozens of pages of charts with basis points and yield compared to recall date, etc. etc. Why does Royal Bank have more preferred share types than there are dog breeds?

#20 Freedom First on 01.19.14 at 7:59 pm

Thank you for posting today Garth. You are the real Iron Man. Good luck on your surgery and your healing. No worries, Bandit will wait for you to walk him again, and you will be walking him again. Garth, did CREA or Re Lepage send you a get well fast card? Or Brad?

Back on topic, I too agree the RE crash will be slow, but hard. There is no such thing as a soft landing. It is an impossibility. I know Garth can’t say that, but I can.

#21 juno on 01.19.14 at 8:00 pm

C and F screw the canadian ecomony. If you have cash I would be buying up Can-suck bucks.

Its already down form 101 to 91 cents. Man that 10 percent in less than 2 month. If it keep on sliding at this rate (from a crea standpoint ) the cansuckbuck will be worth -10 cents by the end of the year (BTW will never happen but with CREA stats that how you can interpret it)

Note Canadian sheeples the 1% who controls your freakin existances is betting against you. Humm guess whos going to win this one?

Anyways we are royally screwed if interest rates goes to 7 /8% real-estate is dead and so is 40% of the real estate speculators when they get called on their margin.

Don’t raise interest rates and we are Greece, buck fall and spinal til they are force to raise to 20% interest rate or let the canadian dollar become useless in the global markets. Oh yeah we have resources. But who is we. Yeah the 1% who owns those companies. Not the average john and jane doe who pays taxes and has no savings just debt.

I’d rather these companies sell into the world market for real dollars instead of a deflated CanSuckBuck. Get the best deal which makes the best profit. Screw the canadians who never invested in these companies, they are not the companies and don’t deserve a red cent unless they own share in them!

#22 mitzerboy on 01.19.14 at 8:03 pm

small bands of the unicorn herds cross the Saskatchewan border every now and again……

#23 Julia on 01.19.14 at 8:04 pm

OMG Garth, how on earth did you get that photo of my bed???

#24 Daisy Mae on 01.19.14 at 8:05 pm

“….and it’s making a bet F and his social engineers will fail miserably in pulling off a soft landing….”

“…by the way, the new fund is open only to accredited investors – rich people with a million in (non-real estate) assets who can afford to bet wrong.”

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

What does this mean? Is it contradictory?

#25 Bill on 01.19.14 at 8:26 pm

If Poloz and the Bank of Canada are not careful with their language at this week’s meeting, they might create a fearful, panicky situation. If the C dollar drops further, it will marginally help exporters. However, it will also trigger a sudden pullback by the consumer. Combine that with long term mortgage rates set to rise and it could create a disaster. For Canadians and the Conservatives. Hello Justin – now that’s scary.

Focus on the positives.

Be careful Stephen, F and Stephen

#26 NoOneOfConsequence on 01.19.14 at 8:28 pm

I have a few sites I like to visit daily…this being one of them. Another of my favorites has a pretty good article on Canadian Real Estate. They don’t normally print anything to do with Canada…but the growing expectation around the world of a coming crash here prompted a recent article.

Well…it’s actually slamming Mark Carney and his foolishness in blowing the biggest property bubble in the world.

http://www.acting-man.com/?p=28004

Interesting to read commentary from others expousing the poor statistical work of the CREA.

#27 NoName on 01.19.14 at 8:31 pm

Now that you mentioned unicorns…
_________________________________
we love metal and we love unicorns lets party!!!! :)
Music video by: sharon luxenburg
http://www.youtube.com/watch?v=3yYZa-70u_M&feature=share&list=UUTiQqullI7sh3TqQYzDwuKw&index=2
________________________________

#28 Andrew Woburn on 01.19.14 at 8:32 pm

When the Economist starts worrying about the future of jobs, the rest of us should pay attention:

“One recent study by academics at Oxford University suggests that 47% of today’s jobs could be automated in the next two decades.

….the benefits of technological progress are unevenly distributed, especially in the early stages of each new wave, and it is up to governments to spread them. In the 19th century it took the threat of revolution to bring about progressive reforms. Today’s governments would do well to start making the changes needed before their people get angry.”

http://www.economist.com/news/leaders/21594298-effect-todays-technology-tomorrows-jobs-will-be-immense-and-no-country-ready

Longer read here –

http://www.economist.com/news/briefing/21594264-previous-technological-innovation-has-always-delivered-more-long-run-employment-not-less

#29 Cici on 01.19.14 at 8:43 pm

I love this comforter set…where do I buy it?

I keep waking up freezing cause HE has stolen all the covers in his sleep. I had been thinking about purchasing a king-size duvet to solve the problem, but this is way cuter ;-)

#30 Gord on 01.19.14 at 8:46 pm

Further…

With bad language, Poloz may not only foster a bit of stimulus to manufactures and exporters but he may create the HARD landing in housing and the economy that F is trying to avoid.

Enough harsh language, it’s time to strike calming optimistic tone.

#31 Van Isle Renter on 01.19.14 at 8:49 pm

#7 Shawn on 01.19.14 at 7:16 pm

Are you on crack? Or are you one of those people who actually believe that down is the new up, cold is caused by global warming, Obama tells the truth and that Justin Trudeau is right in praising communism?

Broke is broke. The presidents of RBC and TD already are on record stating that they throttling back on handing out $$ as people are maxed out. There is nothing “logical” about going out and borrowing every penny that you can and putting it into a house.

Logical thing to do? Take the cheap money and pay off your 25% credit cards. I’m betting almost no one did this though.

#32 KommyKim on 01.19.14 at 8:49 pm

It looks like the Canadian housing market is going to crash harder than Garth Turner on an icy sidewalk.

Sorry, too soon? ;-)
jk, get better Garth!

#33 X on 01.19.14 at 8:52 pm

Tough situation.

F can’t raise rates, as it will tank the economy. Which is already faltering. Can’t raise the minimum down on a house to curb further RE debt gorging, as 8% of the population is employed there, which would make the jobs numbers worse. Doesn’t really matter if CMHC insurance has to be paid up front or not, really it is funded by the tax payer if the home owner can’t make payments. Wouldn’t want to do anything bad in the eye of the tax payer.

Just hope for a soft landing, and if it hits the fan, just blame it on unprudent lending, people borrowing too much despite warnings….

#34 TS on 01.19.14 at 8:59 pm

You’re wrong Garth.

John Budden’s Investment Radio show on CFRA 580 in Ottawa tells me that Gold is going to take a run in 2014.

THE CHINESE ARE BUYING GOLD GARTH!

THE CHINESE!!!!!

#35 EvilMagpie on 01.19.14 at 9:15 pm

Some say if you face west and whisper “Felarof” into the first hint of a Chinook wind, a herd of Alberta Unicorn come galloping across the sky, ushering in a warm +12C wind. They understand the language of men, after all.

Need to finish packing my stuff and move to America already. New job starts at the end of the month. I’m finally not going to feel poor. Well, poor might not be the right word, but I certainly won’t have that “need to borrow half a million” feeling about housing anymore. Just two times gross annual would buy quite the place!

I figure now’s probably the best time in the last few years to leave anyway.

#36 totalinvestor.com on 01.19.14 at 9:17 pm

Canada Housing Bubble – Far Too Late for Warnings – Rule of Predictions

http://totalinvestor.blogspot.ca/2014/01/canada-housing-bubble-far-too-late-for.html

#37 Shawn on 01.19.14 at 9:22 pm

Crack?

Number 31 Van Isle Renter says:

#7 Shawn on 01.19.14 at 7:16 pm

Are you on crack?

**************************************
mmm I love crack…

How’d any of that doomin’ about debt work out for Canadian investors over the past five years?

For American investors over the last five years, ten years, 50 years?

There has seldom been a time in my 53 years when pundits were not panicked about debt. Debtmageddon was all the range in the 70’s and 80’s.

#38 Paully on 01.19.14 at 9:27 pm

#10 Casual Observer on 01.19.14 at 7:27 pm

Great comment!

#39 Questions on 01.19.14 at 9:32 pm

How will toronto, Ontario and eastern canada be affected by the approval of keystone xl?

#40 Hicksville Alberta on 01.19.14 at 9:37 pm

” It’s different here. The Alberta unicorn herds alone prove it. ”

Here is a bit of what is going on with the real Alberta unicorn herd

“Shell shock, Oil giant warns of significantly lower profit ”
http://www.cnbc.com/id/101344098

Already heard of layoffs there and of course that ought to impact their suppliers and services, especially if they slow down on their oilsands expansions.

With a flighty oil and gas market it wouldn’t be too much of a stretch to think the price may continue to correct downwards and other real Alberta unicorns may have to cut back on their enthusiasim as well.

As to the others that pose as unicorns when in fact many are weevils and unaccountable spendthrifts, perhaps like Red Allison or the Calgreedy Mayor and his entourage, that may be another story for awhile longer but the rubber must meet the road sometime, unless of course the realities are mirages.

#41 b on 01.19.14 at 9:40 pm

“Snorffling”. Stellar word. Did you make it up?

You mean you don’t snorffle? — Garth

#42 RayofLight on 01.19.14 at 9:40 pm

To #215 “DR” on 01.18.14 who commented on my Comment #205, “RayofLight” 01.18.14 where I suggested Canadian Real Estate buyers and sellers, and Canada as a whole for that matter, would be better off with a US Style “Zillow.com “ information exchange web site, then the current system of essentially relying on an RE agent for your information.
“DR” commented:
“Rayoflight thanks for that….all the data and info and stats wont help you if you are outbid.
Not sure if you have actually put an offer in on a property in say the past ten years or not.
That’s how it works though, best offer takes it.”
I suggest you are a Real Estate Agent trying to do damage control.
I m a retired engineer and I thrive on unbiased information that is trustwhorthy, reliable and able to be placed in context. The common denominator of the “Bidding Wars” that you claim, is each bidder has been coached by an RE Agent. An Agent that currently MUST be used, and that has a financial incentive to “pump” the highest price possible.
If Canadians had access to unbiased Real Estate Information, from a source independent of the current RE cartel, maybe there would be less bidding wars, because fewer people would show up.
I suggest that with the increasing use of the internet, the current function of a Re Agent as a “Facilitator” of bringing buyer and sellers together will become obsolete. The sooner Canada gets RE Agents out of this mandatory loop, the better the health of the Canadian economy.
This same trend is occurring in the Financial Industry also. More people are turning to ETFs, Discount Brokers etc. and saying ” NO” to “Mutual Fund Sale-people” AKA “ Financial Advisors”
It’s just that the Financial Industry is currently about 20 years ahead of the RE Industry, but they’re still in the eighties.

#43 Bob on 01.19.14 at 9:41 pm

It would have been a good idea to raise interest rates in Canada a year ago, even by a quarter of a point. Just to send homebuyers a message. International economic observers stated that it was the right thing to do like the OECD.

It’s going to get harder and harder for the Conservatives to avoid an all out crash. I agree with one of the earlier posters that they better lay off the bad news for awhile, or they’ll get what they deserve. That would be F and the gang. Unfortunately, the rest of Canadians will suffer the most.

Tread lightly.

#44 T.O. Bubble Boy on 01.19.14 at 9:42 pm

You think Canada’s housing bubble is a tough call? Try China:
http://www.bloomberg.com/news/2014-01-18/china-december-home-prices-rise-as-guangzhou-shenzhen-add-20-.html

… December prices increased in 69 of the 70 cities tracked by the government…

…at least 10 Chinese cities, many of them provincial capitals, have tightened local property policies since November, with the major cities of Shenzhen, Shanghai and Guangzhou all raising minimum down payments for second homes to 70 percent from 60 percent…

which leads to:

…almost one-fifth of respondents in a Renmin University of China survey gave a zero score to the government’s property policies, indicating “near despair” with housing prices, the official China News Service reported last month, citing survey results…

#45 sheane wallace on 01.19.14 at 9:53 pm

So it is a crash coming after all. Probably of epic proportions.
Between 30 and 70 percents aligns perfectly with my predictions.
If we add the dollar crashing it becomes a catastrophe.

The worse thing in the whole story was the constant and repeated bragging by the little troll and Co on and how prudent and smart we are here in the great cold north.
Now is payback time.

The hemorrhoid faced will retire and leave us with the bill.

#46 sheane wallace on 01.19.14 at 10:04 pm

And a piddly loonie is actually good for Canadian manufacturers and exporters, and most of the TSX.
————————————
Wrong.

We need capital investments to be productive in high value added technology and knowledge sector.
This comes with a stronger dollar.

Just look at the Germany, the Euro is strong, they protect their people (there was never a housing bubble in Germany…), look at how their productivity grows more an more while our sucks more and more.

The whole fiction of low dollar helping the economy is just that: fiction. We can’t compete in manufacturing as there is no such left, the skills are rusty and a lower labour cost is not advantage at all.

In which areas would a lower dollar help? Tourism? Movie production? Give me a break. This is not a visionary thinking, it is the poor provincial sucker wet dreams.

It is astonishing how every bad news is twisted with a positive spin. It really sucks big time, it is pathetic,

Actually a lower dollar will make raw exports more competitive and, yes, put animators in Vancouver back to work. Then we can hire intelligentsia like you. — Garth

#47 Gh on 01.19.14 at 10:07 pm

Shorters of the Canadian $ – move on. It’s fallen too far too fast. The bad news is already baked in its recent fall.

There are better ways to make 1% on your money.

#48 young & foolish on 01.19.14 at 10:10 pm

Our housing “bubble” looks similar to Britain’s and Australia’s ….. the commonwealth connection.

Coincidence?

#49 DR on 01.19.14 at 10:13 pm

#5 Jeff on 04.01.08 at 12:36 am William:
Wake up neighbour! I am a Realtor in Vancouver and word on the street amongst Realtors is that we’re due for a 20% correction. And I am of the opinion that Vancouver will experience a 40% plus crash.
——————————————————————————————————————–

Who is this guy? he should get a medal

#50 young & foolish on 01.19.14 at 10:19 pm

“So it is a crash coming after all. Probably of epic proportions.”

Wow, bit-time gloom and doom aimed at one of the most stable, well governed, and richest countries in the world.

Take a good look beyond our borders …. Where ya gonna go?

#51 Victor V on 01.19.14 at 10:20 pm

http://www.theglobeandmail.com/globe-investor/personal-finance/mortgages/royal-bank-quietly-cuts-mortgage-rates/article16402627/

Royal Bank of Canada, the country’s largest mortgage lender, has quietly cut some of its mortgage rates this weekend. The move appears to be part of a broader dip in rates, although economists generally still expect an increase in 2014….

…Royal Bank of Canada, which normally issues a press release when it changes its mortgage rates, made this move quietly, simply posting the new rates on its site.

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

Done “quietly” on a Sunday night. Guess they don’t want to offend F this time around.

#52 Steady on 01.19.14 at 10:24 pm

Royal Bank quietly cuts mortgage rates

http://www.theglobeandmail.com/globe-investor/personal-finance/mortgages/royal-bank-quietly-cuts-mortgage-rates/article16402627/

#53 Steve on 01.19.14 at 10:25 pm

Calgary Oil and Gas company producers sell oil in $US and pay their employees in $CDN.

#54 Victor V on 01.19.14 at 10:26 pm

http://www.theglobeandmail.com/report-on-business/economy/poloz-unlikely-to-cut-rates-despite-deflation-concern/article16402247/

The Bank of Canada moved to a neutral monetary stance in October, implying an equal likelihood that its next move will be a rate cut, or a hike. The bank’s key overnight lending rate has been fixed at 1 per cent since September, 2010. “Poloz has really defined himself by making it clear there is symmetry behind the bank’s inflation mandate, namely that ‘if it goes too far on either side, we have to respond.’ ”

And yet not one of 37 economists polled by Reuters last week expects Mr. Poloz to act Wednesday. Indeed, all of the respondents say the bank’s next move will be to raise rates. The median forecast is a quarter-percentage-point increase in mid-2015, according to the poll.

#55 young & foolish on 01.19.14 at 10:32 pm

Regarding the hollowed out manufacturing sector: it was well organized (25 years in the making, sold as part of globalization push ) as a way to push out the old tech to the developing nations, and eventually bring in the new methods which require new technologies with a fraction of the workers.

Your wages are not likely to go up any time soon …..

#56 Bill on 01.19.14 at 10:38 pm

“Shorters of the Canadian $ – move on. It’s fallen too far too fast. The bad news is already baked in its recent fall.

There are better ways to make 1% on your money.”
—————————————————————-
Shorting costs money and there is a big risk – you could get hurt quick. Selling your C$ and buying US$ also costs exchange rates.

The time to short the Canadian dollar was last year. The trade is done. Unfortunately, there is no other easy way to short the Canadian housing market. Instead, the shorters of Canada might be better off to buy some the stock of the Canadian raw producers and exporters. That’s the ironic thing. The TSX is going to rise this year.

#57 young & foolish on 01.19.14 at 10:38 pm

I worry about those waiting for the “reversion to the mean” ….. the egg-heads have taken over monetary policy everywhere, and they are not about to let go.

In what markets can you trust?

#58 Muttley O'Toole on 01.19.14 at 10:49 pm

So, who is going to lead the push for “GT for Prime Minister by public acclamation” campaign?
Will Smoking Man lead the funding campaign?
Will GT lead a new party?
Will Canadians back a GT for benign dictator campaign.
So many questions, so few answers.
Well, it appears 70% of Canadians will be well & truly screwed and you could do a hell of a lot worse with other options.

#59 not 1st on 01.19.14 at 10:51 pm

#16 Cow Man on 01.19.14 at 7:51 pm

You do realize of course that the majority of U.S. farm debt and commodity losses in rough years have been socialized to the general coffers via the farm bill thats been constantly renewed now for 20 years. Its usually in the range of several hundred billion dollars per year and thats also the reason the U.S. small communities are vibrant and have people and industries.

Canada has never dumped in the kind of money the U.S. has to keep all the illusions afloat. Hence our little old trillion in debt is nothing compared to their 100 trillion. Apples to apples friend.

#60 Mr. Frugal on 01.19.14 at 10:53 pm

The rule of 90 makes perfect sense. It we all followed this, nobody would be bidding up these prices and we wouldn’t have a housing bubble. People can differentiate between “what they think they deserve” and “what they can actually afford”.

#61 timmy on 01.19.14 at 10:53 pm

Of course Harpo went to Israel, why isn’t anyone surprised. What most don’t know is that Harper weaseled out if the UN anti-droughts convention

http://www.cbc.ca/m/news/#!/content/1.1388320
Canada quietly pulls out of UN anti-droughts convention

Now Canada is the only country not part of the agreement. This guy is a real #$%!$

#62 Marco Polo on 01.19.14 at 10:58 pm

Some have been proponants of privatizing CMHC, as I was. Having reflected on this, it would be a bad idea. A private CMHC would likely pull many more cards, like zero down, longer amortizations, etc. I think in this day and age, we don’t need CMHC at all.

Owning a home or property is a privilege, not a right. By the way, there seem to be many more restrictions on bare land lending from banks than RE.

CMHC should be changed to 10 or 20 percent down, with no further CMHC support after 500K. If you can’t afford those terms, you can’t afford the home. Especially in a rising rate future.

#63 sheane wallace on 01.19.14 at 10:59 pm

Actually a lower dollar will make raw exports more competitive and, yes, put animators in Vancouver back to work.
………
raw exports? You mean like real third world country?

———————————
Then we can hire intelligentsia like you. — Garth
………..
If you can afford me even though every dollar would return tenfold.
Don’t get me started on productivity and ‘leadership’.

#64 sheane wallace on 01.19.14 at 11:03 pm

#50 young & foolish on 01.19.14 at 10:19 pm
“So it is a crash coming after all. Probably of epic proportions.”

Wow, bit-time gloom and doom aimed at one of the most stable, well governed, and richest countries in the world.

Take a good look beyond our borders …. Where ya gonna go?
——————————-

They call that brainwashed.
Ever been to Germany, Northern Europe/Scandinavia, Japan, Australia, even Singapore?

#65 ☣ ☣ ☣ recharts on 01.19.14 at 11:06 pm

“The Zero guy’s lights went out some time ago. — Garth”
—————–
I am more interested about China. Zerohedge is just the messenger, let’s not kill him

#66 sheane wallace on 01.19.14 at 11:07 pm

Switzerland, Austria, Netherlands, Denmark, even Slovenia?

#67 DIMWITS'R'US on 01.19.14 at 11:16 pm

The whole “accredited investor” scam is just another way the financial services industry (and their government helpers) keep the average working class folk out of the good stuff.
Sure, the government will let you bet your ENTIRE life savings on DIMWIT penny stocks but you can’t invest in an intelligent (but speculative) hedge fund unless you have like $150,000 to lay down, or you’re classed as an “accredited investor”? Are you kidding me?

The government opens casinos that rid the most financial vulnerable of their last dollar but these same sad people can’t bet on an intelligent hedge fund because this same Canadian government says its too risky and would be unethical to allow such a thing. Of course the financial services industry whole heartedly agrees because who else would buy the shitty penny stocks they peddled on their exchanges? Makes you sick of the whole industry.
The stock exchanges need the average folk more than the average folk need the stock exchanges. The thoughtful folk who see this will see other options.

#68 Mark on 01.19.14 at 11:17 pm

I wouldn’t count on the CAD$ being weak for much longer. Record short interest in the recent CoT report (which usually is a pretty good sign of a violent unwinding in the near future). And the deflation in Canada will result in significant demand for CAD$ to repay CAD$ debts. Short the Canadian dollar at your own risk. Borrowers are not going to be bailed out by a lower CAD$. This is not the 1990s!!

#69 don on 01.19.14 at 11:18 pm

Shawn #37. Are you serious, can you really not see the forest for the trees. Debt simply cannot out grow wealth forever. Period. stop. end of story.

#70 Mark on 01.19.14 at 11:19 pm

” Indeed, all of the respondents say the bank’s next move will be to raise rates.”

Sounds like the ‘economists’ are sharing the crack pipe with Rob Ford. The BoC needs to cut now, or they got serious egg on their face, and they will summarily be taken out back and their monetary policy shot. Can you say “much higher Canadian dollar”?

#71 LP on 01.19.14 at 11:22 pm

#41 b on 01.19.14 at 9:40 pm
“Snorffling”. Stellar word. Did you make it up?

You mean you don’t snorffle? — Garth

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

I don’t think so. Will it make me go blind?

#72 Soylent Green is People on 01.19.14 at 11:31 pm

By the amazing Kevin Page who was an ‘uge thorn in Harper’s side the whole time he was budget officer:

…………………

Income inequality is increasing in Canada and international comparisons put us well behind many European countries. The richest 1 per cent in Canada earns about 10.5 per cent of income, up from about 7 per cent some 30 years ago.

–> About 9 per cent of our population lives in poverty, including some 570,000 of our children. Without aggressive action, these numbers are bound to get worse, not better.

Canadians have also added a lot of debt to our balance sheets. The ratio of household financial liabilities to household disposable income now sits at a record high 166 per cent, compared to 110 per cent in 2000.

And as Canadians try to pay off this increased debt, inevitably consumption will further decrease, adding to more economic drift or stagnation.

http://www.thestar.com/opinion/commentary/2014/01/18/before_we_can_fix_our_economy_we_must_fix_government.html

.

#73 john on 01.19.14 at 11:34 pm

gladiator #11 the phony Canadian RE economy is going to crumble just like the US fake RE economy. As for Yorkdale you have nothing but window shoppers and families killing time taking their kids out to the mall. The real sales seem to be food and beverages. A small number of shoppers which would explain the never ending for lease signs all over the GTA and a 164 % debt to income ratio

#74 Pr on 01.19.14 at 11:36 pm

…Or if long-term mortgage rates increase…

IF! Well it wont happen! Like carney said.

#75 Inglorious Investor on 01.19.14 at 11:36 pm

They all keep saying that at some point rates will rise. This is like the old saying: “The future belongs to Canada, and it always will.”

They always want you to believe that rates will rise because this gets people to borrow and others to put money in banks. Win win for Messrs. TD, Scotia, Royal et al.

There are two many people claiming that we’ve entered a secular period of higher interest rates. When everyone agrees on something, it usually means we are too early or two late. Consider the Canadian housing bubble, which was supposed to burst in 2008. No, 2009. No, 2010. Etc. Etc. Well, in the case of a bond bear and interest rates, we can’t be too late, so… But when it does happen, the first move could be a earth moving. Or did we already feel the first tremors last Spring? Could we see a Fed balance sheet of 50 trillion?

Barring a severe recession, real home price declines in Canada could be largely masked by general inflation. Homes may not be the (ahem) “investments” they were over the last 15 years, but most home owners may not feel too worried about their net worth because their homes will seem to retain their values well.

But if prices do decline much in the GTA, the Ontario government can just declare everything north of Steeles a green belt while they advertise Canadian real estate as a great investment for international money launderers.

#76 Marie on 01.19.14 at 11:41 pm

CiCi
I love this comforter set…where do I buy it?

I keep waking up freezing cause HE has stolen all the covers in his sleep. I had been thinking about purchasing a king-size duvet to solve the problem, but this is way cuter ;-)
—————-

I feel your loss of covers. In our house my DH ends up with most of our king size bed as well by morning. BTW we have a king size duvet and it DOESN’T help. Trust. At times I’ll get up and give my side a good YANK…gets the message across and his rxn is You Tube worthy. No, I haven’t taped it. Yet.

Good luck!

#77 john on 01.19.14 at 11:47 pm

A balanced article in the star?http://www.thestar.com/business/personal_finance/2014/01/10/beware_the_perils_of_buying_or_selling_a_preconstruction_condo.html

#78 US Recovery on 01.19.14 at 11:54 pm

http://www.youtube.com/watch?v=bYkl3XlEneA

#79 Calgary Conditional Owner on 01.19.14 at 11:56 pm

Hey Garth, really sorry to hear about your accident but I’m sure you will punch the injury in the face with stoicism, badassity and Canadian fortitude.

I actually have a question: when applying the rule of 90, are we to take the value of the equity on real estate or the total value of the real estate? I.E. I’m 33, if my home is worth $400k and has $10k equity on it, should my net worth be $17k or $701k to comply with it?

#80 Frustrated Kiwi on 01.20.14 at 12:09 am

The new demographia survey is just out:
http://demographia.com/dhi.pdf
Our bubble is bigger than your bubble (except in Vancouver of course). Can’t believe Auckland has made it up to a median’s multiple of 8 – ridiculous for a city of just over a million.

#81 Valyrian_Steel on 01.20.14 at 12:11 am

Glad I bought in 2002. And glad that I am mortgage free.

If the **** hits the fan with a housing correction I will be happy to vultch me some bargains… if it doesn’t happen, I will be happy to continue to live in my condo for almost nothing (reasonable strata fees, minimal property tax), and continue to plow money into dividend stocks, REITS, preferreds, instead of massive mortgage payments… life is good. Making 3k in monthly dividends now, in my early 40’s. Don’t hate me.

#82 Squatter on 01.20.14 at 12:13 am

It seems that the tapering in U.S. will increase their bond yields.
Now why would that impact canadian bond yields?

#83 Son of Ponzi on 01.20.14 at 12:44 am

#64
you forgot Austria.

#84 Fed-up on 01.20.14 at 12:56 am

@ #63 and 64 sheane wallace

—————————————————————————–

I agree with everything that you have posted tonight Shane-O.

This country is fast becoming an international joke with a disappearing manufacturing and private sector and we now rank 25th in innovation. Why would anyone here want to take risks and be innovative when they can just drop out of school and soak the public while they work for the fire department, Hydro 1, the TTC or any other public sector job where you get insanely overpaid for practically doing nothing all day?

Harper is making the Trudeau days look like happy times by comparison.

#85 bdy sktrn on 01.20.14 at 2:19 am

if anybody watched the seahawks today , a gruesome leg injury occurred on a critical (badly mis-called) play, so it was replayed way too many times. i truly hope that whatever happened to our host is childs play in comparison.

denver looked way better than seattle imho.

#86 Darth on 01.20.14 at 3:21 am

#42 RayofLight – I have a feeling if this guy invented a time machine and went back 15 years he would still load up on pets.com.

#87 Jooks on 01.20.14 at 3:50 am

Get better soon!

I’m so thankful to be renting in beautiful Vancouver! I don’t have to worry about mowing the lawn, shoveling sidewalks, broken gurbarator, wasps invasion, broken dishwasher, leaky toilet and paying for mortgage! Because that’s my landlords job. Muahaha

Yippee!

#88 Hmm... Wondering on 01.20.14 at 3:57 am

Hi Big G :

Just wondering if the pic that you chose to go with the title of “Americans” was meant to represent the debasement of the American ( North American ) male in modern pop culture and media. If so, I heartily agree.

#89 German on 01.20.14 at 4:12 am

@46 “Just look at the Germany, the Euro is strong, they protect their people (there was never a housing bubble in Germany…),”

Living in Germany at the moment. Seems around here people need something to buy that doesn’t have a word in English. It’s a lump of money you need to pay a substantial percentage of the property down at the time of purchase.

The Germans also don’t have a stigma about renting.

That said, everyone’s obsessed with long rental leases, spotless apartments and installing your own kitchen when you move into a place. Realtor commissions seem to be astronomical too. Everything is geared towards people staying put and living in one spot for a long time.

It’s enough of a pain to rent, and there’s such a premium on short-term rentals, that it may even be profitable to lease a unit, install the kitchen and sublet to Britons or Americans.

And Garth’s right about the animators. The low dollar briefly made Canada competitive with Ireland and India for skilled outsourcing. Sure not as cheap as India, but the time zone and cultural differences were good value at $0.66 USD. When the dollar went up, I watched tech jobs go to Brazil and India (then Dalton said techs didn’t get overtime…), but a good thing happened with the film industry… Toronto seemed to prove itself as useful for films, even at a $1.09 USD.

I hate currency fluctuations, but they do shake things up.

Glad I’m earning Euros at the moment.

#90 Ayn Rand Army on 01.20.14 at 4:14 am

We’re F’d, i told you so this day (years) would come.

As a small business, this is a bad year so far.

The US is dead. and me too.

F this. looking for an exit soon…..

my personal income this year, $3500.

FU CRA I’m done.

GL

#91 Exurban on 01.20.14 at 4:18 am

The falling dollar is a mixed blessing. Most producers need to import equipment, ingredients, software, and whatnot in order to produce whatever it is they make. All that becomes more expensive when the C$ is low.

#92 Ayn Rand Army on 01.20.14 at 4:25 am

It no doubt seems women are the smartest of our species.

This wonderful lady, Isabel Paterson, was a friend of Ayn’s. Until they had a falling out some years later. (Of course Ayn was right, as usual, she was a genius)

but Isable ain’t no slouch either…… check out these quotes. (public service, my a$$) And yours too!

http://the-libertarian.co.uk/isabel-paterson-10-great-quotes/

Isabel Paterson was a leading literary critic, journalist, novelist and philosopher. She was a great inspiration to Ayn Rand, and is considered one of the key founders of the American libertarian movement. Her best-known work is a treatise on philosophy, economics and history called The God of the Machine.

On freedom:

“The most dimwitted attempt at argument we’ve heard in this mortal world is the supposed retort to any advocate of freedom: ‘Do you mean to be free to starve?’ We mean, do you think you can’t starve with your hands tied?”

On state education:

“A tax-supported, compulsory educational system is the complete model of the totalitarian state.”

“Do you think nobody would willingly entrust his children to you or pay you for teaching them? Why do you have to extort your fees and collect your pupils by compulsion?”

On individualism:

“Right now it is a terrible thing to be a rugged individualist; but we don’t know what else to be except a feeble nonentity.”

On good intentions:

“Most of the harm in the world is done by good people, and not by accident, lapse, or omission. It is the result of their deliberate actions, long persevered in, which they hold to be motivated by high ideals towards virtuous ends.”

“The humanitarian in theory is the terrorist in action.”

“The philanthropist, the politician, and the pimp are found in alliance because they have the same motives, they seek the same ends, to exist for, through, and by others.”

On legislation:

“No law can give power to private persons; every law transfers power from private persons to government.”

On the military:

“An army is a diversion of energy from the productive life of a nation.”

On the apologists of Communism and the Ukranian famine:

“But when the good people do know, as they certainly do, that three million persons (at the least estimate) have starved to death in one year by the methods the approve, why do they still fraternize with the murderers and support the measures? Because they have been told that the lingering death of the three millions might ultimately benefit a greater number. The argument applies equally well to cannibalism [emphasis in text].”

You can read The God of the Machine for free from the Mises Institute.

#93 Ayn Rand Army on 01.20.14 at 4:45 am

This is my third and final time posting this on Garth’s blog. (Thanks G). But i’m posting it again, cuz it’s still right. What are we gonna do, Canaduh?

Dear Capitalist Antagonist

The positive results of capitalism that surround us are evidenced in everything we own and use daily through the products brought into existence by successful business entrepreneurs. Modern life’s items including all the benefits bestowed upon us by the public sector including the highly touted roads that we depend on so much, the modern conveniences of modern life, are brought to us in one way or another by a base of people called capitalists. The money raisers and wealth creators, the builders of enterprise and industry, the successful business operators who bring people and resources together in the process of delivering products and services for society to consume.

We all know most business start-ups fail and in doing so many starry eyed entrepreneurs lose their life’s savings and years of their time trying to commercialize some idea or invention into a business success. Just watch Dragons Den to see a sample of the turds that get flushed away everyday and the odd few that have a small chance to succeed. Many more obscure businesses languish on the margins of viability indefinitely without failing. These enterprises are a lot of work. So considering this, one must appreciate the rarity of those highly successful and mighty business operations that do succeed, the ones that amass great wealth are truly exceptional to the rule and tremendously beneficial to society and greatly responsible for raising our standard of living. Think Microsoft, Potash, Exxon, RIM, 3M, Intel, Apple etc.

So I’m a defender of capitalism because I’m a capitalist, I’m a small business owner and I’m an entrepreneur and I’m often disgusted watching government constantly squander wealth day after day on the public sector and other incoherent statist pursuits.

Lately many people are blaming capitalism for the corruption and distress in our economy and I constantly argue that people’s anger is misplaced. The villain in our failing economy is not capitalism, its not entrepreneurship, its not rich business people, it’s our government, it’s our banks, and it’s our bloated public sector. These institutions are responsible for our crumbling economy, these institutions are not capitalist they are socialist parasites feeding on the host of an underlying real economy that is capitalism. We have a mixed capitalist/socialist economy with a growing portion of free loaders living off the real economy, hordes of looters feeding on the private sector successes, too many legalized thieves supporting their standard of living on the back of a slowly shrinking impoverished private sector working class poor who are struggling to support an ever expanding expanse of non-productive public sector upper-class socialites. The working private sector businesses and their employees are supporting an ever growing elitist public sector, narcissistic government and an ever growing unsound fraudulent banking system. These are the reasons why so many people have so much debt, these are the reasons why the poor are getting poorer, and this is why it takes two full time incomes to support the average household, soon to be three. Government spending and inflation are robbing us and our future generations blind.

Governments are complicit in contributing to our economic demise. Bailouts for banks and large financial institutions and numerous manufacturing corporations are used to keep the conduits and creators of wealth alive, keeping workers on life support so as not to lose any slaves, government must not allow their cronies to fail and disturb their
system of theft that took so long to construct. Government will continue to guarantee bank deposits and loan books; they will continue to buy billions in bad mortgages and bad debts brought about by their own orchestrated credit expansions puffed up in the
news as a strong economy and rising GDP during the boom phase, such popular fun and political exuberance until the bust lays waste but that’s always postponed until the next guy gets elected.

Everyday in the news it’s one waste fest after another, it’s this scandal here and that intervention there, botchery by bureaucrats. These jokers have turned politics into a reality TV soap opera for the ignorant masses to debate about how they best want to be
oppressed. Proof of our taxpayer funded public education/daycare system’s curriculum of ignorance.

Our modern banks create money out of thin air in a fractional reserve banking system condoned and fostered by government for the benefit of government, a system of misallocation of funds and fraudulent activity. Historic jurisprudence clearly holds that
only term deposits are legal tender for lending at a 100% reserve ratio with some agreed to rate of interest to be paid to the depositor for use of his funds, anything else is misallocation of funds and fraud. Long standing principles developed over centuries for sound banking have been discarded for the benefit of modern banks and governments
around the world at the demise of society’s wealth through inflation and rescue packages to crooks. See the bank of Amsterdam as an example of the most successful and honest bank in world history when gold was money. Gold still is money and always will be.

These are facts of reality and fundamental pillars of economics where erosion will lead to economic demise and social chaos.

And of course the public sector, what a tremendous waste of money and good people’s talents who unfortunately do not contribute nearly as much to society as they receive. If public sector workers had to put cash registers in their public sector offices they would soon realize that no one is actually willing to pay them the high prices needed to support
the delivery of their crappy services. They are so frightened to death of this idea you’ll notice how indignant a public sector worker will get at the mere suggestion of converting them to the private sector, they know full well they could never honestly earn their standard of living by continuing doing what they are doing. They know full well how demanding a free market would be and the impossible task it would be for them to separate people from their money without the force of government extortion feeding their
bloated budgets and lavish compensation.

All the fine people in government, banking and the public sector need to realize that they are in fact the source of much of the looming economic catastrophe we are facing. They are the beneficiaries of immorality, they are the beneficiaries of looting and government largess, they are the beneficiaries of wealth stripped from the real economy, the true
tangible and underlying economy that actually exists built on savings, brains, brawn and risk called capitalism.

Our public sector lottery winners should feel ashamed of themselves and a tremendous sense of guilt and responsibility for the downfall of our economy and the suffering of the poor and working class serfs beneath them, but like a stampede of cows they unknowingly trample over their heads while protesting any cuts and demanding the party must go on.

Socialism destroys capital. This is why capital and jobs flee unfriendly jurisdictions. This is what helped keep the USA competitive domestically, it was competition amongst the states; it’s flee or die; survival of the fittest, efficiency does matter. As it gets worse with time more businesses in the socialist republic of Canada will leave. There will be less arguing from guys like me and fewer votes in the ballot box as more people vote with their feet and leave while bidding farewell to the blood sucking leeches until eventually the only people left in the country will be a bunch of useless twerps and lying politicians. The wealth will be gone and the cannibals will be left to dine upon one another like they did in Soviet Russia.

Socialism’s great until you run out of other people’s money.

This post is off topic for a http://www.battery.ca but I like many others lately have been preoccupied by economics over the years 2008-09 and felt this should be said. It’s sad to watch as economies implode globally due to all the damage done by unsound money, political corruption and ethical bankruptcy, so much time and energy being wasted trying to solve the problems of socialism with treatment by chemotherapy while the true problem is clearly heart attack. I hope society can identify the problems for what they are soon before working to diligently toward their solution.

The central pillar of any solution will be to rebuild our global economy on a foundation of sound money, which means we must return to commodity money and a gold standard as the universal global and domestic currency.

#94 Tony on 01.20.14 at 4:51 am

Re: #34 TS on 01.19.14 at 8:59 pm

2014 will be known as the year of the “great untaper” in America. Bond purchases will increase from 85 billion a month to around 150 billion a month to try to stave off recession. Lower interest rates usually mean higher gold prices. We could see gold double or triple this year.

#95 Ayn Rand Army on 01.20.14 at 5:01 am

That should have read http://www.batteryblog.ca above…

Like anyone cares…..

That post was on my business site for 6 months back then (inspired by Greaterfool.com) but i finally pulled it cuz i was afraid it was not really good for customer relations…etc…. hence they’ve now broken down haha

USA is F’in dead! and Canaduh never existed….. in my world….

#96 Pulp Faction on 01.20.14 at 5:11 am

Garth Turner: The Most Interesting Federal Finance Minister In The World.

Glad you didn’t land on your thick head, you old fock ! :-)

#97 Happy Renting on 01.20.14 at 5:28 am

#51 & 52 – Wow, RBC cutting mortgage rates. Because that’s what we really need!

Really getting used to the rest of the world watching Canada, waiting for the train wreck. Have practice living with such scrutiny by having Rob Ford as mayor.

#98 Dan on 01.20.14 at 5:31 am

Garth, you couldn’t be more right about the coming correction,although quite conservative in my view,(look out below Vancouverites!!)
#34 TS ,amen, you have no idea,but get the non-paper
variety!
I hope you’re back on your feet asap,(bike season),
and all…used to ride myself many years ago,but I got
smoked by a drunk driver.Don’t own a bike anymore but I still go out for a blast once in a while on one of the few
friends left that still ride motorcycles,most of us have given it up.Don’t tell my wife!

Best Wishes, Dan

#99 Pete on 01.20.14 at 6:53 am

I think at the higher end of the market ($1.5M+) we are going to see extreme price stickiness. Once they dream up a value people do not let go of it easily. I am seeing in our area (Oakville / Burlington) a bunch of houses that did not sell last year just re-listed at exactly the same price. Hoping for better times I guess….Also in many cases people with those kind of properties do not have to sell immediately – they might be downsizers who will sell “if I get my price”.

So I think in some case we might see a long, painful grind downwards rather than a sudden across-the- board price decrease.

#100 Habbit on 01.20.14 at 7:06 am

Another great read. Thanks for posting Garth.

#101 NoName on 01.20.14 at 7:49 am

Interesting read.

Boils down to, why school train and invest in canadians , when its easier to import already trains schooled and experienced work force. Plus he hinted on consumer debt and interest rates.
The session ended with Mr. Harper asked what he thinks his legacy would be.

“Legacy. I’m too young to talk about legacy,” he joked.

But Mr. Harper then responded with a defence of his government’s track record on immigration and its importance to the economy.

“I think the most important legacy of this government is re-orienting our economic immigration so it’s not just application-based, so that we can actually go out and recruit immigrants quickly to fill job needs in the Canadian economy,” the Prime Minister said.

I don’t want to twist his legacy statement, I just want to say Mr. Hayper we can not be all plummer, there is only limited number of plugged toilets every day.

http://m.hilltimes.com/news/news/2014/01/20/harper-suggests-his-legacy-could-be-re-orienting-economic-immigration/37138

#102 gg on 01.20.14 at 8:28 am

Your timing sucks:

Once predicted interest rates to rise up … are still dead. You predicted rates to increase years ago. See you get things wrong Garth.

http://www.theglobeandmail.com/globe-investor/personal-finance/mortgages/royal-bank-quietly-cuts-mortgage-rates/article16402627/

Five-year rates increased about 1.0% in 2013, as I suspected. They just decline 0.1%. You are a funny guy. — Garth

#103 Ralph Cramdown on 01.20.14 at 8:40 am

#91 Ayn Rand Army — “You can read The God of the Machine for free from the Mises Institute.”

If there’s one thing I respect about this outfit, it is that they admit the value of their work, and price it accordingly.

See also: http://www.aynrand.org/site/PageServer?pagename=education_classroom_books

Worth every penny, if you’ve got a wood stove.

#104 Victor V on 01.20.14 at 8:56 am

Public-sector packages simply unaffordable

http://www.theglobeandmail.com/report-on-business/rob-commentary/public-sector-packages-simply-unaffordable/article16402741/

The Canadian Federation of Independent Business estimates that “the unfunded shortfall for public pension plans across the country likely exceeds $300-billion … or $9,000 for every man, woman and child in this country.” Despite their staggering size, these taxpayer liabilities rarely make headlines. That’s why the CFIB calls them “Canada’s hidden unfunded public sector pension liabilities.”

But these pension problems won’t go unnoticed much longer. As increasing numbers of civil servants retire, billions of dollars must be added to government budgets to pay for their pensions. And lower birth rates combined with baby boomers leaving the work force mean that those pension costs will fall upon the shoulders of a decreasing number of working Canadians. Most of those saddled with that $300-billion public-service pension liability are private-sector workers, two-thirds of whom don’t have any kind employer pension plan.

#105 Ralph Cramdown on 01.20.14 at 8:59 am

#98 Pete — “I think at the higher end of the market ($1.5M+) we are going to see extreme price stickiness.”

I think quite the opposite. Those starting prices are impacted the most by CMHC regulations and newfound banker prudence. Used to be any fool with $75,000 plus closing costs and cash flow could buy those. Now, fools with less than $450k they’re willing to sink into it need not apply. Somewhere, I’m sure, there’s a mortgage broker able to package a two mortgage solution at a blended rate of 7% for fools with cashflow but poor math and an inability to read the writing on the wall…

#106 neo on 01.20.14 at 9:49 am

So, with debt like that what happens if the economy continues to slow and unemployment rises? Or if long-term mortgage rates increase as Fed tapering rattles the bond market? Time quotes economist Aman Asaf: “Even a modest uptick in mortgage rates will translate into much higher homeownership costs, easily outpacing any expected increase in household incomes. This will price out some prospective home buyers, reinforcing the drop back in existing home sales that is already under way.” – Garth

That’s all fine and good except RBC just LOWERED fixed rates “quietly”. Seems like the past few years these banks lower rates leading into the Spring housing market to keep it buoyant and they steadily rise in the summer scaring people into buying homes because rates are “finally” on there way up. Rinse and repeat. Buyers continue to chase their tails.

A 10-basis point move is not too consequential. — Garth

#107 crowdedelevatorfartz on 01.20.14 at 9:59 am

@#93 Ayn Rand
‘This is the last time I post this on Garth blog….”

Promise?

#108 Penny Henny on 01.20.14 at 9:59 am

the new fund is open only to accredited investors – rich people with a million in (non-real estate) assets who can afford to bet wrong.

And wrong they shall be.

#109 quebec economist on 01.20.14 at 10:15 am

….end up with an air tank and flippers.

good one Garth!

Toronto suburbs, aka the lost city of atlantis! Ha!

#110 crowdedelevatorfartz on 01.20.14 at 10:15 am

@#94 Ayn Rand

“the usa is dead and canaduh never existed….in my world”

Would that be “Wayne’s World?”?

Ayn Rand’s writings belong where they are. In the fictional section of the library.
But then again “Ego” is such a fine thing to waste……

#111 Penny Henny on 01.20.14 at 10:19 am

Boy oh boy Garth, you sure attract lots of angry people here. Comments like these welcoming a crash.

#45 sheane wallace on 01.19.14 at 9:53 pm
So it is a crash coming after all. Probably of epic proportions.
Between 30 and 70 percents aligns perfectly with my predictions.
If we add the dollar crashing it becomes a catastrophe.

The worse thing in the whole story was the constant and repeated bragging by the little troll and Co on and how prudent and smart we are here in the great cold north.
Now is payback time.

#112 souvereigninternational on 01.20.14 at 10:22 am

There is only one thing that can save this real estate market:

Hyperinflation…

…but it will not happen.

meanwhile your canadian home priced in gold,silver, US$ or oil indicates correction is on it’s way. Nominal values are for suckers.

#113 fixie guy on 01.20.14 at 10:33 am

“Meanwhile Time magazine has joined the growing list of Yanks looking north, amazed to see we’ve essentially repeated all of the mistakes …”

Oh hell no, we went one better by institutionalizing those errors. America’s deregulation religion gave birth to CDOs, giving lenders free reign to pass bad debt off to the next sucker as fast as it could be created. Most Americans had no notion at the time of these arcane financial instruments and were caught unaware.
The Canadian government improved on the American grift with an up-front guarantee to lenders the government would cover their risk. Airwaves full of commercials for cash-back mortgages raised no obvious alarm in Ottawa. Our federal hayseeds then compounded it by bragging to the world about our solid banks. It’s hard to conceive of a worse bungle.

#114 Obvious Truth on 01.20.14 at 10:36 am

#46

The euro is a serious discount for Germany.

A currency of their own would be much higher.

#115 Stickler on 01.20.14 at 10:54 am

@ #78 Calgary Conditional Owner on 01.19.14 at 11:56 pm

Hey Garth, really sorry to hear about your accident but I’m sure you will punch the injury in the face with stoicism, badassity and Canadian fortitude.

I actually have a question: when applying the rule of 90, are we to take the value of the equity on real estate or the total value of the real estate? I.E. I’m 33, if my home is worth $400k and has $10k equity on it, should my net worth be $17k or $701k to comply with it?

—————————————

I’d say if you only have 10K you should not be buying a 400K house. Simple as that.

10K/400K = 2.5%

#116 maxx on 01.20.14 at 10:57 am

#10 Casual Observer on 01.19.14 at 7:27 pm

“Having experienced the last housing downturn in the early 90′s, I can tell you that a slow, steady multi-year decline in house prices feels like death by a thousand cuts when you are trying to sell. The whole time you feel like an idiot because poor timing has trapped you in your own home.

You might be able to ride it out, but your neighbor may not. The price you can get for your home is directly influenced by your neighbor’s financial fortitude and his patience, both of which seem to be in decreasing supply these days.”

Bingo. I know people trying to sell, wanting to harvest their RE gains so as to be able to invest in US dollars, diversify and travel. Whilst they dig their heels in, they watch their financial fortitude melt.

Shriveling jobs, skyrocketing debt, a population taxed to the eyeballs, stupid (huge mistake) low interest rates and an impotent oil patch…….

Financial fortitude and patience will result in a wash at best, and for many, rapidly evaporating “on paper gains”.

#117 TEMPLE on 01.20.14 at 11:14 am

#83 Fed-up on 01.20.14 at 12:56 am

Why would anyone here want to take risks and be innovative when they can just drop out of school and soak the public while they work for the fire department, Hydro 1, the TTC or any other public sector job where you get insanely overpaid for practically doing nothing all day?

I hear you. Who needs fires put out? Or electricity or buses, for that matter? And, even if we decide we do want those services, we should underpay everyone providing them to ensure we only get the crappiest people in those positions. Darn civil servants should provide that stuff for free!

Here’s my question: if a certain group of people get “insanely overpaid for practically doing nothing all day”, doesn’t that make you look a little stupid for finishing school and working hard all day while, presumably, being sanely unpaid? Or were you just creating a strawman based on your jealousy and ignorance?

TEMPLE

#118 TEMPLE on 01.20.14 at 11:15 am

Garth, I just read the posts about your leg. Sorry to hear it and I hope you have a quick recovery.

TEMPLE

#119 Happy Renting on 01.20.14 at 11:17 am

#80 Valyrian_Steel
Certainly don’t hate you, but would love to know the composition and size of your portfolio. With $3k a month in dividends I could certainly downsize my work week (I imagine regularly sleeping in on a weekday has got to be the best thing ever.)

#120 Happy Renting on 01.20.14 at 11:19 am

#78 CCO
It’s net worth, so subtract any debt (I assume the numbers you post are just an example because the math doesn’t follow.)

#121 Piccaso on 01.20.14 at 11:35 am

The Loonie is headed back to the .85 cent range, back where it belongs.

#122 Derek R on 01.20.14 at 11:43 am

#70 LP on 01.19.14 at 11:22 pm asked:
You mean you don’t snorffle? — Garth
*******************************
I don’t think so. Will it make me go blind?

Heh, heh. No, but it will make you fat!

#123 recharts on 01.20.14 at 11:49 am

Oh China!

http://www.zerohedge.com/news/2014-01-20/us-closed-markets-elsewhere-are-open-full-overnight-summary

I do believe that China might be a source of problems. Too big, lack of transparency for data about their economy, major player in the big picture, ambitions to make yen a reference currency for trading etc etc

#124 young & foolish on 01.20.14 at 11:59 am

“They call that brainwashed.
Ever been to Germany, Northern Europe/Scandinavia, Japan, Australia, even Singapore?”

Time for you to look under the covers, and examine what’s underpinning those economies. On closer inspection, you will find strong arguments about the serious challenges they all face going forward … sort of like Canada (although their problems are of a different nature).

#125 neo on 01.20.14 at 12:00 pm

A 10-basis point move is not too consequential. — Garth

It’s about direction and timing not magnitude.

Then you’ll be equally analytical when they’re restored 10 basis points? — Garth

#126 young & foolish on 01.20.14 at 12:10 pm

“There has seldom been a time in my 53 years when pundits were not panicked about debt. Debtmageddon was all the range in the 70′s and 80′s.”

Correct …. debt has been an effective instrument for centuries. There are smart ways to work with it. But, that does not justify your our of control LOC or your over the top credit card bills.

#127 Steven on 01.20.14 at 12:10 pm

So when businesses lose the confidence to hire people, how can people be so moronic as to keep on buying houses and snorffling debt?

It is the same brain dead idiocy that motivates people to vote for governments that run deficits, debases the dollar, approves and protects abortion, non white immigration and same sex marriage and queer sex.
People who have no morals or sense of fiscal propriety should not be allowed to be the government or vote.
It is bad enough if their foolishness screws up their own life but it is a crime against the nation if it bankrupts the country and turns it into some kind of whore house.

You are a homophobic racist. And you’re finished here. — Garth

#128 James on 01.20.14 at 12:26 pm

Thanks for making the point it’s a condo problem only.

#129 Cdn Flyer on 01.20.14 at 12:26 pm

#122 Steven.

Hate much? Take your comments to the neocon blogs. I think your Mom didn’t hug you enough as a child.

#130 World According To Garth on 01.20.14 at 12:29 pm

I told you so…..Kanaduhhhhhhh here it comes.

http://www.theglobeandmail.com/report-on-business/rob-commentary/public-sector-packages-simply-unaffordable/article16402741/

Wonder how many useless paper pushers will be forced to sell their homes when their pensions are cut. Time for Govt workers to stop stealing from the poor.

Garth……speedy recovery.

#131 Herb on 01.20.14 at 12:39 pm

#102 Ralph Cramdown

naughty, but nice!

#132 Optimistic Cynic on 01.20.14 at 12:40 pm

Most people don’t care about the price of housing when they are buying. They care when they are selling and when they are borrowing against it. That’s it. What they care about when buying are the monthly payments. This applies to cars, boats, TVs, etc. as well. While this seems UNBELIEVABLE to most readers of this blog, including me, it is true. This is the fundamental reason that prices are out of control. MOST people think this way. Even smart, educated people who really ought to know better. Lower interest rates and mortgage insurance allow lower monthly payments and a minimal down payment (a “monthly payment” CMHC buyer should have been making for years before they buy the house!).

I propose 2 possible solutions:

1. Garth successfully educates the masses on personal finance and economics.

or

2. Rules are tightened even further to curb bank lending. Lower TDS ratios, restricting CMHC, etc.

You decide which is likely to be more successful.

#133 mf on 01.20.14 at 12:40 pm

Should comment #126 be removed?

#134 Rainclouds on 01.20.14 at 12:42 pm

#126

Steven, Aren’t you busy in Israel with 200 of your closest friends? Stop checking up on G….you fired him!

#135 Ralph Cramdown on 01.20.14 at 12:49 pm

So, just to be clear on this, you’re OK with an immigrant stealing your job, as long as he’s straight, white, born to a teen mother (conceived in wedlock, presumably, but whose husband was tragically killed in an animal husbandry accident), and in favour of the gold standard?

Okeydokey then.

#136 Blacksheep on 01.20.14 at 1:04 pm

Steven #126,

“It is the same brain dead idiocy that motivates people to vote”
—————————————–
Steve, buddy, you should have stopped at this brief but profound statement, but then you followed with comments to ignorant to even copy.

Release the hounds.

#137 LP on 01.20.14 at 1:06 pm

#121 Derek R on 01.20.14 at 11:43 am
#70 LP on 01.19.14 at 11:22 pm asked:
You mean you don’t snorffle? — Garth
*******************************
I don’t think so. Will it make me go blind?

Heh, heh. No, but it will make you fat!

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

You mean THAT’s what did it? All this time I thought it was because I quit smoking and then ate too much.

#138 Dual Citizen in Canada on 01.20.14 at 1:15 pm

RBC reducing lending rates by 10 basis points means they are trying to entice more suckers for the spring slaughter. The greed…..

#139 JS on 01.20.14 at 1:19 pm

I have to laugh at the people holding up public salaries as a spectre of doom hanging over the economy. Yes, fuck those bus drivers making slightly more than a median with provisions for retirement. Would it really be better if we had a race to the bottom where teachers, bus drivers, etc. are making practically nothing? What effect would that have on pay packages offered by large multinationals?

No, the real problem is cash hoarding by our beloved “job creators” and the mega-wealthy. Real wages have been stagnant for around 30 years while productivity has doubled. We’re not overtaxed, we’re underpaid.

#140 TS on 01.20.14 at 1:23 pm

As you know, a hard landing is not expected, but seriously possible.

I also know RBC is dropping rate.

#141 Fed-up on 01.20.14 at 1:29 pm

@ #116 TEMPLE on 01.20.14 at 11:14 am

————————————————————————

What a moronic post from what is most likely a typical canucklehead public sector leach err I mean worker .

Did I say we that didn’t need a pubic sector? Did I say I even suggest that I am remotely jealous? I have done very well as a private business owner since I was 23, thank you. But in your world, that precludes me from having an opinion from the painfully obvious. You have no issue with firemen, for example, being offered seven 24 hour shifts a month (that include 12 hours of sleep per shift) and get a full month’s pay? Do you not see a problem with $300 billion dollars in underfunded public pensions in a country that is already $700 billion (federal level only mind you) and counting, in hawk?

No I guess not. You must not be doing the math like every other “genius” that has no issue with leaching what little is left of the private sector bone dry, while expecting everyone else to fund their pension, benefits and bankable sick days.

#142 not 1st on 01.20.14 at 1:34 pm

#118 Happy Renting on 01.20.14 at 11:17 am

Certainly don’t hate you, but would love to know the composition and size of your portfolio.

$750k throwing off 5% is about 3k a month. Nice, but its not enough to retire on yet for the average person.

#143 not 1st on 01.20.14 at 1:37 pm

Garth, shouldn’t you have some better screening on this blog? I mean its one thing to challenge the economics and stats and where things may or may not end up, but its totally another thing to rant off on some conspiracy like half of the posters are doing today and many days.

People point fingers to cover their own failings, but hateful, crazy, lunatic rantings shouldn’t tolerated.

#144 Ralph Cramdown on 01.20.14 at 1:42 pm

#129 World According To Garth

Oh, goodness. Gwyn Morgan writes an editorial in the Globe suggesting that Canada Post’s biggest problem is “a gold-plated pension plan that is beyond the dreams of most taxpayers […]”

Does anyone remember who this guy is? Here’s a hint: “In 2006, Morgan was appointed by Prime Minister of Canada Stephen Harper to chair the new public appointment commission. However, the appointment was rejected by opposition MPs […] because Morgan’s past role as a supporter and fundraiser for the Conservative Party of Canada would conflict with the commission’s role of eliminating the use of public appointments for partisan patronage purposes.”

An all-expenses-paid position for a party bagman to reward donors and other friends of the party [Would he have picked Puffy Duffy? — ed.]

Speaking of gold plated pensions beyond the dreams of most taxpayers, I did some research. Here, from Encana’s 2006 information circular, are a few interesting points:
– The present value of one Gwyn Morgan’s future pension was $19.5M at the end of 2004.
– It went up to $25.6M at the end of 2005
– His name disappeared from the 2007 circular due to his retirement, but he was listed as having 39 years of service in 2006 and — surprise, surprise — his pension would have gotten another fat bump (14%+) assuming he waited to have put in the full 40.
– We needn’t get into all the shares, deferred share units and options he voted himself over the years.

Private sector fatcat (and failed public sector fatcat, due to a minority government, oh drat) says fatcat public sector pensions unaffordable. As a trustee of the Fraser Institute, also says taxes should be lower.

Normally I believe one should concentrate on the message (is it true?) rather than on the messenger and his motives. But Canada Post’s problems are so obviously due to declining mail volumes (never mentioned in the article). And the entire $300B public sector pension shortfall he claims is worth fewer than 12,000 of his own pensions.

If the Tories wanted to float a trial balloon, they should’ve picked a pilot tougher to lampoon.

#145 frank le skank on 01.20.14 at 1:48 pm

#116 TEMPLE on 01.20.14 at 11:14 am
I just spit my coffee all over my cubicle after reading your response. By far one of the most sarcastic responses I’ve ever read. Classic!!!

#126 Steven on 01.20.14 at 12:10 pm
Even the goldbugs think that was a crazy comment.

#146 Happy Renting on 01.20.14 at 2:05 pm

#133 Rainclouds

Oh, snap!

#147 Calgary Rip Off on 01.20.14 at 2:08 pm

Garth your forum goes on and on about renting and saving. I agree with some of your intentions and views. The reality is entirely different in places like Calgary. Do you realize that 1% is the current vacancy rating and that many places in Calgary are more than a mortgage? You may say that renting brings freedom which is correct in one view and simultaneously the view is that your cash is paying off someone else’s mortgage just because they bought before 2005. There is old Calgary and new Calgary with 2005 as the defining point. Old Calgary just doesnt have a clue as how difficult the housing market in Calgary really is. Now you have the High River people scouring rentals and mortgages. Can you say that it is a bit like New York City here? Perhaps in your postings show a rental vs. buy breakdown. In Calgary unless you are under 10 years to stick around it makes more sense to buy a mortgage. Please note: The mortgage, not the house, yes those commercials saying “homeowners helping homeowners” make me want to take a dump each time I see them with their delusional views. Seriously what options do people have when mortgages are less than rentals? And there are no rental controls in Calgary. Zip. Zero. Nada. If landlord wants to raise rent outside of lease can do so. Is democratic process, comrade.

A house is a place to get memories and live in. The idea that things get better as they get older: Real estate, women, guitars, pianos, olympic barbells, nothing else. Er, maybe housing shouldnt be in that list.

#148 bdy sktrn on 01.20.14 at 2:22 pm

#116 TEMPLE on 01.20.14 at 11:14 am
#83 Fed-up on 01.20.14 at 12:56 am

I hear you. Who needs fires put out? Or electricity or buses, for that matter? And, even if we decide we do want those services, we should underpay everyone providing them to ensure we only get the crappiest people in those positions. Darn civil servants should provide that stuff for free!/////////

nobody said free.
cost -effective. non-wasteful. the crappiest people are already there. this we know. those who aspired to a govt job a decade or 3 ago chose it over the real economy which was far stronger than it is today.

institutions established to spend tax dollars quickly lose the perspective of where those dollars are coming from and how they should be guarded.

#149 Son of Ponzi on 01.20.14 at 2:25 pm

@126
After extensive deliberation with my Inner PC voice, I think racist, homophobic bigot would be the correct term.

#150 Ralph Cramdown on 01.20.14 at 2:29 pm

#140 Fed-up — “Do you not see a problem with $300 billion dollars in underfunded public pensions […]”

What exactly IS an underfunded public pension, anyway?

In the private sector, pension funds are in trust, or at least in a separate account. Underfunding is a problem because if the company stops growing or goes BK, there isn’t enough to cover obligations that employees were promised, earned, and partially paid for out of their salaries.

In the private OR public sectors, the employee can’t be the cause of the underfunding problem, because his share of contributions is deducted from his paycheque.

I know that the government’s accounts are largely inscrutable, irreconcilable, and that they account for many things on a cash basis that in the private sector would have to be on an accrual basis (i.e. in gov, everything is pay as you go).

So when some gold-plated assclown with platinum studs (Gwyn, not you) says they’re underfunded by $x, I don’t know whether that means that the fed just hasn’t been setting aside contributions and will pay the bills as they become due, or that the Fraser Institute expects the government to account for pensions as if they could be wound up tomorrow instead of assuming that the country is a going concern whose public sector will grow proportionally with the population. What I do know is that it sounds like they’re saying they haven’t been budgeting for it and can’t afford it. In the private sector that would be tantamount to fraud. This government has been doing its own books for the last seven years.

#151 lawboy on 01.20.14 at 2:44 pm

What’s the fixation with ‘paying off your landlords mortgage’ !?? Who cares! And is it your business what his/her financial arrangements are? And btw, if you purchase the average house, wtf do you think you are doing!??: YOU ARE PAYING OFF THE OWNER’S MORTGAGE.

#152 Calgary Conditional Owner on 01.20.14 at 2:47 pm

@ #114 Stickler on 01.20.14 at 10:54 am

I agree, if I only had $10k I shouldn’t be buying anything. But I am curious as to how the rule of 90 works.

Can anyone please illustrate with an example?

Thanks.

#153 Blithe Barrington on 01.20.14 at 2:55 pm

# 126 Abhorrent, intolerant, offensive, off to the jungle.

#154 recharts on 01.20.14 at 3:03 pm

ambitions to make yen a reference currency for trading etc etc

Did I say that? I meant yuan

#155 backwardsevolution on 01.20.14 at 3:04 pm

“Mega Default in China”

http://www.forbes.com/sites/gordonchang/2014/01/19/mega-default-in-china-scheduled-for-january-31/

#156 Calgary Conditional Owner on 01.20.14 at 3:18 pm

@ #147 Calgary Conditional Owner on 01.20.14 at 2:47 pm
@ #114 Stickler on 01.20.14 at 10:54 am

I agree, if I only had $10k I shouldn’t be buying anything. But I am curious as to how the rule of 90 works.

Can anyone please illustrate with an example?

Thanks.

UPDATE:

Nevermind, a quick google search sent me on a full circle back to this blog, except to an entry from back in February 2013:

http://www.greaterfool.ca/2013/02/20/advice-3/

In it it’s explained (if I got it right) that the principle is not to put down more than (90-your age)% of your total net worth to own real estate, regardless of the total price of said real estate, as long as it doesn’t mess up with your ability to invest in other assets in order to be diversified, liquid and balanced. An extension of this rule, in my opinion, is that not owning ANY real estate can also be counter productive to you, because you are not protected against galloping inflation (which is unlikely but not impossible). It would be a real bitch if you have been waiting for the “right” moment to buy for years and all of the sudden you were unable to jump in the market when your own life events ask for you to do so!

#157 gladiator on 01.20.14 at 3:25 pm

@154 backwardsrevolution:

zerohedge was the first to mention this incoming mega-default, so given its doomer leaning, just ignore this news. Everything coming from ZH is BS.

sarc off.

#158 aaa on 01.20.14 at 3:36 pm

Garth, does Rob Crocker still work for you?

#159 backwardsevolution on 01.20.14 at 3:46 pm

#156 Gladiator – “@154 backwardsrevolution:

zerohedge was the first to mention this incoming mega-default, so given its doomer leaning, just ignore this news. Everything coming from ZH is BS.

sarc off.”

This article came from Gordon Chang, who has lived and worked in Shanghai and Hong Kong for two decades. It’s a great article and explains the whole, sad, sorry state of affairs in China.

http://www.forbes.com/sites/gordonchang/2014/01/19/mega-default-in-china-scheduled-for-january-31/

And then we have this today, “It Comes from the East (and Soon)”:

“They included a 10% annual return to investors, or three times bank deposit rates in China. This means that the company had to be paying more than that (since nobody lends intentionally at a loss.)

Obviously the firm that did the borrowing was desperate. The Forbes article details some of the probable reasons, but it doesn’t matter why. What matters is that this is an instance of a facially-fraudulent scheme if looked at with any sort of diligence at all.

That’s very much like our so-called “pension plans” that promise 8% returns in their portfolios, all of which are scams because there is no possibility of ever earning that return except by stealing it over very long periods of time. A person’s work-life is about 45 years (20-65), and thus if we were to assume such a pension plan had a ~40 year time horizon, the first dollar put in would have to have expanded by 21.7x over that 40 years. For that to be sustainable the economy would have to expand by 21.7x over the same 40 year period.”

http://market-ticker.org/akcs-www?post=227759

#160 backwardsevolution on 01.20.14 at 3:51 pm

#156 Gladiator – it would be interesting to know whether every single buffalo went over Buffalo Jump, or whether some (the doomers) held back, noticed the others jumping to their deaths, and were saved. Just curious.

This whole thing is being held together by bad glue made in China.

#161 Ralph Cramdown on 01.20.14 at 3:53 pm

#146 Calgary Rip Off — “Garth your forum goes on and on about renting and saving. I agree with some of your intentions and views. The reality is entirely different in places like Calgary. Do you realize that 1% is the current vacancy rating and that many places in Calgary are more than a mortgage?”

You need to take a more holistic view of your cash flow. There are some places at some times where, for some people, it just doesn’t make sense to live there. Sometimes this is because houses are cheap and rents are low, but there’s no work for you. Or houses are pricey, rents are high, and the only jobs you can find don’t pay enough for you to put a roof over your head AND save money.

I have a couple of cousins who’ve been playing Ft. Mac roulette for the past few years — buy a house for $1M, rent out a suite, work and save and hope you get out before the boom busts. Their employers even subsidized the bullets by offering a loan ($100k, forgiveable over time, I think) as incentive to relocate. For me, that would be too risky a proposition. One’s moving away this month, so presumably he didn’t lose.

I’m also bothered by “affordable housing for the poor” advocates. Not that I don’t think the poor deserve shelter, but usually what the advocates mean is that the poor deserve shelter in some of Canada’s highest priced cities, which to me looks like a roundabout subsidy for minimum wage employers, who’d face different choices if more low income people simply relocated to a place where their earnings were more in line with their shelter costs.

It’s a wide world out there; find a place where you can save cash from your pay after shelter and commuting costs. This may mean a less-than-ideal location or living arrangement today, but, sooner or later, cash will be king again, and it’ll be good to have some and know how to save more.

#162 Retired Boomer - WI on 01.20.14 at 3:56 pm

#92 Ayn Rand Army

Read the long post. Tried to get my head around its thoughts, concepts, a REAL no go.

Then realized its much the same nonsense that my local congressman Paul Ryan is trying to sell me.

Whew. That was easy!!

#163 :):(Ying Yang on 01.20.14 at 3:59 pm

What no great words of wysdum from Smoking Man all day long? Our own version of Zerohedge must be on vacation.
Smoking Man where are you?

#164 Retired Boomer - WI on 01.20.14 at 4:03 pm

#94 Ayn Rand Army

“USA is finished, Canuduh never existed in my world…..

++++++++++++++++++++++++++++++++++++++
sorry I didn’t realize you might be having delusions, or perhaps more severe mental distresses. Perhaps you shouldn’t make comments where your competency may be questioned.

#165 Vangrrl on 01.20.14 at 4:04 pm

#151- 90 minus your age (100 if you’re female, as we tend to live longer) and that is the max amount you should have in equity in real estate. So if you’re a 50 yr old male, you should only have 40% of your net worth in real estate (90-50), the idea being that the younger you are, the safer it is to have equity in real estate. As you get older and closer to needing liquid assets, the less you should have/owe (?). I believe that’s the main idea…

#166 Ralph Cramdown on 01.20.14 at 4:10 pm

#155 Calgary Conditional Owner — “An extension of this rule, in my opinion, is that not owning ANY real estate can also be counter productive to you, because you are not protected against galloping inflation (which is unlikely but not impossible).”

Thinking about inflation’s impact on your portfolio is always wise.

But think, also, how owning real estate will protect you from inflation. The kind that protects is the kind that does (or can) provide a stream of income at a decent cap rate, and whose rents can periodically be raised to account for inflation. There’s a big difference between a strip mall yielding 8% in a demand area, a house yielding 3% because all the neighbours say the neighbourhood is safe from declines, a recreational property whose high season rents just cover the taxes, maintenance and interest, and a piece of vacant land where you want to build your dream house one day.

Overpriced real estate will NOT protect you from inflation, except perhaps of the “hyper” kind. Since we’re not on the gold standard, don’t have any war reparations to pay and aren’t planning on shooting all of our farmers and miners and handing their productive assets over to the 3,000,000 stooges, we won’t see hyperinflation.

#167 bentoverpayingtaxes on 01.20.14 at 4:10 pm

Actually, the depreciated loonie is building fire under Canadian manufacturing. energy and mining companies revenus which are for the most part paid in Canadian dollars. If you follow the stock markets you see that all sectors..inc financials are beginning to add value. Look at the charts and watch the TSX related issues turning up while US equities are rolling over.

None of the above will do the housing related employment or realtard sectors a lick…. we always see a rising unemployment picture in times where the economy is improving. But…lets look at the real growth areas of the land…public sector employment and immigration. That 30%of the ecnomy will feel no pain during the same time as carpenters are standing in welfare lines should be no surprise or consequence to the big picture.

So I disagree with Mr Zulfiqar……in the absolute sense…he can’t see the forest for the tree’s…his investors will find themselves on the wrong side of the market….like the many miserable homeowners who are now watching the stock market go gangbusters while their own investment strategy bites the dust. I’m already up 10% since the beginning of the year investing in CDN related/denominated assts…such as XFN ( economic expanison in the US is great for CDN banks), XGD ( gold shares…not bullion are on a tear),VCN ( general CDN equities are advancing nicely above the trading averages compared to US counteraprts) , XEG ( CDN oil and gas / E&P is ripping with the low dollar) as shotguns and picking excellent stocks as well.

#168 bentoverpayingtaxes on 01.20.14 at 4:11 pm

Sorry,,Canadian manufacturing and ming cos are paid in USD…

#169 Robbie on 01.20.14 at 4:16 pm

Trouble with the rule of 90 is that one rule can’t really apply to everyone without taking into account other factors such as pensions. For example, I am retired, have fully funded indexed pensions with enough income that I don’t have to work unless I want to or I want to have some expensive holidays. My home is paid for, I have no debt so what % should I have in Real Estate? When I figure out the “value” of my pensions it’s about $1,000,000 so my Real Estate holding (my house) is about right.

#170 Ralph Cramdown on 01.20.14 at 4:17 pm

#158 backwardsevolution — “That’s very much like our so-called “pension plans” that promise 8% returns in their portfolios, all of which are scams because there is no possibility of ever earning that return except by stealing it over very long periods of time.”

I’m not arguing that some plans’ discount rates are pipe dreams. But see:

http://www.theatlantic.com/business/archive/2013/08/why-jeff-bezos-got-a-better-deal-on-i-the-washington-post-i-than-you-think/278406/

http://blogs.wsj.com/corporate-intelligence/2013/08/05/washington-post-co-s-real-star-asset-a-massive-pension-fund/

Uncle Warren strikes again!

#171 gladiator on 01.20.14 at 4:35 pm

@ backwardsrevolution:

my message was mostly addressed to Garth. He is not very fond of ZH. I, being an avid ZH reader and agreeing that sometimes they are too pessimistic, appreciate the information they provide and the exposing of how rigged the markets are against the little investor: pre-announcement information leaks to “the boys”, a year of trading with zero days of losses (JP Morgan), Goldman selling MBSs to its clients and betting that they will collapse, gold and silver price slamdowns etc.

Sorry for the negative emotions I caused you – I am totally with you on this and the ZH guys were among the first ones to mention this default.

#172 Rational Optimist on 01.20.14 at 4:46 pm

#160 Ralph Cramdown

‘I’m also bothered by “affordable housing for the poor” advocates. Not that I don’t think the poor deserve shelter, but usually what the advocates mean is that the poor deserve shelter in some of Canada’s highest priced cities, which to me looks like a roundabout subsidy for minimum wage employers, who’d face different choices if more low income people simply relocated to a place where their earnings were more in line with their shelter costs.’

I’m not going to say I agree or disagree completely with this, but this is the type of critical thinking that we need more of. It’s very easy to say that you care about the poor and want to spend public dollars helping them with the high cost of x. And it’s pretty difficult to ask why that should be a government responsibility (sometimes it should, and sometimes it shouldn’t) when someone is asking for more resources to help poor people. We should be openly wondering what our collective responsibility to the least-fortunate among us is, and what is government interference that will distort market realities and ultimately create less-favourable outcomes for exactly the people whom we were trying to help.

#173 Rational Optimist on 01.20.14 at 4:48 pm

168 Robbie on 01.20.14 at 4:16 pm

You should of course include the present value of your pension in your net worth calculations.

No you should not. Net worth is what you actually possess and control, not future benefits that could be diminished, abrogated or delayed. Be realistic. The world is changing rapidly. — Garth

#174 Blithe Barrington on 01.20.14 at 5:11 pm

Ying Yang on SM

Self-imposed exile due to interjecting humiliating posts on Friday night brought on by experimentation of various drugs and alcohol after reading Fear and Loathing in Las Vegas, and wanting to capture in real life,  the sprit of Hunter S Thompson.

It didn’t work out quite the way he thought, in fact, rumour has it he accidentally texted his wife explicit deviant sexual fantasies of him and an 800 pound woman and her grandmother. He is in the proverbial dog house I am told. Don’t know when his realise date is.

#175 neo on 01.20.14 at 5:25 pm

A 10-basis point move is not too consequential. — Garth

It’s about direction and timing not magnitude.

Then you’ll be equally analytical when they’re restored 10 basis points? — Garth

You are making my point for me. I have an RBC mortgage from 2010 that is 3.39%. In 2014 it is 3.69%. That is 30 basis point difference in 4 years even with all this “volatility”. How much do you want to bet that when I renew next year, the 5 year fixed rate will still be under 4%? You keep expecting a break out that never comes, nor will it for the foreseeable future for a number of reasons.

If you think rates will stay in this range for years, prepare to be wrong. — Garth

#176 economictsunami on 01.20.14 at 5:25 pm

Why Canada’s household debt problem could get worse:

http://www2.macleans.ca/2014/01/16/why-canadas-household-debt-problem-could-get-worse/

#177 TEMPLE on 01.20.14 at 5:35 pm

#140 Fed-up on 01.20.14 at 1:29 pm

What a moronic post from what is most likely a typical canucklehead public sector leach err I mean worker .

You’re funny! I think you meant “leech.” Leach has a totally different meaning, unless you meant I dissolve money and trickle off into retirement. I think your spelling/grammar teacher was underpaid.

You have no issue with firemen, for example, being offered seven 24 hour shifts a month (that include 12 hours of sleep per shift) and get a full month’s pay?

Ever run into a burning house? Do you think underpaid firefighters run into burning houses? Do neocons ever burn, I wonder, or do they just smoulder? So many questions…

[spew deleted]…in a country that is already $700 billion (federal level only mind you) and counting, in hawk?

We are in hawk? I take exception to that. Most of us are clearly in ostrich, i.e., hiding our heads in the sand. Some of us (you) are more in rooster, but by a more colloquial name.

has no issue with leaching what little is left

There it is again, but correct this time (only by accident, I suspect). 50%. It’s a pass, but only barely.

TEMPLE

#178 :):(Ying Yang on 01.20.14 at 5:39 pm

Oh my god he’s probably in Las Vegas trying to re-create Hunter S Thompson’s fear and loathing in Las Vegas. You mean he just discovered it of late. It’s been out for 40 years or more. I hope he knows that Hunter S Thompson blew his brains out while he was on the phone to his wife. For real.

#179 Optimistic Cynic on 01.20.14 at 5:43 pm

#172 To Garth

I’ve got to think the pension is worth something (especially if it comes from the goverment). Should your TFSA assets be worth more than RRSP assests as they are tax free (in calculating net worth)?

#180 Ralph Cramdown on 01.20.14 at 5:48 pm

No you should not [include the present value of your pension in your net worth calculations]. Net worth is what you actually possess and control, not future benefits that could be diminished, abrogated or delayed. — Garth

Don’t wander too far off the reserve, Garth. While I admit that there’s a difference between the present value of a pension from Consolidated-Low-Margin-Industries-That-Just-Went-Through-an-LBO and a senior government pension, suggesting that promised pensions shouldn’t be counted on gets dangerously close to the goldbugs’ stance that current paper dollars shouldn’t be counted on either.

For most people, saving enough to be comfortable in retirement even assuming that their private pensions, OAS and CPP go bust will be delaying a bit TOO much gratification for no good reason. In the event you’re right, as with the goldbugs, we’ll all have bigger problems.

#181 Calgary Conditional Owner on 01.20.14 at 5:50 pm

@ #165 Ralph Cramdown on 01.20.14 at 4:10 pm

You have a good point, but also consider this: inflation (moderate or hyper) makes purchasing power decrease. All of a sudden, you can buy less things if you make the same amount of money. Eventually wages will try to catch up, and debt incurred in before inflation kicked in is easier to be repaid. It is not the same case with rent that you pay after inflation has hit the markets, which will go up in price along with the rest of the cost of life.

If at any point in your career you are able to be mortgage free or have a mortgage which payments are not a considerable part of your cashflow, you have a lot more chances of being able to retire on the rest of your assets, meaning Company Pension, CPP, RRSPs, TFSAs, stocks, etc. You don’t need to make money off of your house, but if it doesn’t put a strain on your finances either, I believe you have the upper hand.

#182 ozy - a year from now on 01.20.14 at 5:50 pm

a year from now, if those dire predictions did not happen, who is responsible?

trying to live in the future and know it all – it’s a risky business, I caution against

if everyone stops buying, RENTS will DOUBLE as landlords know tenants are SCREWED. Smart landlords will over renovate their Decaying assets on tenant money – expect 10% a year rent increases for occupied units (forcibly renovated at tenant expense, lol) and 25% for vacated units.

#183 ozy - POWER BACKUP SOLUTIONS on 01.20.14 at 5:52 pm

POWER BACKUP SOLUTIONS – LET’S make a post on the options for the people that own houses

-wood insert
-gas insert
-motorine based generator
-natural-gas based generator
-etc
-etc

#184 Macrath on 01.20.14 at 5:54 pm

A question for Ralph Cramdown

You seem well informed about Public Corporations and are good with the narrative.
Is there a way to assign all our proxy voting rights to some shareholder activist or organization?
From what I understand the whole voting exercise is a farce and the results are meaningless.
If the share holders vote no they take it into consideration and appoint their chosen yes men.
Then spread bonuses and options all around. Shareholders be damned.

#185 World According to Garth on 01.20.14 at 6:06 pm

149 Ralph Cramdown on 01.20.14 at 2:29 pm

#140 Fed-up — “Do you not see a problem with $300 billion dollars in underfunded public pensions […]“

What exactly IS an underfunded public pension, anyway?

————————————————–

And do you have any “other beans” as far as numbers go Ralphy? I suppose you are going to be one of those people who throws in the the whole “fireman and nurses” BS when this topic comes up. FRONT LINE govt workers (like I WAS BEFORE I RETIRED TO HAVE KIDS) make up approx 6% of Govt Workers. MOST of the other 94% are paper pushing idiots who don’t get anything done other than STEALING from the poor of this country to enrich themselves. I have seen it first hand as a primary healthcare provider.

Underfunded means “Da cash aint there” Jack. So look for:

1. MUCH higher taxes to pay these useless paper pushers which may bring out the cocktails of the molotov variety or

2. Cutting $1,000,000 Govt Worker pensions so us in the private sector don’t have to work until we are 80 to fund retired 51 year old paper pushers living in their haciendas in sunny Mexico.

#186 Ralph Cramdown on 01.20.14 at 6:08 pm

#176 TEMPLE — “Ever run into a burning house? Do you think underpaid firefighters run into burning houses?”

Hell, volunteer* firefighters run into burning houses. I try to think a middle course between those who think that, because they put their lives on the line, they’re worth more, much more than current pay (notwithstanding that economics suggests that when we advertise for 100 positions and get 2,000 applicants, 1,000 of those well qualified, that we might be offering too much) and those who think that we should screw over current employees because their duly promised and contracted pensions are higher than some unskilled labourers’ elsewhere.

* It turns out that volunteers aren’t exactly working for free in most places, but they are still willing to run into burning buildings (with decent equipment, training and appropriate backup) for very little money.

#187 Rate Hike When? on 01.20.14 at 6:33 pm

RBC cutting rate

http://www.huffingtonpost.ca/2014/01/20/mortgage-rates-canada_n_4632148.html

#188 World According to Garth on 01.20.14 at 6:40 pm

http://www.cbc.ca/news/health/canadian-patients-wait-longest-to-see-family-doctors-1.2501468

Welcome to Kanaduhhhhhhhhhhh

Ohh wait……….lets hire 1000 paper pushers and set up a “Task Force” costing taxpayers 30 million dollars to figure out why we are last.

Ohhhhh………….wait…………too many paper pushers IS the problem.

#189 PJ on 01.20.14 at 6:40 pm

“The Zero guy’s lights went out some time ago. — Garth”

Actually, I’ve cross-referenced a lot of the articles and they are accurate. Just because you disagree doesn’t mean it’s wrong.

PJ

Cross-reference harder. — Garth

#190 Shawn on 01.20.14 at 6:43 pm

I agree with Optimistic Cynic and Ralph

On Pension being an asset…

Optimistic at 178 said: I’ve got to think the pension is worth something (especially if it comes from the government). Should your TFSA assets be worth more than RRSP assets as they are tax free (in calculating net worth)?

***************************************
I suppose it depends who is doing the calculating and for what purpose.

If you are 40 and the bank is looking at your assets they don’t care about the value of a defined benefit pension… but you should.

One might argue that if you count pension you should also deduct the liability of your spending in retirement and/or add in CPP and Old Age pension.

I would merely point out that having a fat DB is lot better than not having one and it is obviously worth something.

As far as RRSP and TSFA, TSFA is 100% part of net worth, RRSP is about 60% net worth and 40% tax liability (You are poorer, than you think)

Government subsidized your RRSP to the tune of about 40% via tax refund and they basically own 40% of your RRSP.

#191 Victor V on 01.20.14 at 6:47 pm

#172 Rational Optimist on 01.20.14 at 4:48 pm

168 Robbie on 01.20.14 at 4:16 pm

You should of course include the present value of your pension in your net worth calculations.

No you should not. Net worth is what you actually possess and control, not future benefits that could be diminished, abrogated or delayed. Be realistic. The world is changing rapidly. — Garth

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

When I left my last job, I commuted my pension, so it’s now entirely under my control in a self-directed LIRA. Under this kind of circumstance, I don’t see why one couldn’t add the value of the LIRA as part of the calculation of one’s net worth.

Yes, because it’s not a pension any longer. It’s an investment account. — Garth

#192 HD on 01.20.14 at 7:11 pm

#184 World According to Garth on 01.20.14 at 6:06 pm
to
149 Ralph Cramdown on 01.20.14 at 2:29 pm
——————————————————————-

I truthfully hope for your sake that Ralph Cramdown doesn’t bother responding to your post.

Ralph C. has displayed here many times a high level of critical thinking and great knowledge on various topics. Almost always delivered with humour, wit and an impressive writing style.

You on the other hand…..

No offence but you are no match.

You can always commend a lamb who goes up against a lion….but at the end of the day it’s a lamb vs a lion. The outcome is certain.

http://www.youtube.com/watch?v=ZRd3lrukxu8

Best,

HD

#193 Ken R on 01.20.14 at 7:16 pm

#172 Rational Optimist on 01.20.14 at 4:48 pm

Garth is correct on this one. I sat beside a pilot who flew the Dreamliner to London and he said his pension was worth 1.1 million. I told him to quit and take his pension with him. You can still fly I told him, just with another airline.

#194 Macrath on 01.20.14 at 7:21 pm

#184 World According to Garth
Experiencing healthcare lately- I am getting old and frightened by the machine.

#195 Fed-up on 01.20.14 at 7:29 pm

@ #176 TEMPLE on 01.20.14 at 5:35 pm

—————————————————————————

My apologies for my Blackberry Palybook’s Predictive Text feature. You are correct it is “leech” and not “leach”

It sure takes one of the blood sucking variety to know the difference.

#196 DM in C on 01.20.14 at 7:31 pm

Thanks for this Temple. My chuckle was even more heartfelt when I factored in the ‘does not compute’ look on FedUp’s face when reading. And for the record, it’s ‘in hock’.

[spew deleted]…in a country that is already $700 billion (federal level only mind you) and counting, in hawk?

We are in hawk? I take exception to that. Most of us are clearly in ostrich, i.e., hiding our heads in the sand. Some of us (you) are more in rooster, but by a more colloquial name.

#197 Entrepreneur on 01.20.14 at 7:47 pm

Small businesses are running away from B.C. either to Alberta (that does not have G.S.T.) or to the U.S.A.

People have to live; they have to survive; they go where that is possible. Or work at a big box store to stay afloat.

I watched some of the 4 Hoarsemen and can see that our empires are coming to an end…but has to as I told my kids you can’t eat a computer, in other words, get down to reality. The world has made a false world but will not correct until the mighty mother earth says “Enough is enough”. My take and thanks for the pop-ups.

#198 TEMPLE on 01.20.14 at 8:05 pm

#185 Ralph Cramdown on 01.20.14 at 6:08 pm

Hell, volunteer* firefighters run into burning houses. I try to think a middle course between those who think that, because they put their lives on the line, they’re worth more, much more than current pay

I see where you are coming from, but your argument eats itself. The reductio ad absurdum of your position is that career firefighters shouldn’t be paid at all because of the existence of volunteers. Obviously this isn’t the case, since volunteer fire departments haven’t put the paid crews out of business. So, I’d argue that the volunteer crews are already factored into firefighter pay.

It’s true that some volunteer crews will do some risky work. I think that is very much dependent on situation, however, so I still stand by my position that an underpaid careerist is a totally different animal than a part time hobbyist.

TEMPLE

#199 EB on 01.20.14 at 8:45 pm

#177 :):(Ying Yang on 01.20.14 at 5:39 pm

More to the point HST stone cold sober could write any of us under the table. Plus I’m pretty sure SM’s shtick is kinda what he was on about in Generation of Swine.

#200 Fed-up on 01.20.14 at 8:49 pm

@ #195 DM in C on 01.20.14 at 7:31 pm

————————————————————————–

Oh you Temple are just so clever as you pick on typing errors. Yet you have nothing of substance to offer beyond that. What does DM in C stand for anyway? Dimwhitted in Canada? How apropo.

#201 Snowboid on 01.20.14 at 10:42 pm

#184 World According to Garth on 01.20.14 at 6:06 pm…

Why so bitter? Why so full of BS?

You are telling me as a former health-care worker that in the hospital out of 100 employees…

Six were doctors or nurses or care aides or porters or cleaning/cooking staff, and the rest were pencil-pushers?

Fiddle faddle, I say.

I thought you left the public service to have kids, but you mention you are in the private sector.

Are you related to Truth Hammer?

#202 neo on 01.21.14 at 3:59 pm

A 10-basis point move is not too consequential. — Garth

It’s about direction and timing not magnitude.

Then you’ll be equally analytical when they’re restored 10 basis points? — Garth

You are making my point for me. I have an RBC mortgage from 2010 that is 3.39%. In 2014 it is 3.69%. That is 30 basis point difference in 4 years even with all this “volatility”. How much do you want to bet that when I renew next year, the 5 year fixed rate will still be under 4%? You keep expecting a break out that never comes, nor will it for the foreseeable future for a number of reasons.

If you think rates will stay in this range for years, prepare to be wrong. — Garth

Actually, what I said was 2015, which is next year not many years from now, the 5yr will still be under 4%. What is there to be so wrong about. It hasn’t moved for 4 years and that is with a relatively “strong” economy. We haven’t even had our day of reckoning in Canada yet. It has stayed in this range for years. Those are just facts.