The followers

DOG DUCK modified

Well, you made her cry. Congratulations. Another notch in your doomer belts.

When Yvonne called me yesterday from Fort Mac she was already in tears. “The blog,” she said, “the things people are saying on there has me freaking out. We’re up here working our asses off and making good money, but I’m so scared. If what they’re saying is true, what’s the point?”

It took a few minutes for her to answer my question – what are you afraid of? As it turned out, lots. A stock market crash. Hyperinflation. Cyprus-style bail-ins stealing her savings. US debt default. Currency collapse. 2008 again, only worse. Failing banks.

“I just need to talk to someone,” she said, “because all Pete does is work.” So I gave her two suggestions: (a) be like Pete, and (b) stop reading this pathetic blog.

Fear is a debilitating, all-consuming and paralyzing emotion. The most powerful one, in fact. Today the merchants of it are everywhere. They all have an agenda. Sell gold. Flog survival newsletters. Promote bitcoins. Or legitimize their own panic by infecting everyone else. Doomer web sites abound, stuffed with bad advice and worse information. Through endless repetition, falsehoods are turned into myths, then morph into facts. The widespread belief Ottawa has engineered the takeover of savings accounts if major banks were to fail is a great example. It’s false.

Doomers here, as everywhere, call every normal market correction a ‘crash’ two days after it starts. They swear markets are rigged, central banks are the enemy, and elites are out to destroy and consume the middle class. It’s a steady, tedious drumbeat of negativity and defeat, designed to overwhelm those without enough facts or background to know otherwise. What a disservice they do to people who desperately need to grow their meagre assets in an increasingly expensive world.

Of course, there’s already enough fear and ignorance to ensure we have a looming retirement crisis with a significant portion of the population destined to run out of money. This will happen, ironically, because they’re trying to avoid risk. They cling to houses, GICs and cash. TFSAs are full of no-return savings. Billions in real estate equity stagnates. People who know they’re without pensions yet don’t open RRSPs, won’t buy investment assets and can’t save. Instead they insanely pay off 2.8% mortgages, concentrate all their net worth in a single asset and figure the government will make up the difference. Talk about risk.

Through the snivels, I told Yvonne that yes, the world was scary once, in the autumn of 2008 and the spring of 2009. But every day between then and now has diminished the danger in its own way. Corporate balance sheets and profitability are massively improved. Even a tumbling economy would not bring down corporations that have paid off debt and become more efficient. Today central banks around the world are working hand-in-glove to coordinate monetary and fiscal policies. Low rates. Stimulus spending.

Despite being ground zero for the financial crisis, the US today has the lowest budget deficit in seven years, far less unemployment, confident financial markets, rebounding real estate, far less consumer debt and even politicians working together, as on the recent debt ceiling bill. Are there a whack of people on food stamps (equivalent to our welfare), without enough employment, living in underwater houses and struggling with health care coverage? You bet. It’s one of the slowest recoveries in memory, after the greatest financial scare in 80 years. It could take a generation before the vestiges of 2008 are fully erased. Hopefully it will be much longer before the lessons are forgotten.

The doomers say these are unprecedented times of money-printing, government intervention, debt accumulation and the consolidation of wealth. They’re right. It’s unique. But thank our stars for Keynesian economics, because it worked as expected. Governments went into big debt to ensure the financial system functioned, that banks survived a loss of confidence, sick companies kept workers employed and credit flowed. As a result, a society which had lost its way was largely rescued in four years, and today we live as normal.

The legacy is debt. The solution is growth. Today more companies are profitable, governments are attacking deficits and investors have been well rewarded. When I write on this blog about a balanced and diversified portfolio delivering average double-digit returns since the crisis hit, the doomers balk and scorn. Theirs is a world in which calamity and crisis always lurk, where fear of loss is paramount and confident people are morons. Every day that they hoard silver or quiver in cash, investors profit from recovery and growth. So, yes, the richer are richer. The middle’s in trouble. And the obsession with real estate might just finish it off.

Dr. Phil, I’m not. Yvonne was whimpering again by the time I finished. “I just don’t know who to believe,” she said. “And I have nobody to talk to.”

Fort Mac. February. I reflected on that.

“Read it tonight, Yvonne. But no comments. Promise?”

229 comments ↓

#1 First on 02.20.14 at 8:20 pm

First

#2 Spiltbongwater on 02.20.14 at 8:20 pm

When people cry and have nobody to talk to, they usually do more harm then good upon themselves.

#3 Mr. Frugal on 02.20.14 at 8:26 pm

As with all things, the solution to overcoming fear is … faith. You have to believe in something. Why not believe that things will get better?

#4 Role on 02.20.14 at 8:28 pm

Has anyone really been far even as decided to use even go want to do look lots for banks?

#5 adamfawndale on 02.20.14 at 8:30 pm

Hey long time reader first time commenter. I’m often in agreement with you regarding the fear mongering and certainly on investments but there’s something more to be said about a digital currency which resembles a new, more efficient way of transacting supported by a decentralized network. Keep up the great blogging, I read it every morning on my way to work!

Sincerely Cryptocurrency fan

#6 Obvious Truth on 02.20.14 at 8:38 pm

Tomorrow I’ll be taking another crack at a part of the world everyone is afraid of right now.

Kind of looking forward to it.

#7 Adrian on 02.20.14 at 8:45 pm

OK Garth, sure everyone has an agenda, but Max and Stacy are so entertaining.

#8 Dr. Wu on 02.20.14 at 8:45 pm

Keynes???

A lie believed by everyone is not the Truth. This is one of the Masonic tricks.

“For at least another hundred years, we must pretend to ourselves and to everyone that fair is foul and foul is fair; for foul is useful and fair is not. Avarice and usury and precaution must be our gods for a little longer still.” – Keynes

“There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.” – Keynes

#9 jess on 02.20.14 at 8:45 pm

Average family income in Tory budget called ‘make believe’
http://www.cbc.ca/news/politics/average-family-income-in-tory-budget-called-make-believe-1.2544611

#10 Mike on 02.20.14 at 8:49 pm

I know borrowing to invest is dangerous, but at what interest rate is borrowing to invest worthwhile, assuming you diversify and have some dividend/interest income?

#11 jess on 02.20.14 at 8:52 pm

Oilsands study confirms tailings found in groundwater, river
Federal study shows water from tailings ponds leaching into Athabasca River

CBC News Posted: Feb 20, 2014 11:59 AM MT| Last Updated: Feb 20, 2014 4:50 PM MT

#12 DR. WAYNE on 02.20.14 at 8:53 pm

I was hoping that after a vacant spell when I clicked on COMMENTS, contributors to the blog had grown up … apparently not … a$$hole #1 FIRST still exists and probably is breeding … scary thought …

#13 Victoria Real Estate Update on 02.20.14 at 8:54 pm

. . . . . . . . . . Percentage Price Decline From Peak . . . . . . . . . .
. . . . . . . . . Greater Victoria – Single Family Homes. . . . . . . . .
. . . . . . . . . . . . . . (MLS Home Price Index). . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . .0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– 0.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– 1.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– 1.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– 2.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– 2.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– 3.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– 3.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– 4.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– 4.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– 5.0%. . . . . . . .x . . x. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– 5.5%. . . . . x. . . . . . . . .x. . . . . . . . . . . . . . . . . . . . . . . . . .
– 6.0%. . x. . . . . . . . . . . . . . .x. . . . . . . . . . . . . . . . . . . . . . .
– 6.5%. . . . . . . . . . . . . . . . . . . . x. . . . . . . . . . . . . . . . . . . .
– 7.0%. . . . . . . . . . . . . . . . . . . . . . . x. . x. . . . . . . . . . . . . . .
– 7.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .x. . . . . . . . . . .
– 8.0%. . . . . . . . *. . . . . . . . . . . . . . . . . . . . . . . .x. . . . . . . .
– 8.5%. . . . . . . . . . . *. . .*. . . . . . . . . . . . . . . . . . . . . . . . . .
– 9.0%. . *. . .*. . . . . . . . . . . * . . . . . . . . . . . . . . . . .x. . . . .
– 9.5%. . . . . . . . . . . . . . . . . . . . *. . . . . . . . . . . . . . . . . . . .
-10.0%. . . . . . . . . . . . . . . . . . . . . . .*. . .*. . . . . . . . . . . . . .
-10.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . *. . . . . *. . . . .
-11.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . *. . . . . . . .
————————————————————————————————–
. . . . . . . .F. . M. . A. . M. . J. . J. . A. . S. . O. . N. . D. . J. . . . .

This is a price chart for Greater Victoria single family homes. It is made up of MLS home price index data.

(*) = most recent price level
(x) = price level from one year earlier

For example, there are two price level dots above January. The (*) indicates the price level for January 2014 while the (x) represents the price level for January 2013.

There have been at least 24 consecutive months of year-over-year price declines for Greater Victoria single family homes. Victoria’s housing market price decline is well under way. Single family home prices across all areas of Greater Victoria from Oak Bay to Sooke have experienced price declines. Many mortgage holders who bought with minimum down payments since 2008 have underwater mortgages. This will contribute to lower prices in the future.

Girls and guys, more price declines are on the way. Realtors, real estate boards, mortgage brokers and (almost always) the media want you to buy a house to support the current bubble house prices in Victoria. They make more money if there are more sales. Of course, they don’t acknowledge that there is a housing bubble in Victoria even though it is an obvious fact. Victoria’s housing bubble is comparable to the biggest US bubble markets (Miami, Phoenix, Los Angeles, Las Vegas, etc.) in 2006.

This chart goes through the psychology of a housing bubble. Right now in Victoria, many realtors, mortgage brokers, etc. are telling potential buyers that house prices in Victoria have reached a permanently high plateau and that there has never been a better time to buy. The same thing was said in 2006 in Miami, Phoenix, Los Angeles, Las Vegas, etc. at the peak of the 2006 US housing bubble. The US housing bubble burst and house prices crashed.

David Lereah is the former Chief Economist of the National Association of Realtors (NAR) in the US from 2001 to 2007. He regularly commented on the US housing bubble as it inflated. For example, in August 2005, he told Americans this:

“The continuing shortages of housing inventory are driving the price gains. There is no evidence of bubbles popping.”

Sound familiar? Months later the US housing bubble burst.

There have been many housing bubbles across the world over the years. All of these housing bubbles burst and the result was always predictable – a deep housing price correction/crash. Victoria’s price correction will be deep as well.

Now is not the time to buy a house in Victoria. Wait for lower prices. If you buy now you will almost immediately be in a position of negative equity as house prices continue to drop. Victoria is not different. Canada is not different. Millions of US families bought houses at or near the peak of the 2006 US housing bubble based on the (always positive) words of their realtors, real estate brokers, etc.. Millions of these families continue to go through financial distress as a result. Don’t let this happen to you.

Until next time – Cheers!

#14 Tim on 02.20.14 at 8:55 pm

You sure dish out the negativity. You make a big deal of Best Buy laying off 100 people from low paying jobs but you don’t even mention the huge contract win of General Dynamic which will generate 3000 jobs. You Re so biased it is not funny

Canada Post laying off 8,000. Your point? — Garth

#15 Mr. Reality on 02.20.14 at 9:03 pm

She’s miserable because Fort Mac sucks.

All the rest is noise.

Mr. R.

#16 moneymike on 02.20.14 at 9:04 pm

I’m trying to follow Garth’s formula for a diversified portfolio.. or as diversified as 30k can get.. however, I feel like I just keep going in circles trying to read between the lines in selecting specific ETFs that are on sale.

Do any of you dogs have any tips or suggestions?

Or do any of you have any suggestions for a discount (as oppose to full service) financial planner or investment firm that can help me?

Thanks!

#17 Freedom First on 02.20.14 at 9:07 pm

Fear. Great subject Garth. Fear is the #1 enemy, and all those doomer sites and pundits feed it non-stop. Greed is #2, and many of those doomer pundits are feeding their own greed off of other people’s fear.

I think Yvonne should just hire you Garth, and then relax. I too am aware of the GFC, did it hurt me, not at all, no lost sleep, In spite of myself, as I am human, I watched everything wondering what the hell was going to happen next, but 0 panic. I know that is the exact time not to do anything rash. When others are in panic mode, that is the time to remain calm. That is the known benefit of balance, liquidity, and diversity. Re-balancing is a great friend, and for me, always being debt free. I keep my gonads safe at all times. Never, never, never be vulnerable to ANY 1 asset, as your odds of ending up with crushed gonads skyrockets. There is no exception.

#18 pinstripe on 02.20.14 at 9:10 pm

#14 Tim

huge contract win of General Dynamic which will generate 3000 jobs.

————————————————————

yep, a contract to build war equipment.

What is the carbon footprint on this contract?

Why is it BAD for the keystone pipeline and yet GOOD for building war equipment?

We are in very unstable times. We are in an era where manipulation is free wheeling to achieve an end.

BUYER BEWARE

#19 jan on 02.20.14 at 9:14 pm

#4 Role on 02.20.14 at 8:28 pm
Has anyone really been far even as decided to use even go want to do look lots for banks?

SAY THAT AGAIN DUDE ??????

#20 The Patient on 02.20.14 at 9:17 pm

I can remember when this blog was thick with references to your glorious “bunker” stuffed with Amazons and toilet paper and generators and the aroma of the end times. Then all of a sudden, ’bout a year ago, the bunker references vanished. Poof. Gone.

Why? Because it sent a message of fear?

I was messing with them. — Garth

#21 Cici on 02.20.14 at 9:18 pm

Re #151 Chickenlittle (yesterday)

Fortunately never had any hassle from cousins or other family members. They’re completely supportive of everything I do (or at least to my face, LOL)…

#22 Vangrrl on 02.20.14 at 9:19 pm

Great photo!!

#23 jan on 02.20.14 at 9:25 pm

Canada Post laying off 8,000. Your point? — Garth

Yeah, but these fat civil cats will end up with a million dollar severance pay.
Shit, i wish i could be fired this way.\

Canada is not a good country any more, to me at least.

#24 pinstripe on 02.20.14 at 9:26 pm

The US has made a lot of progress towards destroying the middle class. A tradesman on the Gulf Coast is very pleased having a job, paying 15 bucks an hour, thus making the US competitive in the global economy. The union movement in the US is irrelevant. When Canada is able to achieve the same, then we will be competitive in the global economy too and no need for TFW.

Why are so many politicians interested in helping the middle class now?

#25 Not 1st on 02.20.14 at 9:26 pm

Garth you should have told her the scariest thing if all. That is when the US reaches oil self sufficiency in 2 yrs and no new pipelined ate built all that tar sands bitumen will be forever stranded in the ground.

#26 mister marco on 02.20.14 at 9:33 pm

so why is gold and silver refusing to go down smart guy??? ok 1900 on gold was a bubble when it occurred, but if u were right it should be below 1000 today. There is doom lurking all over… its called debt and it aint goin down. Fiat Cash has become worthless, that’s why people borrow it to buy real thin gs

Cash is worthless? What do you live on? — Garth

#27 Smoking Man on 02.20.14 at 9:33 pm

It’s all about risk vs reward..

On the water taxi at Laughlin a duck rides it, day in day night.

The captain feeds it girl guide cookies. So it’s not afraid, all the other ducks, have to beg, borough and hunt. The fly and swim for food. But because they fear, life is a much tougher.

The fearless duck has it made.

#28 AK on 02.20.14 at 9:43 pm

#27 Smoking Man on 02.20.14 at 9:33 pm
“On the water taxi at Laughlin a duck rides it, day in day night. ”

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

I love Laughlin. I always visit while in Las Vegas…

#29 fred graves on 02.20.14 at 9:44 pm

Is # 4 ROLE’s comments a sentence?

#30 World According To Garth on 02.20.14 at 9:44 pm

General Dynamics are GOVT WORKERS. Every penny they are paid comes from the tax payer while building bombs to kill women and kids in Libya like our fine F-18 pilots did recently (ive seen the videos and pics). That is why the number of Govt Workers you people think Kanaduhhhh has is FAR HIGHER than you think. Road builders. Navy Ship builders. Bridge builders. War killing machine builders. ALL GOVT WORKERS. NO WEALTH is created only TAKEN from taxpayers.

—————————————————

14 Tim on 02.20.14 at 8:55 pm

You sure dish out the negativity. You make a big deal of Best Buy laying off 100 people from low paying jobs but you don’t even mention the huge contract win of General Dynamic which will generate 3000 jobs. You Re so biased it is not funny

#31 carpicker on 02.20.14 at 9:46 pm

Garth, US economy up precious metals up, its messed up seriously, any comment on it!?

#32 Humpty Dumpty on 02.20.14 at 9:56 pm

Lucky for her she doesn’t live in the Ukrain..

Yanukovych has been shooting even women. He has no respect whatsoever for human rights. Here is a message from a Ukrainian girl.

https://www.youtube.com/watch?v=Hvds2AIiWLA#t=68

#33 Yitzhak Rabin on 02.20.14 at 9:57 pm

Keynesian economics has not “worked”. It has only postponed the hangover at the expense of future organ failure. Fear pushes us to need collective affirmation in populist solutions, regardless of whether the ideas are rational or not. No where is this more apparent than among today’s major governments worldwide adopting the money printing, deficit spending interventionist Keynesian policies. It is the poison comfort chocolate or our time.

The weakest currency dominoes of our monetary system are collapsing (Turkey, Argentina, Venezuela, Ukraine, Indonesia, Brazil, South Africa). Are their citizens idiots for buying gold to protect against real lost purchasing power of their national currencies?

Gold is money. It is not about trading on leverage to get rich, it is about protecting your hard earned wealth from idiotic government policies.

If Garth’s grandpa put an ounce of gold into trust for him in 1940, he could get the same amount of goods for it today. Got anything for a nickel lately?

Gold is not money, which is a medium of exchange. It’s a rock. — Garth

#34 BG on 02.20.14 at 10:02 pm

#16 I get confused too

I know Garth gives a lot of advice on what to buy and how to be diversified/balanced.
But I can’t keep up.
Being aware of this stuff is what Garth does for a living.

For us its something we have to learn beside our job.
I have decided to follow the Canadian Couch Potato Portfolio (the global one using TD e-series fund) because it’s simple, it seems safe enough and I can start it right now without having to spend too much time studying other financial assets.

I prefer using my spare time on trying to increase my cash flows (commanding a higher salary, starting a small business…)

#35 pinstripe on 02.20.14 at 10:03 pm

Why do the corporate policymakers allow this to happen?

Why do the political policymakers allow this to happen?

Who do you trust?

Who do you believe?

http://www.cbc.ca/news/canada/edmonton/oilsands-study-confirms-tailings-found-in-groundwater-river-1.2545089

#36 Tony from Calgary on 02.20.14 at 10:06 pm

“But thank our stars for Keynesian economics, because it worked as expected”

Ha. Ha ha. Ha ha ha.
Always the comedian, Garth.

In case you actually believe that, does it not bother you that Keynes advocated public expenditures during economic downturns and increased savings / debt reduction during booms? Because the pseudo-Keynesian abortion of a global economy we currently have explicitly ignores one of those two guidelines…

-TFC

#37 Shawn on 02.20.14 at 10:08 pm

Be Afraid…

What is REALLY scary is to read some of the regular doomer’s posts and realize that these people walk among us.

Well, I guess the bell curve centered on normal intelligence has to have its tails on both sides.

#38 jd on 02.20.14 at 10:08 pm

Yvonne needs to at least avoid the comments section, or the wackos grandstanding here.

#39 DL TINDALL on 02.20.14 at 10:11 pm

Having followed Garth’s blog for several years now, you might say that I am somewhat of an economic’s bug since graduating with a BCom degree some 45 years ago. I like to study issues from different angles and as such, was really intrigued by the views of David A. Stockman in his 2013 book ” The Deformation of Capitalism”. An interesting take on the 2008 meltdown. If you are up to reading 700 + pages of the world according to Stockman, you may find yourself exposed to ideas that the general media never seems to consider. Whether you accept much of what he says,it never hurts to know what other people are thinking, especially if they ever gain any traction. Just to give you a heads up, Stockman believes that the USA has basically devolved into an era of crony capitalism and that the 2008 bailout was really nothing more than a government bailout at taxpayers expense, which, essentially, saved financial gamblers from their speculations and that it simply was not true that the economy would have crashed. Goldman Sacs, et al, should have taken their lumps and possibly lost all their equity but the world would have gone on, he asserts. Instead, the speculators came out stronger than ever and continue their sleezy schemes to reap tremendous profits at society’s expense. Stockman reveals quite clearly how their intricate schemes work, which I’m sure you will find very eye opening. Again, very interesting reading.

#40 Obvious Truth on 02.20.14 at 10:12 pm

To be fair. People are still coming here to comment and ask questions about investing. For all we know they could be the silent majority.

If you understand it you won’t fear it. I think that’s what they are trying to do and you gave to start somewhere.

Strife in the world is unfortunate and heart wrenching at times. Humanity has dealt with and overcome many challenges. There will be more to come.

We can separate this from investing and think of ways to help others in need.

I’ve always said to my kids that playing is winning. Those on the sidelines are the only losers.

It’s always about the journey. Ask an Olympian.

#41 saskatoon on 02.20.14 at 10:13 pm

garth,

i think what you mean to say…is “neo-keynesian”.

keynes himself would never be in favour of using massive debt leveraging in order to help balance downside economic cycles.

#42 quebec economist on 02.20.14 at 10:20 pm

#8 Dr. Wu

Thanks for the Keynes quotes. It goes to show you how smart he was. When you can give the remedy and the side effects…wow I am impressed. He was a genius.

@Yvonne

It seems that some people are too sensitive to be surfing the web. I have a friend who is scared about food poisoning and all she does all day is surf the web about food poisoning…making her sick more then spoiled food! If bad news scares you, don’t search for it. You should stick to the happy stuff. Like :

http://www.happynews.com/

Similar to a diversified portfolio, make sure that you read 60% of things that make you happy and 40% of the bad news. (Ajust your portfolio to match you mood type)

Cheers.

#43 Infused with Opiates on 02.20.14 at 10:21 pm

9 Jess – here it is

http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/famil05a-eng.htm

Not sure what is so hard to believe about it. In the budget example we are talking about a specific type of “economic family” of two earners with children. You can hit this income figure with one skilled job and one
semi-skilled job.

I am surprised the NDP doesnt get it. This example would fit many unionized and/or government workers
with a spouse working at a somewhat lower wage.

#44 Derek R on 02.20.14 at 10:34 pm

Yvonne! What are you doing? Stop reading the comments right now! No more. They’ll only get worse.

#45 jd on 02.20.14 at 10:35 pm

Don’t rely on your pensions to retire; may be appearing at a union plan near you:
http://www.latimes.com/local/la-me-teacher-pensions-20140221,0,3987312.story#axzz2tv6Xh1Ns

#46 airhead princess on 02.20.14 at 10:38 pm

The reason Keynes detailed “100 years” as the time frame in his quote is that at the 2% inflation per year he knew that people would revolt if the price of goods doubled. Keynes was labeled as a loon when his theory was published. It was only after WW2 that government insiders got hold of the inflation meme that would increase their spending and subsequent power.

Keynesian Economics is the greatest destructive force ever perpetrated on the citizens by government.

#47 nonietzsche on 02.20.14 at 10:38 pm

well written garth and so true

#48 Yitzhak Rabin on 02.20.14 at 10:39 pm

Gold is not money, which is a medium of exchange. It’s a rock. — Garth

Technically it is an element. A rock is naturally occurring solid aggregate of minerals or mineraloids.
Elements —> Minerals —> Rocks.

You’re deep seated hatred for it is cute and amusing. Did you get burned on it in 1980?

No hate. Just pity for the gullible. — Garth

#49 Fiendish Thingy on 02.20.14 at 10:41 pm

#23 Jan

I call BS- kindly post a link showing where any union member postal service employee will get a million dollar severance package (pensions and retirement benefits are not a severance package)
If you’re sick of Canada, why not move to the US, where CEO’s regularly get multimillion dollar BONUSES for firing other people, who get little or no severance.

#50 Bargains everywhere on 02.20.14 at 10:42 pm

Here is a very good explanation of the US housing bubble. Many similarities to Canada but some real differences too.

http://faculty.winthrop.edu/stonebrakerr/book/housing.htm

#51 45north on 02.20.14 at 10:44 pm

Humpty Dumpty : from your link “I am a Ukrainian, help us”

#52 zee on 02.20.14 at 10:45 pm

Seeing crazy prices being paid for homes in this Spring Market.

#53 Hamsta on 02.20.14 at 10:48 pm

New commenter here. I love the blog and have got my 2 unmarried sons reading it (age 29 and 30). One has the bug to buy a condo or something and I think I am succeeding in getting him to postpone for a couple or 3 years.

I am one of those boomers who has retired (no pension) and is so scared that in the last year I have mainly ran to cash. I can accept a loss in earnings for a while. What I cannot accept is a loss of 30% or more in capital in a big pullback and the long wait to get back to even.

The dilemma for me is to stay away from longer term fixed income in case interest rates take a pop. On the other hand, even a good stock portfolio (diversified yada yada) can take a dive if the broad market swoons. So I am sitting on my hands not knowing whether to s**t or go blind. I have enough that I can sleep at night but I am slowly cutting unnecessary expenses. House is paid for.

There is a big tug-of-war between inflationary and deflationary trends and I am damned if I can guess which one is going to dominate in the next 3 years.

Some are arguing that deflation is inevitable. Maybe. There has actually been tremendous inflation. Not in ordinary consumer prices, but in the stock market, bonds and of course – real estate. In the US, student loans are another bubble (and its significant) being fueled by easy money policy. I think real estate, stocks and bonds will nosedive for a time. Just a gut feel.

#54 Yes - about gold on 02.20.14 at 10:49 pm

There seems to be a misunderstanding around gold. Yes, it’s a rock, and it should have no value. The reason it does have value is that it’s rare, there is no counter party risk and you can’t create an infinite amount of it. The ridiculousness (and value) of gold is that it always comes back into style, as currencies are ALWAYS abused due to human behavior; when a government can create an ever expanding amount of currency and debt to pay it’s bills and obligations, it always will, until it can’t anymore; one look at the US debt clock will showcase this. For the US, see the continental dollar, and Carter Bonds when the US could not even denominate it’s bonds in it’s own currency any more (and the US was in a far better position back then). Do not be so quick to bless Keynesian policy, as it has already been proven wrong in the past and will again in the future. There is a reason QE’s have numbers – the first did not work and neither will the others.

No doubt I will get some pointed rebuttals – that’s fine. I own much more stock than metals. However, if you truly believe gold is a rock, perhaps a letter to the Fed should be written, apparently they are fools to keep gold, and the other central banks around the world that cannot buy enough gold (and the Germans who cannot even get their ‘rocks’ back); if only they had the wisdom found here to realize their folly and ignorance in holding and desiring gold. Perhaps the 23 trillion dollars that China has created is the better model; perhaps gold really is nutty compared with modern monetary policy. The near future is going to tell us that.

#55 Snowboid on 02.20.14 at 10:49 pm

#30 World According To Garth on 02.20.14 at 9:44 pm…

“…the number of Govt Workers you people think Kanaduhhhh has is FAR HIGHER than you think. Road builders. Navy Ship builders. Bridge builders. War killing machine builders…”

Even as a normally large slinger of manure, your load is magnificent tonight!

But your ongoing bitterness is clouding what slight semblance of information you used to proselytize with.

#56 LP on 02.20.14 at 10:51 pm

#12 DR. WAYNE on 02.20.14 at 8:53 pm

Oh please, don’t start your schtick up again. Go away! You only encourage the idiots.

#57 Waterloo Resident on 02.20.14 at 10:53 pm

Oh my God, I cannot believe it; Bitcoin is now less than $100 each !
Check out the 30-day chart of bitcoin here and see for yourself:

http://bitcointicker.co/

WOW!

You know, you’re right: Stop worrying about things and just live life. That and invest less in homes and more in the stock market ( preferred shares are good, and ETFs are next in goodness.)

I have no idea what’s going on with Tesla stock ‘TSLA’ but I read that 1/3 of the outstanding shares of it are being shorted because the experts expect it to fall by 75%. That got me thinking: Don’t follow the crowd, do the opposite. So if most people think it’s going to fall, then maybe now is a good time to buy? Still, what do they build, one or two cars a day, yet their stock is worth more than California? Maybe it’s a bit overvalued? ( Yes. )

As far as that General Dynamics contract to buy military equipment: We don’t need any military equipment, we have all the SEA KING helicopters that we need. Wow, those things are 50-YEARS-OLD ! That’s even older than i am. You know, maybe it’s time to buy some newer choppers after all.

Read the funny picture here at this site ( http://the-mound-of-sound.blogspot.ca/2013/02/the-worst-procurement-in-history-of.html ), it says:

“SEA KING: Fear is knowing the helicopter you’re riding in was created around the same time as color TV.”

#58 Victor V on 02.20.14 at 10:58 pm

http://www.theglobeandmail.com/report-on-business/united-airlines-outsources-240-jobs-in-canada/article17003026/

United Airlines is outsourcing 240 jobs at airports in Vancouver, Calgary and Toronto, the airline said Thursday.

“These were difficult decisions, but necessary as we must continually look for new opportunities to run a more efficient and financially sustainable business,” United spokeswoman Christen David said in an e-mailed statement.

The jobs cuts, which affect unionized employees, will take effect in 90 days.

The move affects customer service agents who work inside the airport and ramp agents who work on the tarmac.

“This is a devastating blow to an experienced work force that has a proven record of performing their duties to the highest standards,” Jerry Dias, president of the Unifor union, said in a statement.

#59 Darwin always wins on 02.20.14 at 11:00 pm

The only people making money in fort Mac are working at site living in camp.boomtown casino crack 75000$ trucks &425000$ double wide worth $125000 at dealer in Edmonton. An expensive life style with borrowed money. Lots of smoking men to support.

#60 Kootenay Ma on 02.20.14 at 11:00 pm

Greetings All

Whenever encountering the subject of Fear, I always like to consider the acronym:

F alse
E vidence
A ppearing
R eal

Really good to remember, when Fear arising in one’s life.

I find it helps to clarify what’s real, what’s not, and maybe even glimpse who wants you to feel that way…

Life is Love or Fear

Truth is (em)Power(ment)

Love is Real

#61 Nemesis on 02.20.14 at 11:00 pm

Dearest Yvonne, notwithstanding our Magnanimous Host’s invocation not to read the comments (which, I’m quite certain, was a clever ‘ploy’ to encourage you to do exactly the opposite)… it’s really this simple…

If the GFC and its attendant ‘fallout’ [or the preceding century, for that matter] has taught us anything… it’s that a GreatMany people in positions of Authority [and by extension, ostensibly PublicTrust] have been… well, let’s just say, “Somewhat economical with the truth”.

Our MaganimousHost, however – for all his flaws – does not fall within that category.

Indeed… he was roundly punished for placing the PublicTrust above PartyFealty… which must be, inevitably, why he eventually sought solace in Blogging, HarleyDavidsons and RescueDogs.

Or to put it another way, “Yes, Yvonne – it’s true, in some regards [of which I am well qualified to express an opinion] the World is a far more dangerous place now than it was ‘then’ [choose your favourite “then”]. but in others… thankfully, not so much”.

Bad things do continue happen to GoodPeople.

And regrettably, ‘GoodThings’ all too frequently happen to BadPeople.

The only constant is change.

So then… what to do with your spare Loonies&Toonies?… Well, that’s easy [so to speak].

Just do your homework… don’t be rushed into anything… and never invest in something you don’t understand.

Seek council. Be prudent… if uncertain… wait and do nothing.

Regardless, if you’re really worried about things… to the point where they’re getting you down, then how about this…

…A ‘Random’HeadLine and accompanying illustrations that comports well with our Host’s theme this evening…

It’s not all bad out there, you know… and there are a GoodMany people working behind the scenes to make things better… Or at least, valiantly trying to.

One random act of bravery/kindness at a time.

Not to mention the OfficialStuff [I know a lot about ‘OfficialStuff’, Yvonne – or would, if my memory weren’t so HighlyCompartmentalized and poorly influenced by SmokingMan, et al’s bad examples].

Well then, Yvonne… how do you feel about Puppies?

[WSJ] – Forget Medals, Sochi’s Olympians Vie for Puppy Love

http://online.wsj.com/news/articles/SB10001424052702303491404579391200042676812

#62 mark on 02.20.14 at 11:01 pm

Unfortunately Smoking Man, the fearless duck now has diabetes.

#63 gmc on 02.20.14 at 11:01 pm

Garth
Gold is a rock????? it is a element on the periodic table that cannot be replicated and is money because of it.
I live in Asia and when people need to borrow money, they remove their neckless and hawk it, even cut some links to get paper note for ease of transaction.
it cost approx. 3 cents to make a one dollar bill, and it cost 3 cents to make a 100 dollar bill, the only thing of value in that paper, is confidence, and if enough people loose that confidence in that currency than it becomes worthless.
What is going on in the world when a country can simply print the paper and not have to work for it or sell anything for it. We in Canada sell many things on the world markets to bring money to or country, what the USA is doing is not right, who are they to print unlimited pieces of paper, or in today world, not even print but add digits to their computers to add value to their country, meanwhile I read there is 90 million of then on some government assistance.
Why is their line ups buying gold in China, as I have seen, I got myself a Panda as a souvenir , but waited close to an Hour to get it. Most were not rich, but wanted the silver bear. What is going on in the world when there is 1.2 quadrillion dollars in derivatives?????
not a doomer but holy shit batman, what is going on.

#64 Montellino on 02.20.14 at 11:01 pm

Silly rabbit averages are for kids..

If you ever dealt with metrics of any sort you know better and look at the median not average

For Canada that is $76K PER family – same source Statscan

http://www.ctvnews.ca/canada/median-family-income-in-canada-is-76-000-statscan-survey-shows-1.1449641

But if you are really bent on averages because your real estate assgent keeps referring to it than consider this as an average… $38K per person

so if an average family has on average 2 average Canadians with average salaries of $38K each then how are they pulling in $120K…

http://www.cbc.ca/news/business/wealthiest-1-earn-10-times-more-than-average-canadian-1.1703017

#65 heineken on 02.20.14 at 11:01 pm

garth your gold comment was very weird.

#66 World According To Garth on 02.20.14 at 11:02 pm

Nice. A govt worker retired in the warmth of the south while granny works till she dies. Oh….. And as usual…..no facts from useless pencil pushers ( now you know why I call them that) just insults.

——————–

#55 Snowboid on 02.20.14 at 10:49 pm
#30 World According To Garth on 02.20.14 at 9:44 pm…

“…the number of Govt Workers you people think Kanaduhhhh has is FAR HIGHER than you think. Road builders. Navy Ship builders. Bridge builders. War killing machine builders…”

Even as a normally large slinger of manure, your load is magnificent tonight!

But your ongoing bitterness is clouding what slight semblance of information you used to proselytize with.

#67 sheane wallace on 02.20.14 at 11:12 pm

Gold is not money, which is a medium of exchange. It’s a rock. — Garth
——————————
Technically you are incorrect. Gold is money according to the US constitution, bank notes were introduced as a receipt for gold that is hold in a safe storage.
Lenin said the washroom floors would be made out of gold as it would be worthless.

Well, I guess he was wrong.

Gold and silver preserve value, they could be monetary metals (platinum, gold, silver coins are sold in Canada)

Why the central banks hold gold as reserve (gold counts as bank reserves according to Bazel III), I guess it is a tradition (Ben Bernanke)

I personally prefer gold miner ETFs – up 20-50 % thsi year alone. That is real money.

#68 Ralph Cramdown on 02.20.14 at 11:15 pm

#43 Infused with Opiates — “Not sure what is so hard to believe about it. In the budget example we are talking about a specific type of “economic family” of two earners with children. You can hit this income figure with one skilled job and one semi-skilled job. I am surprised the NDP doesnt get it.”

While I agree that it isn’t too difficult to hit that income level, and many families do, it isn’t really “average.” Incomes are not normally (bell curve) distributed. You can play with CANSIM table 202-0408 to discover that while the average income of census families (“2 or more people”) in 2011 was $91,600, the median was only $74,700. The word “average” here refers to the statistical mean, which is of limited utility in characterizing a skewed distribution, rather than meaning “typical” which would more accurately be represented by the median.

The Conservatives with this example are talking to their base and undecideds who they have a shot at. The NDP are talking to average Canadians.

#69 Trevor on 02.20.14 at 11:17 pm

Thank you for this lesson in sanity. It is reassuring to have some logical insight into politics and finance. I find it increasingly difficult to deciper through some of the information out there.

#70 Bob Rice on 02.20.14 at 11:21 pm

Garth you better hope the middle isn’t finished… if real estate does “finish it off” then the doomer will have good reason to gloat…. how will corporations continue to profit if society’s biggest most important sector is in financial ruin?

The market will not collapse, but many families will be set on a path they never imagined. — Garth

#71 toronto landlord on 02.20.14 at 11:22 pm

the last 2 days have been totally crazy in a good way.

1.went to see blue rodeo last night at massey hall. they always put on a smoking show and they didn’t disappoint me last night. the wifey loves these guys.

2. unloaded 1 of my investment properties. multiply offers. got what i was looking for. the tenants have been in constant fear since the for sale sign went up.
unloaded and increased cash flow. what pisses me off is i have to pay $140k in capital gains tax.

3.But this is what really makes me happy.
i just walked over to bulk barn and purchased 13 pounds of black pepper and 2 pounds of hot spice – both on sale.
in a couple of weeks, when the snow melts and i can see my grass i will be jumping for joy. i will be spreading the pepper and hot spice all over my lawn.

when “asswhole” buddy and his dog decide that they want to use my lawn as their personal toilet, they are in for a big spring surprise.

this is war.
when they get whiff, they do a be-liner out of the area. i love it when i see it.
i know who those dog owners are that dont like to pick up there dog shit and leave it for everyone else to pick up or step in. they look around as if everything is cool.
well things aren;t cool and i had it with your dog shit.
Its party time.

#72 Bob Rice on 02.20.14 at 11:24 pm

@# 34,

The e-Series are good… I have them now.. simple and you’ll be automatically diversified with 4 acquisitions; Cdn, US, Intl e-series and the Cdn bond.. you’ll be invested in a good chunk of what Garth promotes.

#73 Money Illusion on 02.20.14 at 11:25 pm

Mr. Keynes also attempted to explain why savers always hope interest rates will go up, while being seemingly indifferent to the rate of inflation.

To explain this he talked about “Money Illusion” – the psychology that savers always want higher (nominal) interest rates so they can receive higher returns on their savings because they will FEEL better off, even though inflation renders the ‘real’ rate of return no different than before.

For example, a 2% return on GICs when inflation is 1% is the same as a 7% return on savings when inflation is 6%.

Alwyn

PS. Garth, I hope your leg is healing satisfactorily.

#74 Kurt on 02.20.14 at 11:26 pm

Garth, gold is not a rock. It is a valuable industrial and decorative metal – like platinum, rhodium and a few others. Oh, what’s that? Yeah, it’s not money.

#75 sheane wallace on 02.20.14 at 11:26 pm

Otherwise I agree that gold is useless, what bothers me most is the great demand from India and China for it and also the obvious blatant manipulation of precious metals markets by naked short selling called out by dr. Paul Craig Roberts, the father of Reaganomics.

I decided to jump on miners etf’s this year and was handsomely rewarded.

#76 sheane wallace on 02.20.14 at 11:30 pm

My commodity portfolio also benefited greatly, specially RDS-B, BBL, RIO.

#77 YVR on 02.20.14 at 11:36 pm

“But thank our stars for Keynesian economics, because it worked as expected.”
———————————————————
Yes but it was Keynesian economics which got us into the situation in the first place. If governments could engineer the economy with Keynesian economics we wouldn’t have had the 2008 crash in the first place, nor the 2000 crash, etc, etc. The problem IS Keynesian economics. Going from bubble to bubble is not the solution.

#78 valleyrenter on 02.20.14 at 11:37 pm

Talked to my local TD guy recently. Branch vice, nice guy, fan of renting. I know that Garth would be breathing over my shoulder saying ETF’s, however he was talking about low MER mutuals. Wanting to put a small amount into TD per month to show faith in them. Hopefully it will pay off down the road when I want to use leverage to buy, doesn’t matter what, just want the lowest interest rate possible. Thoughts on this? We are talking less than 5% of monthly “investing money”. Is there still a place for MF in a balanced portfolio at low MER?

#79 bill on 02.20.14 at 11:39 pm

Hi Yvonne
be like the dog in the picture. keep your ducks in a row and when you want a rest they will be there for you.

#80 Hilarious on 02.20.14 at 11:45 pm

#25.

lol. i’d bet you my entire life savings that the US will not reach oil self-suffiency in two years.

i’d be willing to bet that they never reach it, or if they do, it only lasts for a few years.

unless, of course, you weren’t serious and the point of your post was to illustrate Garth’s point about fear being used to manipulate people, as desperate pipeline shills have now taken to doing. “…build the pipeline NOW or we will be stuck with this oil FOREVER…!” lol… sounds like the real easte industry and their “priced out forever” meme.

just be patient. your precious pipeline will be built. it’s just a matter of when.

#81 The sin of (some) wages is ... on 02.20.14 at 11:47 pm

To my knowledge there is no capitalist economics model that demonstrates why some very highly paid CEOs, who receive hundreds of time the wages of their average employees, should not receive such pay.

Wagemark is an international wage standard used by companies, non-profit organizations and government agencies to certify that the ratio between their highest and lowest earners is competitive and sustainable.

BTW, the Wagemark ratio is 8:1

Alwyn

#82 Dan on 02.20.14 at 11:49 pm

I’d like to see Garth intelligently address commodity/resource equity ETF investing (beyond simply buying XIU) instead of just trolling gold bugs.

Not everyone out there is all in on real estate, savings accounts or bullion, believe it or not.

#83 bill on 02.20.14 at 11:50 pm

#66 World According To Garth on 02.20.14 at 11:02 pm yo
my bet is your a former government worker who was fired for dogging it all the time and is consequently embittered with life…..

#84 Snowboid on 02.20.14 at 11:57 pm

#66 World According To Garth on 02.20.14 at 11:02 pm…

Insults? Oh, you poor dear!

You are the one that states that private company workers are really government workers.

At least in the US these corporate ‘public-servants’ are coming to their day of reckoning.

These are the highest paid public servants in the US:

http://www.prwatch.org/files/americas_highest_paid_government_workers.pdf

What makes you think it’s different in BC?

By the way, wintering down south has nothing to do with my well-earned pension, but everything to do with Prof. Turners’ advice to grab our home equity while we still could, and invest wisely.

Just cause your time in the public service didn’t work out, doesn’t give you the right to spread ridiculous misinformation.

#85 7down on 02.21.14 at 12:04 am

J.P.Morgan said ” Only gold is money, everything else is just credit”
Gold is a precious finite metal , not a rock.

#86 Trojan House on 02.21.14 at 12:07 am

But what I do hold against him is his less than honest portrayal of what is truly happening with the economy. I suppose this is where being a “politician” helps. Politicians want to paint a picture where everything is rosy despite the facts all around them.

The facts are, 5 years after the crash, the economy is still “recovering.” Which is fine because it took over 20 years and a world war (with 60 million dead) to recover after the Great Depression. While the US may have reduced its budget deficit, it’s actual debt has soared to over $17 trillion and counting. It has far less unemployment because millions of Americans have stopped looking for employment and are therefore not being counted as unemployed – if 10 million people are looking for work and 5 million stop looking, voila, there are now only 5 million looking for work. Like magic, the unemployment rate just dropped.

Corporations are more profitable now than ever because hundreds of thousands of jobs have been off-shored to countries where they can pay their employees peanuts thereby saving corporations millions, if not billions in employment wages. The manufacturing industry in Ontario has been devastated by this – this news does not come from doomers and gloomers but from the main stream press. The same has happened in the US where the percentage of manufacturing companies that reside there has dropped dramatically over the last 15 to 20 years. Again, not doomer facts but facts that are easily found on any main stream media outlet. Sick companies only kept people employed because of bail-out packages – GM, Chysler come to mind.

Banks did not survive a lack of confidence. They speculated, no gambled, with billions and billions our dollars and lost, big time, and then were BAILED OUT with trillions of our dollars once again, which continues to this day with QE (even though it may be less, it is still there). Again, common knowledge. The Canadian government even bought off the CMHC with over $100 billion in bail-out money in 2010 I believe it was.

And speaking of QE, the financial markets have benefited greatly from the printing presses (which is the reason I want Garth’s opinion on investing). The money that was supposed to go into the economy to spark spending of us regular folk has actually been planted into the balance sheets of the “too big too fail” banks in order to offset the losses they had gambling with our money. So, no, credit has not flowed to where it was supposed to go. One of the reasons we don’t have high inflation at the moment. But tell Yvonne she does not have to worry about hyperinflation because it will likely be debt deflation that will hurt.

Now the talk is of BAIL INS, as in Cyprus style. Ottawa may not have engineered a take over of savings accounts if big banks fail, yet, however, talk of a bail-in package DID come up in last year’s federal budget – sorry, not talk, it was written into the federal budget. Again, look it up if you don’t believe. It was in the media although buried not long after it came up.

Anyway, the point is that the facts do not exactly point to what Garth is selling. So, is Yvonne right to be afraid? Probably. Am I advocating building a bunker, hoarding gold and silver (Garth is correct, they are only one medium of exchange – chickens could also be a medium of exchange) and preparing for the end of the world? No, I am not. However, figuring out what works best for you in these tumultuous times is probably a good idea.

And before you guys get your “doomers are taking over this site” knickers in a knot, Garth brought it up.

#87 Smoking Man on 02.21.14 at 12:09 am

Garth you’re weird, you made a few desert adventure posts vanish, I think they where clean. I’m angry, give you a scathing post of what I think of you.

Thinking I’m banished for life…

Then you allow the fearless duck post.

I’m thinking, men who wear suits and cowboy boots on pain killers.

Well un predictable…

I suffer from loathing, and no fear..

It can’t end well for me.

Smoking man out on the Vegas Strip…

#88 Re-Birth on 02.21.14 at 12:13 am

No one is getting out of here alive… So accept that premise and then enjoy each minute of every hour and every day as a gift that should never be wasted especially in fear.

If you have worldly concerns than deal with them as best as you can by preparing the best way that you can and then relax, chill, take a break and enjoy your life now.

Money and things have never been my number one or two goals in my entire life.

Being a good and caring person to all who come in and out of my life every single day of every single week month after month year after year. Including being true and good to myself at the same time is what carries me thru the darkness that sometimes life allows to fall upon each and every one of us from time to time so keep the faith and persevere.

But in the end of it all, for me that is… Is I do believe in God and Love and I will never put my time or trust in any material thing (house/money) and I refuse to live in fear, greed or hatred.

I hope this was helpful for you.

Cheers….

[email protected]

https://www.youtube.com/watch?v=sG7L3xEYmVE

#89 Mike T, on 02.21.14 at 12:15 am

#1 First on 02.20.14 at 8:20 pm

There is a place for you to claim your award for being first:

http://www.cafepress.ca/mf/7883136/loser-tee_tshirt?productId=880868438

if that is your contribution to (the oft scotch fueled) web-blog, seriously, don’t bother

SERIOUSLY

#90 Marco Polo on 02.21.14 at 12:19 am

I don’t agree with Garth here,

While this lady has way too many concerns, I wouldn’t dismiss all of them.

Living in ft mac is tough, I’ve worked there. No quality of life, cold, and houses are very expensive. If you work there, you can earn a big paycheque, only to blow it all on an expensive home, or rent, or drugs.

Added to this, you’re a slave to expensive oil. Many of the projects there need to shutdown if we reach $50bbl, as we did in 09. In 09, many locals in fort mac left town, and left their keys for the house or truck at their locsl branch (as if that would get them out of it)

Some diversification is in order, and as Kenny Rogers put it, you need to know when to fold them too. The DOW remaining at this level is unsustainable.

#91 Son of Ponzid on 02.21.14 at 12:28 am

“But thank our stars for Keynesian economics, because it worked as expected.”
———————————————————
Yes but it was Keynesian economics which got us into the situation in the first place. If governments could engineer the economy with Keynesian economics we wouldn’t have had the 2008 crash in the first place, nor the 2000 crash, etc, etc. The problem IS Keynesian economics. Going from bubble to bubble is not the solution.
—————–
exactly, bring in the Austrians and let’s have some constructive destruction.
From the ashes, a new economy will rise.

#92 Infused with Opiates on 02.21.14 at 12:29 am

68 Ralph

“The Conservatives with this example are talking to their base and undecideds who they have a shot at.”

You betcha. That’s what I would do.

And I come from a long line of NDPers. But I saw through that charade a long time ago.

#93 TurnerNation on 02.21.14 at 12:32 am

Parents, don’t let your kids become blog dogs.

#94 Carpe Diem on 02.21.14 at 12:36 am

Everywhere I have driven in the last 4 years I see construction on the roads? Why? Keynesian economics at work!

I sure like the new street or highway to speed up my commute. New bridges, new overpasses. Hell, I love the new school my kids go to in a somewhat new neighborhood. The teachers are awesome!

Keynesian economics gives jobs to construction workers, teachers, police, firemen, government workers, etc to improve the country, province and cities we live in.

But when my 97th percentile kid is stuck in a special class because some teacher needs x amount of student, enough is enough. Better yet, he told us, WFT am I in this class? Well, he’s not anymore and his marks are even better. As for the teacher … thanks for nothing!

So we edged a depression but only had a “Great Recession”. Yea!

I’ve always thought that Keynesian economics was required even when finance budgets sucked the bag at a federal and provincial level!

But eventually, it’s time to reduce the excess. When? I have no clue but make work programs so people who aren’t that smart shall end soon.

The Conservatives think they have done the best for this country but seriously, they have given all the tools to idiots to show how stupid they are.

This will cause more harm that short-time goals of a re-election.

Meanwhile, as a shareholder, I care not for the stupid, taxpayers or the government. I care only that my investments do better each year.

I have REIT for my real-estate exposure since I’m a renter.

#95 Basil Fawlty on 02.21.14 at 12:38 am

It is funny that a few years ago people were labelled as doomers and kooks for suggesting manipulation in financial markets and government statistics.
Well, after the Libor manipulation scandal became public knowledge, no one could suggest there is no manipulation. However, the more one looks into the issue of manipulation it becomes clear that most everything is manipulated, just through the zero interest rate policy. How many houses would be purchased in Canada and the US today if interest rates were actually set by the market? How many houses would have been purchased in Canada if CMHC’s loan book had not gone from $150B to $600B? How high would the stock market be today without the ongoing flood of trillions created by the Fed?
How can it be suggested that there is no manipulation, when it is as obvious as the nose on ones face? In addition, how can it be that anyone who suggests that there are serious economic problems is written off as a doomer, or worse. It’s like there is no room for a rational debate on this site. You either think the economy is good , or you are a kook. You either think gold is a rock, or you are a bullion licker. Where is the middle ground? Where is the reasoned discussion associated with the real issues facing people today, rather than just calling down people who have contrary opinions?

#96 Blacksheep on 02.21.14 at 12:40 am

“I must not fear. Fear is the mind-killer. Fear is the little-death that brings total obliteration. I will face my fear. I will permit it to pass over me and through me. And when it has gone past I will turn the inner eye to see its path. Where the fear has gone there will be nothing. Only I will remain.”

Frank Herbert- “Dune”

#97 Tony on 02.21.14 at 12:54 am

Re: #12 DR. WAYNE on 02.20.14 at 8:53 pm

We’re all a little bit jealous and envious at the same time as the same person just hit the daily double. First yesterday and first today. Ive seen the same thing on usenet where people try to snag the “Furst Poast” of the day on as many newsgroups as they can at the same time.

#98 GenXer on 02.21.14 at 12:54 am

“They swear markets are rigged, central banks are the enemy, and elites are out to destroy and consume the middle class.”

Anyone who’s ever played a game of monopoly knows how capitalism eventually ends – one person holds all the wealth.

The key to the game is to invest your money early and move around the board as fast as possible. Landing on free parking (aka public pension) doesn’t hurt either. But no matter how well you play, you will eventually win everything or lose all your money.

Just ask the bottom 3.5 billion wage earners in the world, who are trying to maintain wealth equal to the richest 85 people in the world.

http://crooksandliars.com/2014/01/kevin-oleary-extreme-income-inequality-0

Seriously? 85 people combined have more wealth than half the planet? Who seriously considers this type of system sustainable?

#99 Cici on 02.21.14 at 1:05 am

#16 moneymike

With $30,000 you should keep it simple; i.e. not too many ETFs, and no stocks. I’d say four ETFs tops for now: 20% US equities, 20% Canadian equities and 20% international + 40% bonds would be one simple option. Garth has recently made some suggestions concerning what types of bonds you should be looking for (i.e. not long-term bonds). So, I’m guessing he’d probably recommend that you choose one short-term bond ETF for now.

With only $30,000, I’d say do all your investing yourself for now, and don’t get too fancy. The real important part of your investing portfolio will be choosing a self-directed account with a discount brokerage that allows you to buy ETFs for free. Questrade is one, but there are others. The guy from milliondollarjourney has published good charts and articles comparing various Canadian discount brokerages, and keeps them fairly updated:

http://www.milliondollarjourney.com/top-canadian-discount-brokerages-with-commission-free-etfs.htm

And at this point I wouldn’t worry to much about rebalancing. Try to even out the asset locations as you invest new funds (e.g. if you are overweighted in equity ETFs and underweighted in bonds the next time you want to add money to the account, simply invest the new funds in bonds to bring up the ratios). I’d keep on like that until you are have accumulated at least $75,000, and then I’d try to talk to a trustworthy advisor like Garth, who can help you diversify even more with more sophisticated options.

#100 Happity on 02.21.14 at 1:06 am

Keynes was a fraud, Friedrich Hayek is on record basically stating such. Gov intervention does not create jobs and has never created an economy, it always ends in tears, you should know that after working for them.

The illusion of paper money will continue as long as it’s profitable to continue the illusion. At the point where the illusion becomes too expensive to maintain, they will just take down the scenery, they will pull back the curtains, they will move the tables and chairs out of the way and you will see the brick wall at the back of the theater.

Kinda sounds like Zappa…

#101 Cici on 02.21.14 at 1:16 am

#16 moneymike

Oh, just saw something. There are some advisors out there willing to set you up with a DIY portfolio for a one-time fee, maybe Garth would be willing to do the same.

However the fee can get expensive (around $3,000), so unless you really need the hand-holding, I’d just do it completely on my own using RRSPs and ETFs for now, and then see about maybe opting for the one-time fee service once you’ve got more $ and need more sophisticated info about currency conversions and tax-efficient strategies.

#102 Cici on 02.21.14 at 1:17 am

#16 moneymike

Oops…meant RRSPs and ETFs

#103 Smoking Man on 02.21.14 at 1:18 am

Why is it fat girls eye me up like I’m a popsicle laced with bacon and eggs, just had a soft set and a smile, brush my perfectly shaved head. Bit of a reverse and an aggressive push em in.

Damn, it’s only 9:16 here.

God take me now, I don’t do fatties….

#104 Cici on 02.21.14 at 1:18 am

#16 moneymike

Ok, that’s twice now…meant RRSPs and TFSAs!

I’m friggin tired, sorry!

#105 Tom from Mississauga on 02.21.14 at 1:22 am

Gold bugs at it again tonight, eh? Energy equities are the way I play inflation, there is no after market on a consumable. Looks though energy inflation is here too, my Enbridge bill for January was WOW!

#106 Tony on 02.21.14 at 1:24 am

The baltic dry index is around a 30 year low. Uranium is around an 8 year low. Both indexes can’t be manipulated like everything else you see today. Switzerland won’t even sell anyone Swiss Francs in bulk anymore. Am I onto something here? This is the real word I’m talking about. Countries and cities are going broke wholesale. America has to legalize pot because they can’t afford to build more jails. Does any of this sink in? Read between the lines today and protect your wealth.

#107 Tony on 02.21.14 at 1:30 am

Re: #81 Hilarious on 02.20.14 at 11:45 pm

Exactly right on oil but the same can’t be said for natural gas in America.

#108 RockStar on 02.21.14 at 1:33 am

Toronto real estate prices continue to climb. 2 decades now. I’m sorry guys.

#109 Tony on 02.21.14 at 1:36 am

Re: #73 Money Illusion on 02.20.14 at 11:25 pm

You forget income tax, it can have a profound different on your rate of tax.

#110 Happity on 02.21.14 at 1:39 am

Gold isn’t fear, it’s condensed energy.

When distrust of paper printers grows it increasingly becomes an alternative, Garth can’t otherwise explain why in his utopian economic world view that a one ounce rock cost over $1300…

#111 TurnerNation on 02.21.14 at 1:39 am

If you haven’t heard a rumour by noon, start one.

The entire system is on the verge of collapse!! Bail-ins, cash and gun seizures, gold-sniffing dogs, bankster currency wars, and werewolves.

This is the moment we’ve been prepping for! Enter Beast Mode.

#112 Notta Sheeple on 02.21.14 at 1:40 am

“… They swear markets are rigged, central banks are the enemy, and elites are out to destroy and consume the middle class…..”
========================

Can you blame them?

How many investment bankers are currently serving jail time for their part in bringing on the financial collapse of 2008?

#113 Spectacle on 02.21.14 at 1:57 am

Thanks Garth.

Re: #71 toronto landlord on 02.20.14 at 11:22 pm

2. unloaded 1 of my investment properties. multiply offers. got what i was looking for……….what pisses me off is i have to pay $140k in capital gains tax.

Hmmmm. Really should have called Garth on that one TL. I think Garth references it along with doing your own dental surgery. Painful

Re: #79 bill on 02.20.14 at 11:39 pm
Hi Yvonne
be like the dog in the picture. keep your ducks in a row and when you want a rest they will be there for you.

Bill, You get comment of the week from me!

Regards

#114 Hank Rearden on 02.21.14 at 2:13 am

Generally a good blog Garth. But thank our stars for Keynesian economics? You must have had one two many at the boozer tonight old boy.

#115 Derek R on 02.21.14 at 2:27 am

#77 YVR on 02.20.14 at 11:36 pm wrote
Yes but it was Keynesian economics which got us into the situation in the first place. If governments could engineer the economy with Keynesian economics we wouldn’t have had the 2008 crash in the first place, nor the 2000 crash, etc, etc. The problem IS Keynesian economics. Going from bubble to bubble is not the solution.

Nope. Governments lost faith in Keynesian economics in the late 1970s when the oil price shock started affecting the global economy in a way that Keynesian demand management couldn’t easily fix. We haven’t had Keynesian policies since the early 1980s.

#116 blase on 02.21.14 at 2:29 am

Hard to cry for someone who probably has a family income of $200,000+, is sitting on hundreds of thousands of $ in equity, and pays a provincial flat tax that means her family underpays their taxes by thousands of $ a year.

Cry me a dirty Ft. Mac river!

#117 james on 02.21.14 at 3:08 am

“Today central banks around the world are working hand-in-glove to coordinate monetary and fiscal policies.”

Uh, why is this a good thing?

Any ecologist or systems engineer knows that resilience systems depend upon a number of key properties, one of which is diversity. The fact that none of the major issues with the financial system have really been addressed since 2008 should be of great concern to all of us.

This is not to argue that a great crash is coming, but it is clear that modern financial systems are so complicated that we don’t understand much about them. Top-down command and control structures are unlikely to work.

#118 Life's a supermartingale on 02.21.14 at 3:20 am

“But thank our stars for Keynesian economics, because it worked as expected.”

With that statement, am I ever thankful that you are no longer in office with no hope of return. Keynesian economics is a complete and total failure as a theory. It is logically inconsistent, and it is at odds with empirical facts: Yes, you can have high unemployment, that is an economy with lots of pressure to bid wages down, and still have very high inflation. It’s politicians like you with their Keynesian mindset who make the world so much worse off.

But hey, just because you have a grade school understanding of a subject, that’s no reason not to spout off like an expert. Do you also have some insight on the Riemann Hypothesis? Please try to understand something about economics in an intellectually honest way before making sweeping claims about the financial crisis to your reading public.

#119 Andrew Woburn on 02.21.14 at 3:21 am

An auto dealer’s take on Generation Y

http://www.autodealerpeople.com/profiles/blogs/40-of-your-buyers-are-gen-y-do-you-know-how-ro-sell-them

#120 Shut the front door on 02.21.14 at 3:25 am

Yvonne, you have a case of Seasonal Affective Disorder.

Google the condition and buy a big light and sit in front of it everyday.

Also, adopt a dog or a cat, they are fabulous company and they are perfect to talk to, because they won’t argue with you over the fate of the world, they will just agree with what ever you say.

You could name your new pet Garth and have the best of both worlds.

One thing for sure, stop reading this loony tune blog, it’s bad for your health, for sure it will lead to smoking, alcohol and maybe even opiates, like so many other posters here.

#121 TakingResponsibility on 02.21.14 at 3:37 am

I enjoy reading what are subjectively called “doomer” authors and am intrigued by what are subjectively labelled “conspiracy” theories. There is a truthiness to everything. Oh, and just Love all the “start ups” – including bitcoin! Geesh, there are lots of ideas out there for new and improved ‘mediums of exchange’. Kudos for all the creativity in the world!

I find it inspiring that more and more people express their questionings of conventional ‘wisdoms.’ Not all of these questionings or expressions are motivated by Fear or an attempt to invoke Fear; some are motivated by Caring – being concerned for the Human Condition.

Fear as Prime Motivator most often comes cloaked in Positivity – For example, It’s clear that it is Fear and not Greed that motivates an individual to ‘irrationally buy’ in real estate. The fear is mostly invoked by a “what will others think of me if I rent, etc., etc.” Fear is the Great Motivator – the Great Seller.

And, if one expresses disagreement, then one is labelled a “Doomer.” Or, even worse – Negative! Haha!

Interestingly, GT’s use of the term Doomer is ironic because the average joe and most “Pumpers” have labelled Garth a Doomer!! Ha!

Whatever you do Yvonne, if you are daring to read comments, do not follow Anyone blindly, including GT.

“You have brains in your head, and feet in your shoes.
You can steer yourself in any direction you choose.” —Dr. Seuss

#122 Happy Renting on 02.21.14 at 3:44 am

Yvonne (I know you’re reading, the comments are irresistible!), knowledge is power. Take some time and make a serious effort to learn the basics of economics and finance (legitimate sources of education, not sensationalistic, dubious websites.) You need fundamental knowledge to be able to evaluate what statements are truthful and what’s unlikely.

No one can foretell or promise that some crazy meltdowns won’t happen. Once your knowledge base is larger, pick an investment strategy and plan that will reach your goals and survive most the-world-is-ending scenarios. No plan will survive every scenario, but if it gets bad enough out there your last hope will be a well-stocked bunker and a shotgun, anyway.

And no one’s said it yet so I will. Assuming you’re not a total dickhead in the comments section, we’ve learned you can call Garth in tears and he’ll kindly assuage your fears! Garth, you big ‘ol softie. :) Already, the world seems like a nicer place.

#123 Charles Ponzi on 02.21.14 at 5:25 am

Early warnings of a crash are dismissed over and over (“just a temporary correction”). They gradually numb us about the inevitable. Time after time we forget history’s lessons. Until finally a big surprise catches us totally off-guard. Financial historian Niall Ferguson put it this way: Before the crash, our world seems almost stationary, deceptively so, balanced, at a set point. So that when the crash finally hits — as inevitably it will — everyone seems surprised. And our brains keep telling us it’s not time for a crash.

#124 Future Expatriate on 02.21.14 at 5:34 am

Conservatives, Garth. Doom is all they do. To get into power, to stay in power, to negate power when they don’t have it, to try to get it back. Pander to the lunatic nutcase paranoid fringe. Make Doom really happen when they hold the reigns of power, and then make it almost impossible for anyone to fix it.

Conservatives, Garth.

#125 Onthesidelines on 02.21.14 at 6:17 am

Fear is actually crucial for survival. It produces a discipline of vigilance and a certain attitude of skepticism towards forces not under one’s control. Those who diss fear probably do not have much experience with it or, in other words, have not done anything truly dangerous in their lives.

To have faith in the same central bankers who stood by and watched but didn’t see the 2009 fracasso unfold is folly. There is absolutely no evidence that any of these clowns have any clue as to what will be the consequences of their current actions in all the so-called pump priming easy money policies that is going on all over the world. It all seems like desperate actions of the ignorant. The claim that a 2009-like or worse crash will not happen ever again is baseless, and I dare the host to provide evidence to the contrary.

‘Prove things won’t get worse.’ Classic. — Garth

#126 I'm stupid on 02.21.14 at 7:14 am

Hi Garth

In your opinion, what should fair market value of a sfh be in the 416?

#127 Rob on 02.21.14 at 7:25 am

@mike

Simple answer, reblance once a year, then ignore it.

Longer answer read Millioniare Teacher he lays the details of a balanced portfolio out in 300 or so entertaining pages

Rob

#128 Joe on 02.21.14 at 7:25 am

Some of the markets are rigged.
Libor manipulation has skimmed from trillions of dollars.
Housing markets being pumped up by fictitious stats.
Banks being busted for laundering billions of drug money.
Suspect lending criteria.
Bankers are turning up dead, mid level positions privy to extensive dealings.
I’m not a doomer this is fact.

#129 housedoc on 02.21.14 at 8:15 am

The doomers say these are unprecedented times of money-printing, government intervention, debt accumulation and the consolidation of wealth. They’re right. It’s unique. But thank our stars for Keynesian economics, because it worked as expected. Governments went into big debt to ensure the financial system functioned, that banks survived a loss of confidence, sick companies kept workers employed and credit flowed. As a result, a society which had lost its way was largely rescued in four years, and today we live as normal.
————————————————————–

I’m pretty sure my head just exploded.

#130 yann on 02.21.14 at 8:56 am

Great post, Garth. Very detailed, well written.

Thank you for all the advice you freely share here with us. Appreciate it!

[long silver, physical and miner stocks; just a really nice form of money, imo. But moving to a diversified portfolio as per your suggestions.]

#131 Buy? Curious? on 02.21.14 at 9:10 am

Garth, if I didn’t see it with my own eyes, hear it with my own ears and feel it in my own…..(I went to a catholic boys school), I would have thought you were really just making all this doom and gloom up. The people that I’ve spoken to in Toronto, friends, milfs, friends of milfs, all say how crazy housing is. You don’t even have to be a trained economist to know that it’s insanity.

Here’s my take on it. If you don’t like living in Toronto, move! If your life consists of going through the Tim Hortons drive thru at 6am to do a 3hour commute, one way for peanuts, you’re so stupid. And who would miss? Your neighbours, friends from school, family? Screw that! It’s winter and pints cost $10 (Legalise marijuana!), who wants to socialise? A social event in Canada is the new “Roll up the Rim” campagin or winning the silver in figure skating.

All you need is proper high speed broadband, a basement with ventalation and an airport within driving distanse. Move to Windsor Ont! Turn off your TV and don’t drink alcohol.

I should get a job at Windsor Ont Tourism or city planning. I would turn that city into the clothing-optional Coppenhagen of North America.

http://www.youtube.com/watch?v=Naf5uJYGoiU

Oh gawd, Please vote Rob Ford 2014! I haven’t laughed or cared about municipal elections in ages.

#132 Herb on 02.21.14 at 9:26 am

Government has no place in the offices of the nation. The economy should be left to the Great God Marketplace and the Suits behind the curtain, who will fix things nicely …

#133 Herb on 02.21.14 at 9:35 am

Selfishness is altruism. Greed is charity. It is settled economic science that only those out for themselves can do something for the common good.

Where is George Orwell when you need him!

#134 gut check on 02.21.14 at 9:40 am

#34 BG
Just a quick thanks for that post. That side of the equation (for lack of a better term) is rarely presented here, but it’s something worth thinking about.
We can’t all be financial managers nor should we be.

#135 devore on 02.21.14 at 9:44 am

The doomers say these are unprecedented times of money-printing, government intervention, debt accumulation and the consolidation of wealth. They’re right. It’s unique. /…/ As a result, a society which had lost its way was largely rescued in four years, and today we live as normal.

Every time in history is unique and unprecedented in its own ways. At the same time, it is just similar enough to other times that ended in historic disaster. Pointing that out proves nothing, and is used solely to foster fear and sell useless junk.

What a sad life it must be to be afraid all the time. Start by turning off the 6 oclock news and stop reading the gaudy doomer sites (why DO they all look so god awful ugly anyways).

#136 NoName on 02.21.14 at 10:03 am

There’s nothing like a good conspiracy first thing in the morning…
http://everything2.com/title/Kit+Kat+Konspiracy

And, I hope that gold bars taste les tungsten-ish in NA vs asia
http://investmentwatchblog.com/60-tonnes-of-tungsten-filled-gold-bars-found-in-asian-depository/

and
Cripto currency seems to be used by crooks only now days, I just don’t k how how are they coping with inflation/deflation thingy
http://blog.cassidiancybersecurity.com/post/2014/02/Bitcrypt-broken

…so, things were clear: the cybercriminal wants 0.4 Bitcoin, which made about 260 Euros at the time of infection, but only 89 Euros at the time of writing (Once again this shows how unreliable the Bitcoin money is, but that is something else)….

#137 bdy sktrn on 02.21.14 at 10:04 am

“a former government worker who was fired for dogging it all the time”
—————————————-
wow, funny stuff.

as if any govt employee ever got fired for screwing the pooch.

most govt work is simply a pooch screwing contest (many front line workers excepted) – last night i listened to one ‘servant’ express the shock and horror and disgust of having to work one single minute past 37.5/week. where their private sector (mgmt) counterpart averages 50-60/wk.

#138 Onthesidelines on 02.21.14 at 10:07 am

‘Prove things won’t get worse.’ Classic. — Garth

Not at all. What I’m asking for is convincing evidence that the systemic failure of the oversight on the part of financial regulators which allowed the 2009 crash to happen is now understood and that there are now significant provisions in place to prevent such a failure from ever happening again.

Provide convincing evidence of a viable exit strategy for the current unprecedented pump priming within a global economy that is stuck in severe unemployment, no wage growth and a consmer society whose only means of survival will be to decrease their consumption.

Better still, just explain to me how Japan is going to get out of its 20 year deflationary mess and let’s stretch that analysis to the rest of the world.

#139 2Cnts Cdn on 02.21.14 at 10:13 am

Relax Yvonne ….. if the world was half as bad or half as doomed as 3/4 of the goof balls who write on here say ….. we all should have killed ourselves 20 years ago. I wish all posters would show their net worth beside their comments ….. it would make it clearer who knows whats going on and who just wants to see their idiotic idea’s on the computer screen. As you listen and learn from blogs like this you will see what is good solid advice and what is noise from idiots. There are some great posters on here …… listen to their stuff ….. the goof balls (as serious as they take themselves) are just for our entertainment.

#140 Fort Mac Flatlander on 02.21.14 at 10:16 am

Not 1st on 02.20.14 at 9:26 pm
Garth you should have told her the scariest thing if all. That is when the US reaches oil self sufficiency in 2 yrs and no new pipelined ate built all that tar sands bitumen will be forever stranded in the ground.

Hah! People truly need to take a look at the rate of decay for the production of the shale oil alternative. Individual well production is dropping by a third after only 2 years. This guarantees two things. 1) A strong demand for drilling and fracking. 2) A new floor price for North American oil. Just like when the price of nat gas fell, supply/demand will dictate if the wells are drilled or capped. As the all in life span cost for shale oil is greater than the open pit oilsand business model, this ensure the continuity of the sector’s viability. Watch out.

#141 drydock on 02.21.14 at 10:18 am

# 4

Put down the pipe , step away from the pipe.

#142 raider on 02.21.14 at 10:19 am

Reading Zerohedge or Karl Denninger should lead to such symptoms, but not Garth….

#143 Aggregator on 02.21.14 at 10:34 am

When one can figure out and explain why Canada's REER competativeness ranking is parked right in the center of these emerging countries, only then will they realize that Canada is not USA, and there's a problem on the horizon called inflation. Chart

How ironic is it that those Canadian investors who keep cheering the Fed's untaper and America's recovery are really just cheering their own demise.

#144 economictsunami on 02.21.14 at 10:36 am

It’s not just about fear Yvonne.

Understand, many may choose to conveniently forget why it is that trillions have been spent and we have seemingly stabilized financial markets but as yet a sustained economic recovery has failed to gain traction.

This in large part is due to both ongoing financial and economic problems merely being papered over.

Definitely be concerned about your family’s particular financial exposure; as G is very wise to constantly pound the diversification drum.

Become both well informed but more capable to separate the noise from the music.

Learn to compartmentalize. Use fear to motivate and make changes in your life, to be rid of it.

G is correct in his assertion, perhaps this blog is definitely not for everyone…

#145 Flamed out in Kitchener on 02.21.14 at 10:38 am

… ” and today we live as normal ” … I for one, don’t quite know what normal means anymore … if you look around the world today, the most ‘growth’ we can expect is from rebuilding what mother nature and us humans destroy on a daily basis … no doom, just reality.

Everyone I talk to has this underlying dread in what they think about the future, their own, and their kid’s. I’ve always been a perpetual optimist, but the hole dug in 2008 is a hard one to rebuild, with Canadian household debt at a 1.64 ratio. This will take a long time to fix at the core level, and one black swan event can take it off the rails really fast. Emotion is a powerful thing, and that’s what seems to be driving individual decisions more and more, … and collectively, this is not good for the economy. Common sense went out the window long ago; just look around.

By the way, there has been a fundamental change in our relationship with the banks (I checked with the office of the Superintendant of Financial Institutions) … we used to be classified as ‘depositors’ if you had any cash in the bank … now we are ‘ unsecured creditors’ … that change, along with last year’s Federal Budget (aka … 2013 Economic Action Plan, pg. 145) outlining the Bail-in status, (read Cyprus trial run) creates a roadmap of action if there should ever be a derivetive meltdown with one of the Big 6.

Like I said, … I’m on the side of optimism, but it is getting very hard to ignore what the big picture shows.

Hope you continue to heal well Garth.

Nobody is to blame for the accumulation of debt but the borrowers. As for a Canadian bank bail-in, there is none affecting any depositor, nor ever will be under any existing provision or proposal. — Garth

#146 Ray Skunk on 02.21.14 at 10:42 am

Hi Garth

In your opinion, what should fair market value of a sfh be in the 416?

=================================
I’m not Garth, but I’ll pipe up with my 2c.

I see Toronto/GTA as very similar in size, population and “importance” as Chicago, IL. It’s even on a lake and cold this time of year. News to Toronto RE pumpers – New York this ain’t.

Median income (3 person household) in Chicago = $66,300 [https://www.cityofchicago.org/city/en/depts/dcd/supp_info/area_median_incomeamichart.html]
Average current sold price in Chicago = $340,920
[http://www.trulia.com/real_estate/Chicago-Illinois/market-trends/]

Home price is 5.14x median annual household income.

Toronto median household income = $68,110
[http://en.wikipedia.org/wiki/List_of_Median_household_income_of_cities_in_Canada – sorry for the wiki link, can’t be bothered digging through StatsCan]

$68,110 x 5.14 = $350,085.

This is all very rough and not that accurate (the Chicago average stat includes condos, which actually brings the average up – not down).

Also, I know Toronto is more the centre-of-the-world in terms of banking and finance, but Chi-town isn’t far behind. I’d wager that disposable income and therefore affordability is higher in Illnois than Ontario. Also, Chicago actually has some half-decent transit and a nicer waterfront.

In summary, draw your own conclusion but this has been a great waste of some work time on a Friday morning.

#147 rosie "moving forward" in the knowledge that, "this won't end well" on 02.21.14 at 10:47 am

An addition to the inspiring assortment of platitudes littering todays blog. Hope it strikes a resonant chord.

http://demotivators.despair.com/demotivational/giveupdemotivator.jpg

#148 truthseeker on 02.21.14 at 10:57 am

Garth – please stick to your knitting and repeating
your mantra of declining real estate.

Money defined is:

A unite of account
A medium of exchange
A store of value.

Wrong. Diamonds, Picassos and vintage Porsches are stores of value. Money is medium of exchange. Period. — Garth

#149 Southeast asian expat on 02.21.14 at 11:02 am

#29 fred graves

ARE # 4 ROLE’s comments a sentence?

#150 Hank Rearden on 02.21.14 at 11:06 am

Look at any of our problems today and you will see the root cause is Big Government Inc. Interest rate manipulation, CMHC, debt, all caused by the magnificently unmagnificent central planners. We need to return to a society based on voluntary interactions by peaceful people. Read The Law by Bastiat.

#151 Future Expatriate on 02.21.14 at 12:02 pm

#151 – Ah, yes, the future nirvana is only a gutted castrated dead government and wall street/bank collapse away. AKA anarchy and THEN, the DARK AGES.

What happens when idiots spent more time at home cleaning guns than they did in school learning history.

Back in the educated days of the 1960’s, at least when the young left called for revolution, they knew it would never ever really happen and where on a lark trying to just shake things up a bit.

Today, the right wing among them grown into “adults”, using the term loosely, they do everything in their power to make fascist revolution a reality. The difference? The full financial backing of a few lunatic corporate heads suicidal with greed. And that’s the problem with everything, not just real estate.

#152 enjc on 02.21.14 at 12:05 pm

Garth,

Returns over inflation are not sustainable for the majority. There is only so much wealth in the world, in whatever form it is measured. Anyone who grows their savings over inflation does it at the expense of another. This is why ultimately gains over inflation cannot be maintained for a majority over the long term. The majority cannot get a return greater than inflation, it’s just not possible without it being at the expense of another and exacerbating inequality. This type of solution is divisive and short sighted – long term the idea of inflation as mandatory needs to be addressed.

#153 Sheane Wallace on 02.21.14 at 12:05 pm

Nobody is to blame for the accumulation of debt but the borrowers. As for a Canadian bank bail-in, there is none affecting any depositor, nor ever will be under any existing provision or proposal. — Garth
……………………………………
actually Flamed out in Kitchener us correct, depositors are unsecured creditors, the only ‘secure/insured’ part is the guaranteed minimum deposit insured under CDIC.
Anything over that is not guaranteed, it was enacted into law with last year’s budget.
……………………………………
Wrong. Diamonds, Picassos and vintage Porsches are stores of value. Money is medium of exchange. Period. — Garth
……………………………………
Incorrect and this is the biggest problem we face these days:

http://en.wikipedia.org/wiki/Store_of_value
Storage of value is one of several distinct functions of money.
……………………………………

#154 Sheane Wallace on 02.21.14 at 12:07 pm

Here it is:

Store of value
Main article: Store of value
To act as a store of value, a money must be able to be reliably saved, stored, and retrieved – and be predictably usable as a medium of exchange when it is retrieved. The value of the money must also remain stable over time. Some have argued that inflation, by reducing the value of money, diminishes the ability of the money to function as a store of value.[4]

#155 Alex n Calgary on 02.21.14 at 12:19 pm

Everyone is depressed at the end of a northern AB winter, fort mac is goddamn cold and freaking miserable. Sure you make the $$$ living at camp, but the divorce rate and relationship failure rate of those guys is through the roof. I see that money being pissed away all the time on dual 25k ATV’s that are used 4 times a year loaded on the back of a 80k truck by the hill-billiest 22yr old guys you’ve ever seen.

The greed and credit spending is contageous, human nature to be competitive, sell that condo, make some $$$, buy a more expensive place, keep it rolling, correction and lose it all, wealth, vaporized.

Quality of life? seeing friends? hanging out with your wife and kids, is it worth the oil and gas job? I used to be a bit jealous of these guys until I had a lunch with the accountant at a Directional Drilling place who told me what life is like for the mopes in the field…outraged at the money they make, but not jealous of that life, holy cow does it sound bad!

#156 World According To Gsrth on 02.21.14 at 12:20 pm

I rest my case. Lazy corrupt useless govt pencil pushers doing nothing. While kids are poisoned to death.

http://www.vice.com/en_ca/read/albertans-are-abandoning-their-homes-to-toxic-air

#157 Ben Dare Dundat on 02.21.14 at 12:24 pm

Living in FT MAC would make anyone cry ! High wages to pay for hyper inflated housing , groceries, utilities and monster trucks …. and 8 months of winter. WTF ? Buying into the system to feed the greed. Get out while you still can.

#158 TnT on 02.21.14 at 12:29 pm

#147 Ray Skunk

Toronto IS Canada’s New York City and that’s all that matters when Canadian Citizens are picking a place to live.

If there was an option to move to Chicago or New York City then I am sure Toronto would be a lot further down the list HOWEVER this is NOT an option or desire for the majority of Canadians which then makes Toronto the #1 choice.

#159 I'm stupid on 02.21.14 at 12:30 pm

#1 147 Ray Skunk

I’m glad I could help you waste some time.

#160 Citran on 02.21.14 at 12:43 pm

http://www.statcan.gc.ca/pub/91-520-x/2010001/t303-eng.pdf

Just curious.

Does your theory of a flood of retired boomers selling their houses take into account the Canadian population growth estimates?

this says we could be 50 million people in Canada by 2041

#161 Flamed out in Kitchener on 02.21.14 at 12:46 pm

Re: #146

Nobody is to blame for the accumulation of debt but the borrowers. As for a Canadian bank bail-in, there is none affecting any depositor, nor ever will be under any existing provision or proposal. — Garth
—————————————————————-
Thanks Garth, and yes I fully agree with you. Just sayin’ that this level of debt is a real economic drag on meaningful growth going forward … especially once we get back to historically normalized interest rate levels … unless of course we see huge improvements in wage growth (doubtful).

As for the bail-in issue … correct, currently everything is fine, status quo … but the Feds have started lining up the ducks for a just-in-case scenario … it’s those nasty derivitive obligations that have the big boys worried (last number I’m aware of is around $170 Trillion globally).

#162 Linda Mulligan on 02.21.14 at 12:53 pm

Garth is correct that money is a medium of exchange. However, the only item of value in the exchange is the desired good or service that the medium of money purchases. Diamonds are nothing but highly compressed carbon which can be cut to sparkle pretty, although they do have value in industry to cut into or through other substances. Gold is a sparkly mineral (we must be magpies, we seem to like sparkly stuff a lot) but again, has a number of useful properties including that it does not rust. You can even eat gold & silver though as far as I know neither has any nutritional value. However, they are still just mediums of exchange. It is the food, shelter, clothing, medical aid & other services they can purchase that is actually of value.

#163 Daisy Mae on 02.21.14 at 12:53 pm

#54 Yes — about gold: “…if only they had the wisdom found here to realize their folly and ignorance in holding and desiring gold.”

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

No one has a problem with precious metals. Garth simply says metals shouldn’t comprise more than 5% of a balanced portfolio.

#164 Old Man on 02.21.14 at 12:58 pm

I am telling you that the economic problems before us all is because nobody is working, and there must be an important event coming up with the Olympic games. I went to a shopping plaza with no way out; no parking; and no backing down as had to hit one store. I am going around in circles for half an hour fighting the traffic jams filled with cars driven by deadbeats – bankers, realtors, car and insurance sales peeps, and lots of reformists from government. They were all heading for this huge sports bar to get drunk on the taxpayers dime.

#165 moneymike on 02.21.14 at 1:06 pm

Cici, thank you for your help!

#166 straight six on 02.21.14 at 1:36 pm

It’s all good!

This one’s a reversal.. it’s as if king doomer took his followers to the edge and said.. jess kidding!
No need to jump..
but you can if you want to.

#167 Shawn on 02.21.14 at 1:53 pm

Money versus Wealth and store of wealth

Truthseeker comment and response at 149

Money defined is:

A unite of account
A medium of exchange
A store of value.

Wrong. Diamonds, Picassos and vintage Porsches are stores of value. Money is medium of exchange. Period. — Garth

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

In any case our paper money meets the three criteria better than Gold or Diamonds etc.

Gold is not a popular medium of exchange nor is it a unit of measurement of account. (Though it COULD be used for both and has been in the distant past)

Until we refer to a dollar as being worth so many micro ounces of Gold, Gold is not the unit of account. Instead we say Gold is worth $1250 dollars or whatever indicating that it is the dollar that is the unit of account.

The one flaw in the paper dollar is that it is not a reliable long term store of wealth. It is a reliable short term store of wealth in today’s low inflation environment. In the long term one simply invests paper money in a real return account or other assets including bonds or (better) stocks of companies or even Gold to get that long term store of value.

Most people seem to think that an investment in stocks is an investment IN dollars. This is not the case. Stocks, like Gold are MEASURED in dollars but are not dollars as such. An investment in a bond is an investment IN dollars becasue it pays off in a SET number of dollars. An investment in stocks is actually an ownership investment in the real assets and wealth generating capacity of a corporation. A corporation can change its currency of use if need be.

It goes without saying that diamonds and Picasso’s are neither a unit of exchange nor a unit of account.

Anyhow, who cares if Gold is money? The goal is to grow wealthier in terms of real spending power.

If one person gets there by owning Gold that’s fine. Warren Buffett has said he is about 100% confident that an investment in farmland and the likes of Exxonwill make you wealthier than investing in Gold over the the long term. But to each his own.

Surely people can understand that buying a farm is not investing IN dollars and neither is buying Exxon shares.

In the long term why would anyone want to merely store their value at a constant level when most investments grow real wealth over the long term?

Gold is an unreliable short-term store of value, can’t be spent at the local supermarket, and trails stocks by miles in the long run, other than that it is fine.

#168 airhead princess on 02.21.14 at 2:00 pm

BOB Gov ‘Handpuppet Poloz’ policy of ZIRP and ‘Crush the dollar’ craters retail sales while inflation is raging…does anyone else want to puke whenever this a-hole makes another pronouncement about exports driving the economy?

http://ca.reuters.com/article/businessNews/idCABREA1K1GC20140221

Mr Handpuppet Poloz …..it takes a decade and more to bring a new Canadian mine into production….your policies will beggar a generation before you see exports ‘lead’. There is no manufacturing left because liberal bureaucrats gutted the industrial base to shore up ‘sustainable development ‘ in the third world under Trudeau. Retail sales have collapsed under the low dollar policy because everything we consume is imported…you bonehead!!!! Meanwhile food products are inflating like crazy…and the poor….namely the 85% of Canadians who are struggling paycheque to paycheque…..are not ‘substituting’ real food for moldy left overs dredged out of the back rooms of dollar stores because fresh produce ( which is imported ) has increased in price 20% since your boneheaded dollar killing suasion came into effect.

#169 devore on 02.21.14 at 2:17 pm

#149 truthseeker

Money defined is:

Defined by whom? Ask 20 people what money is, you will get 20 different answers.

The only truth about money is that it is a medium of exchange. A liquid abstraction that allows us to escape a barter economy. Everything else is literally up for grabs. If your definition of money is detached from reality, you are in need of a new dictionary.

#170 Basil Fawlty on 02.21.14 at 2:20 pm

“Nobody is to blame for the accumulation of debt but the borrowers. As for a Canadian bank bail-in, there is none affecting any depositor, nor ever will be under any existing provision or proposal. — Garth”

In the US, local financial institutions sold mortgages to individuals of low credit worthiness, since these mortgages were immediatly sold to investment banks. These mortgages were then rebundled (tranched) into CDO’s, which were given AAA credit ratings by the corrupt rating agencies. These CDO’s were sold to pension funds, local and national governments etc.

The original borrowers can not be held solely responsible for a system that was corrupt from top to bottom.

#171 Blacksheep on 02.21.14 at 2:34 pm

Most Doomer websites have an agenda.

They share bold opinions, instilling fear into the readers and then offer solutions to return a sense of control. Once these sites reach critical mass they can generate revenue via:

1) Traffic based advertising.

2) Selling subscriptions to the site.

3) Sales of goods or…..services.

Often a wealth of knowledge can be gleaned from the contributors to these sites.

The question becomes, whether my message (agenda) runs tangent to your best interests?

#172 sheane wallace on 02.21.14 at 2:39 pm

#168 Shawn
————————
Gold as well as silver have all the aspects of money and they have been money for thousand of years.

Denarius and solidus from Roman times still have value while I am not aware of any company from the that time surviving or having any value today.

Not that I am advocating for gold, my portfolio is in dividend stocks but if I am retiree I would be very worried of the future value of my money or bonds.

Stock markets are not for everyone.

#173 bill on 02.21.14 at 2:42 pm

private sector (mgmt) counterpart averages 50-60/wk.

hmmm the sawmill I worked at was notorious for management skiving off early.especially on friday.
naturally if we took of say ,five minutes early we got a warning.

#174 Old Man on 02.21.14 at 2:43 pm

#112 Turner Nation – I was not the old man in BC who got hooped with that expensive diamond ring. So lets get the record straight, as in my sordid life only gave out three engagements rings. The first was in my youth to a gal who is a retired appointed Federal Judge in Canada; still loves me dearly, but kept the ring. The other was to a school teacher in Toronto who threw it back in my face, as applied to Law School, and wanted her to support our marriage with her salary while going to Law School. The last one was a legal secretary in Toronto that after 5 years of bliss changed her mind due to an ethnic conflict with her family, and left me holding the bag for a fortune that I spent and she too kept the ring. The one that got away in Toronto is worth $20 million, and if I had been smart should have married her as she is a member of the Granite Club, and living the good life in a $4 million home.

#175 Rational Optimist on 02.21.14 at 2:44 pm

147 Ray Skunk on 02.21.14 at 10:42 am

I actually came up with a very similar answer to that question, but was going to express it as 270 ounces.

#176 Rational Optimist on 02.21.14 at 2:46 pm

It would be kind of crummy having to give your deposit in a suitcase, though…does anyone have a suggested solution for that?

#177 happity on 02.21.14 at 2:56 pm

Bankers are dropping like flies around the world. Usually this happens AFTER Economic collapse.

Must be the new thing to do when there is a USA economic renaissance?

#178 RB on 02.21.14 at 3:12 pm

#96
Simple to explain.
Garth represents the status quo with a limited hangout bent (residential real estate).
Garth leads, the herd on here follows.
That and the people really hate the truth.

#179 RB on 02.21.14 at 3:20 pm

#149 truthseeker on 02.21.14 at 10:57 am

Don’t forget divisible.

Garth I think you mean to describe currency when you describe money as simply a medium of exchange.

#180 RB on 02.21.14 at 3:20 pm

#151 Hank Rearden on 02.21.14 at 11:06 am

aGREED!!!!

#181 Randman on 02.21.14 at 3:21 pm

“Don’t count out the USA”

Guess that doesn’t apply to hockey..EH! garth?

#182 Son of Ponzi on 02.21.14 at 3:31 pm

A store of value:
My local Dollarama store.

#183 Ralph Cramdown on 02.21.14 at 3:31 pm

#170 devore — “Ask 20 people what money is, you will get 20 different answers.”

I think 19 out of 20 people — the ones who’d look at you funny for even asking the question — would know exactly what money is. They know how to use it, and they know that, generally speaking, they’d rather have more of it than less of it.

The remaining few percent — the kooks — would start rambling on about gold and “fiat money” and printing presses and inflation and deflation. Most of these people know too much about money for their own good. If they’d concentrate more on acquiring it, piling it high and putting it to work (i.e. trading it for productive assets), they’d end up far better off than by studying the rare cases where it has failed and exchanging secret handshakes with other doomers. What percentage of all humans who’ve ever lived have lost more than a year’s earnings to inflation?

#184 Son of Ponzi on 02.21.14 at 3:33 pm

Diamonds a store of value.
That’s what the DeBeers want you to believe.

#185 Flamed out in Kitchener on 02.21.14 at 3:33 pm

When we define ‘money’ as a store of value, we have to consider time.

If I get paid $100 and go buy groceries the next week with it, that money was a pretty solid store of value for that length of time. If I put the $100 in a drawer and forget about it for 15 years or so, then go to buy groceries with it … it will get me about 60% of what I could buy today.

So, long term, … not a great store of value at all … the U.S. dollar has lost about 97% of it’s value over the last 100 years or so … check it out. Scarcity determines value … paper money, not so much.

#186 Aggregator on 02.21.14 at 3:33 pm

#169 airhead princess

With all your fury, I couldn't have a said it better myself, and nowhere is the government's failure more evident then by looking at Canada's exports to emerging markets and China, which have gone nowhere since 2011 despite spending hundreds of billions in stimuli and subsidies to big corporations.

So what did they do since Canada had nothing to sell the world? They told banks to make a lot of shitty subprime auto loans to boost auto part exports (and GM shares), resulting in more exports to USA. This is diametrically opposed to Harper and the BOC's goal to boost more exports to China and the rest of the world!

The policy of choice is already choosen: depreciate the CAD to allow all of Canada's wages to decline (when wealthy yuppies realize the new policy in force, they will pick up and leave Canada), more immigration (more subprime drivers and mortgagors) and higher taxes and inflation in the things you need and more deflation in the things you don't. Chart

Always remember what they told you: Canada has developed and is not a third world country.

#187 None on 02.21.14 at 3:34 pm

#157 World According To Gsrth on 02.21.14 at 12:20 pm
I rest my case. Lazy corrupt useless govt pencil pushers doing nothing. While kids are poisoned to death.
http://www.vice.com/en_ca/read/albertans-are-abandoning-their-homes-to-toxic-air

==========

So you’re telling me if Govt slapped on really stringent environ controls to oil gas to stop that sort of thing you’d support it, even if it was fairly damaging to the industry? Wait, isn’t government useless and a hinderer of private business and should stay out of the market? Oh oh I get it, usually always, but if there is a problem, it’s gov’t’s fault, but fix the problem without hurting business.

#188 Son of Ponzi on 02.21.14 at 3:36 pm

Money is just a piece of paper with some numbers written on it.

Without which life is hell. — Garth

#189 Shawn on 02.21.14 at 3:41 pm

Faulty Logic

The original borrowers can not be held solely responsible for a system that was corrupt from top to bottom.

****************************************
That’s right it was okay to be a deadbeat and not repay your mortgage loan because all the other kids were crooked as well. Everthing is justifiable in the end, right?

#190 None on 02.21.14 at 3:42 pm

#169 airhead princess on 02.21.14 at 2:00 pm
Mr Handpuppet Poloz …..it takes a decade and more to bring a new Canadian mine into production….your policies will beggar a generation before you see exports ‘lead’. There is no manufacturing left because liberal bureaucrats gutted the industrial base to shore up ‘sustainable development ‘ in the third world under Trudeau. Retail sales have collapsed under the low dollar policy because everything we consume is imported…you bonehead!!!! Meanwhile food products are inflating like crazy…and the poor….namely the 85% of Canadians who are struggling paycheque to paycheque…..are not ‘substituting’ real food for moldy left overs dredged out of the back rooms of dollar stores because fresh produce ( which is imported ) has increased in price 20% since your boneheaded dollar killing suasion came into effect.

======

Do you even read what you post? All I see is Liberal scum and Trudeau killed Canada. Hate to break it to you but Cons have run the country for the last almost decade and they appointed the current BOC Gov. Do they get a break however? Oh hey, what about the Cons who ran Canada from 1984 to 1993? Seriously, with you it’s just Trudeau and all Liberals are evil and clearly economic problems of today are their fault. Now, I’m not saying he did not have a role in it, but you never seem to holds Cons to account for their problems too. Too blind by partisan politics.

#191 Shawn on 02.21.14 at 3:59 pm

Faulty Logic from ENJC

enjc at 153 says

Returns over inflation are not sustainable for the majority. There is only so much wealth in the world, in whatever form it is measured. Anyone who grows their savings over inflation does it at the expense of another.

******************************************
What you say is true but ONLY over the extremely short term. (like the next minute)

Everyday new wealth is being created. A formerly unused plot of land is farmed. A house is built. Useful oil is separated from sand and water (the oil existed but the value of the oil is enhanced by the process).

Productivity growth increaases wealth all the time.

GDP growth is a measure of the real wealth increase of a nation after inflation.

GDP has been increasing per capita at a huge rate for the last several hundred years. These days that rate is slower but still positive in t he western world and is still huge in much of the world.

Conclusions drawn from your faulty premise are faulty.

Now go and get rich and don’t worry that you are just taking slices of pie from others. There are many ways that you can help grow the pie.

One good way, as Ralph Cramdown suggested, is to own a bakery. There you add value to raw materials to create pie. That is wealth creation at it’s most basic.

#192 Daisy Mae on 02.21.14 at 4:07 pm

“Read it tonight, Yvonne. But no comments. Promise?”

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

Wow! Garth really knew what he was talking about when he suggested Yvonne must NOT ” read the comments” on todays blog…. ;-)

#193 Ivan on 02.21.14 at 4:09 pm

This is off topic but quite interesting, re political behavior. Polish foreign minister Sikorski, very self confident, USA educated, rude, and offers death threats in public. How does he know in advance that there will be martial law unless he works for the side that will create martial law?

Polish minister warns protest leader ‘you’ll all be dead’

http://www.itv.com/news/update/2014-02-21/polish-minister-tells-protest-leader-you-will-all-be-dead/

#194 Daisy Mae on 02.21.14 at 4:14 pm

I can’t stand any more of these comments, either. I feel a headache coming on…. :-(

#195 Son of Ponzi on 02.21.14 at 4:16 pm

I’m not sure if I get this right:
“To get out of debt, you spend more!”
Ah, forget it, I’m probably just plain stupid.

#196 Josh in Calgary on 02.21.14 at 4:28 pm

Wrong. Diamonds, Picassos and vintage Porsches are stores of value. Money is medium of exchange. Period. — Garth

I agree with your premise, but it astounds me why Diamonds are as valueable as they are. They can be synthesized in a lab at a fraction of the cost. A “lab grown” diamond can be flawless and only a machine can detect the difference. Only marketing by the big diamond companies keeps the price up. Doesn’t sound like a good store of value to me.

#197 Spectacle on 02.21.14 at 4:31 pm

Again, Thanks Garth.

In response to ongoing discussion of Gold and Diamonds as ” Stores of value” or a commodity of trade:

The price of a used diamond or gemstone is at best , maximum 10% of the retail value!

They either buy used jewelry ( with the gemstones included) for melt down value ( less a percent profit spread) , or as a finished piece of jewels again on consignment; whichever provides best return on their investment.

Does anyone read blog posts at 200 plus? I do.

Regards

#198 Josh in Calgary on 02.21.14 at 4:32 pm

#170 Devore
“Defined by whom? Ask 20 people what money is, you will get 20 different answers.”

The history of money is quite fascinating. I watched a documentary on it one time. Apparently one of the key factors in any form of currency is whether or not the government will allow you to use it to pay taxes. If it doesn’t pass that hurdle it will eventually fizzle out. Of course historically that’s what’s made gold so valueable.

#199 Old Man on 02.21.14 at 4:33 pm

Now want to give a tip for those first time buyers who are renting waiting for the big crash. This will come so be patient, and save your money, as the main condo core will tumble in 416, so for you wanting a condo you must focus for a first buy. The key area is a block of Yonge, Mount Pleasant, St. Clair and Eglinton, as this is a first buy for sure. I had an office at Eglinton and Yonge at one time for a couple of years so know the area well; buy nothing west of Yonge. Mount Pleasant from Eglinton to St. Clair has a small town village atmosphere which is cool, and this entire area as a block has it all in spades. I suggest looking for a future buy near the Yonge subway system as a short walk, and there are ways near Moore Park and elsewhere for a direct connection taking you north or south on the Don Valley too; its a great location.

#200 Steven on 02.21.14 at 4:41 pm

Given the nature of the markets and those that run them loss for the investor is assured. If that were not the case I would have made money hand over fist in the markets and would not have had to buy silver and gold which has had a significant appreciation in value in the last 20 to 24 years. It beats the crap out of GICs and losing money on stocks.

Equity markets are up 172% since 2009. A balanced portfolio has given a 7.3% annual return over the last decade. What losses? — Garth

#201 Jeff in Moose Jaw on 02.21.14 at 4:45 pm

Fear -a way to keep prisoners in their cells without the need for bars.

#202 Vancouver RE agent. on 02.21.14 at 4:54 pm

Housing prices have only one way to go in Vancouver. IT IS UP UP UP UP and then some more UP. I predict 25% appreciation in the next 3 years.

#203 Just some guy on 02.21.14 at 5:01 pm

Interesting pictures – I think what has happened here is that the goslings have “imprinted” on the dog. Geese and other creatures do this. The first living creature they see is what they latch onto. The animal behaviourist Konrad Z. Lorenz wrote about this in his book “King Solomon’s Ring” and the Zoologist Desmond Morris touched upon this in his books about us (Naked Ape and others).

If I were a doomer, which I am not, I would probably say that the dog had eaten the mother goose just before the chicks hatched and arranged to be the first thing they saw. Interesting idea – train your food to follow you around until, well, you get hungry.

No, a dog would not do that. A real estate agent, however, is a different creature altogether…

#204 Old Man on 02.21.14 at 5:06 pm

#195 Daisy Mae – take one teaspoon of baking soda in a glass of water to adjust your PH level, or is it all about chasing Peter away, and you want him to come back asking you for a date?

#205 Aggregator on 02.21.14 at 5:08 pm

#184 Ralph Cramdown

Most of these people know too much about money for their own good. If they’d concentrate more on acquiring it, piling it high and putting it to work (i.e. trading it for productive assets), they’d end up far better off than by studying the rare cases where it has failed and exchanging secret handshakes with other doomers.

Ahh Ralph. You seem to always put things into your own prospective, yet you never seem to test or disprove your own theories about wealth accumulation.

Tell me, how is it that, let's say, a young woman who chose to take job teaching English in China a few years ago is now accumulating her wealth at the same as pace as the western 60/40 investor? And she's not looking at charts all day and worried about earnings reports — she just works, saves, and lives her life, yet she's keeping pace with average portfolio returns. Chart (and that doesn't include interest gained in her 3-4% RMB savings account)

I won't put word's in your mouth, but it sounds to me like what you're suggesting the average individual can do is to take his or her paycheck — buy their goods and services — and throw the rest into stocks asap so they don't lose it? Umm, but that sounds a little doomer-ish, don't ya think?

The ticker now shows spot gold trading at $1324.20USD and $1473.26CAN (+11% in CAD). Something changed from last year when USD/CAD was at par (the same price), and it's wasn't the weight of gold.

#206 Stickler on 02.21.14 at 5:12 pm

@ #138 bdy sktrn on 02.21.14 at 10:04 am

“a former government worker who was fired for dogging it all the time”
—————————————-
wow, funny stuff.

as if any govt employee ever got fired for screwing the pooch.

most govt work is simply a pooch screwing contest (many front line workers excepted) – last night i listened to one ‘servant’ express the shock and horror and disgust of having to work one single minute past 37.5/week. where their private sector (mgmt) counterpart averages 50-60/wk.

———————–

Exactly!

#207 Stickler on 02.21.14 at 5:19 pm

@ #139 Onthesidelines on 02.21.14 at 10:07 am

‘Prove things won’t get worse.’ Classic. — Garth

Not at all. What I’m asking for is convincing evidence that the systemic failure of the oversight on the part of financial regulators which allowed the 2009 crash to happen is now understood and that there are now significant provisions in place to prevent such a failure from ever happening again.

>>> The banks rule the world. They got to do what ever they want, and the tax payer cleaned it up. They are all recapitalized so they can wreak havoc for many years before any worries. Buy the big US bank stocks.

Provide convincing evidence of a viable exit strategy for the current unprecedented pump priming within a global economy that is stuck in severe unemployment, no wage growth and a consmer society whose only means of survival will be to decrease their consumption.

>>> Buy USA. Sell @ DOW 20,000

Better still, just explain to me how Japan is going to get out of its 20 year deflationary mess and let’s stretch that analysis to the rest of the world.

>>> Japan is toast. Ever watch Kyle Bass speak about Japan. Yikes.

#208 Nosty in the Fudge Tunnel on 02.21.14 at 5:22 pm

YEA CANADA! Point spread for Sunday’s final — Sweden by five. Take ‘nucks plus points (tight game)!

#89 Re-Birth on 02.21.14 at 12:13 am — “No one is getting out of here alive…” — Disagree.

All will prove to themselves the reality of the continuation of life into the next worlds, no matter their path. Each takes their own memories of life here and meets families and friends who left earlier.

It’s these sacks of clothes or physical bodies that are discarded when one has finished here.

#96 Basil Fawlty on 02.21.14 at 12:38 am — “. . . no one could suggest there is no manipulation.”

Accurate. Only the politically correct would suggest otherwise.

#104 Smoking Man on 02.21.14 at 1:18 am — “Why is it fat girls eye me up like I’m a popsicle laced with bacon and eggs . . .”

Add on some fried green tomatoes and fried white Texas bread, triple the bacon and I’m with you in heaven!

#113 Notta Sheeple on 02.21.14 at 1:40 am
— “How many investment bankers are currently serving jail time for their part in bringing on the financial collapse of 2008?”

How many have committed suicide in the past few weeks, and for what reason or reasons?

#129 Joe on 02.21.14 at 7:25 am — “Libor manipulation has skimmed from trillions of dollars. “Housing markets being pumped up by fictitious stats.”

That’s what TREB’s or CREA’s are for — like politicos, they lie and sheeple believe them.

#133 Herb on 02.21.14 at 9:26 am — “. . . and the Suits behind the curtain, who will fix things nicely …”

Bwahahahahahahaaha! Dogmaggit, almost wet ’em. Almost as good as the Pythons! Thanks for the larf Herb!

#201 Steven on 02.21.14 at 4:41 pm — “Equity markets are up 172% since 2009. A balanced portfolio has given a 7.3% annual return over the last decade. What losses? — Garth”

Well said. Our investments have been zooming ahead for quite a while now.

#209 recharts on 02.21.14 at 5:43 pm

#159 TnT on 02.21.14 at 12:29 pm
#147 Ray Skunk

Toronto IS Canada’s New York City and that’s all that matters when Canadian Citizens are picking a place to live.

If there was an option to move to Chicago or New York City then I am sure Toronto would be a lot further down the list HOWEVER this is NOT an option or desire for the majority of Canadians which then makes Toronto the #1 choice.

And Sudbury is the New York of the Northern Ontario while Mississauga is the New York of GTA

Go and find yourself!

#210 Ralph Cramdown on 02.21.14 at 5:53 pm

#201 Steven — “Given the nature of the markets and those that run them loss for the investor is assured.”

I find statements like this SOO bizarre. Buy the telco stock or the cableco stock. Collect your 4 or 5% dividend. Every year, the company will send out a letter to its customers saying “Although we’ve tried EXTREMELY hard to contain costs, prices have gone up because of those dastardly ____ so your bill will be increasing starting next month,” while sending shareholders a letter saying “we’re pleased to announce a dividend increase of 5%.” Do the math on what 20 years of that looks like. Or plunk your money down on today’s hot junior uranium play, and enjoy the news releases as they document their progress drilling dry holes into your wallet.

“If that were not the case I would have made money hand over fist in the markets and would not have had to buy silver and gold which has had a significant appreciation in value in the last 20 to 24 years.”

There’s nothing better than the casual goldbug comment that he’s done well over the “last 20 to 24 years.” 20 years ago gold’s price was half what it was 24 years ago, so your annualized return will be a tad different (i.e. sucked versus OK). Even if he bought at the low for ’84, he would have quadrupled his “money” through this year; buying the S&P 500 and reinvesting dividends would’ve given him 8x his “money” with far less volatility.

#211 Republic of Jon on 02.21.14 at 6:26 pm

Re: #203 Vancouver RE agent:

“Housing prices have only one way to go in Vancouver. IT IS UP UP UP UP and then some more UP. I predict 25% appreciation in the next 3 years.”

If we’re making pie in the sky predictions, go broke or go home. I predict 250%.

#212 jess on 02.21.14 at 6:46 pm

federal reserve underestimated the crisis
FOMC: Transcripts and Other Historical Materials, 2008

http://www.federalreserve.gov/monetarypolicy/fomchistorical2008.htm

http://money.cnn.com/2014/02/21/news/economy/federal-reserve-transcripts/index.html?iid=s_mpm

=

http://money.cnn.com/2014/02/20/news/credit-suisse-tax-evasion.cnnw/

….. A wealthy customer who traveled on flights hiding $250,000 in pantyhose to stash in Swiss accounts.

maybe money should come with tagging chips

#213 airhead princess on 02.21.14 at 6:50 pm

Dear None #191..”Seriously, with you it’s just Trudeau and all Liberals are evil and clearly economic problems of today are their fault. Now, I’m not saying he did not have a role in it”

But the fact is it was Trudeau’s Liberals who gutted the Canadian industrial base in order to fund ‘sustainable development’ in the third world. It has taken a decade of Conservative ( an uphill battle against decades of liberal wrecking ball/ divide and conquer politics) rule to try and get the country back some of what it lost under the Liberal Party…but rules set in stone ( especially the Liberal ‘appointed for life’ judiciary) and Trudeau’s ‘Charter of Tears’ were set purposefully to extend the evil empire of Trudeau into the future and it is still wreaking havoc on the Canadian economy and society today. It has been a 13 year pain staking process to remove the Liberal job killing roadblocks set to impede progress in this country….the Charter of Tears is a document designed to enforce Liberal values and policies of the 1970’s onto today’s economy. We need to force out the Liberal appointed judiciary by whatever means possible and scrap the Charter of Tears. I believe progress will eventually take precedence….. after we scrape the entrenched liberals influence out of the lives of Canadians….only then can we start churning up some positive momentum and not remain the welfare state the Liberals had designed. I am not a card carrying Conservative but I want a vibrant economy for my children and yours….something we will never see under the dogma of liberal socialism and the dictatorship of the labour elite.

#214 Vancouver RE agent. on 02.21.14 at 6:53 pm

The best investment you can make at this time is real estate in Vancouver or LML. Condoes and houses will keep appreciating at over 10% per year guaranteed by the low interest rates from the government as well as a steady and increasing flow of asians with dough.

The government doesn’t set rates. The death of the immigrant investor program means less Asian money. And the plural of ‘condo’ is ‘condos.’ Now buzz off. You’re making us dumber. — Garth

#215 Spiltbongwater on 02.21.14 at 6:54 pm

Is Mt. Gox owned by Bernie Madoff?

#216 Stickler on 02.21.14 at 6:57 pm

@ #190 Shawn on 02.21.14 at 3:41 pm

Faulty Logic

The original borrowers can not be held solely responsible for a system that was corrupt from top to bottom.

****************************************
That’s right it was okay to be a deadbeat and not repay your mortgage loan because all the other kids were crooked as well. Everthing is justifiable in the end, right?

—————————-

Dooood…that is not what he said!

#217 Stickler on 02.21.14 at 7:02 pm

@ #210 recharts on 02.21.14 at 5:43 pm

#159 TnT on 02.21.14 at 12:29 pm
#147 Ray Skunk

Toronto IS Canada’s New York City

And Sudbury is the New York of the Northern Ontario while Mississauga is the New York of GTA

————————-

HA! Everyone knows that -> something that is the “something of something” is really nothing.

#218 MarcFromOttawa on 02.21.14 at 7:41 pm

The 2.99% 5 year mortgage is back.

Although it’s with a credit union.

http://www.cbc.ca/news/business/the-2-99-5-year-fixed-mortgage-is-back-1.2546527

#219 bdy sktrn on 02.21.14 at 7:46 pm

#183 Son of Ponzi on 02.21.14 at 3:31 pm
A store of value:
My local Dollarama store.
——————————-
hahahaha – nice!

#220 screwed on 02.21.14 at 8:02 pm

Garth, why are you cheering this on?

[…] The death of the immigrant investor program means less Asian money. […] — Garth

This was the stupidest decision this government has made to date, even worse than allowing 40 yr amortizations only to repeal that again.

I don’t exactly care for Justin Trudeau or the Liberals but I’d like to screw this government any which way possible and will campaign for “Justin” until my fingers are bleeding and my voice is coarse.

If Trudeau opens up the floodgates for immigrants from China, he will outperform the Conservatives 10x financially in campaign donations.

This was a stupid move and Harper’s Conservatives will pay for it. Maybe their party will be broke as a result when the dust settles. Trudeau’s Liberals shouldn’t have to worry about their finances if they play this card right.

#221 Cici on 02.21.14 at 8:09 pm

#68 Ralph Cramdown

Excellent retort. Loved the rest of your comments as well!

#222 Happy Renting on 02.21.14 at 8:14 pm

#156 Alex n Calgary on 02.21.14 at 12:19 pm

Alex: doesn’t anyone see the financial opportunity this represents? Work a grueling job in a horrible place for a while, save up a pile of money, and be started on a firm financial footing at a young age? Such a wasted opportunity, if you’re going to suffer through living/working there, anyway.

#223 Happy Renting on 02.21.14 at 8:15 pm

#198 Spectacle on 02.21.14 at 4:31 pm

Does anyone read blog posts at 200 plus? I do.

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

Me too, though I’ve started skipping the obviously nuttier ones.

#224 recharts on 02.21.14 at 8:31 pm

#215 Vancouver RE agent. on 02.21.14 at 6:53 pm
The best investment you can make at this time is real estate in Vancouver or LML. Condoes and houses will keep appreciating at over 10% per year guaranteed by the low interest rates from the government as well as a steady and increasing flow of asians with dough.

The government doesn’t set rates. The death of the immigrant investor program means less Asian money. And the plural of ‘condo’ is ‘condos.’ Now buzz off. You’re making us dumber. — Garth

condoms not condos

#225 None on 02.21.14 at 10:38 pm

#214 airhead princess on 02.21.14 at 6:50 pm

What’s your problem with the “Charter of Tears”? I believe that the vast majority of it helps enshrine important rights to Canadians.

#226 Re-Birth on 02.22.14 at 12:28 am

Nosty in the Fudge Tunnel

#89 Re-Birth on 02.21.14 at 12:13 am — “No one is getting out of here alive…” — Disagree.

All will prove to themselves the reality of the continuation of life into the next worlds, no matter their path. Each takes their own memories of life here and meets families and friends who left earlier.

It’s these sacks of clothes or physical bodies that are discarded when one has finished here.

No one is getting out of here alive for our bodies must die but our souls will never die as long as we are caring, forgiving and most importantly loving.

Cheers…

#227 Scibadubadebumbado on 02.22.14 at 2:28 pm

“If you owe your banker a thousand pounds, you are at his mercy. If you owe your banker a million pounds, he is at your mercy.”
— John Maynard Keynes

#228 srv on 02.22.14 at 3:24 pm

The other side of Garth’s rose coloured classes view of the financial world… except it’s really much worse.

http://billmoyers.com/2014/02/21/anatomy-of-the-deep-state/

#229 YVR on 02.22.14 at 4:25 pm

@184 What percentage of all humans who’ve ever lived have lost more than a year’s earnings to inflation?
———————————————————

I think the number would actually be quite high. You are thinking in terms of US/Canada over the past 100 years. Most ‘humans who’ve ever lived’ are not part of that group and most of the worlds population is not part of that group.

If you lived in Argentina would you have your life savings in the Peso? How about if you lived in India would you have all your money in the Rupee? Most of the worlds population is exposed to risky currencies and has been over history. Of course you can put your money in the USD instead of a local currency rather than gold but I would have my money in gold before the Peso or Rupee. For people living in third world countries gold is very attractive.

The gold bugs are thinking that the USD will go the way of the Peso in the future. At some point they will probably be right as history has proven. Lets face it the US Fed is doing exactly what most banana republics have done in the past. The US has the huge advantage of being the reserve currency and since every other curreny around the world is doing the same thing the USD will continue to do well against other currencies. But how will gold do compared to all these currencies that are being printed? Will the USD collapse in our lifetime? It doesn’t hurt to have some gold as a hedge.