Canaries

ZOMBIE modified

Yesterday Andy went to work, opened the envelope and read this from his boss at Bell Media, Kevin Crull:

To all Toronto team members: This morning, Bell Media informed the Federal Minister of Labour that we will be required to eliminate up to 120 positions in our Toronto television operations. This represents a reduction of approximately 5% of our Toronto area workforce and 1.8% of the national team.

As you know, the television industry is subject to a competitive and fast-changing business environment. The difficult decision to reduce staffing in certain operations was made as we continue to face financial pressure related to advertising and subscription challenges across our TV services.

The specific affected positions and the exact number have yet to be identified. However, we will work as quickly as possible to ensure minimum disruption, and hope to resolve the situation by the end of the summer.

Such decisions are never easy, and I thank you in advance for your patience. Please contact your HR manager should you have any specific questions or concerns.

Bell Media owns CTV, TSN and some specialty channels. This week it pulled its main current affairs show off the air, and will now be punting 120 people. The moves are consistent with warnings big media companies have been giving for some time that business is tough. Ad sales have cratered, viewership has splintered and costs keep rising.

So what? Just 120 lib-leaning, urban, metrosexual media lefties? Who cares?

Well, the media guys are the new canaries. Miners carried the birds into coal shafts knowing when the little guys went feet-up that deadly gas fumes were building. Time to get the hell out. Today TV stations without enough ads tell us consumers are tapped and marketers giving up. In a country where 70% of people own houses yet lack pensions, carry $1.2 trillion in variable mortgage debt and where department stores are for sale, this ain’t great.

Liam lives in Toronto now, but was in Ireland when the Celtic Tiger roared and everyone went horny over houses. Yesterday he sent me some words just written by former Irish prime minister John Bruton:

“There were two obvious, and interlinked, signs of disaster which were “studiously ignored” by the political and administrative system….one was the fact that house prices were rising far faster than incomes….the second sign was the huge deficit that developed on the Irish balance of payments. Why did no one in politics, in Government, in the Central Bank, or in the banks themselves do the basic arithmetic to work that out?”

Liam asks: “Does this sound familiar? I’m baffled how the Canadian government, politicians and central bank continue to let the bubble inflate. We have seen it all before in Ireland – cheap money, greedy developers, delusional people lining up for new houses. Ireland ignored the warnings from OECD, the IMF and the economic think tanks and guess what happened? We got a 46% correction in house prices. When the average person can’t afford the average house, you’re in trouble. We’ve seen it all before in Ireland and I promise it will end in tears…”

About this time Joe Owe, our finance minister, was in London doing something vital at a bond conference. He was asked by a reporter (apparently a few are left) if Canada has a housing bubble. After all, the average detached home in Toronto and Vancouver now costs $1 million, and the year/year price increase is 8.6% in the GTA and 10% in Calgary. Inflation is 2% and wage gains are less, with unemployment rising. Real estate now accounts for more of the economy than oil and factories combined. Does this worry you, minister?

“No”, he said. “The advice we have received is that we are not in a bubble.” Holy crap.

Miz lives in Montreal where he trades Canadian short rates and reads this blog when the bond market pauses. “I too share your concern for the housing hornyness going on in our country with particular attention given to Montreal,” he says. But that’s not all he worries about. More canaries.

“On Friday we got a Canadian CPI number that was above the Bank of Canada’s inflation band.  This is the 4th such number that has come in hotter than expected.  While growth is slow, inflation seems to be picking up. Normally our markets have not paid particular attention to rising CPI numbers because Stephen Poloz has said to disregard them.  But something funny is happening in the bond market.  Janet Yellen is also disregarding inflation but the bond markets are slowly pushing back.  On Friday 3-month Bankers Acceptance futures moved down 12 basis points. We are slowly pricing in higher rates.”

Of course we are. And whether central banks raise their rates or not, the bond market will speak

“The reason I write,” adds Miz, “is because I too am a renter.  I chose to make money investing in the markets rather than in a house.  We also want to be mobile.  I live in an upper duplex in a nice part of the city.  I have been monitoring duplexes in my area over the past year or so and something profound is happening.  One right across the street from me, all renovated and remodeled was offered at 419,000. A few months later I see the same place offered at 409, then 399, and finally 389. Yesterday I look again and it is offered at 369,000.  To make a long story short.  IT IS COMING! Be prepared.”

So, connect the dots.

A condo economy. A daft minister. Indebted consumers. Inflated houses. And the absolute certainty that what we have now will not last.

You want fries with that canary?

177 comments ↓

#1 pauly g on 06.24.14 at 6:09 pm

Booya…..first

#2 Happy Renting on 06.24.14 at 6:13 pm

What’s killing us is that RE continues to defy logic. OF COURSE price gains can’t continue when incomes and employment aren’t growing, yet here we are… Prices up, up, up (I’m in Toronto.) Makes you certain the world has gone crazy and uncertain it will ever be sane again (in this lifetime.)

Great strategy by Bell, making the announcement and sending that letter. “95% of you aren’t fired, but we’ll make sure 100% of you worry you are!” Morale at all-time highs, yes?

#3 Olivia Chow on 06.24.14 at 6:15 pm

No subways, I will be next mayor. Buy your house how or forever cry

#4 West Coast on 06.24.14 at 6:18 pm

No thanks…not interested in eating crunchy little birds….however this post is right on. BTW all around the edges of the Vancouver market prices are sticking and in some areas dropping. Folks in parts of West Vancouver who could have sold for 2.5 million (or more) a year ago are now happy to take 1.9 or less. The buyers are getting fussier and the money (at least for some) is getting tighter. Plus the economy in general sucks.

#5 jess on 06.24.14 at 6:23 pm

“invigilators”

English language tests inquiry declares thousands of results invalid
Home Office ministers suspend overseas student sponsorship licences of three universities and 57 further education colleges

“More than 50,000 English language tests taken by overseas students to extend their British visas have been declared invalid or questionable as a result of an official investigation into cheating on a huge scale.”

http://www.theguardian.com/uk-news/2014/jun/24/english-language-tests-cheating-results-invalid-overseas-students

#6 City That Smells Like it Sounds on 06.24.14 at 6:24 pm

FIRRRRRRRRRRRRST!

#7 cash hater on 06.24.14 at 6:25 pm

A question for Garth.
Today for example TSX and the DOW in tandem, always it seems.
Why do these two exchanges always go in tandem ?????

Oh and uh, FIRST……LOL

#8 Pete in Barrie on 06.24.14 at 6:25 pm

I wonder what Flaherty’s response would have been?

#9 Ontario's Left Coast on 06.24.14 at 6:28 pm

My name is Ontario’s Left Coast and I told the truth about my family income. First?

#10 DJG on 06.24.14 at 6:29 pm

It is just ignorant to say that the decline in TV advertising revenues is connected to “tapped out consumers”. Obviously it’s the fracturing of the ad spend across other channels, and changes in the way people watch TV shows, that is the main driver of this change. You may have noticed a small company called Google, for example, with $55 billion in annual revenues virtually all earned at the expense of traditional media channels.

Bell Media is not just TV, of course. — Garth

#11 BG on 06.24.14 at 6:30 pm

Not sure about the classic medias being canaries.
Who needs TV with internet?

Crappy programs interrupted every 15 minutes by commercials.
And expensive!
People are moving away from this rip off and Bell had it coming.

#12 Fish it out on 06.24.14 at 6:44 pm

Same old prediction and it is getting tired. Fed has too much invested to allow such a thing to happen. Fed would sooner deflate the dollar then write off cmhc debt. Bankrupt the whole country before forgiving cmhc debt. They know something we don’t or we won’t admit if 70% own that makes a nice majority government.

This would have happened if it was coming. Sure van and TO and plucked but it will work out fine.

#13 };-) aka Devil's Advocate on 06.24.14 at 6:44 pm

SHIFT happens. Real estate, like any investment, is a long term hold. If you have short term speculative expectations, be they bull or bear, chances are you’ll get screwed.

It’s just as simple as that.

};-)

#14 TO Renter on 06.24.14 at 6:45 pm

Poutine please with an extra helping of pulled pork. Actually lobster poutine would also be yummy now that seafood prices have cratered.

#15 asp on 06.24.14 at 6:47 pm

The only inflation that counts is wage inflation, and that is going nowhere. Until regular people have more spending money, any bursts of inflation in isolated sectors cannot last. Prices can’t stay high if most people can’t pay those prices.

And then there is the new normal. Which says that interest rates will not go above 2% for a long time to come.

The war on inflation has been won.

https://canada.pimco.com/EN/Insights/Pages/Just-Give-Me-a-Framework.aspx

#16 Yogi Bear on 06.24.14 at 6:48 pm

According to Janet Yellen, inflation is “just noise”. The Fed is still adding to its balance sheet.

Anyone still thing this is a trivial unwind and the Fed will get it right?

Maybe. Maybe not.

#17 Sheane Wallace on 06.24.14 at 6:49 pm

fantastic post.

– rising inflation
– dumb minister
– rise in interest rates coming
– housing crash coming

all checks

One particular issue – rising oil prices will bite us this summer. sooner than we think. poorer than we think.

#18 Fleabitten Monkey on 06.24.14 at 6:51 pm

I see bberry also noted 65 new layoffs in the development unit today.

#19 LH on 06.24.14 at 6:52 pm

Ah the smell of wage deflation is sweet to the 0.1%er.
As long as middle and upper middle jobs remain precarious, rates will never buldge.

#20 ILoveCharts on 06.24.14 at 6:54 pm

I agree with the conclusion but I need to call you out on these two.
First: Bell is in trouble because of disruptions to the industry. Youtube, Netflix, etc.
Second: The finance minister can’t say there is a bubble and you know that. It would be political suicide and could be the spark to set off a crash.

#21 Forzudo on 06.24.14 at 6:55 pm

Kevin Newman found out today that nobody really cares about the opinions of the Millenials — just their 7% down payments, and 93% mortgage contract signatures.

#22 LH on 06.24.14 at 6:59 pm

Also unlike the PIIGS, Canada does not have problems with persistent current account nor trade deficits, thanks to our productive natural resources and ag sector. Ireland this is not! (Though in a funny twist, the low Harper corporate taxes are at the margin attracting American multinationals tired of Obamacare. Cheers to that!)

#23 stop lying on 06.24.14 at 6:59 pm

Bell has 55,000+ employees, and they hire and fire people all the time, calling them the canary is a stretch. Anyways if the economy is so bad then we don’t have to worry about interest rates going up, but down.

As for Ireland, they’re about as similar to Canada as Halifax is to Toronto. Maybe less.

Still think a correction is coming, but don’t think it will be as bad as everyone thinks. Looks like condo’s are already not gaining very much the last few years, maybe houses will do the same and we can avoid a big dip. What would help is a small interest rate change up just to make sure people are paying attention.

Bell Media, not Bell. — Garth

#24 Chickenlittle on 06.24.14 at 7:03 pm

Honestly, Garth, what else is there to say? You have said it all.

My only worry is that it may turn out to be different here after all. I hate to think of all that stupidity being reinforced.

Wouldn’t that just be a kick in the teeth?

#25 Victor V on 06.24.14 at 7:04 pm

http://themashcanada.blogspot.ca/2014/06/mila-and-brian-mulroneys-house-drops.html

Looks like Mila and Brian Mulroney are trying to move and they aren’t having an easy time!

They listed their 5+2 bedroom, 5+2 bathroom home at 47 Crois. Forden in Westmount in Montreal in September.

The inside is kind of what you would expect of a Westmount home in Montreal that also happens to be owned by the former Prime Minister of Canada and his wife, Mila.

It’s done. Like REALLY done.

It’s not my style but there has to be someone else looking for this style in Montreal.

But not for $7,950,000.

It didn’t sell and 2 weeks ago, I posted the first price drop (that I was aware of ). The price had been dropped substantially to $6,900,000.

But like a lot of other houses in Montreal, it was still overpriced.

The price has been dropped again.

This house is now listed at…

$6,499,999.

It’s still too high.

#26 Joe2.0 on 06.24.14 at 7:05 pm

Corrections are a inevitability just refer to historical data reflecting the same scenario.
It’s just a matter of time before Toto pulls the curtain back.

#27 Whitey on 06.24.14 at 7:05 pm

I’m just glad that my house is affordable and almost owned. We could have bought as much house as the banks would have allowed us to buy, but we have relatively simple lifestyles and live within our means.

#28 Ray Skunk on 06.24.14 at 7:06 pm

In other news today, Kathleen Wynne’s first step to austerity is to have the biggest cabinet in history, bulging at the seams with plump-salaried Ministers. Meanwhile, Liz Sandals has already let the cat out of the bag and mentioned a potential raise for teachers this summer. Didn’t take long, did it!

Biggest item today though: the Ontario Pension CashGrab(tm) is scheduled to take off in 2017. Talk about kick a man when he’s down; a correction will be in full-steam-ahead mode, rates will be up, jobs in the toilet. The last thing tapped-out Ontario taxpayers will need is an extra payroll tax and a beleaguered employer weighing up whether to simply cut raises or lay off a few dozen.

You can guarantee that they “extend the opportunity” to all non-public workers, regardless of whether they have a private pension or not; given the bounty to be made.

Fun times ahead!

#29 TurnerNation on 06.24.14 at 7:07 pm

I trust only Smoking man’s bond market report!
(Me I’ve only worked & traded in equities, options space.)

#30 4 AM Sunrise on 06.24.14 at 7:09 pm

Would these layoffs have anything to do with the proposal to force cable companies to make their channels pick-n-pay, thereby cutting into their revenues?

(Although I don’t see why they can’t make up the revenue by charging $10 for one popular channel, making it the same price as a package that gives you 2 good channels and 5 wastes of time.)

#31 happity on 06.24.14 at 7:10 pm

Bonds are toast because of the massive unprecedented debt leverage and rolling over and adding to principle.

Who buys debt when it can’t be paid back? Or when the fed is threatening selling penalties?

St50% of stocks are owned by central banks.

It’s a wazzy, it’s a woozy, just ask the wreckers of wall street.

#32 lala on 06.24.14 at 7:11 pm

Well… I’ll try, 34th

#33 Sheane Wallace on 06.24.14 at 7:13 pm

#13 stop lying
……………………………………….
I spoke to friends in Ireland about their housing crash in late 2009, not a pretty picture, houses lost 50 % in value.

Big drops everywhere INCLUDING THE BIG CITIES.

There are many differences with Canada including the credit boom, HOWEVER THE IRISH DID NOT HAVE CMHC.

So when I am predicting 60-70 % decline it is based on something.

Ireland was the Celtic tiger, the booming economy in Europe, after the crash they were pretty miserable.
It is coming folks.

I would like to see a Canadian politician have the decency and honesty to acknowledge how their incompetence and corruption screwed us like the Irish did.

Will we get that?
I am not holding my breath.

#34 Londoner on 06.24.14 at 7:13 pm

Remember what Bernanke was saying as the housing market was collapsing around him? Oliver and Poloz are not going to admit evidence of a bubble until any significant correction has already taken place.

CPI hot? That’s not how the BOC sees it. Their view of inflation is not the same as a consumer’s view.

#35 jsan on 06.24.14 at 7:14 pm

“Liam asks: “Does this sound familiar? I’m baffled how the Canadian government, politicians and central bank continue to let the bubble inflate. …..
…….About this time Joe Owe, our finance minister, was in London doing something vital at a bond conference. He was asked by a reporter (apparently a few are left) if Canada has a housing bubble. ……….

“No”, he said. “The advice we have received is that we are not in a bubble.” Holy crap.”

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

I say Bull Sh!t on this!! They absolutely know there is a gigantic bubble being blown. If we can see what is so plainly obvious, THEY MOST DEFINITELY CAN SEE IT ALSO. They are the ones blowing it. The question that needs to be asked is what are there motives for doing this. Stop asking why they can’t see it because they can. We have to start asking why are they allowing it??

#36 Randy Randerson on 06.24.14 at 7:18 pm

No fries, just a side dish of schadenfreude please. When SHTF, I’ll be smiling at the house hornies who are financially screwed. Maybe then I’ll consider buying a place.

#37 Victor V on 06.24.14 at 7:18 pm

#8 ILoveCharts

Second: The finance minister can’t say there is a bubble and you know that. It would be political suicide and could be the spark to set off a crash.

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

http://www.macleans.ca/general/flaherty-wary-of-housing-bubble-says-he-will-speak-to-market-players

“It does fall to the Department of Finance to do anything if we’re going to do anything because there’s basically no room for the Bank of Canada to move.

Some of the economists suggested I have some conversations with people in the building industry because what we’re seeing in certain parts of the country (is) a re-acceleration of housing prices. I do speak regularly to people in the business and I’m going to do more of it now.” – Jim Flaherty (RIP)

#38 Freedom First on 06.24.14 at 7:20 pm

Liam has seen the tragedy of a housing crash up close and personal. Unfortunately most people don’t believe something like a financial de-balling can happen to them, until it does. And the Irish Prime Minister, don’t let him $hit you, the housing bubble was orchestrated by everyone mentioned and a lot more people/companies were in on it that weren’t listed. They knew they were goosing the economy and preying on the herd with easy credit and that in so doing the cattle would eventually be neutered. And who takes the blame? Only the neutered, and who pays/loses, only the neutered and the taxpayers, and maybe, 1 or 2 scapegoats. It is a long list of countries in the recent past who have had former/and present homeowners driven into extreme financial hardship from the RE crashes in their country. Financial illiteracy/insanity and house lust is a world wide travesty. Owe Canada, no bubble here, we’re different. Good grief.

#39 james on 06.24.14 at 7:20 pm

#23

“As for Ireland, they’re about as similar to Canada as Halifax is to Toronto. Maybe less.”

Uh, you might have missed when Robert Schiller won the nobel prize in economics for his work on housing markets. Part of his message is that no market is unique, and that fundamental metrics are of prime importance.

I suppose Ireland is on a slightly different part of the globe, but why would that be relevant to housing dynamics, over (for instance) price/income, price/rent, speculation, etc?

#40 john mounfield on 06.24.14 at 7:20 pm

Rates are not going anywhere. They will always stay this low and you will continue to build equity through house ownership. You can’t go wrong!!! Advice from my realtor

#41 lala on 06.24.14 at 7:24 pm

Joe. “The advice we have received is that we are not in a bubble.” I like this show, it’s getting funny everyday.

#42 Smoking Man on 06.24.14 at 7:25 pm

Ha, as long as the overnight rate don’t budge, VRMs will be all the rage…

Glad I’m finally getting through to people what the central banks mean by inflation…

A few more lessons you ungrateful bastards will get as good as me calling the markets.

#43 stop lying on 06.24.14 at 7:31 pm

#33 not denying Ireland was/is a mess, just that it has absolutely nothing to do with Canada. We have 30 million more people and import 10x the number of people they do every year. Their GDP is dropping, ours keeps going up. Also, HAM loves us :)

Human behaviour is the thread. — Garth

#44 TurnerNation on 06.24.14 at 7:31 pm

Under the assumption of TSX holding up into the Fall my top picks for Yield Hounds are:

Morguard REIT – MRG.UN – 5.88%
Student Transportation – STB – 7.85%
Convertible Debenture Fund – CCI.UN – 8.05%

(Consult your Schlock Broker)

#45 Daisy Mae on 06.24.14 at 7:40 pm

#8 Pete in Barrie: “I wonder what Flaherty’s response would have been?”

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

Does anyone give a damn?

#46 R on 06.24.14 at 7:42 pm

http://www.theglobeandmail.com/report-on-business/economy/housing/canadian-housing-bears-stand-their-ground-as-prices-keep-rising/article19303240/

The Globe & Mail says that everything is wonderful and people are tired of the bears poo-poohing the party.

The bottom half of the internet declares prices will go up forever.

I hold my breath and rent whilst paying down debt. If I survive the next few years gainfully employed, I’ll be ready for the next leg.

#47 Sheane Wallace on 06.24.14 at 7:43 pm

#22 LH on 06.24.14 at 6:59 pm

(Though in a funny twist, the low Harper corporate taxes are at the margin attracting American multinationals tired of Obamacare. Cheers to that!).
……………………………
I am afraid you are more delusional than Harper. American multinationals coming to Canada?
Whatever you are on is dangerous man.

#48 2CntsCdn on 06.24.14 at 7:47 pm

Listen! …… bang! bang! bang! ….. that’s Garth’s head against the wall. Why do you do keep doing this Garth? They will never get it.

#49 Here there on 06.24.14 at 7:53 pm

Joe Owe! How appropriate.

#50 Don Derc on 06.24.14 at 7:53 pm

Conspiracy theory #241 – the foreign workers program has been altered so we (future unemployed cdns) can have those minimum wage jobs when the economy deflates. It’s a pretty cruel joke being played on baby boomers. A house (your retirement) devalued significantly while you co-signed a mortgage for your kids who bought an overpriced asset that is heavily leveraged.

I said earlier watch the unemployment rate – your first canary. I’m just worried that those bastards at the cdn banks will not be safe to hold the cash I have in there now.

In the 80’s the banks did not want to be real estate owners (foreclosures) but these days they seem to be holding a lot of properties and they won’t let them go cheap like in the 80’s/90’s.

My god where will we all be in 2 years time?

age: 49 single
wage: $65K gross
value: prop values will decline 20% over 36 months
own: townhouse mtge free – CMV $200K

breathe ….breathe…..

#51 Bill Gable on 06.24.14 at 7:54 pm

She reached for her wallet. The clerk didn’t flinch. I did. It was for a grand total of $5.78. Visa Card.

That isn’t collecting air miles – that’s just SAD.

I asked the clerk, when the lady had left, off the top of her head, how many people paid for their food with cash?
She said “not that many, maybe three in ten”.

Houston – we have a problem.

Next move – watch BONDS.

It will provide a glimpse of what is to come. I agree with Garth, that an inevitable rise in Interest Rates are on the way, sooner, rather than later.

#52 Teacher's Ass-istant on 06.24.14 at 7:56 pm

Between my own observations, reading stuff like this and my BS meter smacking me sharply almost everytime I hear a politician speak, I can only see one thing left to do. I need to lose about thirty pounds so I can fit under my bed and hide until this all blows over.

#53 bob on 06.24.14 at 7:59 pm

You usually make good arguments
but your first assumption is probably just wrong:

Today TV stations without enough ads tell us consumers are tapped and marketers giving up.

How about people are watching less TV and are on the internet instead, like using NetFlix, or pirating off torrent sites?

Remember not too long ago that you said HMV on Robson street closed down was a sign-of-the-times? Guess what, it quickly found a new tenant.. of Victoria Secret. Had nothing to do with consumers being tapped out and everything to do with what was being sold. Sex sells. TV ads, not so much.

All media, including digital channels, are hurting for ad support. By far, the MSM still dominates. — Garth

#54 Daisy Mae on 06.24.14 at 8:03 pm

#34 Jsan: “The question that needs to be asked is what are there motives for doing this.’

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

They plan to screw around with us until the next election.

#55 Basil Fawlty on 06.24.14 at 8:08 pm

Moody’s downgrades Canadian bank debt due to bail-in regime.

http://business.financialpost.com/2014/06/11/moodys-downgrades-outlook-for-some-of-canadian-bank-debt-over-bail-in-regime/

It applies only to supported senior debt and uninsured deposits. Non-event. — Garth

#56 Ben on 06.24.14 at 8:09 pm

When you take local wages (and hence local rents) into account Montreal looks way overpriced. Was north of Montreal today, *lots* of holiday homes for sale. It was like fall with a forest of red signs. Quite beautiful to behold…

#57 SHELTER THE MONEY NOT THE PEOPLE on 06.24.14 at 8:10 pm

It strikes me as we get to know Joe OWE, that he comes across as just another bureaucrat suckling on the public teat.
Weak and without credibility. Just another spineless lackey doing the bidding of the Big H.

#58 Ben on 06.24.14 at 8:15 pm

Also Garth your boy Carney is like a cat on a hot tin roof today. He’s doing the can-can on rates, first up, then not, then up, then not. He’s worked out he’s the patsy but hasn’t made a move (yet).

He is getting a lot of derisory coverage in the broadsheets (not that this means much nowadays).

Your readers should also look at Northern Ireland which in spite of being part of the UK banking setup had >50% drops.

The UK is bubbling nicely, should be done soon.

#59 Catalyst on 06.24.14 at 8:17 pm

The mediums of communication have been shifting rapidly over the last decade. We consume information in so many different ways that if they need to restructure and employ capital in a more efficient manner, then we cannot extrapolate this example to the larger economy.

Agree on Joe, but we knew we were getting a yes man for steve when he was hired.

#60 Victoria - the original on 06.24.14 at 8:20 pm

I just read that 48 percent of the Vancouver population own their homes 100 percent mortgage free?????

That’s a neat trick when only 65% of Van families own. — Garth

#61 earthboundmisfit on 06.24.14 at 8:25 pm

The Ontario cabinet shuffle is akin to rearranging the deck chairs on the Titanic. Matthews, the most incompetent of them all, is now in charge of the Treasury Board. Oh man….we are just so, so f***ed.

#62 Victor V on 06.24.14 at 8:31 pm

#41 Smoking Man

Ha, as long as the overnight rate don’t budge, VRMs will be all the rage…

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

http://www.cbc.ca/news/business/fixed-rate-mortgages-trump-variables-report-says-1.2570911

Figures from the Canadian mortgage industry in late 2013 showed that about two-thirds of homeowners with mortgages have fixed rate mortgages. But among those who had arranged financing most recently, 82 per cent had chosen to lock in.

#63 wayne on 06.24.14 at 8:32 pm

Also Garth your boy Carney is like a cat on a hot tin roof today. He’s doing the can-can on rates, first up, then not, then up, then not. He’s worked out he’s the patsy but hasn’t made a move (yet).

Oldest central banker trick in the book. Hint at doing something you have no intention of doing and get the result you want without the pain of actually raising rates.

He did the exact same thing in Canada for years, remember?

#64 Andrew Woburn on 06.24.14 at 8:34 pm

#34 jsan on 06.24.14 at 7:14 pm
“No”, he said. “The advice we have received is that we are not in a bubble.” Holy crap.”
——————————————

The question that needs to be asked is what are there motives for doing this. Stop asking why they can’t see it because they can. We have to start asking why are they allowing it??
============================

Once you juice a slow economy with consumer debt it gets harder and harder to stop. If a large chunk of your money supply consists of personal debt, any major downturn in consumer borrowing chops the money supply. This is called deflation. Banking doesn’t work too well in a deflationary environment.

Any government knows this but they know they will be voted out if they don’t keep the debt show going. The smart money tiptoes out of the theatre before somebody yells “Fire!”.

#65 Willdaman on 06.24.14 at 8:38 pm

Tonight’s blog posting is straining the bounds of credibility…

Why? I hardly made any of it up. — Garth

#66 SHELTER THE MONEY NOT THE PEOPLE on 06.24.14 at 8:40 pm

When the chips are down the real truth is that all of us are greedy. So lets call it “self interest” for those who can’t accept strong language.
Those who are in Government spend their days scheming ways to get OPM (Other Peoples Money) to pay for their “self interest”. Things like gold plated double dipper pensions and other even pricier items like spreading money around to those likely to vote for them at election time.
When you really look into the hearts of people you will see mostly “Self Interest” at work. If a Government wants to give OPM to further “Charitable” or “Good Works Projects”. Then “self interest kicks in because it will make them feel fuzzy inside because they directed OPM to some needy place in society. They will then get their place in History as a “Benevolent Civil Servant who Cared” at least enough to spend OPM on his pet project.
Even people who give generously of their own money are often acting in Self Interest. Some think it will buy them a place in Heaven and others like the feeling of “Doing Good”. The difference here is that the OPM is not present like it is in Government.

We will not be able to stop government from spending our money on their pet projects until we DEMAND a voice (VOTE) on every bill. Just like the Swiss have Votes some 15 or more times a year.
Is it any wonder the Swiss people are so wealthy and differently governed than their neighbors.
If we do not work toward this I predict we will eventually be merged with the USA by some weak PM who Like Harper will cowtow to every demand by our strong southern neighbor.

#67 Nemesis on 06.24.14 at 8:44 pm

#TheNextTimeYouFlyWestJet. #Don’ForgetToInviteBradPitt.

http://youtu.be/YesaFTw1HoA

#68 Thomas on 06.24.14 at 8:44 pm

This is a neat mortgage vs rent calculator:

http://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html?_r=1

Looks like it’s geared for the USA but it’s still fun.

#69 jess on 06.24.14 at 8:48 pm

#16 Yogi Bear

http://www.carrollquigley.net/Lectures/The_Mythology_of_American_Democracy.htm

Alan Greenspan quipped, “Quite frankly it does not matter who is president as far as the Fed is concerned. There are no other agencies that can overrule the action we take.”

Carroll Quigley (/ˈkwɪɡli/; November 9, 1910 – January 3, 1977) was an American historian and theorist of the evolution of civilizations. He is noted for his teaching work as a professor at Georgetown University, for his academic publications, and for his research on secret societies

===================
….if it happens there can that happen here?

Investigation into claims UK English language test results are being sold
Home Office looking at allegations migrants who speak no English have been able to buy official documents for £500

Press Association
theguardian.com, Saturday 17 May 2014 00.58 BST

#70 Willdaman on 06.24.14 at 8:49 pm

I just read that 48 percent of the Vancouver population own their homes 100 percent mortgage free?????

That’s a neat trick when only 65% of Van families own. — Garth
————————————

According to Statistics Canada’s 2011 National Housing Survey, almost 48 per cent of owner households in the city of Vancouver do not have a mortgage. For all of Metro Vancouver, the percentage of mortgage-free owner households falls to 41 per cent.

http://www.vancouversun.com/touch/business/vs-business/Pete+McMartin+doom+gloom+Metro+Vancouver+housing/9967853/story.html

So how does this affect the affordability doom/gloom analysis?

Let the HAM arguments begin…

#71 rawdiswar on 06.24.14 at 8:52 pm

I’m going to keep posting this until someone admits that the Canadian banks were bailed out.

https://www.policyalternatives.ca/newsroom/updates/study-reveals-secret-canadian-bank-bailout

Banks received a cash boost when Ottawa bought mortgage portfolios. It’s highly debatable whether or not they needed it. — Garth

#72 Malcontent on 06.24.14 at 8:56 pm

Yawn…Garth you have been spouting this message for years and here in Vancouver there is no sign of it happening or that it ever will.

#73 zee on 06.24.14 at 8:58 pm

Why does Bell Media have to report to Labour minister about layoffs.

#74 Randy Randerson on 06.24.14 at 8:58 pm

Looks like Canadian investors are pretty dumb when it comes to active vs passive investing

http://www.huffingtonpost.com/dan-solin/canadian-investors-are-lo_b_5517436.html?utm_content=bufferacdfe&utm_medium=social&utm_source=facebook.com&utm_campaign=buffer

#75 Retired WI Boomer on 06.24.14 at 9:01 pm

When the Housing & Debt Moose explodes, will it make any sound?

So, what WAS your first clue, Mr. Clouseau?

The fact your neighbor, and largest trading partner the U.S. went berserk for housing over 6 years ago, and almost went belly-up?

So, rather than remedy things in your own Country, you went to do the same silly stuff as the U.S. even, exporting your BOC Carney top the U.K. to he could commit the same malpractices?

Finance Minister Joe “Owe” has demonstrated a clear understanding of the issues confronting the country – NOT.

So, you are really different, eh? Good luck with that.

The GOOD NEWS these things never last forever, it just feels like it.

#76 4 AM Sunrise on 06.24.14 at 9:17 pm

#51 Bill Gable on 06.24.14 at 7:54 pm

It IS about collecting air miles. I even put $2.00 on my card when they let me. I’m sure I’m not the only “deadbeat” blog dog who pays off the credit card bill on time and in full every month.

#77 T.O. Bubble Boy on 06.24.14 at 9:20 pm

@ #8 Pete in Barrie on 06.24.14 at 6:25 pm
I wonder what Flaherty’s response would have been?
————————–

A minor point, but Stephen Poloz replaced Mark Carney, not Flaherty (Joe Oliver replaced F).

So, what would Carney’s reaction have been? His main action seemed to be verbal warnings about taking on too much debt, and no actual policy changes.

#78 Ben on 06.24.14 at 9:24 pm

Wayne – this isn’t quite the same thing. He was doing the can-can whilst driving a ford in Canada. In the UK, such is our perilous state, he’s walking the high wire. That’s no comment on the importance of the UK vs Canada, just an observation that the UK is in a much worse state.

#79 VICTORIA TEA PARTY on 06.24.14 at 9:36 pm

SO MANY CANARIES, SO FEW MINESHAFTS…

…meanwhile Mr. Owe (Canada’s “mineshaft” manager in residence) fiddles while Canadian real estate starts ungluing.

Ignoring shorter term interest rates in the Western nations solves nothing. In fact it’s a very dangerous game.

It is simply a nasty case of whistling past the graveyard.

Central bankers, and their vassal finance and other ministers, are choosing to ignore the growing suspicion that the low interest train ride is running out of track.

Just how far up ahead is the cliff face and the speed of said train is all conjecture at this point. For us passengers, application of seat belts and prayers to the Almighty may also assist in the final final, that is when the party stops.

So Bell is laying off some folks because no one is watching.

These keepers of “our way of life”, the cannon fodder known as the middle classes, are being cleared out of Dodge against their wishes as the “corporate rationalizing” continues unabated everywhere shrivelling these desperately-needed indebted consumers to protect our insane way of life for ever and ever.

Sure, investment analysts, economists and the like mumble that “layoffs are good” because the company in question now becomes a “lean mean fightin’ machine.” I’ve been hearing that stuff for decades and at one point that was true.

But there approaches a time when job cuts reach a critical mass that so affects corporate performance that no matter how few employees, viewers (in Bell’s example) will STILL not be showing up.

At that point the company stock, coddled by so many becomes worth so little to be, in the end, owned by so few.

Are the big stock markets, as they represent those cost-cutting entities, reaching their own tipping point?
Or are there enough IPOs, refinancings, and other other gibberish going to keep it all moving higher for ever and ever?

Looking back to central bankers: they are caught in a dillemma of being totally screwed if they raise rates, cut back too much on money printing or do simply nothing but maintain this shakey status quo.

Nightmares are made of this.

Only, it will eventually be all of our nightmares.

We may be getting to the stage whereby the entire consumer-based system could begin to implode as too much individual debt eventually catches up, as interest rates begin to rise, resulting in falling stock markets, and then things getting even crappier in the Middle East than they already are.

The mineshafts will be getting mighty crowded, is my guess.

#80 HogtownIndebted on 06.24.14 at 9:41 pm

I did something unusual this past week. Picked up a paper copy of a msm newspaper, The National Post.

(Of course it was free, since I know dozens of spots around the city where you can pick up free newspapers.)

I was curious about the content these days and any changes. I looked at the obituaries.

Only three obituaries were listed, in Canada’s alleged most important business publication. Three.

Even the dead know they are more alive than The National Post.

#81 Italians love real estate on 06.24.14 at 9:49 pm

Italy got robbed out of a chance at the World Cup today. Apparently biting Italian players is perfectly acceptable and not worthy of a red card but a somewhat reasonable challenge at a ball in play is worthy of a red for the azzuri early enough to practically gauranteed a win for a South American team.

Oh well, at least the Italians winning the game of real estate in the honest world of Canada .. Lol

#82 HogtownIndebted on 06.24.14 at 10:11 pm

Speaking of canaries, I think another one is about to fly into the window in exactly 6 days.

You are all probably receiving inbox messages like this:

“We need your consent to continue sending you the emails that you currently subscribe to. Unless you act, changes in Canadian law may prevent us from contacting you after July 1st.

Enter to win $100 (you have 4 chances to win)

As a thank you for taking the time to re-affirm your interest, we are running a series of cash draws. A consenting subscriber will win $100 every Friday from now until July 4th.

Click here for contest details. You may withdraw your consent at any time by contacting [email protected] or by clicking the unsubscribe link (like the one below) in any message received from us.

Drop us a line at [email protected] and let us know your thoughts about what changes you would like to see in the future.

Best regards,

The Stockhouse Team”

Sound familiar?

Financial sites, gold floggers, Best Buy, Sport Chek etc…, all of those places need to confirm you really want their emails, or could face fines of up to $10,000,000 after July 1.

This is a major change in legislation that most will welcome. The new law actually has teeth.

It will, unfortunately, have little impact on Nigerian scammers or…ahem….anatomical “lengthening” offers (some of us might be relieved to know that), but it is already scaring the hell out of regular legitimate retailers, hence all those pleading emails you are getting.

I can’t help think of how many of such retailers are otherwise invisible to me, without their emails. I would not think of going into a Staples these days unless I got a great email offer from them, but I am frankly not interested enough in them to give them permission to continue sending me spam. So they will become even more invisible to me, and I will be even less likely to darken their doors, at least the ones that still remain, in the months ahead.

The CASL comes into effect on July 1. (Canada’s Anti-Spam Legislation)

http://fightspam.gc.ca/eic/site/030.nsf/eng/home

What’s the correct metaphor for this? Is it a canary, is it a tipping point, is it a ‘nudge’, or what?

I do think that given people’s inertia and the likelihood that most will just let emails discontinue, this will affect things negatively.

It would not surprise me to see a small but noticeable percentage drop in purchases from such businesses after July 1. This could affect employment and a host of other related economic factors.

I am curious what others might think of this.

#83 wayne on 06.24.14 at 10:12 pm

#15 asp
The only inflation that counts is wage inflation, and that is going nowhere. Until regular people have more spending money, any bursts of inflation in isolated sectors cannot last. Prices can’t stay high if most people can’t pay those prices.

And then there is the new normal. Which says that interest rates will not go above 2% for a long time to come.

The war on inflation has been won.

So… real estate can’t inflate above wages? Do you even know what blog you’re posting on?

#84 Son of Ponzi on 06.24.14 at 10:14 pm

Poutine please with an extra helping of pulled pork. Actually lobster poutine would also be yummy now that seafood prices have cratered.
————————–
Who eats pork if you can have lobster for the same price.
Even SUBWAY has now lobster sandwiches.
That’s why you can’t trust the CPI stats.
I don’t think they track lobster prices.

#85 stop lying on 06.24.14 at 10:26 pm

#38 “Part of his message is that no market is unique, and that fundamental metrics are of prime importance.”

I don’t know if I read it the same way. He talks about groupthink and that bubbles only stop growing and burst when people change their minds. I think in some markets and some areas people will never change their minds. This is why there was a big difference between Phoenix real estate and Manhattan. Or as a local example, a big difference between Pickering and Markham. I don’t think Garth disagrees as he has many times said sfh in demand locations will not be hit as hard as some other locations or condos.

I also think government plays a role. Besides CMHC and low interest rates, in the GTA we have governments that are pushing for high density and limiting low density, making new sfh harder to build. Local development charges and taxes add a significant cost to building new. We also have greenbelt areas that are artificially limiting the amount of land that can be developed. As long as the government keeps doing this sfh will stay in demand due to lack of supply and expensive.

Speaking of bubbles and inflation, at the top of the bubble in 89 the average single family residential price in toronto was 273,698. In 2013 dollars that is 521,504. Average single family residential price in toronto in 2013?

523,036 :)

#86 Tim on 06.24.14 at 10:26 pm

Connecting the dots re the bond market……

Interest rates have been falling for 30 years, they are still falling. There was a panic last year about this time on rising rates, now they have reversed a good chunk of that and look set to fall further, because economic activity is slowing.

Everyone who said rates would rise were wrong and continue to be.

Cheers.

#87 valleyrenter on 06.24.14 at 10:30 pm

That was an interesting story in the Vancouver Sun about mortgagees. 48% of homeowners (not households) have no mortgage. Says nowhere about the age/demographics of the owners, it could be 90%+ boomers who bought decades ago. Seems about right as it also says that percentage drops off out in the ‘burbs do to newer buyers (read younger) cause of affordability. The story also prattles on about a great wealth transfer to the young.

#88 Pookie on 06.24.14 at 10:36 pm

No Bubble?

“It is difficult to get a man to understand something when
his salary depends upon his not understanding it.”
— Upton Sinclair

#89 will on 06.24.14 at 10:46 pm

Yeah I’m sick of Joe Owe already. And since when does the finance minister take advice? And just who exactly does he take it from? Isn’t he supposed to be in the position of knowing what is going on and DISPENSING advice? Well we here at greaterfool know what is going on and we are not waiting around for anything credible coming out of the mouth of this idiot. Good post Garth and thanx.

#90 will on 06.24.14 at 10:47 pm

Joe Owe is a fraud.

#91 Son of Ponzi on 06.24.14 at 10:54 pm

According to Statistics Canada’s 2011 National Housing Survey, almost 48 per cent of owner households in the city of Vancouver do not have a mortgage.
——————
2011. Talking about a trailing indicator.
Also, I think the HAM families are paying cash.

#92 Tony on 06.24.14 at 11:03 pm

Re: #19 LH on 06.24.14 at 6:52 pm

Interest rates in Canada will turn negative and stay there for a long, long time.

#93 Son of Ponzi on 06.24.14 at 11:06 pm

#51 Bill Gable on 06.24.14 at 7:54 pm

It IS about collecting air miles. I even put $2.00 on my card when they let me. I’m sure I’m not the only “deadbeat” blog dog who pays off the credit card bill on time and in full every month.
——————-
Obviously, you’re not living in Richmond, which is morphing into a cash only society.

#94 will on 06.24.14 at 11:17 pm

Pay no attention to Joe Owe’s pronouncements except as an unusual kind of comic relief.

#95 Steve Sartori on 06.24.14 at 11:23 pm

It’s not if but when. If it’s this year you’re a genius and if it’s 2 to 3 your early and in 5 years you’re a bum.
TV is going through a double tipping point. Many people leaving for their pdf’s social media and as eshopping grows retail doesn’t buy ads from the sinking ship of Tv.
Finally what’s the trigger going to be ?

#96 Teacher's Ass-istant on 06.24.14 at 11:31 pm

Not a smartass comment (this time).

Things look kind of grim to me but I have a question about our whole world state of financial affairs.

This last big crash was reacted to in the way it was because it was felt that the great depression was dealt with in an inappropriate way. Is that correct? What has and is being done is basically theory and a fluid plan still in progress, again is that a correct reading of the situation?

Of course so much is so vastly different now than then that it couldn’t be expected that the same strategy should be employed but does anyone know how it will really all turn out? Some things have to decline it’s clear but if people aren’t working and making a living wage, how does the whole thing continue, whatever intervention?

Higher income earners seem to have forgoten it’s those below that keep making them fat. All of the consildation, in every industry, creates all of these redunancies as they like to call them. It also creates less wage earners able to buy that tv package or the products advertised on it. Certainly they are the other outlets mentioned already, like the internet, still it seems there is more to it than just that. In the case of media it has become just rergitated trash. So why would someone continue to purchase so much of it.

We are actually getting close to back to the five stations you could get forty years ago but now it’s three hundred channels that endlessly show the same repeats on sixty each.

We sure seem to be leaving a mess to future generations.

#97 ozy - this PARTY is not yet over on 06.24.14 at 11:33 pm

” Today TV stations without enough ads tell us consumers are tapped and marketers giving up.”

omg, would I live to see MARKETERS EVER GIVING-UP????? Belly-up would be so fun, and the proper beginning to a new type of society. With solicitors and parasites in jail.

#98 Dr.NickRiviera on 06.24.14 at 11:35 pm

“But… but… We have OIL! Alberta will never see a drop in real estate.”

-My Boomer Parents

#99 Edmonton investing? on 06.24.14 at 11:41 pm

How will the pipline affect real estate prices?

#100 GTA house of cards on 06.24.14 at 11:57 pm

House rich cash poor home “owners” living paycheck to paycheck . You can see businesses are having a hard time and we will see more layoffs. US will continue to recover as workers can work for 50% less then Canadian worker and still afford a house. CREA , bankers and Harper have led Canada and Canadians to financial ruin. Good job you stupid cons.

#101 NorthOf49 on 06.25.14 at 12:12 am

Critics abound tonight. Bell has 50 thousand employees…blah blah blah. I wonder if these 65 newly unemployed in Waterloo share their optimism. I’m sure some of these folks will be immediately employable, but I’m not sure how easy it will be to pick up and move to where the jobs are if they have to unload big houses with big mortgages in the Waterloo region.

http://www.thespec.com/news-story/4595880-blackberry-lays-off-developer-relations-staff/

#102 John Of Brisbane on 06.25.14 at 12:30 am

Nearly all of your words ring true for Australia, I just can’t pick how far behind Canada we are, hopefully far enough to avoid the damage.

#103 Waterloo Resident on 06.25.14 at 12:47 am

Now here is something really useful, something everyone wished they had on their laptops: A SCREEN ‘OFF’ BUTTON.

Go here and download this small little bit of freeware:

http://www.redmondpie.com/turn-off-your-notebook-lcd-with-one-click/

What I did was I downloaded the zipped file (version 1.01) to ‘Documents’, then I un-zipped it and I moved that little computer-icon onto the desktop screen of the laptop itself. (I then deleted the other stuff).

Now when I click on that computer icon (named ‘Turn off LCD’), the LCD screen goes to sleep (turns off). This is really great if you don’t want to have to wait for the screen saver to kick in after a few minutes and want the screen off right away.

Try it, you’ll like it.

#104 Ronaldo on 06.25.14 at 1:55 am

#13 };-) aka Devil’s Advocate on 06.24.14 at 6:44 pm

”SHIFT happens. Real estate, like any investment, is a long term hold. If you have short term speculative expectations, be they bull or bear, chances are you’ll get screwed.

It’s just as simple as that.

};-) ”

Yep, you’re right DA. Like these babies that went up for sale off the Westside Road just outside Kelowna in 2007 for around $840 big ones. Now asking $429,900. Down about 50% so far. A long term investment indeed. Screwed short and long term I would say.

http://homehippo.com/prop/property-for-sale-4215-westside-road-13-kelowna/51dd53b438cb274ffa000539/

#105 Ronaldo on 06.25.14 at 2:25 am

I was wrong DA, those condos on the Westside in Kelowna originally sold in 2007 for $829,000 top price and not $840,000 and two years later 6 remained unsold with askings less than $500,000 and now another 5 years later and still well below the $500,000 mark.

This is what happens to recreation properties when the economy goes all to hell. Same thing happened in the 70’s and the early to mid 80’s. Many Albertans have taken a bath on property in the Okanagan in the past 40 years. The “Oil Patch” was the main target for developers since this is where the big money was and what drove the prices up. When the oil patch dried up property prices crashed and many walked away from them leaving a trail of abandoned properties for many years. Same thing will happen again. Happens about every 7 years.

http://www.6717000.com/blog/2009/05/discount-pricing-in-the-okanagan/

#106 Ronaldo on 06.25.14 at 2:53 am

An Op-ed on how to fix Vancouver’s biggest issue.

https://medium.com/spencers-collection/why-vancouvers-housing-costs-arent-the-problem-its-the-people-who-buy-them-d094a420da2b

#107 Cler on 06.25.14 at 3:15 am

Don’t they eat deep fried Mars bars in Ireland, and then switch to deep fried canaries just before the crash….I am gonna stick to deep fried poutine…..muuuuuuch safer and healthier…..

#108 Flawed on 06.25.14 at 4:03 am

#10 DJG on 06.24.14 at 6:29 pm
It is just ignorant to say that the decline in TV advertising revenues is connected to “tapped out consumers”.

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

No its not……140 bucks of pre-tax dollars for TEEVEE is bullshit. And everyone like me who has cancelled it knows it. We buy internet, netflix and use some “internet sites” for what we like now. Now we have 1500 more a year to invest and not pay for all the sex and murder which is all TEEVEE is today. Good thing our “govt” is here to protect us from all that violence, murder and garbage on teevee……

#109 Flawed on 06.25.14 at 4:12 am

#43 Rexx Rock on 06.24.14 at 7:26 pm
The central bank and government planned this scheme so the majority of Canadians are debt slaves.The low interest rates help bring in more government property taxes and build huge profits for the bank with higher mortages year after year for the Canadian family.This a planned collapse for whatever reason.
This is pure evil at its finest.Why in the world would a government who represents the people try to financially destroy them.

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

Central Banking – Hierarchical, corruptible and centralized.

Bitcoin – De-centralized and controlled by the people of earth.

Which one would you like to see succeed? Anyone? Anyone?

#110 Habs76-79 on 06.25.14 at 4:48 am

Re: #88 valleyrenter.

Wealth transfer to the young??? Only if the property can be sold at such great prices. Now if most retired boomers want to cash out and maybe down size or move out of the high cost cities, there will soon be a glut of these so called high price houses on the market. OVER SUPPLY and lessening demand as the amount of those who will be able to buy at such prices is at a lower amount to likely all those boomers who may want to sell.

Holding on living in near poverty as many a pensioner does until you die to then leave these homes to the kids who will probably fight over them, well guarantees no great return of wealth as they too MUST THEN SELL these high priced homes. Then divide the proceeds up among themselves. Many of these siblings are in debt up to their eyeballs so even if these parents homes sell, the money will likely be used to reduce acquired debts among the surviving kids.

Now early cashing out boomers may make out well, Boomers who hold on and wait until others glut the market will make less on these homes.

Don’t forget many of these boomers have borrowed against their homes, taken reverse mortgages and such including deferring the payment of property taxes. Once they die these debts will come from these homes being sold off.

#111 Spiltbongwater on 06.25.14 at 5:17 am

I watch all my TV through a jail broken Apple TV. No ads, same shows. I am a consumer but not tapped out.

#112 Martha Pearce-Smith on 06.25.14 at 6:58 am

“No”, he said. “The advice we have received is that we are not in a bubble.”

Just WHERE and from WHOM is Owe getting getting this advice? I ask because the Bank of Canada is saying there is a “long slump” ahead for housing in Canada.

http://www.huffingtonpost.ca/2014/06/12/housing-market-canada-bmo_n_5487772.html

And the IMF is warning of a GLOBAL housing crisis…and specifically talks about Canada (among other countries);

“We are not totally out of the woods yet,” Kaushik Basu, the World Bank’s Senior Vice President and chief economist and he warned that “now is the time to prepare for the next crisis.”

The data shows how an acceleration in house prices in many countries from already high levels has emerged as one of the major threats to global economic stability. House prices “remain well above the historical averages for a majority of countries” in relation to incomes and rents, Mr Zhu said in a speech to the Bundesbank last week, which was only released on Wednesday because it clashed with a European Central Bank announcement. “This is true for instance for Australia, Belgium, Canada, Norway and Sweden,” he said.

http://olduvai.ca/?p=22740

#113 yorel on 06.25.14 at 7:17 am

There are not enough ads on TV? Gimme a break.

A surprising number are DR – Direct Response. The broadcaster receives little, if any, upfront payment for them. The economics of TV are brutal. — Garth

#114 pbrasseur on 06.25.14 at 8:01 am

Bell, Rogers, Videotron and the likes are suffering because of things called Netflix, Rdio and now even Google (music player and movies).

And it’s just beginning. Audience kept captive for decades by regulations if freeing itself, it can’t be stopped (and it’s a good thing).

#115 Chris on 06.25.14 at 8:07 am

I have not had cable for over 2 years and I watch all my “tv” from the internet. Youtube, news sites with video that is free etc.

I don’t disagree that we are getting to a point where consumers are getting tapped out and interest rates may slowly rise, but I don’t think the Bell Media layoff is anything more than shifting dynamics in the industry.

#116 Jack Bean on 06.25.14 at 8:24 am

Regarding Bell Media,
Television will go through similar growing pains as the music industry did in the 90’s with MP3s…
Consumers will gravitate to what they want how they want it. The companies that can provide that need and still be profitable will say alive.

Consumers are voters, we vote by making choices.

I vote for Over the air HDTV broadcast, no contracts or dependency on any cable provide

I vote for low cost cellular service with, unlimited everything and no contracts.

I vote for independent unlimited unrestricted ISP for internet, with no contracts

I bet you also vote for Wal-Marts full of crap from China and idle factories in your town. Hey, it’s cheap! — Garth

#117 Detalumis on 06.25.14 at 8:50 am

Oh gee media jobs are important, nobody paid attention when Bell-Bell outsourced most of it’s IT years ago, nobody likes nerds anyway. Nothing will happen until teachers get outsourced to laptops, lesson plans and long-distance Indian teaching assistants. Home schooled kids without the benefit of “educators” do really well in university by the way.

#118 World Traveller on 06.25.14 at 8:59 am

I bet you also vote for Wal-Marts full of crap from China and idle factories in your town. Hey, it’s cheap! — Garth

A bit unfair there Garth, if you go with a local provider such as TEksavvy, they employ more people in Canada and don’t offshore tech support to India like Bell does.

#119 GDPumped on 06.25.14 at 9:00 am

And on the US economic front, Q1 GDP revised to -2.9%. Recession.

It’s almost Q3. History. — Garth

#120 ss on 06.25.14 at 9:02 am

Central bankers are plain stupid. They printed so much money to inflate asset price, thus caused rampant inflation, which is not reflected in stats only because reporting tricks. What do they expect? The purchasing power of working stiffs’ (the 99%) wage goes down exponentially, only the 1% benefited tremendously from these monetary actions. And economy is powered by consumers (ie 99%). It is the typical Emperor’s new clothes tale. This will not end well.

#121 asp on 06.25.14 at 9:03 am

#84 wayne

Real estate is an isolated sector fuelled by debt, not by increases in wages. Medium term general inflation depends on wage inflation.

I suppose that could change if CMHC switched to insuring credit card debt instead of mortgages …

#122 Shawn on 06.25.14 at 9:04 am

Free trade

I bet you also vote for Wal-Marts full of crap from China and idle factories in your town. Hey, it’s cheap! — Garth

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

Free trade is often considered the fountain of wealth.

Free trade and the division of labour go together.

We don’t make our own cloths in our own houses and we usually buy from the most efficient producer. If that be China, so be it.

Adam Smith taught that if we each make decisions in out own economic interest, then things tend to work out for the best.

In other words he seems to same we are each on “team me” and not on “team Canada” or team “my town”.

I like to support local businesses but if they can’t compete they just can’t survive.

If trade and specialization of labour is good at the household level where should it stop? Trade only within the village?, the province, the country? why not the world?

#123 Bob on 06.25.14 at 9:10 am

Garth,

The Prime Minister is formally a trained economist…do you not think he knows what is coming down the road? Hence, do you think he is muzzling the Finance Minister?

Mr. Harper has a degree in economics. He is not an economist. — Garth

#124 Life's a supermartingale on 06.25.14 at 9:19 am

Garth,

There are no such things as bubbles. In fact, I challenge you to define a bubble that works ex ante and not just in hindsight.

You keep talking about bubbles, but nobody has ever been able to write down a set of conditions that forecast a negative return (seriously, you would win the Nobel Prize if you could). What we can forecast are low expected returns and housing in Canada certainly qualifies. So the question isn’t: Are we in a bubble? The questions why do people hold assets with low expected returns? Well, lots of people hold assets with low expected returns all the time, in all market conditions – all assets are held after all. The answer to that question has nothing to do with bubbles. It has much more to do with state contingent payoffs that hedge systematic factors across the population.

Yes, houses will see low expected returns for at least a decade, the market knows this – and people RATIONALLY buy them. The last thing I want are government bureaucrats deciding on when there is a “bubble” and what the correct price of an asset should be. The Soviets couldn’t even get the price of cup of coffee right – you seriously think the wonks at Finance can get the price of a house right?!

But if you really believe that everyone is irrational and that they need the guiding hand of government to sort their lives out, when you crossed the floor, you should have taken a few more steps and marched over to the NDP benches.

I lobby for less government, not more. The argument has been made here consistently that public policy initiatives have helped blind consumers and inflate houses. Try to argue next time without the personal reference. You will be more credible. — Garth

#125 Casual Observer on 06.25.14 at 9:23 am

“A surprising number are DR – Direct Response. The broadcaster receives little, if any, upfront payment for them. The economics of TV are brutal. — Garth”

It seems to me that “live event” programming such as sports would be about the only type of broadcast where a large percentage of the TV audience would want to watch live, and therefore be unable to skip over the commercials.

I don’t mind PVR’ing the game and watching it later, but with most people unable to delay gratification, the majority still watch it live.

My guess is that this type of content would be quite lucrative broadcasters, since advertisers pay top dollar for a “captive” audience.

That’s probably why you see cable companies like Rogers bidding for the rights to sports broadcasts, and buying up sports arenas and in some cases, buying the teams themselves.

#126 Rational Optimist on 06.25.14 at 9:24 am

Great post, but one quibble. You quoted someone as saying ““On Friday we got a Canadian CPI number that was above the Bank of Canada’s inflation band.”

That’s his error, not yours. The CPI number we got on Friday (for June) was 2.3%. The Bank of Canada’s inflation target is 2%, so that’s pretty well dead on. That’s the midpoint of a target range of 1 to 3 per cent, which is I guess what he means by “inflation band.” We’re right in that range.

As for this being the fourth measure higher than expected, it’s his problem if his forecast was wrong. It was 2% in April, and 1.5% in March. This doesn’t sound like high inflation to me.

Most of this is energy, but it was a lot more concerning when we were running at extremely low inflation.

We do not have high inflation, in spite of what Miz claims.

The issue is not that inflation now is high. Of course it’s not. The concern is the trendline. That’s what bond traders watch. — Garth

#127 Ret on 06.25.14 at 9:30 am

Re: #94

“Obviously, you’re not living in Richmond, which is morphing into a cash only society.”

The take-out place down the street (Hamilton) has given a 15% discount for cash for over 20 years. Crap area so 90% of the customers have no credit and have to pay cash anyway.

I guess that the CRA is okay with that. It works for me!

#128 };-) aka Devil's Advocate on 06.25.14 at 9:32 am

#106 Ronaldo on 06.25.14 at 2:25 am

That is SHIFT for you. As I mentioned speculators typically get screwed. 2007 was the peak of the market here in Kelowna when “irrational exuberance” ran rampant. None-the-least of those exuberant ones were developers who were building, not for end users but, “flippers” (speculators).

What was it I said again? Oh ya; ”SHIFT happens. Real estate, like any investment, is a long term hold. If you have short term speculative expectations, be they bull or bear, chances are you’ll get screwed”. And don’t you think appropriately so.

This is one of those natural life cycles. Fools get parted from their money and so it should be. Now that said, as easily as a Bull so too a Bear. Right now prices are poised to rise in Kelowna due to the recent increase in unit sales volume. A property might rise from $400,000 to $600,000 and while the unwarranted gains will be clawed back at some point it is not likely to fall back to the $400,000 it is today. Real estate is a long term hold.

Of course you can pick to lows to make YOUR point as so too could I pick specific statistics to make mine. But, over-all long term, I am confident that someone who buys a property today in 10 years’ time will have no regrets as that property will be worth substantially more then than they paid for it today ALL things considered – barring, of course, some catastrophic life changing event. But then isn’t THAT always a risk?

};-)

#129 neo on 06.25.14 at 9:33 am

Hello Garth,

Remember when I said once the revisions come in on Q1 GDP it will be much worse that originally reported. Hmmmm -2.9%. So how does your prediction of 3% for the year look now? Based on those “economists”. Q2 will be negative as well and low and behold recession (once the final Q2 revisions are done later in the year of course). Heaven forbid the first print be negative and rattle the herd.

The US is fine. I’m worried about you. — Garth

#130 Junket on 06.25.14 at 9:33 am

Speaking of canaries, what do you think of the final Q1 GDP number for the US? Was the winter THAT bad?

Thanks

History. Growth in the second half should be +2.2%. — Garth

#131 valleyrenter on 06.25.14 at 9:36 am

#111-Habs 76-79

Agree with you, hence why I said the story prattles on about wealth transfer. Definition of prattle, verb-1. talk at length in a foolish or inconsequential way.

On an interesting side note, used to drive for a restaurant/service industry supply company. One of the big 2 in Canada/US. In the run up to the GFC guys in town were hungry for extra hours, yet in the valley we were getting burnt out from working too many. The great boomer sell off/move east to the valley was well under way, flush with cash and buying cheap homes, they kept the restaurants busy. Late in 2008 though, developers were handing out ‘upgrades’ that were getting larger and larger on unsold inventory trying to entice more boomers to buy their homes (upgraded BLQ’s on the old base in Chilliwack). In 2009, the company I drove for shut down its Canada call centre and shipped it Stateside along with all the desk jobs. Like Garth says the big companies will do just fine, they know how to cut costs.

#132 };-) aka Devil's Advocate on 06.25.14 at 9:42 am

#106 Ronaldo on 06.25.14 at 2:25 am
Oh and congratulations Ronaldo on sourcing out a most poignant example of “irrational exuberance” where a developer (Mark Consiglio) took advantage by developing a Ponzi scheme development (Secret Point) to part such fools from their money. Want to check out a more flagrant example? Look into Consiglio’s controversial Kelowna Mountain venture.

Stupid is as stupid does and Consiglio is only to happy to take advantage of such.

#133 Bob on 06.25.14 at 9:53 am

re: Mr. Harper has a degree in economics. He is not an economist. — Garth

I stand corrected…thanks. Your cooments on the thrust of the questions (e.g. muzzle, etc.)?

In my personal knowledge of that man, yes. — Garth

#134 Doug in London on 06.25.14 at 9:54 am

So we in Canada see the same trouble signs that were seen in Ireland and elsewhere and ignore them. As the old saying goes, the only thing we learn from history is that we learn nothing from history.

@Joe 2.0, post #26 who said:
It’s just a matter of time before Toto pulls the curtain back. Wow, that’s a good way of putting it!

#135 Casual Observer on 06.25.14 at 10:02 am

“Medium term general inflation depends on wage inflation.”

Or borrowing limits on credit cards and LOCs.

#136 Bob on 06.25.14 at 10:04 am

re: Mr. Harper has a degree in economics. He is not an economist. — Garth

I stand corrected…thanks. Your comments on the thrust of the questions (e.g. muzzle, etc.)?

In my personal knowledge of that man, yes. — Garth

Thanks for the insight…answers a number of questions about our leadership.

#137 waiting on the west coast on 06.25.14 at 10:18 am

Did anyone check our the Financial Post article on whether to rent or buy today? While there were good questions, the one key question that was not raised – is the asset (house) priced at a reasonable valuation?

Can you imagine buying a company/stock that was 2-3x the norm valuation range and only discussing if you could afford the payments. It doesn’t matter if you can afford it… it’s just a bad investment.

#138 Rusty Venture on 06.25.14 at 10:32 am

Garth – Ne t’enfarge pas dans les fleurs du tapis…

Viewership is shrinking because of alternatives, such as streaming video. Bhell and Robbers have to look at alternatives lest they become the buggy whip manufacturers of this decade.

I read my news on the internet and I haven’t paid for specialty programming or even basic cable for more than half a decade.

I’ll pass that on to the punted employees. — Garth

#139 wayne on 06.25.14 at 10:37 am

#121 asp

Real estate is an isolated sector fuelled by debt, not by increases in wages. Medium term general inflation depends on wage inflation.

I suppose that could change if CMHC switched to insuring credit card debt instead of mortgages …

So… other things can’t be inflated by debt? Seriously? Listen to what you’re saying.

The LIRP has turned HELOCs into long-term debt vehicles. The only reason CMHC matters with homes is because of the sheer size of the loan required to purchase a home. Consumer goods and consumables don’t require consumer debt insurance to be inflated with.. you guessed it… debt.

Try again.

#140 liquidincalgary on 06.25.14 at 10:44 am

calgary’s Black Swan?

http://www.calgaryherald.com/life/Lamborghini+plans+Calgary+dealership+opening+this+year+super+sports+centre/9610243/story.html

#141 HD on 06.25.14 at 11:03 am

#138 Rusty Venture on 06.25.14 at 10:32 am

Garth – Ne t’enfarge pas dans les fleurs du tapis…

——————

Wow,

Ça fait longtemps que je n’ai pas entendu cette expression.

Cela me rappelle quelques bons souvenirs du Québec…

Au plaisir,

HD

#142 Ralph Cramdown on 06.25.14 at 11:06 am

#124 Life’s a supermartingale — “There are no such things as bubbles. In fact, I challenge you to define a bubble that works ex ante and not just in hindsight.”

I know them when I see them. When a higher than normal percentage of people are in an asset class, most of them are using leverage, people are incented to use leverage, and they’re all telling each other stories about how and why prices will keep going up, you’ve got a bubble. Bubbles develop more readily in markets that are difficult to short.

What do we have here?
– record high homeownership rates, with record high household debt:income ratios
– bidding wars
– banks encouraging some of their customers to use more leverage, over 80% so that the loan is insured
– stories about immigration, HAM, and comparing Toronto to New York and Paris and Vancouver to San Francisco
– a stream of people here who say “prices may correct elsewhere, but not in premium neighbourhoods like ___, ___ and [where I live]”
– developers selling condos to investors by projecting price increases, or guaranteeing rents for two years

The last thing I want are government bureaucrats deciding on when there is a “bubble” and what the correct price of an asset should be.

These same government beaureaucrats turn highly leveraged credits into AAA sovereign paper which require no capital backing on bank balance sheets, but only for people who buy houses.

#143 20something on 06.25.14 at 11:16 am

Bell is scaling down its TV operations but will likely scale up internet related products, advertising etc. I wouldn’t say the decrease in ad spending on TV commercials is related to tapped out customers—people are still buying products—have you visited any malls lately? (They’re packed)

Since TV viewership is decreasing, as people now tend to favour online options like Netflix and Youtube, the advertisers are shifting their efforts to this realm. This is a trend that has been going on for about 10 years now. Try watching any Youtube video; you’ll be presented with at least 2-3 ads within the space of 5 minutes. Also, advertising via social media is often a cheaper, and more effective, option for businesses.

#144 Ralph Cramdown on 06.25.14 at 11:23 am

#138 Rusty Venture — “Viewership is shrinking because of alternatives, such as streaming video. Bhell and Robbers have to look at alternatives lest they become the buggy whip manufacturers of this decade.”

Just about everybody wants home internet, and most people want TV news and live sports. There’s almost no way for the majority of the population to avoid paying the owners of the wires and of the content. I’ve got a smaller provider’s internet and TV over IP, but that provider is still paying Rogers wholesale to use the cable, and Bell and Rogers rates for the channels they own.

All of Canada’s major telecoms have managed dividend increases above inflation this year in the face of a somewhat hostile federal regulator. I expect that to continue.

#145 Nemesis on 06.25.14 at 11:38 am

#WickedWednesdayMischief #It’sTheEconomy,Stupid

[SCMP] – Home is where the glowing heart is: Why you feel more Canadian when you live in Hong Kong: For thousands of young returnees, Canadian identity and jobs are easier to find in the SAR

…“For mainland Chinese, I can put a bet on the table,” said Yan. “They are cancelling this [IIP], but I’ve heard they will put a more expensive [immigration scheme] in its place. So what will happen … [if it attracts just] rich people who just want to use their money to buy their identity and put some time here? At the end of the day, all the young, all the second generation, will move back to China to take up their business, by default.”…

http://www.scmp.com/comment/blogs/article/1540044/home-where-glowing-heart-why-you-feel-more-canadian-when-you-live-hk

[CBC] – Stanley Park coyote feeding raises concerns

…”Anyone spotting a coyote is advised to try to scare it off by yelling and waving their arms overhead.”…

http://www.cbc.ca/news/canada/british-columbia/stanley-park-coyote-feeding-raises-concerns-1.2685860

[NoteToGT: Just between the two of us, EnglishBayCoyotes are the least of BeachAvenueBachelors’ problems… By far the more dangerous predator is the CoalHarbourCougar – whose natural habitat has recently expanded to include FalseCreek/GranvilleIsland and Kitsilano’s VanierPark. NocturnalHunters, who favour the SeaWall and immediate environs, they are irresistibly drawn towards displays of flagrantly conspicuous consumption. As with the EnglishBayCoyote, the act of feeding a CoalHarbourCougar is fraught with peril.]

#146 Jack Bean on 06.25.14 at 11:38 am

I bet you also vote for Wal-Marts full of crap from China and idle factories in your town. Hey, it’s cheap! — Garth

I am honored that you have respond, although a bit taken back by your response..

I don’t see how making the choices I outlined would even hint that I would or would not support walmart. Quite frankly Walmart doesn’t have better prices than my locals.

I will expand on the choices I outlined:

1) Over the air HD – Canadian – All Canadian Advertising

2) Cell Provider – Canadian (CRTC rules)
+ I use a Black Berry (oh Canada!!!)

3) Internet 100% Canadian

Making choices is my right and my choice not to buy service under contract is fair. The way I and millions of people vote with our dollars will continue to shape innovation and choice from service providers.

It goes beyond my common sense to pay 50% more for 50% less service on a cellular plan.. hopefully the big guys get the message and they will..

Anyway… no hard feeling Garth..

#147 -=jwk=- on 06.25.14 at 11:42 am

@ #44
#33 not denying Ireland was/is a mess, just that it has absolutely nothing to do with Canada. We have 30 million more people and import 10x the number of people they do every year. Their GDP is dropping, ours keeps going up. Also, HAM loves us :)

Not denying USA was/is a mess, just that is has absolutely nothing to do with Canada. We have 270M less people and import 1/2 the number of people they do. Their GDP is rising as our is. HAM loves them even more :)

So we are not like USA or Ireland. Two very very different countries, same housing problem, same result. But ” It’s different here.”?

@#52 thank you for paying cash and subsidizing my credit card points. Tap and Go is faster than cash.

@ #126. Here is a sequence, what do you think the next number will be? : 1.5, 2, 2.3, ??

#148 Zeeman1 on 06.25.14 at 11:47 am

Look out below!!!!!

http://business.financialpost.com/2014/06/25/u-s-economy-shrank-in-first-quarter-by-most-since-the-depths-of-recession/

Ouch!

Last winter’s number. Already recovered. — Garth

#149 Panhead on 06.25.14 at 11:54 am

#104 Waterloo Resident
Now here is something really useful, something everyone wished they had on their laptops: A SCREEN ‘OFF’ BUTTON.

Now if they just had one of these for certain people …

#150 TheCatFoodLady on 06.25.14 at 11:57 am

I think we may have tipped over the edge, RE-wise, in Kingston. The data for May were not encouraging. YOY, sales were down 16% but new listings were way up; by 17%

Of course the average price in May topped $300K but as was rightly pointed out, that’s because the biggest decline in sales were in the homes priced from $200 -250K. In Kingston, that’s in ‘decent starter’ range.

In the complex I live in, tenants generally consist of young people ‘saving up for a down payment’, retirees or folks on social assistance. The house horniess is strong – I almost expect to find the parking lots littered with ‘RE flyer condoms’ most mornings. The cognitive dissonance is equally strong.

“I can buy a house – it makes SO much more sense! It won’t cost more than a few hundred what I’m paying in rent now!” (They ignore the fact that utilities are included here.) The young especially haven’t considered closing costs, don’t have a clue that homes don’t maintain themselves & if they factor in the additional stuff you need to buy – they find it exciting:

“Our very own snow blower! Rakes & other gardening tools, hoses, a kiddy pool for the kiddies.”

Yeah, for 5% down, they figure they can be living the dream. They should speak to those tenants who’ve slunk away from the own RE ventures, sadder, wiser & ‘broker’.

Places are still selling but they’d better be priced right & present well.

#151 TheCatFoodLady on 06.25.14 at 11:58 am

Oops, forgot the linkie-poo:

http://creastats.crea.ca/king/index.htm

#152 Nemesis on 06.25.14 at 12:07 pm

#SpeakingOfTheGood. #TheBad. #TheUgly. #EliWallach:InMemorium.

http://youtu.be/zbEmVEV5f90

#153 Drill Baby Drill on 06.25.14 at 12:17 pm

Lamborghini to open a dealership in Calgary. It really is different here !!

Why? There are established Lambo dealerships in Montreal, Toronto and Vancouver. — Garth

#154 Sean on 06.25.14 at 12:21 pm

“No”, he said. “The advice we have received is that we are not in a bubble.”

What advice…from who??

#155 Hank on 06.25.14 at 12:27 pm

2014 is now setting up to be a year of moderate US growth, not the rosy rebound many economists expected. Second quarter growth, expected at about 3 percent, means that the first half of 2014 could show no growth at all. Expectations are for higher growth rates of 3 percent or more for the third and fourth quarter. That would still mean growth for the year could be just about 2 percent or less.

http://www.cnbc.com/id/101785890

#156 Reasonfirst on 06.25.14 at 12:31 pm

DA – stop yelling “SHIFT”

#157 Mister Obvious on 06.25.14 at 12:36 pm

#111 Habs76-79

“Now early cashing out boomers may make out well….”
——————————–

This one did. I’d say there’s still time for a few more to escape.

#158 Shawn on 06.25.14 at 12:42 pm

Wal-Marts full of crap from China ?

This was mentioned above.

It’s an easy claim to make. How true it is I don’t know, I seldom shop there.

Apparently, they “lower the cost of living for people everywhere”

They are an efficient retailer.

The Walton family owns just over half of the company and collectively the family is richer than Bill Gates and Warren Buffett.

Not bad for owning junk stores.

#159 OttawaGuyRenting on 06.25.14 at 12:49 pm

#125 Casual Observer on 06.25.14 at 9:23 am
—————

You are 100% on target.

I consult for a major brand that does major purchasing of media on TV and Garth is bang on.
The PVR has changed the game.

Sports and Big Event TV (American Idol) still drive the market for spots. HNIC – Rogers Jays – are HUUUGE spots to covet.

male and growing female Demo drive sales in this sports market for ad spots

We have pulled $$$$$ out of terrestrial radio. That thing is DEAD
Radio stations don’t even want on air personalities any more! So how do brands get added value and air time? Pffft

$$$ now pouring into online FB and twitter

$$$ pouring into brand recognition and placement

Good call blog dawg CO :D

#160 Cha Ching on 06.25.14 at 1:01 pm

Although real estate prices have been rising across the board for many years now, I am still surprised by people such as Liam who make comments like, “I’m baffled how the Canadian government, politicians and central bank continue to let the bubble inflate.”

Liam appears to be ignorant about how markets work and seems to believe that the Canadian government can do anything. What does Liam suggest? Probably nothing. Would Canada be better off under his leadership? Probably not. The Canadian economy would probably implode. Let’s try to be less ignorant with our questions.

#161 young & foolish on 06.25.14 at 1:02 pm

It’s not just Canada’s big cities, look what’s happening in London. Average earners there can’t get a house either.

Sure, “what we have now, will not last”, but you can say that about most markets today. I’m not trying to defend high RE prices, just suggesting that our economies are distorted under the extra-ordinary recent intervention of central banks. Can you really say where value resides under current circumstances?

London has 8.5 million people and is the crossroads of the world. Calgary, not so much. — Garth

#162 Mr Zipper on 06.25.14 at 1:24 pm

Civil servants are living in the lap of luxury as the government lavishes huge wages and pension perks on them. No layofffs there. Civil service is 20% of the population….so no depression among the elite. In fact teachers here in BC want more……..more….more….bwahahahahahahahaha….why not?

Meanwhile , wages that have to be supported by the market place are crashing……TFW’s at Wendy’s and oil sands workers being replaced by Chinese nation in Ft Mac…….private buisiness laying people off in droves.

If the Shadow M3 was published every day people would see that the ‘bond market’ is actually the government that issues 99.9% of all offerings. This is primarily used to prop up a bloated civil service. This overspending on the elite is what we call ‘the deficit’.

If new cash in the system mattered any more we would see that real inflation , measured by M3 is running at 16% p/a. Si…if prices keep going up…it’s because of a basic economic phenomena referred to as ‘too much cash, chasing too few goods’.

Of course people in Ontario didn’t get the math in the past election…so screw them….or wait….get in line…there’s a conga line of screwers and screwee’s already dancing off the cliff.

#163 Edmontonian on 06.25.14 at 1:30 pm

Another new pipeline approved from the Fort to Edmonton as the production is set to hit 3 million barrels per day…

Come to Alberta , your future is here…

#164 Joe on 06.25.14 at 1:55 pm

We’re going to need wage deflation if we want to see a real estate correction within our lifetimes cuz it isn’t going to come in the form of higher interest rates — especially after listening to Garth talk about higher interest rates since 2008, I just don’t see it happening. In fact I can see a Japan/US/EU-like situation emerging where interest rates stick around zero or even go into the negative. If fewer and fewer people are buying GICs and putting less of their money in RRSPs/TFSAs, then the govt will likely start charging negative interest rates on deposits.

(a) The government does not set interest rates. (b) They will rise. — Garth

#165 maxx on 06.25.14 at 2:10 pm

#26 Joe2.0 on 06.24.14 at 7:05 pm

“It’s just a matter of time before Toto pulls the curtain back.”

Agreed. Toto was also hard at work in’92, ’00-01 and ’07-09. The more the shtf, the more silly card tricks were deployed by our “leaders”. Silly wabbits.

Decades later, the deny, deny, deny hand is played incessantly with much of the population wishin’ and a hopin’.

Wishin’ and a hopin’ won’t make anyone’s job safe nor stabilize interest rates, taxes, energy and global influence.

#166 Willy2 on 06.25.14 at 3:02 pm

Mr. Turner. Just say the word “DEFLATION” ………

Totally agree. The situation in Canada will soon be the same as in Ireland. And falling house prices and falling stock prices are a symptom of deflation. Remember Robert Prechter & Harry S. Dent ?

Same story for interest rates. Falling yields mean bondprices go higher. Rising yields is the most DEFLATIONARY force one can imagine. Because it makes debt servicing costs more and more costly. More and more defaults. Extremely deflationary.

Inflation is NOT the driver behind rising interest rates. If that were the case then (US) rates would have gone up in the timeframe 2001-2008 (think oilprices going up from USD 20 up to USD). Did rates go (much) higher ? No, they went down from ~ 6% in 2001 down to ~ 4.5% in mid 2008.

#167 Willy2 on 06.25.14 at 3:12 pm

Addition to reply #166:

Oil went up from USD 20 to over USD 140 in mid 2008

#168 Ralph Cramdown on 06.25.14 at 3:20 pm

What is Canada’s comparative advantage?

In order for free trade to work for us, we have to produce and sell some stuff better than anyone else in the world. Manufacturing is difficult in a petrocurrency economy, though. The dollar rises with the price of oil, manufacturers become less competitive and film and TV production go elsewhere.

We always seem to have a few world-beating companies, but never more than a handful of big ones at a time.

From what I can see, the sum total of our current federal government’s industrial policy is to build a few pipelines to narrow the spread between Western Canadian Select and WTI or Brent.

Other countries have made manufacturing work in a high tax, high labour cost social welfare state, but all we do is pump oil. Here’s a man Harper likes to quote, and his policy prescription is to slash taxes, welfare and EI so that those lazy people from the maritimes will be forced onto planes to Ft. Mac.
http://business.financialpost.com/2014/06/24/jack-m-mintz-why-canadas-labour-market-needs-an-overhaul/

Pretty depressing pre-Canada Day reading.

#169 Yogi Bear on 06.25.14 at 4:01 pm

#160 Cha Ching
Liam appears to be ignorant about how markets work and seems to believe that the Canadian government can do anything.

Let’s try to be less ignorant with our questions.

Is that a joke? For starters, they could get out of the mortgage insurance business.

Remember what happened in Ireland? The government declared that it would bail out their banks. Instead of private investors taking a haircut on risky bond investments, the Irish taxpayer was left with generational debt greater than the GDP of the entire country.

I don’t believe we’ll see a similar situation here, but $600 billion is a lot of taxpayer exposure. Private insurers add additional billions which are covered by the taxpayer.

Quite frankly, all mortgage insurance in this country should be privatized, with the exception of a pared down CMHC with a mandate to assist low-income folks get into affordable homes. That’s it.

This ability to transfer risk to someone else is one of the prime causes of US financial crisis.

#170 Mike T. on 06.25.14 at 5:11 pm

‘Even SUBWAY has now lobster sandwiches.’

you do realize they cost 15 dollars right?

not available in the clever but mis-guided $5 footlong promotion

#171 Snowboid on 06.25.14 at 5:11 pm

SHIRT happens. Clothing, like any investment, is a long term fit. If you have short term speculative expectations, be they wool or hare, chances are you’ll get sized.

It’s just as simple as that.

};-(

#172 Bill on 06.25.14 at 6:01 pm

#52 Bill Gable on 06.24.14 at 7:54 pm

I put everything on my VISA. The big monster mega bank only gives me ~10 debits per month before they start zinging me something stupid like a buck a pop. No thanks. It all goes on the VISA because it costs to debit. Gets paid off at the end of the month and tracks nicely on mint.com

#173 Nemesis on 06.25.14 at 8:28 pm

#Dusty&Martha! #[email protected]

http://youtu.be/CXP7tt7TQUk

[NoteToGT: Talk about your ‘Wishin’&Hopin!’, I passed a MadBeardedLegionaire straddling a HondaSilverWing on the 97 today… He was trying to pace me… At 161KMH he decided he’d had enough. 5GoldWings for effort, though. Today’s Oscar, however, goes to the ’69 BonnevilleChopper at CYLW.]

#174 Prairie Girl on 06.26.14 at 12:36 am

We recently took the plunge and started putting almost all purchases on our credit card because we have a no fee credit card that pays us a percentage of our purchases in CASH. So yes, we pay it off every month and then every couple of months, we get a nice $50 cheque in the mail from our friendly credit card company!

#175 Andrew on 06.26.14 at 10:15 am

Hi,
I passed on the original e-mail and thought I can clear up a couple of misconceptions.

First off, TV is by far the dominant screen even in this day and age.

http://www.adweek.com/news/technology/you-wont-believe-how-big-tv-still-156039

Mention the telcos and cue up the usual parade of doomers and cord cutters venting their frustrations.

(Many of which have merit. For instance I champion pick-and-pay even though it will cause short term pain to the industry, because not only is it fair but it may spur much needed innovation)

Still, most people (the herd) need something to put on the huge appliance that is the centrepiece of their living room. Ever tried watching “flip this house” on Netflix?

What amazes me is how people can become so viscerally emotional about telcos over charging (which they do, I’m not arguing that) but at the same see no issue with overpaying by hundreds of thousands of dollars for their accommodation.

This is further evidence if the disconnect when it comes to real estate.

Perhaps if people could flip their cable package to a greater fool they would sing another tune.

As for me, my seniority will save my ass in these cuts but most who will get punted will be 20 something house hornies.

I’ve been hearing this a lot at work. “But they can’t get rid of me, I just bought a house!”

This is most definitely a canary, or better yet an indication of the health of the consumer economy once you remove real estate from the equation, as the TV industry is usually recession proof.

#176 Andrew on 06.26.14 at 10:49 am

Hi,
I passed on the original e-mail and thought I can clear up a couple of misconceptions.

First off, TV is by far the dominant screen even in this day and age.

http://www.adweek.com/news/technology/you-wont-believe-how-big-tv-still-156039

Mention the telcos and cue up the usual parade of doomers and cord cutters venting their frustrations.

(Many of which have merit. For instance I champion pick-and-pay even though it will cause short term pain to the industry, because not only is it fair but it may spur much needed innovation)

Still, most people (the herd) need something to put on the huge appliance that is the centrepiece of their living room. Ever tried watching “flip this house” on Netflix?

What amazes me is how people can become so viscerally emotional about telcos over charging (which they do, I’m not arguing that) but at the same see no issue with overpaying by hundreds of thousands of dollars for their accommodation.

This is further evidence if the disconnect when it comes to real estate.

Perhaps if people could flip their cable package to a greater fool they would sing another tune.

As for me, my seniority will save my ass in these cuts but most who will get punted will be 20 something house hornies.

I’ve been hearing this a lot at work. “But they can’t get rid of me, I just bought a house!”

This is most definitely a canary, or better yet an indication of the health of the consumer economy once you remove real estate from the equation, as the TV industry is usually recession proof.

Oh, and one more rebuttal to those who think people have stopped watching commercial television.

http://www.newswire.ca/en/story/1363727/new-tvb-research-study-confirms-commercial-television-is-the-dominant-video-viewing-medium-in-canada

#177 Patricia Mills on 06.26.14 at 12:33 pm

Inflation: I think we should also be very worried about Inflation. And perhaps also lobby to change how it is measured. Perhaps it should be measured differently in order to expose the truth. Perhaps a wage freeze and legislation to force all companies NOT to increase the cost on ANYTHING would help.
Things that have gone up in the just the last month:
Shaw Cable
BC Hydro
BC Medical
Gas
Food
BC Ferrries
Auto Tune Up
Rent Chiropracter
Prescriptions
List goes on but these are basic living needs. When each of these goes up by an arbitrary $5.00 and one is on a fixed income the first thing to go will be CABLE, next will be FOOD. I guess I have to learn to love Designer Cat Food.